This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 BUENOS AIRES 000407 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/BSC, WHA/EPSC, AND INR/R, 
NSC FOR NILMINI GUNARATNE, AND DEL RENIGAR 
TREASURY FO A/S QUARLES, DAS LEE, DAVID DRYSDALE, RAMIN 
USDOC FOR ALEXANDER PEACHER 
SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV PREL AR
SUBJECT: ARGENTINA POLITICAL ROUNDUP 
 
REF: BUENOS AIRES 346 
 
¶1. (U) Reftels and other Mission reporting available at 
http://www.state.sgov.gov/p/wha/buenosaires 
 
¶2. (U)  TABLE OF CONTENTS: 
-- Ambassador Meets with New MFA International Security 
Director 
-- Rumors of Kirchner Cabinet Changes 
-- Paper Mill Dispute: Blockage of Bridges into Uruguay 
Continues, Expands 
-- Santa Cruz Labor Conflict Calmer but Continues 
-- Meeting with Kirchner Insider 
 
--------------------------------------------- ------------- 
AMBASSADOR MEETS WITH NEW MFA INTERNATIONAL SECURITY DIRECTOR 
--------------------------------------------- ------------- 
 
¶3. (U) The Ambassador hosted a lunch February 15 for the 
MFA,s new Director of International Security, Ambassador 
Elsa Kelly, (who recently served as Argentina,s 
representative to the IAEA in Vienna), and members of Kelly's 
staff.  Kelly is a long-time, experienced diplomat who 
briefly served as Deputy Foreign Minister under President 
Raul Alfonsin.   Her office covers all of the major security 
issues (except for counter-terrorism), including military 
deployments and exercises, peacekeeping, nonproliferation, 
and nuclear energy cooperation.  The Ambassador highlighted 
our interests in these areas such as Iran, Haiti, the 
Additional Protocol, the Proliferation Security Initiative 
(PSI), the Megaports Initiative, peacekeeping operations, and 
joint military exercises.  On PSI, Kelly said the GOA would 
like to send a delegation to the April 11-12 Operational 
Experts Group meeting in Miami. (Reported septel.) 
 
----------------------------- 
MEETING WITH KIRCHNER INSIDER 
----------------------------- 
 
¶4. (SBU) On February 17, the DCM and Poloff paid a courtesy 
call on new Deputy Secretary of the Presidency and long-time 
Kirchner associate Daniel Varizat.  The DCM began by 
highlighting the importance the U.S. places on the bilateral 
relationship and took the opportunity to emphasize some of 
the policy agenda items for 2006: the UN Security Council, 
Venezuela, Bolivia, and Haiti.  Varizat for his part said 
that the GOA also values the bilateral relationship and that 
Argentina was not opposed to U.S. leadership as long as it 
also benefited the region. 
 
¶5. (SBU) Varizat said Kirchner would be focused on the 
economy in the coming year -- ensuring equitable economic 
growth, lower unemployment, and keeping inflation in check. 
Varizat said Kirchner was trying to get as much as possible 
out of the GOA's current economic model -- building up 
reserves, keeping a competitive exchanges rate, and 
maintaining a budget surplus.  Varizat said Kirchner would be 
willing to change this model if the costs started to outweigh 
the benefits.  He said that their biggest long-term concern 
is Argentina's energy shortage.  To solve this problem, 
Varizat said Argentina is looking to Venezuela and Bolivia. 
Varizat acknowledged Bolivia under Morales was a question 
mark for the GOA, although he said they remained in a 
wait-and-see role, hopeful that Morales will make the right 
decisions for Bolivia and the region.  Comment: Varizat 
struck us as a practical individual, someone we can work 
with, but also someone who is completely loyal to Kirchner. 
End Comment. 
 
¶6. (SBU) Bio Note: Varizat was a National Deputy in Congress 
before taking his current position, vacated by Carlos Kunkel 
when Kunkel accepted his seat in Congress last December. 
Varizat has a relationship with Kirchner that stretches back 
decades, even before Kirchner entered politics.  When 
Kirchner was first elected Mayor of Rio Gallegos in 1987, he 
appointed Varizat as his Director General of Public Works and 
Urbanization.  He was later appointed in 1991 as the Under 
Secretary of the Ministry of Interior of Santa Cruz Province. 
 
SIPDIS 
 Between 1995 and 1997, he served as Santa Cruz's Minister of 
Government.  Varizat was elected to the National Senate in 
1997, completing his term in 2001.  He became a National 
Deputy in 2003, when he took current Santa Cruz Governor 
Sergio Acevedo's congressional seat when Acevedo became the 
head of the Secretariat of State Intelligence (SIDE). 
 
---------------------------------- 
RUMORS OF KIRCHNER CABINET CHANGES 
---------------------------------- 
 
¶7. (SBU) The Argentine press and political analyst circles 
have been rife with rumors in the past few weeks that 
President Kirchner is about to initiate a new round of 
changes to his cabinet.  A leading political analyst, quoting 
sources in the Casa Rosada, recently told Poloff that Cabinet 
Chief Alberto Fernandez and Labor Minister Carlos Tomada will 
be replaced.  Deputy Secretary of the Presidency Daniel 
Varizat was named by this source as the likely replacement 
for Alberto Fernandez.  (Note: Pagina 12, a daily with close 
ties to the administration, reported recently that Technical 
and Legal Secretary Carlos Zannini would likely be the new 
Cabinet Chief.  End Note.)  Anibal Fernandez was named by the 
source as the likely replacement for Tomada (who would 
reportedly be named the Ambassador to Chile), with Secretary 
for the Presidency Oscar Parrilli moving over to take the 
helm at the Interior Ministry.  The timeframe for the cabinet 
changes is rumored to be sometime in March. 
 
¶8. (SBU) Kirchner insiders have confirmed Alberto Fernandez's 
difficult situation, but are guarded on whether the cabinet 
changes will actually occur.  Kirchner's leading finance 
advisor, Luis Corsiglia, told Econ Couns, Econoff, and Poloff 
on February 15 that Alberto Fernandez was being blamed for 
the GOA's poor showing in the Capital in the October 
elections and has gotten himself into a conflict with 
Planning Minister Julio De Vido.  According to Corsiglia, the 
conflict with De Vido stemmed from Fernandez's recent trip to 
Spain with First Lady and Senator Cristina Kirchner, which De 
Vido saw as Fernandez stepping on his territory.  Varizat 
told the DCM and Poloff on February 17 that he did not 
foresee cabinet changes in the short-term, although he 
acknowledged that Kirchner can be guarded, and therefore 
difficult to read, on issues of this nature.  Varizat said 
that Kirchner does not like to make changes to his set of top 
advisors. 
 
¶9. (SBU) Comment: The Buenos Aires rumor mill is always 
active and many times these rumors do not come to fruition, 
at least in the way in which they were predicted.  Kirchner 
manages key issues like the composition of his cabinet 
personally and whether there will, in fact, be personnel 
changes, and who will end up where may be decided days or 
even hours before the announcement is made.  End Comment. 
 
--------------------------------------------- ------ 
PAPER MILL DISPUTE: BLOCKAGE OF BRIDGES INTO URUGUAY 
CONTINUES, EXPANDS 
--------------------------------------------- ------ 
 
¶10. (U) Tensions between Argentina and Uruguay remain high as 
Argentines residing opposite the proposed location of two 
Uruguayan paper mills continue high-profile roadblocks on two 
of the three bridges connecting Uruguay with the Argentine 
province of Entre Rios.  Local residents, aided by Green 
Peace activists, had been holding on-again off-again 
roadblocks of the main bridges connecting the two countries 
for several months to protest the potential environmental 
impact of the proposed Uruguayan mills to the Uruguay river. 
In a move to raise the profile of the protest during the high 
tourism season, the protesters recently launched a 
24-hour-a-day roadblock on the most heavily utilized bridge 
connecting the Argentine city of Gualeguaychu and the 
Uruguayan city of Fray Bentos.  A Gualeguaychu citizens group 
has voted to continue the roadblock 13 straight days, 
angering Argentines trying to reach their annual summer 
holiday beach resorts in Uruguay and prompting growing 
criticism from the GOU.  On February 16, a citizens group 
from the Argentine City of Colon announced that they would 
join the protest and commenced a 24-hour a day roadblock of 
the second most heavily utilized bridge between the countries. 
 
¶11. (U) The GOA originally supported the right of the 
protestors to block the bridges, but recently has announced 
its intention of taking the GOU to the World Court to prevent 
construction of the plants.  The GOA has urged the protestors 
to stop forms of protest that could hurt the Argentine case 
before the World Court, but to date has shown no willingness 
to step in and open the bridges.  The GOA,s stance toward 
the protestors is in line with the non-confrontational 
policies President Kirchner has taken toward most forms of 
social protest since taking office in 2004.  There is no 
indication that Kirchner will stop the protests, or take any 
action other than threatening to refer the issue to the World 
Court. 
 
¶12. (U) GOU officials have increasingly been quoted in the 
Argentine press regarding the GOU,s right to construct the 
plants and the economic impact of the roadblocks on a 
Uruguayan tourism industry that depends on the annual 
pilgrimage of thousands of Argentine sun worshipers. 
Recently, GOU officials have stepped up complaints regarding 
the roadblocks, threatening to refer the issue to MERCOSUR if 
the GOA takes the issue to the World Court.  One GOU official 
reportedly told the Argentine press that the very real 
economic impact of the roadblocks to protest possible 
environmental damage was akin to an old Argentine tango song 
about a man who beat his wife because she may cheat on him 
sometime in the future. 
 
¶13. (SBU) The possible scope of the environmental impact of 
the plants is a matter of debate, but their unpopularity with 
a vocal segment of the Argentine population and the 
significant potential economic benefit the plants will 
provide to Uruguay are both beyond question, making this a 
highly intractable dispute that will probably not be resolved 
in the short-term.  Deputy Foreign Minister Garcia Moritan 
opined to the Ambassador that the GOA saw no short-term fix 
to the problem and that relations would get worse before they 
got better.  Judging by the fact that the Gualeguaychu 
protesters recently constructed a traditional outdoor 
barbeque called a quincho at the site of the protest 
indicates that they share that opinion. 
 
--------------------------------------------- - 
SANTA CRUZ LABOR CONFLICT CALMER BUT CONTINUES 
--------------------------------------------- - 
 
¶14. (U)  The Santa Cruz Province roadblocks and strikes by 
oil workers, which ultimately resulted in the death of a 
police officer (REFTEL), have stopped, but negotiations 
between the workers and oil companies have had limited 
success.  Workers claim that YPF Repsol has not held up its 
end of the bargain.  Part of the negotiated respite called 
for YPF Repsol to pay the workers 50 percent of their wages 
lost during the 18-day strike; the workers now declare they 
will settle for no less than 100 percent.  There have been no 
arrests in the death of the policeman to date and the 
investigating judge is avoiding making any predictions saying 
only that they are still working on reconstructing the 
sequence of events. 
 
¶15. (U)  The Santa Cruz event has, however, precipitated 
action in Buenos Aires on the strikers' demand that the 
income tax threshold be raised. The Economy Ministry this 
week presented the Casa Rosada with several options on 
raising the floor at which salaries are taxed, though no 
definitive decisions have been made.  Minister of Federal 
Planning Julio De Vido met February 15 with Hugo Moyano, 
Secretary General of the CGT labor federation and head of the 
 
SIPDIS 
Teamsters union, and several provincial oil worker union 
representatives to discuss the issues and reportedly to 
request restraint on wage demands. 
 
¶16. (U)  Numerous unions, several in key areas of the 
economy, will be renegotiating annual contracts beginning in 
March.  It appears to be a given that wages in the formal and 
unionized sectors of the economy will rise.  The GOA, ever 
fearful of growing inflation levels, wants to keep 
expectations and increases to a minimum and wants to avoid 
events like Las Heras in Santa Cruz from jeopardizing the 
upcoming labor negotiations and tainting discussions with 
unions in other industries that appear willing to work with 
the GOA to keep the wage-demand-price cycle under control. 
 
¶17. (U)  Finally, in another union/piquetero-friendly move by 
the government, Luis D,Ela was appointed to the 
newly-created Subsecretary of Land for the Social Habitat, 
assisting the Secretary of Public Works.  D,Ela is a former 
Buenos Aires City legislator and is the leader of the 
pro-Kirchner piquetero group FTV (Earth and Housing 
Federation).  D'Elia was an early supporter of the 
presidential candidacy of the then-obscure governor from 
Santa Cruz, Nestor Kirchner.  D'Elia gained notoriety in June 
2004 when he led the FTV in a takeover of a police station in 
Buenos Aires -- much like the takeover in Las Heras -- but 
without the fatal outcome.  D'Elia and other pro-K piquetero 
leaders were instrumental in mobilizing pro-Cristina Kirchner 
crowds for campaign events.  He is the latest in a succession 
of piquetero leaders to be appointed to federal or provincial 
government ministries. 
GUTIERREZ