ARGENTINA: PRESIDENT OPENS CONGRESS PREDICTING A

C O N F I D E N T I A L BUENOS AIRES 000219 SIPDIS E.O. 12958: DECL: 03/03/2039 TAGS: PREL PGOV ECON AR SUBJECT: ARGENTINA: PRESIDENT OPENS CONGRESS PREDICTING A DIFFICULT YEAR REF: (A) BUENOS AIRES 168 (B) 08 BUENOS AIRES 1710 Classified By: Ambassador Wayne for reasons 1.4 (b) & (d). ¶1. (C) Summary: Argentine President Cristina Fernandez de Kirchner (CFK) opened the ordinary session of Congress March 1, focusing largely on the economy, predicting that 2009 would be the most difficult one of the last 100 years, and asserting that Argentina was ready to face the economic crisis. She made very few foreign policy references aside from mentioning that, during the April 2 G-20 Summit in London, Argentina would emphasize the need to eliminate tax havens and promote global macroeconomic policy coordination in dealing with the financial crisis. The President announced that she would soon be sending to Congress a new broadcasting bill and called for the judiciary to accelerate cases on human rights abuses during the military dictatorship. Opposition politicians criticized CFK's address, describing it as "arrogant" and lacking concrete announcements. Far from encouraging Argentine politicians to unite in the face of global challenges, CFK's speech appears to have hardened the opposition's view that change will not come under the current administration. End Summary. ¶2. (SBU) Arriving at Congress with unusual punctuality, Argentine President Cristina Fernandez de Kirchner (CFK) was greeted by her estranged Vice President Julio Cobos and her faithful President of the Lower House Eduardo Fellner and Senate President Pro Tempore Jose Pampuro. (Comment: Press speculated previously that the Casa Rosada had considered a variety of options to avoid the Cobos-CFK encounter, including sending him to a conference in Europe. The President and her husband, former President Nestor Kirchner, have been sharply critical of Cobos since July 2008, when he voted against her administration's plan to raise agricultural export taxes.) CFK greeted Cobos with a firm handshake and steady eye contact, avoiding the local custom of a kiss on the cheek. According to leading daily "La Nacion," the anticipated large crowd of Kirchner supporters arrived late to the plaza outside the Congress because the ceremony starting time had been changed twice, which gave the organizers little time to adjust the logistics involved in transporting these paid supporters. ¶3. (C) With an equally stern voice and expression, CFK delivered her 71-minute speech extemporaneously, as is her custom. Carlos Pagni, a columnist from leading daily "La Nacion," remarked that her preference for not reading notes contributed to her forgetting to "declare open the 127 period of ordinary sessions," an oversight that left some local observers later wondering whether the sessions were indeed open or if the President would need to draft a letter to correct the oversight. At one point, as CFK listed the laws passed by Congress during her first year in office, Lower House President Fellner interjected to add the nationalization of retirement funds to her list. CFK made light of the omission, describing it as a "defect" caused by not reading her speech that she would forget such a "fundamental" law. CFK was less organized than in previous speeches, jumping from theme to theme, while purposefully avoiding sensitive issues, such as crime, inflation, and the much-questioned Argentine statistical agency INDEC. However, it was nevertheless an impressive hour plus presentation without a text. Heavy on the Economy, Foreign Policy Light -------------- ¶4. (SBU) CFK devoted much of her speech to economic themes, predicting 2009 would be "the most difficult of the last 100 years." She spent the first part of her remarks on the global economic crisis, comparing it to the Great Depression. She defended the economic record of her administration (2007- ) and her husband's (2003-2007),noting a legacy of growth in export and industrial manufacturing sectors. Notably, she stressed that, to augment GoA policy options to confront the financial crisis, she would send to Congress "all the instruments that would enable them to intervene adequately in the economy to protect jobs and generate economic activity," which local media called a reference to reports that the CFK administration is considering some form of state intervention in the national grain market. She echoed prior stump speech support for the current "competitive" peso, an economic model based on reserve accumulation, and the nationalization of Aerolineas Argentinas and of the private pension funds, while refraining from the mention of any negative economic indicators. The President confirmed that, during the April 1-2 G-20 Summit meeting in London, Argentina will encourage the elimination of tax havens (which she called home to 40% of global capital),seek significant IMF and World Bank reform, and promote coordinated macroeconomic policy remedies to address the global economic slowdown. (Septel will provide more extensive information on the positions that the GOA will take at the G-20 Summit.) Finally, on recent media play on a USG public report that expressed concern that the GOA's capital repatriation law will facilitate money laundering (ref A and septel),the President attributed the misinformation to irresponsible local journalism. The Farm Sector: I Told You So! -------------- ¶5. (SBU) CFK argued that had Congress approved in 2008 her proposal to impose a sliding scale of agricultural export duties, small producers would be better off today. She also linked the GOA's inability to pay higher teacher salaries and build more hospitals to lower revenue from agricultural exports. CFK criticized grain farmers for withholding some of their harvest from the market. ¶6. (SBU) Farm leaders took umbrage at the President's remarks, describing them as "mistaken", "contradictory," and "unclear." Argentine Rural Confederation (CRA) President Mario Llambias singled out in particular the President's reference to Resolution 125, arguing that small producers would be equally exposed to the crisis today because the resolution provided subsidies only until October 2008, a fact CFK neglected to mention. Llambias also criticized CFK for linking the government's ability to pay higher teacher salaries to the level of agricultural taxes. Coninagro economist and negotiator Daniel Asseff remarked that it was contradictory for the President to say on the one hand if Resolution 125 had passed producers would pay fewer taxes and then ask the producers to pay more taxes to improve salaries and build hospitals. The farm sector also criticized her for not directly addressing recent rumors that the GOA is considering nationalizing grain exports. A Jab at Catamarca Province -------------- ¶7. (SBU) CFK defended the status of her government's revenue-sharing program with the provinces. She highlighted in particular the funds Catamarca has received, noting that it received 1.44 billion pesos in 2008, up from 249 million pesos in 2002. (Comment: Catamarca was singled out because it holds elections in a few days which will pit a governor aligned with Vice President Cobos against forces aligned with the Kirchners. Catamarca Governor Brizuela del Moral has criticized the delay in federal funds for public works.) What's Next: New Broadcasting Bill and Human Rights Cases -------------- ¶8. (SBU) Toward the end of her address, CFK said she would soon be sending to Congress a new broadcasting bill, but did not further specify contents or timing. (Comment: Recent press reports speculate that the draft legislation will incorporate suggestions by the Coalition for Democratic Broadcasting, a group of broadcasting reform advocates who believe Argentina's media industry is marred by monopolistic practices. Four years ago, this group compiled 21 points, which they argue should constitute the legislation's backbone.) CFK described the bill as "a definite change" from what was sanctioned during the military era, referring to it as a "historic debt" for Argentine democracy. ¶9. (SBU) CFK also called for the acceleration of judicial review of human rights abuses committed during the 1976-83 military dictatorship, claiming that the executive and legislative branches have done their part and it is now time for the judiciary to step up to the plate. Remarks Rankle the Opposition -------------- ¶10. (SBU) Opposition politicians were highly critical of CFK's address, describing it as "arrogant" and lacking concrete announcements. Civic Coalition (CC) leader and former 2007 presidential candidate Elisa Carrio remarked: "Few times have I heard such a dishonest speech. She does not recognize the suffering of millions of Argentines." Radical Party (UCR) leader Senator Gerardo Morales added: "The President has told us that everything is going to be the same, (and carried out) with the same arrogant attitude." National deputy Francisco de Narvaez (recently aligned with Peronist dissident and national deputy Felipe Sola and Buenos Aires Mayor Mauricio Macri) said her speech focused "heavily on the past, little on the present, and not at all on the future," adding that she did not even mention the public security situation (a top concern for Argentines). Socialist party national deputy Silvia Augsburguer said the speech caused great concern as, despite the recognition that 2009 will be a difficult year, "there was not one announcement on how we will confront it, what provisions the Government will make, and what are its long-term plans." Republican Proposal (PRO) deputy Federico Pinedo complained that "production has fallen 30 percent in one year and there was not one reference to it. It is as if they live in Miami." Former Victory Front National Deputy Miguel Bonasso described it as a "politically intelligent, moderate, and conciliatory speech," but asked ironically "if we are doing well, (as CFK asserts,) why are we so bad off?" ¶11. (C) Comment: After a grueling first year in office (ref B),CFK's second year promises to be politically and economically critical for the Kirchners given the upcoming October midterm elections and the impending impact of the economic international crisis. Far from searching for common ground that might form the basis of a broadly acceptable legislative agenda, CFK's speech -- including her telling reference to the GoA's desire to expand government intervention in the economy -- appears not to have blazed any new trails. As one pundit remarked, this was the same speech that CFK has been making for months. WAYNE