VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0615/01 1291857
ZNR UUUUU ZZH
R 081857Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0995
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS BUENOS AIRES 000615 
 
STATE FOR ECON WHA/BSC 
USDA FOR FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO 
MERCOSUR COLLECTIVE 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958:  N/A 
TAGS: EAGR ECON EINV PGOV ELAB PHUM AR
SUBJECT: FARM STRIKE RESUMES IN ARGENTINA 
 
REF: Buenos Aires 0592 and previous 
 
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Summary 
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¶1.  (U) Farm groups announced late on May 7 that they will resume 
the farm strike due to the GoA's refusal to discuss making any 
changes to the variable export tax regime.  The farm groups will 
continue protests for the next 8 days (through May 15), when they 
will meet again to discuss their next steps.  The strikers say they 
will focus during this period on blocking export of grains and 
oilseeds, which prevents the GoA from collecting the associated tax, 
and on seeking the political support of provincial governors and 
mayors.  Some local farm groups also announced "selective" road 
blocks around the country.  Press reports indicate that Cabinet 
Chief Alberto Fernandez admitted to the error of export taxes 
increases, only to repudiate his statements at the command of former 
president Nestor Kirchner later the same day.  The apparent 
"miscommunication" is further evidence of a widely rumored divide in 
the administration, and fuels rumors that Fernandez could be 
replaced on May 25.  Fernandez's departure would pose serious 
challenges for future negotiations, as he is the GoA decision-maker 
with the greatest openness to dialogue.  It would also have much 
wider implications as Fernendez is seen as the chief "moderate" 
voice in the government.  End Summary 
 
¶2. (U) Farm groups negotiating with the GOA announced on May 7 that 
they were resuming the farm strike that caused major disruptions in 
Argentina during March.  They are, however, changing the form of 
protest to avoid disrupting food supplies to the major cities and 
other commerce, as occurred during the last strike.  The farm 
leaders asked local producer groups to protest on the sides of the 
road and not block food shipments or other traffic.  They are also 
asking producers to stop marketing grains and oilseeds for export 
during the protest so that the GOA cannot collect the export tax. 
 
¶3. (SBU) The decision on any additional measures beyond refusing to 
sell grains and oilseeds during the strike was left to local protest 
groups.  The most prominent protest group in Entre Rios province, 
led by charismatic strike leader Alfredo De Angeli, has already 
announced that they will block trucks carrying grains and oilseeds, 
as well as trucks moving international trade with Brazil and 
Uruguay.  Elsewhere, local farmer farm groups have announced 
additional "selective" road blocks. The Gendarmeria and National 
Police are clearly concerned about being put in a position of having 
to confront striking producers, who have the widespread sympathy of 
the rural public and even in the security forces. 
 
¶4. (SBU) Resumption of the farm strike came after meetings on May 7, 
in which the GoA continued its refusal to discuss any changes to the 
variable export tax.  This variable tax at the heart of the dispute 
was introduced on March 11 and initially increased the export tax on 
soybeans to 44% (the tax varies as export prices go up or down) from 
a previous fixed rate of 35%.  The GOA has consistently refused to 
discuss the variable export tax regime with farm groups, despite 
indications in recent days that the GOA was considering some 
modifications. (We understand confidential talks had identified 
possible modifications several weeks ago but that ex-president 
Nestor Kirchner had rejected them. 
 
¶5. (SBU) The failure of the GOA to implement the few agreements 
reached during the truce in the strike was also a factor in its 
resumption.  The GoA agreed in discussions during April to reopen 
exports of beef and wheat.  Despite these agreements, the GoA 
continues to restrict exports to guarantee lower domestic prices. 
In the case of beef, the most recent measures implemented by the GoA 
actually increases its control over beef exports. 
 
¶6. (SBU) Contacts in the grain industry indicate that they have port 
storage facilities filled to the maximum.  The farm strike in March 
caught them off guard, and they were forced to suspend soybean 
processing and exports at the start of the harvest season.  The 
decision to block marketing of grains and oilseeds for export was 
widely expected and they used the truce in the farm strike to fill 
their storage facilities to the maximum.  The soybean production in 
storage should allow them to continue soybean processing (crushing) 
up to 30 days before having to shut down their export operations. 
Soybeans and soybean products are Argentina's largest export good. 
 
 
¶7. (SBU) The farm groups reiterated on numerous occasions that they 
are not seeking a confrontation with the public and do not want to 
disrupt food supplies.  They have also expressed a strong desire to 
reach a negotiated agreement with the GoA, despite its hard-line 
position.  In an effort to gain allies, the farm groups will meet 
with provincial governors and mayors to seek their political support 
during the next week. 
 
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Comment 
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¶8. (SBU) It appears that the hard-line position espoused by former 
president Nestor Kirchner (NK) has carried the day in the GoA's 
negotiations with the farm sector.  If anything, the GoA's 
regulatory grip on the farm sector is now greater than at the start 
of the strike due to additional controls on the beef sector to 
prevent supply shortages during the dispute.  The former president 
is widely quoted as expressing a desire to "bring the farm sector to 
its knees."  Local press reports that rural representatives allege 
Cabinet Chief Alberto Fernandez admitted to the error of export 
taxes increases, but later the same day retracted the statement at 
NK's command after NK saw initial press stories about it.  The 
apparent reversal is further evidence of the widely rumored divide 
in the administration, a battle the hard-liners seem to be winning 
and one that fuels rumors Fernandez will be replaced on May 25. 
Local commentators are writing that Nestor Kirchner wants to force 
the ag sector to strike and cause food shortages so they will lose 
public support and increase support for firm government actions. 
This strategy or the departure of Alberto Fernandez would pose 
serious challenges for future negotiations.  Alberto Fernandez is 
widely seen the senior person in the GoA with the greatest openness 
to dialogue.  In general, Fernandez has been seen the leading voice 
for moderation among senior official on a range of issues.  Local 
contacts have expressed amazement that the GoA has managed to turn 
the bonanza of high world prices for Argentina's agricultural 
exports into a major political and economic crisis.  END COMMENT 
 
WAYNE