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Viewing cable 07BUENOSAIRES1920, ARGENTINA: EX-VEEP ALVAREZ ON MERCOSUR, VENEZUELA, AND

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Reference ID Created Released Classification Origin
07BUENOSAIRES1920 2007-09-25 15:30 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
VZCZCXYZ0001
RR RUEHWEB

DE RUEHBU #1920/01 2681530
ZNR UUUUU ZZH
R 251530Z SEP 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 9345
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6591
RUEHMN/AMEMBASSY MONTEVIDEO 6791
RUEHSG/AMEMBASSY SANTIAGO 0803
RUEHBR/AMEMBASSY BRASILIA 6461
RUEHLP/AMEMBASSY LA PAZ SEP CARACAS 1514
RUEHSO/AMCONSUL SAO PAULO 3550
RUEHRI/AMCONSUL RIO DE JANEIRO 2382
UNCLAS BUENOS AIRES 001920 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
PASS NSC FOR MICHAEL SMART 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN 
TREASURY FOR LTRAN, MMALLOY 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL PINR VZ AR
SUBJECT: ARGENTINA: EX-VEEP ALVAREZ ON MERCOSUR, VENEZUELA, AND 
DOMESTIC ELECTIONS 
 
Ref:  (A) Buenos Aires 1707 
      (B) Buenos Aires 1359 
      (C) Caracas 844 
 
This cable contains sensitive information - not for internet 
distribution. 
 
------- 
Summary 
------- 
 
1. (SBU) Former De La Rua Administration Vice President "Chacho" 
Alvarez, currently serving as the President of Mercosur's Permanent 
Representatives Commission, sees Mercosur's current expansion agenda 
as a political effort to contain and manage Venezuela (protect).  A 
Venezuela within Mercosur and subject to Mercosur's democracy 
clause, he said, is less likely to pursue its more ideologically 
driven ALBA (Bolivarian Alternative for the Americas) trade bloc 
"adventures."  Mercosur continues to grapple with internal 
asymmetries which concentrate the bulk of foreign capital flows to 
Brazil and Argentina at the expense of Uruguay and Paraguay. 
Alvarez sees Argentina's post-economic crisis normalization being 
complicated by an unprecedented concentration of presidential power 
and a fragmented opposition that is operating outside of traditional 
political parties and so lacks national projection and broad 
legitimacy. 
End Summary. 
 
--------------------------------------------- 
On Mercosur's Asymmetries and Expansion Plans 
--------------------------------------------- 
 
2. (U) On September 21 Ambassador, PolCouns, and EconCouns met with 
Mercosur President of the Permanent Representatives Commission (and 
former GoA Vice President under President De la Rua) Carlos Alberto 
"Chacho" Alvarez and Cabinet Chief for the Mercosur Presidency 
Facundo Nejamkis.  Conversation focused on Argentine pre-election 
political dynamics and on Mercosur's ongoing expansion exercise. 
Please protect Alvarez's comments. 
 
3. (SBU) Mercosur continues to grapple with internal asymmetries 
which concentrate the bulk of foreign investment into the bloc to 
Brazil and Argentina at the expense of smaller members Uruguay and 
Paraguay, Alvarez said.  Uruguay's exports to Brazil, which had 
averaged in the $1 billion range annually in the 1990s, are now half 
of that level.  It is not at all hard to understand then, Alvarez 
concluded, why Uruguay is eagerly exploring TIFA links with the U.S. 
 
 
4. (SBU) A Mercosur internal compensation fund will distribute 
$50-60 million to Uruguay and Paraguay to address some of the large 
economy/small economy differences in productivity and productive 
capacity, Alvarez said.  Uruguay hopes to use the bulk of its 
compensation fund monies to build infrastructure links, including 
electricity transmission lines, to Brazil. Paraguay, in contrast, is 
exploring the use of its share of compensation funds to develop 
small business capacity and productivity, particularly in the 
Tri-border Area.  Alvarez said he had participated at a UNDP 
conference in New York earlier this year to explore how Mercosur 
could contribute to the development of smaller nation member 
productive capacity. 
 
5. (SBU) On Mercosur's expansion to include new members Venezuela 
and Bolivia, Ambassador noted his own experience with the European 
Union was that trade bloc expansion efforts invariably divert 
attention from efforts to deepen current bloc disciplines.  Alvarez 
agreed and called Mercosur's expansion agenda broadly political: it 
would be far easier to manage the region's relations with a 
fractious Venezuela embedded into Mercosur bloc disciplines.  A 
Venezuela within Mercosur and subject to Mercosur's democracy 
clause, he said, was also less likely to pursue its more 
 
ideologically driven ALBA (Bolivarian Alternative for the Americas) 
trade bloc (Ref C) "adventures."  Alvarez admitted that the 
incorporation of Venezuela's increasingly centralized economy into 
Mercosur's common external tariff regime would be a difficult 
long-term challenge. 
 
--------------------------------------------- ------ 
On Argentine Normalization and a Cristina Candidacy 
--------------------------------------------- ------ 
 
6. (SBU) In the immediate aftermath of the 2001/2 economic crisis, 
Alvarez said, Argentina had turned inwards to recover its sense of 
balance and self-esteem.  Five years later, Argentina has stabilized 
economically and politically and so a likely Cristna Fernandez de 
Kirchner (CFK) administration will face internal demands for a 
"normalization" of Argentina's relations with the international 
community.  Part of this normalization process requires a strong 
opposition party to call a government to account and to keep it 
focused on serving the national interests.  However, Alvarez 
emphasized, Argentina's fragmented opposition is largely 
"vanity-driven," party-less and so lacking in national projection 
and broad legitimacy.  This divided opposition, combined with the 
unprecedented budget and patronage power that President Kirchner has 
concentrated at the federal level, will make this normalization 
process difficult, Alvarez concluded. 
 
--------------------------------------------- ------ 
Relations with Neighbors: Hope on Papermill Dispute 
--------------------------------------------- ------ 
 
7. (SBU) In its international engagements, Argentina under President 
Nestor Kirchner has been "defensive," Alvarez said.  CFK will be a 
more open international interlocutor than her husband has been to 
date, and has made clear she will engage both the USG and European 
Union on common interests.  Alvarez speculated that President Nestor 
Kirchner could, after he leaves office, turn his energies to 
improving Argentina's regional relations with Brazil, Chile and 
Uruguay.  Argentine/Chile relations have deteriorated, he said, over 
Argentina's breach of natural gas delivery contracts. 
Argentine/Uruguay relations have similarly suffered over paper mill 
frictions (Ref A).  With Argentina's paper mill environmental 
protestors losing popular support and Kirchner himself having 
requested Spanish conciliation efforts, "common sense" will prevail: 
 Argentina will accept the Uruguayan paper mill as a fait accompli, 
demand enhanced environmental monitoring, and come to some final 
accord with Uruguay before the upcoming 2009 Summit of the Americas 
in Trinidad. 
 
-------- 
Bio Note 
-------- 
 
8. (U) Carlos Alberto "Chacho" Alvarez, born December 26, 1948 in 
Buenos Aires, was Vice-President of Argentina during part of 
President Fernando de la Rua's mandate, and currently heads the 
Mercosur Commission of Permanent Representatives (CRPM).  Alvarez 
has a degree in history from Buenos Aires University.  He was a 
staff adviser to the Regional Economies Commission of the National 
Senate from 1983 to 1989.  That year he was elected as National 
Deputy for the Justicialist Party, but he split from the party 
shortly afterwards because of disagreements with President Carlos 
Menem, creating an independent block known as The Group of the 
Eight. 
 
9. (U) In 1991, Alvarez joined a group of politicians of different 
progressive parties, as well as former Justicialists, to create the 
Frente Grande coalition party. He was again elected congressman for 
the 1993-1997 period, as well as a member of the Constitutional 
Convention that modified the constitution in 1994, both as a member 
of the Frente Grande party.  In 1994, he took part in the creation 
of the FrePaSo party.  In the 1995 presidential elections, he was 
 
the vice-presidential running mate of Jose Octavio Bordon, 
Argentina's current Ambassador to the United States; they won second 
place. 
 
10. (SBU) In 1997, FrePaSo joined the Union Civica Radical to form 
the Alliance for Work, Justice and Education (usually known as the 
Alianza). Alvarez was elected once again to the Chamber of Deputies, 
this time by the Alianza.  He became vice-president in the 1999 
presidential elections with Fernando de la Rua, but resigned his 
post on October 8, 2000, due to his disapproval of alleged 
administration bribes paid to the Federal Senate to approve labor 
law reforms.  He retired from public life for five years until his 
appointment to Mercosur in December 2005. 
 
------- 
Comment 
------- 
 
11. (SBU) Chacho Alvarez's 2000 resignation from the De La Rua 
administration in protest over alleged payment of bribes won him 
lasting credibility among some Argentine voters.  His departure from 
De La Rua's Alianza administration only a year before the nation 
descended into economic and political chaos, however, has left 
Alvarez his share of detractors as well.  Alvarez's current position 
heading the Mercosur PermReps' Committee is widely seen as a 
comfortable sinecure from which to choose the best timing and 
opportunity to re-enter the Argentine political mainstream.  It 
could well be that a Cristina Kirchner administration, more open and 
internationally minded that that of her husband, could find some use 
for Alvarez's Mercosur credentials. 
WAYNE