ARGENTINE GOVERNMENT PROPOSES JOINT DECLARATION TO

C O N F I D E N T I A L SECTION 01 OF 02 BUENOS AIRES 000451 SIPDIS EEB/OIA FOR WSCHULZ, GHICKS, NHATCHER L/EB FOR LCAPLAN E.O. 12958: DECL: 04/16/2029 TAGS: EINV EFIN ECON AR SUBJECT: ARGENTINE GOVERNMENT PROPOSES JOINT DECLARATION TO CLARIFY ASPECTS OF BILATERAL INVESTMENT TREATY REF: BUENOS AIRES 445 Classified By: Acting Economic Counselor C. Landberg for Reasons 1.4 (b ,d) -------------- Summary -------------- ¶1. (C) MFA North America Director Antonio Trombetta passed CDA a non-paper April 14 proposing that the USG and GoA issue a joint declaration clarifying certain aspects of the 1991 Bilateral Investment Treaty (BIT). GoA officials subsequently clarified that their priority is to get USG support for the idea that Article XI of the BIT, covering national security interests, is "self-judging." These officials believe that the USG will see it in its interests to make such a declaration, given recent USG actions taken in the financial sector in response to the ongoing economic crisis. Washington guidance is requested in formulating a response to the GoA. End Summary. -------------- Text of Non-Paper -------------- ¶2. (C) During an April 14 meeting, reported reftel, Trombetta passed CDA a Spanish-language non-paper outlining its proposal for a joint declaration on the BIT. A rough translation follows, and original has been faxed to WHA/EPSC and EB/IFD/OIA, as well as to the Treasury Department. Begin Text: The Government of the Argentine Republic proposes to the Government of the United States of America the adoption of a joint declaration in relation to the Treaty of Promotion and Reciprocal Protection of Investment signed in Washington, D.C., on November 14, 1991, with respect to the following points: -- Article XI of the agreement is self-judging, although each Party will expect the other Party to apply it in good faith; -- The fair and equitable treatment standard established in Article II.2.a) of the agreement does not require an additional treatment beyond that which is required by the international minimum treatment standard; -- A shareholder will not be able to claim for loss or damage borne by the firm in which (the shareholder) holds shares. This notwithstanding what is established by Article VII.9 of the agreement. End Text. -------------- -------------- Argentine Attorney General's Comments on Proposal -------------- -------------- ¶3. (C) On the margins of an April 15 conference in Buenos Aires on issues related to the International Center for the Settlement of Investment Disputes (ICSID),GoA Attorney General for Treasury Affairs Oswaldo Guglielmino admitted to an Economic Section FSN that his office had generated the non-paper. Guglielmino has the lead for the GoA on all ICSID-related matters and has the lead for the GoA on Argentina's many pending ICSID disputes. ¶4. (C) Guglielmino is behind other controversial interpretations of Argentina's obligations under its BITs. He repeated one of his more contentious arguments during his speech to the conference: that the GoA is fulfilling its ICSID obligations by requiring companies that have received favorable judgments to execute them through local courts. ¶5. (C) Guglielmino acknowledged that the first point on "self-judging" is the GoA's top priority. He said that the GoA expects that the USG will be challenged in international courts over the actions it has taken in response to the ongoing financial crisis (i.e., loans to banks in return for equity stakes). Therefore, Guglielmino believes the USG may BUENOS AIR 00000451 002 OF 002 consider it in its interest to "officialize" this interpretation of the "self-judging" clause when faced with national emergencies. (Article XI states: "This Treaty shall not preclude the application by either Party of measures necessary for the maintenance of public order, the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the Protection of its own essential security interests.") ¶6. (C) Guglielmino blatantly commented that the GoA believes it can take advantage of this situation to make this an official interpretation. (Comment: The GoA has tried to advance this interpretation that Article XI is self-judging in most of its cases before ICSID tribunals, particularly those stemming from the 2001-02 financial crisis. In response to ICSID challenges to this position, the GoA has submitted an internal USG letter that mentions USG perspectives on the interpretation of "self-judging." To date, this has not affected ICSID decisions on Argentine cases. End Comment.) ¶7. (SBU) Post requests Washington agencies' guidance on formulating a response to this non-paper. KELLY