VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0751/01 1512008
ZNR UUUUU ZZH
R 302008Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1213
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE
RUEHQT/AMEMBASSY QUITO 1095
RUEHPE/AMEMBASSY LIMA 2303
RUEHLP/AMEMBASSY LA PAZ MAY SOUTH OPSDIR

UNCLAS BUENOS AIRES 000751 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EINV ENRG KPAO BEXP PREL AR
SUBJECT: Argentina: Ambassador Promotes NGOs, U.S. Commercial 
Presence, Military Cooperation in Neuquen Province 
 
 
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Summary 
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¶1. (SBU) Ambassador met with political, business and military 
leaders, NGOs, media, and Fulbright scholars during a May 22-23, 
2008, visit to Argentina's southwestern province of Neuquen. 
Ambassador discussed the current political situation and U.S. 
corporate social responsibility efforts with Governor Jorge Sapag. 
He visited a youth soccer NGO dedicated to disadvantaged youth, and 
met with representatives from several other NGOs dedicated to 
improving civil society.  Ambassador discussed provincial economic 
and political matters with leading local journalists, and U.S. 
higher education with former Fulbright scholars.  Ambassador and the 
regional military commander discussed the excellent Argentine global 
peacekeeping efforts and U.S.-Argentine military relations.  The 
visit received prominent and positive local media coverage.  END 
SUMMARY. 
 
------------------------------- 
Governor of Neuquen Jorge Sapag 
------------------------------- 
 
¶2. (U) The Ambassador met May 22 with Governor Jorge Sapag, whose 
term began in December 2007.  At the time of the visit, the province 
was experiencing heavy flooding, several hundred citizens were being 
evacuated, and provincial officials were monitoring the levels of 
its several dams.  Sapag is from the Neuquen Popular Movement (MPN), 
the dominant provincial party founded in 1964 by Sapag's uncle, and 
historically aligned to the national Peronist Party of current 
President Cristina Fernandez de Kirchner).  Also in attendance were 
the Neuquen Provincial Legislature's First Vice President Carlos 
Gonzalez and Second Vice President Graciela Muniz Saavedra. 
 
¶3. (U) Neuquen enjoys a relatively strong economy, in large part 
bolstered by oil and gas reserves (representing two-thirds and 
one-quarter, respectively, of Argentina's total), and is Argentina's 
main hydroelectric producer, with five dams.  Governor Sapag and his 
colleagues expressed strong support for the many U.S.-based 
companies and their corporate social responsibility efforts in the 
province, citing AES, Chevron, Duke Energy, oil-driller Pride 
International, Apache, and Wal-Mart.  Sapag said that they are "good 
neighbors," noted their strong and growing investments, and said he 
hoped they would continue. 
 
¶4. (SBU) Governor Sapag lamented that some of the GOA's policies 
that keep oil, gas and electricity prices far below world market 
levels had led to over-consumption and under-investment in these 
sectors.  He also criticized the GOA's policy of maintaining high 
hydrocarbon export taxes.  He said he has been raising this subject 
with GOA officials for five years and they have long promised policy 
changes, but he is "still waiting to see them."  Sapag said that 
Chevron has difficulty selling its oil domestically, as the three 
main domestic buyers, Shell, Esso, and YPF, effectively form what he 
called an "oligarchy," keeping prices down. 
 
¶5. (SBU) Although he cited the strong gas, oil, and hydroelectric 
presence - and the potential for more - he also expressed his desire 
to diversify the Province's economy.  He said he wanted to further 
increase Neuquen's potash extraction, which he said had great 
potential.  Sapag said that the nearby Arroyito heavy water plant is 
one of the biggest in the world, is running at full capacity, and 
will support Argentina's planned Atucha II nuclear reactor in Buenos 
Aires Province, scheduled to be operational in 2011.  He also cited 
the new dam project, Chihuidos II, to be built in the northern part 
of the province. 
 
¶6. (SBU) Sapag indicated that high spending and debt accumulated by 
his predecessor Jorge Sobisch left the province dependent on the 
federal government for significant infrastructure spending.  That is 
why he has cultivated closer ties with President Cristina Fernandez 
de Kirchner, for example, to fund part of the Chihuidos II dam.  As 
an example of over spending, Sapag and his colleagues also cited the 
acquisition by the previous administration of Governor Sobisch of a 
$50 million "information super highway" scheme.  They expressed 
regret about its cost, that its capacity was far more than needed 
for their small province, and that only about 16% of its capacity 
was being used.  Thus far, the infrastructure is only being used for 
police security cameras along highways, but has potential in the 
areas of education, telemedicine, e-government, communication in 
small towns, and video conferencing. 
 
---------------- 
NGO youth soccer 
---------------- 
 
¶7. (U) Ambassador visited a gathering of the Western Community Youth 
Soccer Association, a youth soccer NGO that targets disadvantaged 
and at-risk youth, promoting "healthy competition," "norms of 
conduct," and leadership.  About 100 boys and girls were on hand, 
and the Ambassador spoke to many of them about their activities, and 
encouraged their continued involvement.  He lauded parental 
involvement in this program (several parents from very humble 
backgrounds were present), spoke to coaches, and toured the 
community center where they gathered with the NGO's director, 
Federal Judge Antonio Labate. 
 
-------------------------- 
Off-the-Record Press Event 
-------------------------- 
 
¶8. (SBU) The Ambassador engaged in a frank, off-the-record 
discussion with two editors and one correspondent from the "Rio 
Negro," the Patagonia region's oldest and largest-selling daily. 
The journalists said that, although the province receives healthy 
income from its oil, gas, and electricity earnings, there was still 
a lot of inequality.  They compared the 40-plus years of MPN party 
domination to Mexico's long-running Institutional Revolutionary 
Party.  They also argued that the oil, gas and electricity dependent 
province was in need of diversification.  The journalists said that 
provincial inflation was running at about 30%, far higher than the 
official national average of 10%. (This estimate of actual national 
inflation is in line with the estimates of private sector 
economists.) 
 
¶9. (SBU) They said that a few years ago, then-Governor Sobisch had 
started what they described as a highly questionable scheme to begin 
a wine industry in the province, for which a few close associates 
secured province-backed loans.  They noted that wine production was 
not common in this province and requires great expertise.  They said 
that in recent years, Sobisch had also undertaken costly and 
unnecessary public works programs to court voters.  These and other 
actions had contributed to the province's relatively high debt 
burden (now at about 2.5 billion pesos, or about $800 million, in a 
province of only 550,000).  The journalists said that Sapag's style 
is quite distinct from that of Sobisch.  As Sapaq grew up and 
attended private schools in Buenos Aires, and later worked with his 
then-Senator father, he is more sophisticated than Sobisch.  They 
added that Sapag also had much more cordial relations with the 
media. 
 
¶10. (SBU) In response to questions, the Ambassador discussed the 
strong U.S. investment in the province, noting the positive 
contributions of U.S. companies, such as providing employment, 
training and provincial revenues.  He said that U.S. investment also 
makes a great contribution to the national economy, that many U.S. 
firms have been here for almost 100 years, and that there are 
presently nearly 500 U.S. firms here, employing over 155,000 
Argentines.  He noted that Argentina is home to the regional 
headquarters of many if not most of U.S. companies for 
Spanish-speaking South America, and that many U.S. companies report 
that Argentina is quickly becoming one of the most important 
international, strategic locations for IT services due in large part 
to the human talent here.  The Ambassador said that Argentina is 
also becoming Latin America's audiovisual and broadcasting capital, 
and in recent years, many U.S. media and entertainment companies 
have established their regional headquarters in Buenos Aires, 
including Google, MTV, Fox, and Turner. 
 
¶11. (SBU) In response to a question on the USG strategy on free 
trade, whether it is a hemispheric, bilateral or global one, the 
Ambassador he said that we see actually these as mutually 
reinforcing, and that we are engaging at all three levels.  Although 
the hemispheric Free Trade Area of the Americas has not prospered 
for various reasons, the U.S. has signed several bilateral free 
trade agreements with countries in the hemisphere and is active on 
the Doha agenda. 
 
¶12. (SBU) The Ambassador and journalists also discussed the 
well-publicized September 2007 Argentine Supreme Court case that 
directly involved the "Rio Negro" daily itself.  The Court ruled in 
favor of its 2002 suit charging that the former Sobisch 
administration had curtailed press freedom by barring it from state 
advertisements.  This ruling also tackled, and in turn spawned a 
heated national debate about, the governments of Neuquen, the GOA, 
and other provinces' use of state-paid advertisements, a widely held 
practice in Argentina.  The newspaper argued that Sobisch had 
withdrawn ads it would normally have placed in Rio Negro as reprisal 
for Rio Negro's publication of stories alleging that the 
administration had sought to bribe provincial legislators in 
exchange for their approval of Sobisch's "cronies" to fill vacancies 
on the provincial high court.  While the Court pointed out that 
neither national nor international legislation nor jurisprudence 
obliges governments to allocate advertisements to certain media if 
it does not wish to, withdrawing or substantially reducing it in 
reaction to the publication of certain stories amounts to an 
indirect curtailment of press freedom. 
 
--------------------------------------------- ----- 
Discussing U.S. Higher Education with Fulbrighters 
--------------------------------------------- ----- 
 
¶13. (U) Ambassador hosted a roundtable discussion for four local 
Fulbright scholars from science and teaching disciplines, all of 
whom are now professors at the nearby Comahue University.  They 
recounted their academic experiences, lauding what they described as 
the American educational system's promotion of creativity, 
problem-solving, and original thinking, which they said has 
contributed to the creativity of American society.  They contrasted 
this to what they said was the general Argentine tendency towards 
"memorization."  They noted the vast array of courses, activities, 
and facilities (e.g., computers) that were available to them in the 
U.S., which is generally not the case in Argentina.  They also 
extolled the amount of networking, interaction, and "unplanned 
collaboration" that was the norm at American universities, and that 
they still use these contacts today in their academic work. 
 
¶14. (U) The Fulbrighters said that this academic opportunity had 
granted them a time to reflect and to get a fresher outlook on their 
work.  The scholars did note the high costs of American higher 
education, and said that some costs were not always covered by their 
Fulbright grants, and they had in some cases been obliged to work or 
seek other grants.  They also cited the problems that some foreign 
students encounter obtaining visas.  They all agreed that more 
academic exchanges were needed.  Ambassador Wayne noted the 
Embassy's efforts to obtain more resources to support youth and 
teacher exchanges, especially for disadvantaged students, and that 
such direct experience with the U.S. can be a positive antidote to 
the prevailing negative U.S. image in Argentina. 
 
-------------------------------------------- 
Discussions with Regional Military Commander 
-------------------------------------------- 
 
¶15. (SBU) Ambassador and U.S. Defense Attache attended a private 
dinner hosted by Brigadier General Hernan Gustavo Prieto Alemandi, 
Commander of the Army's Sixth Mountain Brigade, and which 
encompasses the Provinces of Neuquen and Rio Negro.  Ambassador and 
General Prieto discussed the excellent state of US-Argentine 
military relations; Argentina's global peacekeeping roles in Haiti, 
Kosovo, Cypress; Argentina's close military relations with its 
neighbors, particularly Brazil and Chile; and the Neuquen region's 
recent flooding, for which General Prieto's brigade was providing 
assistance for affected civilians. 
 
¶16. (SBU) General Prieto later continued these discussions with the 
U.S. Defense Attache.  General Prieto mentioned his close working 
relationship with Governor Sapag and the General's desire to assist 
with one the Governor's key concerns: dealing effectively with 
annual flooding by constructing an evacuation center.  General 
Prieto said that such an initiative required strong political 
support.  The objective would be to have capacity for 500 people and 
also space for a command and control center.  General Prieto also 
discussed his "soldiers to industry" initiative, a plan to partner 
the military with local educational institutions to raise what he 
said was the lagging educational levels of his soldiers, and to 
provide them -- and Argentine private sector -- more skills and 
career options.  This initiative would also need the support of 
political leadership, and he also welcomed any U.S. Embassy support. 
 
 
-------------------------- 
Neuquen's 24-hour Wal-Mart 
-------------------------- 
 
¶17. (U) Ambassador visited Neuquen's Wal-Mart, which recently began 
24-hour operations.  It is the first Wal-Mart in Argentina to do so, 
and has the highest sales of all Wal-Mart locations in Argentina. 
Wal-Mart is the number one employer in Argentina among the nearly 
500 U.S.-based companies here.  The Ambassador highlighted the 
store's "Help Me Study" campaign, which promotes employee and 
customer contributions of school materials for disadvantaged 
students.  Wal-Mart managers noted that a great amount of store 
stock is produced locally.  They also said that the new 24-hour 
operations has been well-received by employees, unions, customers 
and local authorities. 
 
--------------------------------------------- ---- 
Breakfast with NGO FundeSur - making a difference 
--------------------------------------------- ---- 
 
¶18. (U) The Ambassador hosted a breakfast roundtable for 
representatives of the NGO "Foundation for the Development of 
Southern Argentina (FundeSur)," as well as those from FundeSur's 
umbrella network of smaller NGOs, "Enclave Solidario."  FundeSur was 
created in 1990 by local citizens dedicated to improving education 
and civil society participation in the design and implementation of 
public policies in Patagonia, the five southernmost provinces of 
Argentina.  FundeSur is also a member of several national and 
international networks involved in similar work. Participants 
described how they have created programs and networks with public 
and private sector organizations to strengthen civil society, 
improve public policies, and assist in the many areas where federal, 
provincial and local governments do not have the capacity to assist. 
 Ambassador and NGO leaders agreed on a number of potential 
follow-on projects for Embassy-NGO cooperation. 
 
WAYNE