US embassy cable - 05BUENOSAIRES68

C O N F I D E N T I A L SECTION 01 OF 02 BUENOS AIRES 000068 
 
SIPDIS 
 
STATE FOR H (JREDDY AND KGATZ) AND WHA/BSC 
 
E.O. 12958: DECL: 01/07/2015 
TAGS: PGOV, ECON, SNAR, AR 
SUBJECT: SCENESETTER FOR CODEL DODD 
 
REF: STATE 04 274600 
 
Classified By: Ambassador Lino Gutierrez for reasons 1.4 (b) and (d). 
 
 1. (C)  Summary:  Ambassador Gutierrez and the Embassy 
Buenos Aires country team warmly welcome CODEL Dodd to 
Argentina January 12-13.  During your stay in Argentina you 
will have the opportunity to speak with senior Argentine 
officials and experts on a range of political, economic and 
counternarcotics issues.  Your visit comes at the beginning 
of a year in which Argentina will seek to consolidate its 
impressive economic and political recovery from the 2001-2002 
crisis.  Indeed, during your visit, Argentina will launch its 
long-awaited restructuring of over USD 81 billion of private 
debt following the largest sovereign default in history.  A 
successful debt restructuring will be a key component in 
reintegrating Argentina into world capital markets.  On the 
political front, President Kirchner, while maintaining 
remarkably high approval ratings, will be looking to 
consolidate his own position within the ruling Peronist party 
as the country faces legislative elections in October.  On 
counternarcotics issues, our cooperation with Argentine 
authorities, both federal and provincial, is excellent.  In 
September 2004, following ten years of negotiations, the GOA 
signed a Letter of Agreement with the Department of State, 
both demonstrating its increased willingness to work with the 
U.S. on counternarcotics issues, and enabling the U.S. to 
begin providing assistance to the GOA.  End Summary. 
 
Overall Political Scene 
------------------------ 
 
2. (C)  Your visit comes as President Nestor Kirchner is 
enjoying a good run politically and economically.  Argentina 
has made a steady recovery from its catastrophic economic and 
political meltdown at the end of 2001 and early 2002.  Since 
taking office, Kirchner has focused on consolidating his 
political strength from the 22 percent popular vote he 
received in national elections April 27, 2003.  He forced 
changes in the Supreme Court, the military, and his own 
ruling Peronist (PJ) party and undertook populist measures 
such as seeking to raise the lowest government salaries, the 
minimum wage, and government pensions.  In mid-2004, however, 
Kirchner,s high approval ratings were showing some decline 
because of concerns over crime and public security.  The 
spectacular rescue in October of a high-profile kidnapping 
victim by Buenos Aires police has helped counter the 
perception that Kirchner's government has not done enough to 
deal with crime, including a wave of kidnappings that have 
included wealthy, middle, and working class families. 
Kirchner is also helped immeasurably by the absence of real 
political opposition.  The PJ party controls 51 percent of 
the seats in the House and 57 percent in the Senate and 16 of 
the 24 governorships.  The next largest party, the Radicals 
(UCR), controls less than 20 percent in each chamber.  Forty 
other political parties, many of them one-man shows, round 
out the political scene. 
 
Economy 
------- 
 
3. (U)  Argentina's economic recovery since late 2002 has 
been impressive.  An export-led boom triggered an 8.7 percent 
surge in real GDP in 2003 and an estimated growth of 8.2 
percent in 2004.  Unemployment declined to 13.5 percent in 
2004.  Investment has jumped and capital flight has 
decreased.  Argentina's robust economic recovery is the 
result of market reforms in the 1990s, including very high 
investment, the adoption of a market-based exchange rate 
regime in early 2002, and a favorable combination of high 
international commodity prices and low interest rates. 
Argentina has sound economic fundamentals and should continue 
to perform well in 2005, assuming a successful debt 
restructuring attracts international and domestic investment. 
 Argentina needs to sustain a high rate of investment and 
growth to deal with its high poverty rate.  During the first 
half of 2004, 44 percent of the population were living below 
the poverty line, and 17 percent were considered destitute. 
 
Foreign Relations 
----------------- 
 
4. (C)  Argentina has played a generally positive role in 
promoting human rights and democratic institutions in the 
hemisphere, particularly in Haiti and Bolivia.  Along with a 
number of its neighbors, Argentina currently has peacekeeping 
forces (almost 600) in Haiti in support of MINUSTAH, 
reflecting its traditionally strong support of UN 
peacekeeping operations.  In Venezuela, President Kirchner 
also played a constructive role in pressing Chavez to hold a 
recall referendum in 2004.  This month Argentina assumed a 
two-year seat on the UN Security Council.  In November 2005, 
Argentina will host the hemisphere's leaders at the next 
Summit of the Americas. 
 
Counternarcotics Cooperation 
---------------------------- 
 
5. (U)  Argentina is not a major drug producing country, but 
it is a transit country for cocaine flowing from neighboring 
Bolivia, Peru and Columbia primarily destined for Europe. 
Argentina is also a transit route for Colombian heroin en 
route to the U.S. east coast (primarily New York).  Due to 
its advanced chemical production facilities, Argentina 
continues to be a source for precursor chemicals.  According 
to Argentine government statistics, there was more cocaine 
seized in the first three quarters of 2004 than in the entire 
2003 calendar year.  In addition to Argentine traffickers, 
there is evidence that Colombian drug traffickers have 
greatly increased their presence in all aspects of the 
Argentine drug trade.  This may signal a new chapter in the 
global war on drugs, as Colombian narcotics traffickers 
search out alternative bases of operations and transit routes 
in response to the increased pressure of Plan Colombia. 
 
6. (U)  The September 2004 signing of the Letter of Agreement 
has allowed the Embassy to receive an INL budget for the 
first time since 1995 and begin providing much needed 
training and assistance.  However,the fact that Argentina 
remains under Brooke Amendment Sanctions for failure to make 
payments on a bilateral loan may affect Post's ability to 
provide assistance.  The GOA is embarking on the creation of 
both a national security plan focusing on narcotics 
interdiction and a national drug prevention plan.  The GOA 
has asked for Post,s input and assistance with both plans. 
 
7. (U)  Cooperation between the USG and Argentine 
authorities, both federal and provincial, continued to be 
excellent in 2004.  During 2004, USG assistance supplied both 
equipment and training programs for Argentine law enforcement 
personnel.  Examples of USG-funded programs in 2004 include: 
two law enforcement tactical training courses provided by 
DEA; a money laundering course sponsored by the Department of 
Homeland Security (ICE); an airport narcotics interdiction 
course sponsored by DEA/INL; and a prevention seminar held in 
conjunction with SEDRONAR sponsored by PAS and INL.  DEA/INL 
also sponsored several GOA law enforcement professionals, 
participation in regional training programs.  In addition to 
providing valuable training opportunities, Post,s DEA 
detachment supports the Northern Border Task Force (NBTF), 
and starting in 2004, the Mendoza Airport Task Force.  The 
DEA-supported task forces demonstrate the benefits of 
interagency cooperation, and GOA officials have expressed 
interest in expanding the program to develop task forces in 
other narcotics trafficking hot spots. 
 
 
GUTIERREZ