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Cablegate: Media Reaction; Argentine Country-Risk; Impact of the World

VZCZCXYZ0014
OO RUEHWEB

DE RUEHBU #1622/01 2291455
ZNR UUUUU ZZH
O 171455Z AUG 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8958
INFO RHMFISS/CDR USSOCOM MACDILL AFB FL//SCJ2//
RULGPUA/USCOMSOLANT

UNCLAS BUENOS AIRES 001622

SIPDIS

STATE FOR INR/R/MR, I/GWHA, WHA, WHA/PDA, WHA/BSC,
WHA/EPSC
CDR USSOCOM FOR J-2 IAD/LAMA

SIPDIS

E.O. 12958: N/A
TAGS: KPAO OPRC KMDR PREL
SUBJECT: MEDIA REACTION; ARGENTINE COUNTRY-RISK; IMPACT OF THE WORLD
FINANCIAL CRISIS ON ARGENTINE ECONOMY; 08/17/07


1. SUMMARY STATEMENT

Key international stories today are related to the impact of
Argentine-Venezuelan ties on Argentina's country-risk ratings; and
business expectations about the next Argentine Government's economic
policy.

2. OPINION PIECES AND EDITORIALS

- "(Argentina's) country-risk and corruption"

Fernando Laborda, chief editorialist of daily-of-record "La Nacisn,"
comments (08/17) "From the moment the suitcase scandal was made
public, the Argentine Government decided to convince the public that
the Argentine authorities were betrayed in their good faith. In
other words, that there are no thieves in the Argentine Government,
but at most clumsy people.

"With Hugo Chvez's expected decision to fire PDVSA VP..., Argentine
authorities believe they have made progress on their strategy.
Cabinet Chief Alberto Fernndez said: 'This resignation is the most

conclusive evidence that we told the truth.'

"Whether Fernndez likes it or not, the case will not end up here.
No one believes it is enough that the Argentine Government distanced
itself from the alleged person responsible for having let the
'suitcase Mr.' board and that the Argentine Venezuelans followed
suit with the PDVSA official...

"The final destination of the almost 800,000 dollars Antonini
brought remains uncertain, as well as how many other dollar-filled
suitcases he brought on previous trips to Argentina and why a state
company without any profits, such as Enarsa, wastes our money in
luxurious chartered flights for two government officials and their
invitees.

"There is something as serious as the facts already mentioned - the
awareness of the close partnership between Chavism and Kirchnerism
has started to spread around the world. Now, that international
financial panic prevails and capitals are scared away from emerging
markets, the image of the Kirchner-Chvez partnership only help to
scare away investors from Argentina even further.

"Most of Argentine society, particularly after the suitcase scandal,
does not fully understand the benefits of this relationship. It is
true that the Chvez administration lends money to Argentina, but at
an annual rate of 10.6 per cent in dollars, which is twice as much
as the IMF rate. To make matters worse, today our country risk is
greater than the one we had during the first months of the de la Ra
administration."

- "In face of the crisis, the (Argentine) Government confirms its
economic model"


Marcelo Bonelli, economic columnist of leading "Clarn," writes
(08/17) "Kirchner made the decision on Tuesday night - in view of
the international (financial) crisis, that Argentina will deepen its
current economic model. The President has also confirmed that the
Central Bank's monetary-exchange policy will aim to put a brake on
the impact of the financial 'earthquake' on the local economy.

"... Now, the Government believes that the USG considers the crisis
will last between three to six months at most. In other words, that
there will be another negative international financial scenario
during the pre-election period and the beginning of the new
(Argentine) Government... The Argentine Government opines that the
crisis is larger due to lack of G7 leadership, which has been a
recurrent problem. Kirchner has been working with an internal report
which anticipates possible disagreement within the G7 about the way
central banks are intervening.

"Europe and Japan are convinced that the intervention should be
strong in order to tame the crisis and as a matter of fact they have
acted accordingly for several days. Instead, the White House wants
banks and investors to pay the costs of their speculation with major
losses and it wants to use the crisis to adjust the international
economy...

"... Businessmen insist that the international economic climate will
be different when the next Argentine Government takes power and that
the future president will have to immediately solve a series of
issues. A document circulating among top-ranking bankers conveys
that in the event Cristina Kirchner is elected president, she will
be made to face and immediately solve the following issues:
increased public service rates...; put the National Statistics
Institute (INDEC) on a sound track; acknowledge the country's energy

crisis and implement a contingency plan; renegotiate the country's
debt to the Paris Club and rationalize the debt with holdout
bondholders."

To see more Buenos Aires reporting, visit our
classified website at:
http://www.state.sqov.gov/p/wha/buenosaires

WAYNE

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