Identifier
Created
Classification
Origin
04BUENOSAIRES3427
2004-12-10 14:45:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

TRAVEL NOTES: ARGENTINA'S MENDOZA PROVINCE LEADING

Tags:  PGOV PREL AR 
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C O N F I D E N T I A L SECTION 01 OF 04 BUENOS AIRES 003427 

SIPDIS

STATE FOR WHA/BSC AND INR/RA,
NSC FOR TOM SHANNON
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 10/07/2014
TAGS: PGOV PREL AR
SUBJECT: TRAVEL NOTES: ARGENTINA'S MENDOZA PROVINCE LEADING
THE PACK IN POLITICAL AND ECONOMIC DEVELOPMENT

REF: BUENOS AIRES 00023

Classified By: Ambassador Lino Gutierrez for Reasons 1.4 (B) and (D)

C O N F I D E N T I A L SECTION 01 OF 04 BUENOS AIRES 003427

SIPDIS

STATE FOR WHA/BSC AND INR/RA,
NSC FOR TOM SHANNON
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 10/07/2014
TAGS: PGOV PREL AR
SUBJECT: TRAVEL NOTES: ARGENTINA'S MENDOZA PROVINCE LEADING
THE PACK IN POLITICAL AND ECONOMIC DEVELOPMENT

REF: BUENOS AIRES 00023

Classified By: Ambassador Lino Gutierrez for Reasons 1.4 (B) and (D)


1. (C) Summary: POLOFFS recently traveled to Mendoza to
attend a political development conference, meet with leading
political leaders, and participate in a cosmic ray
observatory dedication ceremony. Mendoza enjoys greater
political diversity than the nation as a whole, with three
well-developed political parties and a host of minor parties
competing for power in the province. Mendoza's economy is
also growing faster than the nation on average, boosted by
strong exports in wine, tourism, petroleum, and agricultural
products. The province has been making good on promises to
the scientific community with its support for The Pierre
Auger Cosmic Ray Observatory that is putting Mendoza on the
map for scientific research. POFOFFS found that people in
Mendoza, as in many other provinces, have a noticeably more
upbeat outlook on Argentina and the Argentine economy than
people in Buenos Aires. End Summary.

--------------
A Diverse Political Environment
--------------


2. (C) On November 20-21, POLOFF attended a political
development conference sponsored by the International
Republican Institute (IRI) that brought representatives of
Ricardo Lopez Murphy's Recrear party from throughout
Argentina with the goal of developing a national party
structure. Delegates to the conference were optimistic about
Recrear's chances of building a nationwide movement, but they
acknowledged the daunting obstacles facing them in
challenging the political dominance of the Peronist Party
(PJ). Many delegates expressed privately to POLOFF the hope
that alliances with Mauricio Macri's Commitment for Change
movement or the Radical Civil Union (UCR) would materialize
to help Recrear have a greater impact nationally. A
Representative of the UCR, which currently holds the
governorship of Mendoza, attended the conference. In one of
the panel discussions, the UCR representative exhorted the
Recrear delegates to not attempt to go it alone, arguing that
Recrear could only build a true opposition to the PJ working

in concert with the UCR and Elisa Carrio's Affirmation for an
Egalitarian Republic (ARI).


3. (C) In addition to attending the political development
conference, POLOFF also met with leaders from all three major
political parties in Mendoza: the UCR, the PJ, and the
Democratic Party, as well as a key ARI leader. UCR National
Deputy and former governor Roberto Iglesias gave an upbeat
assessment of the province politically and economically. He
felt one of the biggest challenges for the UCR-led provincial
government was the difficulty in reaching agreements with the
other two political parties due to the fact that both parties
are divided and lack strong leaders. He felt the UCR was
starting to recover and reorganize from their disastrous
showing in the 2003 presidential elections, with the election
of Adolfo Stubrin to head the UCR convention and the recent
UCR Congress as the first steps. Iglesias felt the 2003
presidential vote was more of a vote for a change of any
kind, rather than an endorsement of the PJ. He thought that
over the long-term there would be more political space for
other political parties, like the UCR, as is already the case
in Mendoza. Roberto Iglesias did not discount the utility of
political alliances, but argued that the party could not
attempt to align with every possible political force and
expect to be taken seriously. For example, Iglesias was
strongly against the Grupo Olavarria's, a break-away faction
of the UCR in BA province, attempts to align with Kirchner.
Iglesias acknowledged that the greatest obstacle to the
recovery of the UCR nationally was its lack of strength in BA
province and BA city, arguing that the downfall of the De la
Rua Administration took much of the BA party structure with
it.


4. (C) Rodolfo Arland, chief advisor the President of the PJ
bloc of provincial deputies, and PJ Provincial Deputy
Frederico Uriguen largely confirmed National Deputy Iglesias'
description of the Mendoza PJ party as divided and lacking
strong leaders, but were still optimistic that the party
would win the governorship in 2007. Federico Uriguen
described Peronism as a combination of nationalism and
populism that is completely American in its origin (meaning
Western Hemisphere),as opposed to the UCR that draws its
roots from Spain and France. This background gives the PJ a
much greater ability to garner support from the lower classes
than the UCR, which has been especially important over the
last several years of economic difficulties. Uriguen
characterized himself as a political reformer within the
provincial PJ. He felt most PJ politicians in Mendoza were
willing to work with Kirchner, but were not beholden to him
nor his methods. Rodolfo Arland described himself as a
traditional Peronist, stemming from his days as a student
during the military dictatorship. Arland argued that many
things were going well in the province, but that the economic
improvements were in spite of the mismanagement of the UCR
government.


5. (C) Rodolfo Arland told POLOFF that corruption was a real
problem in the province, which was demonstrated first hand
when two motorcycle police officers pulled Rodolfo Arland
over, with POLOFF in the passenger seat, allegedly for
speeding. Arland had been taking POLOFF on a short tour of
the city, driving slowly to show him the sights. The police
officers claimed their radar gun showed that Arland was
driving 80 kph in a 40 kph zone, something that was extremely
unlikely given the pace of Arland's tour. Neither POLOFF nor
Arland saw a radar gun, nor would the police officers show
Arland the gun when he asked to see it. The police officers
asked Arland to step out of the vehicle, which Arland later
told POLOFF was done to avoid any witnesses and provide
Arland an opportunity to offer the bribe that the police
officers wanted. Arland stepped out of the vehicle and
pulled out his cell phone and told the officers he was
calling his good friend the Minister of Security to let him
know that his officers were operating with faulty radar
equipment because he could not possibly have been driving at
more than 40 kph. (Rodolfo Arland, before moving to the
provincial legislature, was the chief advisor to the Mendoza
Minister of Security.) The officers replied that this was
not necessary and that they must have made a mistake and
handed him back his license and wished him a nice day.
Arland told POLOFF as they drove away that this type of
corruption was unfortunately fairly frequent, as police
officers are poorly paid and the procedures for paying fines
are so cumbersome that people find it much easier to offer
bribes to avoid the hassle. Arland felt the officers spotted
a foreign-made car with two well-dressed men inside and
figured they would likely pay a sizable bribe.


6. (C) Horacio Migliozzi, the Provincial Director of
Investigations, briefed POLOFF on his efforts to improve the
image of the police, but stated that his efforts have been
limited by police corruption. He stated that corruption is a
major problem in the province; he himself has been
responsible for sending five officers to prison, and
continues to receive death threats as a result. As an
example of police corruption, Migliozzi explained that if
there is a bank robbery his first step in the investigation
is to get a list of police working in the area at the time
and then figure out which ones were involved. He believes
with a combination of proper supervision, hiring new officers
and an increase in police salaries the situation can be
improved, but admits it will be uphill battle.


7. (C) Dr. Omar Demarchi, President of the Democratic Party
and Mayor of Lujan de Cuyo, the heart of the wine-growing
region, described his party as being in the rebuilding stage.
The Democratic Party is the oldest party in Mendoza, tracing
its roots back to the mid-19th century. The Democratic Party
has been unable to retain its past dominance of Mendoza
politics, as it is seen by many Mendocinos as having worked
too closely with the military dictatorship. The Democratic
Party still holds a number of seats in the provincial
legislature, but fared poorly in the last two races for
governor. Demarchi displayed an almost egotistical sense of
confidence about the party's ability to regain the
governorship in 2007, although all the other political
leaders and analysts POLOFF spoke with in Mendoza felt the
party's chances for a major resurgence are slim.


8. (C) Gustavo Gutierrez, who was Carrio's running mate in
2003 and was formally a congressman for the Democratic Party,
attributed Mendoza's strong economic growth in discussions
with POLOFF to the wine industry and Mendoza's proximity to
Chile. Gutierrez felt that Mendoza and Argentina as a whole
had been severely damaged by the populism of both the PJ and
the UCR. He felt Argentina needed a new direction and a
focus on institution-building that he thought Carrio could
best provide for the country. Carrio's emphasis on
institution-building and good governance were the reasons
Gutierrez gave to explain how a right-of-center individual
like himself could work with a left-wing politician like
Carrio. Gutierrez said he did not plan to seek elected
office before 2007, choosing to focus on his trucking
business, but he would accept the spot as vice presidential
candidate again if Carrio asked him in 2007. Gutierrez
readily acknowledges the ideological difference between
himself and Carrio. He stated to POLOFF that he worked with
Lopez Murphy in the past and was much more ideologically
aligned to him and Recrear, but felt Lopez Murphy was "too
intellectual" to effectively govern Argentina. Gutierrez,
decision to run with Carrio was yet another example that
ideology is often not the deciding factor in Argentine
politics. Gutierrez felt that political alliances might be
possible between ARI and the other opposition parties,
acknowledging that an agreement existed between Carrio and
Lopez Murphy to not compete against each other in the 2005
elections, with Lopez Murphy agreeing to run in BA province
and Carrio running in BA city.

-------------- --------------
Mendoza's Economy Booming, but Only in Certain Sectors
-------------- --------------


9. (C) Leading economist Silvia Jardel of the Consejo
Empresario Mendocino (CEM) told POLOFF that Mendoza's economy
has been growing more rapidly than the rest of the nation
since recovering from the recession the province experienced
between 1999 and 2002. She argued the main drivers of the
strong growth rates were the petroleum industry and wine
exports. Mendoza also has a strong agricultural sector, with
the main exports being garlic, pears, olives, peaches, and
apples. Of the 15 billion pesos worth of goods and services
produced in Mendoza in 2003, 19 percent of it was exported,
representing the fastest growing sector of the economy.
Mendoza has increasingly benefited from Argentina's tourism
boom, with tens of thousands of tourists every year coming to
enjoy Mendoza's mountains, good weather, and wine. At the
same time, Silvia Jardel pointed out that traditional
industries in Mendoza, such as manufacturing and
construction, have been undergoing a severe contraction over
the last few years. The manufacturing sector fell 26.2
percent and the construction sector declined 32.1 percent in
the period between 1993 and 2003. Jardel pointed out that
this was creating greater income distribution disparities, as
those workers tied to fast growing industries like the wine
and tourism sectors dramatically increased their household
incomes, while those tied to declining industries faced
increasing economic hardship.


10. (C) One major obstacle facing even the hottest parts of
the export sector is the difficulty in obtaining credit and
investment. According to Jardel, despite the recently
successful restructuring of the province's USD 250 million
Aconcagua bond, even Mendoza's wine industry has a difficult
time obtaining badly needed foreign credit and investment due
to the reluctance of international investors to invest in
Argentina while the national debt restructuring is still
pending. The petroleum industry has an even more difficult
time obtaining credit and investment, Jardel argued, due to
the GOA's continued intervention in the energy sector making
it difficult for private energy producers to make a profit.

-------------- --------------
Cosmic Ray Optical Detector Observatory Dedication
-------------- --------------


11. (U) On November 13, POLOFF attended the dedication
ceremony for the third of four optical detector observatories
planned for the Pierre Auger Cosmic Ray Observatory located
in Malargue, Mendoza. For a complete description of the
Observatory and the science behind the study of cosmic rays
see reftel, or visit the Observatories website at
.


12. (C) The Observatory is an international undertaking
budgeted at USD 54 million, receiving major funding from a
large number of donor nations including the United States,
Argentina, Italy and Germany. Argentina is the second
largest donor after the United States, with the federal
government originally pledging USD 10 million and the
Province of Mendoza pledging USD 5 million. Due to the
Argentine economic collapse the project managers have been
forced to look elsewhere for the USD10 million pledged by the
GOA, while the Province has slowly worked to fulfill its
commitment. Mendoza Governor Julio Cobos presided over the
recent ceremony with members of the Italian Science
Institute, and promised that the Province would make good on
its USD 5 million dollar pledge in the next three years.
While project managers continue to negotiate with GOA
officials regarding funding, they remain skeptical that any
significant amount will be forthcoming and federal
representation was noticeably lacking at the event.


13. (C) The new Observatory is a prime example of the type
of funding provided by the Province. While the Government of
Italy funded the newly dedicated optical detector, the
provincial government provided vital infrastructure support
needed to bring the detector on-line. For example, Cobos
recently approved the installation of a high-tension power
line running more than 50 miles directly to the detector at
an estimated cost of USD 400,000. POLOFF was informed by a
provincial official that the Governor rationalized the
expense by arguing that the power line brought power to the
citizens living near the detector, but admitted that the less
than 20 goat herders living in the area without running water
probably would not be signing up for electrical service
anytime soon. In these difficult financial times POLOFF
expected to find ample criticism among opposition parties for
Cobos's decision to meet the Province's commitments to the
project, but support for the Observatory appears to cross all
political and cultural lines in the Province. Celso Jacque,
National Senator for Mendoza and member of the opposition
Peronist Party, told POLOFF that the Observatory project was
an example of "positive international investment." Jacque is
a former mayor of Malargue and compared the impact of the
Observatory to that of the oil industry in the early 90s.
He stated that while the oil companies did bring jobs and
money to the region, when they left the city suffered over 45
percent unemployment. He stressed that his people were worse
off after the oil boom because they had abandoned their
traditional jobs. By comparison, he praised the Observatory
and the scientific community for the positive and
long-lasting changes they have made to the quality of life in
the region. The Observatory is overwhelmingly seen locally,
and within the scientific community involved, as a positive
example of international cooperation in Argentina.

--------------
Comment
--------------


14. (C) Mendoza's political and economic diversity provides
a model for the rest of Argentina. It was refreshing to see
Recrear's attempt to build a national party structure,
although they have a difficult road in front of them in order
to achieve a level of organization that will allow them to
compete with the more established parties. Corruption,
especially in the police force, is a crucial issue that the
provincial government needs to address. Mendoza's economy is
booming, although it is evident that like the rest of
Argentina, Mendoza is counting on a successful restructuring
of the national debt to bring in the investment necessary to
sustain the economic recovery.


GUTIERREZ