AMBASSADOR RAISES ARGENTINA INVESTMENT CLIMATE

C O N F I D E N T I A L BUENOS AIRES 000056

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/15/2028
TAGS: PGOV PREL EINV ECPS EPET EMIN AR
SUBJECT: AMBASSADOR RAISES ARGENTINA INVESTMENT CLIMATE
CONCERNS WITH FM TAIANA

REF: (A) BUENOS AIRES 44 (B) BUENOS AIRES 43 (C)

BUENOS AIRES 54 (D) BUENOS AIRES 45

Classified By: Charge d'Affaires Tom Kelly for reasons 1.4 (b) & (d).


1. (C) Summary: The Ambassador raised with Foreign Minister
Jorge Taiana U.S. companies' concerns about Argentina's
investment climate during their January 10 meeting (reftels).
He informed Taiana that the USG is closely monitoring
Argentina's dispute with CMS Gas Transmission, and expressed
concern that the GOA has now signalled that it will not pay
an ICSID arbitral award, despite earlier assurances to the
contrary. He also relayed U.S. companies' concerns over the
GOA's decision to raise export taxes on the mining and energy
sectors as well as limit fuel exports, noting the negative
impact the policies had on attracting additional investment.
The Ambassador requested MFA assistance for arranging
appointments for the upcoming visit by Ambassador David
Gross, the U.S. Coordinator for International Communications
and Information Policy. Although the MFA initially agreed to
assist with the visit, the MFA subsequently said they believe
it would be better for Ambassador Gross to reschedule his
visit for February or March as this is "vacation time", but
that if he had to come at this time to focus on private
sector meetings and to keep a low public profile. End
Summary.


2. (C) On January 10, Ambassador Wayne raised with Foreign
Minister Jorge Taiana U.S. companies' concerns over
Argentina's investment climate. They also discussed the
current state of bilateral relations (ref A),the release of
Colombian hostages (ref B),Kosovo (septel),the Damascus
Declaration National Council (ref C),and the upcoming
Washington conference on renewable energy (ref D). Taiana was
accompanied by Under Secretary for Bilateral Relations
Vicente Espeche Gil.

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Ambassador Stresses Importance of Paying ICSID Awards
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3. (C) The Ambassador informed Taiana that the USG is
closely monitoring the dispute between Argentina and American
investor CMS Gas Transmission, and noted that EEB Assistant
Secretary Dan Sullivan had raised the issue with Argentine

SIPDIS
Ambassador Jose Octavio Bordon in Washington six weeks ago.
He noted that Argentina's Attorney General for the Treasury
had recently indicated that Argentina would not pay CMS the
arbitral award ordered by the International Center for the
Settlement of Investment Disputes (ICSID),despite previous
public assurances that the GOA would pay if the ICSID
arbitral tribunal denied Argentina's request for annulment.
The Ambassador asked Taiana to transmit to the Ministry of
Economy the importance of paying the award, cautioning that
failure to pay the ICSID arbitral award would "not send a
positive signal" to the international community and foreign
investors. The Foreign Minister stated that he would forward
our concerns to the Ministry
of Economy.

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Ambassador Highlights Concerns over Export Taxes
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4. (C) Ambassador Wayne also indicated that a number of
U.S. companies are troubled by recent GOA moves to increase
export taxes on mining and petroleum exports as well as limit
fuel exports. He commented that these decisions complicate
their efforts to convince headquarters to authorize
additional investment in Argentina. Taiana noted the
concern, and asked if the Embassy could provide him with
information on U.S. investment in the mining sector, as he
was not aware of significant U.S. mining investments. As if
to note his own frustration with the GOA's self-defeating
trade policy, Taiana ironically observed that the MFA had
just issued a report on its efforts to expand export markets
for Argentine producers.

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MFA Declines Authorization for GOA Meetings for Gross
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5. (C) The Ambassador also informed Taiana that Ambassador
David Gross, the U.S. Coordinator for International
Communications and Information Policy, will visit Buenos
Aires on January 17 to discuss telecommunication, Internet,
and satellite education issues with Argentine officials and
executives. The Ambassador requested GOA assistance with
arranging Ambassador Gross's meetings with several GOA
officials, including the Science Minister. Deputy Foreign

Minister Roberto Garcia-Moritan called Ambassador Wayne on
Monday January 14 to say that given the "vacation period" in
Buenos Aires, it would be better if Ambassador Gross could
reschedule his visit for February or March. When the
Ambassador explained that Ambassador Gross was visiting Chile
this week, the Deputy Foreign Minister said it would be
better at present to focus on private sector meetings and to
maintain a low public profile.

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COMMENT
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6. (C) Ref A noted that meeting atmospherics were excellent,
with Taiana going out of his way to strike a positive tone.
While the MFA has said that normal embassy interaction with
the GOA should continue, the MFA decision not to authorize
GOA meetings with Ambassador Gross is a clear indication of
their sensitivity over requests for Ministerial and senior
sub-ministerial meetings until we have worked through current
problems.
KELLY