VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0711/01 1442028
ZNR UUUUU ZZH
R 232028Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1149
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000711 
 
USDA FOR FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO 
 
SENSITIVE 
 
SIPDIS 
 
 
E.O. 12958:  N/A 
TAGS: EAGR ECON EINV PGOV ELAB PHUM AR
SUBJECT: ARGENTINE FARM TALKS FALTER (AGAIN) - ALL EYES ON COMPETING 
MAY 25 EVENTS 
 
REF: (A) Buenos Aires 0686 and previous (B) Buenos Aires 0681 
 
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Summary 
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¶1. (SBU) The first meeting between the GoA and leaders of the major 
farm groups following suspension of the on-again, off-again farm 
strike on May 21 quickly broke down after the GoA negotiators 
reportedly refused to address the controversial variable export tax 
until after the large demonstration planned for May 25 in Rosario 
and the Administrations celebration of Argentina's May 25 
"Revolution Day".  Farm sector leaders accused the GoA of 
negotiating in bad faith and once again delaying any real solution 
to the conflict, while the government team gave a more positive spin 
to the talks.  Farm groups are now concentrating on the May 25 
demonstration in Rosario.  Meanwhile, the GoA is working to ensure a 
large turnout at its official Independence Day ceremony led by 
President Cristina Fernandez de Kirchner in Salta on the same day to 
ensure that it is not overshadowed by the farm demonstration.  There 
appears to be growing discontent with the fact that the dispute is 
dragging on and negatively affecting the overall economy.  End 
summary. 
 
----------------- 
Back to the Table 
----------------- 
 
¶2. (SBU) The GoA re-opened discussions with leaders of the major 
farm groups the evening of May 22, declaring that all issues were on 
the table.  This was the first official meeting between the GoA and 
the farm groups since the farm strike was suspended on May 21 (the 
GoA had refused to negotiate while the strike was in place).  The 
GoA characterized the initial meeting as positive in a press 
conference after the meeting.  The government''s statement was 
quickly followed by a denial of any progress by the leaders of the 
farm groups.  Visibly irate farm leaders expressed disappointment 
that the GoA was unwilling to negotiate on the variable export tax 
regime (which is at the heart of the ongoing dispute) before May 26, 
after the large farm protest and the government's own big event, 
both of which are scheduled for May 25, Argentina's Revolution Day. 
The farm leaders declared that they are now focused on ensuring as 
large a turnout as possible for the farm protest in Rosario, which 
is the second largest city in Argentina and the major port for soy 
exports.  The GoA is, however, mobilizing resources to ensure as 
large a turnout as possible for the official Independence Day 
ceremony in Salta, which will be attended by President Cristina 
Fernandez de Kirchner, to ensure that the turnout is at least as 
large as the 60,000 expected at the farm protest in Rosario. 
 
¶3. (SBU) The lead negotiator for the GoA, Chief of Cabinet Alberto 
Fernandez, later that evening accused the farm leaders of distorting 
what happened in the meeting and declared that the farm protest was 
now an opposition protest.  He claimed farmers had not presented a 
proposal (a claim that was contested by farm leaders, who 
distributed to the press copies of the proposal they had made), and 
he said the GoA was prepared to discuss modifications to the 
variable export tax regime, including a possible ceiling on the 
maximum tax collected.  (The press is reporting that the GOA's 
marginal tax rate on soy exports, if soy prices go over $600/ton, is 
95%.) 
 
¶4. (SBU) Agricultural contacts say their anger and distrust of the 
government is due in large part to the negative experience of the 
farm groups with the beef and wheat agreements they negotiated with 
the GoA in April.  After extensive delays, the agreements are still 
not fully in place and the implementing regulations issued so far 
have included additional restrictions that go beyond what was 
agreed.  In the case of wheat, the agreement to allow exports of 
100,000 tons to Brazil (which does not address the full amount of 
wheat available for export) has been implemented with additional 
provisions, such as limiting export licenses to 2,000 tons per 
exporter, per day, making it very difficult to implement.  While the 
GoA has started issuing export permits for beef, the approvals have 
been slow and well below levels agreed to with the farm groups. 
 
¶5. (SBU) Per ref B, recent polls show a sharp drop in the 
President's positive image, approval of her performance and 
confidence in her government.  The drop is widely attributed to the 
GOA's handling of the farm protest and anxiety over rising 
inflation.  Polls also indicate, however, declining support for the 
farm strike (although farmers remain the most admired 
institution/sector in Argentina). 
 
¶6. (SBU) Indeed, it seems that there is growing impatience with both 
sides for not settling the strike.  A senior Peronist governor told 
the Ambassador May 23 that, at the age of 57, he had seen many 
conflicts in Argentina and had grown inured to a lot of "noise," but 
this was the worst strike he had seen.  He said that, after 72 days 
of a strike interrupted several times by talks, it was fair to 
conclude that both sides had failed.  He argued there was bad faith 
and mistrust on both sides -- hardly the conditions for successful 
negotiations.  The public's perception was that both sides were 
acting capriciously.  He said he feared the GoA was running the risk 
of letting the farm crisis rip the country apart.  The GoA did not 
have a convincing peacemaking plan or communication strategy, and he 
claimed he had conveyed this to former president Nestor Kirchner. 
 
¶7. (SBU) COMMENT:  Farm leaders say they have suspended their strike 
several times to respond to GOA calls for dialogue and negotiations, 
but the GOA has not offered them any counter-proposals (let alone 
any concessions) to address their primary concerns.  We will be 
watching closely the May 25 events as both sides try to demonstrate 
their public support.  Farm leaders are now talking about resuming 
the farm strike on Monday, May 26, a decision that could be 
announced at the demonstration in Rosario.  END COMMENT. 
 
WAYNE