VZCZCXYZ0010
RR RUEHWEB

DE RUEHBU #1061/01 2661415
ZNR UUUUU ZZH
R 231415Z SEP 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 4385
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001061 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR OES/ENV AND WHA/EPSC 
DEPT PLEASE PASS TO EPA 
 
E.O. 12958:  N/A 
TAGS: SENV ECON EFIN EIND AR
SUBJECT:  ARGENTINA:  RISING PRESSURES FOR THE RIACHUELO RIVER 
CLEAN-UP TO BEGIN 
 
REF: 08 BUENOS AIRES 1703 
 
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Summary 
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¶1. (SBU) A massive, long-delayed cleanup of the Riachuelo- 
Matanza River Basin, the most polluted basin in Latin America, 
is due to begin shortly.  Funded in part through a $2 billion 
World Bank loan, the project is expected to define the World 
Bank's involvement in Argentina in the medium to long-term. 
Administrative intransigency and a lack of cooperation between 
different government bodies, however, raise the possibility of 
further delays for the clean-up, while orders from the federal 
court supervising the project put pressure on the GoA to start 
work immediately.  The high-profile clean-up has the potential 
to be an important achievement or a resounding failure for the 
Kirchner Administration, although its outcome will not be 
known for some time.  End Summary. 
 
--------------------------------------------- ---------- 
World Bank Loan for Huge Environmental Clean-Up Project 
--------------------------------------------- ---------- 
 
¶2. (SBU) ESTHOff met on September 3 with World Bank (WB) 
officials Franz Dress-Gross and Renan Poveda to discuss the 
Matanza-Riachuelo River Basin Clean-Up Project (Riachuelo 
clean-up).  The project is a massive $3.5 billion, 12-year 
project to clean up the greater Buenos Aires Riachuelo river 
basin, through construction of new sewage treatment systems 
and curtailment of industrial effluent flow.  A WB loan signed 
in August by the GoA is to provide $2 billion in financing in 
two tracts, with the first loan of $840 million to be 
committed this November.  The GoA will provide 44% of the 
total funding, a higher than normal counterpart for WB 
projects.  Poveda suggested that the GoA chose to provide this 
higher level of funding as a means of showing its commitment 
to the project. 
 
¶3. (SBU) The Riachuelo river basin is home to about four 
million people, of which 35% do not have clean drinking water 
access and 65% do not have sewage connections.  Approximately 
4,100 industries are located in the basin, with many 
discharging untreated effluents directly into the river.  The 
river has organic compound levels that are 10 times what is 
needed to maintain a healthy, aerobic river, as well as high 
levels of heavy metals and other pollutants. 
 
¶4. (SBU) Pursuant to a 2008 Supreme Court decision that 
mandated a clean-up of the river, the GoA established an 
overarching authority, ACUMAR (La Autoridad de Cuenca Matanza- 
Riachuelo), to manage the project.  ACUMAR, which by statute 
operates under the Secretariat of the Environment, includes 
representatives of the national government, province, City of 
Buenos Aires, and 14 other municipalities that make up the 
river basin.  ACUMAR is to work closely with AySA (the primary 
water and sanitation utility in Buenos Aires), which has 
technical expertise and runs the sewage system and water 
treatment plants.  The decision also gave a federal judge in 
Quilmes, Luis Armella, supervisory power over the project. 
 
¶5. (SBU) The WB-funded clean-up project consists of two parts. 
The first is to direct runoff and sewage into massive 
collector pipes and then to primary treatment plants, which 
will remove organic pollutants.  The wastewater is then 
discharged via underground pipelines 11 km into the Rio de La 
Plata river, where it will disperse.  While some NGOs have 
criticized the plan for not including secondary treatment that 
would allow the water to be discharged directly into the 
river, the WB determined that this was the most cost-effective 
means of cleaning up the Riachuelo.  The sewer extensions will 
increase sewage coverage from 35% to over 75% of river basin 
residents. 
 
¶6. (SBU) The second part of the clean-up is the progressive 
elimination of point source discharge, directly controlling 
effluent from the 4,100 industries lining the river.  This 
project focuses on monitoring and requiring companies to treat 
discharge and/or direct it to treatment plants.  Tanneries and 
milk/meat producers are the primary sources of pollutants, 
discharging respectively 43% and 17% of all pollutants. 
Grants will be available to small and medium-size enterprises 
 
to assist in updating their treatment facilities.  The WB and 
ACUMAR are considering moving factories involved in the most 
polluting parts of the tanning process (splitting fur off 
leather and softening the leather) to one location, so as to 
allow for targeted treatment and monitoring. 
 
¶7. (SBU) According to WB Project Head Dress-Gross, ACUMAR and 
AySA "are committed to the project."  The first stage of the 
project, involving the construction of a new collector and 
treatment plant on the left bank of the river, will free up 
capacity on the right bank to allow AySA to expand its sewage 
network.  The Environment Secretariat has already transferred 
inspectors to ACUMAR to begin inspections of the industrial 
polluters and is reportedly transferring almost half of its 
employees to work on the clean-up.  It is not clear what 
implications this has for the Secretariat's other day-to-day 
work.  Although a previous cable (ref A) noted that the GoA 
may be open to water and sanitation tariff increase to pay for 
AySA's operating costs related to increased coverage and 
treatment, WB Official Poveda said that this now appears to be 
off the table and that the GoA will have to find another 
revenue source for AySA. 
 
¶8. (SBU) In addition to the WB-funded project, the 
municipalities along the river are required by law to clean 
the river banks within 35 meters on either bank.  The 
supervisory federal judge has ordered the river bank cleanup 
to begin by November.  The City of Buenos Aires plans to clean 
up floating solid waste and to demolish illegal buildings 
along the river.  This plan has been complicated by the 
existence of several illegal housing units along the river 
that will require the removal of approximately 1,500 
households.  City environmental officials told ESTHOff that 
the City, although nominally part of ACUMAR, played no part in 
the WB loan negotiations and feels frozen out of the larger 
clean-up, since ACUMAR is part of the national government 
structure and responds to Presidential Cabinet Chief Anibal 
Fernandez. 
 
------------------------------------- 
But Delays Loom for Political Reasons 
------------------------------------- 
 
¶9. (SBU) The WB officials told ESTHOff that ACUMAR is now 
being restructured, which may cause delays in the project's 
start-up. The WB loan agreement locates the administrative and 
technical units in the Environment Secretariat but outside of 
ACUMAR, thus giving the Secretariat primary control of the 
project.  According to Poveda, however, Cabinet Chief 
Fernandez has ordered that the administrative and technical 
units be moved to ACUMAR to allow him to have more direct 
authority over the clean-up project and its funding.  This 
administrative restructuring will require an amendment in the 
WB loan, however, which may lead to a delay in the initial 
disbursement. 
 
¶10. (SBU) Poveda said that the need for GoA approval of the 
loan amendment opens the door for GoA infighting and delays, 
as several ministries must sign off on the amendment. 
Therefore, the GoA has asked the WB to release funds to begin 
the project while the amendment is pending.  WB lawyers are 
currently reviewing that request, but Poveda indicated that 
the GoA may have to begin carrying out eligible expenditures 
itself, to be reimbursed once the loan becomes effective. 
 
¶11. (SBU) According to Poveda, Fernandez decided to reassert 
control over the clean-up project when he became Cabinet Chief 
in July 2009.  The restructuring of ACUMAR and the loan 
agreement is an attempt to make ACUMAR more directly 
accountable to his office.  Andres Napoli, head of the 
Riachuelo project of the environmental NGO Fundacion Ambiente 
y Recursos Naturales, confirmed to ESTHOff that the 
restructuring is a political decision to give Fernandez close 
control of ACUMAR.  Napoli said to the daily newspaper "La 
Nacion" that repeated change of personnel was delaying any 
work on the project: "It can't be that every new official who 
joins the process starts from zero. In this year the 
representatives of ACUMAR have already changed four times." 
Fernandez's restructuring of ACUMAR could be an attempt to get 
the stagnant body to function more efficiently through tighter 
control over the WB loan funds. 
 
¶12. (SBU) Meanwhile, the WB expressed some concern that ACUMAR 
build the capacity to handle the complex procurement/contract 
guidelines of international loans.  Although it can access 
experts from many ministries, ACUMAR will need time to build 
this capacity.  Even though ACUMAR is to be staffed primarily 
from within the Environment Secretariat, and up to half of the 
Secretariat's staff is to be reportedly assigned to the 
project, our contacts tell us that individual offices within 
the Secretariat are reluctant to release employees to ACUMAR. 
 
------------------------------------------ 
While the Court Demands Action Immediately 
------------------------------------------ 
 
¶13.  While delays loom due to politics, the federal judge 
supervising the clean-up has ordered immediate action. 
According to "La Nacion," Judge Armella ordered on September 4 
that ACUMAR must start work within two months.  He threatened 
the imposition of daily fines on the officials responsible for 
the delay if the order is not complied with.  Judge Armella 
found that ACUMAR was not in compliance with the initial 
Supreme Court orders of last July and therefore issued the new 
demand for the project to begin, and for the national, 
provincial, and city governments to put forth the necessary 
funds to start work. According to "La Nacion," this order was 
a response to a statement by Buenos Aires Mayor Mauricio Macri 
that the City of Buenos Aires would not put forth funds for 
its part of the Riachuelo clean-up. 
 
¶14. (SBU) According to WB Project Head Dress-Gross, the judge 
also ordered that ACUMAR must immediately begin inspections of 
all 4,100 industrial sites in the basin and that the 
Secretariat must transfer inspectors to ACUMAR to complete 
that task.  The WB believes that ACUMAR/AySA can complete 200 
inspections per month, so this tasking alone would take 20 
months to complete. 
 
--------------------------------------- 
Plans to Involve Civil Society and NGOs 
--------------------------------------- 
 
¶15. (SBU) Poveda indicated that NGOs are strategic allies in 
the project and that he was meeting with two groups of NGOs on 
the same week that he met with ESTHOff.  Napoli of FARN, 
however, said that ACUMAR is "totally closed" to NGO 
involvement or monitoring, even though the Supreme Court order 
created a "Cuerpo Colegiado," a committee of NGOs authorized 
to monitor and assist with the clean-up.  Poveda agreed that 
Environment Secretary Homero Bibiloni, and the GoA in general, 
seemed quite skeptical of NGO involvement and refused to 
include grants or programs for NGOs in the WB loan funding. 
The WB still hoped to involve NGOs and smaller municipalities, 
Poveda added, as many NGOs and municipal officials already 
know who the main polluters are and can direct ACUMAR to them. 
 
¶16. (SBU) Poveda noted that the WB has another on-going 
project focused on solid waste management in Buenos Aires. 
Although not within the framework of the Riachuelo loan, solid 
waste is a concern in the river basin, and Poveda said the WB 
planned to seek additional financing for the solid waste 
management project to pay for clean-up of solid waste in the 
basin, community work to prevent dumping, and social 
campaigning.  He believed that this would provide a backdoor 
for NGO/civil society involvement in the Riachuelo clean-up. 
 
------------------------------- 
Comment:  A High-Stakes Project 
------------------------------- 
 
¶17. (SBU) With a $2 billion WB loan agreement in place, the 
Riachuelo clean-up project finally appeared ready to go 
forward.  The need for a loan amendment and restructuring of 
the administrative and technical units, however, will make it 
difficult for ACUMAR to begin the project within the two-month 
deadline set by Judge Armella.  As a high-profile project for 
residents of Buenos Aires, the clean-up has the potential to 
be an important achievement or resounding failure for the 
Kirchner Administration, although its outcome will not be 
known for some time.  End comment. 
 
MARTINEZ