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Cablegate: Ambassador Meets with Argentine Mogul Eduardo Eurnekian,

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DE RUEHBU #0153/01 0420736
ZNR UUUUU ZZH
R 110736Z FEB 08 ZDK
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0215
INFO RUEHC/DEPT OF LABOR WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHYE/AMEMBASSY YEREVAN 0005
RUEHBJ/AMEMBASSY BEIJING 0199
RUEHQT/AMEMBASSY QUITO 1041
RUEHGL/AMCONSUL GUAYAQUIL 0102
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000153

SIPDIS

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ECON EAIR EAGR ENRG PREL AM AR UY
SUBJECT: Ambassador Meets with Argentine Mogul Eduardo Eurnekian,
Avatar of Globalization

Ref: 07 Buenos Aires 2390

1. (SBU) Ambassador met February 6 with Argentine CEO Eduardo
Eurnekian, who has important investments in the United States,
Argentina, Armenia, Uruguay, Ecuador, Italy, Morocco and China in
agro-industry, energy, airports, infrastructure, construction,
banking and real estate. An admirer of the United States, Eurnekian
maintains several residences there and employs U.S. technology,
products and management techniques in his businesses. Eurnekian
(protect) offered to help the US as needed in Argentina and shared a
range of insights with the Ambassador.

Dealing with Argentina
----------------------

2. (SBU) Patience, Eurnekian confided to the Ambassador, is always
needed in Argentina. The lack of strong institutions is palpable,
as is the short-term focus of much government decision-making. This
complicates doing business just as it does managing bilateral
relations. A ray of hope, he said, is that President Cristina
Fernandez de Kirchner likes things international. Eurnekian advised
for the USG to find opportunities to expose her to international
actors and norms -- getting her to participate substantially in
gatherings like Davos or the Clinton Initiative should help. Right
now in Argentina, he said, much is done by personal contacts. The
business community is not united and is not capable of acting as an
effective counter-weight to the government on most issues.

Trans-Andean Chile-Argentine Tunnel and Rail System
--------------------------------------------- ------

3. (SBU) Eurnekian is trying to get both governments to support a
project for a new rail link between Mendoza, Argentina and Los
Andes, Chile. He foresees massive potential growth in transit of
goods from Brazil and Argentina to the Pacific and from Valparaiso
to Mercosur over this route. He says his project should take about
six years to complete and cost about 2.8 billion U.S. dollars. He
has already talked to the French government about contributing to
the financing, and is also looking to the Inter-American Development
bank and the Corporacisn Andino de Fomento (a multilateral financial
institution based in Caracas -- www.caf.com).

Argentine Aviation System
-------------------------

4. (SBU) Eurnekian says his company Aeropuertos 2000 has met all of
its obligations for investing in Argentina's airports as
concessionaire for managing the facilities (six new terminals, eight
new runways, etc.). (Reftel notes the opinions of local
representatives of all U.S. and other foreign carriers, as well as
the International Air Transportation Association, IATA, who describe
Aeropuertos 2000 services as sub-par and overpriced.) He argues
that he has had no control over the poor airline service or dealing
with the difficult union, security, and air control challenges. Nor
is he optimistic that the Government of Argentina is ready to face
up to the problems. A long-term vision is needed. Air fares and
costs need to be liberalized so you can generate both low-fare
carriers and allow higher fares for late bookings. Right now, the
government is locked in a struggle with Aerolineas Argentinas,
seeking greater control, rather than seeking to allow quality
improvement through more competition. The airorts in the interior
of the country are suffering, he observed. Air travel is down in
all airports except at Buenos Aires International airport.
Customers tired of cancellations and delays are increasingly
choosing buses or other transport. Internal tourism and business
travel suffer as a result of rampant delays, paucity of flights, and
poor connections between provincial cities (except via Buenos
Aires).

Energy
------

5. (SBU) Eurnekian is teaming up with private Brazilian investment
firm GP Investment/Investimentos, (www.gp.com.br) to bid on Exxon's
assets in Argentina. While the GoA has made it very hard to operate
in the petroleum and gas sector, pressure to find more resources
will increase, as will the economy's dependence on these products.
Eventually, he reasons, the government will need to let prices rise
and to create additional incentives to explore and increase
reserves. Eurnekian will be opening his first bio-diesel plant in
Argentina soon, and plans two more in the future.

Agro-business

-------------

6. (SBU) This is where Argentina has a real advantage globally, in
Eurnekian's opinion. He is investing heavily in additional
Argentine production of field crops and livestock, and taking the
advanced methods and technology used in Argentina to places like
Morocco and China. In China, he is very optimistic about using
Argentine genetic technology to strengthen the Chinese cattle stock.


WAYNE

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