Cablegate: Argentina: Ambassador Promotes Ngos, U.S. Commercial


DE RUEHBU #0751/01 1512008
R 302008Z MAY 08



E.O. 12958: N/A
SUBJECT: Argentina: Ambassador Promotes NGOs, U.S. Commercial
Presence, Military Cooperation in Neuquen Province


1. (SBU) Ambassador met with political, business and military
leaders, NGOs, media, and Fulbright scholars during a May 22-23,
2008, visit to Argentina's southwestern province of Neuquen.
Ambassador discussed the current political situation and U.S.
corporate social responsibility efforts with Governor Jorge Sapag.
He visited a youth soccer NGO dedicated to disadvantaged youth, and
met with representatives from several other NGOs dedicated to
improving civil society. Ambassador discussed provincial economic
and political matters with leading local journalists, and U.S.
higher education with former Fulbright scholars. Ambassador and the
regional military commander discussed the excellent Argentine global
peacekeeping efforts and U.S.-Argentine military relations. The
visit received prominent and positive local media coverage. END

Governor of Neuquen Jorge Sapag

2. (U) The Ambassador met May 22 with Governor Jorge Sapag, whose
term began in December 2007. At the time of the visit, the province
was experiencing heavy flooding, several hundred citizens were being
evacuated, and provincial officials were monitoring the levels of
its several dams. Sapag is from the Neuquen Popular Movement (MPN),
the dominant provincial party founded in 1964 by Sapag's uncle, and
historically aligned to the national Peronist Party of current
President Cristina Fernandez de Kirchner). Also in attendance were
the Neuquen Provincial Legislature's First Vice President Carlos
Gonzalez and Second Vice President Graciela Muniz Saavedra.

3. (U) Neuquen enjoys a relatively strong economy, in large part
bolstered by oil and gas reserves (representing two-thirds and
one-quarter, respectively, of Argentina's total), and is Argentina's
main hydroelectric producer, with five dams. Governor Sapag and his
colleagues expressed strong support for the many U.S.-based
companies and their corporate social responsibility efforts in the
province, citing AES, Chevron, Duke Energy, oil-driller Pride
International, Apache, and Wal-Mart. Sapag said that they are "good
neighbors," noted their strong and growing investments, and said he
hoped they would continue.

4. (SBU) Governor Sapag lamented that some of the GOA's policies
that keep oil, gas and electricity prices far below world market
levels had led to over-consumption and under-investment in these
sectors. He also criticized the GOA's policy of maintaining high
hydrocarbon export taxes. He said he has been raising this subject
with GOA officials for five years and they have long promised policy
changes, but he is "still waiting to see them." Sapag said that
Chevron has difficulty selling its oil domestically, as the three
main domestic buyers, Shell, Esso, and YPF, effectively form what he
called an "oligarchy," keeping prices down.

5. (SBU) Although he cited the strong gas, oil, and hydroelectric
presence - and the potential for more - he also expressed his desire
to diversify the Province's economy. He said he wanted to further
increase Neuquen's potash extraction, which he said had great
potential. Sapag said that the nearby Arroyito heavy water plant is
one of the biggest in the world, is running at full capacity, and
will support Argentina's planned Atucha II nuclear reactor in Buenos
Aires Province, scheduled to be operational in 2011. He also cited
the new dam project, Chihuidos II, to be built in the northern part
of the province.

6. (SBU) Sapag indicated that high spending and debt accumulated by
his predecessor Jorge Sobisch left the province dependent on the
federal government for significant infrastructure spending. That is
why he has cultivated closer ties with President Cristina Fernandez
de Kirchner, for example, to fund part of the Chihuidos II dam. As
an example of over spending, Sapag and his colleagues also cited the
acquisition by the previous administration of Governor Sobisch of a
$50 million "information super highway" scheme. They expressed
regret about its cost, that its capacity was far more than needed
for their small province, and that only about 16% of its capacity
was being used. Thus far, the infrastructure is only being used for
police security cameras along highways, but has potential in the
areas of education, telemedicine, e-government, communication in
small towns, and video conferencing.

NGO youth soccer

7. (U) Ambassador visited a gathering of the Western Community Youth
Soccer Association, a youth soccer NGO that targets disadvantaged
and at-risk youth, promoting "healthy competition," "norms of
conduct," and leadership. About 100 boys and girls were on hand,
and the Ambassador spoke to many of them about their activities, and
encouraged their continued involvement. He lauded parental
involvement in this program (several parents from very humble
backgrounds were present), spoke to coaches, and toured the
community center where they gathered with the NGO's director,
Federal Judge Antonio Labate.

Off-the-Record Press Event

8. (SBU) The Ambassador engaged in a frank, off-the-record
discussion with two editors and one correspondent from the "Rio
Negro," the Patagonia region's oldest and largest-selling daily.
The journalists said that, although the province receives healthy
income from its oil, gas, and electricity earnings, there was still
a lot of inequality. They compared the 40-plus years of MPN party
domination to Mexico's long-running Institutional Revolutionary
Party. They also argued that the oil, gas and electricity dependent
province was in need of diversification. The journalists said that
provincial inflation was running at about 30%, far higher than the
official national average of 10%. (This estimate of actual national
inflation is in line with the estimates of private sector

9. (SBU) They said that a few years ago, then-Governor Sobisch had
started what they described as a highly questionable scheme to begin
a wine industry in the province, for which a few close associates
secured province-backed loans. They noted that wine production was
not common in this province and requires great expertise. They said
that in recent years, Sobisch had also undertaken costly and
unnecessary public works programs to court voters. These and other
actions had contributed to the province's relatively high debt
burden (now at about 2.5 billion pesos, or about $800 million, in a
province of only 550,000). The journalists said that Sapag's style
is quite distinct from that of Sobisch. As Sapaq grew up and
attended private schools in Buenos Aires, and later worked with his
then-Senator father, he is more sophisticated than Sobisch. They
added that Sapag also had much more cordial relations with the

10. (SBU) In response to questions, the Ambassador discussed the
strong U.S. investment in the province, noting the positive
contributions of U.S. companies, such as providing employment,
training and provincial revenues. He said that U.S. investment also
makes a great contribution to the national economy, that many U.S.
firms have been here for almost 100 years, and that there are
presently nearly 500 U.S. firms here, employing over 155,000
Argentines. He noted that Argentina is home to the regional
headquarters of many if not most of U.S. companies for
Spanish-speaking South America, and that many U.S. companies report
that Argentina is quickly becoming one of the most important
international, strategic locations for IT services due in large part
to the human talent here. The Ambassador said that Argentina is
also becoming Latin America's audiovisual and broadcasting capital,
and in recent years, many U.S. media and entertainment companies
have established their regional headquarters in Buenos Aires,
including Google, MTV, Fox, and Turner.

11. (SBU) In response to a question on the USG strategy on free
trade, whether it is a hemispheric, bilateral or global one, the
Ambassador he said that we see actually these as mutually
reinforcing, and that we are engaging at all three levels. Although
the hemispheric Free Trade Area of the Americas has not prospered
for various reasons, the U.S. has signed several bilateral free
trade agreements with countries in the hemisphere and is active on
the Doha agenda.

12. (SBU) The Ambassador and journalists also discussed the
well-publicized September 2007 Argentine Supreme Court case that
directly involved the "Rio Negro" daily itself. The Court ruled in
favor of its 2002 suit charging that the former Sobisch
administration had curtailed press freedom by barring it from state
advertisements. This ruling also tackled, and in turn spawned a
heated national debate about, the governments of Neuquen, the GOA,
and other provinces' use of state-paid advertisements, a widely held
practice in Argentina. The newspaper argued that Sobisch had
withdrawn ads it would normally have placed in Rio Negro as reprisal
for Rio Negro's publication of stories alleging that the
administration had sought to bribe provincial legislators in
exchange for their approval of Sobisch's "cronies" to fill vacancies
on the provincial high court. While the Court pointed out that
neither national nor international legislation nor jurisprudence
obliges governments to allocate advertisements to certain media if
it does not wish to, withdrawing or substantially reducing it in
reaction to the publication of certain stories amounts to an
indirect curtailment of press freedom.

--------------------------------------------- -----
Discussing U.S. Higher Education with Fulbrighters
--------------------------------------------- -----

13. (U) Ambassador hosted a roundtable discussion for four local
Fulbright scholars from science and teaching disciplines, all of
whom are now professors at the nearby Comahue University. They
recounted their academic experiences, lauding what they described as
the American educational system's promotion of creativity,
problem-solving, and original thinking, which they said has
contributed to the creativity of American society. They contrasted
this to what they said was the general Argentine tendency towards
"memorization." They noted the vast array of courses, activities,
and facilities (e.g., computers) that were available to them in the
U.S., which is generally not the case in Argentina. They also
extolled the amount of networking, interaction, and "unplanned
collaboration" that was the norm at American universities, and that
they still use these contacts today in their academic work.

14. (U) The Fulbrighters said that this academic opportunity had
granted them a time to reflect and to get a fresher outlook on their
work. The scholars did note the high costs of American higher
education, and said that some costs were not always covered by their
Fulbright grants, and they had in some cases been obliged to work or
seek other grants. They also cited the problems that some foreign
students encounter obtaining visas. They all agreed that more
academic exchanges were needed. Ambassador Wayne noted the
Embassy's efforts to obtain more resources to support youth and
teacher exchanges, especially for disadvantaged students, and that
such direct experience with the U.S. can be a positive antidote to
the prevailing negative U.S. image in Argentina.

Discussions with Regional Military Commander

15. (SBU) Ambassador and U.S. Defense Attache attended a private
dinner hosted by Brigadier General Hernan Gustavo Prieto Alemandi,
Commander of the Army's Sixth Mountain Brigade, and which
encompasses the Provinces of Neuquen and Rio Negro. Ambassador and
General Prieto discussed the excellent state of US-Argentine
military relations; Argentina's global peacekeeping roles in Haiti,
Kosovo, Cypress; Argentina's close military relations with its
neighbors, particularly Brazil and Chile; and the Neuquen region's
recent flooding, for which General Prieto's brigade was providing
assistance for affected civilians.

16. (SBU) General Prieto later continued these discussions with the
U.S. Defense Attache. General Prieto mentioned his close working
relationship with Governor Sapag and the General's desire to assist
with one the Governor's key concerns: dealing effectively with
annual flooding by constructing an evacuation center. General
Prieto said that such an initiative required strong political
support. The objective would be to have capacity for 500 people and
also space for a command and control center. General Prieto also
discussed his "soldiers to industry" initiative, a plan to partner
the military with local educational institutions to raise what he
said was the lagging educational levels of his soldiers, and to
provide them -- and Argentine private sector -- more skills and
career options. This initiative would also need the support of
political leadership, and he also welcomed any U.S. Embassy support.

Neuquen's 24-hour Wal-Mart

17. (U) Ambassador visited Neuquen's Wal-Mart, which recently began
24-hour operations. It is the first Wal-Mart in Argentina to do so,
and has the highest sales of all Wal-Mart locations in Argentina.
Wal-Mart is the number one employer in Argentina among the nearly
500 U.S.-based companies here. The Ambassador highlighted the
store's "Help Me Study" campaign, which promotes employee and
customer contributions of school materials for disadvantaged
students. Wal-Mart managers noted that a great amount of store
stock is produced locally. They also said that the new 24-hour
operations has been well-received by employees, unions, customers
and local authorities.

--------------------------------------------- ----
Breakfast with NGO FundeSur - making a difference
--------------------------------------------- ----

18. (U) The Ambassador hosted a breakfast roundtable for
representatives of the NGO "Foundation for the Development of
Southern Argentina (FundeSur)," as well as those from FundeSur's
umbrella network of smaller NGOs, "Enclave Solidario." FundeSur was
created in 1990 by local citizens dedicated to improving education
and civil society participation in the design and implementation of
public policies in Patagonia, the five southernmost provinces of
Argentina. FundeSur is also a member of several national and
international networks involved in similar work. Participants
described how they have created programs and networks with public
and private sector organizations to strengthen civil society,
improve public policies, and assist in the many areas where federal,
provincial and local governments do not have the capacity to assist.
Ambassador and NGO leaders agreed on a number of potential
follow-on projects for Embassy-NGO cooperation.


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