U.S. CITIZEN'S LAND THREATENED WITH EXPROPRIATION

UNCLAS BUENOS AIRES 001567 SIPDIS SIPDIS FOR WHA/BSC, EB/OIA, EB/CBA, AND L/EB USTR FOR MARY SULLIVAN NSC FOR SUE CRONIN OPIC FOR RUTH ANN NICASTRO TREASURY FOR OSIA/INL E.O. 12958: N/A TAGS: EINV ECON AR SUBJECT: U.S. CITIZEN'S LAND THREATENED WITH EXPROPRIATION IN ARGENTINA (MCBRIDE, PETER) ¶1. The senate in the Argentine province of Catamarca unanimously approved a bill July 13 expropriating 53,603 hectares of privately-held land, a large part of which is owned by U.S. citizen Peter McBride. The bill must still be approved by the provincial lower house and signed by governor Eduardo Segundo Virzuela del Moral before taking effect. Virzuela de Moral has indicated on numerous occasions his opposition to the bill, and told Ambassador Gutierrez during a call June 21 that he was aware of the issue and would work to prevent implementation of the law. ¶2. McBride first contacted Embassy Buenos Aires to warn of a possible expropriation in August 2005. At that time, Ambassador Gutierrez called a federal senator from Catamarca (Senator Oscar Castillo),who promised to use his influence as a national politician and also as stepfather to the Catamarcan state senator sponsoring the expropriation bill to quash the proposed legislation. That call, coupled with a Dow Jones International news story featuring McBride, appeared to have halted the expropriation effort. A number of factors, however, including a schism between the governor and the vice governor (who is supporting expropriation, according to McBride),allowed the resurrection of the expropriation bill in June 2006. ¶3. The Embassy has been unable to date to procure a copy of the bill that just passed the Catamarca senate, but according to McBride it was identical to the 2005 proposal, which alleged that expropriation was necessary to protect the interest of persons residing on the property against the "force of foreign capital." It is unclear whether the bill proposes compensation to affected landowners. Embassy will keep trying for a copy, a translation of which we intend to forward to the Department. We will also report any developments as they occur, and continue to work on McBride's behalf. ¶4. For background, the following is a compilation of relevant events, as presented by McBride's Argentine attorney: -- McBride purchases 116,000 hectares of land for USD 400,000 on December 12, 2003. The land had a low value due to a lack of improvements and water scarcity. -- The sellers of the parcels were not resident on the land, and McBride quickly settled with the few persons resident on the land, with the exception of two families. -- A number of local politicians saw possibilities in McBride's purchase. Some coveted the land, others saw in foreign ownership of the land a possibility of gaining political advantage. -- As a result, McBride has had to face judicial and popular action (non-violent to date),leading McBride to approach the Embassy in August 2005. McBride has also been in contact with the office of Senator Kay Bailey Hutchison. GUTIERREZ