VZCZCXRO4533
PP RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHQU RUEHTM RUEHVC
DE RUEHBU #1888/01 2641441
ZNY CCCCC ZZH
P 211441Z SEP 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 9297
INFO RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUCNMRC/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS

C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 001888

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/21/2022
TAGS: PGOV PREL OVIP EFIN EINV EAIR AR
SUBJECT: CRISTINA IN HER WORDS: WILL ARGENTINA'S
PRESIDENTIAL FRONT-RUNNER BE A BETTER PARTNER FOR US?

REF: A. BUENOS AIRES 1883
¶B. BUENOS AIRES 1809
¶C. BUENOS AIRES 1777

Classified By: DCM Tom Kelly for reasons b, d.

¶1. (C) Summary. A well-briefed, confident Cristina
Fernandez de Kirchner (CFK) described her policy priorities
to the Ambassador on September 20, a few days before she
departs for a five-day program in New York. Although she
defended GOA positions on controversial economic issues, CFK
expressed a strong desire to promote foreign investment,
increase scientific and educational exchange with the United
States, and "tell it like it is" with American policymakers.
The discussion's conciliatory content and tone confirms our
expectation that CFK will prove a more reliable, trustworthy,
and accessible partner of the United States than her husband,
Nestor Kirchner. End Summary.

¶2. (C) CFK met with the Ambassador for 45 minutes at the
Presidential Residence in Los Olivos on September 20.
Argentina's first lady and presumptive next president was in
full command of her brief, speaking without notes on a broad
range of topics. At one point, noting that she and the
Ambassador were reviewing topics that would resurface
throughout her New York trip, she said (referring to her
travels and speeches), "This is good preparation, but hey,
I'm already prepared!" She was gracious and relaxed
throughout, not rushing through any part of the conversation
and listening as well as talking. The meeting was CFK's
second with the Ambassador; in contrast, President Kirchner
has never met privately with the Ambassador. She also went
out of her way to ask the Ambassador to "send greetings to
Shannon," whom she recalled meeting early on in Washington
just before the Assistant Secretary was confirmed by the
Senate.

Paris Club: Willing to Deal "Without Preconceptions"
------------------------------------

¶3. (C) After CFK previewed her schedule in New York (ref A),
the Ambassador noted the great international interest in her
policy views. He commented that CFK's interest in the world
and willingness to countenance policy changes, especially in
the economic realm, were well-received abroad, including in
the United States, as is her evident openness to dialogue.
The Ambassador also mentioned issues that may well draw
questions from journalists, businessmen, and others during
her program, including prospects for a deal with the Paris
Club, the investment climate, prospects for inflation, and
the GOA's relationship with Iran and Venezuela.

¶4. (C) CFK replied in great detail on economic themes, but
refrained from commenting on Iran and Venezuela. On the
Paris Club (PC), she stressed Argentina's desire to reach an
agreement, but reiterated the current government's insistence
that a deal not be conditioned on a GOA accord with the IMF.
She said that Argentina's attitude stemmed not from a
anti-IMF bias, but from a conviction that IMF policies as
currently constituted are anti-growth -- and therefore
unacceptable. That is why, in her view, the IMF had
experienced a "serious loss of prestige in Latin American
societies." "If we don't grow," she continued, "we can't
pay. You can't collect debts from the dead."

¶5. (C) CFK characterized debt agreements reached by previous
Argentine governments as illusory, made by desperate
governments that never intended to repay. The current
government, and the one that she hopes to lead, sought to
break what she called "a cycle of lies" and restructure
Argentine debt without inhibiting growth. Such a
negotiation, she said, would need to occur "without
preconceptions," and both sides should come to the table with
flexibility and an open mind. She claimed that, during his
campaign swing through Argentina (ref B), French candidate
for IMF Managing Director Strauss-Kahn had expressed sympathy
for Argentina's approach and criticism of the IMF's track
record in Argentina. She acknowledged, however, that "he's
running for office, so maybe he was just telling us what we
wanted to hear." The Ambassador said that the United States
stands ready to engage constructively to move to a Paris Club
solution.

¶6. (C) The Ambassador mentioned the issue of bond-holdots
as another potential topic that CFK will face in New York,
noting that the U.S. bondholders are carrying out a
well-organized effort to win support for their cause. CFK
indicated awareness of the lobbying resources holdouts bring
to bear and their negative attitude towards the current

BUENOS AIR 00001888 002 OF 003


government. She said that she had encountered their
publicity campaign during her recent trip to Germany, and
knew they were active in Japan, too. At the same time, she
offered little hope that the holdouts would get a deal
anytime soon, noting that a law circumscribes what the
government can offer them. She told the Ambassador that "I
know this isn't what you want to hear," but said that
previous Argentine leaders would tell foreign Ambassadors
what their interlocutors wanted to hear, not what they really
thought or intended to do. She and her husband were
different, she insisted; they told it straight. CFK said
that she understood that Americans valued straight talk, and
she hoped that this quality would earn her trust and respect
in the United States.

Foreign Investment: Bring It On
-------------------------------

¶7. (SBU) CFK said that the GOA's main motivation in striking
a deal with the Paris Club was to entice foreign export
credit agencies to go back on cover in Argentina,
facilitating her plans to bring more foreign investment here.
She noted that foreign investment in certain sectors was
already booming. Auto companies, including Mercedes-Benz,
Peugeot, Ford, and GM were pumping tens of millions of
dollars of new investment into their plants, with many adding
new assembly lines and exporting much of their output.

¶8. (U) CFK reserved her greatest enthusiasm for Argentina's
progress in attracting investment in the information
technology sector as a means to expand Argentina's global
economic role. She noted proudly that IT represented the
fastest growing sector in the economy during her husband's
presidency. She expected great things from the sector in the
future. "We have great soccer players in Argentina because
our kids play so much soccer," she said. "Now they spend all
their time on computers, so I know that there's an Argentine
Bill Gates out there. We just have to find him." The
Ambassador agreed that this was an area of great potential.
He noted the significant U.S. investment in this sector,
including the fact that IBM is the largest U.S. employer in
Argentina. He also made a pitch for quick approval of Turner
Broadcasting's purchase of Claxion, a local audiovisual
company, which will lead to Argentine creations being
distributed throughout Latin America.

Playing Defense: Energy, Inflation
----------------------------------

¶9. (SBU) Despite her expression of enthusiasm for foreign
investment, she was defensive about charges that the current
government is attacking foreign investors in the Argentine
energy sector (septel). She characterized Exxon's apparent
exit from the Argentine market as the result of a regional
draw-down in Latin America, and argued that "the energy
sector is a problem everywhere right now." She said that
private companies miscalculated domestic energy demand over
the past few years, failing to anticipate the government's
success in achieving extremely rapid rates of growth. Now,
there was little idle capacity in Argentina's energy sector.
The GOA, she insisted, was doing its part, presiding over the
construction of thousands of kilometers of new pipelines and
seeking new sources of supply.

¶10. (SBU) CFK was also defensive when she responded to
concerns that the GOA was manipulating economic statistics to
keep Argentine inflation numbers down. She said that there
were several biases in the way that the government's
statistical institute (INDEC) had previously collected price
data. She claimed that it did not account sufficiently for
seasonal variations in price data; collected food data in
posh food emporiums rather than in the modest groceries where
most Argentines shop; and focused on private school costs,
while the vast majority of Argentines sent their children to
public schools. She said that Argentina had revised its
inflation methodology six times since the 1930s. The
political opposition, she said, was behind the claims that
current methodological changes reflected a government plot to
understate inflation. She also blamed the opposition for the
growing warnings about electoral fraud in Argentina, which
she dismissed as "bizarre." CFK did acknowledge that the GOA
needs to settle with clarity the methodological issues as
well as to resolve the union problems troubling the
statistical institute.

Future Economic Goals
---------------------

¶11. (C) CFK returned to economic growth as the most

BUENOS AIR 00001888 003 OF 003


important objective of the government that she intends to
lead. She said that, if Argentina achieves positive growth
in 2007 and 2008, it will represent the first time in a
century that the country has grown for six straight years.
If its economy continues to grow at rates of five to six
percent for another decade, she continued, Argentina would
become "unbeatable."

¶12. (SBU) A key sector for the country's future, she said,
was tourism, an area in which her country had enormous
undeveloped potential. With the rise in ecotourism, the
wealthiest tourists were looking for unspoiled, safe venues,
which Argentina had in abundance. She noted that Argentina
experienced a travel boom after the Asian tsunami, as
tourists sought safer places in which to experience nature.
The Ambassador interjected that for the tourism sector to
achieve its potential, Argentina needed to address its
dysfunctional domestic aviation sector. She agreed,
identifying reform of domestic aviation as "one of our great
challenges." Without referring specifically to the
strike-prone national airline Aerolineas Argentinas, she
identified two specific problems in the sector: a need for
more resources and a conflictive labor environment in which a
handful of combative unions undermined all attempts to turn
the sector around.

Other Issues: Exchanges, TIP
----------------------------

¶13. (SBU) The Ambassador raised trafficking in persons (the
need to pass a federal law) and the importance of expanded
educational and cultural exchanges, especially among youth.
He asked for the Senator's support. CFK:

-- expressed strong interest in cultural and educational
exchanges with the United States, including an upcoming
Buenos Aires summit of hemispheric women leaders organized by
U.S. NGO Vital Voices;

-- told the Ambassador that Argentina "must not fail to take
advantage of your scientific resources; they're the best in
the world".

-- reassured the Ambassador that legislation to criminalize
trafficking in persons would pass the Argentine Congress
after the October elections "without any great difficulty."


Comment
-------

¶14. (C) The discussion's conciliatory content and tone
confirmed what we have observed in CFK's speeches and
gestures with increasing frequency: Argentina's presidential
front-runner seeks a rapprochement with the United States.
CFK seems to understand that a pragmatic, enmity-free
relationship with Washington will buy Argentina leeway on a
number of critical financial and geopolitical issues. At the
same time, this forward-leaning attitude is unlikely to
presage the next government's repudiation of the current
regime's nationalist, populist policies. CFK's defense of
GOA positions on the IMF, the investment climate, the energy
sector, and inflation numbers during this private discussion
suggests an unwillingness to break with the heterodox
policies of her husband. But even if the charm offensive is
calculated rather than heart-felt, there is no mistaking the
opportunities that await the USG beyond the Argentine
presidential election. CFK's conversation with the
Ambassador confirms our expectation that she will prove a
more reliable, trustworthy, and accessible partner of the
United States. That does not, however, take away from the
challenges we will face in forging solutions to such issues
as the Paris Club or bondholders' outstanding debt.
WAYNE