THE AMBASSADOR DISCUSSES REGIONAL DEVELOPMENTS

C O N F I D E N T I A L BUENOS AIRES 001035 SIPDIS SIPDIS E.O. 12958: DECL: 05/08/2016 TAGS: PREL PGOV EPET ENRG SENV AR SUBJECT: THE AMBASSADOR DISCUSSES REGIONAL DEVELOPMENTS WITH VICE FOREIGN MINISTER REF: A. BUENOS AIRES 1024 ¶B. BUENOS AIRES 1027 Classified By: Ambassador Lino Gutierrez, Reasons 1.4(b) and (d). ¶1. (C) Summary: The Ambassador, accompanied by DCM, met May 5 with Argentine Deputy Foreign Minister Roberto Garcia Moritan at the Foreign Ministry. Also participating in the meeting were Under Secretary for Political Affairs Luis Cappagli, North American Affairs Director Vicente Espeche Gil, and Deputy Director Jose "Pepe" Ureta. The Ambassador expressed growing U.S. concern about Bolivia, including Morales' sudden decision to nationalize the oil and gas industries. Garcia Moritan said that both Argentina and Brazil were taken by surprise by the timing of the decision and said there was the added worry of the increasingly erratic role of Venezuelan President Hugo Chavez in the region. Garcia Moritan described efforts by President Kirchner and Lula to closely coordinate policy on Bolivia, Venezuela and Haiti. Garcia Moritan tried to downplay the paper mill dispute between Argentina and Uruguay, and noted that President Kirchner's approach was measured and calm and focused on Argentina making its case in the Hague. The Ambassador briefed the Argentines on President Bush's successful meeting with Uruguayan President Tabare Vazquez on May 4 in Washington. End Summary. Growing Concerns About Bolivia -------------- ¶2. (C) Following a review of bilateral cooperation on avian flu preparedness and Argentina's clear intention not/not to support Iran's bid to become a member of the UN Human Rights Commission (reftels A and B),the Ambassador turned the discussion to recent developments in the region. He opened by expressing concern about Bolivian President Evo Morales' recent decision to nationalize the strategic oil and gas industries. The Ambassador described the arbitrary nature of the decree and the likely negative impact of this action on investment flows to Bolivia and the region at large. The Ambassador said the Brazilian position seemed confusing with Petrobras executives issuing public statements suspending all of its investment activity in Bolivia, while President Lula had sent contradictory statements by first expressing his strong displeasure and later engaging in "hugs and kisses" with Morales at the May 4 meeting hosted by President Kirchner. 
 Kirchner and Lula not Happy with Chavez -------------- ¶3. (C) Garcia Moritan acknowledged the unsettled situation in the region and that both Lula and Kirchner had been angered with the recent actions by Venezuelan President Hugo Chavez, particularly his decision to turn up at the April 19 meeting in Asuncion involving the Paraguayans, the Uruguayans and the Bolivians and taking the lead on the coordination of Southern Cone energy policy, as well as his growing influence over Morales. He said Lula and Kirchner had responded by arranging a meeting with Chavez on April 25 in Sao Paulo. Garcia Moritan said that Lula and Kirchner had made a point of holding a very public two-hour meeting prior to their meeting with Chavez to signal their lack of confidence in the Venezuelan leader. He said Chavez's erratic behavior had had the salutary effect of bringing Kirchner and Lula closer together and prompting them to begin to develop a common approach on both Venezuela and Bolivia. Guaranteeing the Supply of Gas -------------- ¶4. (C) Garcia Moritan pointed out that Morales's surprise decision to nationalize the oil and gas sector had been a bigger blow to Brazil than to Argentina. Bolivia provided 75 percent of Brazil's gas needs or nearly 30 million cubic meters of gas per day and nearly all of the natural gas used by the economically vital industrial base of Sao Paulo. Garcia Moritan conceded that the Bolivian government actions, including its recent effort to sharply raise the price of natural gas it sells Argentina, were a negative development. Fortunately Bolivian gas only accounted for 5 percent of Argentina's natural gas needs. Garcia Moritan explained that the principal purpose of the May 4 meeting Kirchner and Lula had called with Chavez and Morales was to guarantee the continued flow of Bolivian gas to Brazil and Argentina. Regional Partners Support Haiti -------------- ¶5. (C) Garcia Moritan said that one positive effect of recent developments in the region was to get Kirchner more focused on foreign policy and to strenghten Brazilian-Argentine ties. In the immediate neighborhood, Argentina's two key partners were Brazil and Chile. Garcia Moritan underscored the close coordination of Argentina, Brazil and Chile in support of Haiti. In this regard, the key priorities were to make sure that the international development assistance committed could actually make a positive difference on the ground, as well as to support Preval's ability to govern and restore stability to the country. He said Argentine Assistant Secretary for Latin American Affairs Leonardo Franco was currently in Haiti holding discussions with Preval and his team. Uruguay Crisis -------------- ¶6. (C) Garcia Moritan lamented how a "small problem" with neighbor Uruguay had mushroomed into a major crisis. He downplayed President Kirchner's decision to convene Vice President Scioli, all of his cabinet ministers and most of Argentina's provincial governors, and address a mass rally of 40,000 supporters on May 5 at the river port of Gualeguaychu, across from where the Uruguayans are building the paper mills. Garcia Moritan said Kirchner's message in Gualeguaychu had been "cautious and measured," and focused on strengthening Argentina's own environmental policy. Kirchner has also signaled Argentina's intention of making its case to the World Court at the Hague where it would argue that Uruguay had failed to consult with Argentina on its plans to build the plants as required by the Uruguay River Commission Treaty. U.S.-Uruguay -------------- ¶7. (C) The Ambassador responded by expressing the strong hope of the United States that Argentina and Uruguay could resolve this bilateral problem quickly. Ambassador also briefed Garcia Moritan on President Bush's May 4 successful meeting with Uruguayan President Tabare Vazquez at the White House and the interest of both Presidents to deepen bilateral trade and investment relations. GUTIERREZ