ARGENTINA: NO END IN SIGHT FOR 100-DAY FARM CRISIS

C O N F I D E N T I A L BUENOS AIRES 000827

SIPDIS

E.O. 12958: DECL: 06/18/2028
TAGS: PGOV EAGR ECON EFIN INVI AR
SUBJECT: ARGENTINA: NO END IN SIGHT FOR 100-DAY FARM CRISIS

REF: A. BUENOS AIRES 803

B. BUENOS AIRES 797 AND PREVIOUS

Classified By: E. Anthony Wayne for reasons 1.4(b)and(d)


1. (C) Summary: In what could prove an important step in
diffusing the 100-day old farm crisis, President Fernandez de
Kirchner (CFK) announced on June 17 that she would be sending
a bill this same day to the legislature on the question of
the increased agricultural export taxes for debate and vote.
This move, she stated, is in direct response to a request by
the farm sector in its meetings with the GoA. CFK provided
no details about the draft legislation, which could prove to
be unacceptible to the farm sector if, beyond addressing just
the rolling export charge rate, imposes additional controls
on the export market. The draft legislation could also
reaffirm existing legislation (which the GoA has threatened
to use at various time during the crisis) to force producers
to supply the domestic market -- again limiting exports. It
will take some time, once the details are made public, for
the farm sector and legal types to begin to sort out the
implications. Some road blockages are likely to continue in
the short term as they are not controlled by any one group,
and, even if the roads clear, it will take some time for
deliveries to return to normal. End Summary.


2. (SBU) Using the commemoration of the military's 1955
bombing of the Plaza de Mayo, President Cristina Fernandez de
Kirchner (CFK) on June 17 announced she would be sending a
bill to the legislature that same evening for debate and vote
on the sliding scale of taxes on soy exports. She provided
no details of the draft legislation but noted that this is in
response to a demand from the farm sector. She also noted
that the government was well within its constitutional
responsibities in establishing the increased export rates in
the first place. Apart from this apparent concession to the
farm sector, CFK was otherwise her regular combative self,
attacking the motives of the road blockages and the resulting
shortages of consumable goods in various parts of the country.


3. (C) CFK, however, provided no details about her proposed
legislation. If it includes additionally restrictive
language, i.e. imposes new controls on exports, it could
prove unaccepable to producers. The draft legislation could
also seek to reaffirm existing legislation that requires
producers to supply the local market, another bone of
contention with the farm sector and a measure that has been
threatened several times during the crisis by the GoA.


4. (SBU) The Kirchners' remarks follow on a long holiday
weekend that witnessed a marked escalation in confrontations,
tension and anxiety in Argentina. The temporary arrest on
June 14 of vocal farm leader Alfredo De Angeli and other farm
protestors -- covered widely on TV and radio -- resulted in
large, spontaneous demonstrations throughout Argentina's
major urban centers -- including in the Plaza de Mayo and in
front of the suburban official residence in Olivos.
Protestors voiced as much their disapproval of the GoA's
hardline tactics and refusal to negotiate as support for the
farm cause. Once again, administration shock troops
(friendly piquetero and union groups) mobilized to "retake"
the streets, this time joined by Nestor Kirchner and senior
GoA ministers in a raucous and off-putting show of support
for the government. Even larger spontaneous demonstrations
broke out on the evening of June 16 (Flag Day) following
statements earlier that day by vocal piquetero leader Luis
D'Elia claiming that former president and BA governor Eduardo
Duhalde and other PJ dissidents were trying to organize a
coup d'etat and calling for Argentines to "arm themselves" in
support of the constitution (D'Elia later walked back from
the latter comment). Unlike earlier public protests in
Buenos Aires where largely middle and upper class Argentines
took their pots and pans to the streets, this time the
protests were picked up in some of the lower middle class
sections of the greater Buenos Aires area.


5. (C) The Kirchners' continued hardline approach to the
100-day farm crisis, while appealing to their core
constituency, is increasingly bringing to the fore fissures
among peronists and in the GoA's governing coalition. A
number of Senior PJ figures, legislators and governors,
including Senator Carlos Reutemann and governors Juan
Schiaretti, Das Neves and former governors Felipe Sola and
Eduardo Duhalde are openly calling for dialogue. Vice
President (and President of the Senate) Julio Cobos, possibly
in a break with the Kirchners, has called for a special
session of the Senate to debate the farm issues. The
opposition parties in the lower Chamber of Deputies are also
trying to force a debate in that government-controlled body.
Nestor Kirchner in his June 17 remarks toned down his call
for the faithful to "flood" the Plaza de Mayo on June 18 in
support of the government. Some PJ luminaries, PJ mayors in
the greater BA area, and even the pro-government union
confederation CGT, alarmed by the ex-president's combative
tone, had quietly called for the Casa Rosada to cancel the
rally. There is a general anxiety among Argentines and some
analysts that the dynamics of the situation are spiraling out
of control. The hope is that cooler heads will prevail but
serious shortages in food stuffs and consumer items,
industrial inputs, and particularly fuel (diesel and gas) are
beginning to be felt and will get worse before improving,
even if the situation is quickly resolved.


6. (C) Comment: While a potentially important concession
that will require significant study by interested parties,
just addressing back export taxes may not be sufficient to
quell rising popular demands for a less confrontational
governing style, dominated behind the scenes by CFK's
pugnacious husband, former president Nestor Kirchner.
WAYNE