Search

 

Cablegate: Spanish-Argentine Relations: Spain Waiting Out Tough Times

VZCZCXYZ0006
RR RUEHWEB

DE RUEHBU #1451/01 2970938
ZNR UUUUU ZZH
R 230938Z OCT 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 2300
INFO RUEHMD/AMEMBASSY MADRID 2151
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001451

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ETRD ECON EAIR EFIN EINV PREL AR SP
SUBJECT: SPANISH-ARGENTINE RELATIONS: SPAIN WAITING OUT TOUGH TIMES

Ref:
A) BUENOS AIRES 1277
B) BUENOS AIRES 1395
C) BUENOS AIRES 1396

This cable contains sensitive information - not for internet
distribution.

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

1. (SBU) SBU Ambassador met with Spanish Ambassador to Argentina,
Rafael Estrella Pedrola, on October 16 to compare notes on recent
developments. Estrella (protect) explained that Spanish-Argentine
relations have been going through difficult times, in large part due
to the GoA decision to nationalize the Argentine flag carrier
Aerolineas Argentinas (AA) and its sister carrier Austral Airlines,
and to actively dispute compensation claimed by the two firms'
Spanish owners. He also commented on other Spanish investments in
Argentina, the GOA's recent foreign debt announcements, and
Argentina's political outlook. Despite lingering tensions,
Argentine President Cristina Fernandez de Kirchner (CFK) is still
planning to visit Spain in February. End Summary.

----------------
Unfriendly Skies
----------------

2. (SBU) Estrella said that the GoA's decision to nationalize AA
and Austral and to actively dispute compensation claimed Marsans,
their Spanish owner, had angered Prime Minister Zapatero and King
Juan Carlos. The owner of Marsans heads the largest Spanish chamber
of commerce, and he stoked the ire of the GoS. In the end, the
Ambassador said he told Argentine Cabinet Chief Massa that CFK's
visit to Spain should be postponed from October while both sides
work to manage the airline issue constructively. Next February was
agreed as a safer timeframe. However, GoA handling of the case
since the discussion with Massa has not calmed Spanish concerns,
Estrella said. GoA Transportation Secretary Jaime has distanced
himself from the original agreement between the Marsans' group and
the GoA (which Jaime did not heartily support), Qd Argentina's
Congress did not accept the original method for establishing a value
of the airlines, resulting in a large gap between what the Spanish
company says it is owed and what Argentine authorities say the
company is worth. (See ref a for background.) When President CFK
met with President Zapatero in New York during the UN opening in
late September, she said that an acceptable solution would be found.
The Spanish are being patient waiting for that solution to emerge,
the Ambassador said.

----------------
Other Investment
----------------

3. (SBU) Other Spanish firms in Argentina that have invested in
public utilities have recently gotten some tariff relief to assure a
return that will cover new investment needs but not a lot more, the
Spanish Ambassador said. The GoA has indicated that it will let the
prices and rates charged by the companies rise to cover basic
company needs. But that commitment will need to be confirmed now
that the economic situation has deteriorated. Estrella said that he
is encouraged that, for the first time in his tour here, it looks
like the GoA is trying to tackle some longer term economic issues,
rather than just reacting to short term developments. While this
apparent trend still needs to be confirmed by consistent GoA
actions, local Spanish businessmen tell him they are hopeful about
recent signs.

----------------------------
Paris Club and Bond Holdouts
----------------------------

4. (SBU) In this context, the Spanish Ambassador said that the
recent GoA decisions to pay Paris Club debt and to open discussions
on an arrangement with private bond holders were positive, but the
timing was unfortunate. The global economic crisis has made their
implementation problematic. Also, he said, the decisions were taken
with the same poor policymaking style that characterized earlier
Kirchner decisions: economic advisors were not involved until the
decisions were ready to be announced or had been announced. And, as
previously, this meant that some of important nuances of the
initiatives were wrong at first, requiring correction after the
fact. Still, Spain hopes that both processes will eventually
proceed. (See refs b and c for background.)

----------------------------
Bilateral Trade and Mercosur
----------------------------

5. (SBU) The Spanish have no major problems with bilateral trade
issues, according to Estrella. Exports and imports are growing, but
he noted that Argentina enjoys a surplus, which mitigates the
Argentine propensity to implement protectionist measures. He
observed that Argentina protectionist tendencies seem to be
manifestly themselves most clearly with respect to Brazil.
President Lula is still committed to international trade, but CFK is
grounded in the Argentine tradition of protecting industry. This is
likely to lead to more problems in Mercosur during this economic
downturn, though Lula seems to have given orders to try to avoid a
clash with Argentina.

----------
Digital TV
----------

6. (SBU) The Spanish Ambassador said that his impression was that
the Argentine decision to choose the Brazilian/Japanese norm for
Digital TV still holds, but progress to implement it has slowed. He
said he thinks this is because Lula has yet to deliver on promises
to make new investments in Argentina, including an Embraer
investment in the Cordoba aircraft manufacturing facility where
Lockheed-Martin currently has the management contract.

-------------------------
Argentine Political Scene
-------------------------

7. (SBU) The Spanish Ambassador did not see the Argentine
opposition rallying together anytime soon to pose an effective
counter-force to the Kirchners. That might happen by 2011, he
speculated, but it is just as likely that the effective opposition
to the first couple will emerge from within the Peronist Party. All
that said, he continued, for the 2009 Congressional elections, it
looks very much like the Kirchners and their allies will be limited
to 30-35% of the vote, and that the results will include an
increased presence in Congress for the opposition within and without
of the Peronist party.

WAYNE

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO:

 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC