ARGENTINA POLITICAL ROUNDUP

UNCLAS SECTION 01 OF 04 BUENOS AIRES 000407

SIPDIS

SENSITIVE

STATE FOR WHA/BSC, WHA/EPSC, AND INR/R,
NSC FOR NILMINI GUNARATNE, AND DEL RENIGAR
TREASURY FO A/S QUARLES, DAS LEE, DAVID DRYSDALE, RAMIN
USDOC FOR ALEXANDER PEACHER
SOUTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: PGOV PREL AR
SUBJECT: ARGENTINA POLITICAL ROUNDUP

REF: BUENOS AIRES 346


1. (U) Reftels and other Mission reporting available at
http://www.state.sgov.gov/p/wha/buenosaires


2. (U) TABLE OF CONTENTS:
-- Ambassador Meets with New MFA International Security
Director
-- Rumors of Kirchner Cabinet Changes
-- Paper Mill Dispute: Blockage of Bridges into Uruguay
Continues, Expands
-- Santa Cruz Labor Conflict Calmer but Continues
-- Meeting with Kirchner Insider

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AMBASSADOR MEETS WITH NEW MFA INTERNATIONAL SECURITY DIRECTOR
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3. (U) The Ambassador hosted a lunch February 15 for the
MFA,s new Director of International Security, Ambassador
Elsa Kelly, (who recently served as Argentina,s
representative to the IAEA in Vienna),and members of Kelly's
staff. Kelly is a long-time, experienced diplomat who
briefly served as Deputy Foreign Minister under President
Raul Alfonsin. Her office covers all of the major security
issues (except for counter-terrorism),including military
deployments and exercises, peacekeeping, nonproliferation,
and nuclear energy cooperation. The Ambassador highlighted
our interests in these areas such as Iran, Haiti, the
Additional Protocol, the Proliferation Security Initiative
(PSI),the Megaports Initiative, peacekeeping operations, and
joint military exercises. On PSI, Kelly said the GOA would
like to send a delegation to the April 11-12 Operational
Experts Group meeting in Miami. (Reported septel.)

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MEETING WITH KIRCHNER INSIDER
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4. (SBU) On February 17, the DCM and Poloff paid a courtesy
call on new Deputy Secretary of the Presidency and long-time
Kirchner associate Daniel Varizat. The DCM began by
highlighting the importance the U.S. places on the bilateral
relationship and took the opportunity to emphasize some of
the policy agenda items for 2006: the UN Security Council,
Venezuela, Bolivia, and Haiti. Varizat for his part said
that the GOA also values the bilateral relationship and that
Argentina was not opposed to U.S. leadership as long as it
also benefited the region.


5. (SBU) Varizat said Kirchner would be focused on the
economy in the coming year -- ensuring equitable economic
growth, lower unemployment, and keeping inflation in check.
Varizat said Kirchner was trying to get as much as possible
out of the GOA's current economic model -- building up
reserves, keeping a competitive exchanges rate, and
maintaining a budget surplus. Varizat said Kirchner would be
willing to change this model if the costs started to outweigh
the benefits. He said that their biggest long-term concern
is Argentina's energy shortage. To solve this problem,
Varizat said Argentina is looking to Venezuela and Bolivia.
Varizat acknowledged Bolivia under Morales was a question
mark for the GOA, although he said they remained in a
wait-and-see role, hopeful that Morales will make the right
decisions for Bolivia and the region. Comment: Varizat
struck us as a practical individual, someone we can work
with, but also someone who is completely loyal to Kirchner.
End Comment.


6. (SBU) Bio Note: Varizat was a National Deputy in Congress
before taking his current position, vacated by Carlos Kunkel
when Kunkel accepted his seat in Congress last December.
Varizat has a relationship with Kirchner that stretches back
decades, even before Kirchner entered politics. When
Kirchner was first elected Mayor of Rio Gallegos in 1987, he
appointed Varizat as his Director General of Public Works and
Urbanization. He was later appointed in 1991 as the Under
Secretary of the Ministry of Interior of Santa Cruz Province.

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Between 1995 and 1997, he served as Santa Cruz's Minister of
Government. Varizat was elected to the National Senate in
1997, completing his term in 2001. He became a National
Deputy in 2003, when he took current Santa Cruz Governor
Sergio Acevedo's congressional seat when Acevedo became the
head of the Secretariat of State Intelligence (SIDE).

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RUMORS OF KIRCHNER CABINET CHANGES
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7. (SBU) The Argentine press and political analyst circles
have been rife with rumors in the past few weeks that
President Kirchner is about to initiate a new round of
changes to his cabinet. A leading political analyst, quoting
sources in the Casa Rosada, recently told Poloff that Cabinet
Chief Alberto Fernandez and Labor Minister Carlos Tomada will
be replaced. Deputy Secretary of the Presidency Daniel
Varizat was named by this source as the likely replacement
for Alberto Fernandez. (Note: Pagina 12, a daily with close
ties to the administration, reported recently that Technical
and Legal Secretary Carlos Zannini would likely be the new
Cabinet Chief. End Note.) Anibal Fernandez was named by the
source as the likely replacement for Tomada (who would
reportedly be named the Ambassador to Chile),with Secretary
for the Presidency Oscar Parrilli moving over to take the
helm at the Interior Ministry. The timeframe for the cabinet
changes is rumored to be sometime in March.


8. (SBU) Kirchner insiders have confirmed Alberto Fernandez's
difficult situation, but are guarded on whether the cabinet
changes will actually occur. Kirchner's leading finance
advisor, Luis Corsiglia, told Econ Couns, Econoff, and Poloff
on February 15 that Alberto Fernandez was being blamed for
the GOA's poor showing in the Capital in the October
elections and has gotten himself into a conflict with
Planning Minister Julio De Vido. According to Corsiglia, the
conflict with De Vido stemmed from Fernandez's recent trip to
Spain with First Lady and Senator Cristina Kirchner, which De
Vido saw as Fernandez stepping on his territory. Varizat
told the DCM and Poloff on February 17 that he did not
foresee cabinet changes in the short-term, although he
acknowledged that Kirchner can be guarded, and therefore
difficult to read, on issues of this nature. Varizat said
that Kirchner does not like to make changes to his set of top
advisors.


9. (SBU) Comment: The Buenos Aires rumor mill is always
active and many times these rumors do not come to fruition,
at least in the way in which they were predicted. Kirchner
manages key issues like the composition of his cabinet
personally and whether there will, in fact, be personnel
changes, and who will end up where may be decided days or
even hours before the announcement is made. End Comment.

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PAPER MILL DISPUTE: BLOCKAGE OF BRIDGES INTO URUGUAY
CONTINUES, EXPANDS
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10. (U) Tensions between Argentina and Uruguay remain high as
Argentines residing opposite the proposed location of two
Uruguayan paper mills continue high-profile roadblocks on two
of the three bridges connecting Uruguay with the Argentine
province of Entre Rios. Local residents, aided by Green
Peace activists, had been holding on-again off-again
roadblocks of the main bridges connecting the two countries
for several months to protest the potential environmental
impact of the proposed Uruguayan mills to the Uruguay river.
In a move to raise the profile of the protest during the high
tourism season, the protesters recently launched a
24-hour-a-day roadblock on the most heavily utilized bridge
connecting the Argentine city of Gualeguaychu and the
Uruguayan city of Fray Bentos. A Gualeguaychu citizens group
has voted to continue the roadblock 13 straight days,
angering Argentines trying to reach their annual summer
holiday beach resorts in Uruguay and prompting growing
criticism from the GOU. On February 16, a citizens group
from the Argentine City of Colon announced that they would
join the protest and commenced a 24-hour a day roadblock of
the second most heavily utilized bridge between the countries.


11. (U) The GOA originally supported the right of the
protestors to block the bridges, but recently has announced
its intention of taking the GOU to the World Court to prevent
construction of the plants. The GOA has urged the protestors
to stop forms of protest that could hurt the Argentine case
before the World Court, but to date has shown no willingness
to step in and open the bridges. The GOA,s stance toward
the protestors is in line with the non-confrontational
policies President Kirchner has taken toward most forms of
social protest since taking office in 2004. There is no
indication that Kirchner will stop the protests, or take any
action other than threatening to refer the issue to the World
Court.


12. (U) GOU officials have increasingly been quoted in the
Argentine press regarding the GOU,s right to construct the
plants and the economic impact of the roadblocks on a
Uruguayan tourism industry that depends on the annual
pilgrimage of thousands of Argentine sun worshipers.
Recently, GOU officials have stepped up complaints regarding
the roadblocks, threatening to refer the issue to MERCOSUR if
the GOA takes the issue to the World Court. One GOU official
reportedly told the Argentine press that the very real
economic impact of the roadblocks to protest possible
environmental damage was akin to an old Argentine tango song
about a man who beat his wife because she may cheat on him
sometime in the future.


13. (SBU) The possible scope of the environmental impact of
the plants is a matter of debate, but their unpopularity with
a vocal segment of the Argentine population and the
significant potential economic benefit the plants will
provide to Uruguay are both beyond question, making this a
highly intractable dispute that will probably not be resolved
in the short-term. Deputy Foreign Minister Garcia Moritan
opined to the Ambassador that the GOA saw no short-term fix
to the problem and that relations would get worse before they
got better. Judging by the fact that the Gualeguaychu
protesters recently constructed a traditional outdoor
barbeque called a quincho at the site of the protest
indicates that they share that opinion.

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SANTA CRUZ LABOR CONFLICT CALMER BUT CONTINUES
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14. (U) The Santa Cruz Province roadblocks and strikes by
oil workers, which ultimately resulted in the death of a
police officer (REFTEL),have stopped, but negotiations
between the workers and oil companies have had limited
success. Workers claim that YPF Repsol has not held up its
end of the bargain. Part of the negotiated respite called
for YPF Repsol to pay the workers 50 percent of their wages
lost during the 18-day strike; the workers now declare they
will settle for no less than 100 percent. There have been no
arrests in the death of the policeman to date and the
investigating judge is avoiding making any predictions saying
only that they are still working on reconstructing the
sequence of events.


15. (U) The Santa Cruz event has, however, precipitated
action in Buenos Aires on the strikers' demand that the
income tax threshold be raised. The Economy Ministry this
week presented the Casa Rosada with several options on
raising the floor at which salaries are taxed, though no
definitive decisions have been made. Minister of Federal
Planning Julio De Vido met February 15 with Hugo Moyano,
Secretary General of the CGT labor federation and head of the

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Teamsters union, and several provincial oil worker union
representatives to discuss the issues and reportedly to
request restraint on wage demands.


16. (U) Numerous unions, several in key areas of the
economy, will be renegotiating annual contracts beginning in
March. It appears to be a given that wages in the formal and
unionized sectors of the economy will rise. The GOA, ever
fearful of growing inflation levels, wants to keep
expectations and increases to a minimum and wants to avoid
events like Las Heras in Santa Cruz from jeopardizing the
upcoming labor negotiations and tainting discussions with
unions in other industries that appear willing to work with
the GOA to keep the wage-demand-price cycle under control.


17. (U) Finally, in another union/piquetero-friendly move by
the government, Luis D,Ela was appointed to the
newly-created Subsecretary of Land for the Social Habitat,
assisting the Secretary of Public Works. D,Ela is a former
Buenos Aires City legislator and is the leader of the
pro-Kirchner piquetero group FTV (Earth and Housing
Federation). D'Elia was an early supporter of the
presidential candidacy of the then-obscure governor from
Santa Cruz, Nestor Kirchner. D'Elia gained notoriety in June
2004 when he led the FTV in a takeover of a police station in
Buenos Aires -- much like the takeover in Las Heras -- but
without the fatal outcome. D'Elia and other pro-K piquetero
leaders were instrumental in mobilizing pro-Cristina Kirchner
crowds for campaign events. He is the latest in a succession
of piquetero leaders to be appointed to federal or provincial
government ministries.
GUTIERREZ