VZCZCXYZ0007
OO RUEHWEB

DE RUEHBU #0398/01 0920038
ZNY CCCCC ZZH
O 010038Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0605
INFO RUCNMER/MERCOSUR COLLECTIVE IMMEDIATE

C O N F I D E N T I A L BUENOS AIRES 000398 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/31/2033 
TAGS: EAGR ECON PGOV PHUM PREL AR
SUBJECT: ARGENTINA: NO DIALOGUE, MORE ROADBLOCKS 
 
REF: BUENOS AIRES 386 AND PREVIOUS 
 
Classified By: Classified By: Ambassador E. Anthony 
Wayne for reasons 1.4(d) 
 
¶1. (SBU) Summary:  Argentina's farm sector decided late March 
28 to continue its strike (now in its third week) following 
the failure of initial discussions with the GOA to make any 
headway on the sector's main demand of suspending increased 
agricultural export taxes for 90 days.  The rural sector, 
however, has made clear its willingness to continue 
discussions.  The GOA, for its part, has offered a number of 
measures aimed at benefiting small and medium producers, but 
has remained firm on the tax issue.  President Cristina 
Fernandez de Kirchner (CFK) canceled an April 2 trip to 
London, but reportedly still hopes to visit Paris for an 
April 7 meeting with President Sarkozy.  The GOA is expected 
to announce some compensatory measures late on March 31, and 
a large government-organized rally is scheduled for April 1. 
The GOA and four agricultural organizations are expected to 
restart their dialogue, but the confrontational approach 
taken by both sides could exacerbate the situation.  The 
disruption of rural produce and trucking in general is 
causing acute shortages in stores and markets throughout 
Argentina.  End Summary. 
 
No Change After First Round of Talks 
------------------------------------ 
 
¶2.  (SBU) In initial discussions with four organizations 
representing the farm sector, which lasted for seven hours on 
March 28, the GOA rejected the farmers, request for a 90 day 
suspension of the increased taxes on soy and other exports. 
Instead, the GOA offered earlier proposals to provide some 
relief for small producers via tax rebates (but not a 
withdrawal of the overall export tax increases), trucking 
subsidies, and the creation of an Under Secretariat for small 
producers in the Economy Ministry's Agricultural Secretariat. 
 Following the meeting, the rural sector representatives 
reiterated their willingness to enter into negotiations with 
the government, but resumed the road blocks because they felt 
they had not been offered enough.  Strikers are reportedly 
allowing milk and some other perishable items through, but 
delivery of most rural produce is being blocked or disrupted. 
 There are serious shortages of meat and other products 
throughout markets in Argentina, and local press is reporting 
that some small stores -- but not major chains -- are 
charging up to a 150 percent premium on scarce perishable 
foodstuffs.  Domestic Trade Secretary Moreno on March 28 made 
a show of visiting supermarkets, and rudely ordering them to 
lower their prices.  The supermarket chains agreed to roll 
back prices to those of March 1.  Minister of Justice Anibal 
Fernandez on March 31 threatened to arrest anyone who 
attempts to block the passage of MERCOSUR trucks, which 
generated critical commentary about the government's previous 
inaction when allied protestors had blocked roads. 
 
¶3. (SBU) The GOA delegation for the Casa Rosada talks was led 
by Cabinet Chief Alberto Fernandez, who was joined by Economy 
Minister Martin Lousteau, Agriculture Secretary Javier de 
Urquiza, Domestic Trade Secretary Guillermo Moreno, and 
Interior Minister Florencio Randazzo.  President Cristina 
Fernandez de Kirchner (CFK) stopped in briefly to greet 
participants and encourage a fruitful dialogue but did not 
participate in the discussions.  Fernandez reportedly was 
very courteous and conciliatory, but the rural reps said they 
were ultimately disappointed with the GOA's lack of concrete 
proposals.  In a nod to the seriousness of the domestic 
crisis, CFK canceled an April 2 trip to London but reportedly 
still hopes to visit Paris for an April 7 meeting with 
President Sarkozy if the farmers' strike is ended. 
 
Pressure from Below 
------------------- 
 
¶4.  (SBU) Local economists privately told us that government 
pressure to dialogue during this crisis has come from the 
bottom up, a marked difference from the top-down model of 
governance employed by the Kirchners.  They attributed the 
GOA,s decision to move towards negotiations to a chain of 
events starting with small rural mayors.  The mayors 
expressed constituents, dissatisfaction with the 
government,s anti-farmer rhetoric to their governors, who, 
in turn, argued within the GOA for a compromise, putting 
pressure on the Casa Rosada to come to the table. 
 
¶5.  (C) Provincial governors who had been privately concerned 
about the situation began expressing some of the concerns 
more publicly, showing cracks and fissures in the GOA,s 
relationships with the provinces.  Kirchner-allied governor 
of Chubut Mario Das Neves criticized the government,s 
handling of the crisis and appeared to blame Cabinet Chief 
Fernandez for the mistakes.  Das Neves slammed CFK,s 
media-heavy approach by saying "We speak with the people face 
to face; we don,t send them messages on television...we 
appeal to dialogue." 
 
Rallying Support 
---------------- 
 
¶6. (SBU) Local media are reporting that CFK will announce a 
series of unspecified measures late on March 31 to entice 
small and medium agricultural producers, making more formal 
the offers floated by the GOA in the discussions last Friday. 
 She is also expected to speak at a pro-government rally 
planned for April 1 at the Plaza de Mayo, which reportedly 
could draw between 100,000 and 150,000 government supporters. 
 The government is reaching out to its supporters to assemble 
a large number of Kirchner-aligned governors, mayors, and 
labor activists in a show of strength. 
 
¶7.  (C) Comment: Rural reps left last Friday's discussions 
very disappointed with what the GOA is offering and are 
expected to announce the continuation of the strike -- 
particularly in the face of an increasingly radicalized base. 
 The Kirchner team appears to be equally intransigent, 
refusing to consider rescinding or suspending the export tax 
increases, reportedly fueled by the two Kirchners.  The GOA 
strategy now seeks to divide the diverse rural sector, 
(numerically) dominated by small and medium producers. 
Ironically, it these smaller producers, to whom the 
government is trying to reach out to, who appear the most 
radicalized and have been the most firm in rejecting the 
Government's offer last Friday.  Monday evenings' 
announcement of remedial measures -- unless the GOA has found 
some way to sweeten the pot -- will probably be unlikely to 
appease the rural sector.  CFK has had two opportunities to 
defuse this situation -- her speeches of March 25 and 27 -- 
but has chosen to remain on the offensive, painting the issue 
in very divisive terms.  Should the rural sector reject the 
GOA's measures tonight, another large, pro-government rally 
April 1 would not seem to be conducive to more conciliatory 
tones from CFK. 
WAYNE