VZCZCXYZ0021
RR RUEHWEB

DE RUEHBU #0331/01 0741813
ZNR UUUUU ZZH
R 141813Z MAR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0471
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000331 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: AR ECON EINV BEXP PREL
SUBJECT: Argentina's Mendoza Province: Agriculture-Based Growth and 
Commercial Links to Chile 
 
 
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Summary 
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¶1. (SBU) During a visit to Mendoza to attend the province's 
emblematic Vendimia wine harvest festival, Ambassador reviewed the 
province's strong economic growth -- and burgeoning inflation -- 
with newly elected Radical Party Mendoza City Mayor Fayad, and 
briefly with Governor Jaque and Provincial Minister for Investment, 
Security and the Economy Aguinaga.  Ambassador visited Mendoza Food 
Bank officials and an underprivileged youth tennis academy to 
support local grass-roots organizations' social responsibility and 
volunteer efforts. In an interview with editors of local daily 
newspaper Los Andes, editors attributed Mendoza's distinctive 
independent political orientation to a highly educated technical 
middle class and term limits for governors that leave the province 
less susceptible to political "manipulation" than other Argentine 
metropolitan centers.  They attributed the widely acknowledged crime 
problem in Mendoza City to an inflation-linked decline in 
lower-income class purchasing power and a deterioration of 
traditionally strong family structures linked to the 2001/2 economic 
crisis. The bulk of Argentine/Chilean commercial trade passes 
through Mendoza, improving the province's long term growth 
prospects. 
End Summary. 
 
--------------------------------------------- - 
Mayor of Mendoza City and Provincial Officials 
on the Local Economy 
--------------------------------------------- - 
 
¶2. (SBU) Radical Party Mendoza City Mayor Fayad, re-elected in 
November 2007 for a second term after a 16-year hiatus, reviewed 
with Ambassador the province's strong, largely agriculture-based 
economic growth.  He acknowledged high levels of provincial 
inflation, but felt that such levels would not significantly affect 
the province's medium-term prospects since an undervalued peso will 
ensure an expanding agricultural export market. (Mendoza recently 
adopted the federal government's inflation calculation methodology 
and its "official" inflation rates are now significantly below those 
calculated by independent analysts.)  Fayad, viewed as the new 
leader of the provincial Radical party, characterized the Radical 
party's situation as "complicated." (The Radical party was broken in 
the last elections due to the defections of key party party members 
to President Kirchner's victory Front coalition, including former 
Mendoza Governor and now Argentine Vice President Cobos.)  Fayad is 
a former International Visitor grantee and he spoke enthusiastically 
of his trips to the US, especially the last one four years ago when 
he was part of a team of seven Argentine election observers in 
Washington. He expressed admiration for American presidential 
election voting policies and logistics. 
 
¶3. (SBU) Ambassador held several brief discussions with Governor 
Celso Jaque, his Chief of Staff and Provincial Minister for 
Infrastructure, Energy, Industry and Security Juan Carlos Aguinaga 
as well as one of the Senators for the Province and the Governors of 
nearby San Juan and Salta provinces.  Mendoza officials were eager 
to attract US investment and to continue educational exchanges.  The 
provincial Security Minister was enthused with the prospect of USG 
training courses at the International Law Enforcement Academy (ILEA) 
and restarting cooperation with DEA.  The Energy Minister noted that 
a US natural gas exploration company would be visiting within weeks 
to consider starting operations in the province.  Several officials 
commented on looming challenges of energy and water shortages. 
Despite an anti-mining protest during the Vendimia festival, 
ministers said the provincial government would support mining 
projects with adequate environmental safeguards. 
 
------------------------------------- 
Mendoza Food Bank: Local Volunteerism 
------------------------------------- 
 
¶4. (SBU) Ambassador met with volunteers and board members of the 
Mendoza Food Bank, including its President, Bernardo Zunino.  The 
Food Bank is an organization that works to alleviate the economic 
legacy of the 2001-2002 economic crisis on the poorer strata of 
society.  It is led by successful private sector entrepreneurs and 
professionals who donate their expertise as nutritionists, doctors, 
accountants, and lawyers and utilize spare capacity in various 
business ventures to receive, store, and distribute food to at-risk 
sectors of the population, including dozens of food kitchens for the 
young and the old. 
 
¶5. (SBU) The Food Bank estimates that 130,000 of the Mendoza 
province's 1.7 million citizens fall below the poverty line and 
27,000 children suffer from inadequate nourishment.  The Food Bank 
currently assists 9,000, mostly children and elderly, with food and 
 
programs that work to improve nutrition, health, and food hygiene. 
They receive no public funding, but are affiliated with a web of 
food banks in Argentina, as well as the Global Foodbanking Network 
based in Chicago.  Food Bank officials commented on their efforts to 
develop a transparent system for food distribution.  Ambassador 
praised the Food Bank as an excellent and unusually effective 
example of corporate social responsibility and volunteerism.  Food 
Bank officials, in turn, expressed appreciation for Embassy's 
continuing efforts to highlight their organizations good work. 
Ambassador had met with President Zunino on a previous visit and the 
embassy has been a regular supporter of the Argentine food bank 
network as well as helping organizers participate in NGO meetings 
held in the US. 
 
--------------------- 
Tennis for the Masses 
--------------------- 
 
¶6. (SBU) Ambassador visited a tennis academy serving children in a 
low-income neighborhood on the outskirts of Mendoza.  Co-located 
with a local sports center, the tennis program provides training for 
60 children and was developed by a local tennis teaching 
professional with the support of local donors, including a Mendozan 
living in the United States who believes sports are the best way to 
keep kids off the streets and away from drugs.  Ambassador spoke of 
the universal values learned playing sports, presented the program 
with a collection of tennis equipment donated by Embassy personnel, 
and distributed gifts to thirty children present, who gave a 
spirited demonstration of their tennis prowess.  Program director 
Laura Rocco and Provincial Secretary of Sport Beatriz Barbera 
thanked Ambassador for bringing attention to their efforts to expand 
options available to children in poor communities. 
 
----------------------------- 
Positive Local Media Coverage 
----------------------------- 
 
¶7. (SBU) A coterie of local print, radio, and television journalists 
met the Ambassador upon his arrival, requesting an informal 
interview session.  While media focused on Ambassador's 
participation in the Vendimia celebration, they also raised 
questions on the USG's position on the Ecuador/Colombia border 
crisis.  Ambassador later met with Editor-in-Chief of Mendoza 
province's oldest print daily, Los Andes, Dr. Arturo Guardiola, 
Senior Editor Carlos La Rosa, and Political and Economic Editor 
Marcelo Zentil. Los Andes ownership is split, with 80% controlled by 
Argentina's two largest media conglomerates (Clarin and La Nacion), 
and 20% by a private Mendoza family.  Los Andes editors noted that 
Clarin and La Nacion grant Los Andes complete editorial 
independence.  Ambassador noted his own experience as a journalist 
and the value of an informed press and an informed public. 
 
¶8. (SBU) In response to Ambassador's questions on Mendoza City's 
history and political dynamic, editors explained that, subsequent to 
an 1861 earthquake that destroyed the city and killed 5,000 people, 
the newly rebuilt city flourished, with a predominantly immigrant 
population building eight important universities. 
 
¶9. (SBU) Ambassador noted neighboring Chile's sustained economic 
development and asked about projects to improve commercial links 
between Mendoza and Chile.  Editors noted a proposal by Argentine 
entrepreneur Eduardo Eurnekian's Americas Corporation to build a 14 
km-long tunnel through the Andes facilitating transport between the 
Atlantic and the Pacific.  Chile's strong economy works to Mendoza's 
advantage, they said, with bilateral trade increasingly contributing 
to Mendoza's overall economic growth and importance as a gateway for 
commercial transit between the two nations.  Mendoza also benefits 
from a continuing stream of relatively small but significant 
investments by Americans and Europeans buying houses and vineyards. 
 
¶10. (SBU) Los Andes editors raised the deterioration in personal 
security in Mendoza.  In response to Ambassador's question on how 
Mendoza security statistics compare to national averages, editors 
suggested that national statistics are not entirely accurate.  They 
attributed the widely acknowledged crime problem in Mendoza City to: 
1) an inflation-linked decline in lower-income class purchasing 
power (an independent Mendoza University study puts provincial 
inflation at 25% per year); 2) significant immigration in the 1990s 
of poor and marginal workers from Chile, Bolivia, and Paraguay; and 
3) a deterioration of traditionally strong family structures and 
values linked to the 2001/2 economic crisis, with a lower emphasis 
placed on children's education. 
 
¶11. (SBU)  In response to editors' questions on ways to improve 
Argentine citizens' impressions of the US, Ambassador noted the 
importance of people-to-people exchanges to improve cross-cultural 
understanding and noted Embassy efforts with regard to youth 
 
programs, English language study, Fulbright scholarships, and 
international visitors.  On questions raised on the recent 
Colombia/Ecuador/Venezuela border frictions, Ambassador praised 
President Kirchner's recent statements encouraging peaceful 
resolution of the crisis.  Ambassador also noted WHA Assistant 
Secretary Tom Shannon's recent comments on Argentina's important 
 
SIPDIS 
contribution to the OAS' attempts to find a peaceful solution, and 
on Argentina's humanitarian efforts to liberate the hostages from 
the FARC. 
 
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Comment 
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¶12. (SBU) From the Mendoza City mayor on down to local media, most 
of the Ambassador's interlocutors presented Mendoza province as an 
unusually independent political entity.  It is interesting to note 
the disconnect between Mayor Fayad's comment that high levels of 
provincial inflation would not significantly affect the province's 
medium-term prospects, and local daily Los Andes editors 
attribution of the widely acknowledged crime problem in Mendoza City 
to an inflation-linked decline in lower-income class purchasing 
power.  Mendoza has drawn significant foreign investment by 
successfully branding itself as an important global center of 
high-quality wine production.  Its geography, providing the primary 
commercial link between Argentina and Chile, also offers it a 
potential long-term economic advantage as both countries' economies 
continue to develop and as regional commerce continues to flourish. 
 
 
WAYNE