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DE RUEHBU #0294/01 0752129
ZNR UUUUU ZZH
R 162129Z MAR 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 3286
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE
RUEHLO/AMEMBASSY LONDON 1310
RUEHFR/AMEMBASSY PARIS 1508
RUEHRL/AMEMBASSY BERLIN 1177
RUEHKO/AMEMBASSY TOKYO 0873
RUEHMD/AMEMBASSY MADRID 2208
RUEHOT/AMEMBASSY OTTAWA 0590
RUEHRO/AMEMBASSY ROME 1498
RUEHTC/AMEMBASSY THE HAGUE 0199
RUEHBS/USEU BRUSSELS

UNCLAS BUENOS AIRES 000294 
 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958:  N/A 
TAGS: ECON ETRD EINV PGOV PHUM AR
SUBJECT: Argentina: G7-Plus Ambassadors on Economy, Protectionism 
and GoA G-20 Posture 
 
Ref:  Buenos Aires 230 
      Buenos Aires 164 
 
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Summary 
------- 
 
¶1. (SBU) Local G7-plus representatives were upbeat on the ability of 
crisis-tested Argentina to weather the current economic downturn, at 
least through 2009, but complained about growing Argentine 
protectionism via non-automatic license non-tariff barriers. 
Ambassadors also agreed on the importance of direct contact by 
leaders with President Christina Fernandez de Kirchner (CFK) to help 
secure her constructive role in the G-20 Summit.  At a US-hosted 
coffee March 11 (two days before President Obama called CFK), UK 
ambassador confirmed PM Brown will meet President Fernandez de 
Kirchner on the margins of the G-20 Summit and emphasized the 
importance that the Summit convey a sense of shared conviction and 
momentum to boost global consumer confidence.  The group agreed that 
the GoA appears aware that an Argentina perceived as politically 
conflictive could be expelled from the G-20 or see crisis-related 
action shift to other fora that exclude it.  Ambassadors also agreed 
that GoA key objectives for the G-20 Summit are narrowly focused on 
IMF reform and emerging market access to new low- or no- 
conditionality IMF credits, priorities linked to an internal GoA 
debate on whether and how to use IMF reform as a face-saving vehicle 
to reconcile with the Fund.  On G-20 trade issues, there was 
consensus that the GoA will maintain its hard-line position that 
Ag-NAMA linkage and asymmetrical North-South NAMA tariff reductions 
are quid pro quos to re-launching Doha Development Round talks.  End 
Summary. 
 
¶2. (SBU) Ambassador hosted a March 11 coffee for G7 plus Spain and 
Netherlands Ambassadors to review the impact of the global economic 
crisis on Argentina and to discuss the role Argentina will play at 
the upcoming G-20 London Summit April 1-2.  Joining were British 
Ambassador Shan Morgan, German Ambassador Gunter Rudolf Kniess, 
Japanese Ambassador Hitohiro Ishida, Spanish Ambassador Rafael 
Estrella Pedrola, French Charge Claudia Delmas-Scherer, E.U. Charge 
Carlos Gimeno Verdejo, Canadian Charge Rejean Tessier, Italian 
Ambassador Stefano Ronca, Dutch Ambassador Henk Soeters, DCM, and 
EconCouns. 
 
--------------------------------------------- --- 
Crisis Impact on Argentina & Trade Protectionism 
--------------------------------------------- --- 
 
¶3. (SBU) UK Ambassador Morgan noted that, at a gathering she hosted 
earlier that day for Argentine industrialists and economists with 
ties to the UK, there was broad agreement that an Argentina was 
somewhat insulated from the first stage of the crisis (due to the 
relative isolation of its domestic financial sector from global 
capital markets) and would now experience a ""normal"" recession, in 
contrast to the economic and social devastation that Argentina 
experienced in its earlier 2001/2 crisis.  Most thought that the GoA 
would meet its 2009 debt maturities by completing debt swaps, using 
pension fund resources, and tapping central bank reserves or 
state-owned bank deposits, if necessary.  There was general concern 
among her interlocutors on the precipitous decline in Argentine 
commodity exports and linked drop in export tax revenues, the 
potential for another bout of capital flight if the central bank 
fails to adequately manage a gradual depreciation of the Argentine 
peso, as well as increasing informal and formal sector unemployment 
and its potential to generate social unrest.  Nevertheless, she 
said, industrialists felt 2009 would be a year of ""caution, not 
contraction,"" with no major layoffs planned. 
 
¶4. (SBU) Italian Ambassador Ronca noted his embassy had also 
recently convoked Italian industrialists doing business in 
Argentina.  They were similarly upbeat on the ability of 
crisis-tested Argentina to weather the current economic downturn but 
complained about growing Argentine protectionism via imposition and 
strict enforcement of non-automatic license non-tariff barriers 
(NTBs) that has made dealing with the GoA bureaucracy ""more painful 
than usual.""  EU Charge Verdejo highlighted growing EU company 
 
concern about Argentine protectionism, with NTBs that originally 
targeted Chinese and Brazilian imports now directly impacting EU 
products.  He spoke of a ""mafia-style"" GoA approach to balancing its 
trade account whereby EU exporters to Argentina are being asked to 
present their export plans/projections and are then directly to cut 
them by 20%.  New non-automatic export license requirements, he 
said, appear to be added to the GoA NTB list each time the Argentine 
industrial union (UIA) complains about specific product competition. 
He said the EU had been talking to the US and others about a 
complaint at the WTO.  He also noted that the Brazilians had 
concluded that Argentina was breaking WTO rules but had opted to 
find a bilateral solution to its problems. 
 
¶5. (SBU) German Ambassador Kniess commented on a mercantilist GoA 
worldview where all economic policies are viewed through an export 
filter.  He called ""crude"" GoA efforts to attempt to influence 
individual foreign exporter policies.  Ambassador Wayne noted 
anecdotal reports from U.S. exporters that their goods manufactured 
by Chinese-based affiliates were being held up by Argentine NTBs. 
Japanese Ambassador Ishida noted growing complaints of delays in 
processing by Japanese exporters.  Spanish Ambassador Estrella said 
Argentine protectionist measures ""shoot themselves in the foot"" 
insofar as imposing NTBs on items with no or small domestic 
manufacturing bases (e.g., high performance tires) simply increase 
domestic consumer costs. 
 
----------------------------------------- 
UK on G-20 Preparations, UK Goals as Host 
----------------------------------------- 
 
¶6. (SBU) Ambassador Morgan reported on recent meetings with GoA 
officials on G-20 themes by UK Financial Secretary Steven Timms and 
Foreign Office Minister Lord Malloch Brown (Ref A).  A 27-point 
action plan on stabilizing financial markets will be a centerpiece 
of discussions at the March 15-16 G-20 Finance Ministers meeting in 
London, she said, along with a review of various IMF and MDB reform 
proposals.  Prime Minister Gordon Brown is keen, she said, that the 
overall G-20 message include a commitment to sustainable low-carbon 
global growth, as well as measures to protect the poorest nations 
from the impact of the current crisis.  From the UK perspective, 
Morgan said, as important as having G-20 heads of state come to 
agreement on concrete cooperative measures to address the current 
financial market crisis will be their ability to convey a sense of 
shared conviction and momentum to boost global consumer confidence. 
She emphasized there is no/no hidden UK agenda or blueprint for the 
G-20 Summit and that the G-20 consultative process (including the 
G-20 Finance Ministers meeting) and a parallel series of regional 
meetings taking place in the run-up to the summit are working to 
define priorities and build consensus. 
 
¶7. (SBU) Morgan confirmed that PM Brown will hold a bilateral with 
President Cristina Fernandez de Kirchner (CFK) during the London 
Summit.  She commented that, while it is difficult to predict the 
tone of CFK's London intervention, her participation will offer 
Argentina valuable exposure to global G-20 leadership. 
 
¶8. (SBU) EU Charge Verdejo noted GoA concern that an Argentina 
perceived as economically diminished and politically conflictive 
could be ""expelled"" from the G-20.  Italy's Ronca expressed his 
government's view that the G-20 grouping is an unwieldy, outmoded 
legacy of the global economic conditions and rankings that obtained 
when it was created in 1998.  Stressing the importance of ensuring 
that other groupings provide input, he highlighted the February 
discussion between Italian Premier Silvio Berlusconi and British PM 
Brown on coordinating the efforts of the G-8 and the G-20 on 
combating global recession (Italy holds the G-8 presidency for 2009 
while Britain holds the rotating chair of the G-20).  Ronca also 
reviewed the Heiligendamm Process launched at the German-hosted G-8 
summit that was aimed at intensifying cooperation between the G-8 
and G-5 emerging countries Brazil, China, India, Mexico and South 
Africa.  At the upcoming G-8 summit that Italy will host in 2009, 
Ronca said, Italy will invite the G-5 as well as Egypt to 
participate. 
 
------------------------------------------- 
 
Argentina's Objectives at the London Summit 
------------------------------------------- 
 
¶9. (SBU) Participants agreed that GoA key objectives for the G-20 
Summit are narrowly focused on IMF reform and joint action to 
regulate tax havens.  Ambassador Wayne noted divergent GoA messages 
coming out of the Central Bank (seeking low-conditionality IMF 
credits) vs. those from the Presidency and Foreign Ministry 
(demanding no-conditionality IMF credits).  Ambassador also noted 
debate within the GoA over whether and how to reconcile with the 
IMF, with considerable domestic media speculation that the GoA, 
deeply in need of new international credits, will attempt to use IMF 
reform as a face-saving vehicle to access Fund credits.  The Spanish 
ambassador said that CFK was somewhat unpredictable on these issues, 
noting she had, for example, labeled Delaware as a tax haven to be 
controlled in a conversation with PM Zapatero.  EU Charge Verdejo 
noted considerable EU common ground with Argentine positions, 
including on the need for expanded emerging market participation in 
IFI decision making and on the need to definitively address tax 
havens. 
 
¶10. (SBU) On trade issues, EU Charge Verdejo said the GoA has made 
clear it will maintain its hard-line position that Ag-NAMA linkage 
and asymmetrical North-South NAMA tariff reductions are quid pro 
quos to re-launching Doha Development Round talks.  Ambassador Wayne 
noted the disconnect between the GoA's overtly protectionist bent in 
support of domestic manufacturing interests and the President's 
recent exhortation to Argentine ambassadors abroad to pry open 
foreign markets to Argentine exports.  German Ambassador Kniess 
commented on a mercantilist GoA worldview where all economic 
policies are viewed through an export filter.  He called ""crude"" GoA 
efforts to attempt to jawbone individual foreign exporters to 
curtail volumes shipped to Argentina.  Verdejo hoped that a strong 
message could be sent to the GoA in the G-20 on the need to respect 
its Washington G-20 stand-still pledge on protectionist measures. 
 
 
------------------------------------------ 
UK on Lack of GoA Environmental Awareness 
------------------------------------------ 
 
¶11. (SBU) Ambassador Morgan commented on the narrow environmental 
perspective taken by the GoA: other than a focus on the cleanup of 
the metropolitan area's massively polluted Riachuelo river basin, 
she said, there is little or no political or public awareness of 
global environmental priorities such as climate change.  The UK is 
funding a study on the domestic impact of climate change in 
Argentina, and Morgan hoped that the report's examination of climate 
change's potential impact on key domestic sectors (e.g., Argentina's 
successful and growing wine industry) will help raise public 
awareness.  German Ambassador Kniess noted that Argentina is 
supporting the International Renewable Energy Agency (IRENA) 
established in Bonn in January 2009. 
 
-------------------- 
Comment: Work on CFK 
-------------------- 
 
¶12. (SBU) G7-plus Ambassadors agreed on the value of Argentina's 
participation in the G-20 summit as a way to expose the parochial 
Kirchner administration to a broader worldview on global economic 
linkages and inter-dependence.  They also agreed, however, that 
convincing mercantilist Argentina to avoid the temptations of 
protectionism and to reaffirm its earlier G-20 pledge to refrain 
from raising new barriers to trade in goods and services will be a 
significant challenge in London.  There was a general consensus that 
most senior GoA officials (except for the MFA's Trade 
Undersecretary) see the need to play a contributing role, but that 
there was considerable uncertainty over CFK's performance: thus the 
necessity of engaging her to help build a useful outcome in London. 
(President Obama's March 13 call to CFK was just the kind of 
engagement suggested.) 
 
WAYNE