ARGENTINE ECONOMY MINISTRY OFFICIALS AGREE TO

C O N F I D E N T I A L BUENOS AIRES 001785 SIPDIS SIPDIS TREASURY FOR NANCY LEE, AJEWEL, WBLOCK, LTRAN, MMALLOY E.O. 12958: DECL: 09/06/2017 TAGS: EFIN ECON EINV AR SUBJECT: ARGENTINE ECONOMY MINISTRY OFFICIALS AGREE TO REVIEW LIBERIA ARREARS CLEARANCE PROPOSAL REF: STATE 108948 Classified By: Economic Officer Chris Landberg for Reasons 1.4 (b,d) ¶1. (C) Econoff delivered reftel demarche on supporting plans to clear Liberia's IMF arrears to new Economy Ministry Chief of Advisors Javier Alvaredo and new Undersecretary of Finance Juan Carlos Barboza on September 5. Econoff also outlined issue in general terms over the telephone to Secretary of Finance Sergio Chodos. Alvaredo agreed to consult on the topic with the GoA's representative to the IMF, Hector Torres, and also with new Minister of Economy and Production, Miguel Peirano. He preferred not to speculate on the Minister's position, but promised to respond as soon as possible. ¶2. (C) This meeting followed on the German Embassy's July 23 demarche on the same topic to Javier Mutal, Chief Advisor to Finance Secretary Chodos. During that meeting, Mutal told the German Financial Attache that in exchange for Argentina's assistance with the Liberia issue, the G-8 countries should agree to suspend the requirement that Argentina have a current IMF agreement in order to reach a debt restructuring deal with the Paris Club. ¶3. (C) Javier Alvaredo urged Econoff to ignore Javier Mutal's earlier comments, stating that Mutal had responded without consultation with or prior instructions from Minister Peirano, who had taken over that position just days earlier (following the mid-July dismissal of former Economy Minister Felisa Miceli). (Comment: Alvaredo made it clear that Mutal would have no more to do with this issue, and also hinted that Finance Secretary Chodos would not be involved in internal deliberations on this subject. End Comment) ¶4. (C) Econoff suggested that this was an opportunity for the GoA to be seen playing a positive and constructive role on an important international issue. Playing a more prominent international role is what Presidential candidate (and likely winner of the presidential elections in late October) Cristina Fernandez de Kirchner, wife of current President Nestor Kirchner, is reportedly eager to do. Econoff noted that this would also be a way to begin Argentina's gradual rapprochement with the Fund. It would build on the recent visit to Argentina of Dominique Strauss Kahn, France's candidate to head the IMF (see septel),during which he reportedly held friendly and productive talks with President and Cristina Kirchner and Minister Peirano. ¶5. (C) Alvaredo noted that the GoA's current focus with regards to the IMF is on opposing the Canadian reform proposal, which GoA officials view as detrimental to Argentina's position on the Executive Board. Therefore, while he personally seemed to agree with the concept of supporting Liberia arrears clearance, and also seemed to appreciate the opportunities to develop a more reasonable approach to Argentina's dealings with the IMF, he made it clear that any decision on Liberia would be made in the context of their overall IMF priorities. ¶6. (C) Javier Alvaredo is leading the GoA delegation to Durban, South Africa, for the G-20 meeting this weekend. He has been a close Embassy contact for years, while working in the private sector. He is a well-respected economist and Post considers him a credible interlocutor. In practice, Alvaredo acts as the Economy Minister's number two, and has taken over many finance issues from Secretary Chodos, whose role has recently diminished in the Ministry. For example, Alvaredo has taken over the lead from Chodos on Paris Club negotiations. 7 (C) Comment: A majority of Argentines blame the IMF for contributing significantly to the 2001/2002 financial crisis, which plunged over half the population into poverty. Populist President Kirchner, always the opportunist, regularly strikes out at the IMF to generate political support and win votes. This demonization of the IMF makes any GoA decision on IMF-related issues politically sensitive. End Comment WAYNE