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Cablegate: K Verguenza: Kirchner-Controlled Congress Passes

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P 031853Z AUG 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 5441
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RUEHMD/AMEMBASSY MADRID 1681

C O N F I D E N T I A L SECTION 01 OF 02 BUENOS AIRES 001732

SIPDIS

SIPDIS

STATE FOR WHA TOM SHANNON, JOHN MAISTO, AND CHARLES SHAPIRO
NSC FOR DAN FISK
TREASURY FOR DAS NANCY LEE
USCINCSO FOR POLAD

E.O. 12958: DECL: 08/03/2016
TAGS: PGOV PHUM PREL AR
SUBJECT: K VERGUENZA: KIRCHNER-CONTROLLED CONGRESS PASSES
SUPERPODERES BILL

REF: A. BUENOS AIRES 01594

B. BUENOS AIRES 00293

Classified By: CDA, a.i., Michael Matera, Reasons 1.4(b) and (d)

1. (SBU) SUMMARY: On August 2, the Lower House of the
Argentine Congress approved a controversial bill granting the
Casa Rosada permanent special powers to modify the federal
budget without the approval of Congress. The bill passed the
Senate three weeks earlier. Congress authorized these
special budgetary powers on a year-by-year basis during the
economic crisis and its aftermath between 2001 and 2005, but
the new bill would make these powers permanent. Political
opposition leaders strongly opposed the bill, but with the
help of the ex-Duhaldista bloc and defecting Radical Civic
Union (UCR) members, Kirchner's supporters easily won the
vote. END SUMMARY.

2. (SBU) On August 2, the Lower House of the Argentine
Congress approved a controversial bill granting the Casa
Rosada permanent special powers to modify the federal budget
without the approval of Congress. The bill passed the Senate
three weeks earlier. The new law specifically will permit
Cabinet Chief Alberto Fernandez to move funds around within
five key areas of the budget: government administration,
security and defense (with the exception of the national
intelligence service SIDE), social services, economic
services, and public debt interest. Furthermore, the Cabinet
Chief will be able to alter the percentage of the budget
devoted to current expenditures and capital investments.

3. (SBU) Congress authorized these special budgetary powers
on a year-by-year basis during the economic crisis and its
aftermath between 2001 and 2005, but the new bill would make
these powers permanent. The Casa Rosada did not request the
special budgetary powers in the 2006 budget, approved before
Kirchner effectively won control of Congress in the October
2005 legislative elections, because of opposition in
Congress. (See Reftel A for more on Kirchner's recent
actions in Congress.)

4. (SBU) Leaders from the political opposition strongly
opposed the bill, but with the help of the ex-Duhaldista bloc
and defecting UCR members, Kirchner's supporters easily won
the vote. President Kirchner argued that the special powers
are ""necessary instruments to be able to govern and carry
Argentina forward."" Kirchner's allies in Congress criticized
UCR congressmen opposed to the current bill that voted in
2001 to grant then Minister of the Economy Domingo Cavallo,
part of a UCR-led government, these same powers. (Note:
Cristina Kirchner, then a Lower House Member from Santa Cruz,
vehemently opposed the granting of special budgetary powers
to Minister Cavallo in 2001. End Note.) UCR President
Roberto Iglesias countered, ""It would be irrational to think
that rules in force during a moment of hyperinflation would
be applied today, when there is a surplus."" Affirmation for
an Egalitarian Republic (ARI) expressed her opposition in
stronger terms, arguing that the bill represented, ""the death
of the Republic."" ARI and Mauricio Macri's Republican
Proposal (PRO) are considering taking legal action against
the bill, but legal consultants argue that the chances of a
successful legal challenge are remote.

-------
COMMENT
-------

5. (C) Together with the recently passed law that
legitimates the President's arbitrary use of presidential
decrees, Kirchner has essentially stripped the Argentine
Congress of its control over the budget. Kirchner's
additional powers will undoubtedly be useful next year during
the presidential election campaign. Kirchner's budgetary
control and other recent actions, such as the Council of
Magistrates reform that strengthened the Casa Rosada's
control over the judiciary (See Reftel B), have brought
presidential authority in Argentina to its highest level

BUENOS AIR 00001732 002 OF 002


since the return of democracy in 1983. All hope that
Kirchner would pursue more moderate policies after winning
the mandate in last year's congressional elections that was
denied him when former President Carlos Menem dropped out of
the second round presidential race in 2003 is gone.

6. (C) However, Kirchner is not the only one to blame for
the poor condition of Argentina's institutional democracy, as
the opposition once again demonstrated its disunity and
complete lack of power. Not only did several members of the
opposition UCR vote for the bill, but unlike during the
debate over the Council of Magistrates reform, the opposition
leaders could not even manage to organize a group photo-op.
Both ARI and PRO leaders talked about taking the issue to the
courts, but could not agree on a joint legal effort. The
opposition will need to work more closely together in order
to prevent further erosion of Argentina's democratic
institutions and avoid their relegation to political
irrelevance. END COMMENT.


MATERA

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