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