VZCZCXYZ0000
PP RUEHWEB

DE RUEHBU #0760/01 1551851
ZNR UUUUU ZZH
P 031851Z JUN 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 1235
INFO RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000760 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ETRD SNAR MASS EAID EC
SUBJECT: ARGENTINA: CODEL DODD DISCUSSES REGION WITH 
AMBASSADORS AND POLITICAL ANALYSTS 
 
¶1. (U) Summary:  The Ambassador hosted a lunch with 
ambassadors and private sector employees in honor of Senator 
Christopher Dodd and Representative Xavier Becerra.  The 
group discussed the region's efforts at integration, pointing 
to the benefits of closer relations that have developed and 
the challenges of reducing poverty and increasing social 
justice.  Regarding Argentina, participants expressed concern 
about the poor state of political parties and the 
government's ability to handle inflation and the farm strike. 
 Participants expressed great interest in the U.S. elections 
and what they could mean for policy towards the region.  End 
summary. 
 
Latin America Today 
------------------- 
 
¶2.  (U) The Ambassador welcomed and introduced Senator Dodd 
and Representative Becerra.  Senator Dodd fondly recalled a 
trip he took to many different South American countries, 
including Argentina, in the 1960s at the end of his Peace 
Corps service in the Dominican Republic.  Dodd asked the 
guests to address what Latin America wanted and how to 
improve relations with the region.  Representative Becerra 
said the region has experienced many changes and asked how 
the participants saw the relationship with the United States. 
 The participants expressed a great interest and curiosity in 
the U.S. elections. 
 
¶3.  (SBU) Economist Miguel Alberto Kiguel said that the 
current situation in Latin America is encouraging, with low 
inflation, budget surpluses, and good foreign policy. 
Macro-economic policy lessons have been learned -- fiscal 
surplus, etc.  But the micro-economy is still a big 
challenge.  The region is in a unique situation to address 
poverty, income distribution, and investment in the social 
sector.  Nevertheless, political analyst and professor Carlos 
Escude said that many countries in Latin America have adopted 
populist policies to address some nagging social ills.  By 
way of explanation, Escude said he was born in an Argentina 
where 10% of the population was poor; that number rose in 
2001 to 50% and now hovers around 30%.  While some countries 
have higher levels of absolute poverty, Escude emphasized 
that none have experienced such growth from limited to 
widespread poverty in the way that Argentina has.  Escude 
noted the region's high concentration of wealth was one of 
the biggest problems.  UN Economic Comission for Latin 
America (ECLAC) Director Bernando Kosakoff agreed that Latin 
America needs to generate wealth, and reiterated that the 
main challenge for the region is addressing the unequal 
distribution of income.  Economic analyst Rogelio Frigerio 
pointed out that some leaders have employed populist rhetoric 
but still play by democratic rules of the game.  These 
"realistic populists," he predicted, would fare better than 
their counterparts with more authoritarian tendencies. 
 
¶4. (SBU) Former Ambassador to the United Nations Arnoldo 
Listre noted that it was important to recognize there had 
been positive changes in the Southern Cone, and specifically 
cited the very good relations between Argentina, Brazil, and 
Chile as a new and positive development that has contributed 
to regional stability.  Mercosur, he said, had prevented 
cross-border disputes from leading to larger 
political-military confrontations in the Southern Cone just 
as effectively as the European Union had in Europe. 
Brazilian Ambassador Mauro Vieira added the relationship 
between Argentina and Brazil was economically very strong and 
of considerable strategic importance for Brazil.  He 
emphasized the importance of multilateralism, and noted that 
Brazil shares borders with all countries in South America 
except Chile and Ecuador.  Vieira insisted that trade 
agreements with Mercosur had to be with the bloc, and not 
with individual countries. 
 
Regional Solidarity 
------------------- 
 
¶5.  (SBU) Director of the Institute of International Commerce 
at the BankBoston Foundation Felix Pena emphasized the 
importance of identifying areas for regional cooperation.  He 
criticized U.S. policy in the region for not unequivocally 
endorsing regional integration schemes like Mercosur.  Pena 
specifically cited the economy, energy, and narcotrafficking 
as areas to explore.  He said it was difficult to understand 
the region as one because of each country's individual 
history.  Frigerio disagreed on regional solidarity, arguing 
that the region was dividing more than uniting, especially in 
terms of macroeconomic policies.  On the subject of economy, 
Escude claimed that Latin America had signed many free trade 
agreements, but not ratified many of them.  He observed that 
the most successful thing the region has been able to achieve 
is avoiding conflicts that develop into war. 
 
 
U.S.-South America 
------------------ 
 
¶6.  (SBU) Colombian Ambassador to Argentina Jaime 
Bermudez-Merizalde said the key to a strong bilateral 
relationship was expanding ties further than the military and 
security realm and focusing on initiatives with social 
impact.  Bermudez said that it was precisely the populists' 
focus on social issues that helped them win elections.  He 
suggested the U.S. work on programs to combat the populists' 
social discourse, and to seek to broaden its message and 
dialogue beyond elites.  Kiguel said that opening the U.S. 
economy to Latin America would be interpreted as a concrete 
effort to improve relations.  Listre said there was no 
strategic threat to the United States in the region and 
because of this the U.S. would not prioritize Latin America 
in its foreign policy.  Listre urged ratification of the free 
trade agreement with Colombia and warned that failing to do 
so would send a bad message to the region as Colombia was the 
U.S.'s closest friend:  what you do will be read as how you 
treat your friends, he said. 
 
U.S.-Argentine Relations 
------------------------ 
 
¶7.  (SBU) Pena said the challenge was to deepen the 
relationship between U.S. and Argentina which he said he 
thought was possible with work.  President of the La Plata 
University Foundation Fernando Maurette said Argentina's 
political parties exist nominally, but they lack the spirit 
and values you need in a participatory democracy and "do not 
exist" in the same way that they do in the United States and 
Europe.  He said that U.S. legislators should reach out more 
often to their counterparts in the region, claiming that 
Argentine legislators conversed frequently with counterparts 
in France, Great Britain, and Brazil, but not with those in 
the United States.  This kind of interaction can help 
strengthen Argentina's democracy and bilateral relations. 
Maurette pointed out new actors were emerging in the regional 
sphere, like China, who have expanded their role in the 
region's defense and energy arenas.  Kosakoff mentioned that 
American businesses participate in the Argentine economy but 
aren't provided many incentives to integrate fully into the 
economy.  We need to treat them as partners in our 
development.  He felt U.S. companies could play a bigger 
positive role in Argentina's development.  The Ambassador 
noted many U.S. companies are eager to be more active 
participants in Argentina's development and have very good 
CSR programs to help local communities. 
 
Paraguay 
-------- 
 
¶8.  (SBU) Pena brought up the case of President-elect 
Fernando Lugo in Paraguay and said that the region -- and the 
United States -- had to help him succeed in his efforts to 
forge a moderate leftist path, following the examples of 
countries like Chile and Uruguay.  Senator Dodd asked Vieira 
what Lula thought of Lugo, and Vieira replied that Lula wants 
to collaborate and sees the relationship with Paraguay as 
important. 
 
Inflation, Inflation, Inflation 
------------------------------- 
 
¶9.  (SBU) Senator Dodd asked the guests what were some of the 
problems facing Argentina today.  Frigerio replied that 
inflation was destroying the economy and attacking a pillar 
of the economy.  Kiguel said that inflation was officially 
reported at 8%, but in fact was at least 20-25%.  He said 
that burgeoning inflation has had two serious effects -- it 
has hurt people's purchasing power because the salaries can't 
keep up with inflation, and it has destroyed access to 
credit.  He said this was a serious problem.  Kosakoff said 
that inflation was hurting investment because investors don't 
know what will happen.  The government needs to resolve these 
problems -- specifically energy, inflation, and 
infrastructure -- to head off a major crisis. 
 
Farmers 
------- 
 
¶10.  (SBU) Dodd asked whether the GOA would reach an 
agreement with the striking agricultural sector.  Kosakoff 
said the burgeoning global demand would maintain upward 
pressure on food prices.  The question is how to generate 
more capacity.  Argentina can be a player, and the government 
can resolve the situation without bringing the country to 
another crisis. 
 
Comment 
------- 
 
¶11.  (SBU) The commentators were cautiously hopeful about the 
future of U.S. relations with Latin America.  Their emphasis 
on regional solidarity tended towards the Southern Cone and 
Mercosur countries.  Most were pessimistic about Argentina's 
internal problems, which one guest argued were not so large 
they could not be fixed, but their solutions required 
political will and consensus which has heretofore been 
absent. 
 
¶12.  (U) This cable was cleared by the codel after departure. 
WAYNE