PRESIDENT KIRCHNER DELIVERS STATE OF THE NATION

UNCLAS SECTION 01 OF 03 BUENOS AIRES 000499

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E.O. 12958: N/A
TAGS: ECON EINV ENRG AR
SUBJECT: PRESIDENT KIRCHNER DELIVERS STATE OF THE NATION
ADDRESS


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Summary
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1. (SBU) Kirchner delivered a state of the nation speech to
congress on March 1st. He began the speech by repeating many
of the themes that he has mentioned in earlier speeches, such
as Argentina's continuing struggle to emerge from "hell." He
claimed that Argentina has now entered a process of
"sustained growth," noting that what was once interpreted as
a temporary recovery is now the beginning of a new era of
genuine development. His speech highlighted the proactive
role that the state is expected to play in expanding
productive infrastructure, consolidating economic activity,
creating employment, and increasing demand for goods and
services. The speech also addressed GOA social policies that
seek to promote "inclusion, equality and social justice."
Kirchner's pronouncements on foreign policy issues during the
speech were largely a reinforcement of long-standing
Argentine policy. Kirchner's speech was moderate and
centrist, containing little of his past populist rhetoric.
He avoided speaking about the bilateral relationship with the
U.S., but his strong words of support for counterterrorism,
counternarcotics, and peacekeeping operations indicate that
we can expect continued cooperation in these key policy
areas. End Summary.

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Argentina's Growth is Sustainable
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2. (U) President Nestor Kirchner delivered a State of the
Union speech to the combined houses of Congress on March 1.
The Embassy was represented by the DCM. Kirchner began the
speech by repeating many of the themes that he has utilized
in earlier speeches. He reminded the audience that Argentina
is expending a great effort to overcome the worst crisis in
its history and emerge from hell. He also observed that
Argentina's recurrent crises have gotten in the way of
constructive long-term policies. He then highlighted the
importance of Argentina's having renegotiated its private
debt, noting that 2005 would be remembered as the year in
which Argentina had found a "strategic solution" to the
problem of its foreign debt. This solution would both avoid
more sacrifice for Argentina's people and strengthen the
country's autonomy, Kirchner said.


3. (U) Kirchner claimed that Argentina has now entered into
a process of "sustained growth," noting that what was once
interpreted by analysts as a temporary recovery is now the
beginning of a new era of genuine development that will leave
behind years of persistent decline. He then enumerated the
country's economic achievements: fiscal discipline; debt
reduction; monetary prudence; a trade surplus; increased
reserves; vigorous growth and diversification of exports;
increased productive investment; reversed capital flight;
millions of new jobs; increased purchasing power for salaried
workers; reduced poverty and misery; and improved
distribution of income (see Buenos Aires 419 for Embassy's
take on income distribution). Kirchner then backed up these
accomplishments with numbers, including: 37 consecutive
months of economic growth; a 36 percent increase in GDP since
mid-2002; an increase in the export and import substitution
sectors reaching 36 percent of GDP; a 50 percent growth in
the industrial sector; record grain production of 84 million
tons; a more than 40 percent increase in the construction,
transportation and communications sectors; a noticeable
improvement in the banking sector; an increase in investment
to 21 percent of GDP during the fourth quarter of 2005. He
also highlighted the repayment of Argentina's USD 10 billion

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in IMF debt, a line that brought the loudest applause from
Congress.


4. (U) Kirchner's speech highlighted the proactive role that
the state is expected to play in expanding productive
infrastructure, consolidating economic activity, creating
employment, and increasing demand for goods and services. He
announced that the 2005 budget for public works had increased
by 79 percent over the previous year. Almost half of this
money was spent on housing. The rest was spent on potable
water, hospitals, schools, universities, highways, flood
control, railroads, navigable railways and ports. He also
made mention of the efforts being made to increase the supply
of energy to meet the demands of the rapidly growing economy.
Those efforts include the expansion of power of gas lines,
an increase in the capacity of the Yacyreta Hydroelectric
project, the completion of the Atucha II nuclear power plant,
and the construction of thermal power plants. Almost all of
this investment was initiated or supervised by the
increasingly important Ministry of Planning.


5. (U) The speech also addressed social policies which seek
to promote "inclusion, equality and social justice,"
replacing "the vision that existed in previous decades that
merely provided assistance". These policies include: the
construction of Community Integration Centers to promote the
government's social and health projects; the Family Plan to
support needy families; the Federal Health Plan to promote
primary health care; the Argentine Birth Plan to reduce
infant mortality; the National Sexual Health and Procreation
to reduce adolescent birth; the National Medicine Policy to
promote the use of generic medicine, and the National AIDS
Plan to provide free medicine to AIDS patients. Kirchner
also highlighted the construction of new schools, an increase
in the number of scholarships for poor children,
back-to-school programs, literacy programs, and the recently
approved Education Finance Law, which seeks to increase
government spending on education to 6 percent of GDP by 2010.


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Foreign Policy Issues
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6. (U) Kirchner's pronouncements on foreign policy issues
during the speech were largely a reinforcement of
long-standing Argentine policy. He reaffirmed the GOA's
commitment to fight against terrorism and narcotrafficking.
Kirchner noted Argentina's ongoing efforts to support
peacekeeping operations and to promote the respect for human
rights in the region. Kirchner also voiced his support for
the peaceful use of nuclear energy. Kirchner's only
extensive comments on Argentine relations with another
country came when he called on his Uruguayan counterpart to
institute a 90-day halt in the construction of two
controversial paper mills in order to allow time for a
technical commission to evaluate the plants' environmental
impact (See Reftel Buenos Aires 486 for more on the paper
plant dispute). (Comment: Local press reports from March 2
indicated that Uruguayan Vice-President Rodolfo Nin Novoa
rejected Kichner's request as "impertinent." However, on
March 3 the local press quoted Uruaguay's Vice Foreign
Minister Belela Herrera as saying that Uruguayan President
Tabare Vasquez "was moved by Kirchner's words, including his
appeal to dialogue and brotherhood." End Comment).

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Comment
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7. (SBU) President Kirchner's speech was moderate and

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centrist, containing little of his past populist rhetoric.
The discourse broke little new ground and largely was a
technical summary -- delivered in a dry monotone -- of the
Kirchner administration's achievements in bringing Argentina
out of the severe political and economic crisis of 2001-2002.
Argentina's recovery over the past three years is indeed
impressive and Kirchner utilized scores of figures to
document his government's accomplishments. Kirchner avoided
speaking directly about the U.S.- Argentina bilateral
relationship, but his strong words of support for
counterterrorism, counternarcotics, and peacekeeping
operations indicate that we can expect continued cooperation
with the GOA in these key policy areas. End Comment.


8. (U) To see more Buenos Aires reporting, visit our
classified website at:
http://www.state.sgov.gov/p/wha/buenosaires.< /a>
GUTIERREZ