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.

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The Best and Worst of Times
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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.

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Kirchner Strong, With Room to Maneuver

BUENOS AIR 00000857 002 OF 003


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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.

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Murphy Upholds Ideals, Eyes Congressional Run
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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.

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Comment
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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