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Cablegate: Argentina's Mendoza Province: Agriculture-Based Growth And

VZCZCXYZ0021
RR RUEHWEB

DE RUEHBU #0331/01 0741813
ZNR UUUUU ZZH
R 141813Z MAR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0471
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000331

SIPDIS

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: AR ECON EINV BEXP PREL
SUBJECT: Argentina's Mendoza Province: Agriculture-Based Growth and
Commercial Links to Chile


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Summary
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1. (SBU) During a visit to Mendoza to attend the province's
emblematic Vendimia wine harvest festival, Ambassador reviewed the
province's strong economic growth -- and burgeoning inflation --
with newly elected Radical Party Mendoza City Mayor Fayad, and
briefly with Governor Jaque and Provincial Minister for Investment,
Security and the Economy Aguinaga. Ambassador visited Mendoza Food
Bank officials and an underprivileged youth tennis academy to
support local grass-roots organizations' social responsibility and
volunteer efforts. In an interview with editors of local daily
newspaper Los Andes, editors attributed Mendoza's distinctive
independent political orientation to a highly educated technical
middle class and term limits for governors that leave the province
less susceptible to political "manipulation" than other Argentine
metropolitan centers. They attributed the widely acknowledged crime
problem in Mendoza City to an inflation-linked decline in
lower-income class purchasing power and a deterioration of
traditionally strong family structures linked to the 2001/2 economic
crisis. The bulk of Argentine/Chilean commercial trade passes
through Mendoza, improving the province's long term growth
prospects.
End Summary.

--------------------------------------------- -
Mayor of Mendoza City and Provincial Officials
on the Local Economy
--------------------------------------------- -

2. (SBU) Radical Party Mendoza City Mayor Fayad, re-elected in
November 2007 for a second term after a 16-year hiatus, reviewed
with Ambassador the province's strong, largely agriculture-based
economic growth. He acknowledged high levels of provincial
inflation, but felt that such levels would not significantly affect
the province's medium-term prospects since an undervalued peso will
ensure an expanding agricultural export market. (Mendoza recently
adopted the federal government's inflation calculation methodology
and its "official" inflation rates are now significantly below those
calculated by independent analysts.) Fayad, viewed as the new
leader of the provincial Radical party, characterized the Radical
party's situation as "complicated." (The Radical party was broken in
the last elections due to the defections of key party party members
to President Kirchner's victory Front coalition, including former
Mendoza Governor and now Argentine Vice President Cobos.) Fayad is
a former International Visitor grantee and he spoke enthusiastically
of his trips to the US, especially the last one four years ago when
he was part of a team of seven Argentine election observers in
Washington. He expressed admiration for American presidential
election voting policies and logistics.

3. (SBU) Ambassador held several brief discussions with Governor
Celso Jaque, his Chief of Staff and Provincial Minister for
Infrastructure, Energy, Industry and Security Juan Carlos Aguinaga
as well as one of the Senators for the Province and the Governors of
nearby San Juan and Salta provinces. Mendoza officials were eager
to attract US investment and to continue educational exchanges. The
provincial Security Minister was enthused with the prospect of USG
training courses at the International Law Enforcement Academy (ILEA)
and restarting cooperation with DEA. The Energy Minister noted that
a US natural gas exploration company would be visiting within weeks
to consider starting operations in the province. Several officials
commented on looming challenges of energy and water shortages.
Despite an anti-mining protest during the Vendimia festival,
ministers said the provincial government would support mining
projects with adequate environmental safeguards.

-------------------------------------
Mendoza Food Bank: Local Volunteerism
-------------------------------------

4. (SBU) Ambassador met with volunteers and board members of the
Mendoza Food Bank, including its President, Bernardo Zunino. The
Food Bank is an organization that works to alleviate the economic
legacy of the 2001-2002 economic crisis on the poorer strata of
society. It is led by successful private sector entrepreneurs and
professionals who donate their expertise as nutritionists, doctors,
accountants, and lawyers and utilize spare capacity in various
business ventures to receive, store, and distribute food to at-risk
sectors of the population, including dozens of food kitchens for the
young and the old.

5. (SBU) The Food Bank estimates that 130,000 of the Mendoza
province's 1.7 million citizens fall below the poverty line and
27,000 children suffer from inadequate nourishment. The Food Bank
currently assists 9,000, mostly children and elderly, with food and

programs that work to improve nutrition, health, and food hygiene.
They receive no public funding, but are affiliated with a web of
food banks in Argentina, as well as the Global Foodbanking Network
based in Chicago. Food Bank officials commented on their efforts to
develop a transparent system for food distribution. Ambassador
praised the Food Bank as an excellent and unusually effective
example of corporate social responsibility and volunteerism. Food
Bank officials, in turn, expressed appreciation for Embassy's
continuing efforts to highlight their organizations good work.
Ambassador had met with President Zunino on a previous visit and the
embassy has been a regular supporter of the Argentine food bank
network as well as helping organizers participate in NGO meetings
held in the US.

---------------------
Tennis for the Masses
---------------------

6. (SBU) Ambassador visited a tennis academy serving children in a
low-income neighborhood on the outskirts of Mendoza. Co-located
with a local sports center, the tennis program provides training for
60 children and was developed by a local tennis teaching
professional with the support of local donors, including a Mendozan
living in the United States who believes sports are the best way to
keep kids off the streets and away from drugs. Ambassador spoke of
the universal values learned playing sports, presented the program
with a collection of tennis equipment donated by Embassy personnel,
and distributed gifts to thirty children present, who gave a
spirited demonstration of their tennis prowess. Program director
Laura Rocco and Provincial Secretary of Sport Beatriz Barbera
thanked Ambassador for bringing attention to their efforts to expand
options available to children in poor communities.

-----------------------------
Positive Local Media Coverage
-----------------------------

7. (SBU) A coterie of local print, radio, and television journalists
met the Ambassador upon his arrival, requesting an informal
interview session. While media focused on Ambassador's
participation in the Vendimia celebration, they also raised
questions on the USG's position on the Ecuador/Colombia border
crisis. Ambassador later met with Editor-in-Chief of Mendoza
province's oldest print daily, Los Andes, Dr. Arturo Guardiola,
Senior Editor Carlos La Rosa, and Political and Economic Editor
Marcelo Zentil. Los Andes ownership is split, with 80% controlled by
Argentina's two largest media conglomerates (Clarin and La Nacion),
and 20% by a private Mendoza family. Los Andes editors noted that
Clarin and La Nacion grant Los Andes complete editorial
independence. Ambassador noted his own experience as a journalist
and the value of an informed press and an informed public.

8. (SBU) In response to Ambassador's questions on Mendoza City's
history and political dynamic, editors explained that, subsequent to
an 1861 earthquake that destroyed the city and killed 5,000 people,
the newly rebuilt city flourished, with a predominantly immigrant
population building eight important universities.

9. (SBU) Ambassador noted neighboring Chile's sustained economic
development and asked about projects to improve commercial links
between Mendoza and Chile. Editors noted a proposal by Argentine
entrepreneur Eduardo Eurnekian's Americas Corporation to build a 14
km-long tunnel through the Andes facilitating transport between the
Atlantic and the Pacific. Chile's strong economy works to Mendoza's
advantage, they said, with bilateral trade increasingly contributing
to Mendoza's overall economic growth and importance as a gateway for
commercial transit between the two nations. Mendoza also benefits
from a continuing stream of relatively small but significant
investments by Americans and Europeans buying houses and vineyards.

10. (SBU) Los Andes editors raised the deterioration in personal
security in Mendoza. In response to Ambassador's question on how
Mendoza security statistics compare to national averages, editors
suggested that national statistics are not entirely accurate. They
attributed the widely acknowledged crime problem in Mendoza City to:
1) an inflation-linked decline in lower-income class purchasing
power (an independent Mendoza University study puts provincial
inflation at 25% per year); 2) significant immigration in the 1990s
of poor and marginal workers from Chile, Bolivia, and Paraguay; and
3) a deterioration of traditionally strong family structures and
values linked to the 2001/2 economic crisis, with a lower emphasis
placed on children's education.

11. (SBU) In response to editors' questions on ways to improve
Argentine citizens' impressions of the US, Ambassador noted the
importance of people-to-people exchanges to improve cross-cultural
understanding and noted Embassy efforts with regard to youth

programs, English language study, Fulbright scholarships, and
international visitors. On questions raised on the recent
Colombia/Ecuador/Venezuela border frictions, Ambassador praised
President Kirchner's recent statements encouraging peaceful
resolution of the crisis. Ambassador also noted WHA Assistant
Secretary Tom Shannon's recent comments on Argentina's important

SIPDIS
contribution to the OAS' attempts to find a peaceful solution, and
on Argentina's humanitarian efforts to liberate the hostages from
the FARC.

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Comment
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12. (SBU) From the Mendoza City mayor on down to local media, most
of the Ambassador's interlocutors presented Mendoza province as an
unusually independent political entity. It is interesting to note
the disconnect between Mayor Fayad's comment that high levels of
provincial inflation would not significantly affect the province's
medium-term prospects, and local daily Los Andes editors
attribution of the widely acknowledged crime problem in Mendoza City
to an inflation-linked decline in lower-income class purchasing
power. Mendoza has drawn significant foreign investment by
successfully branding itself as an important global center of
high-quality wine production. Its geography, providing the primary
commercial link between Argentina and Chile, also offers it a
potential long-term economic advantage as both countries' economies
continue to develop and as regional commerce continues to flourish.


WAYNE

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