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Cablegate: Argentine Farm Strike Extended Six More Days

VZCZCXYZ0001
RR RUEHWEB

DE RUEHBU #0665/01 1401018
ZNR UUUUU ZZH
R 191018Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1074
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS BUENOS AIRES 000665

STATE FOR ECON WHA/BSC
USDA FOR FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO
MERCOSUR COLLECTIVE

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EAGR ECON EINV PGOV ELAB PHUM AR
SUBJECT: ARGENTINE FARM STRIKE EXTENDED SIX MORE DAYS

REF: Buenos Aires 0615 and previous

-------
Summary
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1. (U) The farm groups leading the Argentine agricultural strike
announced on May 15 that the strike will continue, despite a call
for further dialogue from President Cristina Kirchner. The farm
groups will meet again on May 21 to review the situation and decide
whether to continue the strike. The farm groups sent a letter to
the President asking for a meeting to discuss their issues. In an
effort to increase pressure on the GoA, they will hold a large
protest in Rosario on May 25, Argentina's Independence Day and the
fifth anniversary of the Kirchners' combined rule. The farm strike
has been successful in blocking sales and internal transport of
grains and oilseeds, and current exports are limited to stocks
placed in the ports prior to resumption of the strike. The farm
sector's decision to extend the strike is being perceived as an
aggressive move on their part in the light of the President's most
recent remarks, which are being widely interpreted as conciliatory.
The parties are now in a vicious circle, with the farm sector
stating they will not end the strike until the government offers
some concrete measures, and the President's people saying she will
not meet with sector representatives until they lift the strike.
End Summary

2. Farm leaders announced on May 15 that they will continue the
farm strike - a continuation of the original three-week strike
initiated on March 13 that was suspended from April 2 to May 7. The
strike has paralyzed marketing of grains and oilseeds for the last
week. They did not set a limit on how long the strike will last,
but will meet again on May 21 to review the situation. They will
continue protests on the major highways, although they will only
limit movement of grains and oilseeds for export in order to
guarantee food supplies to the major cities. The farm groups will
also organize a large protest in Rosario (the second largest city in
Argentina and the center of its agricultural industry) on May 25,
the national day of Argentina, and the same day President Kirchner
had previously targeted to announce a series of broad social pact
(reftel) and political renovation initiatives linked to the upcoming
2010 Bicentennial, and the fifth anniversary of combined Kirchner
rule. The planned "Social Pact", part of a "re-launching" of the
administration, appears to have been postponed due to the ongoing
farm dispute.

3. (SBU) The farm sector's decision to prolong their action caught
many by surprise given that it came in the wake of a more
conciliatory speech by President Cristina Kirchner on May 14, when
she called for suspension of the strike and resumed dialogue.
Initial responses from farm sector leaders immediately following the
President's speech seemed to indicate they had found enough positive
in her comments to lift their action. This was not the case,
however, as the following day they announced the strike's
continuation. The farm leaders asked for concrete measures from the
GoA in order to lift the strike. In particular, they asked that the
GoA acknowledge up front that any discussions specifically include
possible modifications of the variable export tax regime put in
place on March 11, and that the GoA fully implement the wheat and
beef agreements negotiated in April during the previous truce in the
strike. The farm groups sent a letter to the President asking to
meet with her and outlining their demands. While no formal GoA
response has been forthcoming, frequent GOA unofficial spokesperson,
national deputy Carlos Kunkel, stated May 15 after a meeting with
President Kirchner that there would be no negotiations with the farm
sector unless the strike is lifted.

4. (SBU) The ongoing strike has been successful in blocking
movement of grains and oilseeds for export within Argentina since it
resumed on May 7. Local producers are refusing to sell grains and
oilseeds, and protestors on the main highways are blocking trucks
moving grains and oilseeds to the ports. Some of the groups (most
prominently in Entre Rios province) are maintaining intermittent
blockades of other traffic, including international transport with
Brazil and Uruguay. Local contacts report that inland soybean
crushing plants have already been forced to suspend operations,
while soybean processing plants at the ports (the majority of the
crushing plants) are currently limited to using oilseeds bought and
stored before the resumption of the strike. While estimates vary,
it appears that stocks in ports are only sufficient to allow
continued operation for another week or two. The major export
companies have suspended purchases of grains and oilseeds pending
resolution of the strike.

5. (SBU) COMMENT: Local commentators have expressed surprise at the
refusal of the farm groups to suspend the strike after the more
"conciliatory" speech of President Kirchner. Contacts in the
agricultural sector indicate, however, that there is a high degree
of anger and suspicion among protestors in the rural areas. The
main complaints are the refusal of the GoA to discuss the variable
export tax and its failure to implement the beef and wheat
agreements negotiated during the previous truce. There seems to be
a feeling, somewhat justified, among the farm groups that the GoA is
willing to talk, but it is not willing to make any concessions.
Leaders of the farm groups suspended the original 21-day strike on
April 2 after a similar call for dialogue by President Kirchner, but
made little progress in subsequent discussions. The hard-line
position of the farm groups is now being driven by their
increasingly restive base of small and medium producers which is
relatively autonomous and, with this year's crop harvested, ready
for a long struggle. Continuation of the strike, however, runs the
risk of undermining public support for the rural sector. While the
general public has been sympathetic to the farm protest, there is
also a strong desire to see an end to the dispute. The risk for the
GoA is that it might win the battle and lose the war. Investment in
the agricultural sector, a motor of Argentine economic growth, is
being undermined by the conflict and a number of government policies
while rural area governors, legislators, and other officials are
increasingly feeling the pressure from constituents to support their
cause, creating serious tensions within the Kirchners' governing
coalition. END COMMENT

WAYNE

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