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Cablegate: Argentine Farm Talks Falter (Again) - All Eyes On Competing

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0711/01 1442028
ZNR UUUUU ZZH
R 232028Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1149
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000711

USDA FOR FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO

SENSITIVE

SIPDIS


E.O. 12958: N/A
TAGS: EAGR ECON EINV PGOV ELAB PHUM AR
SUBJECT: ARGENTINE FARM TALKS FALTER (AGAIN) - ALL EYES ON COMPETING
MAY 25 EVENTS

REF: (A) Buenos Aires 0686 and previous (B) Buenos Aires 0681

-------
Summary
-------

1. (SBU) The first meeting between the GoA and leaders of the major
farm groups following suspension of the on-again, off-again farm
strike on May 21 quickly broke down after the GoA negotiators
reportedly refused to address the controversial variable export tax
until after the large demonstration planned for May 25 in Rosario
and the Administrations celebration of Argentina's May 25
"Revolution Day". Farm sector leaders accused the GoA of
negotiating in bad faith and once again delaying any real solution
to the conflict, while the government team gave a more positive spin
to the talks. Farm groups are now concentrating on the May 25
demonstration in Rosario. Meanwhile, the GoA is working to ensure a
large turnout at its official Independence Day ceremony led by
President Cristina Fernandez de Kirchner in Salta on the same day to
ensure that it is not overshadowed by the farm demonstration. There
appears to be growing discontent with the fact that the dispute is
dragging on and negatively affecting the overall economy. End
summary.

-----------------
Back to the Table
-----------------

2. (SBU) The GoA re-opened discussions with leaders of the major
farm groups the evening of May 22, declaring that all issues were on
the table. This was the first official meeting between the GoA and
the farm groups since the farm strike was suspended on May 21 (the
GoA had refused to negotiate while the strike was in place). The
GoA characterized the initial meeting as positive in a press
conference after the meeting. The government''s statement was
quickly followed by a denial of any progress by the leaders of the
farm groups. Visibly irate farm leaders expressed disappointment
that the GoA was unwilling to negotiate on the variable export tax
regime (which is at the heart of the ongoing dispute) before May 26,
after the large farm protest and the government's own big event,
both of which are scheduled for May 25, Argentina's Revolution Day.
The farm leaders declared that they are now focused on ensuring as
large a turnout as possible for the farm protest in Rosario, which
is the second largest city in Argentina and the major port for soy
exports. The GoA is, however, mobilizing resources to ensure as
large a turnout as possible for the official Independence Day
ceremony in Salta, which will be attended by President Cristina
Fernandez de Kirchner, to ensure that the turnout is at least as
large as the 60,000 expected at the farm protest in Rosario.

3. (SBU) The lead negotiator for the GoA, Chief of Cabinet Alberto
Fernandez, later that evening accused the farm leaders of distorting
what happened in the meeting and declared that the farm protest was
now an opposition protest. He claimed farmers had not presented a
proposal (a claim that was contested by farm leaders, who
distributed to the press copies of the proposal they had made), and
he said the GoA was prepared to discuss modifications to the
variable export tax regime, including a possible ceiling on the
maximum tax collected. (The press is reporting that the GOA's
marginal tax rate on soy exports, if soy prices go over $600/ton, is
95%.)

4. (SBU) Agricultural contacts say their anger and distrust of the
government is due in large part to the negative experience of the
farm groups with the beef and wheat agreements they negotiated with
the GoA in April. After extensive delays, the agreements are still
not fully in place and the implementing regulations issued so far
have included additional restrictions that go beyond what was
agreed. In the case of wheat, the agreement to allow exports of
100,000 tons to Brazil (which does not address the full amount of
wheat available for export) has been implemented with additional
provisions, such as limiting export licenses to 2,000 tons per
exporter, per day, making it very difficult to implement. While the
GoA has started issuing export permits for beef, the approvals have
been slow and well below levels agreed to with the farm groups.

5. (SBU) Per ref B, recent polls show a sharp drop in the
President's positive image, approval of her performance and
confidence in her government. The drop is widely attributed to the
GOA's handling of the farm protest and anxiety over rising
inflation. Polls also indicate, however, declining support for the
farm strike (although farmers remain the most admired
institution/sector in Argentina).

6. (SBU) Indeed, it seems that there is growing impatience with both
sides for not settling the strike. A senior Peronist governor told
the Ambassador May 23 that, at the age of 57, he had seen many
conflicts in Argentina and had grown inured to a lot of "noise," but
this was the worst strike he had seen. He said that, after 72 days
of a strike interrupted several times by talks, it was fair to
conclude that both sides had failed. He argued there was bad faith
and mistrust on both sides -- hardly the conditions for successful
negotiations. The public's perception was that both sides were
acting capriciously. He said he feared the GoA was running the risk
of letting the farm crisis rip the country apart. The GoA did not
have a convincing peacemaking plan or communication strategy, and he
claimed he had conveyed this to former president Nestor Kirchner.

7. (SBU) COMMENT: Farm leaders say they have suspended their strike
several times to respond to GOA calls for dialogue and negotiations,
but the GOA has not offered them any counter-proposals (let alone
any concessions) to address their primary concerns. We will be
watching closely the May 25 events as both sides try to demonstrate
their public support. Farm leaders are now talking about resuming
the farm strike on Monday, May 26, a decision that could be
announced at the demonstration in Rosario. END COMMENT.

WAYNE

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