ARGENTINA: JAPANESE AMBASSADOR EXPRESSES CONCERN

UNCLAS BUENOS AIRES 001006 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EFIN PGOV EAGR AR JA SUBJECT: ARGENTINA: JAPANESE AMBASSADOR EXPRESSES CONCERN OVER ARGENTINA'S PARIS CLUB DEBT REF: BUENOS AIRES 0976 ¶1. (SBU) Summary: In an early July meeting among embassy teams, Japanese Ambassador to Argentina, Hitohiro Ishida, stressed the importance of Paris Club solidarity in dealing with Argentina's outstanding Paris Club debt and emphasized the need to send a strong message to the GOA to develop a repayment schedule soon. Ambassador Wayne noted that President Cristina Fernandez de Kirchner (CFK) was not yet prepared to discuss the topic. Ishida expressed concern with CFK's unilateral and zero-sum approach to politics, one that does not consult with interested parties prior to launching initiatives. He noted that, despite the political damage done by the agricultural conflict, the Kirchners appear firmly in control and opposition parties remain weak. In closing, Ambassador Ishida reaffirmed the close relationship between Japan and the United States and suggested that the two Embassies meet on a regular basis to discuss common interests. End summary. ¶2. (SBU) On July 7, Ambassador Wayne met with Ambassador Hitohiro Ishida and discussed Argentina's outstanding Paris Club debt as well as the current political climate given the GOA's protracted conflict with the agricultural sector. Ambassador Hitohiro was accompanied by DCM Masaru Watanabe, Political officer Satoshi Hishiyama, Economic Counselor Tomomi Yamazaki, and Economic Officer Ryu Murasawa. Ambassador Wayne was accompanied by DCM, Econcouns, Polcouns and Polintern. -------------- Concern over Outstanding Paris Club Debt -------------- ¶3. (SBU) Ambassador Ishida outlined Japan,s primary interests in Argentina, which included: 1) protecting Japanese investment; 2) developing and implementing green technologies; and 3) urging the GOA to pay off its outstanding debt to the Paris Club. Ambassador Ishida asked Ambassador Wayne several times whether A/S Shannon would raise Argentina's outstanding Paris Club debt during his bilateral consultations July 10-11. He expressed great concern over the GOA's inaction in addressing its Paris Club debt and noted that Japanese companies are hesitant to invest further in Argentina as a result of the GOA's delay in resolving the issue. Ambassador Wayne indicated that the Paris Club debt was not on A/S Shannon,s agenda because Cristina Fernandez de Kirchner (CFK) was not yet prepared to �00A;discuss the topic. Ambassador Ishida underscored the importance of Paris Club solidarity and emphasized the need to send a strong message to the GOA that it should develop a repayment schedule soon. The costs to the GoA of financing its Paris Club repayment are increasing in line with Argentina's growing country risk premium and Ishida wondered whether the GOA fully appreciates the potential costs involved. Argentine media coverage of Paris Club debt routinely referred to the GoA's Paris Club obligations in the $6 billion range, while the true amount is closer to $8 billion, he said. Ambassador Wayne said the U.S. agrees on the importance of Paris Club Solidarity and shared frustration that Argentina had not been able to put forward a serious offer for dealing with the debt. -------------- -------------- Kirchners in Control Despite Unilateral Approach to Governance -------------- -------------- ¶4. (SBU) Ambassador Ishida observed that he had arrived in Argentina on March 10, the day before the GOA,s ill-fated announcement of Resolution 125 and its sliding scale of levies on agricultural exports. His tenure in Argentina had been dominated by the GOA's protracted conflict with the agricultural sector (Ref A). He criticized the process by which the GOA arrived at its export tax regime, regarding it as a unilateral measure imposed without the consultation of Argentina's interested parties. The Kirchners' zero-sum attitude, he said, favors only those who follow their political lead. He also criticized the administration's failure to tackle growing inflationary pressures. ¶5. (U) Ambassador Ishida offered his views on Argentina's political parties, noting that the opposition remains weak, but that the conflict has exposed fissures within the Kirchners' "transversal alliance" and particularly in the Kirchners, Peronist Party (PJ) and the Kirchner-allied Victory Front (FPV). Elements within the parties are beginning to distance themselves from the Kirchners, he said, though they are doing so very carefully, waiting to see what happens as political developments unfold. The Kirchners, however, appear to be firmly in control of the reins of government. He predicted that the Kirchners should be able to maintain a majority in the Senate in the 2009 legislative elections. He expresseddoubts, however, that they could maintain a majority in the entire Congress next year. DCM Kelly, Political Counselor Featherstone, and Economic Counselor Climan shared U.S. Embassy perspectives on all of these issues. -------------- Strengthening U.S. - Japan Ties in Argentina -------------- ¶6. (U) In closing, Ambassador Ishida noted the importance of relations between Japan and the United States and emphasized that allies such as our need to maintain close relationships, even when outside of our respective countries. He recognized the U.S. Embassy,s breadth of resources when compared to Japan's much smaller mission, and expressed an interest in meeting with the Ambassador at least once a year to discuss common interests. He suggested that each Embassy,s counselors meet with greater frequency. Ambassador Wayne agreed that the U.S.-Japanese bilateral relationship is important and agreed to maintain close contact. WAYNE