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Cablegate: Argentine President Cfk Announces Her Priorities

VZCZCXYZ0098
PP RUEHWEB

DE RUEHBU #0269/01 0631927
ZNR UUUUU ZZH
P 031927Z MAR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 0372
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHLO/AMEMBASSY LONDON 1240

UNCLAS BUENOS AIRES 000269

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV ECON AR
SUBJECT: ARGENTINE PRESIDENT CFK ANNOUNCES HER PRIORITIES
IN STATE OF THE UNION SPEECH

REF: BUENOS AIRES 0230

1. (SBU) Summary: Argentine President Cristina Fernandez de
Kirchner (CFK) opened the ordinary session of Congress March
1 with the equivalent of a State of the Union address.
Speaking extemporaneously for 73 minutes, she was well
organized and demonstrated an impressive mastery of
statistics. She focused on the economy, investment in
infrastructure, the energy sector, social development, and
public security. In discussing energy, she repeated her
position that Mercour should admit Venezuela to help address
energy security, not because of "personal sympathies or
political friendships." She did not mention inflation (an
omission which was sharply criticized later by commentators
and the opposition) but had tough words for private banks,
the business community, the Supreme Court and the judicial
branch, the media, "energy experts," security forces, and
teachers' unions. End summary.

------------------------
Economy & Infrastructure
------------------------

2. (SBU) CFK devoted much of her speech to economic themes.
This included (her now standard) references to Argentina's
record of strong GDP growth and its accumulation of a US$49
billion reserve cushion as well as "twin" fiscal and trade
account surpluses over the past 5 years. While CFK did not
specifically ascribe this strong economic performance to the
tenure of her husband, Nestor Kirchner (who watched the
speech from home), media pundits interpreted these remarks as
self-congratulatory and as yet another indication that CFK
plans to continue her husband's policy of priming the economy
for consumption-led growth.

3. (SBU) The need to expand and diversify Argentina's
industrial base is a stump-speech theme for Presidential and
Ministry of Economy statements on economic policy, with a
particular focus on the need to address the high cost, short
tenure, and scarcity of bank credits to small and medium
enterprises (SME). CFK again emphasized the need to expand
domestic financing for investment in new capacity by small-
and medium-scale business, criticized Argentine private banks
for emphasizing consumption lending to the detriment of
production lending, and announced that state-owned Banco de
la Nacion will this week roll out a substantial new SME
credit facility program. (In a February 28 meeting with
Econoffs and new Banco de la Nacion president Marco del Pont,
she previewed a March 4 announcement of new SME credit lines
that, if not actively subsidized, will offer "attractive"
rates to spur domestic production.) She also highlighted the
need to add value to Argentina's exports and to enter the
knowledge-based economy with more applications of Argentine
brain power to the economy (a theme Economy Minister Lousteau
has been promoting).

--------------------------------
Energy and other Economic Issues
--------------------------------

4. (SBU) On pressing energy issues (reftel) CFK repeated her
standard critique of "experts" who have predicted Argentine
natural gas and electricity shortages. She said there will
be "no (energy-related) risks" to investors or to production
in the coming year, and projected an 11% increase in
electricity production capacity and an 8% increase in natural
gas production in 2008. She stressed the need for regional
energy coordination and cooperation and called energy a
world-wide as well as regional concern. In this context, CFK
made specific reference to energy cooperation with Venezuela:
"It is not a question of personal affection or of political
favoritism; it is simply an exercise in rationality," she
said. CFK also raised the GoA's support for major
infrastructure investment, questioning those who called the
GoA-supported US$ 3-plus billion Buenos Aires to Cordoba
bullet-train project an expensive white elephant. "Not to
address (Argentina's) modernization (in order to focus on)
other problems we have yet to resolve is a recipe for
addressing neither."

5. (SBU) More broadly, CFK spoke of a national project to
reduce poverty to single digit levels by the 2010
bicentennial (from roughly 25% currently). CFK did
specifically support the efforts of Interior Commerce
Secretary Guillermo Moreno to control prices and monitor

SIPDIS
costs of major producers of consumer goods. "Transparency is
for everyone, for the state and for the market, for the
public and private sectors." However, notable for its
absence was any mention of high levels of inflation or the
current debate over the accuracy and reliability of INDEC

data (septel). Comment: This spurred quite a bit of
critical commentary and probably reflects the lack of
consensus on how to tackle this problem. End comment.

-------------------------
Crime and Public Security
-------------------------

6. (SBU) In a nod to the Argentine public's growing concerns
about public safety, CFK put the blame on others including
judges (with their "revolving door policy" for delinquents),
the Supreme Court (for not accelerating trials against "dirty
war era" indictees), and the police for its lack of
commitment. Despite frequent calls to increase the Court's
budget to implement reforms that would improve judicial
efficiency, CFK "reminded" the Supreme Court that its budget
had increased 173% since 2003, signaling that she would not
consider a budget increase for the judicial system. She also
noted that the Supreme Court is charged with monitoring the
judicial efficiency of the lower courts. She said she would
push reforms of the criminal procedural code to increase
judicial efficiency.

7. (SBU) CFK said she believed it "necessary to return to a
society of rewards and punishments... where those who commit
crimes are punished." In reference to the Supreme Court, CFK
stated that "Argentines have the right to demand of the
justice system the conclusion of cases against those who
committed crimes against humanity during the last military
dictatorship." She said the law had to be applied with equal
rigor against those who committed crimes against humanity and
those who commit street crime. CFK asserted a "connection"
between the "free zones" (zonas liberadas) from the dirty war
era -- areas reportedly vacated by police in order for other
security forces to operate freely, kidnapping regime
opponents and committing other crimes -- and today's "free
zones" where drug sales and assaults are common.
-------------------------
Social Development Agenda
-------------------------

8. (SBU) Citing Argentina's continued economic growth, CFK
announced her intention to reach a "Bicentennial Accord" in
2010 that would reduce poverty and unemployment to
single-digit rates. On her desire to reach a social pact,
CFK clarified that the pact is not exclusively focused on
prices and salaries, but entails a series of sectoral accords
aimed at increasing value-added activities in each sector.

9. (SBU) On education, CFK noted that there are five million
Argentines under 40 who have not completed high school and
sharply criticized teachers unions for excessive strikes even
after getting pay increases well above the national average.
Although Argentina has one of the highest literacy rates in
Latin America at 97%, she stressed that Argentines should not
overestimate the quality of its public education. To address
this, she announced that she would introduce a national plan
to increase the number of Argentines who finish primary and
secondary education. She also noted the need for Argentina's
university system to steer students into fields that are
better-suited to the global economy. To this end, she vowed
to push through a new higher education law that would
reformulate the concept of university autonomy. "It is
incumbent upon me to improve (Argentina's) quality of
education. As the daughter of workers, I am where I am today
because of my education. And I want all Argentines to once
again have that opportunity," she stated.

10. (SBU) On health, CFK praised Health Minister Graciela
Ocana, "not because she is a woman, but because she is a hard
worker." Ocana was the only Cabinet Minister to be singled
out for praise during CFK's address. CFK also noted a plan
to reduce cardiac disease in children and a program to help
deal with socially at-risk youth.

----------------------
Lean on Foreign Policy
----------------------

11. (SBU) Other than her references to other countries in her
discussion of the energy sector (above), CFK did not have
much to say about foreign policy per se, but toward the end
of her speech she made an impassioned plea to the UK to
permit humanitarian flights to the Falklands/Malvinas
carrying the family members of Argentine soldiers killed
during the 1982 war.

--------------------
Opposition Criticism
--------------------

12. (SBU) Opposition politicians and pundits were critical of
CFK primarily for failing to mention inflation. Civic
Coalition leader and former presidential candidate Elisa
Carrio argued that CFK's presentation demonstrated "a strong
disassociation with reality" that ignored widespread anxiety
over rapidly rising consumer price levels.

13. (SBU) The opposition also criticized CFK for not offering
more specific, concrete proposals for improving security,
although CFK did call for better equipping of federal
security forces and for reforms to criminal court
proceedings. Carrio accused CFK and her husband of
continuing to look back at the past instead of to the future,
this in reference to CFK's linkage of today's crime and
security to the 1976-83 military dictatorship.

WAYNE

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