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Cablegate: Argentina Upgrades Agriculture to Ministry Level, Appoints

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #1117/01 2812038
ZNR UUUUU ZZH
R 082038Z OCT 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 4463
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAEPA/HQ EPA WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL

UNCLAS BUENOS AIRES 001117

USDA FOR FAS/OA/OCRA/ONA/OGA/OFSO

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EAGR SNAR ECON EINV PGOV ELAB PHUM TBIO AR
SUBJECT: Argentina Upgrades Agriculture to Ministry Level, Appoints
New Minister

1. (SBU) Summary: On October 2, Argentine President Fernandez de
Kirchner created a Ministry of Agriculture to be headed by Kirchner
loyalist Julian Dominguez. This change upgrades the agriculture
portfolio to a Ministry level - a status it had not held since 1981,
despite Argentina's role as a global agricultural player. Minister
Dominguez has been a fixture of both Kirchner presidencies; he is a
lawyer and does not have a background in agriculture. In addition,
the announced changes place Argentina's controversial Agricultural
Control Office (ONCCA) under the direct control of Minister
Dominguez -- a loss of power for tax agency chief Ricardo Echegaray.
The changes also create a new Ministry of Industry and Tourism to
replace the former Ministry of Production. Minister Deborah Giorgi
will remain as head of the smaller Ministry. Chief of Cabinet
Anibal Fernandez appears to be the real benefactor of this shifting
power dynamic, given his close ties with Dominguez. Farm leaders
are clearly pleased with the higher political status accorded to
agriculture, but are not overly optimistic that this change will
transform their confrontational relationship with the government.
End Summary.

-------------------------------------------
Agriculture -- From Secretariat to Ministry
-------------------------------------------

2. (SBU) Following weeks of rumors about the future of Argentina's
agricultural political landscape in the wake of Agriculture
Secretary Carlos Cheppi's announced resignation, President Fernandez
de Kirchner published decrees creating a new Ministry of Agriculture
to be headed by Julian Dominguez on October 2. The change upgrades
agriculture to Ministry level - a status it had not held since 1981.
Prior to this recent change, Argentina had surprisingly been one of
a very few countries in Latin America that did not accord its top
agricultural official Ministerial status.

3. (SBU) Julian Dominguez is a former mayor of the Buenos Aires
province town of Chacabuco (1995-1999); and he later served as the
Minister of Public Works for the Buenos Aires province under
Governor Carlos Ruckauf. He was elected as a provincial
Representative for Buenos Aires in 2007, and served as
vice-president of the lower house prior to being appointed Minister
of Agriculture. Minister Dominguez is a staunch ally of the
Kirchner couple and has been strongly supportive of government
policies during both Kirchner presidencies. He is a lawyer and does
not have a background in agriculture.

------------------------
A Shifting Power Dynamic
------------------------

4. (SBU) In addition to creating the new Ministry of Agriculture,
the announced changes place Argentina's controversial Agricultural
Control Office (ONCCA) under the direct control of Minister
Dominguez. ONCCA has wide- ranging powers, including responsibility
for agricultural export authorizations and administration of subsidy
programs for the sector. ONCCA had previously been controlled by
Ricardo Echegaray, Argentina's current tax czar (head of AFIP),
through his appointment of Emilio Eyras as President of the agency
in 2008 when Echegaray was moved to head AFIP. Minister Dominguez
inherits oversight of ONCCA amid a wave of corruption allegations
directed at the agency. ONCCA is currently under judicial review
for "irregularities" and "bribe requests" surrounding payment of
subsidies totaling more than AR$13 million. Although Dominguez has
official oversight of ONCCA, it remains to be seen how much decision
autonomy he will be granted. Press reports indicate that former
President Nestor Kirchner picked Juan Manuel Campillo, a strong
Kirchner ally, to replace Eyras as ONCCA chief.

5. (SBU) Agriculture previously had been in the hands of a
sub-cabinet secretary who reported to Production Minister Deborah
Giorgi. Carving agriculture out of Production leaves Giorgi with a
smaller agency, which has been renamed the Ministry of Industry and
Tourism. Minister Giorgi will remain as head of the smaller
Ministry. Echegaray and Giorgi have clearly lost power in this
restructuring. Post contacts opine that Cabinet Chief Anibal
Fernandez appears to be the real benefactor of this shifting power
dynamic due to his close ties with, and influence over, Dominguez.


---------------------------------
Farm Sector Pleased But Cautious
---------------------------------

6. (SBU) Farm leaders are clearly pleased with the political
upgrade to agriculture in the Cabinet. In June, the farm sector's
Liaison Board (composed of leaders of the four main farm groups)
presented Cabinet Chief Fernandez with a document containing 22
action items to improve the sector's situation. One of those items
was to give more political weight to the Secretariat of Agriculture.
To that end, the farm sector was pleasantly surprised by the
creation of the Ministry, given previous failed attempts to make
headway in the more than year-old conflict with the government. The
sector's underlying suspicions are possibly best summed up by
Argentine Rural Confederation (CRA) vice-president Nestor Roulet's
public statement that "the new Ministry of Agriculture brings us a
strange mix of hope and distrust."

7. (SBU) On October 6, Minister Dominguez held his first meeting
with the Liaison Board. Although the meeting was protocol-based,
Dominguez reiterated the need to depoliticize and bring an end to
the conflict. He presented farm leaders with his proposed work
methodology to reach that end. He plans to begin negotiations with
the Liaison Board next week by addressing technical concerns in the
conflict. Farm leaders are not convinced this "technical" path is
the quickest way to a resolution -- they believe that the conflict
is more political than technical. Argentine Rural Society (SRA)
president Hugo Biolcati reportedly told Minister Dominguez that the
farm sector's principal problem is "loss of working capital and
government intervention in the market." However, Argentine
Agricultural Federation (FAA) president Eduardo Buzzi hopefully
noted to the press after the meeting that the Minister "showed some
level of independence."

-------
Comment
-------

8. (SBU) It comes as a surprise that the Kirchner government gave
agriculture a ministry in the Cabinet. Given Argentina's status as
a world agricultural powerhouse, the change is long overdue.
However, the ag sector remains skeptical that this change will be
anything more than window dressing. The lack of background in
agriculture of both of the GOA's newly appointed officials at the
Ministry of Agriculture and ONCCA leaves some doubt as to their
ability to resolve the dispute between the government and the farm
sector that began in March 2007 over export taxes. The farm
sector's meetings with Minister Dominguez (as well as the
Ambassador's pending courtesy call with him) in the weeks to come
should reveal whether there is real hope for an end to the conflict.


MARTINEZ

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