CODEL PETERSON'S SEPTEMBER 4 MEETING WITH

UNCLAS BUENOS AIRES 001255

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON EAGR EFIN BEXP AR
SUBJECT: CODEL PETERSON'S SEPTEMBER 4 MEETING WITH
PRESIDENT KIRCHNER


1. (SBU) Summary: Argentine President Cristina Fernandez de
Kirchner met September 4 with a U.S. congressional delegation
led by Collin Peterson of Minnesota. The President supported
holding bilateral discussions later this year to try to
resolve market access issues involving Argentine lemons and
beef, as well as U.S. beef and chicken. The President
briefed on Argentine agricultural taxes and support programs,
and the congressmen talked about the U.S. approach. The
President explained that she believed her decision to repay
Paris Club debt could encourage investment and economic
relations with the members of the Paris Club. At the end of
the meeting, she expressed appreciation to the Ambassador for
the positive U.S. statement regarding the debt decision and
asked for U.S. support as experts seek to reconcile numbers
surrounding the debt owed and try to reach agreement on
repayment. End Summary.


2. (U) Argentine President Cristina Fernandez de Kirchner
(CFK) held a friendly and wide-ranging meeting with four U.S.
Congressmen for well over an hour on September 4.
Representatives Collin Peterson (D-Minn.),Marion Berry
(D-Ark.),Jerry Weller (R-Ill.),and Ben Chandler (D-Ky.)
were joined by Ambassador Wayne. Foreign Minister Taiana,
Economy Minister Fernandez, Agriculture Secretary Cheppi and
Ambassador to the United States Timerman accompanied the
President.

Bilateral Agricultural Issues
--------------


3. (U) CFK asked where the Congressmen would travel in
Argentina, and on learning of their visits to Rosario, Santa
Fe, and Cordoba province, she extended an invitation for the
Congressmen to visit the southern region of Patagonia when
they could return. She asked Agricultural Secretary Cheppi
to brief her on the discussions earlier in the afternoon
surrounding two Argentine agricultural market access issues
with the United States: lemons and beef. She noted the
potential value of increased lemon exports for job creation
in Tucuman province and the special importance she attached
to allowing Argentine beef exports to the United States,
notably first from Patagonia. Cheppi presented the Argentine
arguments that the USDA should allow free access to the U.S.
market and that it had been agreed in discussions with
Representative Peterson that the way to proceed was to have
talks on agricultural trade issues between the two countries,
probably after the U.S. elections.


4. (SBU) Representative Peterson said that he thought the
U.S. Department of Agriculture was getting close to issuing a
finding on both access of meat from Patagonia to the United
States and of Argentine lemons. He noted that the USG also
had market access problems that merited discussion, including
the unwarranted exclusion of U.S. beef and chicken from the
Argentine market. Thus, he had suggested discussions after
the U.S. elections on all of the issues. The President asked
a number of questions about both issues. Ambassador Wayne
and Agricultural Secretary Cheppi presented various aspects
of the reasons for the market access problems concerning U.S.
and Argentine meats and Argentine lemons. After about 20
minutes of discussion, CFK said she understood.


5. (SBU) Congressmen Peterson said his committee would
support the USG abiding by all the health and scientific
rules, but would want Argentina to do likewise. His
committee, he said, would support finding a solution to all
the access problems. However, the solutions needed to be
worked out among the two Agricultural services in the
executive branches. CFK agreed that it was important that
both Argentina and the USG follow the rules, and that we open
up agricultural trade between the two countries.


6. (U) The Congressmen provided CFK with a briefing on the
difficulty of forging agreement on the recent U.S.
agriculture bill and the complicated nature of U.S.
agriculture interests. She said she understood various
interests of different districts, but thought that the
overriding interests of providing the consumer with the best
prices should win out. Representative Peterson explained
that, in his view, the United States had priced food too
cheaply for the consumer and that now it was a great
challenge for farmers to make money in the United States. He
indicated that only about 10% of U.S. consumer income goes to
food, and that out of the $60 billion that will be expended

each year under the new farm bill, only about 10% will go to
the farmers. The rest will go for food stamps, lunch school
programs, etc. CFK said she was surprised by that and
described the situation in Argentina where families spend a
higher percentage of their income on food, with the poorest
spending about 60% of their income on food each month.


7. (SBU) Congressman Peterson then asked about agricultural
taxes and subsidies in Argentina. CFK explained the policy
of providing subsidies for fuel and other inputs with lower
prices and by supporting lower costs by managing the exchange
rate. She noted that these positives for agriculture are
balanced by the desires to keep domestic food prices down and
to redistribute income from wealthy sectors to poorer ones.
She explained that for soy and soy oil production, where
domestic use accounted for only about 5% of production,
export taxes were highest. CFK also reviewed the wheat and
corn tax and consumption statistics in Argentina.
Congressman Peterson said that he had one recommendation:
Argentina should set its export tax on biodiesel at the same
level as its taxes on soybean oil. Right now, he argued,
with a lower tax rate on soy-based biodiesel, Argentina was
encouraging a great deal of biodiesel production. This, he
said, might lead to a glut in the international market once
the United States alters its law to take out a loophole which
allows companies to get a subsidy ($1 per gallon) when a
small amount of U.S. biodiesel is mixed with internationally
sourced biodiesel and the product is re-exported to the
European Union. CFK asked Minister Fernandez and
Agricultural Secretary Cheppi to examine this situation.

Paris Club, U.S. Investment and U.S. Elections
-------------- -


8. (SBU) Congressman Peterson congratulated CFK on her
announcement that Argentina would repay its Paris Club debt.
CFK said it was an important decision because no country
wants to leave debts unpaid and because Argentina wanted to
send the signal that it was normalizing relations with the
rest of the world. She said she believed this was a win-win
decision as it will also open Argentina to more investment
and economic cooperation with the Paris Club countries. CFK
then provided an in-depth briefing on economic growth over
the past five years, the drop in the debt-to-GDP ratio, and
declining unemployment. She noted increased investment and
good investment opportunities offered by Argentina.
Ambassador Wayne noted that over the past three or so years,
U.S. companies have led in new investments in Argentina. CFK
and the Congressmen then talked a bit about the need to
develop diverse sources of energy to keep growth on track in
the future. Congressman Weller discussed the potential for
U.S.-Argentine partnership in areas of alternative energy
development. CFK discussed the Argentine nuclear program and
research facilities at INVAP (a public-private company in
Bariloche, Argentina). She highlighted space cooperation
with NASA. She expressed her support for more such bilateral
cooperation.


9. (SBU) CFK and the Congressmen then discussed the U.S.
presidential elections. CFK shared some of her impressions,
remarking that she and her husband and ex-President Kirchner
had watched both party conventions on CNN each evening over
the past two weeks. The Congressmen shared some of their
thoughts about the direction the election would take. CFK
noted that the new Vice Presidential candidate for the
Republicans had run into a good deal of press criticism as
had Senator Clinton on the Democratic side. She shared her
views that women in politics often get special criticism,
noting that when she came to Buenos Aires as a Senator while
her daughter was still young, the press asked about how she
would care for her daughter. CFK noted that the press
doesn't raise this kind of concern with male politicians who
have young children. She also noted her sense that both U.S.
candidates have very compelling life stories and the contest
seems to encompass the contest between two important themes:
change and patriotism.


10. (SBU) Congressman Peterson said that after his meeting
with Governor Alperovich of Tucuman province earlier in the
day, he had agreed to visit the province on his next trip.
CFK said that Alperovich is one of the best governors in the
country and recounted how he faced a great deal of
anti-Semitism when he first ran for governor and then was
re-elected with an overwhelming majority.



11. (SBU) At the conclusion of the meeting, CFK told the
Ambassador that she appreciated the U.S. statement about her
decision to pay back the Paris Club debt and that she hoped
the U.S. would be able to work constructively as the process
begins to reconcile numbers about the debt owed.
Specifically, she referred to her hope to avoid any excessive
penalty interest as Argentina had made an offer to pay $6.7
billion at once. In a side conversation with Economy
Minister Fernandez, he acknowledged that the government would
likely use a bond purchase to acquire the money from Central
Bank reserves and that the government might need to adjust
the initial decree issued to provide better legal protection
for the process of the executive branch getting the money
from the Central Bank reserves.


12. (U) This cable has been cleared by Rep. Peterson.
WAYNE