Cablegates de Embajada Argentina 3

REFERENCIA ID 07BUENOSAIRES1888
ASUNTO CRISTINA IN HER WORDS: WILL ARGENTINA'S
CREADO 2007-09-21
LANZADO 2010-11-30
CLASIFICACION Confidencial

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C O N F I D E N T I A L SECTION 01 OF 03 BUENOS AIRES 001888

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E.O. 12958: DECL: 09/21/2022
TAGS: PGOV PREL OVIP EFIN EINV EAIR AR
SUBJECT: CRISTINA IN HER WORDS: WILL ARGENTINA'S
PRESIDENTIAL FRONT-RUNNER BE A BETTER PARTNER FOR US?

REF: A. BUENOS AIRES 1883
¶B. BUENOS AIRES 1809
¶C. BUENOS AIRES 1777

Classified By: DCM Tom Kelly for reasons b, d.

¶1. (C) Summary. A well-briefed, confident Cristina
Fernandez de Kirchner (CFK) described her policy priorities
to the Ambassador on September 20, a few days before she
departs for a five-day program in New York. Although she
defended GOA positions on controversial economic issues, CFK
expressed a strong desire to promote foreign investment,
increase scientific and educational exchange with the United
States, and "tell it like it is" with American policymakers.
The discussion's conciliatory content and tone confirms our
expectation that CFK will prove a more reliable, trustworthy,
and accessible partner of the United States than her husband,
Nestor Kirchner. End Summary.

¶2. (C) CFK met with the Ambassador for 45 minutes at the
Presidential Residence in Los Olivos on September 20.
Argentina's first lady and presumptive next president was in
full command of her brief, speaking without notes on a broad
range of topics. At one point, noting that she and the
Ambassador were reviewing topics that would resurface
throughout her New York trip, she said (referring to her
travels and speeches), "This is good preparation, but hey,
I'm already prepared!" She was gracious and relaxed
throughout, not rushing through any part of the conversation
and listening as well as talking. The meeting was CFK's
second with the Ambassador; in contrast, President Kirchner
has never met privately with the Ambassador. She also went
out of her way to ask the Ambassador to "send greetings to
Shannon," whom she recalled meeting early on in Washington
just before the Assistant Secretary was confirmed by the
Senate.

Paris Club: Willing to Deal "Without Preconceptions"
------------------------------------

¶3. (C) After CFK previewed her schedule in New York (ref A),
the Ambassador noted the great international interest in her
policy views. He commented that CFK's interest in the world
and willingness to countenance policy changes, especially in
the economic realm, were well-received abroad, including in
the United States, as is her evident openness to dialogue.
The Ambassador also mentioned issues that may well draw
questions from journalists, businessmen, and others during
her program, including prospects for a deal with the Paris
Club, the investment climate, prospects for inflation, and
the GOA's relationship with Iran and Venezuela.

¶4. (C) CFK replied in great detail on economic themes, but
refrained from commenting on Iran and Venezuela. On the
Paris Club (PC), she stressed Argentina's desire to reach an
agreement, but reiterated the current government's insistence
that a deal not be conditioned on a GOA accord with the IMF.
She said that Argentina's attitude stemmed not from a
anti-IMF bias, but from a conviction that IMF policies as
currently constituted are anti-growth -- and therefore
unacceptable. That is why, in her view, the IMF had
experienced a "serious loss of prestige in Latin American
societies." "If we don't grow," she continued, "we can't
pay. You can't collect debts from the dead."

¶5. (C) CFK characterized debt agreements reached by previous
Argentine governments as illusory, made by desperate
governments that never intended to repay. The current
government, and the one that she hopes to lead, sought to
break what she called "a cycle of lies" and restructure
Argentine debt without inhibiting growth. Such a
negotiation, she said, would need to occur "without
preconceptions," and both sides should come to the table with
flexibility and an open mind. She claimed that, during his
campaign swing through Argentina (ref B), French candidate
for IMF Managing Director Strauss-Kahn had expressed sympathy
for Argentina's approach and criticism of the IMF's track
record in Argentina. She acknowledged, however, that "he's
running for office, so maybe he was just telling us what we
wanted to hear." The Ambassador said that the United States
stands ready to engage constructively to move to a Paris Club
solution.

¶6. (C) The Ambassador mentioned the issue of bond-holdots
as another potential topic that CFK will face in New York,
noting that the U.S. bondholders are carrying out a
well-organized effort to win support for their cause. CFK
indicated awareness of the lobbying resources holdouts bring
to bear and their negative attitude towards the current

BUENOS AIR 00001888 002 OF 003


government. She said that she had encountered their
publicity campaign during her recent trip to Germany, and
knew they were active in Japan, too. At the same time, she
offered little hope that the holdouts would get a deal
anytime soon, noting that a law circumscribes what the
government can offer them. She told the Ambassador that "I
know this isn't what you want to hear," but said that
previous Argentine leaders would tell foreign Ambassadors
what their interlocutors wanted to hear, not what they really
thought or intended to do. She and her husband were
different, she insisted; they told it straight. CFK said
that she understood that Americans valued straight talk, and
she hoped that this quality would earn her trust and respect
in the United States.

Foreign Investment: Bring It On
-------------------------------

¶7. (SBU) CFK said that the GOA's main motivation in striking
a deal with the Paris Club was to entice foreign export
credit agencies to go back on cover in Argentina,
facilitating her plans to bring more foreign investment here.
She noted that foreign investment in certain sectors was
already booming. Auto companies, including Mercedes-Benz,
Peugeot, Ford, and GM were pumping tens of millions of
dollars of new investment into their plants, with many adding
new assembly lines and exporting much of their output.

¶8. (U) CFK reserved her greatest enthusiasm for Argentina's
progress in attracting investment in the information
technology sector as a means to expand Argentina's global
economic role. She noted proudly that IT represented the
fastest growing sector in the economy during her husband's
presidency. She expected great things from the sector in the
future. "We have great soccer players in Argentina because
our kids play so much soccer," she said. "Now they spend all
their time on computers, so I know that there's an Argentine
Bill Gates out there. We just have to find him." The
Ambassador agreed that this was an area of great potential.
He noted the significant U.S. investment in this sector,
including the fact that IBM is the largest U.S. employer in
Argentina. He also made a pitch for quick approval of Turner
Broadcasting's purchase of Claxion, a local audiovisual
company, which will lead to Argentine creations being
distributed throughout Latin America.

Playing Defense: Energy, Inflation
----------------------------------

¶9. (SBU) Despite her expression of enthusiasm for foreign
investment, she was defensive about charges that the current
government is attacking foreign investors in the Argentine
energy sector (septel). She characterized Exxon's apparent
exit from the Argentine market as the result of a regional
draw-down in Latin America, and argued that "the energy
sector is a problem everywhere right now." She said that
private companies miscalculated domestic energy demand over
the past few years, failing to anticipate the government's
success in achieving extremely rapid rates of growth. Now,
there was little idle capacity in Argentina's energy sector.
The GOA, she insisted, was doing its part, presiding over the
construction of thousands of kilometers of new pipelines and
seeking new sources of supply.

¶10. (SBU) CFK was also defensive when she responded to
concerns that the GOA was manipulating economic statistics to
keep Argentine inflation numbers down. She said that there
were several biases in the way that the government's
statistical institute (INDEC) had previously collected price
data. She claimed that it did not account sufficiently for
seasonal variations in price data; collected food data in
posh food emporiums rather than in the modest groceries where
most Argentines shop; and focused on private school costs,
while the vast majority of Argentines sent their children to
public schools. She said that Argentina had revised its
inflation methodology six times since the 1930s. The
political opposition, she said, was behind the claims that
current methodological changes reflected a government plot to
understate inflation. She also blamed the opposition for the
growing warnings about electoral fraud in Argentina, which
she dismissed as "bizarre." CFK did acknowledge that the GOA
needs to settle with clarity the methodological issues as
well as to resolve the union problems troubling the
statistical institute.

Future Economic Goals
---------------------

¶11. (C) CFK returned to economic growth as the most

BUENOS AIR 00001888 003 OF 003


important objective of the government that she intends to
lead. She said that, if Argentina achieves positive growth
in 2007 and 2008, it will represent the first time in a
century that the country has grown for six straight years.
If its economy continues to grow at rates of five to six
percent for another decade, she continued, Argentina would
become "unbeatable."

¶12. (SBU) A key sector for the country's future, she said,
was tourism, an area in which her country had enormous
undeveloped potential. With the rise in ecotourism, the
wealthiest tourists were looking for unspoiled, safe venues,
which Argentina had in abundance. She noted that Argentina
experienced a travel boom after the Asian tsunami, as
tourists sought safer places in which to experience nature.
The Ambassador interjected that for the tourism sector to
achieve its potential, Argentina needed to address its
dysfunctional domestic aviation sector. She agreed,
identifying reform of domestic aviation as "one of our great
challenges." Without referring specifically to the
strike-prone national airline Aerolineas Argentinas, she
identified two specific problems in the sector: a need for
more resources and a conflictive labor environment in which a
handful of combative unions undermined all attempts to turn
the sector around.

Other Issues: Exchanges, TIP
----------------------------

¶13. (SBU) The Ambassador raised trafficking in persons (the
need to pass a federal law) and the importance of expanded
educational and cultural exchanges, especially among youth.
He asked for the Senator's support. CFK:

-- expressed strong interest in cultural and educational
exchanges with the United States, including an upcoming
Buenos Aires summit of hemispheric women leaders organized by
U.S. NGO Vital Voices;

-- told the Ambassador that Argentina "must not fail to take
advantage of your scientific resources; they're the best in
the world".

-- reassured the Ambassador that legislation to criminalize
trafficking in persons would pass the Argentine Congress
after the October elections "without any great difficulty."


Comment
-------

¶14. (C) The discussion's conciliatory content and tone
confirmed what we have observed in CFK's speeches and
gestures with increasing frequency: Argentina's presidential
front-runner seeks a rapprochement with the United States.
CFK seems to understand that a pragmatic, enmity-free
relationship with Washington will buy Argentina leeway on a
number of critical financial and geopolitical issues. At the
same time, this forward-leaning attitude is unlikely to
presage the next government's repudiation of the current
regime's nationalist, populist policies. CFK's defense of
GOA positions on the IMF, the investment climate, the energy
sector, and inflation numbers during this private discussion
suggests an unwillingness to break with the heterodox
policies of her husband. But even if the charm offensive is
calculated rather than heart-felt, there is no mistaking the
opportunities that await the USG beyond the Argentine
presidential election. CFK's conversation with the
Ambassador confirms our expectation that she will prove a
more reliable, trustworthy, and accessible partner of the
United States. That does not, however, take away from the
challenges we will face in forging solutions to such issues
as the Paris Club or bondholders' outstanding debt.
WAYNE

REFERENCIA ID 07BUENOSAIRES2345
ASUNTO ARGENTINE FUROR CONTINUES OVER U.S. ALLEGATIONS
CREADO 2007-12-14
LANZADO 2010-11-30
CLASIFICACION Confidencial

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E.O. 12958: DECL: 12/14/2017
TAGS: PREL SNAR CJAN ECON ASEC KJUS VE AR
SUBJECT: ARGENTINE FUROR CONTINUES OVER U.S. ALLEGATIONS
THAT VENEZUELAN MONEY WAS INTENDED FOR CRISTINA KIRCHNER

REF: (A) BUENOS AIRES 2336 (B) MCWHIRTER 12/14/07

E-MAIL TO DS COMMAND CENTER

Classified By: Ambassador Wayne for reasons 1.4 (b) & (d).

Summary
-------

¶1. (C) The GOA has repeatedly suspended Ministerial-level
contacts and has cut off some law enforcement contacts with
the USG in wake of the continuing furor (ref a) over DOJ
allegations that $800,000 intercepted August 4 by Argentine
officials was a BRV cash contribution for Cristina Kirchner's
(CFK) presidential campaign. The press reports that the GOA
is considering further responses, including the staging of a
massive protest in front of the Embassy which could involve
radical and sometimes violent groups. The Argentine Deputy
Foreign Minister advised the Ambassador that he would be
called in to the MFA on December 18. The Ambassador used a
previously scheduled holiday reception for more than 100
journalists to roll out Washington-cleared guidance
reinforcing the message that the recent arrests in Miami do
not constitute a U.S. conspiracy against the GOA and that the
United States wants a good relationship with Argentina. End
Summary.

GOA Ire Against USG Dominates Headlines
---------------------------------------

¶2. (SBU) Argentine media on December 14 continued to give
extensive coverage to the GOA's furious reaction (ref a) to
FBI allegations that $800,000 intercepted August 4 by
Argentine officials was a BRV cash contribution for Cristina
Kirchner's (CFK) presidential campaign. According to several
sources, CFK was very angry and upset, interpreting U.S.
arrests and charges as rejection of her overtures for better
relations, an attempt to destabilize
her new administration, and an effort to force her to
distance Argentina from Venezuela. Following the lead of
President Kirchner, her chief of staff and Justice Minister
-- whose remarks (ref a) were broadcast and re-broadcast
throughout the day and night -- a broad array of CFK's
congressional, gubernatorial, and mayoral allies have accused
the USG of slandering CFK and the GOA in premeditated fashion
in its effort to get Chavez.

¶3. (SBU) Opposition leader and presidential candidate Elisa
Carrio, who finished the October 28 polling in second place,
ridiculed the GOA's attempt to portray the arrests as part of
an anti-CFK conspiracy. "President Kirchner does not seem to
understand that the justice system in the U.S. is autonomous.
Thank God, (CFK) cannot stop the U.S. justice system. I am
happy that the Americans are investigating, because they're
the best guarantee (of an
impartial inestigation). Not even the U.S. president can
intervene." Leaders of other opposition parties questioned
CFK's ties to Caracas and criticized the GOA for having let
Antonini-Wilson leave the country before completing its own
investigation.

GOA Gives the USG the Silent Treatment
--------------------------------------

¶4. (SBU) The press is further reporting that cabinet
ministers have been instructed not to meet with the
Ambassador, and that all U.S. requests for high-level
meetings with GOA officials must be coordinated through the
MFA. We are also hearing from our law enforcement contacts
that they are being instructed by the GOA leadership to
minimize contacts with us. Several bilateral meetings were
cancelled under instruction on December 13. The Airport
Security Police told Embassy they had been instructed not to
meet with U.S. officials. On the afternoon of December 14,
the GOA ended more than 24 hours of shunning contacts with
the Embassy when Deputy Foreign Minister Garcia Moritan
called the Ambassador. He advised the Ambassador that he
should come to the MFA to meet Foreign Minister Taiana on the
evening of December 18. We anticipate this will entail a
protest and an explanation of the steps the GOA plans to
undertake.


GOA-Organized Anti-USG Protest in the Offing?
---------------------------------------------

¶5. (SBU) "La Nacion," the newspaper of record, and other
media have reported that CFK and her top advisers repeatedly
huddled Wednesday night and Thursday morning on how to deal
with "the worst moment of the bilateral relationship with the
United States" in the last four and a half years. According
to "La Nacion," "the Casa Rosada (presidential palace)
Thursday considered ordering mayors, social organizations,
and activists ("piqueteros" to organize a mass demonstration
of protest in front of the U.S. embassy." The article quotes
an unnamed official at Casa Rosada who said, "We have not
ruled it out. There is a great deal of anger with the United
States, but it has not yet been decided." (Mission ARSO sent
a report on this development and Mission counter-measures to
DS Command Center -- ref b.)

¶6. (SBU) The press reported remarks by WHA A/S Shannon that
the case was a law enforcement matter, not a political issue,
and that it should not be allowed to affect bilateral
relations. The press also quoted Department spokesman
McCormack on the strength of the bilateral relationship and
the independence of federal prosecutors, as well as similar
statements by the Embassy's spokesperson.

The Empire Strikes Back: Mission PD Response
---------------------------------------------

¶7. (U) The Ambassador used a previously scheduled holiday
reception for more than 100 print, radio, and TV journalists
December 14 to roll out Washington-cleared guidance on the
case. Several of the radio journalists used their cell
phones to transmit the Ambassador's words on the air through
their stations, and many rushed out after the Ambassador
concluded to call in stories. Several stories reporting on
the Ambassador's reception remarks have already hit the
wires. We expect that the Ambassador's remarks will dominate
Argentine headlines Saturday.

¶8. (U) We also gave the journalists recent quotes by
Assistant Secretary Shannon, Secretary Chao, Dana Perino, and
the Ambassador on the U.S.-Argentine relationship. We are
posting the Ambassador's remarks on the Mission's web page.

Comment
-------

¶9. (C) What began as a black day for the U.S. image in
Argentina -- with headlines filled with attacks by CFK and
others about our supposedly dark intentions -- is ending on a
more hopeful note, as the quick work by State, Justice, and
the FBI to review and clear our draft guidance on the issue
enabled us to get our story out to a captive group of
Argentine journalists. As the first week of the CFK
administration draws to a close, we have given pragmatists
within the GOA material to work with in their effort to
convince CFK to climb back from the precipice and re-engage
with the USG as she begins the second week of her
presidential term. We will see their reaction and response
in the days ahead.

WAYNE

REFERENCIA ID 08BUENOSAIRES235
ASUNTO ARGENTINA: GETTING PAST SQUARE ONE WITH THE
CREADO 2008-02-26
LANZADO 2010-11-30
CLASIFICACION Secreto

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S E C R E T BUENOS AIRES 000235

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FOR P - U/S BURNS, WHA - A/S SHANNON, EEB A/S SULLIVAN
NSC FOR DAN FISK
TREASURY FOR A/S LOERY AND DAS O'NEILL
DOD FOR DASD STEPHEN JOHNSON
SOUTHCOM FOR ADM STAVRIDIS
FBI FOR TOM FUENTES

E.O. 12958: DECL: 02/22/2028
TAGS: PREL CJAN KJUS EFIN SNAR MASS VZ AR
SUBJECT: ARGENTINA: GETTING PAST SQUARE ONE WITH THE
FERNANDEZ DE KIRCHNER GOVERNMENT

REF: A. BUENOS AIRES 124
¶B. BUENOS AIRES 172
¶C. BUENOS AIRES 178
¶D. BUENOS AIRES 188
¶E. BUENOS AIRES 216
¶F. BUENOS AIRES 225

Classified By: DCM Tom Kelly for reasons b, d.

¶1. (C) Summary: With a seven-week period of bilateral
estrangement in our rear-view window, we have an opportunity
-- again -- to build a more constructive relationship with
Argentina. The warming trend in the bilateral relationship
continues. President Cristina Fernandez de Kirchner and her
government rolled out the red carpet for CODEL Engel and
PDDNI Kerr, and the circle of GOA luminaries making positive
statements about the United States is growing. Capitalizing
on this opportunity, however, will be no easy task.
Confidence must be rebuilt on our side and in Buenos Aires.
The GOA must demonstrate its commitment to a constructive
relationship, including through visits to the United States.
But concerted effort is also needed from our side, including
visits to Argentina by senior USG officials. The presence of
authoritative USG officials here, and the attendant positive
media coverage it creates, feed the Argentine need for
attention, directly attacking one of the main causes of
anti-Americanism here -- the perception that the USG does not
care enough about Argentina. The hard work will be worth the
effort if we can make a dent in anti-U.S. sentiment and
influence Argentina to stay out of the Bolivarian camp.
Making Argentina a more cooperative interlocutor and
receptive audience for U.S. ideas is achievable. End Summary.

An Austral Warming Trend
------------------------

¶2. (C) Three weeks have passed since the GOA signaled an end
to its bilateral squabble with the USG via a highly
publicized meeting on January 31 betweQPresident Cristina
Fernandez de Kirchner (CFK) and Ambassador Wayne. (The U.S.
Ambassador is the only Chief of Mission who has been received
privately by CFK; she has now received him three times since
her inauguration.) The change in how the United States is
treated and portrayed by Argentine authorities is striking.
As we had agreed beforehand, CFK insiders followed the
January 31 session with positive and conciliatory statements
from Cabinet Chief Alberto Fernandez, Foreign Minister Jorge
Taiana, and others. From January 31 on, the Argentines have
given prominent positive public play to each event involving
a USG visitor, including the two (CODEL Engel and PDDNI) that
occurred in the last week.

¶3. (C) The chorus of anti-U.S. recriminations has fallen
silent. In their place, we are hearing positive
pronouncements about our country. On February 20, for
example, after a meeting between the Ambassador and Minister
of Defense Garre, a hold-over from the first Kirchner
administration who had previously resisted close cooperation
with the USG, the Defense Ministry issued an upbeat
communique on its website noting that "the Argentine side
expressed gratitude for American assistance." The statement
then proceeded to detail several areas of successful
bilateral cooperation that helped to train and transform
Argentina's military.

¶4. (C) In the wake of the meeting three weeks ago with CFK,
the Ambassador has had friendly and productive meetings with
Cabinet heavyweights such as Cabinet Chief Fernandez, MOD
Garre, Foreign Minister Taiana, Economy Minister Lousteau,
and Justice Minister Anibal Fernandez (reftels A-E).

¶5. (C) More importantly, CFK herself has demonstrated her
continuing personal interest in ties with the USG by hosting
two meetings in her presidential office at the Casa Rosada
with U.S. visitors in rapid succession: a positive,
well-covered session with CODEL Engel on February 21, and
PDDNI Kerr, who had a productive meeting with her on February
¶25. Privately, Rep. Engel described the CODEL's 90-minute

meeting with CFK as "a home-run." The meeting was covered
intensively by the media, which characterized the event as a
"Gesture of Detente" and "Improvement in Bilateral Relations"
in leading daily headlines. PDDNI Kerr's meeting was equally
positive. CFK warmly thanked him for his "important" visit,
and repeated several times her commitment to the struggle
against terrorism (saying, for example, that her government
was "strongly committed to fight terrorism at home and
internationally" and that her commitment to counter-terrorism
was "absolute".

Argentina Is In Play
--------------------

¶6. (C) The about-face is striking, because it comes on the
heels of a coordinated GOA effort, with the Kirchners and
other GOA all-stars front and center, to impugn the motives
of the United States in the Miami prosecution of Venezuelan
agents connected to the matter of Guido Alejandro
Antonini-Wilson's cash-filled suitcase. But the rhetorical
course-correction is not surprising. CFK spent much of the
latter half of 2007 telegraphing her intention to pursue
closer relations with the United States, holding three
meetings with Ambassador Wayne and spending a week in New
York City wooing investors and the media, as well as meeting
A/S Shannon. Just days before her inauguration, in a meeting
with the Ambassador, CFK expressed her admiration for the
United States and her desire to improve the bilateral
relationship. Her Cabinet Chief Fernandez and new Ambassador
to the United States Timerman argue forcefully that she wants
to change past GOA practices and maintain good relations with
the USG.

¶7. (C) Clearly, there is still hard work to be done to build
mutual confidence and establish a basis for sustained "good"
relations. To maintain and reinforce the recent positive
momentum, we need more engagement, not less -- by both sides.
The GOA certainly needs to demonstrate its commitment to
this effort. But it is important to remember that we also
have much to gain if things go well.

¶8. (C) The foreign policy orientation of the fledgling CFK
government is very much in play. Moreover, in our view, the
prevailing winds in the region favor our efforts to help
Argentina evolve into a constructive partner. Hugo Chavez
(whom CFK will visit in early March to ink an oil-for-food
deal -- septel) is being portrayed in the local media as
increasingly on the defensive, and Fidel Castro's withdrawal
from the Cuban political scene is being covered here as the
end of a radical era. In contrast, neo-left politicians like
Lula (who just visited Buenos Aires to sign a number of
bilateral agreements) and Chile's Michelle Bachelet are
well-regarded here as pragmatic leaders who are making
progress on social justice while maintaining good relations
with Washington. We read the tea leaves to indicate that CFK
much prefers to follow Lula's path than Chavez's, and wants
to diversify Argentina's good relations in the world.

¶9. (C) At the same time, there are countervailing forces that
could push the new president in another direction.
Influential figures within her government, such as Planning
Minister Julio de Vido, espouse a close embrace of Chavez's
Bolivarian project. Although de Vido's primary motive for
tilting towards Chavez may be pecuniary, a Bolivarian
approach to foreign policy would sit well with CFK's poor and
working class political constituency, and probably appeal at
a certain level to the Peronist/populist instincts of CFK and
her husband. Nestor Kirchner himself was never as
comfortable with the United States as his wife has proven to
be. For example, he never received this Ambassador or
publicized contacts with us, whereas CFK has met the
Ambassador six times and played each meeting positively and
prominently in the media. While Nestor Kirchner is still a
powerful decision-maker, he is by most reports ceding foreign
policy to CFK.

¶10. (C) In our view, the government's left-leaning,
nationalistic heritage does not necessarily lead to chronic

confrontation with the United States. CFK seems more
interested in governance and the longevity of her family's
political prospects than in gratuitous Yankee-bashing.
Without U.S. engagement, however, our opportunity to develop
a more constructive relationship with Argentina could be
squandered. We need to stay on the field to win the game.

Why Visits Help Educate and Show Interest
-----------------------------------------

¶11. (C) Engagement means, among other things, senior-level
visits in both directions. This is true for symbolic and
practical reasons. Like other geographically isolated
countries, Argentines keep track of who visits them and who
doesn't. The GOA's infatuation with the travel plans of
Assistant Secretary Shannon reflects a deep-seated,
society-wide insecurity about Argentina's relative importance
in the world. Argentines obsess over the perceived
indifference of other countries to their interests and
concerns, especially that of the United States. Visits to
the region by senior USG officials that seem to hopscotch
over Argentina are always noted in the press and the
corridors of power.

¶12. (C) CFK clearly shares this fixation. She told the
Ambassador late last year that she faults the USG for not
paying sufficient attention to Latin America (read:
Argentina) over the past few years, and repeated that
analysis to CODEL Engel on February 21 (ref F). This is not
new, or confined to CFK and her constituency. It is a widely
shared perception in Argentina that the United States has
only rarely sustained positive interest in the Southern Cone.
(At a recent lunch with prominent local analysts,
businesspersons, and media figures for PDDNI Kerr, this was a
recurrent theme -- and none of them were government
supporters.) High-level visits can be used to demonstrate
our good intentions and sincere desires for stronger
relations. For example, Secretary Chao's December visit to
CFK's inauguration helped us to rebut accusations of a U.S.
conspiracy against the GOA during the furor over the Miami
court case.

¶13. (C) Just as importantly, visits help GOA officials to
learn. CFK and her husband know little about the way that
our society and political system function. This holds true
for most of their closest advisors and the Argentine
political establishment writ large as well. The recent
bilateral crisis, for example, reminded us how few of them
(including those in the "pro-U.S." camp) really understand
the extent of our justice system's independence. To our
great advantage, Argentina is now headed by a President who
wants to learn more about our country -- evinced, for
instance, by the manner in which she pumps visitors for
information about the U.S. presidential race. (Though she
initially favored another woman candidate, it was clear by
February 21 that she had absorbed much about all three
leading candidates, and in both of her meetings with USG
visitors in recent days she made positive comments about all
three and about the vitality of our electoral process.)
Alberto Fernandez told the Ambassador that he recently
recommended that CFK accept Gordon Brown's invitation to
travel to London for a gathering of international political
party leaders precisely because it would be an excellent
opportunity for her to learn more about the global scene
through direct contact with other world leaders.

The Most Promising Areas of Focus
---------------------------------

¶14. (C) On the practical level, despite this Mission's
renewed access to every level of the Argentine government,
there are a number of concrete policy areas in which
Washington-based agencies and their leaders need to engage,
including via the personal contact that visits make possible:


-- (C) Finance: Achievement of a closer economic
relationship, which CFK has told us she wants, will not

happen without a Paris Club deal to normalize the GOA's debt
to official creditors. That in turn will require Treasury's
engagement with CFK's capable young Economy Minister Martin
Lousteau. A Paris Club deal would be a critical first step
towards an economically resurgent Argentina's broader
reinsertion into global capital markets. This, in turn, will
lessen Argentina's reliance on Venezuela to help place new
Argentine debt, a reliance that comes with Bolivarian
political and ideological strings attached. It could also
help Lousteau, who is engaged in an internal tug-of-war with
less market-friendly forces on many issues critical to the
500 U.S. companies doing business here, establish his primacy
within the GOA on economic policy.

-- (C) Defense Cooperation: The Ministry of Defense is more
friendly to us now than it has been at any time since MOD
Garre took office two years ago. The Army chief, who
previously kept his distance from the United States, has
reached out to us for contact. Argentina's Navy and Air
Force are eager to work with us. To capitalize on this
attitudinal shift, we need high-profile U.S. military leaders
like Southcom Commander Stavridis (scheduled to visit in May)
to come to Argentina. His visit could help us bring the
military relationship to another level, advancing the ball on
issues like Argentine participation in exercises, exchanges,
and regional security cooperation. Such a visit could also
keep U.S. military suppliers in the race for important
contracts like 3-D radars. MOD U/S Forti told the Ambassador
last week that he hopes to get MOD Garre to the United States
in the months ahead.

-- (C) Law Enforcement and Intelligence: Cooperation in this
area was a bright spot in the bilateral relationship, even
during the most difficult periods of the first Kirchner
administration. The worrying freeze in cooperation that took
place during the period of estrangement is over, and our
cooperation is returning to normal. We need senior-level
visits, such as the planned trip by Deputy FBI Director
Pistole in May, to advance U.S. interests in intensified
counter-terrorism work, and to resume our valuable
partnership with the GOA to bring the Iranian-sponsored
perpetrators of the 1994 AMIA bombing to justice. We also
need to get leading GOA law enforcement officials to the
United States for bilateral consultations.

-- (S) Intelligence: Argentine intelligence officials highly
value their relationship with U.S. counterparts, as PDDNI
Kerr's visit amply demonstrated. During a dinner with the
PDDNI February 23, the GOA's Deputy Director of Intelligence
recounted with pride that his service has shared high-value
information with us and worked closely with us in support of
U.S. goals. The PDDNI's visit reinforced our superb working
relationship with Argentina's service (the National
Intelligence Service -- SIDE), and we need to keep developing
it through continued cooperation.

-- (SBU) Science and Technology: CFK has repeatedly cited
this as an area where she hopes to expand contact and
cooperation with the United States.

¶15. (C) Visits by high-level U.S. and GOA officials to each
other's country on these and other areas will advance our
long-term interest in a friendly relationship with a
populous, fast-growing country with considerable talent and
resources. As importantly, such travel advances key U.S.
interests in specific policy areas -- normalization of
financial relationships between developing economies and
creditors, amicable military-to-military ties, and
cooperation on regional counter-terrorism issues -- that
matter to our country's security interests.

¶16. (C) Finally, travel by prominent USG and GOA officials to
each other's countries directly addresses one of the main
causes of anti-Americanism here -- the perception that the
USG does not care enough about Argentina. The positive media
coverage created by such visits makes Argentines at all
levels of society feel relevant in the world and taken into
considerations by our powerful country. This cannot help but

chip away at this society's collective animus towards out
nation, which stems to a large extent from its collective
insecurity about itself.

Let's Make It Work
------------------

¶17. (C) Events over the past two years remind us that
relations with the GOA are not easy. Nonetheless, we have a
real opportunity to reach a more positive equilibrium in the
bilateral relationship. In his January 31 meeting with CFK,
the Ambassador deployed Department-cleared talking points
that featured the proposal that both sides would demonstrate
interest in the relationship by engaging each other,
including via visits in each direction. As reported in ref
A, CFK agreed, and expressed interest in a steady stream of
high-level visits. We therefore have a deal in place with
the GOA on travel in both directions. The Argentines need to
hold up their end of the bargain. Cabinet Chief Fernandez
told the Ambassador February 21 that he had identified March
8-12 for travel to the United States. Foreign Minister
Taiana, MOD Garre, and Economy Minister Lousteau also intend
to travel to the United States soon. We should remain
committed to our part in this effort, especially after
several weeks of positive interaction with the GOA.
KELLY

REFERENCIA ID 09BUENOSAIRES827
ASUNTO NOW WHAT? THE KIRCHNERS' OPTIONS IN POST-ELECTION
CREADO 2009-07-15
LANZADO 2010-11-30
CLASIFICACION Secreto

VZCZCXRO8303
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHBU #0827/01 1961828
ZNY SSSSS ZZH
R 151828Z JUL 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 4069
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

S E C R E T SECTION 01 OF 05 BUENOS AIRES 000827

SIPDIS

E.O. 12958: DECL: 07/15/2029
TAGS: PGOV PREL ECON AR
SUBJECT: NOW WHAT? THE KIRCHNERS' OPTIONS IN POST-ELECTION
ARGENTINA

Classified By: Charge d' Affaires Tom Kelly for reasons 1.4 (B) and (D)
.

¶1. (C) Summary/Introduction. More than two weeks have
passed since Argentina's ruling first couple lost badly in
mid-term congressional elections. It has taken President
Cristina Fernandez de Kirchner (CFK) and her husband Nestor
time to process the meaning of the debacle and respond.
Though the GOA has taken some significant steps over the past
two weeks, including a Cabinet shuffle, the signals that the
Kirchners and their associates have sent have been decidedly
mixed. It may be another month before their new strategy is
fully discernible.

¶2. (S/NF) In the past two weeks, Mission personnel have
talked to dozens of political analysts, economists,
businesspersons, and politicians about the Kirchners' likely
course. Most analyses posit three possible scenarios:
radicalization, reform, or the status quo. While there are
serious, smart people who believe that the government will
lurch simply left or right over the coming months, we, and
most of our contacts, believe that the government will behave
in the future much as it has in the past. We think a tepid
move toward reform is more likely than radicalization because
the country's ascendant forces support the former, not the
latter. At the same time, we doubt that Kirchner-led reform
will be ambitious. The best that can be expected from this
weakened government is a "reform-lite" agenda that seeks to
recapture political space without significant policy
concessions. This cable examines the three scenarios in
depth; identifies evidence in support of each one, as well as
indicators to watch for that might clarify the Kirchners'
future intentions; and evaluates the scenarios' likelihood.
A separate message will critically examine another possible
political outcome - that CFK will fail to reach the end of
her term. End Summary/Introduction.

---------------------------
The Radicalization Scenario
---------------------------

¶3. (C) In the first (and least likely) scenario, the
Kirchners react by turning hard left, attempting to reverse
their fortunes through a radicalization of their regime that
would propel them unambiguously into the Bolivarian camp led
by Hugo Chavez. This approach is referred to locally as
"deepening the model." Key elements of this approach would
include:

-- Economy: Further nationalization of private companies
and/or intensified attempts to manage their behavior; a
partial default on sovereign debt instruments; and a
confirmation of Internal Commerce Secretary Guillermo Moreno
as the executor of NK's dirigiste economic policy; increased
influence by labor unions.

-- Governance: Abandonment of the Peronist party in favor of
"transversality," in which the Kirchners consort with any and
all who offer their fealty; use of the government budget and
other means to punish Peronist governors and other
politicians deemed disloyal; pursuit of restrictive media
legislation; increased resort to executive decrees.

-- Foreign Policy: Closer identification with Hugo Chavez
and his Bolivarian allies; increasing criticism of USG
policies.

-------------------------------
Evidence of a Shift to the Left
-------------------------------

¶4. (C) There is a significant group of observers (including
political analyst Rosendo Fraga and Deutsche Bank Managing
Director Marcelo Blanco) who subscribe to this school of
thought. They do not lack evidence. Erstwhile Kirchner
allies in the private sector, including Bank Association
chief Jorge Brito and Argentine Industrialist Association
head Hector Mendez, tell us that they are disgruntled with
the Kirchners and lack influence on them. Their loss seems
to be union boss Hugo Moyano's gain. He flexed his muscles
last week, compelling the GOA to withdraw a subcabinet
nomination in the Health Ministry that threatened his unions'
financial interests and installing the son of his attorney as
head of Aerolineas Argentinas (septel).

¶5. (C) On the political front, Nestor Kirchner resigned his
position as head of the Peronist Party the day after the June
28 election. Since then, rumors have proliferated of a new
"transversal" approach that elevates Kirchner loyalists and
hard-line ideologues like "piquetero" street activists and

BUENOS AIR 00000827 002 OF 005


the "Carta Abierta" intellectual group. Kirchner showed up
last week at an open-air meeting of "Carta Abierta," his
first public appearance since his June 29 resignation as
Peronist-in-chief. Last week's cabinet shuffle only
strengthened the hands of the loyalists, with no new blood
and the replacement of the reform-oriented Sergio Massa with
Kirchnerista Anibal Fernandez as Cabinet Chief.

¶6. (C) Some of the GOA's post-election foreign policy moves
can also be read to support the radicalization thesis. The
most obvious was CFK's spur-of-the-moment trip to Central
America (via the OAS in Washington) in a hastily conceived
effort to restore Manual Zelaya to power in Honduras. Only
Ecuador's Rafael Correa and Paraguay's Fernando Lugo
accompanied CFK and OAS Secretary General Insulza on the
ill-fated Mission. Wittingly or not, she seemed to side with
hasty Bolivarian efforts to force the issue in Honduras
rather than to wait for mediation to take its course. A more
careful leader, Uruguay's Tabare Vazquez, let it be known
that he declined CFK's invitation to join her aboard Tango
One.

¶7. (C) There was one other foreign policy-related event that
may suggest a leftward turn. Kirchner congressional ally
Patricia Vaca Narvaja recently wrote a letter to U.S. Speaker
of the House Nancy Pelosi asking for the USG to declassify
all information at its disposal regarding the Argentine
military dictatorship. The Kirchner government has often
seemed obsessed with refighting the "Dirty War" of the 1970s
and early 80s, and the request could be construed as a
prelude to another rhetorical offensive against the USG for
its "support" of military regimes in the region.
(Alternatively, it could be a routine request consistent with
the government's longstanding interest in settling Dirty
War-related human rights cases.)

--------------------------------
The Verdict: "Red Dawn" Unlikely
--------------------------------

¶8. (C) Despite all of the above, we view the radicalization
scenario as the least likely of the three paths that the
government will take, with a probability of less than five
percent. Even if the Kirchners prefer this approach in their
heart of hearts, circumstances in the wake of the election
give them virtually no margin to implement it. Immediately
after the election, many of the most powerful forces within
the governing coalition began clamoring for more moderate
policies, a more inclusive approach to governance, and
(especially) a larger share of government finances. These
Peronist governors and mayors fared far better than Nestor
did, and they are in no mood to take orders from the
Kirchners. As a source close to Buenos Aires Governor Daniel
Scioli told the CDA, "There are no captive politicians after
these elections." The private sector is similarly
emboldened. As Industrialist Association (UIA) chief Hector
Mendez told us that "deepening the model won't happen. We
just won't allow it." Finally, the anti-Kirchner opposition
is clearly ascendant. These groups will fight GOA efforts to
march Argentina further to the left. Given the current
political climate, they should have the votes to hold the
Kirchners at bay even before the new Congress is seated in
December.

¶9. (C) Nor do we believe that Argentina's foreign policy is
becoming more Bolivarian. The GOA has become much less eager
to criticize the USG directly since Barack Obama became
President. CFK wears her affection for our
Commander-in-Chief on her sleeve. In addition, as mentioned
in the next section (para 16), there is new evidence of
concrete GOA efforts to support U.S. foreign policy
objectives in multilateral fora, at least behind the scenes.

¶10. (C) There is another external factor that makes
Argentina's embrace of Bolivarian politics unlikely -- the
growing influence of Brazil here. The local IDB rep,
Brazilian Daniel Oliveira, told econoff recently that
"Argentina has become as important to Brazil as Mexico is to
the United States." With a US$31 billion trade relationship
and more than US$10 billion in Brazilian investment flowing
into the Argentina economy since 1997, Brazil is strongly
engaged here, and is not shy about defending its interests.
The local press has reported that Lula worked the phones in
July 2008 to prevent the Kirchners from abandoning power in
the wake of their failed attempt to push a tax increase on
agricultural exports through Congress. Lula and his
associates will remain an important moderating influence on
the Kirchners.

¶11. (S/NF) Although we think this scenario's likelihood is

BUENOS AIR 00000827 003 OF 005


limited, it bears mention that it is also the most likely to
lead to political crisis, confrontation, escalating violence,
and CFK's failure to reach the end of her term. We explore
how such a downward spiral might play out, and the likelihood
of this calamitous scenario, in a separate report.

-------------------------------------------
Scenario Two: The Kirchners Embrace Reform
-------------------------------------------

¶12. (C) Some observers expect (and many more hope) that the
Kirchners will reinvent themselves, pursuing a reform-minded
agenda that mollifies Peronist governors, defangs the
opposition, and wins over new foreign friends. A larger
group believes that a rebellious Peronist establishment will
put them on that course, whether they like it or not. Key
policy features of such an approach would include:

-- Economy: Interventionist-in-Chief Guillermo Moreno is
dismissed, clearing the way for a normalization of the state
statistical institute INDEC (and thus a return to
methodological integrity in the national accounts); GOA makes
deals with the Paris Club and private bondholders left out of
the 2005 debt swap deal and normalizes its relationship with
the IMF, starting with an Article IV Consultation; progress
on outstanding ICSID judgments against Argentina.

-- Governance: CFK rules more inclusively, coordinating
policies with governors and looking for common ground with
the opposition in the current and next Congress. Government
rolls back agricultural export taxes as a down-payment on its
new conciliatory approach. NK reduces his public profile.

-- Foreign Policy: Concrete steps benefiting the United
States and non-Bolivarian governments in the hemisphere,
coupled with distancing from Chavez and his allies.

¶13. (C) Proponents of this scenario's likelihood have plenty
of recent evidence to back them up. There is clearly ferment
in the government's approach to economic policy, with a new
Economy Minister on board, powerful (and heretofore
pro-Venezuelan) Planning Minister Julio De Vido now reputed
to be an advocate of pragmatic moderation, and prestigious,
market-oriented advisors (specifically, former Central Banker
and IMF official Mario Blejer) said to be poised to join the
government. The government sacked its statist, corrupt
Transportation Secretary Ricardo Jaime days after the
election, and rumors abound that Moreno, the icon of "market
repression" economics, has become such a political liability
that his days in the government are numbered. Well-placed
sources within the government confirm that change is in the
air. Top Kirchner aide Carlos Zannini indicated that the GOA
would focus almost exclusively on changes on the economic
policy front this month, and influential Buenos Aires
Province Vice-Governor Alberto Balestrini told the CDA last
week that the GOA would roll back agricultural export taxes
on wheat and corn soon.

¶14. (C) Nor is there any doubt that the political center of
gravity has shifted dramatically in Argentina since the
election. Most of the country's 16 Peronist governors have
reportedly expressed their desire for market-oriented
changes, at least privately. Some former allies, like
ambitious Chubut Governor Mario Das Neves, have broken ranks
with the Kirchners and openly criticize them. Even loyalist
governors like Chaco's Jorge Capitanich have publicly called
for straightening out INDEC and other changes. Faced with
this onslaught from ostensible allies, CFK announced on July
9 (as she has before) that she would convoke the country's
main political and private sector leaders to a process of
dialogue. The following week, she modified the proposed
process to accommodate opposition demands.

¶15. (C) The GOA's political position is further weakened by
the prospect that it will suffer defections from its ranks in
the current Congress. Of course, the next Congress that
takes office December 10 will be more independent, with the
government losing majorities in both chambers. This will
make it easier for reform-minded groups to push the Kirchners
into accepting elements of their agendas. As Balestrini told
us, the GOA will need to renegotiate and compromise in order
to rule.

¶16. (C) The GOA has taken a few subtle foreign policy moves
that could be construed as harbingers of a closer
relationship with the United States. After he received a
call on the issue from Secretary Clinton, FM Jorge Taiana
convinced CFK to change the voting instructions of the
Argentine delegation to the International Atomic Energy
Agency, which enabled U.S.-supported candidate Yukiya Amano

BUENOS AIR 00000827 004 OF 005


to win election after a month-long impasse. In a more
prosaic but perhaps symbolically important development, the
CDA received a warm note from CFK expressing regret for her
failure to attend the Mission's Independence Day celebration
and offering best wishes. We had never before received such
a note from either Kirchner.

-------------------------------------
The Verdict: Don't Bet On A New Leaf
-------------------------------------

¶17. (C) While the reform scenario has gained credence over
the past week, driven primarily by economic policy news and
rumors, we remain skeptical that Nestor and Cristina will
turn into a latter-day incarnation of Ozzie and Harriet,
dispensing moderation and good sense wherever they turn.
Neither Kirchner seems inclined to admit error, even tacitly,
by shifting course so abruptly. A senior official at the
Central Bank told us that Nestor will resist reformist
policies because they would be interpreted as a sign of his
weakness and even irrelevance. If changes come, he argues,
they will come at a time of his choosing. A reformist path
may also strike the Kirchners as politically risky,
distancing them from their most fervent supporters in the
working class, poor "villas," and intelligentsia in deference
to sectors that are at best disloyal and at worst openly
hostile to them.

¶18. (C) The "forced reform" variant of this scenario seems
somewhat more likely, but not by much. For it to work, one
of two things must happen. Either the Peronist governors
will need to set aside their rivalries and effectively
advocate for a more robust approach to reform than seems
likely, or the bickering, often inept opposition will need to
get its act together and engage the Kirchners as a united
front. Much depends, for example, on whether dissident
Peronists coalesce behind Senator Carlos Reutemann, who has
emerged as a frontrunner for the Peronist presidential
nomination in 2011, and whether Vice President Julio Cobos
can gain some traction in pulling together support from the
Radicals, Civic Coalition, and Socialists. If either of
these two groups works cooperatively over the coming two
months, it is possible that positive changes can come to
Argentina before CFK leaves office in 2011. We don't think
that will happen, however, and estimate the two reform
scenarios' combined probability at no more than twenty
percent.

---------------------------------
Scenario Three: Muddling Through
---------------------------------

¶19. (C) In the third scenario, the Kirchners do not
definitively opt for reform or radicalization. Maintaining
the short-term focus that has characterized their six years
in power, they muddle through as best they can, trying to
salvage their political futures or at least to reach the end
of CFK's term in 2011. There may be some positive changes in
this scenario -- one analyst dubs it "reform-lite" -- but the
electoral setback does not ultimately result in a dramatic
course correction. In the words of economist Nicolas
Dujovne, the Kirchners will pursue a strategy of "minimum
reforms, but without collapse." Under this scenario, the
following might happen:

-- Economy: Lots of policy zigzagging without a clear
direction; Moreno stays, or leaves and is replaced with
another hard-liner; new, "reform-minded" Economy Minister
Boudou changes little, like the Cabinet's previous reformist
also-rans Martin Lousteau and Sergio Massa.

-- Governance: Cooption of some Peronist governors and
mayors, punishment of others considered to be disloyal.
Stalemate on legislation in Congress. Top-down dialogue
process initiated without intention to compromise.

-- Foreign Policy: Some private gestures to the USG, but
little movement towards resolution of long-term sources of
friction; no palpable distancing from Chavez's camp or
modification of the GOA's "independent" foreign policy.

--------------------------------------------- ---------
For Evidence That Nothing Has Changed, Buy a Newspaper
--------------------------------------------- ---------

¶20. (C) This status-quo scenario is the clear frontrunner
among our contacts. There is fresh evidence to support it in
every day's harvest of newspapers. The two dominant news
stories since the election, CFK's botched trip to Honduras
and the GOA's response to the H1N1 epidemic here, both

BUENOS AIR 00000827 005 OF 005


suggest that the government's improvisational style and
closed decision-making process remain intact. This in turn
will mean that GOA policies are more likely to develop in
response to the first couple's whims than to a coherent
design. It also means that the government bureaucracy is
unlikely to save the Kirchners from the consequences of their
impulses. For example, CFK went ahead with her ill-advised
trip to Washington and Central America earlier this month
against the advice of her Foreign Ministry. She ended up
achieving no more than Nestor did in December 2007 when he
participated in the Chavez-organized "bungle in the jungle"
in Colombia, in which Nestor and others sat helplessly in the
jungle for days in the futile hope that the FARC would
deliver hostages to them.

¶21. (C) The opacity of decision-making at the GOA's apex
means that the government will continue to meander hither and
yon, regardless of whether or not it has definitively chosen
a particular direction. The GOA's performance in dealing
with H1N1 flu is a case in point. Although many public
health officials in the GOA are working around the clock to
contain the challenging problem, the government's lack of
internal communication made it look hapless. For example,
upon alighting on Argentine territory after her Central
American jaunt, CFK denounced "fear-mongering" media reports
of 100,000 flu cases in Argentina -- information that had
come from her own health ministry. (The 100,000 number
referred to all flu cases, not just H1N1 flu.) The poor
coordination continues. Over the past weekend, the Mission
found itself in the middle of an unsightly (non-public)
dispute between the federal Ministry of Health and its
counterpart in the Province of Buenos Aires (governed by
Kirchner ally Daniel Scioli) over the destination of
CDC-donated Tamiflu doses, with each accusing the other of
bad faith and subterfuge.

--------------------------------------------- ------
The Verdict: More of the Same, But Good Can Happen
--------------------------------------------- ------

¶22. (C) Like most of our contacts, we think that this untidy
scenario is the most likely outcome. We don't expect the
Kirchners to change, but given the magnitude of their defeat
in the mid-terms, we don't expect the Peronist establishment
or the opposition to back down, either. The Kirchners may
even be able to prevail if their rivals and opponents fail to
unite. Prolonged stalemate on most of the "big" policy
issues seems the most likely outcome of a collision between a
closed, reform-adverse, and politically weakened regime and
disparate political groups that believe that they have a
mandate for reform.

¶23. (C) This does not mean, however, that no positive change
in this scenario is possible. The Kirchners could take steps
for ulterior motives that turn out to have beneficial
consequences. This has already happened in the post mid-term
era, when Transportation Secretary Ricardo Jaime departed
office soon after the election. One of our contacts
characterized the Kirchners' willingness to cut the
notoriously corrupt official loose as the beginning of a
purge designed to distance them from the shadiest elements of
their regime in an effort to reduce the likelihood that they
themselves could end up in prison. Whatever the reason,
Jaime's removal could lead to policy improvements in the
transportation sector.

¶24. (C) Nor does it mean that the USG should ignore the
Kirchner regime or give up on it as hopeless. CFK may not
have a grand scheme in mind for her remaining two years in
power, but she clearly would like to associate herself with
President Obama's star power. The intensity of this desire
opens all kinds of opportunities for us, as it did in
Argentina's decisive IAEA vote. As the Kirchners struggle
for political relevance or at least survival, they will be
looking for success stories -- and we should be on guard for
opportunities to induce them to do the right thing