VZCZCXYZ0004
PP RUEHWEB

DE RUEHBU #1745/01 2432012
ZNY CCCCC ZZH
P 312012Z AUG 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 9125
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 6526
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0168
RUEHRL/AMEMBASSY BERLIN PRIORITY 1072
RUEHBO/AMEMBASSY BOGOTA PRIORITY 1623
RUEHBR/AMEMBASSY BRASILIA PRIORITY 6383
RUEHCV/AMEMBASSY CARACAS PRIORITY 1465
RUEHLP/AMEMBASSY LA PAZ AUG 4884
RUEHPE/AMEMBASSY LIMA PRIORITY 2143
RUEHMD/AMEMBASSY MADRID PRIORITY 1890
RUEHMU/AMEMBASSY MANAGUA PRIORITY 0148
RUEHME/AMEMBASSY MEXICO PRIORITY 1432
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 6717
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0542
RUEHZP/AMEMBASSY PANAMA PRIORITY 0313
RUEHFR/AMEMBASSY PARIS PRIORITY 1315
RUEHQT/AMEMBASSY QUITO PRIORITY 0989
RUEHRO/AMEMBASSY ROME PRIORITY 1362
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0748
RUEHKO/AMEMBASSY TOKYO PRIORITY 0832
RUEHSO/AMCONSUL SAO PAULO PRIORITY 3512
RUEHGV/USMISSION GENEVA PRIORITY 0662
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHINGTON DC PRIORITY

C O N F I D E N T I A L BUENOS AIRES 001745 
 
SIPDIS 
 
SIPDIS 
 
TREASURY FOR CLAY LOWERY, NANCY LEE, AJEWEL, WBLOCK, LTRAN 
NSC FOR JOSE CARDENAS, ROD HUNTER 
PASS FED BOARD OF GOVERNORS FOR RANDALL KROSZNER, PATRICE 
ROBITAILLE 
PASS EXIM BANK FOR MICHELE WILKINS 
PASS OPIC FOR JOHN SIMON, GEORGE SCHULTZ, RUTH ANN NICASTRI 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
 
E.O. 12958: DECL: 08/30/2017 
TAGS: EFIN ECON EINV AR
SUBJECT: NEW ECONOMY MINISTER ON PARIS CLUB, DOHA TALKS, 
POST-ELECTION REFORMS 
 
REF: A. BUENOS AIRES 1648 
 
     ¶B. BUENOS AIRES 1496 
     ¶C. BUENOS AIRES 1558 
     ¶D. BUENOS AIRES 1301 
 
Classified By: Ambassador E.A. Wayne for Reasons 1.4 (b,d) 
 
Subject 
------- 
¶1. (C) New Economy Minister Miguel Peirano emphasized to the 
Ambassador his interest in resolving the Paris Club impasse, 
supported Canada's IMF reform proposals, agreed to deal with 
disputes involving U.S. interests, and affirmed Argentina's 
commitment to broad trade liberalization in an August 24 
meeting.  However, Peirano complained that current Doha texts 
would limit the GoA's ability to protect key domestic 
constituencies.  He also justified recent protective trade 
measures (Ref A) as essential to countering the wave of cheap 
Asian imports.  Ambassador highlighted increasing pressure on 
the USG from bondholder groups ("holdouts") that did not 
participate in the 2005 debt exchange, and stressed that 
resolving this issue was in Argentina's best interests. 
Peirano is reportedly developing a post-election economic 
road-map, prioritizing Paris Club, tighter fiscal policies, 
ending price controls, reorganizing the statistical agency, 
and even dealing with holdouts.  Although a positive signal 
to markets, it is an ambitious agenda for a first-year 
President to implement.  End Summary. 
 
Paris Club:  Time to Renew Efforts to Resolve 
--------------------------------------------- 
¶2. (C) In his first meeting with the Ambassador since being 
promoted from Secretary of Industry on July 17 (Ref B), new 
Economic Minister Miguel Peirano emphasized the importance he 
placed on reaching a payment deal with the Paris Club over 
Argentina's roughly $6.3 billion official debt (over half of 
which is in arrears).  Without offering details, he stated 
his intention to renew discussions soon with Paris Club 
members.  He announced he had appointed his new Chief of 
Advisors, Javier Alvaredo, to take the lead on the issue. 
The Ambassador agreed that resolving the Paris Club arrears 
would be a positive step forward, and offered assistance with 
arranging meetings with U.S. officials in Washington or 
during international meetings, as well as providing 
background on how the Club works. 
 
IMF Reform 
---------- 
¶3. (C) Peirano noted the upcoming visit (September 2) to 
Argentina of France's candidate to head the IMF, Dominique 
Strauss-Kahn, and commented that he looked forward to 
discussing voting share reforms with him (a favorite issue of 
Peirano's predecessor, Felisa Miceli).  He called Canada's 
proposal for voting share reform a good basis to begin 
discussions. 
 
Peirano Promises to Address Outstanding Disputes 
 
--------------------------------------------- --- 
¶4. (C) Ambassador noted that the Embassy had working closely 
with former Economy Minister Felisa Miceli and her staff on a 
number of disputes involving U.S. companies, and he hoped to 
continue the close cooperation with Peirano's new team.  In 
particular, the Ambassador urged action on TIG Insurance 
company, which has an approximately $15 million re-insurance 
contract claim against the GoA, and Bowne of New York LLC, 
which the GoA owes $1.4 million for work it did during the 
2005 debt exchange.  See Ref D for background. 
 
¶5. (C) The Ambassador also inquired about the status of the 
GoA's settlement with Argentine citizen Eduardo Saiegh, who 
claims anti-semitism played a role in his seizure and 
mistreatment by the GoA military dictatorship in 1980, and 
the GoA's subsequent expropriation of his stake in Banco 
Latinoamericano.  The Ambassador said he understood that 
Argentine courts had ruled in Saiegh's favor, and had issued 
a judicial order for the GoA to compensate him for loss of 
property.  However, according to Saiegh the payment was 
pending (or held up) in the Economy Ministry.  Peirano agreed 
to investigate all three cases, and appointed his advisor 
Javier Alvaredo as the lead contact for the Embassy. 
 
Trade Issues:  China a Common Threat 
------------------------------------ 
¶6. (C) Ambassador noted his discussions with Foreign Ministry 
officials on upcoming September meetings in Geneva that will 
try to come to closure on Doha Round Agriculture, NAMA, and 
Services modalities draft texts (Ref C).  The U.S., he said, 
remains committed to a successful Doha outcome, and he urged 
Argentina to keep to the same commitment.  Peirano affirmed 
Argentina's commitment to broad trade liberalization, but 
called current Doha draft texts "too rigid," limiting 
Argentina's room to maneuver in satisfying domestic 
constituencies, including powerful labor unions.  He called 
burgeoning Asian imports a threat that justified temporarily 
strengthening Argentina's non-tariff barriers (Ref A).  In 
this environment, NAMA Swiss coefficients proposed by 
developed countries would require excessive cuts in Argentine 
industrial tariffs, a move that, he said, would benefit China 
and not the U.S.  In fact, he noted, many large U.S. 
multinationals have optimized their Argentine production to 
benefit from existing regional managed trade regimes and have 
a strong interest in maintaining the tariff status quo.  The 
Ambassador appreciated Peirano's frank response and shared 
NAMA-specific talking points targeted to Argentina for the 
Minister's consideration. 
 
Bondholders Increasing Pressure 
------------------------------- 
¶7. (C) The Ambassador commented that he had spoken frequently 
(Ref D) with former Economy Minister Miceli about the issue 
of bondholders who did not participate in the 2005 debt 
exchange (so-called "holdouts").  The Ambassador acknowledged 
that the GoA is not prepared to deal with this issue in the 
short term (i.e., prior to elections).  However, he informed 
 
the Minister that it is of great interest in Washington.  he 
explained that U.S. citizen holdout bondholders were 
increasing pressure on the executive branch and Congress to 
take action.  The Ambassador noted the USG position that 
resolving the issue was in Argentina's best interests, and 
passed the Minister a copy of the recent letter from the 
American Task Force Argentina (ATFA) to Secretaries Paulson 
and Rice.  The letter urges the Administration to intensify 
efforts to convince the GoA to honor its commitments to U.S. 
citizen bondholders, including blocking multilateral 
development bank loans. 
 
Comment 
------- 
¶8. (C) Recent news reports, which Peirano's staffers have 
confirmed to Econoffs, say Peirano is drawing up a 
post-election economic road-map.  The goal is for this plan 
to serve as the GoA's action plan for the transition period 
between the late October elections and early December, when 
the newly elected President takes over, and also for the 
first 100 days of what the GoA assumes will be the "Cristina" 
(Kirchner) administration.  Economic Ministry staff confirm 
that they are considering ways to resolve both the Paris Club 
and Holdouts, and the plan will also prioritize tighter 
fiscal policies, ending price controls, and reorganizing the 
statistical agency INDEC.  News of this program is a welcome 
and positive, albeit highly ambitious, signal to markets. 
However, it remains to be seen whether Peirano will retain 
his job in a follow-on administration and whether a 
first-year President would be able to support such an 
ambitious reform program.  It is also far from clear that 
Peirano and his team have a realistic view of what is needed 
to resolve the Paris Club or bondholdouts issues.  End 
Comment. 
 
WAYNE