AMBASSADOR WAYNE MEETS CRISTINA'S RUNNING MATE, WITNESSES THE BOOM IN MENDOZA, ARGENTINA

C O N F I D E N T I A L BUENOS AIRES 001673



SIPDIS



SIPDIS



E.O. 12958: DECL: 08/22/2017

TAGS: PGOV, PREL, ECON, SOCI, AR

SUBJECT: AMBASSADOR WAYNE MEETS CRISTINA'S RUNNING MATE,

WITNESSES THE BOOM IN MENDOZA, ARGENTINA



Classified By: Ambassador E. Anthony Wayne for Reasons 1.4 (b) and (d).



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Summary

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1. (U) In a well-publicized August 16-17 visit to the

central-western province of Mendoza, the Ambassador met with

Mendoza Governor and Cristina Kirchner's running mate Julio

Cobos, who told the Ambassador he expected better

U.S.-Argentine relations after the next elections -- in which

he expects his ticket to prevail. However, a Kirchnerista

who is running to replace Cobos as governor gave a pretty

negative view of Cobos's record as Mendoza's chief executive.

The Ambassador also held a successful social outreach event

at a school for the underprivileged, and attended a donation

ceremony at another local school and participated in a

roundtable at the Mendoza Binational Center with visiting

U.S. Secretary of Education Margaret Spellings. The visit

received positive coverage in the local media. END SUMMARY.



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Meeting with Governor and VP candidate Cobos

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2. (U) On August 16, Ambassador Wayne met with Mendoza

Governor and National Vice Presidential candidate Julio

Cobos, Cristina Kirchner's running mate. They agreed on the

importance of relations between Argentina and the United

States and on expanding those relations to include science,

technology, culture, education, and commerce. Cobos shared

his view on the importance of education and its connection to

public security. Cobos added that Argentina needs to

implement a strong campaign to educate people on the rule of

law. He said that they need to "break the chain" of

tolerating crimes, which will require a cultural change.

Cobos explained that Mendoza has made several progressive

changes in its education system, which is regarded as perhaps

the best in Argentina, including giving indigent children

free room and board at special schools housed in refitted

military buildings. Cobos said he believes that by making

sure these children are given an education, housing, and

food, they are reducing the chances the children will become

involved in drugs, alcohol, and crime. Ambassador Wayne

noted Argentina's educational system strengths and stressed

the need to continue investing in the youth of Argentina.



3. (C) Cobos was vague when describing campaign plans for

his and Senator and First Lady Cristina Fernandez de

Kirchner's vice presidential and presidential (respectively)

candidacies. Cobos said he thought that their campaign

platform would have three or four key points, probably

including improving Argentina's foreign relations, education,

and strengthening Argentina's infrastructure. He said that

the Fernandez de Kirchner-Cobos administration will be unique

in its inclusion of political figures from various

backgrounds. He said that he believes the "concertacion" (as

it is called locally) will open more positions than just the

vice president slot to "Radicals K" -- Radical party members

who support President Nestor Kirchner. Cobos cautioned that

the Fernandez de Kirchner - Cobos ticket first had to win in

October, and then they could try to make sure the

administration included a good mix of Radicals, Peronists,

and Victory Front members. Cobos mentioned that he has had a

lot of experience working with a mix of political groups in

Mendoza. He said he thought relations between Argentina and

the U.S. would improve under a Fernandez de Kirchner

administration.



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4th Air Force Brigade

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4. (U) Ambassador Wayne visited the Air Force 4th Brigade

where pilots train on the domestically-produced Pampas jet.

Brigade Commander Sergio Mayor told Ambassador that the

brigade trains pilots for all jets in Argentina using the

Pampas aircraft that is manufactured by Lockheed-Martin

Argentina S.A. in Cordoba province. U.S. exchange officer

Major Douglas Sirk gave a presentation on the activity of the

brigade, which includes training, control of air traffic



along the northern and western borders, and search and rescue

missions.



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University of the River Plate Foundation

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5. (U) Ambassador Wayne addressed a group of political and

business leaders organized by the local University of the

River Plate Foundation (FURP) members at the Park Hyatt

Mendoza. Ambassador stressed the importance of relations

between Argentina and the U.S. Questions from the FURP

members mainly focused on Ambassador Wayne's impressions of

Argentina and the USG's agenda for Latin America as a whole

and Argentina specifically. Mendoza's Vice Governor Juan

Carlos Jaliff and two candidates for governor of Mendoza,

Cesar Biffi (Radical K) and Omar Demarche (Mendoza Democrat

party),attended the meeting arranged by FURP president and

political commentator Luis Rosales. Rosales also arranged

for a private dinner at a local vineyard for the Ambassador

and many of the Mendoza FURP members.



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Meeting with Directors of the Mendoza Food Bank

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6. (U) On August 17, Ambassador Wayne met with Mendoza Food

Bank president Bernardo Zunino and executive director

Virginia de Luca. Zunino and de Luca explained the food

bank's main activities and support structure. The food bank

provides food and nutritional seminars for needy families in

Mendoza, which, according to Zunino and de Luca, have not

diminished in numbers even as poverty in Mendoza has

decreased. The food bank has 12 corporate sponsors and works

with approximately 40 more companies that donate food,

supplies, and time. Although Argentina does not have "Good

Samaritan" legislation to protect donors from legal action if

a donation harms a recipient, the Mendoza Food bank receives

monthly certification from the Argentine Institute of

Normalization and Certification (IRAM),which is similar to

norms of the International Standards Organization (ISO) for

food handling. Thus, food bank donors are protected from

legal consequences of donations since the food bank takes

responsibility for ensuring donations will not harm

recipients.



7. (U) Zunino and de Luca mentioned that they do not

receive assistance from the local Walmart, which they claim

destroys its excess inventory of perishables instead of

donating it probably out of concern about legal liability.

Ambassador Wayne said he was aware of Walmart donations in

other provinces and offered to follow up with Walmart about

the possibility of donations to the Mendoza food bank.



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Eva Peron Boarding School for the Underprivileged

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8. (U) On August 17, Ambassador Wayne visited the Eva Peron

Boarding School for underprivileged children and made a

donation of books for the school's library. Approximately

half of the students reside at the school during the week and

return to their families for weekends. The teachers and

administration were interested in ways to increase cultural

exchanges for the students. Ambassador Wayne explained the

GLOBE program provides a forum for virtual classroom

exchanges via the internet and offered to help the school

learn more about accessing the program.



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Briefing on Mendoza's Economy

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9. (U) Ambassador Wayne visited the Mendoza offices of the

Mediterranean Foundation (FM),an Argentine economic think

tank, and received a briefing on the economic forecast for

Mendoza. Mendoza has experienced an impressive 13% growth

rate for the past four years, but FM predicts that this will

not be sustainable. FM believes that Mendoza's growth

depends on three key factors: whether the GoA can maintain

(1) a "consumption boom" fueled by income transfer and market



intervention policies; (2) low domestic oil and gas prices

and high export prices; and (3) a favorable real exchange

rate. FM sees the consumption boom continuing in the near

term, but as world oil prices continue to climb, domestic

production will continue to fall. FM said that domestic

business profits started to fall in 2005 as wage and input

price increases cut gross revenue margins. According to FM,

the real exchange rate is currently appreciating as domestic

inflation goes up, which will affect the tourism and commerce

sectors of Mendoza's economy.



10. (U) FM believes that the agroindustrial sector in

Mendoza will face significant decreases in its market. They

base this on signs that the 370% growth in the prune industry

was temporary (unexplained increase in Russian consumption of

Argentine prunes and a poor harvest in the U.S. in 2005) and

that Mendoza is showing signs of overproduction of grapes in

the wine industry.



11. (C) FM reports that inflation in Mendoza is around 14%.

Ambassador Wayne asked why inflation in Mendoza and

neighboring provinces is so much higher than in Buenos Aires.

FM explained that the real inflation rate in Buenos Aires

and for the country is probably around 14% as well, but that,

for political convenience, the GoA has adjusted these numbers

down. FM said that since 1912 there has been a 95%

correlation between the inflation rates in Mendoza and for

the nation. FM said that it is impossible for all regions of

Argentina to have increasing inflation except Buenos Aires

city and province.



12. (U) FM explained that Mendoza provincial government

policies and actions can really only affect about 5% of

Mendoza's economy. FM believes that the province should work

to facilitate the growth of business by reducing bureaucratic

obstacles currently in place that make opening legitimate

enterprises a slow and costly exercise. FM said that the

paperwork and fees o legally register a new business are so

prohibitive and time-consuming that they are an incentive to

maintain businesses in the informal economy.



13. (U) FM touched briefly on the energy sector crisis in

Argentina, saying that this has been the first year the

problem affects everyone in Argentina. Mendoza has problems

transporting sufficient natural gas to meet demand, with

current pipeline capacity inadequate. FM said that energy

shortages in Mendoza has forced some vineyards to operate at

night when there are less demands on the energy grid. FM

fears that the energy issue has already begun to affect

exports from Mendoza.



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Candidate for Governor Offers a Critique

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14. (U) Ambassador Wayne met with Senator and gubernatorial

candidate Celso Jaque to discuss his views on the key issues

in Mendoza and his main campaign messages. Also present were

emboffs, Zuccardi Vineyards owner Jose Zuccardi, IV grantee

and Jaque advisor Diego Bossio, and architect Cristian

Racconto. Jaque is running as the Victory Front party

(FPV--President Kirchner's party) candidate for governor of

Mendoza (elections on October 28). Jaque frankly shared his

vision for improving the province of Mendoza. He said that

the principal problem in Mendoza is a lack of strong

institutions, followed by corruption. He believes Mendoza's

current leadership (Governor and vice presidential candidate

Julio Cobos and vice governor Juan Carlos Jaliff) have

mismanaged Mendoza's abundant resources and perpetuated the

poverty and misery of many Mendozans.



15. (C) Jaque said that Mendoza currently has 22,000

children not attending school. He said that the cheap

cocaine byproduct "paco" has begun to show up in Mendoza and

he fears it will lead to more addiction and more crime. He

criticized the province's lack of a strategy to address

demand for drugs, the supply of drugs, nor the faulty police

work in counter drugs in Mendoza.



16. (C) In commentary on the public security crisis in

Mendoza, which has brought National Gendarmerie to the



streets, Jaque was particularly critical of police training

in Mendoza. He said that in the six-month training course,

cadets only fire their weapons five times. He said this

leads to police on the streets whose fire-arms training is

insufficient to know when to draw their weapons and when to

withhold fire. He added that the cadets must pay for their

own bullets, but that their salaries are not augmented for

the extra cost. Jaque said that if the police continue to be

paid insufficient wages and to be expected to pay for their

own ammunition, the officers will end up living in the same

tough neighborhoods as the "delinquents" they are charged

with policing. Jaque said that Governor Cobos's recent

success in bringing 120 extra gendarmerie troops to Mendoza

will not help the crime situation in the province. Jaque was

clear that he believes the police must be local; they must

know the neighborhoods and their residents. He mentioned

that Cobos's administration had purchased a number of new

patrol cars, but when Jaque went to see the cars, he found

that many had burnt-out motors and flat tires. He cited this

as a blatant example of Cobos's mismanagement of the

province.



17. (C) Jaque was adamant that the province has so many

natural and industrial resources that there should not be any

significant poverty, indigence, or hunger. He said that if

he is elected in October, he will begin negotiating a new

consensus in the province before his accession to power in

December. He believes that the government and the economy of

Mendoza should be decentralized to provide improvements to

the quality of life for all Mendozans, not just those who

live in the capital. He pledged to continue Cobos's record

of good relations with the federal government, which he named

as the only positive aspect of Cobos's administration.



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Press Coverage

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18. (U) Local press coverage of Ambassador Wayne's trip

highlighted his meetings with a broad range of politicians

and business leaders during his visit. This was particularly

mentioned by the city's two leading newspapers, Los Andes and

Uno, in their coverage of Ambassador's speech to FURP

members. Local newspaper, TV, and radio also covered the

Ambassador's book donation at the Eva Peron school. At the

national level, the press carried the news of the

Ambassador's meeting with Governor Julio Cobos, who had only

two days before formally launched his candidacy in Buenos

Aires as Fernandez de Kirchner's running mate.

WAYNE