TRAVEL NOTES: ARGENTINA'S NEUQUEN PROVINCE

UNCLAS SECTION 01 OF 03 BUENOS AIRES 000911

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PHUM PREL AR
SUBJECT: TRAVEL NOTES: ARGENTINA'S NEUQUEN PROVINCE

REF: BUENOS AIRES 00857


1. (SBU) SUMMARY: In March, Poloff traveled to the province
of Neuquen to meet with political and academic leaders and
has subsequently met with a number of national legislators
from Neuquen. Neuquen Governor Jorge Sobisch is currently
the only declared candidate for the 2007 presidential
elections, and Neuquen has Argentina's most important
reserves of petroleum and natural gas. Governor Sobisch is
generally praised, both within and outside of his Popular
Neuquino Movement (MPN),as having been a good governor,
although the opposition criticizes his use of public funds,
interference in the judiciary, and alleged lack of respect
for the freedom of the press. Governor Sobisch faces an
uphill battle for the presidency in 2007, with President
Kirchner riding high in the polls and Sobisch facing low name
recognition and high negatives in opinion polls. Despite
Neuquen's independence from the national government's purse
strings, President Kirchner is finding other ways to put
pressure on his potential rival, such as by encouraging labor
unrest in the province. Neuquen is a rich province, but many
worry that the province is not planning for the future when
the oil and gas reserves are exhausted. END SUMMARY.


2. (SBU) In March, Poloff traveled to the province of
Neuquen to meet with political and academic leaders and has
subsequently met with a number of national legislators from
Neuquen in order to get a better understanding of this
economically, and increasingly politically important
province. Neuquen Governor Jorge Sobisch is currently the
only declared candidate for the 2007 presidential elections,
and Neuquen has Argentina's most important reserves of
petroleum and natural gas.


3. (SBU) Background: Neuquen has been governed for more than
four decades by the Popular Neuquino Movement (MPN) Party, an
offshoot of Peronism founded in 1961 when the Peronist Party
(PJ) was banned by the Argentine military. Governor Sobisch
is the current leader of the MPN and is in his third term as
Governor of Neuquen. Sobisch is running for President in
2007 and is aligned with Commitment for Change (CPC) leader
Mauricio Macri in the center-right Republican Proposal (PRO)
coalition, although Sobisch has been engaged in a war of
words with the third leader of PRO, Recrear's Ricardo Lopez
Murphy. Governor Sobisch is facing a challenge from within
his party by his former Vice Governor, Jorge Sapag, who is
the most prominent member of the family dynasty that founded
the MPN. Governor Sobisch has a reputation of being the
Argentine Governor that is most independent from the national
government, with Neuquen's sizable oil and gas royalties
limiting the province's dependence on national
co-participation funds that the GOA routinely manipulates to
keep the provincial governors in line.


4. (SBU) Governor Sobisch is generally praised, both within
and outside of the MPN, as having been a good governor,
although the political opposition is quick to point to
corruption allegations regarding Sobisch's use of public
funds and interference in the justice system. Radical Civic
Union (UCR) provincial legislator Marcelo Inaudi told Poloff,
"Sobisch has done a lot of good as governor, particularly in
his first term. There are some real questions, however,
about where the public funds have gone. For example, Neuquen
received USD $600 million from the YPF privatization in the
1990s and other than a gymnasium and a highway, there is no
evidence of what Sobisch did with the money." Federal Judge
Dr. Antonio Labate, a member of the PJ, told Poloff that
Neuquen has one of the best health care systems in Argentina
and one of the highest levels of spending on education in
Argentina, but criticized Governor Sobisch for mismanaging
public works funding and for interfering in the provincial
judicial system to stop cases that are against the provincial
government's interests. However, Graciela Carrion de
Chrestia, the MPN chief of staff of the provincial
legislature, told Poloff that Governor Sobisch has a better
track record of governance than President Kirchner had
governing the similar province of Santa Cruz.


5. (SBU) Governor Sobisch generally receives mixed reviews
regarding his respect for freedom of the press. Journalist
Daniel Darrieux of Fundacion Atlas and the local radio
station FM 104.7 told Poloff that the Sobisch government does
interfere with the press, but "we can still speak." He said

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the circulation-leading daily, Rio Negro, is adamantly
anti-Sobisch, while the second most important daily, La
Manana, is pro-Sobisch. Darrieux explained that Sobisch has
never made a move to prevent Rio Negro from publishing, but
like the national government, he spends all of the official
advertising funds on those media outlets that print favorable
stories. Fabiana Trinciante, the Press Secretary for the
Neuquen legislature and staunch MPN member, told Poloff that
Governor Sobisch's only problem with the press is with the
Rio Negro newspaper. Trinciante said that Rio Negro is
aligned politically with the UCR Mayor of Neuquen city and
aspirant to become Neuquen's next Governor, Horacio Quiroga.
Trinciante said that the conflict with Rio Negro began when
the newspaper "set up" Governor Sobisch by planting a hidden
camera that "purportedly" caught Governor Sobisch attempting
to bribe a provincial legislator, Recrear's Jorge Taylor, in

2002.


6. (SBU) Governor Sobisch faces an uphill battle for the
presidency in 2007, with President Kirchner riding high in
the polls and Sobisch facing low name recognition and high
negatives in opinion polls. Leading Argentine pollsters have
told Poloff that a majority of Argentines have never heard of
Sobisch, and a majority of those who have heard of him, have
a negative opinion of him. Sobisch lacks a national
structure to facilitate a presidential run, although he has
tried to build a network in Buenos Aires province through his
Movimiento de Las Provincias Unidas headed by Mauricio Silva.
Silva told Pol Couns and Poloff that they are developing a
structure that he said will be able to propel Governor
Sobisch into the presidency next year. However, Sobisch
faces conflict from within PRO, both with Lopez Murphy
stemming from the earlier bribery scandal and potentially
from Mauricio Macri, should Macri also decide to run for
President in 2007. National congressman for MPN and Sobisch
ally, Jorge Brillo, told Poloff that they have good
cooperation with Recrear's national congressmen, despite the
conflict with Lopez Murphy, and predicted the alliance would
hold together. However, Lopez Murphy recently told the DCM
and Poloff that he would never support a presidential ticket
that included Sobisch (Reftel).


7. (SBU) Despite Neuquen's independence from the national
government's purse strings, President Kirchner is finding
other ways to put pressure on his potential rival. Several
contacts in Neuquen pointed out to Poloff that the provincial
government receives roughly USD $1 billion in annual revenue
from the oil and gas royalties. The energy windfall allows
Governor Sobisch a measure of independence from the national
government, much as was the case for Nestor Kirchner when he
was Governor of oil-rich Santa Cruz province. Neuquen
suffered a serious teacher strike February through March that
included the blocking of the main provincial roads to the oil
and gas fields, as well as major tourist centers. Many in
Neuquen argued that Jorge Sapag and President Kirchner were
behind the strike as a means of putting pressure on Governor
Sobisch and damaging his reputation as a good manager of the
province. Comahue University Director Dr. Maria Colantuono
told Poloff that the main motivation for the teachers strike
was political. "It started out as a salary dispute, but
really has become political. The Neuquen teachers are
already some of the highest paid in the country. The oil
workers union boss, Guillermo Pereyra, is a aligned with
Jorge Sapag and President Kirchner and him are supporting the
teacher's strike." MPN provincial legislator Christina
Storioni told Poloff that she was working day and night
trying to solve the dispute, but that the teachers would not
agree to lift the roadblocks despite Governor Sobisch's offer
of a 40 percent increase in pay. NOTE: The strike was
finally settled at the beginning of April when Governor
Sobisch acceded to the teacher's union demand that the 40
percent pay raise would entirely apply to their base pay, and
thus also to their retirement. Sobisch's previous offer only
had part of the pay raise applying to base pay. With the pay
raise, Neuquen's teachers are now the highest paid in the
Argentina. END NOTE.


8. (SBU) Neuquen is a rich province, but many worry that
the province is not planning for the future when the oil and
gas reserves will be exhausted. Daniel Darrieux told Poloff
that Neuquen produces 45 percent of Argentina's natural gas
and 28 percent of its petroleum. Despite this, he argued,
Neuquen still has 38 percent of the population living in

BUENOS AIR 00000911 003 OF 003


poverty. "We only have 12 to 15 years of proven reserves and
we should be using this money to invest in alternative
industries. After the oil and gas are gone, then what?"
Neuquen is also an important producer of fruit, particularly
pears and apples. Dr. Labate complained to Poloff that a
large percentage of the fruit crop is wasted every year
because poor infrastructure makes it expensive to export
fruit that is not consumed by the local market.


9. (SBU) COMMENT: Governor Sobisch is currently the only
declared presidential candidate and likely will be the
standard bearer of the center-right in the presidential
contest next year if Mauricio Macri decides not to run for
president. Despite the similar backgrounds of Sobisch and
Kirchner, Sobisch faces a much more difficult path to the
presidency than Kirchner, who benefited from President
Duhalde's support and a good portion of the PJ political
machine behind him. Governor Sobisch is the one Governor
President Kirchner has not been able to co-opt and has
instead developed into an adversary. Ironically, Sobisch and
Kirchner were strong allies in the mid-to-late 1990s as they
both struggled with then President Carlos Menem for more
coparticipation funds and greater independence.


10. (SBU) COMMENT CONTINUED: Sobisch has been much
criticized for his authoritarian tendencies, but Neuquen's
recent reform of the provincial constitution that included
prohibiting the reelection of the Governor stands in contrast
to constitutional reforms elsewhere in Argentina that were
instigated by sitting Governors primarily as a means to
enable their reelection, such as the recent constitutional
reform in Tucuman. Governor Sobisch touts his pro-business
credentials and his allies have repeatedly told Emboffs that
Sobisch is pro-U.S. Unfortunately for Governor Sobisch,
polling shows that the traditional center-right, pro-business
message lacks widespread Argentine public support and will
make Sobisch's political platform a tough sell in 2007. END
COMMENT.

GUTIERREZ