VZCZCXYZ3332
PP RUEHWEB

DE RUEHBU #0272/01 0640821
ZNR UUUUU ZZH
P 040821Z MAR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 0379
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHLO/AMEMBASSY LONDON 1243

UNCLAS BUENOS AIRES 000272 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON AR
SUBJECT: ARGENTINE PRESIDENT CFK ANNOUNCES HER PRIORITIES 
IN STATE OF THE UNION SPEECH 
 
REF: BUENOS AIRES 0230 
 
¶1. (SBU) Summary:  Argentine President Cristina Fernandez de 
Kirchner (CFK) opened the ordinary session of Congress March 
1 with the equivalent of a State of the Union address. 
Speaking extemporaneously for 73 minutes, she was well 
organized and demonstrated an impressive mastery of 
statistics.  She focused on the economy, investment in 
infrastructure, the energy sector, social development, and 
public security.  In discussing energy, she repeated her 
position that Mercour should admit Venezuela to help address 
energy security, not because of "personal sympathies or 
political friendships."  She did not mention inflation (an 
omission which was sharply criticized later by commentators 
and the opposition) but had tough words for private banks, 
the business community, the Supreme Court and the judicial 
branch, the media, "energy experts," security forces, and 
teachers' unions.  End summary. 
 
------------------------ 
Economy & Infrastructure 
------------------------ 
 
¶2. (SBU)  CFK devoted much of her speech to economic themes. 
This included (her now standard) references to Argentina's 
record of strong GDP growth and its accumulation of a US$49 
billion reserve cushion as well as "twin" fiscal and trade 
account surpluses over the past 5 years.  While CFK did not 
specifically ascribe this strong economic performance to the 
tenure of her husband, Nestor Kirchner (who watched the 
speech from home), media pundits interpreted these remarks as 
self-congratulatory and as yet another indication that CFK 
plans to continue her husband's policy of priming the economy 
for consumption-led growth. 
 
¶3. (SBU)  The need to expand and diversify Argentina's 
industrial base is a stump-speech theme for Presidential and 
Ministry of Economy statements on economic policy, with a 
particular focus on the need to address the high cost, short 
tenure, and scarcity of bank credits to small and medium 
enterprises (SME).  CFK again emphasized the need to expand 
domestic financing for investment in new capacity by small- 
and medium-scale business, criticized Argentine private banks 
for emphasizing consumption lending to the detriment of 
production lending, and announced that state-owned Banco de 
la Nacion will this week roll out a substantial new SME 
credit facility program.  (In a February 28 meeting with 
Econoffs and new Banco de la Nacion president Marco del Pont, 
she previewed a March 4 announcement of new SME credit lines 
that, if not actively subsidized, will offer "attractive" 
rates to spur domestic production.)  She also highlighted the 
need to add value to Argentina's exports and to enter the 
knowledge-based economy with more applications of Argentine 
brain power to the economy (a theme Economy Minister Lousteau 
has been promoting). 
 
-------------------------------- 
Energy and other Economic Issues 
-------------------------------- 
 
¶4. (SBU) On pressing energy issues (reftel) CFK repeated her 
standard critique of "experts" who have predicted Argentine 
natural gas and electricity shortages.  She said there will 
be "no (energy-related) risks" to investors or to production 
in the coming year, and projected an 11% increase in 
electricity production capacity and an 8% increase in natural 
gas production in 2008.  She stressed the need for regional 
energy coordination and cooperation and called energy a 
world-wide as well as regional concern.  In this context, CFK 
made specific reference to energy cooperation with Venezuela: 
"It is not a question of personal affection or of political 
favoritism; it is simply an exercise in rationality," she 
said. CFK also raised the GoA's support for major 
infrastructure investment, questioning those who called the 
GoA-supported US$ 3-plus billion Buenos Aires to Cordoba 
bullet-train project an expensive white elephant. "Not to 
address (Argentina's) modernization (in order to focus on) 
other problems we have yet to resolve is a recipe for 
addressing neither." 
 
¶5. (SBU)  More broadly, CFK spoke of a national project to 
reduce poverty to single digit levels by the 2010 
bicentennial (from roughly 25% currently).  CFK did 
specifically support the efforts of Interior Commerce 
Secretary Guillermo Moreno to control prices and monitor 
 
SIPDIS 
costs of major producers of consumer goods.  "Transparency is 
for everyone, for the state and for the market, for the 
public and private sectors."  However, notable for its 
absence was any mention of high levels of inflation or the 
current debate over the accurac and reliability of INDEC 
data (septel).  Comment:  This spurred quite a bit of 
critical commentary and probably reflects the lack of 
consensus on how to tackle this problem.  End comment. 
 
------------------------- 
Crime and Public Security 
------------------------- 
 
¶6. (SBU)  In a nod to the Argentine public's growing concerns 
about public safety, CFK put the blame on others including 
judges (with their "revolving door policy" for delinquents), 
the Supreme Court (for not accelerating trials against "dirty 
war era" indictees), and the police for its lack of 
commitment.  Despite frequent calls to increase the Court's 
budget to implement reforms that would improve judicial 
efficiency, CFK "reminded" the Supreme Court that its budget 
had increased 173% since 2003, signaling that she would not 
consider a budget increase for the judicial system.  She also 
noted that the Supreme Court is charged with monitoring the 
judicial efficiency of the lower courts.  She said she would 
push reforms of the criminal procedural code to increase 
judicial efficiency. 
 
¶7. (SBU) CFK said she believed it "necessary to return to a 
society of rewards and punishments... where those who commit 
crimes are punished."  In reference to the Supreme Court, CFK 
stated that "Argentines have the right to demand of the 
justice system the conclusion of cases against those who 
committed crimes against humanity during the last military 
dictatorship."  She said the law had to be applied with equal 
rigor against those who committed crimes against humanity and 
those who commit street crime.  CFK asserted a "connection" 
between the "free zones" (zonas liberadas) from the dirty war 
era -- areas reportedly vacated by police in order for other 
security forces to operate freely, kidnapping regime 
opponents and committing other crimes -- and today's "free 
zones" where drug sales and assaults are common. 
------------------------- 
Social Development Agenda 
------------------------- 
 
¶8. (SBU) Citing Argentina's continued economic growth, CFK 
announced her intention to reach a "Bicentennial Accord" in 
2010 that would reduce poverty and unemployment to 
single-digit rates.  On her desire to reach a social pact, 
CFK clarified that the pact is not exclusively focused on 
prices and salaries, but entails a series of sectoral accords 
aimed at increasing value-added activities in each sector. 
 
¶9. (SBU)  On education, CFK noted that there are five million 
Argentines under 40 who have not completed high school and 
sharply criticized teachers unions for excessive strikes even 
after getting pay increases well above the national average. 
Although Argentina has one of the highest literacy rates in 
Latin America at 97%, she stressed that Argentines should not 
overestimate the quality of its public education.  To address 
this, she announced that she would introduce a national plan 
to increase the number of Argentines who finish primary and 
secondary education.  She also noted the need for Argentina's 
university system to steer students into fields that are 
better-suited to the global economy.  To this end, she vowed 
to push through a new higher education law that would 
reformulate the concept of university autonomy.  "It is 
incumbent upon me to improve (Argentina's) quality of 
education.  As the daughter of workers, I am where I am today 
because of my education.  And I want all Argentines to once 
again have that opportunity," she stated. 
 
¶10. (SBU)  On health, CFK praised Health Minister Graciela 
Ocana, "not because she is a woman, but because she is a hard 
worker."  Ocana was the only Cabinet Minister to be singled 
out for praise during CFK's address.  CFK also noted a plan 
to reduce cardiac disease in children and a program to help 
deal with socially at-risk youth. 
 
---------------------- 
Lean on Foreign Policy 
---------------------- 
 
¶11. (SBU) Other than her references to other countries in her 
discussion of the energy sector (above), CFK did not have 
much to say about foreign policy per se, but toward the end 
of her speech she made an impassioned plea to the UK to 
permit humanitarian flights to the Falklands/Malvinas 
carrying the family members of Argentine soldiers killed 
during the 1982 war. 
 
-------------------- 
Opposition Criticism 
-------------------- 
 
¶12. (SBU) Opposition politicians and pundits were critical of 
CFK primarily for failing to mention inflation.  Civic 
Coalition leader and former presidential candidate Elisa 
Carrio argued that CFK's presentation demonstrated "a strong 
disassociation with reality" that ignored widespread anxiety 
over rapidly rising consumer price levels. 
 
¶13. (SBU) The opposition also criticized CFK for not offering 
more specific, concrete proposals for improving security, 
although CFK did call for better equipping of federal 
security forces and for reforms to criminal court 
proceedings.  Carrio accused CFK and her husband of 
continuing to look back at the past instead of to the future, 
this in reference to CFK's linkage of today's crime and 
security to the 1976-83 military dictatorship. 
WAYNE