VZCZCXYZ0001
OO RUEHWEB

DE RUEHBU #1084/01 2731308
ZNR UUUUU ZZH
O 301308Z SEP 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4410
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001084 
 
SIPDIS 
SENSITIVE 
 
DEPARTMENT PASS to USTR KKALUTKIEWICZ 
TREASURY for WLINDQUIST 
LABOR for INTERNATIONAL RELATIONS JANE RICHARDS 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EIND ETRD ELAB PREL PGOV KSAC AR
 
SUBJECT: Argentina: Kraft Conflict Heats Up As Police Remove Workers 
From Plant 
 
Sensitive But Unclassified - Not for Internet Distribution or Use by 
Private Parties 
 
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Summary 
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¶1.  (SBU) On Friday September 25, the government of the Province of 
Buenos Aires, with the support of the federal government, 
implemented, after much hesitation, a judge's decision and ordered 
the police to move into the Kraft plant in the suburbs of Buenos 
Aires.  The police forcibly removed about 50 dismissed workers who 
had been illegally maintaining a presence in the plant and 
preventing it from operating at full capacity since September 4. 
The workers had acted after Kraft refused to reinstate 156 workers 
fired for physically preventing management from leaving the plant 
during a dispute on July 3 over measures to prevent the spread of 
the H1N1 flu virus.  The principal, recognized union at the Kraft 
plant has not supported either the original demand or the subsequent 
plant occupation.  The dismissed workers have succeeded in turning 
this dispute into a very high-profile issue by, for example, 
blocking a major highway out of Buenos Aires.  The police action of 
a few days ago generated non-stop media coverage.  The workers'cause 
has been adopted by the more extreme, dissident wing of the labor 
movement as well as anti-globalization protestors and bloggers, and 
there are likely to be further demonstrations and work disruptions 
in the coming days.  There is increasing concern in the business 
community of greater labor unrest across sectors, as the current 
economic recession in Argentina impacts the average Argentine worker 
and family.  The Mission has been quietly encouraging the GoA and 
Kraft to find a solution to the conflict.  However, a leak from the 
Buenos Aires provincial government officials about its conversations 
with the Embassy prompted headlines about the Embassy's role.  In 
response, we released a short press statement expressing the 
expectation that the workers and company will soon return to work 
and full production.  End Summary. 
 
----------------------- 
Kraft Dismissed Workers 
----------------------- 
 
¶2.  (U) On August 18, Kraft dismissed 156 workers represented by a 
radical dissident union for illegal actions that occurred on July 3, 
when those fired workers prevented administrative staff from leaving 
the factory following disputes over a demand by dissident union 
members for paid leave during Argentina's outbreak of the H1N1 
virus.  Some of the dismissed workers were also caught on videotape 
committing acts of vandalism against the factory and equipment. 
 
-------------------------- 
50 Workers Seize the Plant 
-------------------------- 
¶3.  (U) Kraft officials had refused the H1N1-related demand, saying 
that they had complied with all aspects of the law and had no 
reported cases of H1N1 in their facility.  The demand was not 
supported by the main food workers union, representing most of the 
3000 plant employees.  Kraft has since signed severance agreements 
with 70 of the 156 terminated employees and indicates they are close 
to finalizing with another 16.  However, on September 4, a group of 
approximately 50 of the dismissed union workers seized the plant and 
demanded that Kraft reinstate all terminated workers.  They had 
illegally maintained a presence inside the plant until police action 
on Friday, September 25 to remove them, shutting down most 
operations at the facility. 
 
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Arbitration Didn't Work 
----------------------- 
 
¶4.  (U) Initially, the dispute was under the jurisdiction of the 
Ministry of Labor, which had ordered a "conciliacion obligatoria" 
similar to a mandatory arbitration agreement to seek consensus among 
the parties, with a deadline of September 9, 2009.  Under Argentine 
labor law, in the event of a labor-management dispute under a 
collective bargaining agreement, Ministry of Labor (MOL) mediation 
is mandatory if one of the parties requests it.  In the case of 
Kraft, once the dissident labor organization requested mediation, 
the MOL initiated a 20- day period of conciliation during which it 
attempted to mediate the dispute.  At the end of the period, the MOL 
declined to extend its mediation for a second period of conciliation 
because it had determined that the union which had requested 
mediation was not the legally recognized collective bargaining unit. 
 
 According to press reports, the MOL officially stated that it was 
ending the period of legally-mandated conciliation because there had 
not been any progress toward a negotiated settlement.  The plant 
occupation then became an issue for the justice system.  On the 
order of a judge, the police were given the authority to remove the 
former Kraft employees responsible for this ongoing violence, 
without prejudice to their claims or mediation. 
 
-------------- 
Police Move In 
-------------- 
¶5.  (U) The police action on September 25 was preceded by four hours 
of negotiation requesting that the dismissed workers peacefully 
follow the judges' order and depart the facility.  Following their 
removal, some workers -- along with what appeared to mostly be young 
student protesters -- threw rocks at the police, several of whom 
were injured.  Police eventually forcefully rounded up the 
protesters, using mounted police, tear gas, and police in riot gear, 
arresting over one hundred.  The episode was televised nationally 
and replayed endlessly over the weekend of September 26-27.  All of 
the detainees were released from custody the next day, though some 
may be charged for violence. 
 
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Government Supports Continued Mediation 
--------------------------------------- 
¶6.  (SBU) The labor action has been led by a radical union 
representing a small portion of Kraft workers.  (The union marches 
with banners featuring Lenin and Trotsky's faces.)  The larger labor 
confederation, tied to the ruling Peronist party, and the main food 
workers union representing workers at the plant rejected the actions 
of the group.  A large element in the Kraft dispute appears in fact 
to involve competition for membership and recognition between the 
two unions.  Both the national labor ministry and the government of 
the Province of Buenos Aires, where the factory is located, have 
ordered continued mediation over the issues.  The dismissed workers 
or their supporters again blocked the main north-south highway into 
Buenos Aires on September 28, and protests and road blockages 
continue this week. 
 
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Embassy Involvement 
------------------- 
 
¶7.  (SBU) At the behest of Kraft, the Embassy has been in contact 
with national and provincial officials requesting their engagement 
to resolve the conflict and to enforce the law, including Kraft's 
rights to operate its factory in a safe fashion.  The DCM has 
discussed the case over the past two weeks with Chief of Cabinet 
Anibal Fernandez and Justice Minister Julio Alak, as well as the 
Province of Buenos Aires's ministers of Justice and Production. 
Other embassy officials have had broached the issue with 
working-level GOA officials.  In all of these conversations, we have 
also encouraged moderation and conciliation.  On September 28, Kraft 
agreed to participate in government-sponsored talks over the fired 
workers. 
 
¶8.  (SBU) Calls made by Buenos Aires Governor Daniel Scioli's staff 
to the Embassy on September 28 requesting help with the dispute were 
leaked to the press, apparently by Scioli's staff.  This guaranteed 
headlines on September 29 of a U.S. Government role in the dispute. 
To cushion the blow, the Embassy used the following talking points 
in conversations with reporters: 
 
Text of talking points: 
 
We support the full application of labor rights and protections, as 
well as respect for property rights and decisions of the judicial 
system. 
We are pleased that the Kraft plant is now in operation again. 
 
If Asked about U.S. Embassy contact with the Government: 
 
The U.S. Embassy is following this issue, consistent with our desire 
to promote U.S. investment in Argentina, which provides good jobs to 
155,000 Argentines.  To that end, we've been in touch with 
appropriate Argentine authorities with the goal of achieving a 
lasting solution as soon as possible.  The embassy is not, however, 
involved in the ongoing negotiations. 
 
End text of talking points. 
 
----------------------- 
Press Coverage Negative 
----------------------- 
 
¶9.  (SBU) Press coverage of the removal of the workers from Kraft 
has generally been negative and has emphasized the violent nature of 
the action.  Part of this is due to the normal tendency of the local 
press to dramatize any police action that involves violence, but the 
ongoing dispute between the government and the local press over a 
new media law in the Congress (septel) is also a factor.  In the 
current environment of confrontation between the Administration and 
the local press, the press is highly critical of any and all 
government actions.  Kraft also failed to develop a discernable 
press strategy during the conflict.  Since the police action, the 
story has heated up even more and was the headline story in almost 
all newspapers on September 29.  Most of the stories focused on the 
Embassy's involvement in the case, indicating that the USG was 
seeking an end to the conflict. 
¶10. (SBU) Because of the press frenzy, and with the Mission's 
agreement, Chief of Cabinet cancelled his September 29 courtesy call 
with Ambassador Martinez.  In a subsequent phone conversation, he 
explained to the Ambassador that meeting on the morning of big 
headlines about Embassy involvement in the dispute would feed the 
stories, complicating GOA efforts to negotiate a settlement. 
------------------- 
Now a Cause Celebre 
------------------- 
 
¶11.  (SBU) Although not supported by the mainstream labor movement 
here, the Kraft dispute has become a cause celebre among the 
anti-globalization advocates in the blogosphere and on Buenos Aires 
campuses.  More protests at the plant and here in the city are 
likely. 
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Comment 
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¶12. (SBU) The Embassy has publicly voiced support for the full 
application of labor rights and protections, coupled with 
appropriate respect for property rights and court-ordered mediation. 
 We will avoid comment on the decision of the GOA to order the 
police to open up the plant on September 25.  We advocate continued 
mediation, but without prejudice to the rights of Kraft and its 
workers to operate in a safe environment.  However, we are 
emphasizing that while we have been in touch with appropriate 
Argentine authorities with the goal of achieving a lasting solution 
as soon as possible, we are not involved in the ongoing 
negotiations. 
¶13.  (SBU) The Kraft situation highlights what the GOA may face in 
coming months, as its loss in the June election renders it less 
capable of acting decisively on important issues.  This is already 
indicated in the strike last week at the principal port of Bahia 
Blanca that threatened to cut off the flow of oil imports to the 
refineries.  That strike is now on hold under a ten-day cooling off 
period, but is unresolved.  Continuing high inflation, together with 
the failure of the government to deliver any real wage relief to 
Argentine workers during the recession, is spurring labor unrest, 
which threatens to continue to spike up until there is a return to 
meaningful growth, lower inflation, and job creation. 
 
MARTINEZ