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Viewing cable 08BUENOSAIRES522, A/S SHANNON AND AMCHAM REPRESENTATIVES SHARE

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Reference ID Created Released Classification Origin
08BUENOSAIRES522 2008-04-22 19:32 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
VZCZCXYZ0001
OO RUEHWEB

DE RUEHBU #0522/01 1131932
ZNR UUUUU ZZH
O 221932Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0849
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 1744
RUEHCV/AMEMBASSY CARACAS PRIORITY 1796
RUEHFR/AMEMBASSY PARIS PRIORITY 1396
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
UNCLAS BUENOS AIRES 000522 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON EINV EPET KPAO KCOR MARR VZ AR
SUBJECT: A/S SHANNON AND AMCHAM REPRESENTATIVES SHARE 
PERSPECTIVES ON GOA 
 
1.  (SBU) Summary.  Assistant Secretary Shannon and 
Ambassador Wayne met with members of American Chamber 
(AmCham) Executive Committee to discuss the companies, 
observations and concerns about the Argentine business 
climate, market opportunities and challenges.  AmCham 
representatives were unanimous in expressing their 
companies, commitment to Argentina, and all noted that their 
Argentine operations are profitable.  However, AmCham 
representatives also expressed a uniform view that what they 
described as the mercurial economic policies of the GOA are 
thwarting market stability, growth and investment in 
Argentina.  AmCham representatives also explained that there 
are many cultural and historical reasons for anti-Americanism 
in Argentina, while noting that U.S. companies are often 
recognized as being the best employers in the country.  They 
expressed their strong desire to establish a regular dialogue 
with the government in which they would be seen as 
participants in Argentina,s growth and in which they could 
work to improve the investment climate.  All participants 
urged the United States to help Argentina resolve its Paris 
Club debt issues, arguing that renewed access to 
international capital markets would reduce Argentina's 
dependence on Venezuela and promote foreign investment.  End 
Summary. 
 
U.S. Companies are Doing Well in Argentina 
------------------------------------------- 
 
2.  (SBU)   A/S Shannon met with a group of CEO,s, 
Presidents and other senior managers of the following AmCham 
Executive Committee companies:  Citibank, Coca-Cola, Dow 
Chemical, Ford, Exxon, General Electric, Motorola, 
Prudential, IBM, CHM2 Hill, Monsanto, and Cargill.  The 
company representatives emphasized their respective 
company,s long histories in Argentina which date back from 
20 to over 100 years.  They all cited positive statistics 
about their recent hiring, investment and profitability, and 
there is a consensus view that tremendous potential exists 
for doing even better. 
 
AmCham Companies Crave Stability, Yearn for Productive 
Dialogue With GOA 
-------------------------------------------- 
 
3.  (SBU) The AmCham members, principal concern about doing 
business in Argentina is the lack of clear and constant 
rules.  They lamented the GOA,s frequent interventions in 
the economy, and penchant for changing rules with minimal 
notice and no prior discussion with the business community. 
This situation has left the companies craving a sense of 
stability. 
 
4.  (SBU) AmCham members expressed frustration with what they 
described as the GOA,s inability or unwillingness to 
articulate a long-term economic plan.  AmCham companies 
believe GOA economic policy is driven by how best to respond 
to the crisis of the moment without any real thought to a 
sustainable, long-term economic model. 
 
5.  (SBU) Company representatives also lamented that they 
have no channel for dialogue with the GOA that would enable 
them to influence policies that impact their respective 
operations and that limit their possibilities for expanding 
investment in Argentina.  President Cristina Fernandez de 
Kirchner campaigned as someone who would work in partnership 
with the private sector; however, the AmCham representatives 
said they have not yet seen evidence of such a collaborative 
approach.  Instead, the President makes decisions in 
consultation only with a small group of advisors, and it is 
extremely difficult for individual companies or industry 
groups of any nationality to have access to this small group. 
 Lower-level officials are available for meetings, but have 
minimal influence on the President and her decisions.  The 
AmCham representatives said they sought a dialogue in which 
the GOA would see them as &partners8 in Argentina,s 
growth. 
 
Other Concerns:  Energy, Labor Laws, Inflation, Price Controls 
------------------------------------------ 
 
6.  (SBU) Company representatives expressed significant 
concern that the GOA has not developed a viable, long-term 
energy policy.  The demand for energy in Argentina is 
growing, but GOA policies have created a difficult 
environment for energy producers.   A combination of import 
restrictions, export taxes, and price controls has left the 
energy industry with little incentive to continue investing 
further in building domestic capacity. 
 
7.  (SBU) Several AmCham members expressed concerns about 
cumbersome labor laws.  They believe the Kirchners have an 
impression that labor laws were too employer-friendly in the 
1990s and so have instituted a series of employee-friendly 
changes.  These changes have added another level of 
uncertainty for companies looking to expand and hire more 
employees in Argentina. 
 
8.  (SBU) Everyone expressed concerns about inflation and the 
controversy surrounding the validity of official GOA 
statistics.  Specifically, they mentioned the uncertainty in 
the markets caused by growing inflation, the threat to 
continued profitability caused by inflation, the lack of 
transparency of the GOA in acknowledging inflation and the 
lack of a long-term view for dealing with inflation. 
 
9.  (SBU) A corollary concern is the GOA,s willingness to 
resort to &informal8 price controls.   They expressed 
concern about the heavy-handed tactics of some GOA officials 
in not formally mandating price controls, but exerting 
substantial pressure on companies not to raise prices. 
 
Challenges to Future Investment and Growth in Argentina 
--------------------------------------------- ---------- 
 
 
10.  (SBU) A general consensus exists that U.S. companies are 
committed to continuing operations in Argentina, but the 
current business environment is not conducive to expansion. 
The companies must compete with subsidiaries of their 
companies in other countries in Latin America and from around 
the world for new global investments.  With an uncertain 
business environment, and rising government intervention in 
many sectors of the economy, they cannot realistically 
compete with the subsidiaries in many other countries for 
investment dollars.  One CEO noted that Brazil, for example, 
provides a much more stable investment climate with clear and 
consistent rules, compared to present conditions in 
Argentina. 
 
11.  (SBU) An additional challenge to future investment is a 
lack of broad access to capital markets.  The Argentine 
public still does not have confidence in the domestic banking 
industry and tends to make only short-term bank deposits. 
This restricts the depth of the domestic capital markets. 
Only large companies have realistic access to international 
capital markets.  Small companies do not have access to 
sufficient capital to fund sustained long-term growth.  In 
this sense, all participants agreed that the U.S. should work 
with others to encourage solutions to Paris Club debt.  This 
would be a key step to reopening access to international 
capital and reducing Argentina's dependence on Venezuela. 
 
12.  (SBU) Some AmCham members mentioned the GOA,s 
relationship with Venezuela as a disincentive to further 
investment by their headquarters and wished that the GOA were 
closer to more moderate neighbors such as Chile and Brazil. 
AmCham representatives noted that Venezuela,s recent 
decision to nationalize a large Argentine majority-owned 
steel maker (SIDOR) may put stress on the GOA,s relationship 
with Venezuela and present an opportunity for the U.S. to 
help bring Argentina back into the fold of more responsible 
Latin American countries. 
 
USG Perspective On Dialogue With GOA 
------------------------------------- 
 
13.  (SBU) A/S Shannon noted that the USG has also had 
difficulty establishing a consistent and productive dialogue 
with the GOA and that the USG often finds the bilateral 
relationship held hostage by whatever crisis the GOA is 
experiencing at that moment.  The goal of the USG is to build 
a stable relationship based on long-term dialogue, rather 
than allowing the relationship to be defined by crisis.  The 
USG does not want the bilateral relationship to be focused on 
our differences, but seeks a positive, forward-looking agenda 
building upon our policy convergences.  He acknowledged that 
the companies and the USG face similar challenges in trying 
to foster dialogue with the GOA because of the ways decisions 
are made by this Argentine government.  The USG wants to work 
with the companies to promote an environment where the 
presence of U.S. companies is increasingly viewed as positive 
and mutually beneficial. 
 
Reasons for Anti-Americanism in Argentina 
------------------------------------------ 
 
14.  (SBU) A/S Shannon invited the AmCham representatives to 
discuss the reasons for persistently high levels of 
anti-American sentiment in Argentina.  In response, several 
company representatives noted that Argentina has been going 
from crisis to crisis for 80 years and that Argentines 
instinctively look to blame others for their problems.  The 
U.S. is the biggest, most powerful nation in the world, and 
it is easy for populist Argentine politicians to blame 
Argentina,s problems on the U.S.   The war in Iraq has 
reinforced the stereotype of the U.S. having an agenda to 
dominate the world without regard for the concerns of others, 
and this has fostered increased anti-Americanism. 
 
15.  (SBU) Several representatives noted that many Argentines 
have an ideological dispute with the U.S. conventional wisdom 
concerning the role of the private sector and free enterprise 
in the economy.  Many Argentines do not trust the private 
sector and accept that the Argentine government will have bad 
relations with the private sector.  The instinctive distrust 
of the private sector by many Argentines extends to dislike 
for the United States given its strong identification as a 
champion of free markets and the private sector.  The system 
of public education does not teach about business or 
economics, and so it is difficult to teach children about the 
benefits of a strong private sector and to change stereotypes 
about the United States as a redoubt of rapacious capitalism. 
 
 
16.  (SBU) Another factor cited by Committee members as 
contributing to anti-Americanism is that Argentine society is 
largely made up of immigrants from Europe and Argentines 
instinctively identify more with Europe than the United 
States.  Argentines do not feel any strong cultural bond with 
the United States and are therefore more likely to buy into 
anti-U.S. sentiment. 
 
17.  (SBU) While anti-American sentiment is strong, there is 
also evidence of positive changes.   More and more students 
now want to work for U.S. companies, and there is growing 
recognition in Argentina that U.S. companies are the best 
companies to work for in the country.  For example, the 
Ambassador cited a poll taken in late 2007 which rated six 
American companies as among the top ten places to work in the 
country.  There have even been recent indications that the 
GOA recognizes that U.S. employers improve the quality of 
life of their employees and are often market leaders in terms 
of providing training and career development opportunities to 
their employees, offering a good working environment and 
excellent salaries and benefits. 
 
18.  (SBU) A/S Shannon remarked afterward that he was 
impressed at how long the U.S. companies have been present in 
Argentina and how committed they are to the long term success 
of Argentina,s economic and social development.  He noted 
that all of the companies spoke of their desire to construct 
a dialogue with the GOA that will enable them to be partners 
in building a better future for the country. 
 
WAYNE