KIRCHNER'S ASSOCIATES ATTACK FORMER ECON MINISTER

C O N F I D E N T I A L BUENOS AIRES 001243 SIPDIS SIPDIS STATE FOR WHA/BSC, WHA/EPSC, AND INR/R, SOUTHCOM FOR POLAD E.O. 12958: DECL: 03/17/2015 TAGS: PGOV PREL PHUM SNAR AR SUBJECT: KIRCHNER'S ASSOCIATES ATTACK FORMER ECON MINISTER Classified By: Ambassador Line Gutierrez for Reasons 1.4 (B)(D). ¶1. (U) Other Mission reporting available at http://www.state.sgov.gov/p/wha/buenosaires ¶2. (SBU) Summary: Following a number of recent public appearances and statements by former Minister of Economy Roberto Lavagna, many government officials close to President Kirchner have come out strongly criticizing Lavagna in an apparent effort to discredit him. While Lavagna has declared that he will not make clear his plans for the 2007 elections until next year, he is widely seen as a likely rallying point for opposition to Kirchner. The only clear fact in Lavagna's recent criticism of the government and the strong response by Kirchner's allies is an end to speculation about Lavagna joining Kirchner's electoral slate for the 2007 elections. End Summary. ¶3. (SBU) Lavagna was appointed as the Minister of Economy by caretaker president Edwardo Duhalde in 2002 and continued in that position for the first two-and-a-half years of the Kirchner administration. Lavagna was the only cabinet official not to openly support Kirchner or his slate of candidates in the 2005 elections and resigned shortly after the elections concluded. He was the last non-Kirchnerite in the government, with the exception of the Vice President, and was widely seen as the last minister with any degree of independence. When he left office, he was by far the most popular figure in the government after President and Mrs. Kirchner, in large part due to a belief that he deserved a great deal of the credit for steering the Argentine economy out of the worst economic meltdown in the country's history. ¶4. (SBU) Immediately after Lavagna left office, rumors and speculation regarding his political future began. He has been courted by all major opposition groups and leaders as a possible opposition presidential candidate in 2007, while pundits have often named him as a possible Buenos Aires Mayoral candidate for Kirchner. Until recently, Lavagna had been carefully silent and had refrained from comment on the state of the Argentine economy, leaving a great deal of speculation about whether he intended to rejoin Kirchner, join the opposition, or simply retire from public life. Over the last couple of weeks, Lavagna ended his silence with a series of interviews in which he questioned his successor's handling of the economy. He particularly criticized the government's ban on beef exports, strong-arming of the agriculture sector, price control policy and relations with Venezuela. ¶5. (SBU) Kirchner himself has not publicly reacted to Lavagna's criticism but it is widely reported that the recent barrage of attacks on Lavagna by key Kirchner supporters is being coordinated by the Casa Rosada. Kirchner supporters are quick to downplay Lavagna's role in the economic recovery and blame him for both his failure to control inflation and his successor's conflicts with the agriculture sector. Some opposition leaders who often can agree on nothing have rallied publicly to Lavagna's defense and have increased calls for him to run for president in 2007. Lavagna, like Kirchner, has publicly stated that he will not make any announcement regarding a possible presidential run until next year, but his recent comments could well be a preliminary "testing of the waters" on his part. (Comment: Even though the local papers daily report both rumor and theory regarding the 2007 elections, it is still far to soon to make any definite predictions about the 2007 elections. The one clear conclusion that can be drawn from the recent fireworks is that Lavagna has apparently chosen not to leave open the option of rejoining Kirchner's political machine. End Comment.) ¶6. (SBU) Lavagna's public break with President Kirchner makes him an even more attractive candidate for the fractured opposition. Radical Civic Union (UCR) heavyweight, former President Raul Alfonsin, has been heavily courting Lavagna as a 2007 presidential candidate as a means to save the long-declining, century-old UCR party. Alfonsin's public backing of Lavagna in the face of the criticism of Krichner's allies is a clear negative response to Kirchner's call of a Chilean-style "concertacion" alliance between the UCR and Kirchner's Victory Front (FPV). Lavagna has also been receiving support from the ex-Duhaldista camp and from allies of Republican Proposal's (PRO) Mauricio Macri, although Macri himself has not shown as much enthusiasm, labeling Lavagna as a "pro-government candidate. ¶7. (C) Comment: Any potential opposition candidate will have a difficult time competing with the popular President Kirchner in 2007 -- assuming President Kirchner does in fact seek reelection as most analysts expect -- but polls show that Lavagna is viewed favorably by a majority of Argentines who feel that Lavagna deserves a good portion of the credit for Argentina's strong economic recovery. Given his long history in Kirchner's government and even longer history as a statist economic official (his first public position was in the office of Price Controls under Alfonsin),it will be difficult for him to build a potential presidential campaign based only on attacking Kirchner's economic policies, particularly if the economy continues to grow. If Lavagna does aspire to run against Kirchner in 2007, he will have to develop a broader alternative message in order to gain ground against a president that polls show would easily win a first round victory if presidential elections were held today. End Comment. GUTIERREZ