Identifier
Created
Classification
Origin
06BUENOSAIRES1665
2006-07-26 20:47:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

MERCOSUR SUMMIT IN CORDOBA: MORE QUESTIONS THAN

Tags:  PREL ECON ETRD AR 
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C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 001665 

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 07/25/2016
TAGS: PREL ECON ETRD AR
SUBJECT: MERCOSUR SUMMIT IN CORDOBA: MORE QUESTIONS THAN
ANSWERS

REF: BUENOS AIRES 1631

Classified By: CDA Michael Matera for reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 001665

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 07/25/2016
TAGS: PREL ECON ETRD AR
SUBJECT: MERCOSUR SUMMIT IN CORDOBA: MORE QUESTIONS THAN
ANSWERS

REF: BUENOS AIRES 1631

Classified By: CDA Michael Matera for reasons 1.4 (b) and (d)


1. (C) SUMMARY: The MERCOSUR summit, which took place July
20-21 in Cordoba, left more questions than answers about the
future of the regional organization. The impact of Venezuela
joining the union, how to better treat the smaller members of
the bloc, whether MERCOSUR can return to a primarily economic
rather than political organization - are all questions that
are still wide open. The MFA Under Secretary for Latin
America argued to emboffs July 26 that MERCOSUR emerged from
the summit in much stronger shape than in the months before.
Private-sector Embassy contacts, however, argue that the
regional organization's future is as opaque as ever. END
SUMMARY.

--------------
THE VIEW FROM THE GOA
--------------


2. (C) MFA Under Secretary for Latin American Affairs
Ambassador Leonardo Franco, in a meeting with Charge and
emboffs July 26, said that the six-month leadup to the summit
had been "very difficult," citing the Argentina-Uruguay
papermill conflict and the sharp complaints of the smaller
members over unequal treatment. When asked about the
Uruguayan consideration of an FTA with the U.S., he admitted
it too was a real challenge. However, he stated that
"MERCOSUR is coming out of the summit strengthened," in a way
that "could show a new reality for Latin America." He cited
the "large dynamism" that Venezuela brings to the
organization and the fact that Mexico is moving closer to
associate membership as evidence, concluding that MERCOSUR
"continues to be an economic relationship, but with much more
political strength" than before. He also noted efforts to
bring Bolivia into the fold, adding that GOA reps will attend
the early August opening of the Bolivian Constituent Assembly
in Sucre. When questioned by the Charge about Argentina and
Brazil's lack of "protagonism" at the summit, he downplayed
the perceived dominance of Castro and Chavez as "rhetorical
presence," saying it wasn't true during the plenary sessions.

He also lauded the commitment to form a commission to
propose "concrete" solutions to the problem of small-economy
asymmetries, and the proposed new regional development bank
(a GOA initiative),which he says will focus on lending
directly to private businesses, in contrast to the Andean
Development Bank (CAF) which lends mainly to the public
sector. In addition to these issues, Franco related the
serious discussions regarding regional energy policy, an
extremely important issue for all of the MERCOSUR members.


3. (C) When asked about MERCOSUR's endorsement of Venezuela's
candidacy for the 2007-09 UNSC security seat in the summit
declaration, Franco said the MERCOSUR group had earlier
confirmed this position at the July 5 Caracas summit where
Venezuela was formally welcomed as a full MERCOSUR member.
Charge countered that the USG and a large and growing number
of countries oppose the Venezuelan candidacy and hope that
the MERCOSUR members will eventually see the difficulties
that Venezuelan membership would involve.

--------------
WHAT HAPPENED
--------------


4. (C) Leading up to the MERCOSUR summit, the biggest unknown
was whether or not Fidel Castro would show. Despite many
rumors to the contrary, Castro did indeed arrive on the 20th
(ref A),joking that "Even I didn't know if I would attend."
Nearly everything else associated with the summit went
roughly as expected, with Chavez and Castro garnering most of
the press, a predictable "People's (or parallel) Summit" led
by Castro and Chavez, and (other than the inclusion of
Venezuela, and announcing support for Venezuela's UNSC seat
bid) no other decisions of clear import. (The asymmetry
commission and development bank have some potential, but they

BUENOS AIR 00001665 002 OF 003


are only proposals to consider thus far.)


5. (C) Perhaps the only real surprise of the Summit were
events related to Hilda Molina, a Cuban neurosurgeon who has
been denied permission by the Cuban government to visit her
son and grandsons in Argentina. Ambassador Franco admitted
that the issue had clearly impacted quite negatively on the
Argentine/Cuban dynamic, but he said the GOA position on this
issue was clear and had not changed. He added that he did
not know what to expect from Havana in response to a letter
from Kirchner to Castro on the issue.


6. (C) Roberto Quinones told Poloff on July 25 that Kirchner
had insisted on delivering the letter on Molina's behalf to
Castro, threatening to raise the issue in the plenary session
if Castro would not receive it, which reportedly made Castro
angry enough to nearly order his plane to return to Cuba in
mid-flight. This was likely the cause of the evident
coldness between Castro and Kirchner. According to Quinones,
an influential (but unnamed) Argentine leftist also told the
Cuban delegation that he would walk off the stage at the
People's Summit if Castro made any negative remarks about
Kirchner. Castro became visibly angry when, upon his arrival
to the summit, he was asked by a Cuban reporter based in
Miami, "Why don't you release Molina?"

--------------
WHAT TO EXPECT IN THE FUTURE
--------------


7. (C) Among private sector contacts, there was strong
agreement that the inclusion of Venezuela as a full member of
MERCOSUR (NOTE: The BRV will not be a voting member until all
five congresses ratify its accession; so far, only the
Venezuelan has done so. END NOTE) will make the organization
more politically - and less economically - oriented. Daniel
Artana, the director of economic consultant FIEL, told
econoff July 20 that "Kirchner doesn't join with Chavez
because he thinks like him, but because it's convenient" for
Argentina. However, political analyst Rosendo Fraga told
emboffs July 21 that "It won't be easy to say no to Chavez"
and any demands he brings to the table. Felix Pena, Director
of Fundacion BankBoston, complemented this theory, telling
econoff July 25 that MERCOSUR said yes to Venezuela's
accession because "it was easier than saying no" politically,
but thought the act could have been postponed much longer
than the less than a year that it took.


8. (C) However, there is some disagreement over whether
Venezuela's membership will be good for Argentina. Artana
was positive, saying that increased access to Venezuelan
finance and hydrocarbons would help. Fraga noted that Chavez
was now the leader of the region, at least in the short term,
and that he had been "underestimated by the U.S., Brazil, and
now by Argentina." Pena opined that "nobody serious (in the
GOA) is thinking this is good for our country." FIEL
economist Marcela Cristini took a balanced view, telling
econoff July 21 that despite the recent economic growth and
prospects for more, it still felt like Argentina was being
left behind and "losing much of its weight relative to the
region."


9. (C) COMMENT: Mar del Plata this was not - if anything,
there was less anti-U.S. rhetoric than expected rather than
more. What was remarkable about the summit was the degree to
which Argentina and Brazil, the two key protagonists in
MERCOSUR since its founding, played secondary roles at this
summit, while Chavez and Castro dominated. The parallel
People's Summit was less weighty than it could have been, as
Morales didn't attend and Kirchner left Cordoba early, which
has been interpreted as a snub of Chavez and Castro and their
event. As Felix Pena said, "We should be prepared to observe
an even more chaotic MERCOSUR" in the future, one in which
Venezuela will seek "a greater influence in South America."
While Franco described Venezuela's entry into the bloc in
generally neutral terms ("important," can complement
MERCOSUR"),Kirchner and Lula may be realizing that they now

BUENOS AIR 00001665 003 OF 003


have a tiger by the tail, and that containing Chavez will not
be nearly as easy as they once thought.
MATERA