AMBASSADOR MEETS WITH NEW ARGENTINE CABINET CHIEF

C O N F I D E N T I A L BUENOS AIRES 001202

SIPDIS

DEPT PASS TO DEPT OF AGRICULTURE WASHINGTON DC
DEPT OF AGRICULTURE FOR CHUCK ALEXANDER, BRUCE ZANIN, BRIAN
GRUNENFELDER AND GREGG YOUNG

E.O. 12958: DECL: 08/27/2018
TAGS: PREL ECON ETRD PTER PINR SNAR AR
SUBJECT: AMBASSADOR MEETS WITH NEW ARGENTINE CABINET CHIEF

Classified By: Ambassador E. Anthony Wayne for reasons 1.4 (B) and (D)


1. (C) Summary: On August 26, the Ambassador had a warm and
encouraging meeting with new Argentine Cabinet Chief Sergio
Massa, 36, who replaced Alberto Fernandez as the senior
member of the cabinet. Displaying the vigor and charm for
which he is well-known, Massa pointedly said his operating
style was non-confrontational. He said President Cristina
Fernandez de Kirchner (CFK) makes all the major decisions,
but he intends to address some of the larger policy
challenges confronting the administration. He stressed his
intentions to work on "macro" decisions and not to get bogged
down in details. Massa also noted that changes would come
gradually; you can only turn an airliner in a big arc, he
noted. The Ambassador told how he and Massa's predecessor
undertook to meet regularly in order to avoid a repeat of the
misunderstandings that led to the December-January breakdown
in bilateral relations. The Ambassador stressed the
importance of containing the Miami court case in judicial
channels. The Ambassador raised Argentina's debt, and Massa
said he was working on proposals to address Argentina's debt
refinancing needs over the next three years. He also said
the President had approved a decree to tighten Argentina's
control of precursor chemicals. Massa was open and
forthcoming throughout. He said he was looking forward to
his meeting with Assistant Secretary Shannon the following
day and wanted to work closely with us to keep bilateral
relations moving forward. End summary.


2. (C) The Ambassador congratulated Massa on his cabinet
appointment and his early efforts to create a more open style
of government and to rebuild ties with provincial and other
leaders. Massa indicated his desire to bring about
additional changes of style and substance but indicated he
would need time: "you can't turn an airliner in a sharp turn
but in a gradual arc," he explained. Massa recalled that he
and the Ambassador had been scheduled to meet on July 24 in
Tigre (on the outskirts of Buenos Aires) where he was mayor,
but he had been forced to cancel because that was the day CFK
took his oath as cabinet chief, 24 hours after announcing his
appointment. The Ambassador explained the usefulness of his
monthly meetings with the previous cabinet chief in order to
head off the kind of misunderstanding that precipitated the
December-January crisis in bilateral relations. Massa agreed
to meet regularly and later accepted in principle an
invitation to a meal at the Ambassador's Residence.


3. (C) The Ambassador noted that jury selection in the
Franklin Duran case was scheduled to begin September 2 in
Miami. He said that case should be kept in judicial
channels, stressing we could not predict what the trial might
reveal, but we should seek to keep it from harming bilateral
relations.


4. (C) The Ambassador noted that WHA A/S Shannon would meet
Massa during his visit to Argentina the following day. The
Ambassador noted that Shannon was committed to bolstering
U.S.-Argentine relations and that he wanted to cultivate a
mature relationship, one that could survive occasional
differences without losing all sense of balance. Based on an
objective appraisal of the shared interests at stake, it was
important to both countries to maintain an even, steady
relationship in which we could work through any differences
while maintaining cooperation in areas of agreement. Massa
said he was looking forward to his meeting with A/S Shannon
and wanted to work closely with us to keep bilateral
relations moving forward.


5. (C) As an example of cooperation, the Ambassador expressed
appreciation for the Defense Ministry's continued support of
the U.S. Military Group in Buenos Aires and its ongoing work
in key areas identified by Minister Garre, such as strategic
planning and logistics. The Ambassador also raised the
importance of counter-narcotics cooperation and our
appreciation of GOA efforts. Massa said the President had
signed a decree transferring responsibility over precursor
chemicals from SEDRONAR, the government Secretariat of
Planning for the Prevention of Drug Addiction and Drug
Trafficking, to the National Institute for Industrial
Technology (INTI),as Justice Minister Fernandez had
previously previewed to the Ambassador. (Note: Local press
reports quote Fernandez publicly praising the decision to
give control over precursor chemicals to a technical agency,
such as INTI, adding that it was important to analyze "every
gram that moves through Argentina." He also criticized
SEDRONAR for failing to develop the necessary administrative
capacity to tackle precursors. At the same time, however,
Fernandez reportedly urged legislators in the Chamber of
Deputies not to approve a current draft law to criminalize
the use of precursors intended for the production of illicit
drugs, arguing that the law was too vague to withstand legal
challenges. He seeks to introduce an alternative version of
the law. End Note.)


6. (C) The Ambassador informed Massa that a congressional
delegation led by Rep. Collin Peterson, chairman of the House
Agriculture Committee, would be visiting Argentina September
3-6 and greatly appreciated that CFK had agreed to meet with
them. The Ambassador said the CODEL would visit Cargill
facilities in Rosario, where they would likely learn of
Cargill's concerns about an investigation by the GOA's
National Office of Agricultural Trade Controls (ONCCA) and
its Federal Administration of Public Revenues (AFIP). Massa
mildly objected to calling it an "investigation," claiming
the GOA was merely seeking to determine whether all exporters
in that sector had the commodities in their possession at the
time they registered their sales as required by a recent law.
The Ambassador noted the sector's concern about the
implication of a new 45-day requirement for Argentina's
participation in futures markets. Massa agreed the 45 days
had been a problem. He said "the President makes all the
decisions here" and noted that she had signed a decree
establishing new 90-workday, 120-workday, and 180-workday
registration periods to enable futures trading.


7. (C) Massa asked which other U.S. companies had concerns
about Argentine operations. The Ambassador named the energy
sector, and Massa said the President had committed to gradual
reductions in subsidies but, recognizing the need to provide
incentives for greater investment, was also looking to lift
tariff ceilings and had already begun to do so. Massa
stressed that, in a country which until recently had 59% of
the population living in poverty, the government's priority
had been to redistribute income and cushion the impact of
energy prices with subsidies and tariff ceilings.


8. (C) The Ambassador pointed out the important presence of
U.S. businesses in Argentina, noting that U.S. investment was
widespread across sectors and longstanding. The Ambassador
said Argentina's high-tech and services sectors continued to
attract U.S. investment, as did the retail sector.


9. (C) Massa, scheduled to speak the following day at the
Council of Americas conference which the Ambassador and A/S
Shannon would also address, asked the Ambassador for his
views on what the U.S. companies in the audience wanted to
hear from him. The Ambassador said the COA audience was
favorably impressed by the high quality of Argentine human
capital but wanted to hear more about how the GOA intended to
enhance the conditions for medium- and long-term investment,
such as regulatory predictability, confidence in credible
official statistics (such as the inflation rate),and the
government's openness to dialogue with the business
community. Massa said the administration had learned from
its conflict with the agricultural sector about the need to
send reassuring signals to the business community. He cited
several recent pro-business measures and to find ways out of
the farm dispute, ranging from a government proposal to make
the labor code more flexible to drought relief for stricken
farmers. He said the GOA planned to distribute one billion
pesos in assistance to the agricultural sector as part of the
effort to improve relations with that sector. He added that
the Kirchner administration believed parts of the
agricultural sector, particularly the Liaison Table
coordinating the actions of the four major agricultural
entities, were unhelpfully taking up a non-agricultural
political agenda.


10. (C) The Ambassador noted there were persistent concerns
about the GOA's ability and willingness to pay its debt.
Massa said he was preparing for the President some proposals
to address Argentina's debt restructuring or refinancing
needs and committed to meeting obligations in 2009-2011
(through the end of CFK's term). In this context, he hoped
to address Paris Club and bondholder issues. He acknowledged
there was some truth to a page one article in that day's "La
Nacion" concerning a proposal for possibly reopening
negotiations with certain holdouts within certain parameters,
but the proposal was still in preliminary stages. Massa
indicated that by focusing on financing needs in 2009-2011,
he hoped to win approval for a number of policy changes which
would have other beneficial effects on the economy and
investment.


11. (C) Massa said he intended to work on big-picture,
"macro" issues first to create the right conditions to tackle
"micro" issues. He thought he could be most helpful to the
President if he took care in rank-ordering priorities. There
was no point, he said, in arguing where to put the television
set when the roof needed to be fixed. He said there was hope
of eliminating concerns about the accuracy of inflation
measurements by getting the macro-economic situation right
and reducing inflation to acceptable levels.


12. (C) Comment: Massa was open and forthcoming throughout.
His stated desire to tackle "macro" issues may have been a
dig at his predecessor, who was known for getting buried by
minutiae and also an indication of how he hopes to deal with
the problems of inflation statistics and policy and perhaps
Internal Commerce Secretary Guillermo Moreno. We look
forward to working with Massa to keep relations on an even
keel.
WAYNE