Identifier
Created
Classification
Origin
08BUENOSAIRES1165
2008-08-19 14:20:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

INFLUENTIAL COMMENTATOR ON ARGENTINA'S UNSETTLED

Tags:  PGOV PINR AR 
pdf how-to read a cable
VZCZCXYZ0005
PP RUEHWEB

DE RUEHBU #1165/01 2321420
ZNY CCCCC ZZH
P 191420Z AUG 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 1810
INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RHMFISS/HQ USSOUTHCOM MIAMI FL PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
C O N F I D E N T I A L BUENOS AIRES 001165 

SIPDIS

E.O. 12958: DECL: 08/19/2018
TAGS: PGOV PINR AR
SUBJECT: INFLUENTIAL COMMENTATOR ON ARGENTINA'S UNSETTLED
POLITICAL CLIMATE

REF: BUENOS AIRES 1124

Classified By: Charge d'Affaires Tom Kelly for reasons 1.4 (B) and (D).

C O N F I D E N T I A L BUENOS AIRES 001165

SIPDIS

E.O. 12958: DECL: 08/19/2018
TAGS: PGOV PINR AR
SUBJECT: INFLUENTIAL COMMENTATOR ON ARGENTINA'S UNSETTLED
POLITICAL CLIMATE

REF: BUENOS AIRES 1124

Classified By: Charge d'Affaires Tom Kelly for reasons 1.4 (B) and (D).


1. (C) Summary: In an hour-long conversation on August 15,
leading political analyst Joaquin Morales Sola (JMS)
described the Argentine government as struggling to get by
with short-term solutions and as being dangerously out of
touch with Argentine society. He said that he believes that
President Cristina Fernandez de Kirchner (CFK),at her
husband Nestor's insistence, will resign if confronted with
another serious political setback in the hope that the first
couple can launch a political comeback in a few years. He
hastened to add that he does not see such a scenario playing
out in the short term. JMS described one positive
development: the rising economic policy influence of
Argentina's capable Central Bank chief, Martin Redrado. We
report his opinions because Morales Sola is one of the most
astute and well-connected analysts on the Argentine scene.
End Summary.

JMS: GOA Not Dealing with Mounting Problems
--------------


2. (SBU) La Nacion columnist JMS, arguably Argentina's most
influential political commentator, met with Ambassador August

15. Information officer and press assistant also attended.
JMS, who has multiple sources within the government, did much
of the talking, and had much of interest to say. The
government, he observed, is surviving by tamping down fires
like the farm strike. This approach, however, is not solving
any of the country's problems, while new ones continue to
emerge. These issues include high inflation, the national
statistics agency INDEC's loss of credibility, the divisive
role of Internal Commerce Secretary Guillermo Moreno, the
proposed nationalization by the GOA of Aerolineas Argentinas,
and the still-simmering dispute with the farm sector, which
could heat up again soon. In addition, he argued, the fiscal
balance will soon be an issue of concern, as Argentina must
pay 30 billion dollars by 2010. Given the poor performance
of the government, JMS maintained, the Argentine public has
lost confidence in the political leadership of the Kirchners,
and this will not be easily restored.

The First Couple's Struggles
--------------


3. (C) JMS noted that both of the Kirchners are having a hard

time adjusting to the current situation. Nestor Kirchner, he
claimed, really wanted his wife to resign following the GoA's
defeat in the farm crisis. They were only stopped from doing
so by then-Cabinet Chief Alberto Fernandez and Casa Rosada
Chief Counsel Carlos Zannini. JMS claimed that Nestor still
sees the idea of a resignation as a plausible course of
action for his wife if the political situation deteriorates
and another crisis breaks out. As JMS described it, Nestor's
political calculation is that Argentines associate his rule
with good economic times, and that it would therefore be
better politically to leave before the Kirchners become
associated with the bad economic times that lie ahead. If
they bow out, someone else will have to rule Argentina during
a challenging period of economic hardship. That ruler will
be compelled to take difficult decisions and implement
unpopular measures, such as major utility hikes. In a few
years, according to this logic, Argentine society will
associate the Kirchners with economic prosperity, setting the
stage for their return to power.


4. (C) JMS said that this scenario would only play out in a
crisis as serious as the battle with the rural sector. He
does not/not see any of the current problems rising to that
level in the near term. JMS thought that the current
disagreements with the opposition )- including the
developing show-down in Congress over the GOA's plan to take
over troubled flag carrier Aerolineas Argentinas -- would not
suffice to convince CFK to abandon office, no matter how they
played out.


5. (C) Still, JMS mused, it is worrisome that Nestor Kirchner
thinks this way. Indeed, there is no one left in the inner
circle with the independence and clout to say no to Nestor.
Former Cabinet Chief Fernandez was such an individual, which
was one of the reasons he had so many arguments with Nestor
in recent months. But Carlos Zannini, for example, depends
on Nestor and Cristina for his power and stature, and backs
down when he gets stared at or yelled down by Nestor. The
new Cabinet Chief, Sergio Massa, has no clout with Nestor,
according to JMS.

JMS: CFK Lives in a Bubble

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


6. (C) JMS characterized CFK as smart and talented, but
dangerously out of touch with reality. Her discourse doesn't
correspond with what is happening in Argentine society, such
as the rising prices that confront consumers in stores. CFK
stubbornly sticks to her views and past positions, finding it
very difficult to admit any errors or accept other
viewpoints. JMS contended that part of the problem is that
CFK has lived in a bubble for years, hopping from helicopter
to plane and never having to manage money for her household.
As a result, when advisers tell her that inflation is a
problem, she disregards the news, believing that her advisers
are inordinately influenced by the anti-GOA media.

A Positive Development: Redrado's Influence Rising
-------------- --------------


7. (SBU) JMS said that one positive development of late is
that the Kirchners have been consulting with Central Bank
chief Martin Redrado on the economy. Redrado's premise is
that "all problems are manageable -- if you manage them."
(JMS's August 17 column in La Nacion reported this line,
without attributing it to Redrado.) JMS said that this
approach encourages the Kirchners to face up to the problems
that are out there and manage them. (See BA 1124, which
describes the Ambassador's recent discussion with Redrado.)
Redrado, said JMS, is on the short list to replace Carlos
Fernandez as Minister of Economy. Redrado, however, has
earned a good reputation, which he wants to maintain and
protect. JMS argued that he would only agree to become
Economy Minister if he was given real autonomy. Because he
thinks that Nestor will never agree to cede control over the
economy, JMS concludes that Redrado will not become minister.


JMS Asks About Washington's Views
--------------


8. (SBU) JMS asked about a report in the daily Clarin that
A/S Shannon was so concerned about conditions in Argentina
that he had thought about taking a quick visit to the country
to get a better feel for the seriousness of the current
political situation and offer advice to CFK. Ambassador
Wayne refuted this story, saying that Argentina's problems
are to be solved by Argentines. He recounted how A/S Shannon
was recently in Argentina for bilateral consultations,
reflecting our long-term view of Argentina's importance and
the value of a stronger bilateral relationship. We are
pleased with the state of our bilateral dialogue and are
looking for ways to strengthen ties with Argentina and its
democratic institutions, the Ambassador said. As for the
economic situation, U.S. firms, like other companies doing
business in Argentina, are concerned about inflation and the
investment climate, but have not felt targeted by the GoA.
In fact, the GoA continues to seek and promote U.S.
investment.


9. (SBU) The Ambassador conceded that there is naturally
concern in the United States about Argentina's situation
given the recent strife and the press reports. He cited the
example of Senate staff member Carl Meacham's recent visit to
Argentina, in which the staffer conveyed Senator Lugar's
concern about the local situation. The Ambassador noted,
however, that the majority of Wall Street analysts are not
predicting default or an economic meltdown. JMS said he
agreed with that view.


10. (U) JMS synthesized these remarks into the following
single sentence in his August 17 La Nacion column: "In
Washington, reliable sources from the American capital agree
laconically that there's concern."
KELLY