K VERGUENZA: KIRCHNER-CONTROLLED CONGRESS PASSES

C O N F I D E N T I A L SECTION 01 OF 02 BUENOS AIRES 001732 SIPDIS SIPDIS STATE FOR WHA TOM SHANNON, JOHN MAISTO, AND CHARLES SHAPIRO NSC FOR DAN FISK TREASURY FOR DAS NANCY LEE USCINCSO FOR POLAD E.O. 12958: DECL: 08/03/2016 TAGS: PGOV PHUM PREL AR SUBJECT: K VERGUENZA: KIRCHNER-CONTROLLED CONGRESS PASSES SUPERPODERES BILL REF: A. BUENOS AIRES 01594 ¶B. BUENOS AIRES 00293 Classified By: CDA, a.i., Michael Matera, Reasons 1.4(b) and (d) ¶1. (SBU) SUMMARY: On August 2, the Lower House of the Argentine Congress approved a controversial bill granting the Casa Rosada permanent special powers to modify the federal budget without the approval of Congress. The bill passed the Senate three weeks earlier. Congress authorized these special budgetary powers on a year-by-year basis during the economic crisis and its aftermath between 2001 and 2005, but the new bill would make these powers permanent. Political opposition leaders strongly opposed the bill, but with the help of the ex-Duhaldista bloc and defecting Radical Civic Union (UCR) members, Kirchner's supporters easily won the vote. END SUMMARY. ¶2. (SBU) On August 2, the Lower House of the Argentine Congress approved a controversial bill granting the Casa Rosada permanent special powers to modify the federal budget without the approval of Congress. The bill passed the Senate three weeks earlier. The new law specifically will permit Cabinet Chief Alberto Fernandez to move funds around within five key areas of the budget: government administration, security and defense (with the exception of the national intelligence service SIDE),social services, economic services, and public debt interest. Furthermore, the Cabinet Chief will be able to alter the percentage of the budget devoted to current expenditures and capital investments. ¶3. (SBU) Congress authorized these special budgetary powers on a year-by-year basis during the economic crisis and its aftermath between 2001 and 2005, but the new bill would make these powers permanent. The Casa Rosada did not request the special budgetary powers in the 2006 budget, approved before Kirchner effectively won control of Congress in the October 2005 legislative elections, because of opposition in Congress. (See Reftel A for more on Kirchner's recent actions in Congress.) ¶4. (SBU) Leaders from the political opposition strongly opposed the bill, but with the help of the ex-Duhaldista bloc and defecting UCR members, Kirchner's supporters easily won �0A;the vote. President Kirchner argued that the special powers are ""necessary instruments to be able to govern and carry Argentina forward."" Kirchner's allies in Congress criticized UCR congressmen opposed to the current bill that voted in 2001 to grant then Minister of the Economy Domingo Cavallo, part of a UCR-led government, these same powers. (Note: Cristina Kirchner, then a Lower House Member from Santa Cruz, vehemently opposed the granting of special budgetary powers to Minister Cavallo in 2001. End Note.) UCR President Roberto Iglesias countered, ""It would be irrational to think that rules in force during a moment of hyperinflation would be applied today, when there is a surplus."" Affirmation for an Egalitarian Republic (ARI) expressed her opposition in stronger terms, arguing that the bill represented, ""the death of the Republic."" ARI and Mauricio Macri's Republican Proposal (PRO) are considering taking legal action against the bill, but legal consultants argue that the chances of a successful legal challenge are remote. -------------- COMMENT -------------- ¶5. (C) Together with the recently passed law that legitimates the President's arbitrary use of presidential decrees, Kirchner has essentially stripped the Argentine Congress of its control over the budget. Kirchner's additional powers will undoubtedly be useful next year during the presidential election campaign. Kirchner's budgetary control and other recent actions, such as the Council of Magistrates reform that strengthened the Casa Rosada's control over the judiciary (See Reftel B),have brought presidential authority in Argentina to its highest level BUENOS AIR 00001732 002 OF 002 since the return of democracy in 1983. All hope that Kirchner would pursue more moderate policies after winning the mandate in last year's congressional elections that was denied him when former President Carlos Menem dropped out of the second round presidential race in 2003 is gone. ¶6. (C) However, Kirchner is not the only one to blame for the poor condition of Argentina's institutional democracy, as the opposition once again demonstrated its disunity and complete lack of power. Not only did several members of the opposition UCR vote for the bill, but unlike during the debate over the Council of Magistrates reform, the opposition leaders could not even manage to organize a group photo-op. Both ARI and PRO leaders talked about taking the issue to the courts, but could not agree on a joint legal effort. The opposition will need to work more closely together in order to prevent further erosion of Argentina's democratic institutions and avoid their relegation to political irrelevance. END COMMENT. MATERA