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Cablegate: Argentina: Kraft Conflict Heats Up As Police Remove Workers

VZCZCXYZ0001
OO RUEHWEB

DE RUEHBU #1084/01 2731308
ZNR UUUUU ZZH
O 301308Z SEP 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4410
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001084

SIPDIS
SENSITIVE

DEPARTMENT PASS to USTR KKALUTKIEWICZ
TREASURY for WLINDQUIST
LABOR for INTERNATIONAL RELATIONS JANE RICHARDS

E.O. 12958: N/A
TAGS: ECON EINV EIND ETRD ELAB PREL PGOV KSAC AR

SUBJECT: Argentina: Kraft Conflict Heats Up As Police Remove Workers
From Plant

Sensitive But Unclassified - Not for Internet Distribution or Use by
Private Parties

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

1. (SBU) On Friday September 25, the government of the Province of
Buenos Aires, with the support of the federal government,
implemented, after much hesitation, a judge's decision and ordered
the police to move into the Kraft plant in the suburbs of Buenos
Aires. The police forcibly removed about 50 dismissed workers who
had been illegally maintaining a presence in the plant and
preventing it from operating at full capacity since September 4.
The workers had acted after Kraft refused to reinstate 156 workers
fired for physically preventing management from leaving the plant
during a dispute on July 3 over measures to prevent the spread of
the H1N1 flu virus. The principal, recognized union at the Kraft
plant has not supported either the original demand or the subsequent
plant occupation. The dismissed workers have succeeded in turning
this dispute into a very high-profile issue by, for example,
blocking a major highway out of Buenos Aires. The police action of
a few days ago generated non-stop media coverage. The workers'cause
has been adopted by the more extreme, dissident wing of the labor
movement as well as anti-globalization protestors and bloggers, and
there are likely to be further demonstrations and work disruptions
in the coming days. There is increasing concern in the business
community of greater labor unrest across sectors, as the current
economic recession in Argentina impacts the average Argentine worker
and family. The Mission has been quietly encouraging the GoA and
Kraft to find a solution to the conflict. However, a leak from the
Buenos Aires provincial government officials about its conversations
with the Embassy prompted headlines about the Embassy's role. In
response, we released a short press statement expressing the
expectation that the workers and company will soon return to work
and full production. End Summary.

-----------------------
Kraft Dismissed Workers
-----------------------

2. (U) On August 18, Kraft dismissed 156 workers represented by a
radical dissident union for illegal actions that occurred on July 3,
when those fired workers prevented administrative staff from leaving
the factory following disputes over a demand by dissident union
members for paid leave during Argentina's outbreak of the H1N1
virus. Some of the dismissed workers were also caught on videotape
committing acts of vandalism against the factory and equipment.

--------------------------
50 Workers Seize the Plant
--------------------------
3. (U) Kraft officials had refused the H1N1-related demand, saying
that they had complied with all aspects of the law and had no
reported cases of H1N1 in their facility. The demand was not
supported by the main food workers union, representing most of the
3000 plant employees. Kraft has since signed severance agreements
with 70 of the 156 terminated employees and indicates they are close
to finalizing with another 16. However, on September 4, a group of
approximately 50 of the dismissed union workers seized the plant and
demanded that Kraft reinstate all terminated workers. They had
illegally maintained a presence inside the plant until police action
on Friday, September 25 to remove them, shutting down most
operations at the facility.

-----------------------
Arbitration Didn't Work
-----------------------

4. (U) Initially, the dispute was under the jurisdiction of the
Ministry of Labor, which had ordered a "conciliacion obligatoria"
similar to a mandatory arbitration agreement to seek consensus among
the parties, with a deadline of September 9, 2009. Under Argentine
labor law, in the event of a labor-management dispute under a
collective bargaining agreement, Ministry of Labor (MOL) mediation
is mandatory if one of the parties requests it. In the case of
Kraft, once the dissident labor organization requested mediation,
the MOL initiated a 20- day period of conciliation during which it
attempted to mediate the dispute. At the end of the period, the MOL
declined to extend its mediation for a second period of conciliation
because it had determined that the union which had requested
mediation was not the legally recognized collective bargaining unit.

According to press reports, the MOL officially stated that it was
ending the period of legally-mandated conciliation because there had
not been any progress toward a negotiated settlement. The plant
occupation then became an issue for the justice system. On the
order of a judge, the police were given the authority to remove the
former Kraft employees responsible for this ongoing violence,
without prejudice to their claims or mediation.

--------------
Police Move In
--------------
5. (U) The police action on September 25 was preceded by four hours
of negotiation requesting that the dismissed workers peacefully
follow the judges' order and depart the facility. Following their
removal, some workers -- along with what appeared to mostly be young
student protesters -- threw rocks at the police, several of whom
were injured. Police eventually forcefully rounded up the
protesters, using mounted police, tear gas, and police in riot gear,
arresting over one hundred. The episode was televised nationally
and replayed endlessly over the weekend of September 26-27. All of
the detainees were released from custody the next day, though some
may be charged for violence.

---------------------------------------
Government Supports Continued Mediation
---------------------------------------
6. (SBU) The labor action has been led by a radical union
representing a small portion of Kraft workers. (The union marches
with banners featuring Lenin and Trotsky's faces.) The larger labor
confederation, tied to the ruling Peronist party, and the main food
workers union representing workers at the plant rejected the actions
of the group. A large element in the Kraft dispute appears in fact
to involve competition for membership and recognition between the
two unions. Both the national labor ministry and the government of
the Province of Buenos Aires, where the factory is located, have
ordered continued mediation over the issues. The dismissed workers
or their supporters again blocked the main north-south highway into
Buenos Aires on September 28, and protests and road blockages
continue this week.

-------------------
Embassy Involvement
-------------------

7. (SBU) At the behest of Kraft, the Embassy has been in contact
with national and provincial officials requesting their engagement
to resolve the conflict and to enforce the law, including Kraft's
rights to operate its factory in a safe fashion. The DCM has
discussed the case over the past two weeks with Chief of Cabinet
Anibal Fernandez and Justice Minister Julio Alak, as well as the
Province of Buenos Aires's ministers of Justice and Production.
Other embassy officials have had broached the issue with
working-level GOA officials. In all of these conversations, we have
also encouraged moderation and conciliation. On September 28, Kraft
agreed to participate in government-sponsored talks over the fired
workers.

8. (SBU) Calls made by Buenos Aires Governor Daniel Scioli's staff
to the Embassy on September 28 requesting help with the dispute were
leaked to the press, apparently by Scioli's staff. This guaranteed
headlines on September 29 of a U.S. Government role in the dispute.
To cushion the blow, the Embassy used the following talking points
in conversations with reporters:

Text of talking points:

We support the full application of labor rights and protections, as
well as respect for property rights and decisions of the judicial
system.
We are pleased that the Kraft plant is now in operation again.

If Asked about U.S. Embassy contact with the Government:

The U.S. Embassy is following this issue, consistent with our desire
to promote U.S. investment in Argentina, which provides good jobs to
155,000 Argentines. To that end, we've been in touch with
appropriate Argentine authorities with the goal of achieving a
lasting solution as soon as possible. The embassy is not, however,
involved in the ongoing negotiations.

End text of talking points.

-----------------------
Press Coverage Negative
-----------------------

9. (SBU) Press coverage of the removal of the workers from Kraft
has generally been negative and has emphasized the violent nature of
the action. Part of this is due to the normal tendency of the local
press to dramatize any police action that involves violence, but the
ongoing dispute between the government and the local press over a
new media law in the Congress (septel) is also a factor. In the
current environment of confrontation between the Administration and
the local press, the press is highly critical of any and all
government actions. Kraft also failed to develop a discernable
press strategy during the conflict. Since the police action, the
story has heated up even more and was the headline story in almost
all newspapers on September 29. Most of the stories focused on the
Embassy's involvement in the case, indicating that the USG was
seeking an end to the conflict.
10. (SBU) Because of the press frenzy, and with the Mission's
agreement, Chief of Cabinet cancelled his September 29 courtesy call
with Ambassador Martinez. In a subsequent phone conversation, he
explained to the Ambassador that meeting on the morning of big
headlines about Embassy involvement in the dispute would feed the
stories, complicating GOA efforts to negotiate a settlement.
-------------------
Now a Cause Celebre
-------------------

11. (SBU) Although not supported by the mainstream labor movement
here, the Kraft dispute has become a cause celebre among the
anti-globalization advocates in the blogosphere and on Buenos Aires
campuses. More protests at the plant and here in the city are
likely.
-------
Comment
-------

12. (SBU) The Embassy has publicly voiced support for the full
application of labor rights and protections, coupled with
appropriate respect for property rights and court-ordered mediation.
We will avoid comment on the decision of the GOA to order the
police to open up the plant on September 25. We advocate continued
mediation, but without prejudice to the rights of Kraft and its
workers to operate in a safe environment. However, we are
emphasizing that while we have been in touch with appropriate
Argentine authorities with the goal of achieving a lasting solution
as soon as possible, we are not involved in the ongoing
negotiations.
13. (SBU) The Kraft situation highlights what the GOA may face in
coming months, as its loss in the June election renders it less
capable of acting decisively on important issues. This is already
indicated in the strike last week at the principal port of Bahia
Blanca that threatened to cut off the flow of oil imports to the
refineries. That strike is now on hold under a ten-day cooling off
period, but is unresolved. Continuing high inflation, together with
the failure of the government to deliver any real wage relief to
Argentine workers during the recession, is spurring labor unrest,
which threatens to continue to spike up until there is a return to
meaningful growth, lower inflation, and job creation.

MARTINEZ

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