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Viewing cable 09BUENOSAIRES499, Argentina: International Donor Community
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 09BUENOSAIRES499 | 2009-04-30 21:10 | 2011-08-25 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Buenos Aires |
VZCZCXYZ0000
OO RUEHWEB
DE RUEHBU #0499/01 1202110
ZNR UUUUU ZZH
O 302110Z APR 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3621
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHMD/AMEMBASSY MADRID 2248
RUEHRO/AMEMBASSY ROME 1511
UNCLAS BUENOS AIRES 000499
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: PREL EAID ECON SOCI PHUM AR
SUBJECT: Argentina: International Donor Community
Braces for Tough Times Ahead
¶1. (SBU) Summary. The Ambassador hosted a roundtable
coffee with the international donor community to
discuss the impact of the global economic crisis on
international assistance to Argentina. The
roundtable was co-organized with the Argentine
Network for International Cooperation (RACI) and the
Avina Foundation. After the Ambassador's welcoming
remarks, RACI gave a presentation on areas that
receive the most development assistance in
Argentina, noting that the international donor
community tended to fund programs focused on the
environment, economic development, education, good
governance, and human rights, while local
philanthropic organizations focused overwhelmingly
on education, followed by culture and healthcare.
RACI's remarks were followed by Avina's presentation
on the lessons learned from Argentina's 2001-02
crisis. In the presentations and subsequent
discussion with IDB and World Bank representatives,
it was clear that the social support network in
Argnetina would be overwhelmed if the economic
crisis hit Argentina hard. In closing, the
Ambassador reiterated the USG's commitment to
supporting Argentine society despite the current
economic crisis and invited participants to attend
the Embassy's second annual NGO Fair on April 30.
End Summary.
Participants
------------
¶2. (SBU) On March 30, Ambassador Wayne hosted a
roundtable coffee with the international donor
community to discuss the impact of the global
economic crisis on international assistance to
Argentina. It was the international donor
community's third meeting in a series of quarterly
roundtable breakfasts/coffees organized by the
Argentine Network for International Cooperation
(RACI) and the Avina Foundation. Participants
included the Ambassadors of Canada, the EU, Italy,
New Zealand, the Netherlands, and Switzerland;
representatives of the Embassies of Australia,
Norway, Sweden, and the UK; as well as
representatives from the World Bank (WB), the Inter-
American Development Bank (IDB), the UN Development
Program, the Japan International Cooperation Agency,
and the Carolina Foundation.
RACI: International Aid Focuses on Environment,
Economic Development, Education, Good Governance and
Human Rights
---------------------------------------
¶3. (SBU) After the Ambassador's welcoming remarks,
RACI Executive Director Guillermo Correa gave a
presentation on RACI's analysis of the development
assistance priorities of the international community
versus local philanthropic organizations. Since
RACI was unable to ascertain exact funding amounts,
it determined international donor priorities based
on the number of donors supporting a given cause as
opposed to total funding each cause receives. Of
the 32 foreign donors sampled, RACI noted that over
50% funded programs aimed at environmental
protection, economic development, and good
governance. Over 53% of foreign donors provided
scholarships and fellowships, and 41% funded local
education programs. Over 40% of foreign donors
funded human rights organizations. Roughly a third
of foreign donors fund programs that promote social
inclusion, poverty reduction, and gender equality;
and a quarter of them fund organizations focused on
public health, citizen participation, cultural
activities, youth, and research. Third-tier
priorities include indigenous communities, science
and technology, children, nutrition, disabled,
migration, and small business development.
RACI: Local Donors Overwhelmingly Focus on Education
-------------------------------------
¶4. (SBU) Of the 22 local philanthropies sampled,
RACI discovered that the overwhelming majority (77%)
supported local education programs. Roughly 20%
supported cultural and public health programs. Only
1-2 organizations supported programs related to
children, the environment, research, job search
assistance, professional development, local
development, rural development, journalism
development, youth labor training, transportation
security, the elderly, agricultural development.
Although the study showed that international donor
and local priorities differed significantly, Correa
stressed that this did not mean the international
donor community should shift its priorities to match
local priorities more closely. He argued that many
local philanthropic organizations (LPO) shy away
from funding programs that promote good governance
and human rights, due to the perception that there
may be political or economic repercussions for
funding programs that may be critical of the GOA.
Acknowledging that times are tough around the world,
Correa urged greater cooperation between
international and local donors to optimize limited
development assistance.
Lessons Learned from Argentina's 2001-02 Crisis
--------------------------------------------- --
¶5. (SBU) Carlos March, Country Representative for
the Swiss-based Avina Foundation, spoke on lessons
learned from Argentina's economic crisis in 2001-02.
He observed that Argentina's economic downturn
sparked spontaneous and violent street protests
against the perceived economic incompetence of the
government and corruption among the ruling elite.
The popular cry to "Get rid of them all!" ("Que se
vayan todos!"), coupled with political and
institutional weakness, forced four Presidents to
resign in the span of two weeks. According to
March, the mobilized masses did not have an agenda,
did not have any leaders in government through which
they could channel their dissent, and cooperation
between civil society groups was inexistent.
Despite the political and social chaos that ensued,
Argentina's democratic system stayed in tact, he
said.
¶6. (SBU) March then went on to compare Argentina's
crisis with the current global economic crisis.
First, he noted that the 2001-02 crisis was
exclusive to Argentina, whereas today's crisis is a
global crisis. Prior to the crisis, Argentina was
far more integrated within the international
financial system and had broader access to
international assistance. Following its 2002
default (at over US$ 80 billion, the largest
sovereign default in world history) and still today,
Argentina remains relatively isolated from
international capital markets. This makes it more
difficult for Argentina to request stabilization
packages and budgetary support from the
international financial institutions. Argentines
know that it is only a matter of time before the
global economic crisis significantly impacts the
local economy. During the 2001-02 crisis, the GOA
ignored civil society. Although more social
activists have been included in executive and
legislative positions, the GOA has succeeded in
dividing civil society, he added.
¶7. (SBU) March predicted that Argentina will be
paralyzed for the first half of 2009 due to
elections. After June 2009, there will be great
uncertainty and Argentina's weak macrofundamentals
will likely exacerbate the local impact of the
global crisis. He indicated that Argentina's
business sector has a limited capacity to weather
the economic storm, and would likely stop
outsourcing services; hold off on new investments;
and lay off personnel. By 2010, Argentina's economy
will stop growing. With less revenue coming in, the
GOA will be forced to reduce public spending.
Rising unemployment will strain the GOA's social
welfare system, resulting in an increased demand for
services offered by civil society organizations
(CSOs). The crisis, however, will have an adverse
impact on CSOs as well, as their budgets shrink and
CSOs are forced to down-size their staff. Without
adequate budgetary and organizational support, it
will be extremely difficult for CSOs to meet the
needs of those left out of the GOA social safety
net.
Poverty and Income Inequality Continue to Grow
-------------------------------------
¶8. (SBU) After the presentations, the Canadian
Ambassador asked why Argentina requires increasing
levels of international assistance when it has
enjoyed high growth rates since 2003. March
explained that despite Argentina's economic growth,
income inequality grew during that same timeframe.
Demand for CSO services has not diminished since
2001, which suggests the poor application of public
policies, he asserted. WB representatives chimed
in, saying that the rolls for inclusion in the WB-
financed GOA subsidy program for heads of households
has been closed by the GOA since 2003, leaving many
people who would otherwise qualify without access to
this program. (Comment: The GOA has, in fact,
created a number of additional social assistance
programs to address growing poverty, including one
for women with low employment prospects, Plan
Familias, and another program that
provides temporary subsidies to the non-
working poor.) Poverty is growing, they said, but
the GOA has not yet developed new social assistance
programs nor allocated budget resources to deal with
the problem. March added that few programs provide
a cushion for the middle and working class. He
noted that the quality of healthcare and education
is deteriorating. Correa pointed out that while the
middle class is steadily growing in Latin American
countries such as Brazil, Mexico and Chile; in
Argentina it is disappearing.
IDB: People Need a Hand Up, Not a Handout
-----------------------------------------
¶9. (SBU) The IDB representative noted that the IDB
finances healthcare, education and social
development programs. Although he stressed the need
to fill the many gaps in Argentina's social safety
net, he noted that it is very difficult for families
to go off welfare once they are in the system, thus
creating a handout culture. In the IDB's view,
greater attention needs to be given to job creation
programs, he stated. A WB representative observed
that the economic crisis has had a moderate impact
on the formal economy and a major impact on the
informal economy. Although layoffs have been
minimal in the formal economy, businesses are not
hiring new personnel. In the informal economy,
however, there have been massive layoffs. It is
easy to give money, but it is much harder to ensure
that it goes to the right hands, he stated.
¶10. (SBU) When Poloff asked whether international or
local donors funded job training and labor
reinsertion programs, an Italian Embassy
representative noted that its Ministry of Labor
(MOL) through the International Labor Organization
provides technical assistance to Argentina's MOL to
develop a network of provincial employment offices
that provide job training. The WB representative
noted that the Spanish government was also financing
a similar initiative.
¶11. (SBU) As the discussion came to a close, the EU
Ambassador acknowledged that Argentina's needs are
many, but noted that most international donors focus
on the poorest countries. Even in the face of the
current global economic crisis, it will be difficult
to justify increasing assistance to middle-income
countries such as Argentina, he said.
Embassy NGO Fair
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¶12. (SBU) The Ambassador acknowledged that there are
tough times ahead for everyone, but reiterated the
USG's commitment to working with international and
local partners to promote institutional
strengthening, and social and economic progress in
Argentina. To that end, he announced that the U.S.
Embassy, in collaboration with RACI and the American
Chamber of Commerce (AmCham) would organize its
second annual NGO Fair April 30 to bring together
international donors, foundations, foreign
embassies, and U.S. businesses to promote new
philanthropic associations. PAS gave a presentation
on the fair and encouraged those present to attend
and suggest local partners who could participate in
the fair.
Comment
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¶13. (SBU) The meeting served as an excellent forum
to learn more about each donor's development
assistance priorities and share lessons learned in
working with community-based organizations in
Argentina. The discussion also helped identify new
opportunities where we can work with international
and local donors to optimize limited development
assistance in the face of the global economic
crisis. Our efforts to use the meeting as a
recruitment tool for our April 30 NGO fair proved
successful, as many expressed interest in attending
and recommended inviting additional NGOs with whom
they have worked successfully.
WAYNE