AMBASSADOR MEETS ARGENTINE MINISTER OF INDUSTRY

C O N F I D E N T I A L BUENOS AIRES 001174

SIPDIS

E.O. 12958: DECL: 10/30/2019
TAGS: ECON ETRD AR
SUBJECT: AMBASSADOR MEETS ARGENTINE MINISTER OF INDUSTRY
AND TOURISM

Classified By: Ambassador Vilma Martinez for reasons 1.4 (b) & (d).

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Summary
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1. (C) Ambassador Vilma Martinez paid a courtesy call on
Minister of Industry and Tourism Debora Giorgi in the wake of
the recent transfer of the agriculture portfolio to a
standalone Ministry. Giorgi discussed her approach to her
duties and described maintaining employment as her chief
concern. Discussion between the Ambassador and Giorgi ranged
over fields for likely industrial development, the software
sector in particular, and the Government's latest plan for
support to local producers. End Summary.

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Shift in Responsibilities
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2. (C) The Ambassador, accompanied by EconCouns and EconOff
(notetaker),paid an introductory call on Argentine Minister
of Industry and Tourism Debora Giorgi in her Ministry office
on October 23. The meeting came in the wake of the former
Ministry of Production's redesignation as Industry and
Tourism after the spin-off of the Agriculture portfolio into
a separate and newly created Ministry of its own. According
to press reports, Giorgi, stripped of Agriculture, had
threatened to resign at the end of September unless she
received a signal of support from President Cristina
Fernandez de Kirchner (CFK). When the Secretary of Industry
stepped down to be replaced by Giorgi loyalist Eduardo
Bianchi instead of Marta Diaz, who is close to Chief of
Cabinet Anibal Fernandez, the press interpreted the reshuffle
as a victory for Giorgi and a sign of support for her
continuation in office. During the meeting, Giorgi provided
an overview of the work of her Ministry and ran through a
short list of possible areas for collaboration with the
United States.

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A Minister's Work is Never Done
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3. (C) Giorgi defined her portfolio broadly as encouraging
markets and fostering competition to build productive
infrastructure and human capital. Her Ministry covers all
industrial sectors and also promotes and regulates tourism.
Building industrial capacity, improving the strength of the
service sectors, harnessing science and technology and
generally optimizing the use of Argentina's resources and
productive capacity is Giorgi's principal aim.


4. (C) Giorgi buoyantly observed that the global economic
crisis was providing an unexpected opportunity for Argentina
to build on its strengths in human capital and natural
resources and emerge stronger. She confided, however, that
she found both the challenges and the opportunities that
confront her now to be formidable.

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The Number One Priority: Jobs
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5. (C) CFK's top priority, according to Giorgi, is to
maintain employment, and the Ministry's initiatives all
converge on efforts to safeguard jobs. The purpose of
capital, she observed, is for companies to preserve workers'
positions. Under CFK, competition and corporate regulation
are oriented toward job creation that helps poor families
with numerous children and no breadwinners.


6. (C) Promising sectors for increasing employment include
textiles, footwear, and home appliances. According to a
Giorgi staffer, there has also been substantial recent
investment in kitchen and laundry appliances. For example,
the South Korean industrial conglomerate, LG Group, has
recently begun working with a local producer, where 120
workers make high-quality washing machines to international
standards. The plant is now planning to add 70 workers,
Giorgi noted. Development, she observed, is a matter of
production and hope.

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Industrial Development
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7. (C) Several other economic sectors also offer promising
opportunities for Argentina, according to Giorgi. Services,
bio and information technology and specialized agriculture
are all burgeoning sectors with successful local
entrepreneurs, some of them in their early twenties. The

Ministry is looking at modifications of the law and
adjustments to benefits to promote exports and
entrepreneurial businesses oriented towards international
commerce and export opportunities. It is also looking to
focus on strategic joint ventures in natural resources, the
auto sector, and software, among others. Giorgi hopes to host
an event for young businesspeople in developing economic
areas.

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Hi-Tech Ambitions
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8. (C) Giorgi reserved her greatest enthusiasm for promising
technological sectors. She said that the cultural
differences between Argentina and the United States are
minimal, adding that Argentina has many fluent English
speakers and boasts fine Universities and a thriving software
development sector. She noted that Argentine hi-tech
companies should produce software not just in Spanish but in
English too. Argentine companies, she noted, have partnered
with Microsoft to develop applications for small and medium
enterprises. She would also like to initiate a joint hi-tech
incubator and views such a project as an interesting chance
for cooperative engagement.

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Support for Producers
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9. (C) Giorgi also spoke about subsidies for producers and
her relaunch, in conjunction with Economy Minister Amado
Boudou, of the investment promotion law. The initiative
provides for an 800 million peso stimulus before the close of
2009 and a total of 3.6 billion pesos by the end of 2010. The
plan offers qualifying businesses accelerated amortization of
capital goods in corporate income tax and advance return of
value added tax. Both options would be available on goods
either produced for export or with a sustainable
environmental profile.

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Comment
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10. (C) Giorgi, with her free market credentials from years
in the private sector, has been viewed as something of an
outsider in the Kirchner circle. In her conversation with
the Ambassador, however, she fully supported CFK's professed
economic philosophy and strongly supported the President's
initiatives. Despite her loss of control over agriculture,
she seems intent on supporting CFK and surviving, for now, as
the chief of a smaller cabinet ministry.

MARTINEZ