VZCZCXYZ0002
PP RUEHWEB

DE RUEHBU #1980/01 2771202
ZNY CCCCC ZZH
P 041202Z OCT 07
FM AMEMBASSY BUENOS AIRES
TO RUEHCV/AMEMBASSY CARACAS PRIORITY 1527
RUEHME/AMEMBASSY MEXICO PRIORITY 1456
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 6819
RUEHUB/USINT HAVANA PRIORITY 0071

C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 001980 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 10/03/2017 
TAGS: PGOV PREL ECON KLAB KCOR AR
SUBJECT: ARGENTINE PUNDITS: RESTORING PUBLIC CONFIDENCE KEY 
CHALLENGE FOR NEXT GOVERNMENT 
 
REF: BA 1862 
 
Classified By: Ambassador E. Anthony Wayne for reasons 1.4 (b) and (d) 
 
¶1.  (C)  Summary.  A group of top political and economic 
analysts maintain that the main challenges facing Argentina's 
next administration are restoring confidence in public 
institutions; reining in inflation and labor demands for 
higher wages; and improving juridical certainty to attract 
greater investment.  They expect a first-round victory for 
Senator Cristina Fernandez de Kirchner (CFK) in the upcoming 
presidential election, and feel that the most relevant 
question now is whether she will capture a credible 
percentage of the vote that will simultaneously provide her 
with political legitimacy in the eyes of the public and ward 
off potential cries of electoral fraud from the opposition. 
Some of them doubt that CFK will finish her term.  They 
suggest that the USG could enhance prospects for a better 
bilateral relationship with a CFK-led government through 
early engagement with key players in her Cabinet.  This, they 
say, would enhance the CFK team's understanding of U.S. 
priorities in Argentina and Latin America.  End summary. 
 
¶2.  (C)  Ambassador Wayne hosted a lunch on October 1 in 
honor of visiting Brazil/Southern Cone Office Director Milton 
Drucker.  Participants included: Rosenda Fraga, Executive 
Director, New Majority Unon; Diana Mondino, Director of 
Institutional Relations at the Argentine Center for 
Macroeconomic Studies;  Manuel Mora y Araujo, Executive 
President of the polling firm Ipsos-Mora y Araujo;  Graciela 
Romer, President of political polling and consultancy firm, 
Graciela Romer and Associates; and Eduardo Van der Kooy, 
leading editorialist for Argentine daily, Clarin. 
 
--------------------------------------------- -------- 
CFK Win Predicted, But Will it be a Credible Outcome? 
--------------------------------------------- -------- 
 
¶3.  (C)  Our Argentine interlocutors forsee a first-round win 
for Senator Cristina Fernandez de Kirchner (CFK) in the 
upcoming presidential election.  The most relevant question 
now, they debated, is whether she will capture a credible 
percentage of the vote that will simultaneously provide her 
with political legitimacy in the eyes of the public and ward 
off potential cries of electoral fraud from the opposition. 
Van der Kooy stated that it is a mistake for CFK to act as if 
the upcoming elections are a "coronation".  If CFK only 
captures 42 percent of the vote, she will lack the political 
legitimacy necessary to successfully deal with the unions in 
the next round of government negotiations over wages.  If she 
captures 48 percent of the vote, however, the opposition will 
claim electoral fraud, he predicted. 
 
¶4.  (C)  Romer explained that while there have been claims 
under previous governments of electoral fraud in lesser 
developed provinces like Formosa and Chaco, they have never 
before extended to Argentina's more developed provinces or 
its national elections, as she alleged they do today.  Claims 
of fraud in Cordoba (ref A), coupled with alleged GOA 
manipulation of economic data, have contributed to a climate 
of public distrust in government institutions.  The Kirchners 
have underestimated the damage that this (especially the 
manipulation of data from INDEC, the national statistics 
agency) has caused.  Restoring public confidence will be one 
of CFK's main challenges, she concluded to the agreement of 
others. 
 
--------------------------------------------- -------------- 
Some Find CFK More Interested in Monologue than Dialogue... 
--------------------------------------------- -------------- 
 
¶5.  (C)  Office Director for Brazil and Southern Cone Affairs 
Milton Drucker indicated that much has been said about CFK's 
willingness to engage in dialogue with the United States, but 
that her visit to New York seems to indicate a greater 
interest in talking rather than listening.  Fraga agreed, 
adding that CFK has made no effort to understand how the 
United States works.  When the Ambassador asked what the USG 
could do to improve U.S.-Argentine relations under a CFK 
administration, Fraga suggested early USG engagement with key 
players in her Cabinet to enhance their understanding of U.S. 
priorities in Argentina and Latin America.  Romer noted that 
CFK is trying to fashion herself as a progressive 
intellectual rather than a traditional Peronist figure.  She 
expressed concern that CFK could have a tendency to conduct 
foreign policy based on whim or ideology -- something 
Argentina can not afford. 
 
--------------------------------------------- ----- 
...Others Expect CFK Outreach to Sectors K Scorned 
 
BUENOS AIR 00001980  002 OF 003 
 
 
--------------------------------------------- ----- 
 
¶6.  (C)  Mora y Araujo has a more optimistic view of 
Argentina's foreign policy under CFK, suggesting that she 
will work to improve public relations with sectors that her 
husband has publicly scorned, such as the Catholic Church and 
press.  He said that he expects CFK to have a stronger 
Cabinet and to delegate more to her Ministers.  He also 
thought she is interested in trying to find more consensus 
among social sectors and the government.  Both Mora y Araujo 
and Romer expected CFK to engage Mercosur more actively and 
work to ease tensions with Uruguay over the Botnia pulp mill 
dispute. 
 
--------------------------------------------- ---------- 
CFK Foreign Policy: Change in Style more than Substance 
--------------------------------------------- ---------- 
 
¶7.  (C)  Turning to a discussion on CFK's likely foreign 
policy priorities, Fraga asserted that there would be a 
change in style, not substance, under CFK.  Mondino argued 
that resolving Argentina's arrears to the Paris Club is a 
"serious issue" that the next administration must resolve in 
order to restore Argentina's credibility with the 
international financial community and access resources and 
investment needed.  Fraga, however, said that he did not see 
CFK tackling the issue.  He added that CFK is unlikely to 
change her husband's policy of engaging Venezuela, noting 
that she passed up the opportunity to say anything to 
distance herself from Venezuela during her recent visit to 
New York.  Rather, CFK said that Argentina has different 
friends than Venezuela-- in an allusion to Venezuela's close 
relationship with Iran.  Mora y Araujo indicated that the 
GOA's flirtation with Venezuela has its limits, as the 
Argentine public will not tolerate CFK supporting Venezuelan 
President Chavez.  He added that CFK is a strong advocate of 
democracy and appears to be more comfortable defending 
democracy than her husband -- particularly on Cuba.  He also 
thought it very important that CFK had started to build a 
good relationship with Mexico's President Calderon.  This, he 
told the Ambassador, is part of CFK's effort to build in more 
options for Argentines. 
 
-------------------- 
The Challenges Ahead 
-------------------- 
 
¶8.  (C)  The Ambassador asked about Argentina's domestic 
challenges in the near-term.  Mora y Araujo stated that 
improving juridical certainty is key to attract greater 
investment.  Mondino stated that there are three 
inter-related problems facing the Argentine economy in the 
near-term: 1) cash flow; 2) inflation; and 3) the potential 
for labor conflict.  She noted that Argentina's fiscal 
surplus is declining, limiting the GOA's ability to govern 
via patronage politics.  Inflation has eroded real wages 
fueling ever-increasing labor demands to boost wages in order 
to keep pace with inflation. GOA policies to keep the 
Argentine peso artificially low, combined with government 
manipulation of economic data has resulted in a de facto 
dollarized economy.  She stated that the Argentines no longer 
know what the peso is worth-- rent and other transactions are 
quoted in dollars and there has been a 15-17 percent increase 
in the number of dollar-denominated bank accounts opened in 
recent months.  All agreed that labor unrest would be one of 
the early challenges CFK would face as President.  They also 
speculated whether CFK would be able to complete her mandate, 
with Van der Kooy observing that there is no great love in 
Argentine society for either of the Kirchners.  He added that 
neither have really connected with the people in general, or 
the unions in particular -- Peronism's traditional base. 
 
¶10.  (C)  Romer observed that the next administration will 
have to work hard to regain the public trust.  She argued 
that Argentines have adopted a cynical attitude towards 
politics and are only voting for CFK because there are no 
viable alternatives.  She concluded that it is not that 
Argentines are apolitical, but rather, Argentina is in 
"stand-by" mode waiting to see what the new administration 
will bring and whether viable alternatives materialize. 
 
------- 
COMMENT 
------- 
 
¶11.  (C)  The opinions expressed at the lunch reflect what we 
have been hearing lately from different quarters, including 
the opposition, political wonks, financial analysts, and 
corporate executives.  The fact that some of these top-drawer 
pundits question whether CFK will finish her mandate suggests 
 
BUENOS AIR 00001980  003 OF 003 
 
 
that she will face a tough political environment. 
WAYNE