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