VZCZCXYZ0000
OO RUEHWEB

DE RUEHBU #0430/01 1011415
ZNR UUUUU ZZH
O 111415Z APR 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3530
INFO RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000430 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON SCUL SNAR AR
SUBJECT: AMBASSADOR BREAKS THE ICE IN NORTHERN PROVINCE 
 
¶1. (SBU) SUMMARY:  In the first U.S. ambassadorial visit to the 
northern province of Santiago del Estero in 22 years on April 6, 
Ambassador Wayne sent a message that Argentina matters to the United 
States.  Pragmatic Governor Gerardo Zamora seized the opportunity to 
mobilize key private and public sector actors to display the 
potential for U.S. investment in the province.  The Ambassador 
reinforced the importance of people-to-people diplomacy as the basis 
for improving bilateral relations by meeting with foundations for 
young Argentine leaders and distributing English language 
scholarships.  Zamora privately confirmed reports about increasing 
drug-trafficking via air into Santiago del Estero but said his 
government lacks the resources to do anything about it.  END 
SUMMARY. 
 
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BACKGROUND 
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¶2. (SBU) Santiago del Estero, one of Argentina's poorer provinces, 
survives mainly on agriculture and has a colorful political 
background.  Peronist strongman Carlos Juarez and his wife Mercedes 
"Nina" Aragonez ruled the province for approximately 50 years until 
then-President Nestor Kirchner removed them from power in the wake 
of a murder scandal.  Governor Gerardo Zamora, closely aligned with 
the Kirchners, was elected in 2005 and re-elected in 2008 with 
nearly 85 percent of the vote.  Zamora has proven to be a pragmatic 
leader.  Throughout President Cristina Fernandez Kirchner's (CFK) 
conflict with the farm sector, Zamora has tried to preserve good 
relations with the national government in order to maintain access 
to national funds for his province's infrastructure projects. 
Zamora has been one of the few "Radical-K" governors to remain loyal 
to the government, even after Vice President Cobos (once the 
pre-eminent "Radical-K" leader) defected via his July 2007 
tie-breaking vote in the Senate against CFK's agricultural export 
tax bill. 
 
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COURTING U.S. INVESTMENT 
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¶3. (SBU) Zamora's main focus during this visit was to attract U.S. 
investment to the province by "breaking the ice" and showing 
openness to cooperation with the U.S.  Emphasizing the importance of 
public-private partnerships for economic growth and development, he 
gathered the Council of Provincial Development and Promotion for a 
working lunch with the Ambassador to showcase the province's 
potential in terms of agriculture, tourism and oil exploration. 
Zamora explained his government's main priorities include improving 
the province's infrastructure, as well as the legal security and 
predictability businesses need to thrive.  To address the deficit of 
industrial production in Santiago del Estero, his government 
recently passed business-friendly legislation to exempt new 
investment  from provincial taxes for 10 years; and offer a rebate 
from the provincial government of 50 percent of the interest on new 
investment-related bank loans and 50 percent of the value of capital 
improvements.  According to the governor, over 50 national and 
international companies have moved into the province to take 
advantage of the favorable terms.  Projects opening this year 
include the province's first biodiesel and meat refrigeration 
plants.  However, basic infrastructure constraints, such as access 
to potable water persist, aggravated by the shrinking availability 
of fund transfers to the province from the federal government. 
(Note: As detailed by the governor, such investment incentives 
appear to entail large and open-ended provincial budget 
commitments.) 
 
¶4. (SBU) Ambassador Wayne expressed to Governor Zamora, the 
foundation of young Argentine leaders, and journalists his interest 
in getting to know more about the province to potentially create 
opportunities for U.S. companies to invest, buy, and sell.  Santiago 
del Estero's primary exports include cotton, soy, beef, sweet potato 
and beans, and the Ambassador suggested agriculture would be the 
most obvious sector for potential cooperation.  One government 
official explained Zamora is hoping to diversify away from soy 
production due to the recent tug-of-war with the national government 
over export taxes.  Zamora also encouraged the Ambassador to 
consider the potential for oil exploration.  Two of the 18 oil wells 
drilled in the 1970s produced oil, but there has been very little 
exploration activity since despite the fact that the province's oil 
wells are only 150 kilometers from the more thoroughly explored and 
exploited Salta province oil wells. 
 
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SECURITY CONCERNS 
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¶5. (SBU) The Ambassador privately asked Zamora about reports that 
Santiago del Estero was increasingly the preferred site for 
clandestine aircraft landings, presumably associated with drug 
trafficking.  Planes are quickly unloaded at remote locations, and 
the drugs distributed to land vehicles for transport south.  Zamora 
confirmed his government is aware that such planes land "all the 
time" but said the provincial government simply did not have the 
resources to address the problem. 
 
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PROMOTING PEOPLE-TO-PEOPLE DIPLOMACY 
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¶6. (U) The Ambassador kicked off the other main theme of his visit - 
the importance of "people-to-people diplomacy" - by delivering a 
speech on the common agenda between Argentina and the United States 
to a room packed with young Argentine leaders from the private and 
public sectors, civil society and the media.  His speech outlined 
our improving bilateral relations, emphasized the need to cooperate 
to find common solutions to the global financial crisis, and 
described existing areas of cooperation and exchange at all levels. 
Several members of the audience had previously benefited from the 
Department's International Visitor programs.  The Ambassador also 
visited a local bi-national center to award 20 scholarships for 
English language education to low-income youth.  Governor Zamora 
publicly thanked the Ambassador for preparing Santiago del Estero's 
youth to succeed and expressed interest in increasing educational 
ties. 
 
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WHAT IS ON SANTIAGO'S MIND? 
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¶7. (U) The Ambassador's visit received strong press coverage at both 
the national and provincial level, with features on television, in 
radio, and in print.  Personal interviews with both young and 
seasoned journalists revealed the pressing questions on the minds of 
northern Argentina's population.  Many were eager to know how soon 
concrete agreements for economic cooperation and investment between 
the U.S. and the province would be signed.  In the wake of the 
initiatives announced at the G-20 Summit, people asked the 
Ambassador how long he guessed the financial crisis would last. 
Audiences seemed reassured about the steadily improving bilateral 
relationship under the new U.S. administration, taking the March 27 
meeting in Chile between CFK and Vice President Biden and the April 
7 meeting in Washington of Secretary Clinton and Foreign Minister 
Taiana as strong indicators that things are off to a good start. 
More provocative interviewers asked the Ambassador whether the U.S. 
now agrees with CFK that the state needs to play a bigger role in 
regulating the economy.  Young private sector and NGO leaders were 
curious about the potential evolution in U.S. policy on agricultural 
subsidies and climate change. 
 
¶8. (SBU) COMMENT: High-profile visitors are rare in Santiago del 
Estero.  The Ambassador's visit successfully reinforced U.S. 
interest in working cooperatively with all levels of the Argentine 
government, as well as in seeking new opportunities for 
people-to-people diplomacy.  While Governor Zamora continues to 
pursue smooth relations with CFK's government, the Ambassador's 
visit suggests he is banking on private sector activity as the more 
reliable driver of economic growth.  His provincial government's 
program to attract economic investment, epitomized by the recent 
business-friendly legislation, is steps ahead of the national 
government in this aspect. 
 
WAYNE