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