CRISTINA IN HER WORDS: WILL ARGENTINA'S

C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 001888 SIPDIS SIPDIS E.O. 12958: DECL: 09/21/2022 TAGS: PGOV PREL OVIP EFIN EINV EAIR AR SUBJECT: CRISTINA IN HER WORDS: WILL ARGENTINA'S PRESIDENTIAL FRONT-RUNNER BE A BETTER PARTNER FOR US? REF: A. BUENOS AIRES 1883 ¶B. BUENOS AIRES 1809 ¶C. BUENOS AIRES 1777 Classified By: DCM Tom Kelly for reasons b, d. ¶1. (C) Summary. A well-briefed, confident Cristina Fernandez de Kirchner (CFK) described her policy priorities to the Ambassador on September 20, a few days before she departs for a five-day program in New York. Although she defended GOA positions on controversial economic issues, CFK expressed a strong desire to promote foreign investment, increase scientific and educational exchange with the United States, and "tell it like it is" with American policymakers. The discussion's conciliatory content and tone confirms our expectation that CFK will prove a more reliable, trustworthy, and accessible partner of the United States than her husband, Nestor Kirchner. End Summary. ¶2. (C) CFK met with the Ambassador for 45 minutes at the Presidential Residence in Los Olivos on September 20. Argentina's first lady and presumptive next president was in full command of her brief, speaking without notes on a broad range of topics. At one point, noting that she and the Ambassador were reviewing topics that would resurface throughout her New York trip, she said (referring to her travels and speeches),"This is good preparation, but hey, I'm already prepared!" She was gracious and relaxed throughout, not rushing through any part of the conversation and listening as well as talking. The meeting was CFK's second with the Ambassador; in contrast, President Kirchner has never met privately with the Ambassador. She also went out of her way to ask the Ambassador to "send greetings to Shannon," whom she recalled meeting early on in Washington just before the Assistant Secretary was confirmed by the Senate. Paris Club: Willing to Deal "Without Preconceptions" -------------- ¶3. (C) After CFK previewed her schedule in New York (ref A), the Ambassador noted the great international interest in her policy views. He commented that CFK's interest in the world and willingness to countenance policy changes, especially in the economic realm, were well-received abroad, including in the United States, as is her evident openness to dialogue. The Ambassador also mentioned issues that may well draw questions from journalists, businessmen, and others during her program, including prospects for a deal with the Paris Club, the investment climate, prospects for inflation, and the GOA's relationship with Iran and Venezuela. ¶4. (C) CFK replied in great detail on economic themes, but refrained from commenting on Iran and Venezuela. On the Paris Club (PC),she stressed Argentina's desire to reach an agreement, but reiterated the current government's insistence that a deal not be conditioned on a GOA accord with the IMF. She said that Argentina's attitude stemmed not from a anti-IMF bias, but from a conviction that IMF policies as currently constituted are anti-growth -- and therefore unacceptable. That is why, in her view, the IMF had experienced a "serious loss of prestige in Latin American societies." "If we don't grow," she continued, "we can't pay. You can't collect debts from the dead." ¶5. (C) CFK characterized debt agreements reached by previous Argentine governments as illusory, made by desperate governments that never intended to repay. The current government, and the one that she hopes to lead, sought to break what she called "a cycle of lies" and restructure Argentine debt without inhibiting growth. Such a negotiation, she said, would need to occur "without preconceptions," and both sides should come to the table with flexibility and an open mind. She claimed that, during his campaign swing through Argentina (ref B),French candidate for IMF Managing Director Strauss-Kahn had expressed sympathy for Argentina's approach and criticism of the IMF's track record in Argentina. She acknowledged, however, that "he's running for office, so maybe he was just telling us what we wanted to hear." The Ambassador said that the United States stands ready to engage constructively to move to a Paris Club solution. ¶6. (C) The Ambassador mentioned the issue of bond-holdots as another potential topic that CFK will face in New York, noting that the U.S. bondholders are carrying out a well-organized effort to win support for their cause. CFK indicated awareness of the lobbying resources holdouts bring to bear and their negative attitude towards the current BUENOS AIR 00001888 002 OF 003 government. She said that she had encountered their publicity campaign during her recent trip to Germany, and knew they were active in Japan, too. At the same time, she offered little hope that the holdouts would get a deal anytime soon, noting that a law circumscribes what the government can offer them. She told the Ambassador that "I know this isn't what you want to hear," but said that previous Argentine leaders would tell foreign Ambassadors what their interlocutors wanted to hear, not what they really thought or intended to do. She and her husband were different, she insisted; they told it straight. CFK said that she understood that Americans valued straight talk, and she hoped that this quality would earn her trust and respect in the United States. Foreign Investment: Bring It On -------------- ¶7. (SBU) CFK said that the GOA's main motivation in striking a deal with the Paris Club was to entice foreign export credit agencies to go back on cover in Argentina, facilitating her plans to bring more foreign investment here. She noted that foreign investment in certain sectors was already booming. Auto companies, including Mercedes-Benz, Peugeot, Ford, and GM were pumping tens of millions of dollars of new investment into their plants, with many adding new assembly lines and exporting much of their output. ¶8. (U) CFK reserved her greatest enthusiasm for Argentina's progress in attracting investment in the information technology sector as a means to expand Argentina's global economic role. She noted proudly that IT represented the fastest growing sector in the economy during her husband's presidency. She expected great things from the sector in the future. "We have great soccer players in Argentina because our kids play so much soccer," she said. "Now they spend all their time on computers, so I know that there's an Argentine Bill Gates out there. We just have to find him." The Ambassador agreed that this was an area of great potential. He noted the significant U.S. investment in this sector, including the fact that IBM is the largest U.S. employer in Argentina. He also made a pitch for quick approval of Turner Broadcasting's purchase of Claxion, a local audiovisual company, which will lead to Argentine creations being distributed throughout Latin America. Playing Defense: Energy, Inflation -------------- ¶9. (SBU) Despite her expression of enthusiasm for foreign investment, she was defensive about charges that the current government is attacking foreign investors in the Argentine energy sector (septel). She characterized Exxon's apparent exit from the Argentine market as the result of a regional draw-down in Latin America, and argued that "the energy sector is a problem everywhere right now." She said that private companies miscalculated domestic energy demand over the past few years, failing to anticipate the government's success in achieving extremely rapid rates of growth. Now, there was little idle capacity in Argentina's energy sector. The GOA, she insisted, was doing its part, presiding over the construction of thousands of kilometers of new pipelines and seeking new sources of supply. ¶10. (SBU) CFK was also defensive when she responded to concerns that the GOA was manipulating economic statistics to keep Argentine inflation numbers down. She said that there were several biases in the way that the government's statistical institute (INDEC) had previously collected price data. She claimed that it did not account sufficiently for seasonal variations in price data; collected food data in posh food emporiums rather than in the modest groceries where most Argentines shop; and focused on private school costs, while the vast majority of Argentines sent their children to public schools. She said that Argentina had revised its inflation methodology six times since the 1930s. The political opposition, she said, was behind the claims that current methodological changes reflected a government plot to understate inflation. She also blamed the opposition for the growing warnings about electoral fraud in Argentina, which she dismissed as "bizarre." CFK did acknowledge that the GOA needs to settle with clarity the methodological issues as well as to resolve the union problems troubling the statistical institute. Future Economic Goals -------------- ¶11. (C) CFK returned to economic growth as the most BUENOS AIR 00001888 003 OF 003 important objective of the government that she intends to lead. She said that, if Argentina achieves positive growth in 2007 and 2008, it will represent the first time in a century that the country has grown for six straight years. If its economy continues to grow at rates of five to six percent for another decade, she continued, Argentina would become "unbeatable." ¶12. (SBU) A key sector for the country's future, she said, was tourism, an area in which her country had enormous undeveloped potential. With the rise in ecotourism, the wealthiest tourists were looking for unspoiled, safe venues, which Argentina had in abundance. She noted that Argentina experienced a travel boom after the Asian tsunami, as tourists sought safer places in which to experience nature. The Ambassador interjected that for the tourism sector to achieve its potential, Argentina needed to address its dysfunctional domestic aviation sector. She agreed, identifying reform of domestic aviation as "one of our great challenges." Without referring specifically to the strike-prone national airline Aerolineas Argentinas, she identified two specific problems in the sector: a need for more resources and a conflictive labor environment in which a handful of combative unions undermined all attempts to turn the sector around. Other Issues: Exchanges, TIP -------------- ¶13. (SBU) The Ambassador raised trafficking in persons (the need to pass a federal law) and the importance of expanded educational and cultural exchanges, especially among youth. He asked for the Senator's support. CFK: -- expressed strong interest in cultural and educational exchanges with the United States, including an upcoming Buenos Aires summit of hemispheric women leaders organized by U.S. NGO Vital Voices; -- told the Ambassador that Argentina "must not fail to take advantage of your scientific resources; they're the best in the world". -- reassured the Ambassador that legislation to criminalize trafficking in persons would pass the Argentine Congress after the October elections "without any great difficulty." Comment -------------- ¶14. (C) The discussion's conciliatory content and tone confirmed what we have observed in CFK's speeches and gestures with increasing frequency: Argentina's presidential front-runner seeks a rapprochement with the United States. CFK seems to understand that a pragmatic, enmity-free relationship with Washington will buy Argentina leeway on a number of critical financial and geopolitical issues. At the same time, this forward-leaning attitude is unlikely to presage the next government's repudiation of the current regime's nationalist, populist policies. CFK's defense of GOA positions on the IMF, the investment climate, the energy sector, and inflation numbers during this private discussion suggests an unwillingness to break with the heterodox policies of her husband. But even if the charm offensive is calculated rather than heart-felt, there is no mistaking the opportunities that await the USG beyond the Argentine presidential election. CFK's conversation with the Ambassador confirms our expectation that she will prove a more reliable, trustworthy, and accessible partner of the United States. That does not, however, take away from the challenges we will face in forging solutions to such issues as the Paris Club or bondholders' outstanding debt. WAYNE