CASTRO ATTENDS MERCOSUR SUMMIT IN ARGENTINA

UNCLAS SECTION 01 OF 02 BUENOS AIRES 001631

SIPDIS

SIPDIS

NSC FOR DAN FISK
TREASURY FOR DAS NANCY LEE
USCINCSO FOR POLAD

E.O. 12958: N/A
TAGS: PREL ETRD ECON AR
SUBJECT: CASTRO ATTENDS MERCOSUR SUMMIT IN ARGENTINA

REF: BUENOS AIRES 1566


1. (SBU) SUMMARY: The 30th Mercosur heads of state summit
took place in Cordoba, Argentina July 20-21. The summit
marked Venezuela's debut as a full member of Mercosur.
However, the arrival of Cuban leader Fidel Castro has
overshadowed all other aspects of the gathering. Castro,
Venezuelan president Hugo Chavez and Bolivian president Evo
Morales are scheduled to address a "people's summit"
following the conclusion of the formal summit. Some
indications of the tensions within Mercosur did appear during
the plenary session. Uruguayan president Tabare Vazquez used
his time to address the paper mill dispute with Argentina
while Paraguayan president Nacanor Durate Frutos commented on
the discrepancies between large and small-economy members.
Embassy staff in Cordoba noted an almost carnival-like
atmosphere in the city, with a small environmental protest
going largely unnoticed. Post will provide detailed analysis
of summit in septel. End Summary.


2. (U) The first day of the Mercosur summit (Thursday) was
devoted largely to meetings of foreign ministers in
preparation for Friday's plenary sessions. The main
substantive items on the agenda were the drafting of the
summit declaration and finalizing of a commercial agreement
with Cuba which would allow for the purchase of 2,700
products at preferential prices. (See reftel for more
details of agreement.) Economy ministers of the five full
Mercosur member states agreed on to adopt a "common front"
toward the IMF. There will be a bloc meeting in Rio de
Janeiro prior to the September IMF gathering in Singapore in
order to arrive at the common position. Argentina's Economy
Minister Felisa Miceli proposed the creation of a Mercosur
development bank, which would be headquartered in Argentina.
The plans hit a bump when Brazil's Finance Minister Guido
Mantega warned against creating new bureaucracies within
Mercosur, according to press reports. Meanwhile, Argentine
Foreign Minister Jorge Taiana called for a ministerial to
discuss the problems of Mercosur's smaller members. The
initiative was reportedly prompted by an Uruguayan proposal
that Mercosur's smaller partners be allowed to individually
negotiate trade agreements with other countries, a stance at
odds with Mercosur decision 32/00.


3. (U) The most pressing question of the day, however, was
whether Castro would, or would not, actually attend the
summit. Indeed, as late as noon on Thursday it had still not
been publicly announced that the Cuban leader was actually on
his way. His arrival at Cordoba's international airport
Thursday evening was carried live on Argentine television. A
frail and tired looking Castro slowly made his way down the
airplane stairs to the tarmac where he was surrounded by a
phalanx of security personnel and whisked away to his nearby
hotel in his motorcade. Upon arrival at his hotel, his
security detail kept him in his car for several minutes until
the crush of reporters could be pushed back. (Comment:
Argentine television reporters on the scene complained they
could not get near the Cuban leader because the Venezuelan
media had been given preferential access. End Comment.) In
his short walk to the hotel, an unidentified reporter asked
if Castro had "any message for the Quinones family." (Note:
Roberto Quinones is the Argentine-resident son of Cuban
dissident physician Hilda Molina. End note.) Castro said
nothing. This is Castro's first visit to Argentina since May
2003 when he attended Kirchner's inauguration.


4. (U) The plenary session on Friday was for the most part
predictable as the five Mercosur presidents were joined in
their presentations by Chilean president Michelle Bachelet,
Morales and Castro. However, some of the long-standing
tensions within Mercosur did come out during the
presentations. Uruguay's President Tabare Vasquez devoted
most of his discourse to the pulp mill controversy in an
effort to regionalize the issue. He asked that his country
at least be given the "benefit of the doubt" in constructing
the plants. More happily for the GoA, he told journalists
July 20 that Uruguay would shut down the controversial pulp
mills being built on the Uruguay river if they are found to
"contaminate the environment" once they begin operation.

BUENOS AIR 00001631 002 OF 002


Paraguayan president Duarte Frutos, commenting on the
inequalities between large and small Mercosur members, said
his country did not want only "half the stadium celebrating
the goals" and that if Mercosur was to have a future, all the
countries needed to become a team. Bachelet noted in her
presentation that Chile had committed itself to diversify its
energy supplies and to become energy self-sufficient -- an
obvious reference to the recent Argentine announcement that
it was increasing the price of gas exports to Chile.


5. (U) Brazilian president Lula da Silva said he did not
share the view of a Mercosur undergoing a crisis. He
emphasized that Mercosur's main goals remained "as valid as
ever," and that the customs union had to be its major
objective. However, he warned that Mercosur would have many
problems if internal concerns (i.e. internal politics)
determined relations among the states.


6. (U) Chavez spoke of the "renaissance" of Latin America.
He thanked the other Mercosur members for making Venezuela's
entry possible. He said the "great battle of Mar del Plata"
against the FTAA had made the Cordoba summit possible.
Castro (in a 50-minute address) underscored the importance of
the meeting and, in reference to the U.S., said that Latin
American integration had had enemies for centuries and that
these countries were not happy with the Cordoba meeting.
(Comment: Dressed in a suit, Castro appeared alert and
refreshed. Referring to the secrecy surrounding his travel,
he joked that not even he knew until the last moment whether
he attend the summit. End Comment).


7. (SBU) Comment: Post will provide analysis of summit
proceedings following meetings with GoA and other embassy
contacts next week. End Comment.
LLORENS