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### Viewing cable 08BUENOSAIRES760, ARGENTINA: CODEL DODD DISCUSSES REGION WITH

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08BUENOSAIRES760 | 2008-06-03 18:51 | 2011-05-02 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Buenos Aires

`

    VZCZCXYZ0000
    PP RUEHWEB

    DE RUEHBU #0760/01 1551851
    ZNR UUUUU ZZH
    P 031851Z JUN 08
    FM AMEMBASSY BUENOS AIRES
    TO RUEHC/SECSTATE WASHDC PRIORITY 1235
    INFO RUCNMER/MERCOSUR COLLECTIVE

` `

    UNCLAS BUENOS AIRES 000760

    SENSITIVE
    SIPDIS

    E.O. 12958: N/A
    TAGS: PREL PGOV ETRD SNAR MASS EAID EC
    SUBJECT: ARGENTINA: CODEL DODD DISCUSSES REGION WITH
    AMBASSADORS AND POLITICAL ANALYSTS

    ¶1. (U) Summary:  The Ambassador hosted a lunch with
    ambassadors and private sector employees in honor of Senator
    Christopher Dodd and Representative Xavier Becerra.  The
    group discussed the region's efforts at integration, pointing
    to the benefits of closer relations that have developed and
    the challenges of reducing poverty and increasing social
    justice.  Regarding Argentina, participants expressed concern
    about the poor state of political parties and the
    government's ability to handle inflation and the farm strike.
     Participants expressed great interest in the U.S. elections
    and what they could mean for policy towards the region.  End
    summary.

    Latin America Today
    -------------------

    ¶2.  (U) The Ambassador welcomed and introduced Senator Dodd
    and Representative Becerra.  Senator Dodd fondly recalled a
    trip he took to many different South American countries,
    including Argentina, in the 1960s at the end of his Peace
    Corps service in the Dominican Republic.  Dodd asked the
    guests to address what Latin America wanted and how to
    improve relations with the region.  Representative Becerra
    said the region has experienced many changes and asked how
    the participants saw the relationship with the United States.
     The participants expressed a great interest and curiosity in
    the U.S. elections.

    ¶3.  (SBU) Economist Miguel Alberto Kiguel said that the
    current situation in Latin America is encouraging, with low
    inflation, budget surpluses, and good foreign policy.
    Macro-economic policy lessons have been learned -- fiscal
    surplus, etc.  But the micro-economy is still a big
    challenge.  The region is in a unique situation to address
    poverty, income distribution, and investment in the social
    sector.  Nevertheless, political analyst and professor Carlos
    Escude said that many countries in Latin America have adopted
    populist policies to address some nagging social ills.  By
    way of explanation, Escude said he was born in an Argentina
    where 10% of the population was poor; that number rose in
    2001 to 50% and now hovers around 30%.  While some countries
    have higher levels of absolute poverty, Escude emphasized
    that none have experienced such growth from limited to
    widespread poverty in the way that Argentina has.  Escude
    noted the region's high concentration of wealth was one of
    the biggest problems.  UN Economic Comission for Latin
    America (ECLAC) Director Bernando Kosakoff agreed that Latin
    America needs to generate wealth, and reiterated that the
    main challenge for the region is addressing the unequal
    distribution of income.  Economic analyst Rogelio Frigerio
    pointed out that some leaders have employed populist rhetoric
    but still play by democratic rules of the game.  These
    "realistic populists," he predicted, would fare better than
    their counterparts with more authoritarian tendencies.

    ¶4. (SBU) Former Ambassador to the United Nations Arnoldo
    Listre noted that it was important to recognize there had
    been positive changes in the Southern Cone, and specifically
    cited the very good relations between Argentina, Brazil, and
    Chile as a new and positive development that has contributed
    to regional stability.  Mercosur, he said, had prevented
    cross-border disputes from leading to larger
    political-military confrontations in the Southern Cone just
    as effectively as the European Union had in Europe.
    Brazilian Ambassador Mauro Vieira added the relationship
    between Argentina and Brazil was economically very strong and
    of considerable strategic importance for Brazil.  He
    emphasized the importance of multilateralism, and noted that
    Brazil shares borders with all countries in South America
    except Chile and Ecuador.  Vieira insisted that trade
    agreements with Mercosur had to be with the bloc, and not
    with individual countries.

    Regional Solidarity
    -------------------

    ¶5.  (SBU) Director of the Institute of International Commerce
    at the BankBoston Foundation Felix Pena emphasized the
    importance of identifying areas for regional cooperation.  He
    criticized U.S. policy in the region for not unequivocally
    endorsing regional integration schemes like Mercosur.  Pena
    specifically cited the economy, energy, and narcotrafficking
    as areas to explore.  He said it was difficult to understand
    the region as one because of each country's individual
    history.  Frigerio disagreed on regional solidarity, arguing
    that the region was dividing more than uniting, especially in
    terms of macroeconomic policies.  On the subject of economy,
    Escude claimed that Latin America had signed many free trade
    agreements, but not ratified many of them.  He observed that
    the most successful thing the region has been able to achieve
    is avoiding conflicts that develop into war.

    U.S.-South America
    ------------------

    ¶6.  (SBU) Colombian Ambassador to Argentina Jaime
    Bermudez-Merizalde said the key to a strong bilateral
    relationship was expanding ties further than the military and
    security realm and focusing on initiatives with social
    impact.  Bermudez said that it was precisely the populists'
    focus on social issues that helped them win elections.  He
    suggested the U.S. work on programs to combat the populists'
    social discourse, and to seek to broaden its message and
    dialogue beyond elites.  Kiguel said that opening the U.S.
    economy to Latin America would be interpreted as a concrete
    effort to improve relations.  Listre said there was no
    strategic threat to the United States in the region and
    because of this the U.S. would not prioritize Latin America
    in its foreign policy.  Listre urged ratification of the free
    trade agreement with Colombia and warned that failing to do
    so would send a bad message to the region as Colombia was the
    U.S.'s closest friend:  what you do will be read as how you
    treat your friends, he said.

    U.S.-Argentine Relations
    ------------------------

    ¶7.  (SBU) Pena said the challenge was to deepen the
    relationship between U.S. and Argentina which he said he
    thought was possible with work.  President of the La Plata
    University Foundation Fernando Maurette said Argentina's
    political parties exist nominally, but they lack the spirit
    and values you need in a participatory democracy and "do not
    exist" in the same way that they do in the United States and
    Europe.  He said that U.S. legislators should reach out more
    often to their counterparts in the region, claiming that
    Argentine legislators conversed frequently with counterparts
    in France, Great Britain, and Brazil, but not with those in
    the United States.  This kind of interaction can help
    strengthen Argentina's democracy and bilateral relations.
    Maurette pointed out new actors were emerging in the regional
    sphere, like China, who have expanded their role in the
    region's defense and energy arenas.  Kosakoff mentioned that
    American businesses participate in the Argentine economy but
    aren't provided many incentives to integrate fully into the
    economy.  We need to treat them as partners in our
    development.  He felt U.S. companies could play a bigger
    positive role in Argentina's development.  The Ambassador
    noted many U.S. companies are eager to be more active
    participants in Argentina's development and have very good
    CSR programs to help local communities.

    Paraguay
    --------

    ¶8.  (SBU) Pena brought up the case of President-elect
    Fernando Lugo in Paraguay and said that the region -- and the
    United States -- had to help him succeed in his efforts to
    forge a moderate leftist path, following the examples of
    countries like Chile and Uruguay.  Senator Dodd asked Vieira
    what Lula thought of Lugo, and Vieira replied that Lula wants
    to collaborate and sees the relationship with Paraguay as
    important.

    Inflation, Inflation, Inflation
    -------------------------------

    ¶9.  (SBU) Senator Dodd asked the guests what were some of the
    problems facing Argentina today.  Frigerio replied that
    inflation was destroying the economy and attacking a pillar
    of the economy.  Kiguel said that inflation was officially
    reported at 8%, but in fact was at least 20-25%.  He said
    that burgeoning inflation has had two serious effects -- it
    has hurt people's purchasing power because the salaries can't
    keep up with inflation, and it has destroyed access to
    credit.  He said this was a serious problem.  Kosakoff said
    that inflation was hurting investment because investors don't
    know what will happen.  The government needs to resolve these
    problems -- specifically energy, inflation, and
    infrastructure -- to head off a major crisis.

    Farmers
    -------

    ¶10.  (SBU) Dodd asked whether the GOA would reach an
    agreement with the striking agricultural sector.  Kosakoff
    said the burgeoning global demand would maintain upward
    pressure on food prices.  The question is how to generate
    more capacity.  Argentina can be a player, and the government
    can resolve the situation without bringing the country to
    another crisis.

    Comment
    -------

    ¶11.  (SBU) The commentators were cautiously hopeful about the
    future of U.S. relations with Latin America.  Their emphasis
    on regional solidarity tended towards the Southern Cone and
    Mercosur countries.  Most were pessimistic about Argentina's
    internal problems, which one guest argued were not so large
    they could not be fixed, but their solutions required
    political will and consensus which has heretofore been
    absent.

    ¶12.  (U) This cable was cleared by the codel after departure.
    WAYNE

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