NEW ECONOMY MINISTER ON PARIS CLUB, DOHA TALKS,

C O N F I D E N T I A L BUENOS AIRES 001745

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USDOC FOR 4322/ITA/MAC/OLAC/PEACHER

E.O. 12958: DECL: 08/30/2017
TAGS: EFIN ECON EINV AR
SUBJECT: NEW ECONOMY MINISTER ON PARIS CLUB, DOHA TALKS,
POST-ELECTION REFORMS

REF: A. BUENOS AIRES 1648


B. BUENOS AIRES 1496

C. BUENOS AIRES 1558

D. BUENOS AIRES 1301

Classified By: Ambassador E.A. Wayne for Reasons 1.4 (b,d)

Subject
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1. (C) New Economy Minister Miguel Peirano emphasized to the
Ambassador his interest in resolving the Paris Club impasse,
supported Canada's IMF reform proposals, agreed to deal with
disputes involving U.S. interests, and affirmed Argentina's
commitment to broad trade liberalization in an August 24
meeting. However, Peirano complained that current Doha texts
would limit the GoA's ability to protect key domestic
constituencies. He also justified recent protective trade
measures (Ref A) as essential to countering the wave of cheap
Asian imports. Ambassador highlighted increasing pressure on
the USG from bondholder groups ("holdouts") that did not
participate in the 2005 debt exchange, and stressed that
resolving this issue was in Argentina's best interests.
Peirano is reportedly developing a post-election economic
road-map, prioritizing Paris Club, tighter fiscal policies,
ending price controls, reorganizing the statistical agency,
and even dealing with holdouts. Although a positive signal
to markets, it is an ambitious agenda for a first-year
President to implement. End Summary.

Paris Club: Time to Renew Efforts to Resolve
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2. (C) In his first meeting with the Ambassador since being
promoted from Secretary of Industry on July 17 (Ref B),new
Economic Minister Miguel Peirano emphasized the importance he
placed on reaching a payment deal with the Paris Club over
Argentina's roughly $6.3 billion official debt (over half of
which is in arrears). Without offering details, he stated
his intention to renew discussions soon with Paris Club
members. He announced he had appointed his new Chief of
Advisors, Javier Alvaredo, to take the lead on the issue.
The Ambassador agreed that resolving the Paris Club arrears
would be a positive step forward, and offered assistance with
arranging meetings with U.S. officials in Washington or
during international meetings, as well as providing
background on how the Club works.

IMF Reform
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3. (C) Peirano noted the upcoming visit (September 2) to
Argentina of France's candidate to head the IMF, Dominique
Strauss-Kahn, and commented that he looked forward to
discussing voting share reforms with him (a favorite issue of
Peirano's predecessor, Felisa Miceli). He called Canada's
proposal for voting share reform a good basis to begin
discussions.

Peirano Promises to Address Outstanding Disputes

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4. (C) Ambassador noted that the Embassy had working closely
with former Economy Minister Felisa Miceli and her staff on a
number of disputes involving U.S. companies, and he hoped to
continue the close cooperation with Peirano's new team. In
particular, the Ambassador urged action on TIG Insurance
company, which has an approximately $15 million re-insurance
contract claim against the GoA, and Bowne of New York LLC,
which the GoA owes $1.4 million for work it did during the
2005 debt exchange. See Ref D for background.


5. (C) The Ambassador also inquired about the status of the
GoA's settlement with Argentine citizen Eduardo Saiegh, who
claims anti-semitism played a role in his seizure and
mistreatment by the GoA military dictatorship in 1980, and
the GoA's subsequent expropriation of his stake in Banco
Latinoamericano. The Ambassador said he understood that
Argentine courts had ruled in Saiegh's favor, and had issued
a judicial order for the GoA to compensate him for loss of
property. However, according to Saiegh the payment was
pending (or held up) in the Economy Ministry. Peirano agreed
to investigate all three cases, and appointed his advisor
Javier Alvaredo as the lead contact for the Embassy.

Trade Issues: China a Common Threat
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6. (C) Ambassador noted his discussions with Foreign Ministry
officials on upcoming September meetings in Geneva that will
try to come to closure on Doha Round Agriculture, NAMA, and
Services modalities draft texts (Ref C). The U.S., he said,
remains committed to a successful Doha outcome, and he urged
Argentina to keep to the same commitment. Peirano affirmed
Argentina's commitment to broad trade liberalization, but
called current Doha draft texts "too rigid," limiting
Argentina's room to maneuver in satisfying domestic
constituencies, including powerful labor unions. He called
burgeoning Asian imports a threat that justified temporarily
strengthening Argentina's non-tariff barriers (Ref A). In
this environment, NAMA Swiss coefficients proposed by
developed countries would require excessive cuts in Argentine
industrial tariffs, a move that, he said, would benefit China
and not the U.S. In fact, he noted, many large U.S.
multinationals have optimized their Argentine production to
benefit from existing regional managed trade regimes and have
a strong interest in maintaining the tariff status quo. The
Ambassador appreciated Peirano's frank response and shared
NAMA-specific talking points targeted to Argentina for the
Minister's consideration.

Bondholders Increasing Pressure
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7. (C) The Ambassador commented that he had spoken frequently
(Ref D) with former Economy Minister Miceli about the issue
of bondholders who did not participate in the 2005 debt
exchange (so-called "holdouts"). The Ambassador acknowledged
that the GoA is not prepared to deal with this issue in the
short term (i.e., prior to elections). However, he informed

the Minister that it is of great interest in Washington. he
explained that U.S. citizen holdout bondholders were
increasing pressure on the executive branch and Congress to
take action. The Ambassador noted the USG position that
resolving the issue was in Argentina's best interests, and
passed the Minister a copy of the recent letter from the
American Task Force Argentina (ATFA) to Secretaries Paulson
and Rice. The letter urges the Administration to intensify
efforts to convince the GoA to honor its commitments to U.S.
citizen bondholders, including blocking multilateral
development bank loans.

Comment
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8. (C) Recent news reports, which Peirano's staffers have
confirmed to Econoffs, say Peirano is drawing up a
post-election economic road-map. The goal is for this plan
to serve as the GoA's action plan for the transition period
between the late October elections and early December, when
the newly elected President takes over, and also for the
first 100 days of what the GoA assumes will be the "Cristina"
(Kirchner) administration. Economic Ministry staff confirm
that they are considering ways to resolve both the Paris Club
and Holdouts, and the plan will also prioritize tighter
fiscal policies, ending price controls, and reorganizing the
statistical agency INDEC. News of this program is a welcome
and positive, albeit highly ambitious, signal to markets.
However, it remains to be seen whether Peirano will retain
his job in a follow-on administration and whether a
first-year President would be able to support such an
ambitious reform program. It is also far from clear that
Peirano and his team have a realistic view of what is needed
to resolve the Paris Club or bondholdouts issues. End
Comment.

WAYNE