VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0466/01 1011920
ZNR UUUUU ZZH
R 101920Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0764
INFO RUEHUNV/USMISSION UNVIE VIENNA 0184

UNCLAS BUENOS AIRES 000466 
 
SIPDIS 
 
SIPDIS 
 
FOR THE U.S. DELEGATION TO THE JOINT STANDING COMMITTEE ON 
NUCLEAR ENERGY COOPERATION FROM EMBASSY BUENOS AIRES 
 
E.O. 12958: N/A 
TAGS: KNNP IR AR
SUBJECT: ARGENTINA: SCENESETTER FOR THE U.S. DELEGATION TO 
THE JOINT STANDING COMMITTEE ON NUCLEAR ENERGY COOPERATION 
 
¶1. (U) This telegram is sensitive but unclassified, and not 
for Internet distribution. 
 
------------ 
Introduction 
------------ 
 
¶2. (SBU)  Embassy Buenos Aires warmly welcomes the U.S. 
delegation to the Joint Standing Committee on Nuclear Energy 
Cooperation (JSCNEC), hosted this year by the Government of 
Argentina.  Our bilateral nuclear relationship with Argentina 
is an important point of engagement with the GoA.  As you 
know, we have a long history of nuclear cooperation with the 
GoA, culminating in the recent transfer of most of 
Argentina's U.S.-origin high enriched uranium to U.S. 
facilities.  Argentina has repeatedly announced an ambitious 
program to increase its reliance on nuclear power and expand 
its nuclear infrastructure, national goals that underscore 
the importance of continued dialogue and cooperation in this 
area.  We are looking forward to meeting with you during your 
time in Argentina. 
 
¶3. (SBU) One of your principal Argentine counterpart 
organizations, The National Commission on Atomic Energy 
(CNEA), is currently undergoing a difficult period of 
transition.  The current President, Norma Boero, is a nuclear 
fuels specialist who the GoA appointed in January amid a 
corruption scandal involving former CNEA Pesident Jose 
Abriata and former General Manager Ruben Calabrese.  Abriata 
is currently the subject of an ongoing investigation. 
Calabrese remains at CNEA, but without executive 
responsibilities.  Boero has stated that one of her early 
management priorities is to "clean house" within CNEA.  She 
maintains the GoA's stated goals of maintaining a uranium 
enrichment capacity, completion of the mothballed Atucha II 
reactor, development of the CAREM reactor, and the 
construction of a fourth reactor.  Of note, during an early 
April official visit to France, President Cristina Fernandez 
de Kirchner (CFK) spoke with French President Nicholas 
Sarkozy about the possible sale of a fourth generation French 
design reactor to Argentina.  However, many within the 
Argentine nuclear sector have voiced skepticism about the 
GoA's ability to realize such an ambitious set of goals, 
given budgetary issues and competing priorities.  End 
Introduction. 
 
---------------------------- 
A Recent Bilateral Low Point 
---------------------------- 
 
 
¶4. (SBU) In December, two days after CFK's inauguration, the 
GoA misinterpreted and over-reacted to news reports 
concerning a federal case in Miami against some Venezuelans 
and an Uruguayan who were arrested on charges of operating 
and conspiring to operate in the United States as agents of 
the Venezuelan government without notifying the Attorney 
General as required by law.  During the proceedings in Miami, 
allegations surfaced that undeclared cash brought into Buenos 
Aires in August 2007 from Venezuela had been destined for a 
presidential campaign.  The statements were not made by the 
USG, but rather by one of those arrested.  They were 
misinterpreted here as reflecting the USG's views. 
 
¶5. (SBU) CFK reacted angrily to the implication that she had 
been the intended recipient of the cash that was intercepted 
by GoA officials.  She publicly interpreted the Miami arrests 
as directed against her government and characterized the case 
as a "garbage operation."  Her ministers and the Argentine 
Congress made similar statements.  However, the rhetoric 
gradually subsided, and the relationship normalized with a 
great deal of behind the scenes work.  A new beginning 
occurred on January 31, when Ambassador Wayne met with CFK. 
The principals agreed at that meeting to put the case aside 
and to work to strengthen bilateral cooperation.  Since that 
time, there have been several important visits by U.S. 
officials to Buenos Aires, most notably this week's visit by 
WHA Assistant Secretary Tom Shannon. 
 
------------------------------ 
A Government Against the Ropes 
------------------------------ 
 
¶6. (SBU) A GoA decree issued March 11 that increased export 
taxes on Argentina's main agricultural export crops 
precipitated the worst political crisis of either Kirchner 
administration.  Argentina's four principal agricultural 
organizations showed rare unity in organizing production 
stoppages and blockades of Argentina's transport 
 
infrastructure for twenty days, leading to nationwide 
shortages of such staples as beef, chicken, dairy products, 
and vegetables.  There were massive protests in support of 
the strike in the countryside and in Buenos Aires, and 
GoA-organized counter-protests in Buenos Aires, including one 
attended by an estimated 100,000 individuals.  On April 2, 
agricultural producers decided to lift the strike for thirty 
days and hold discussions with the GoA.  Those groups vowed 
to block Argentina's roads again if they are unable to reach 
an acceptable agreement, so the crisis is not resolved.  The 
GoA's public perspective is that the truce is a victory for 
the government, and validates CFK's hard line.  Most 
analysts, however, consider the dispute to be a setback for 
the government, with the vital agricultural sector more 
united than at any time in a century. 
 
¶7. (SBU) We provide the preceding information to you in order 
that you may have some context for the state the GoA finds 
itself as you embark on your bilateral discussions. 
 
¶8. (SBU) You should also know that Argentina holds Major 
Non-NATO Ally status and cooperates in regional security, 
counter-terrorism, drug interdiction, and in contributing 
troops to U.N. peacekeeping missions.  The GoA has been a 
strong international voice on arms control and 
nonproliferation issues.  In the IAEA, the GoA has voted to 
refer Iran's noncompliance to the UNSC.  The GoA has also 
endorsed the Proliferation Security Initiative (PSI) and the 
Global Threat Reduction Initiative (GTRI).  It is under the 
banner of science that the U.S. and Argentina have realized 
some of the best examples of bilateral cooperation.  For 
example, we have a long history of aerospace cooperation with 
Argentina, and you are all aware of the GoA's work with NNSA. 
 
 
-------------------------------------- 
What We're Doing on Issues of Interest 
-------------------------------------- 
 
¶9. (SBU) Terrorism:  Argentina was itself a victim of 
international terrorist attacks in the 1990s and has been a 
cooperative partner in countering terrorism, especially in 
the Tri-border Area.  On November 7, 2007, Argentina 
succeeded in getting Interpol's General Assembly vote to 
issue international capture notices for five current and 
former Iranian officials and one Lebanese Hizballah member 
(who was reportedly killed in Syria February 13) wanted in 
connection with the 1994 terrorist bombing of the Buenos 
Aires Jewish Community Center (AMIA).  The Embassy and USG 
agencies worked with the GoA to pass comprehensive 
antiterrorism, money laundering, and terrorism finance 
legislation to strengthen local enforcement efforts.  We 
assist the GoA in capacity-building in the Financial 
Intelligence Unit, within the restraints created by Brooke 
Amendment sanctions, to build capacity of Argentine law 
enforcement forces, and work closely with the Argentine 
military on modernization, increasing interoperability, and 
training and education focused on civilian control, respect 
for human rights, defense resource management, strategic 
planning, and science and technology. 
 
¶10. (SBU) International Crime and Drugs:  Argentina is a 
transshipment point for narcotics emanating largely from 
Colombia, Peru, and Bolivia.  Argentine law enforcement 
agencies cooperate closely with their USG counterparts on 
drug interdiction efforts, fugitive arrests and information 
sharing, which has resulted in increased enforcement.  This 
Mission is focused on institutional capacity-building and 
expanding training opportunities for law enforcement 
officials, prosecutors and judges in order to improve 
internal security and decrease international drug and 
criminal activity in Argentina. 
 
¶11. (SBU) Democracy and Rule of Law:  We work with the GoA, 
media and civil society to strengthen democratic 
institutions, fight corruption and reinforce civilian control 
of the military.  We promote key reform efforts such as 
ending the election of representatives by party slate lists, 
increasing governmental transparency, and limiting public 
corruption and strengthening the political independence of 
the judicial branch.  While it does not side with us on every 
issue, we continue to cultivate the GoA as a cooperative 
partner in multilateral fora, and seek Argentina's 
cooperation in the defense of democracy and the observance of 
human rights in countries like Cuba, Venezuela, and Bolivia, 
as well as UN peacekeeping in Haiti. 
 
¶12. (SBU) Human Rights:  The Government of Argentina 
generally respects the human rights and fundamental freedoms 
 
of its citizens.  The Kirchner government's human rights 
policy focuses on seeking justice for the human rights 
violations committed during the 1976-83 military 
dictatorship, which resulted in the disappearance of 
11,000-30,000 political dissidents.  It does not, however, 
focus on bringing to justice armed guerrilla groups who also 
committed human rights abuses during the same period, known 
as "the Dirty War", albeit on a much smaller scale.  To date, 
the courts have convicted three former officials of the 
military regime, including a military chaplain. 
 
¶13. (SBU) Human Trafficking:  Argentina is on the USG's 
Tier-2 Watchlist for lack of progress in providing greater 
assistance to victims and curbing official complicity in 
trafficking at the provincial level.  Argentina is a source, 
transit, and destination country for men, women, and children 
trafficked for the purposes of commercial sexual exploitation 
and forced labor.  According to the International 
Organization for Migration, 80 percent of trafficking victims 
in Argentina are Argentine, most of whom are trafficked for 
the purpose of sexual exploitation.  Bolivians and Peruvians 
are trafficked into the country for forced labor in 
sweatshops and agriculture.  Argentine efforts to combat 
trafficking have focused on prevention and training of 
security and government officials.  Draft anti-trafficking 
legislation is currently being considered by the Argentine 
Congress, with the debate focused on the issue of victim's 
consent.  The Senate version of the bill makes trafficking in 
minors a federal crime, but considers a victim's consent 
relevant in the case of adult trafficking victims.  The 
Embassy has worked with NGOs, lawmakers, and government 
officials in an effort to push for comprehensive 
anti-trafficking legislation.  The government has told us 
they intend to get a first federal law passed in the next 
couple of months. 
 
------------------------------- 
Background: Political Landscape 
------------------------------- 
 
¶14. (SBU) Cristina Fernandez de Kirchner (CFK) took office on 
December 10, 2007, receiving the presidential sash from her 
husband, Nestor Kirchner.  He completed his 
four-and-a-half-year term as the most popular Argentine 
President since the return to democracy in 1983.  CFK has a 
long history in politics, having served in the Chamber of 
Deputies and most recently in the Senate.  She won the 
October 28 election with 45% of the vote over a divided and 
largely ineffective opposition, and she enjoys a strong 
majority in both houses of Congress.  Having campaigned on 
the seemingly contradictory themes of change and continuity, 
she has retained most of her husband's cabinet.  Apart from 
the agricultural dispute, CFK's major policy challenges will 
be to contain inflation, attract and boost investment -- 
particularly in Argentina's energy sector -- and to restore a 
sense of law and order to an electorate increasingly 
concerned about crime and security.  And, in spite of her 
pique over the Antonini Wilson case, CFK has also made clear 
that she would like to improve relations with the United 
States. 
 
--------------------------------------------- 
Background: Economic and Commercial Landscape 
--------------------------------------------- 
 
¶15. (U) Following the 2001-2002 economic crisis, 2003-2006 
real GDP growth averaged over 8%, and Argentina's GDP in 2007 
grew at an estimated rate of 8.5% to $255 billion, roughly 
$6,500 per capita.  This impressive economic recovery has 
also led to improvements in key socio-economic indicators, 
with unemployment down from a peak of over 20% in 2002 to 
8.8% during the third quarter of 2007 and poverty levels down 
from a post-crisis high of over 50% to a (still-worrisome) 
25% range.  The five-year-long economic recovery can be 
attributed to a number of factors, including a post-crisis 
move to a flexible exchange rate regime, sustained global and 
regional growth during this period, the government's efforts 
to boost domestic aggregate demand via monetary, fiscal, and 
income distribution policies, and favorable international 
commodity price and interest rate trends. 
 
¶16. (U) While the accumulation of a substantial foreign 
exchange reserve cushion (over $46 billion as of December 
2007) and expanded tax collections have helped insulate 
Argentina's economy from external shocks, the Central Bank's 
policy of maintaining an undervalued exchange rate and 
negative real interest rates has contributed to substantial 
inflationary pressures.  Private sector analysts estimate 
inflation is in the 17-20% range for 2007, although the 
 
 
government's official 2007 inflation is 8.5%.  There is 
ongoing public debate about inflation measures.  To help 
control inflation, the government largely froze key public 
utility tariff rates since 2002 and, since 2005, has 
negotiated price stabilization 
agreements on a sizable basket of essential consumer goods. 
The combination of Argentina's undervalued currency and high 
global commodity prices have lifted Argentine exports to a 
record $55.4 billion in 2007.  Major 2007 Argentine export 
markets were Mercosur (22%), the EU (18%) and NAFTA (11%). 
Argentine 2007 imports totaled $44.8 billion, with the major 
suppliers Mercosur (36%), the EU (17%) and NAFTA (16%). 
Total U.S.-Argentina two-way trade in 2006 (the latest year 
available) amounted to $8.9 billion.  Imports from the U.S. 
largely comprise intermediate capital goods which have 
contributed to improvements in domestic productive capacity. 
 
¶17. (U) Over 450 U.S. companies are currently operating in 
Argentina and employ over 150,000 Argentine workers.  U.S. 
investment in Argentina is concentrated in the manufacturing, 
information, and financial sectors. Other major sources of 
investment include Spain, Chile, Italy, France, Canada, 
Japan, and Brazil.  U.S. investment in Argentina is 
concentrated in the manufacturing, information, and financial 
sectors.  A range of economic experts have identified 
challenges to sustaining high levels of economic growth in 
the future, including: capacity constraints; the need for 
substantial new investment in primary infrastructure; 
potential energy shortages in the face of high growth and 
domestic energy prices kept below international market 
levels; increasing scarcity of highly skilled labor; 
inflation and the government's heterodox policies to contain 
it, including price controls.  Continuing Argentine arrears 
to international creditors (including over $20 billion in 
default claims by international bondholders, including U.S. 
citizens, and over $6 billion owed to official creditors, 
approximately $360 million of which is owed to the U.S. 
government) and a large number of arbitration claims filed by 
foreign companies, including U.S. companies, are legacies of 
the 2001/2002 economic crisis that remain to be resolved and 
adversely affect Argentina's investment climate. 
 
¶18. (SBU) Promoting U.S. economic/commercial interests:  In 
support of U.S. companies operating in Argentina, we are 
encouraging the GoA to support a more welcoming investment 
climate, with greater regulatory, legal, and tax regime 
consistency.  You will get an understanding for how the U.S. 
business community feels about the local climate during your 
coffee April 10 with the AmCham Board.  We expend a good deal 
of effort supporting and working with U.S. companies.  We are 
working closely with the GoA and the Paris Club of sovereign 
creditors to resolve long-standing arrears to the USG and are 
encouraging the GoA to resolve claims of U.S. holders of 
defaulted Argentine bonds.  Regarding ongoing WTO trade 
negotiations, Argentina has staked out a hard-line position 
that links acceptance of developed economy agricultural 
sector proposals with more developing nation flexibility on 
industrial tariff cuts.  We have been urging them to adopt a 
more constructive approach. 
WAYNE