Cablegate: Argentina: Rising Pressures for the Riachuelo River

VZCZCXYZ0010
RR RUEHWEB

DE RUEHBU #1061/01 2661415
ZNR UUUUU ZZH
R 231415Z SEP 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 4385
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001061

SIPDIS
SENSITIVE

DEPT FOR OES/ENV AND WHA/EPSC
DEPT PLEASE PASS TO EPA

E.O. 12958: N/A
TAGS: SENV ECON EFIN EIND AR
SUBJECT: ARGENTINA: RISING PRESSURES FOR THE RIACHUELO RIVER
CLEAN-UP TO BEGIN

REF: 08 BUENOS AIRES 1703

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Summary
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1. (SBU) A massive, long-delayed cleanup of the Riachuelo-
Matanza River Basin, the most polluted basin in Latin America,
is due to begin shortly. Funded in part through a $2 billion
World Bank loan, the project is expected to define the World
Bank's involvement in Argentina in the medium to long-term.
Administrative intransigency and a lack of cooperation between
different government bodies, however, raise the possibility of
further delays for the clean-up, while orders from the federal
court supervising the project put pressure on the GoA to start
work immediately. The high-profile clean-up has the potential
to be an important achievement or a resounding failure for the
Kirchner Administration, although its outcome will not be
known for some time. End Summary.

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World Bank Loan for Huge Environmental Clean-Up Project
--------------------------------------------- ----------

2. (SBU) ESTHOff met on September 3 with World Bank (WB)
officials Franz Dress-Gross and Renan Poveda to discuss the
Matanza-Riachuelo River Basin Clean-Up Project (Riachuelo
clean-up). The project is a massive $3.5 billion, 12-year
project to clean up the greater Buenos Aires Riachuelo river
basin, through construction of new sewage treatment systems
and curtailment of industrial effluent flow. A WB loan signed
in August by the GoA is to provide $2 billion in financing in
two tracts, with the first loan of $840 million to be
committed this November. The GoA will provide 44% of the
total funding, a higher than normal counterpart for WB
projects. Poveda suggested that the GoA chose to provide this
higher level of funding as a means of showing its commitment
to the project.

3. (SBU) The Riachuelo river basin is home to about four
million people, of which 35% do not have clean drinking water
access and 65% do not have sewage connections. Approximately
4,100 industries are located in the basin, with many
discharging untreated effluents directly into the river. The
river has organic compound levels that are 10 times what is
needed to maintain a healthy, aerobic river, as well as high
levels of heavy metals and other pollutants.

4. (SBU) Pursuant to a 2008 Supreme Court decision that
mandated a clean-up of the river, the GoA established an
overarching authority, ACUMAR (La Autoridad de Cuenca Matanza-
Riachuelo), to manage the project. ACUMAR, which by statute
operates under the Secretariat of the Environment, includes
representatives of the national government, province, City of
Buenos Aires, and 14 other municipalities that make up the
river basin. ACUMAR is to work closely with AySA (the primary
water and sanitation utility in Buenos Aires), which has
technical expertise and runs the sewage system and water
treatment plants. The decision also gave a federal judge in
Quilmes, Luis Armella, supervisory power over the project.

5. (SBU) The WB-funded clean-up project consists of two parts.
The first is to direct runoff and sewage into massive
collector pipes and then to primary treatment plants, which
will remove organic pollutants. The wastewater is then
discharged via underground pipelines 11 km into the Rio de La
Plata river, where it will disperse. While some NGOs have
criticized the plan for not including secondary treatment that
would allow the water to be discharged directly into the
river, the WB determined that this was the most cost-effective
means of cleaning up the Riachuelo. The sewer extensions will
increase sewage coverage from 35% to over 75% of river basin
residents.

6. (SBU) The second part of the clean-up is the progressive
elimination of point source discharge, directly controlling
effluent from the 4,100 industries lining the river. This
project focuses on monitoring and requiring companies to treat
discharge and/or direct it to treatment plants. Tanneries and
milk/meat producers are the primary sources of pollutants,
discharging respectively 43% and 17% of all pollutants.
Grants will be available to small and medium-size enterprises

to assist in updating their treatment facilities. The WB and
ACUMAR are considering moving factories involved in the most
polluting parts of the tanning process (splitting fur off
leather and softening the leather) to one location, so as to
allow for targeted treatment and monitoring.

7. (SBU) According to WB Project Head Dress-Gross, ACUMAR and
AySA "are committed to the project." The first stage of the
project, involving the construction of a new collector and
treatment plant on the left bank of the river, will free up
capacity on the right bank to allow AySA to expand its sewage
network. The Environment Secretariat has already transferred
inspectors to ACUMAR to begin inspections of the industrial
polluters and is reportedly transferring almost half of its
employees to work on the clean-up. It is not clear what
implications this has for the Secretariat's other day-to-day
work. Although a previous cable (ref A) noted that the GoA
may be open to water and sanitation tariff increase to pay for
AySA's operating costs related to increased coverage and
treatment, WB Official Poveda said that this now appears to be
off the table and that the GoA will have to find another
revenue source for AySA.

8. (SBU) In addition to the WB-funded project, the
municipalities along the river are required by law to clean
the river banks within 35 meters on either bank. The
supervisory federal judge has ordered the river bank cleanup
to begin by November. The City of Buenos Aires plans to clean
up floating solid waste and to demolish illegal buildings
along the river. This plan has been complicated by the
existence of several illegal housing units along the river
that will require the removal of approximately 1,500
households. City environmental officials told ESTHOff that
the City, although nominally part of ACUMAR, played no part in
the WB loan negotiations and feels frozen out of the larger
clean-up, since ACUMAR is part of the national government
structure and responds to Presidential Cabinet Chief Anibal
Fernandez.

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But Delays Loom for Political Reasons
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9. (SBU) The WB officials told ESTHOff that ACUMAR is now
being restructured, which may cause delays in the project's
start-up. The WB loan agreement locates the administrative and
technical units in the Environment Secretariat but outside of
ACUMAR, thus giving the Secretariat primary control of the
project. According to Poveda, however, Cabinet Chief
Fernandez has ordered that the administrative and technical
units be moved to ACUMAR to allow him to have more direct
authority over the clean-up project and its funding. This
administrative restructuring will require an amendment in the
WB loan, however, which may lead to a delay in the initial
disbursement.

10. (SBU) Poveda said that the need for GoA approval of the
loan amendment opens the door for GoA infighting and delays,
as several ministries must sign off on the amendment.
Therefore, the GoA has asked the WB to release funds to begin
the project while the amendment is pending. WB lawyers are
currently reviewing that request, but Poveda indicated that
the GoA may have to begin carrying out eligible expenditures
itself, to be reimbursed once the loan becomes effective.

11. (SBU) According to Poveda, Fernandez decided to reassert
control over the clean-up project when he became Cabinet Chief
in July 2009. The restructuring of ACUMAR and the loan
agreement is an attempt to make ACUMAR more directly
accountable to his office. Andres Napoli, head of the
Riachuelo project of the environmental NGO Fundacion Ambiente
y Recursos Naturales, confirmed to ESTHOff that the
restructuring is a political decision to give Fernandez close
control of ACUMAR. Napoli said to the daily newspaper "La
Nacion" that repeated change of personnel was delaying any
work on the project: "It can't be that every new official who
joins the process starts from zero. In this year the
representatives of ACUMAR have already changed four times."
Fernandez's restructuring of ACUMAR could be an attempt to get
the stagnant body to function more efficiently through tighter
control over the WB loan funds.

12. (SBU) Meanwhile, the WB expressed some concern that ACUMAR
build the capacity to handle the complex procurement/contract
guidelines of international loans. Although it can access
experts from many ministries, ACUMAR will need time to build
this capacity. Even though ACUMAR is to be staffed primarily
from within the Environment Secretariat, and up to half of the
Secretariat's staff is to be reportedly assigned to the
project, our contacts tell us that individual offices within
the Secretariat are reluctant to release employees to ACUMAR.

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While the Court Demands Action Immediately
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13. While delays loom due to politics, the federal judge
supervising the clean-up has ordered immediate action.
According to "La Nacion," Judge Armella ordered on September 4
that ACUMAR must start work within two months. He threatened
the imposition of daily fines on the officials responsible for
the delay if the order is not complied with. Judge Armella
found that ACUMAR was not in compliance with the initial
Supreme Court orders of last July and therefore issued the new
demand for the project to begin, and for the national,
provincial, and city governments to put forth the necessary
funds to start work. According to "La Nacion," this order was
a response to a statement by Buenos Aires Mayor Mauricio Macri
that the City of Buenos Aires would not put forth funds for
its part of the Riachuelo clean-up.

14. (SBU) According to WB Project Head Dress-Gross, the judge
also ordered that ACUMAR must immediately begin inspections of
all 4,100 industrial sites in the basin and that the
Secretariat must transfer inspectors to ACUMAR to complete
that task. The WB believes that ACUMAR/AySA can complete 200
inspections per month, so this tasking alone would take 20
months to complete.

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Plans to Involve Civil Society and NGOs
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15. (SBU) Poveda indicated that NGOs are strategic allies in
the project and that he was meeting with two groups of NGOs on
the same week that he met with ESTHOff. Napoli of FARN,
however, said that ACUMAR is "totally closed" to NGO
involvement or monitoring, even though the Supreme Court order
created a "Cuerpo Colegiado," a committee of NGOs authorized
to monitor and assist with the clean-up. Poveda agreed that
Environment Secretary Homero Bibiloni, and the GoA in general,
seemed quite skeptical of NGO involvement and refused to
include grants or programs for NGOs in the WB loan funding.
The WB still hoped to involve NGOs and smaller municipalities,
Poveda added, as many NGOs and municipal officials already
know who the main polluters are and can direct ACUMAR to them.

16. (SBU) Poveda noted that the WB has another on-going
project focused on solid waste management in Buenos Aires.
Although not within the framework of the Riachuelo loan, solid
waste is a concern in the river basin, and Poveda said the WB
planned to seek additional financing for the solid waste
management project to pay for clean-up of solid waste in the
basin, community work to prevent dumping, and social
campaigning. He believed that this would provide a backdoor
for NGO/civil society involvement in the Riachuelo clean-up.

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Comment: A High-Stakes Project
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17. (SBU) With a $2 billion WB loan agreement in place, the
Riachuelo clean-up project finally appeared ready to go
forward. The need for a loan amendment and restructuring of
the administrative and technical units, however, will make it
difficult for ACUMAR to begin the project within the two-month
deadline set by Judge Armella. As a high-profile project for
residents of Buenos Aires, the clean-up has the potential to
be an important achievement or resounding failure for the
Kirchner Administration, although its outcome will not be
known for some time. End comment.

MARTINEZ

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