Identifier
Created
Classification
Origin
07BUENOSAIRES675
2007-04-10 19:02:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

SPANISH AMBASSADOR ESTRELLA ON REPSOL, RADARS AND

Tags:  EFIN ECON EINV AR SP KSTC KFPC 
pdf how-to read a cable
VZCZCXRO1606
PP RUEHWEB
DE RUEHBU #0675/01 1001902
ZNY CCCCC ZZH
P 101902Z APR 07 ZDK CTG RUEHZC SVC #698
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 7780
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 6086
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RUEHPE/AMEMBASSY LIMA PRIORITY 2018
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C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 000675 

SIPDIS

SIPDIS

TREASURY FOR NANCY LEE, AJEWEL, WBLOCK, LTRAN
NSC FOR JOSE CARDENAS, ROD HUNTER
PASS FED BOARD OF GOVERNORS FOR RANDALL KROSZNER, PATRICE
ROBITAILLE
PASS EXIM BANK FOR MICHELE WILKINS
PASS OPIC FOR JOHN SIMON, GEORGE SCHULTZ, RUTH ANN NICASTRI
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER

E.O. 12958: DECL: 04/09/2017
TAGS: EFIN ECON EINV AR SP KSTC KFPC
SUBJECT: SPANISH AMBASSADOR ESTRELLA ON REPSOL, RADARS AND
PARIS CLUB

BUENOS AIR 00000675 001.2 OF 003


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

C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 000675

SIPDIS

SIPDIS

TREASURY FOR NANCY LEE, AJEWEL, WBLOCK, LTRAN
NSC FOR JOSE CARDENAS, ROD HUNTER
PASS FED BOARD OF GOVERNORS FOR RANDALL KROSZNER, PATRICE
ROBITAILLE
PASS EXIM BANK FOR MICHELE WILKINS
PASS OPIC FOR JOHN SIMON, GEORGE SCHULTZ, RUTH ANN NICASTRI
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER

E.O. 12958: DECL: 04/09/2017
TAGS: EFIN ECON EINV AR SP KSTC KFPC
SUBJECT: SPANISH AMBASSADOR ESTRELLA ON REPSOL, RADARS AND
PARIS CLUB

BUENOS AIR 00000675 001.2 OF 003


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


1. (U) This is an action request. Please see paragraph 8.

--------------
Summary
--------------


2. (C) Ambassador met April 4 with Spanish Ambassador to
Argentina Estrella (protect). Estrella had recently been the
target of false leaks to the daily paper Clarin which alleged
that President Kirchner had privately asked Estrella for more
investment by Spanish-owned energy firm Repsol-YPF in
Argentina and for an Argentine equity stake in the company.
The Spaniard explained that Kirchner had only welcomed
Repsol-YPF's presence and confirmed that he did not support
re-nationalization of the firm's assets in Argentina. The
rest of the false report was likely supplied by Secretary of
Energy Cameron or others in the Planning Ministry, who
believe Repsol is not investing aggressively enough and who
favor a growing Argentine presence in the nation's
foreign-dominated oil and gas sector. Estrella also
confirmed that Spain intended to treat in the Paris Club the
$680 million of Argentina's debt to Spain not covered by the
recent bilateral agreement and that, while Spain had promised
to seek creative debt solutions, it would not break Paris
Club solidarity. Finally, he briefed on a Spanish supply of
radars to Argentina and said the transfer of some older
US-made radars would require US approval. Please see action
request, para 8. End Summary


3. (C) Highlights of the Ambassador's April 4 conversation
with Spanish Ambassador Rafael Estrella Pedrosa included:

--------------
Unhappiness with Repsol-YPF

--------------


4. (C) On March 26, Estrella paid his first call on President
Kirchner. After the meeting, the Spanish Ambassador told the
press that the President had told him that he does not favor
the re-nationalization of Spanish-owned Repsol-YPF, contrary
to earlier press reports that the some in the government
wanted to increase Argentine presence in the company. On
March 30, a column in the Argentine daily Clarin claimed,
with supposed presidential quotes, that Kirchner had told the
Spaniard that Repsol-YPF was not investing enough in its
Argentine concessions and had encouraged an Argentine equity
stake in the firm. Estrella said this story was completely
false and that he had immediately called Clarin to complain
(the Ambassador recounted our own similar problems with
Clarin articles). He said President Kirchner had made no
complaints about Repsol, nor had he discussed the question of
Argentine capital, but that he had asked Estrella to talk to
Planning Minister De Vido.


5. (C) In Estrella's subsequent meeting with De Vido, the
Planning Minister talked of his discussions with Repsol-YPF
about future exploration and investment in production, but

BUENOS AIR 00000675 002.3 OF 003


had never mentioned the possibility of losing concessions or
of increasing the presence of Argentine capital in
Repsol-YPF. Subsequently, the false version of events
appeared in Clarin. The Spanish Ambassador speculated that
Energy Secretary Daniel Cameron or others in the Planning
Ministry were the like source of the stories. They had
complained previously that Repsol-YPF's investments in its
Argentine concessions were inadequate, and they had also been
talking to Argentine-owned energy company Bridas and to
prominent local banker Jorge Brito about investing in
Repsol-YPF. The Spanish Ambassador believes that some in the
Planning Ministry want to increase local capital and presence
in the Argentine energy sector at the expense of
multinationals and that some favor an increasing state role.
There is even speculation that Planning Minister De Vito may
be looking to become the head of the nascent government
energy company ENARSA.


6. (SBU) Note: In 1999, Spanish energy major Repsol merged
with Argentina's Yacimentos Petroliferos Fiscales (YPF),the
formerly state-owned oil company. The combined entity is now
one of the world's 10 largest private oil enterprises and its
Argentine integrated exploration, development, refining and
pipeline activities contribute about one third of
Repsol-YPF's earnings. Repsol-YPF Chairman had announced in
May 2006 that the company was considering a float of up to
20% of its stake in YPF (valued at Euro 2.5 billion) on the
Buenos Aires stock exchange. End Note

--------------
Spanish Radars
--------------


7. (C) Estrella said that Kirchner had asked him to see if
Spain could help provide back-up civilian air control radars
quickly to bolster the faltering system supporting Buenos
Aires' two main airports. (The main radar at the
international airport was hit by lightening recently and the
system has been plagued by technical and human error,
resulting in more delays that usual and many complaints by
travelers, pilots and air controllers.) Estrella called the
Spanish President's chief of staff and agreement was
subsequently reached for Spain to quickly provide a back-up
system. (Comment: This version generally tracks with
Embassy's own understanding of the situation. We understand
that some used radars are being delivered from Spain, but
still have not arrived, or at least have not yet been
installed. End Comment).


8. (C) Estrella said that Spain also offered to provide
several used 2D military radars to Argentina for one peso.
But as these are US made radars, the USG would need to
approve the transfer. Comment: Argentina Defense Minister
Garre has also queried Ambassador about US regulatory
approval of this transfer. Could Department and Embassy
Madrid please provide information of the status of the
Spanish request.

--------------

BUENOS AIR 00000675 003.22 OF 003


Paris Club Debt
--------------


9. (C) On March 23, Spain's Council of Ministers approved a
restructuring deal with the GoA which covers US$982 million
in debt that Spain had provided shortly before Argentina's
economic collapse. Ambassador Estrella confirmed that
approximately $680 million in debt contracted earlier would
be considered for treatment in the Paris Club context. He
said he had promised Kirchner that Spain would work to find a
creative Paris Club solution given Kirchner's opposition to
an IMF program, but that Spain had already rebuffed a
proposal from the GoA that part of its debt be swapped for
assistance/investment in Argentina's education sector.
Comment: Dutch Ambassador noted that in EU meetins here, the
Spanish and others are urging Paris Club flexibility. End
comment.

--------------
Civil Aviation
--------------


10. (C) Estrella said that he continues to encounter
"strange" commercial dealings in Argentina. One Spanish
airline company, Air Europa, had been cleared to take over
the routes given up by failed company Air Madrid, but days
before the first flight was told that all the papers were not
correctly filed. But the government would not tell the
airline what papers were incorrect. After intervention by
the Spanish government, it was discovered that the GoA wanted
the Spanish carrier to take over the routes and assets of the
poor-performing, money-losing, government-owned domestic
carrier LADA, as part of the deal. The Spanish carrier has
so far refused.

--------------
Natural Gas
--------------


11. (C) The Artentina Government has shown flexibility on one
other important commercial issue. Cabinet Chief Alberto
Fernandez promised Estrella several weeks ago that the GOA
would approve a natural gas consumer price increase; Spanish
interests have a large role in the natural gas distribtion
company, Natural Gas BAN. The rate increases were formally
announced on April 9.

--------------
Comment
--------------


12. (C) Estrella is off to a strong start here managing a
major commercial and political relationship. In the energy
sector, clearly some in the GoA would like a way to get back
more control either directly through building up national oil
company ENARSA or indirectly by increasing the presence of
more pliant domestic capital and companies.
WAYNE