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Cablegate: Argentina Calls for Emergency Mercosur Summit to Address

VZCZCXYZ0002
RR RUEHWEB

DE RUEHBU #1400 2841444
ZNR UUUUU ZZH
R 101444Z OCT 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 2222
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001400

USDOC for 4321/ITA/MAC/OLAC/PEACHER

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ETRD WTRO ECON AR
SUBJECT: Argentina Calls for Emergency Mercosur Summit to Address
Global Crisis Impact

Reftels: A. Buenos Aires 1377
B. Buenos Aires 1374
C. Buenos Aires 1079

1. (U) On October 8, Argentine Foreign Minister Jorge Taiana
announced he would ask his fellow Mercosur Foreign Ministers as well
as Economy Ministers to hold an emergency summit regarding the
global financial crisis. Daily La Nacion quoted a "high-ranking
government official" as saying that "the intent is for the Economy
and Foreign Ministers of MERCOSUR countries to analyze the crisis
and coordinate common positions of the bloc" on the impact of the
crisis on the region.

2. (SBU) Adrian Makuc, National Director of Trade Policy in the
Economy Ministry, just back from an October 8 meeting of the
Mercosur Coordinating Committee in Rio de Janeiro, told Econoff that
the international financial crisis and Taiana's request for a summit
were the main topics of discussion there. He expects the summit
will take place October 27, and that the focus will be on
coordinating macroeconomic, trade, and currency valuation policies
"to avoid collisions." On the recent, rapid depreciation of the
Brazilian real relative to the Argentine peso (Ref A), Makuc noted
"we have a problem with that, obviously." Ernesto de la Guardia, a
Foreign Ministry trade officer in the Foreign Ministry's Mercosur
office, confirmed to Econoff October 9 that Argentine "angst" at the
Brazilian central bank's hands-off policy on the value of the Real
(versus the Argentine central bank's active stabilization
intervention) would make exchange rate policy differences between
Argentina and Brazil the primary topic of discussion. He estimated
that a meeting could take place the week of the 20th or 27th, and
expected that Venezuela would be invited to participate.

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Comment
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3. (SBU) The summit request by the GoA (though current Mercosur
president Brazil would host the summit if it occurs) apparently
springs from the new GoA "Coordinating Table" chaired by Cabinet
Chief Sergio Massa (Ref B). Given recent frictions between
Argentina and Brazil over end-game WTO Doha Round negotiations (Ref
C), the two nations' distinct approaches to macro policy management,
and the wild-card of Venezuela participation, finding common ground
on financial crisis management could prove difficult.

WAYNE

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