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OO RUEHWEB

DE RUEHBU #0597/01 1411331
ZNR UUUUU ZZH
O 211331Z MAY 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3752
INFO RUEHPE/AMEMBASSY LIMA 2504
RUEHZP/AMEMBASSY PANAMA 0361
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC

UNCLAS BUENOS AIRES 000597 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM OREP ECON PTER MASS ASEC AR
SUBJECT: ARGENTINA: SCENESETTER FOR CODEL THOMPSON VISIT 
MAY 28-30 
 
¶1. (U) On behalf of Embassy Buenos Aires, I warmly welcome 
your May 28-30 visit to Argentina, which occurs one week 
before I leave post for my next assignment, in which I will 
oversee U.S. non-military assistance to Afghanistan.  We 
propose to schedule meetings for you with Argentina's 
Minister of Justice, Security and Human Rights Anibal 
Fernandez; Customs Administrator Silvina Tirabassi; and host 
a coffee for you focused on security issues.  We also propose 
a visit to Argentina's largest port, Exolgan, where you will 
be able to observe DHS-supported cooperation, including the 
operation of Container Security Initiative container 
scanners.  Your visit will support our efforts to build on 
the important bilateral relationship we have worked to foster 
with the administration of President Cristina Fernandez de 
Kirchner, and it underscores the importance we place on 
counterterrorism cooperation, emerging threats, maritime 
security, and border security. 
 
------------------------- 
Broader Political Context 
------------------------- 
 
¶2. (SBU) You arrive in Argentina one month before June 28 
congressional mid-term elections, advanced from their 
original date of October in response to a request by 
President Cristina Fernandez de Kirchner (CFK).  Her 
rationale was that by getting through the election, Argentine 
officials could better concentrate on minimizing the local 
impact of the global economic crisis.  The political class is 
consumed with the sudden onset of election season.  Critics 
charged that move was designed to limit the opposition's 
capacity to unite and agree on candidate lists, but current 
pro-government majorities in both houses of Congress agreed 
to the change.  Still, two major opposition coalitions have 
formed in time to field candidates, along with important 
regionally-based movements.  Polls in many key races indicate 
setbacks for the Peronist followers of CFK and her husband, 
former President Nestor Kirchner.  Only about half of the 
Lower House and a third of the Senate seats will be 
contested, but many believe that the Kirchner's could lose 
their working majorities in Congress.  Former president 
Nestor Kirchner is running for Congress as a deputy for 
Buenos Aires Province.  He will certainly win a seat due to 
his position at the top of a party-list style ballot, but how 
well his list will fare is less clear.  Many see this 
election as a vote for or against the Kirchners, and most 
observers believe that the first couple's political future is 
riding on the outcome. 
 
¶3. (SBU) CFK took office on December 10, 2007, succeeding her 
husband, Nestor Kirchner, who retains a high profile in 
government policy and decision-making.  CFK has a 
decades-long history in politics, having served in the 
Chamber of Deputies and most recently in the Senate.  She won 
the 2007 presidential election with 45% of the vote over a 
sharply divided opposition.  Having campaigned on the themes 
of change and continuity, she retained most of her husband's 
cabinet and much of his confrontational style.  During her 
first year in office, she suffered a severe drop in 
popularity and approval ratings, which now hover around 30%, 
due in large part to her handling of a four-month conflict 
with the farming sector over a government proposal to 
increase export duties on soy and other agricultural 
products.  That conflict is still simmering.  In coping with 
the sudden downturn in global commodity prices that had 
fueled Argentina's 2002-2008 economic recovery, CFK's major 
policy challenges will be to maintain government programs, 
prevent job losses, prevent a major slip in the GOA's 
finances, and address public concerns over deteriorating 
crime and security. 
 
¶4. (SBU) Bilateral relations are good, having recovered from 
a rough patch in December 2007 - January 2008.  Two days 
after CFK was inaugurated, the GOA misinterpreted and 
over-reacted to news reports concerning a federal case in 
Miami against some Venezuelans and an Uruguayan who were 
arrested on charges of operating and conspiring to operate in 
the United States as agents of the Venezuelan government. 
One of the accused was recently convicted and sentenced to 
four years in prison.  The others pled guilty.  During the 
proceedings in Miami, allegations surfaced that undeclared 
cash brought into Buenos Aires in August 2007 on a government 
contracted plane from Venezuela -- and uncovered by an 
Argentine customs official -- had been destined for the 
presidential campaign of CFK.  (The allegations were not made 
by the USG, but rather by one of the defendants.) 
 
¶5. (SBU) Initially, President Fernandez de Kirchner reacted 
angrily to the allegation that she had been the intended 
 
recipient of the cash.  She publicly interpreted the Miami 
arrests as directed against her government and characterized 
the case as a "garbage operation."  Her ministers and the 
Argentine Congress made similar statements.  However, the 
rhetoric gradually subsided, and the relationship normalized 
due to a great deal of behind-the-scenes work.  We agreed at 
the end of January 2008 to put the case behind us and to work 
to strengthen bilateral cooperation, which we have done in 
part by reviving a special consultative process that has 
already resulted in agreements in new areas such as 
alternative energy, nanotechnology, and national park 
administration.  We also agreed to promote greater 
parliamentary exchanges; your visit will help in that regard. 
 The election of President Barrack Obama also changed 
significantly the approach of CFK and her advisors toward the 
U.S. Government, though areas of friction remain. 
Argentina's Congress has expressed interest in strengthening 
bilateral ties.  As a testament to that interest and in the 
midst of a compressed electoral schedule, a five-member 
multi-partisan congressional delegation, including three 
deputies seeking to renew their seats, visited Washington, 
D.C. May 11-13. 
 
---------------- 
Economic Context 
---------------- 
 
¶6. (SBU) Argentina, once one of the richest countries of the 
world, has experienced much economic decline and political 
instability over the last 70 years, culminating in a profound 
political and economic crisis in 2001-2002 that was 
comparable to our Great Depression and included Argentina's 
default on $82 billion in debt, the largest sovereign debt 
default in history.  Many Argentines are at a loss to explain 
how their country, blessed with rich natural resources, 
fertile land, and low population density, fell so far short 
of its potential.  Some blame the military dictatorships, 
which predominated between 1930 and 1983.  Others blame 
corruption and a series of populist measures taken since 
¶1944.  Many Argentines blame external factors, particularly 
the IMF and alleged U.S. insensitivity to their plight for 
the last crisis. 
 
¶7. (U) Argentina's economy sustained a robust recovery 
following the 2001/2002 economic crisis, with five 
consecutive years of over 8.5% real growth in gross domestic 
product (GDP).  Argentine GDP reached US$ 320 billion in 
2008, approximately US$ 8,150 per capita. The economic 
expansion created jobs, with unemployment declining from over 
21% in 2002 to 7.3% as of the fourth quarter of 2008. 
Poverty levels also dropped.  According to government 
statistics, 15.3% of the population in the 31 largest urban 
areas remained below the poverty line in the second quarter 
of 2008, down from over 50% in the immediate aftermath of the 
economic crisis. 
 
¶8. (U) Argentina benefits from rich natural resources, a 
highly educated population, a globally competitive 
agricultural sector, and a diversified industrial base. 
Argentina's post-crisis move to a more flexible exchange rate 
regime, along with sustained global and regional growth, a 
boost in domestic aggregate demand via monetary, fiscal, and 
income distribution policies, and favorable international 
commodity prices and interest rate trends were catalytic 
factors in supporting renewed growth between 2003 and 2008. 
A higher tax burden, improved tax collection efforts, and the 
recovery's strong impact on tax revenues supported the 
government's successful efforts to maintain primary fiscal 
surpluses since 2003. 
 
¶9. (SBU) Although Argentina continued its strong expansion in 
2008, with GDP growth estimated at 7%, many economists 
predict a sharp deceleration of economic activity in 2009, in 
part due to the impact of ongoing global financial turmoil 
and the resulting slowdown in world economic output.  In 
addition to the challenges posed by global economic trends, 
economic experts have identified a range of other potential 
challenges to sustaining high levels of growth in the future. 
 The government has introduced measures to stimulate the 
economy and maintain jobs, and to deal with a serious 
agricultural drought. 
 
¶10. (U) Argentina's exchange rate policy is based on a 
managed float.  Market analysts have considered the peso's 
real exchange rate undervalued in previous years, though it 
is now under substantial pressure and has depreciated 
significantly in recent months, currently trading around 3.74 
pesos to the dollar.  The previous undervaluation, along with 
historically high global commodity prices, helped lift export 
 
volumes and values to record level, resulting in an estimated 
$12.6 billion trade surplus in 2008.  Foreign trade was 
approximately 39% of GDP in 2008 (up from only 11% in 1990) 
and plays an increasingly important role in Argentina's 
economic development.  Exports totaled approximately 21% of 
GDP in 2008 (up from 14% in 2002), and key export markets 
included MERCOSUR (23% of exports), the EU (19%), and NAFTA 
countries (10%). 
 
¶11. (SBU) Two-way trade in goods with the U.S. in 2008 
totaled about $13.3 billion (according to the U.S. 
International Trade Commission).  Total two-way trade in 
services in 2007 (the latest data available) was $4.0 
billion, $5.0 billion, $3.5 billion in U.S. exports to 
Argentina, and $1.5 billion in U.S. imports from Argentina, 
according to the Bureau of Economic Analysis, U.S. Department 
of Commerce.  The production of grains, cattle, and other 
agricultural goods continues to be the backbone of 
Argentina's export economy. High technology goods and 
services are emerging as significant export sectors.  A 
decline in global commodity prices and slower global (and 
Argentine) growth levels in 2009 is expected to reduce 
Argentina's trade surplus levels in the medium term. 
 
¶12. (U) Around 500 U.S. companies are currently operating in 
Argentina, employing over 155,000 Argentine workers. U.S. 
investment in Argentina is concentrated in the manufacturing, 
information, and financial sectors.  Other major sources of 
investment include Spain, Chile, Italy, France, Canada, 
Japan, and Brazil.  Continuing Argentine arrears to 
international creditors and a large number of international 
arbitration claims filed by foreign companies are legacies of 
the 2001/2002 economic crisis that remain to be resolved and 
adversely impact Argentina's investment climate.  Outstanding 
debts include over $28 billion in default claims by 
international bondholders and approximately $8 billion owed 
to official ("Paris Club") creditors.  President Cristina 
Fernandez de Kirchner announced in September 2008 that the 
government intends to pay Paris Club creditors and seek a 
settlement with international holders of untendered Argentine 
government debt.  However, neither of these initiatives has 
moved to fruition as of this writing.  The government in late 
2008 nationalized Argentina's private pensions system, which 
affected two U.S. companies that had been running pension 
funds. 
 
-------------------------------------------- 
Promoting U.S. Economic/Commercial Interests 
-------------------------------------------- 
 
¶13. (SBU) In support of U.S. companies operating in 
Argentina, we are encouraging the GoA to maintain a more 
welcoming investment climate, with greater regulatory, legal, 
and tax regime consistency.   We expend a good deal of effort 
supporting and working with U.S. companies.  We are working 
closely with the GoA and the Paris Club of sovereign 
creditors to resolve longstanding arrears to the USG, and are 
encouraging the GoA to resolve claims of U.S. holders of 
defaulted Argentine bonds.  Regarding currently stalled WTO 
trade negotiations, Argentina has staked out a position that 
links acceptance of developed economy agricultural sector 
proposals with more developing nation flexibility on 
industrial tariff cuts.  We have been urging them to adopt a 
more flexible approach.  We have also encouraged the GOA to 
uphold its G-20 pledge to refrain from implementing 
protectionist measures in response to the international 
financial crisis. 
 
--------------------------------------------- --------- 
Anti-Americanism, Bilateral Relations, Strategic Goals 
--------------------------------------------- --------- 
 
¶14. (SBU) The greatest overall challenge we face in Argentina 
is the high level of anti-Americanism in the Argentine 
public.  Argentina consistently registers the highest levels 
of anti-Americanism in the hemisphere in public opinion 
polls.  Working to change these perceptions is the Embassy's 
highest priority.  We believe we have found a formula for 
success through substantially increased media outreach, 
focused attention on youth, and augmented involvement with 
NGOs and community activities.  We seek to use all available 
resources, from visiting American rock groups and sports 
heroes to Nobel Prize winners and U.S. companies, to carry 
the positive agenda forward. 
 
¶15. (SBU) The election of President Obama has given our 
public diplomacy efforts a big boost.  He rates very highly 
in opinion polls and the President of Argentina has made 
clear her hope to build a good relationship with him. 
 
Argentina maintains positive political relations with the 
United States, but there is room for further improvement. 
One of the major tasks facing the Embassy is forging 
relationships of trust with a government that has been 
largely inward-focused and intent on maintaining an image as 
independent from our country.  Argentine officials react very 
negatively to perceived affronts their sovereignty, often 
winning public support for their strong reactions. 
 
¶16. (SBU) Argentina, nevertheless, holds Major Non-NATO Ally 
status and cooperates in regional security, 
counter-terrorism, drug interdiction, nonproliferation and in 
contributing troops to U.N. peacekeeping missions.  The GoA 
has been a strong international voice on arms control and 
nonproliferation issues.  In the International Atomic Energy 
Agency, the GoA has voted to refer Iran's noncompliance to 
the UN Security Council.  The GoA has also endorsed the 
Proliferation Security Initiative (PSI) and the Global Threat 
Reduction Initiative (GTRI).  Recently, Argentina and the 
U.S. co-hosted in Buenos Aires a gathering of all OAS States 
to look for ways to better implement UN resolution 1540, 
which is aimed at keeping WMD from terrorists.  It is under 
the banner of science that the USG and Argentina have 
realized some of the best examples of bilateral cooperation, 
and we have a long history of aerospace cooperation with 
Argentina. 
 
--------------------------- 
Trafficking in Persons (TIP) 
--------------------------- 
 
¶17. (SBU) Argentina is on the USG's Tier-2 Watchlist for lack 
of progress in providing greater assistance to victims and 
curbing official complicity in trafficking at the provincial 
level.  However, the legislature last year passed fairly 
comprehensive anti-TIP legislation that makes TIP-related 
violations a federal crime.  Argentina is a source, transit, 
and destination country for men, women, and children 
trafficked for the purposes of commercial sexual exploitation 
and forced labor.  According to the International 
Organization for Migration, 80% of trafficking victims in 
Argentina are Argentine, most of whom are trafficked for the 
purpose of sexual exploitation.  Bolivians and Peruvians are 
trafficked into the country for forced labor in sweatshops 
and agriculture.  Argentine efforts to combat trafficking 
have focused on prevention and training of security and 
government officials. One of our key goals this year is to 
support a vigorous GoA implementation of the new federal law 
and promote the prosecution of human traffickers.  Some NGOs 
have criticized this new law as weak on the issue of adult 
"consent," but the Justice Ministry has been vigorous in 
arresting traffickers and freeing minor and adult victims in 
recent months. 
 
------------------------- 
Democracy and Rule of Law 
------------------------- 
 
¶18. (SBU) We work with the GoA, media, and civil society to 
strengthen democratic institutions, fight corruption, and 
reinforce civilian control of the military.  We promote key 
reform efforts such as increasing governmental transparency, 
limiting public corruption, and strengthening the political 
independence of the judicial branch.  While we do not succeed 
on every issue, we continue to cultivate the GoA as a 
cooperative partner in multilateral fora, and seek 
Argentina's cooperation in the defense of democracy and the 
observance of human rights in countries like Cuba, Venezuela, 
and Bolivia, as well as UN peacekeeping in Haiti. 
 
------------ 
Human Rights 
------------ 
 
¶19. (SBU) The Argentine government generally respects the 
human rights and fundamental freedoms of its citizens.  The 
Kirchner government's human rights policy focuses on seeking 
justice for the human rights violations committed during the 
1976-83 military dictatorship, which resulted in the 
disappearance of between 11,000-30,000 leftist guerrillas and 
political dissidents.  It does not, however, focus on 
bringing to justice armed guerrilla groups who also committed 
human rights abuses during the same period (known as "the 
Dirty War"), albeit on a much smaller scale.  To date, the 
courts have indicted an estimated 508 persons for crimes 
against humanity, and sentenced 32 former officials of the 
military regime, including a military chaplain.  We recently 
returned one person sought here for human rights violations 
and another individual wanted by the GoA remains in Florida. 
 
Argentines are also concerned about an Argentine citizen on 
death row in Texas.  The USG and GOA generally cooperate on 
human rights issues in international and regional fora.  The 
GOA has not been a strong advocate for reform in Cuba and has 
publicly pressed for the United States to eng its trade 
embargo and other restrictions. 
 
----------------------------- 
International Crime and Drugs 
----------------------------- 
 
¶20. (SBU) Argentina is a transshipment and destination point 
for narcotics emanating largely from Colombia, Peru, Bolivia, 
and Paraguay.  With its large chemical and pharmaceutical 
industries, Argentina is also a major source and destination 
for precursor chemicals.  Argentine law enforcement agencies 
cooperate closely with their USG counterparts on drug 
interdiction efforts, fugitive arrests, and information 
sharing, which has resulted in increased drug seizures and 
successes against trafficking organizations.  This Mission is 
focused on institutional capacity-building and expanding 
training opportunities for law enforcement officials, 
prosecutors and judges in order to improve internal security 
and decrease international drug and criminal activity in 
Argentina.  Justice Minister Fernandez has repeatedly stated 
that he wants to put top priority on attacking drug 
traffickers and less priority on arresting individual users. 
One challenge to advancing a more effective policy against 
international crime is Argentina's judicial system, which 
remains inefficient despite halting efforts at reform. 
 
-------------------- 
ICE Country Programs 
-------------------- 
 
¶21. (SBU) U.S. Immigration and Customs Enforcement (ICE) is 
the largest DHS component at the U.S. Embassy in Buenos Aires 
and serves as the primary contact office for DHS operations 
in the Southern Cone.  ICE transferred its Attache Office to 
Buenos Aires in November 2006 after being located in 
Montevideo, Uruguay for over ten years.  The ICE Attache 
Office area of responsibility (AOR) includes the countries of 
Argentina, Chile, Paraguay, and Uruguay.  In addition to its 
investigative caseload, the ICE Attache Office's seven-member 
staff (three permanent Special Agent personnel) manages ICE 
and DHS enforcement programs, including the ICE Trade 
Transparency Units (TTU) in Argentina and Paraguay, ICE 
Deportation and Removal Operations (DRO) throughout its AOR, 
and management oversight of U.S. Customs and Border 
Protection (CBP), and the Container Security Initiative (CSI) 
Team in the Port of Buenos Aires.  The TTU is an ICE 
initiative focusing on the trade-based money laundering of 
proceeds from narcotics trafficking and commercial fraud 
violations.  ICE established TTUs in Argentina's Customs 
Headquarters in June 2006 and Paraguay's Customs Headquarters 
in March 2007.  The ICE Attache Office facilitates all 
deportations from the U.S. to the four-countries within its 
AOR.  The number of removals averages approximately 5-15 per 
week and requires coordination with U.S. Embassy Consular 
Sections, Regional Security Offices, host government 
Immigration Agencies, and local INTERPOL offices.  In regards 
to the CSI Program, the ICE Attache Office conducts all 
investigative and law enforcement liaison activity for the 
Buenos Aires Team, and maintains budgetary/procurement 
management for the team as well.  CBP established the Buenos 
Aires CSI operations in November 2005, and it ranks 51st of 
58 CSI ports in export tonnage to the United States. 
 
--------- 
Terrorism 
--------- 
 
¶22. (SBU) Former President Nestor Kirchner's administration 
strongly supported counter-terrorism policies during his time 
in office, and his wife and successor CFK has continued the 
cooperation.  Argentina was itself a victim of international 
terrorist attacks in the 1990s and has been a cooperative 
partner in countering terrorism, 
especially in the Tri-border Area (where Argentina, Brazil, 
and Paraguay meet).  In November 2007, Argentina succeeded in 
getting Interpol's General Assembly vote to issue 
international capture notices for five current and former 
Iranian officials and one Lebanese Hizballah member (who was 
reportedly killed in Syria February 13, 2008) wanted in 
connection with the 1994 terrorist bombing of the Buenos 
Aires Jewish Community Center (AMIA). 
 
¶23. (SBU) Argentina cooperates with the United Nations, the 
OAS, its neighbors, and the United States on a number of 
 
counterterrorism initiatives.  We assist the GoA in 
capacity-building, to strengthen Argentine law enforcement 
forces.  Argentina has a leading role in the OAS 
Inter-American Committee Against Terrorism (CICTE), 
established on Argentina's initiative in the 1990s. 
Argentina has ratified all of the 12 international 
counD~Q|4:Q7`wQin 
1993, and an extradition treaty that entered into force in 
¶2000.  Within the restraints created by Brooke Amendment 
sanctions, we also work closely with the Argentine military 
on peacekeeping operations, modernization, increasing 
interoperability, and training and education focused on 
civilian control, respect for human rights, defense resource 
management, strategic planning, and science and technology. 
 
WAYNE