ARGENTINA: RICARDO LOPEZ MURPHY ON THE ECONOMY,

C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 000857 SIPDIS SIPDIS STATE FOR AMBASSADORS TOM SHANNON, JOHN MAISTO, AND CHARLES SHAPIRO NSC FOR DAN FISK TREASURY FOR DAS NANCY LEE USCINCSO FOR POLAD E.O. 12958: DECL: 04/13/2016 TAGS: PGOV PHUM PREL AR SUBJECT: ARGENTINA: RICARDO LOPEZ MURPHY ON THE ECONOMY, KIRCHNER, AND HIS POLITICAL FUTURE REF: 05 BUENOS AIRES 01260 Classified By: CDA, a.i., Hugo Llorens, Reasons 1.4(b) and (d). ¶1. (C) Summary: On March 12, the Charge and Poloff (notetaker) met with opposition Recrear Party leader Ricardo Lopez Murphy that included a wide-ranging discussion on the state of the country and the opposition, President Nestor Kirchner, and Lopez Murphy's future plans. Lopez Murphy was critical of the GOA's economic policies, but acknowledged that Argentina's external economic environment was favorable and that the mistakes that President Kirchner was making would not cause a serious economic downturn until at least ¶2008. Lopez Murphy was downbeat on the state of the opposition and said that Kirchner would easily win reelection in 2007. Lopez Murphy was critical of Kirchner's double discourse with key international actors, like the IMF and the U.S., but said that this was one of Kirchner's most successful methods. ¶2. (C) Summary continued: When asked about his own political future, Lopez Murphy said that he would run for Congress in 2007, probably in the province of Buenos Aires. Lopez Murphy admitted he made a mistake running for Senate in Buenos Aires province last October, but said that he thought he would have more resources and more support from those opposed to First Lady Cristina Kirchner's candidacy. He said he would support a presidential bid by PRO's Mauricio Macri, but would oppose any presidential ticket that included Neuquen Governor Jorge Sobisch. Lopez Murphy noted that his relations with Affirmation for an Egalitarian Republic (ARI) leader Elisa Carrio and Radical Civic Union (UCR) leader Roberto Iglesias have improved, indicating a possible trend towards greater cooperation between the UCR and its two most prominent former members. Lopez Murphy vowed to continue the fight to create a viable opposition, even if he is not successful personally. End Summary. -------------- The Best and Worst of Times -------------- ¶3. (C) On March 12, the Charge and Poloff (notetaker) met with opposition leader Ricardo Lopez Murphy, at Lopez Murphy's request, for coffee at the Charge's residence. The conversation included a wide-ranging discussion on the state of the country and the opposition, President Nestor Kirchner, and Lopez Murphy's future plans. Lopez Murphy, a former Minister of the Economy, said that he had never seen a better external economic situation for Argentina, but described the organization of the Argentine economy as the "worst I have ever known." Lopez Murphy criticized GOA policies, such as the beef export ban, mishandling of the Uruguay paper mill crisis, and price controls that make investment in the energy sector unprofitable. He also was critical of the business community's passivity, refusing to stand up to the GOA and insist on more business-friendly economic policies. Despite his criticism of the GOA's economic policies, Lopez Murphy did not think that the economy would run into serious trouble before 2008. He also predicted a devaluation of the U.S. dollar over the long term to correct the U.S. current account deficit that would also help Argentina's economy. ¶4. (C) Regarding the political opposition, Lopez Murphy was downbeat about their prospects in the short to medium term, characterizing the opposition as weak, divided, and under funded. Lopez Murphy lamented that the environment in Latin America was not good for neoliberal political leaders like himself. "All of my friends lost in recent elections. I supported Quiroga in Bolivia, Flores in Peru, and I lost here last October." Lopez Murphy noted that the message of a limited government is not popular now in Latin America and that politicians advocating populist, interventionist polices are on the rise. -------------- Kirchner Strong, With Room to Maneuver BUENOS AIR 00000857 002 OF 003 -------------- ¶5. (C) Lopez Murphy said that President Kirchner was in a strong position, with little to prevent him from winning reelection in 2007. He thought that the growing economy, the weak opposition, Kirchner's control of the media and enormous funding resources made Kirchner unbeatable. Lopez Murphy said that Kirchner currently has no limits on his power. The Charge responding by saying that one of Argentina's main problems is weak institutions, which results in a lack of controls over presidential authority. The Charge said that the lack of a healthy opposition was not good for Argentina, or even for President Kirchner. The Charge noted that Kirchner is more susceptible to making errors without the moderating influence of an active opposition. ¶6. (C) While acknowledging the success of the tactic, Lopez Murphy castigated Kirchner's double discourse of appearing tough in public against groups like the IMF, the U.S. and the business community, but making deals with them in private. For example, he noted Kirchner's tough rhetoric against the IMF, while all the while he faithfully made payments to the IMF and eventually paid off the debt in full. Part of Kirchner's method of success, Lopez Murphy opined, is his ability to maintain his populist discourse while quietly making the right decisions on key issues in the international arena to keep important countries on his side. For example, President Kirchner has maintained good cooperation with the U.S. on counterproliferation, counternarcotics, and counterterrorism behind the scenes, even though Kirchner publicly criticized the U.S. at the Summit of the Americas. Lopez Murphy said that Kirchner purposely keeps this type of cooperation out of the public eye -- like the GOA's cooperation with the U.S. on Iran in the UN Security Council -- so as to not to affect his support among the Argentine people. -------------- Murphy Upholds Ideals, Eyes Congressional Run -------------- ¶7. (C) When asked about his plans for the future, Lopez Murphy said he would run for Congress in 2007, preferably in the province of Buenos Aires. However, he did not rule out a run in the Capital if he has no option to run in Buenos Aires province. His goal, he said, is to survive during this difficult stage for the opposition and build for the future. "I will fight, even if I remain alone." Lopez Murphy jokingly compared his situation to the defenders of the Alamo, saying that like them, he has decided to fight to the last breath, regardless of the cost. ¶8. (C) Lopez Murphy admitted he made a poor decision in choosing to compete in Buenos Aires province for Senate last October. "I thought I would have more resources and that those who wanted to oppose the First Lady (Christina Kirchner) would rally around me. I was wrong." Lopez Murphy said that at least he was able to avoid Macri's pressure to join forces with the Duhaldes, thus preserving his reputation as being free of corruption. He said that he incurred a lot of debts -- roughly USD $500,000 -- from his election campaign that he is not able to pay, leaving him with no access to credit to support another election campaign. "However, I have an austere lifestyle. With very little resources, I can continue to speak. I do not need a lot of money to run for Congress." ¶9. (C) Turning to a discussion of the future of Propuesta Republica (PRO) and his alliance with Mauricio Macri, Lopez Murphy said that he would support Macri's bid for President, but would oppose any ticket that included Neuquen Governor Jorge Sobisch. Lopez Murphy said that there was no possibility of reconciliation between him and Sobisch. He criticized Sobisch's recent reform of the Neuquen Constitution as a sham designed to allow him to award contracts without a bidding process. He also criticized the Neuquen Governor for appointing 20 judges outside of the BUENOS AIR 00000857 003 OF 003 Council of Magistrates process required by the provincial constitution. Lopez Murphy noted that if he opposes Sobisch in 2007, Kirchner would give Lopez Murphy as much media attention as possible in order to do damage to Sobisch. (Comment: On a previous occasion, Lopez Murphy told the Ambassador, Pol Couns and Poloff that his conflict with Governor Sobisch first began during the 2003 presidential race when Sobisch tried to bribe top leaders in Recrear around Lopez Murphy in order to secure the Vice Presidential spot on Recrear's presidential ticket. Lopez Murphy found out about the effort and cut off all contact with Sobisch. Sobisch was later caught on tape attempting to bribe a Recrear provincial legislator in Neuquen, which further soured relations between the two men. See Reftel. End Comment.) ¶10. (C) Looking towards the future, Lopez Murphy said that for the first time in many years he had good relations with Affirmation for an Egalitarian Republic (ARI) leader Elisa Carrio. "Now that we are both in a difficult situation, we can talk." Lopez Murphy also noted that he maintained a good dialogue with Radical Civic Union (UCR) leader Roberto Iglesias. (Comment: Lopez Murphy's comments sync with predictions that some Pol contacts in PRO and ARI have recently made to Poloff -- that Lopez Murphy would leave PRO and form and alliance with ARI and the UCR. End Comment.) Lopez Murphy said he thought it would take a long time to develop a real opposition, but that over time, conditions may become more favorable to the opposition. Lopez Murphy said that he was in favor of a broad opposition coalition to balance Kirchner's preponderant power, but lamented that many in the opposition lacked the fortitude to do this. The Charge closed the conversation by saying that he thought Lopez Murphy had a important role to play in Argentine politics as a man regarded by everyone as honorable, who is seeking to provide constructive opposition. The Charge encouraged Lopez Murphy to continue his valuable efforts for Argentine democracy. -------------- Comment -------------- ¶11. (C) Ricardo Lopez Murphy was clearly humbled by his fifth place showing in the October legislative elections. His poor performance in the 2005 elections makes a 2007 presidential bid out of the question, something that Lopez Murphy seems to realize. At the same time, he is someone that is held in high esteem both within the opposition and the GOA for his principled, corruption-free reputation. Lopez Murphy vows to keep up his struggle, despite the obstacles. Lopez Murphy has proven his value to the Argentine political system, and his determination to adhere to his values at all cost is admirable. However, since his third place showing in the 2003 presidential elections, he has not demonstrated his skills as a politician. His fixation on running in Buenos Aires province instead of the Capital could lead him, under the best of scenarios, to enter Congress in 2007 as a minority diputado far down the Buenos Aires provincial electoral list, instead of a chance to be first Senator for the Capital, where he continues to enjoy popular support. Also, if Lopez Murphy breaks with PRO, it will deprive him of badly needed funding. Regardless of Lopez Murphy's political decisions, he is likely to continue to play a constructive role in Argentine politics for many years to come. LLORENS