US embassy cable - 03BUENOSAIRES1747

C O N F I D E N T I A L SECTION 01 OF 04 BUENOS AIRES 001747 
 
STATE FOR WHA AND WHA/BSC 
PASS NSC FOR HUGO LLORENS, JOANNA WALLACE AND JASON SINGER 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
EX-IM BANK FOR MICHELE WILKINS 
TREASURY FOR IA NANCY LEE, HEIDI CRUZ, BILL BLOCK, JAMES 
JOHN AND RAMIN TOLUI, AND FOR OCC CARLOS HERNANDEZ 
USDOC FOR ALEXANDER PEACHER 
USDOL FOR ILAB PAULA CHURCH 
USCINCSO FOR POLAD 
 
E.O. 12958: DECL: 05/28/2013 
TAGS: PGOV, MARR, PREL, AR, CU 
SUBJECT: ARGENTINA: KIRCHNER TAKES OFFICE WITH PREDICTABLE 
SPEECH BUT PURGES MILITARY LEADERSHIP 
 
REF: A. BUENOS AIRES 1704 
     B. BUENOS AIRES 1662 
 
CLASSIFIED BY: POLITICAL COUNSELOR MICHAEL MATERA.  REASON 1.5 (D). 
 
1.  (C)  SUMMARY:  NESTOR KIRCHNER'S MAY 25 INAUGURAL ADDRESS 
WAS CONSISTENT WITH HIS CAMPAIGN MESSAGES ADVOCATING A 
GREATER STATE ROLE IN THE ECONOMY WHILE AT THE SAME TIME 
MAINTAINING FISCAL DISCIPLINE.  HE REPEATED HIS CAMPAIGN 
PROMISE TO GIVE PROMINENCE OF PLACE TO ARGENTINA'S RELATIONS 
WITH OTHER LATIN AMERICAN COUNTRIES, BEGINNING WITH MERCOSUR. 
 THE MODERATE TONE OF THE SPEECH WAS IN SHARP CONTRAST TO HIS 
FIRST REAL ACTION AS PRESIDENT, IN WHICH HE NAMED A GENERAL 
SERVING IN SANTA CRUZ PROVINCE TO HEAD THE ARMY, A MOVE 
WHICH, ACCORDING TO MILITARY NORMS OF PROMOTION, WILL MEAN 
THE DISMISSAL OF CLOSE TO HALF OF THE GENERALS IN THE ARMY. 
IN THE AIR FORCE AND NAVY, KIRCHNER INTENDS TO PROMOTE JUNIOR 
FLAG OFFICERS AS SERVICE CHIEFS AS WELL, WHICH WILL ALSO 
PRODUCE MASS DISMISSALS IN THOSE SERVICES.  MEMBERS OF THE 
KIRCHNER ADMINISTRATION ALSO HINTED THAT THEY WOULD NOT STAND 
IN THE WAY OF CONGRESSIONAL EFFORTS TO IMPEACH THE MEMBERS OF 
THE SUPREME COURT, AN ANNOUNCEMENT WOULD COULD LEAD TO 
CONTINUED FIGHTING AMONG THE BRANCHES OF GOVERNMENT 
REMINISCENT OF THAT WHICH TOOK PLACE AT THE BEGINNING OF THE 
DUHALDE ADMINISTRATION.  FIDEL CASTRO'S VISIT TO BUENOS AIRES 
FOR THE INAUGURATION PROMPTED LARGE GATHERINGS AND AN 
OUTPOURING OF PUBLIC SUPPORT FOR THE CUBAN LEADER.  IN A 
PRESS INTERVIEW, FOREIGN MINISTER BIELSA REFUSED TO CRITICIZE 
CASTRO'S RECORD ON HUMAN RIGHTS IN CUBA, CLAIMING THAT SUCH A 
CRITICISM WOULD BE "SUPERFICIAL."  FINALLY, BIELSA CLAIMED 
THAT KIRCHNER WOULD VISIT WASHINGTON ON AN OFFICIAL VISIT 
"WITHIN 90 DAYS" AND FORMER PRESIDENTIAL CANDIDATE (1995) 
JOSE OCTAVIO BORDON WAS NAMED THE NEW ARGENTINE AMBASSADOR TO 
THE UNITED STATES.  END SUMMARY. 
 
2.  (U)  NESTOR KIRCHNER'S INAUGURAL ADDRESS ON SUNDAY, MAY 
25 WAS CONSISTENT WITH MANY OF THE THEMES OUTLINED DURING HIS 
PRESIDENTIAL CAMPAIGN (REF A) AND PRODUCED NO SURPRISES.  THE 
MODERATE TONE OF THE ADDRESS WAS FAIRLY WELL-RECEIVED ACROSS 
THE POLITICAL SPECTRUM HERE, WITH THE EXCEPTION BEING THOSE 
POLITICAL FORCES LOYAL TO DEFEATED RIVAL CANDIDATES CARLOS 
MENEM AND ADOLFO RODRIGUEZ SAA.  ONE OF KIRCHNER'S MOST 
FREQUENT THEMES WAS HIS CALL FOR A "SERIOUS" ADMINISTRATION, 
ONE CHARACTERIZED MORE BY "DAY-TO-DAY WORK" RATHER THAN 
"GRANDIOSE" ANNOUNCEMENTS OR PLANS.  A FEW POINTS FROM THE 
SPEECH FOLLOW. 
 
3.  (U)  GREATER ROLE FOR THE STATE IN THE ECONOMY.  KIRCHNER 
DEFENDED HIS CALL FOR A "NATIONAL CAPITALISM" (I.E., STRONGER 
GOVERNMENTAL REGULATION, PROTECTING VULNERABLE MEMBERS OF 
SOCIETY, INCREASED PUBLIC INVESTMENT IN INFRASTRUCTURE WORKS 
AS MEANS OF EMPLOYMENT), AS OPPOSED TO "THE MODEL OF 
PERMANENT SPENDING CUTS," SAYING, "IT IS ENOUGH TO SEE HOW 
THE MOST DEVELOPED COUNTRIES PROTECT THEIR PRODUCERS, THEIR 
INDUSTRIES, AND THEIR WORKERS."  PREDICTING THAT HIS 
GOVERNMENT'S EMPHASIS ON PUBLIC WORKS PROJECTS WOULD PROVE 
WRONG "NEOLIBERAL" CREEDS CRITICAL OF UNPRODUCTIVE PUBLIC 
SPENDING, HE ASSERTED, "WE ARE NOT INVENTING ANYTHING NEW; 
THE UNITED STATES IN THE 1930S OVERCAME THE DEEPEST ECONOMIC 
CRISIS OF THE CENTURY IN THAT WAY." 
 
4.  (U)  FISCAL BALANCE KEY.  DESPITE THE EMPHASIS ON 
KEYNESIAN-TYPE GOVERNMENT SPENDING, HE EMPHASIZED THAT 
MAINTAINING BALANCE IN THE PUBLIC-SECTOR FISCAL ACCOUNTS -- 
BOTH AT THE NATIONAL AND PROVINCIAL LEVELS -- WOULD BE 
"FUNDAMENTAL."  HE CONTINUED, "THE COUNTRY CANNOT CONTINUE 
COVERING DEFICITS WITH PERMANENT INDEBTEDNESS NOR WITH 
UNCONTROLLED MONEY CREATION."  ON THE REVENUE SIDE, HE 
REITERATED CALLS FOR A MORE PROGRESSIVE TAX SYSTEM, LOWER TAX 
RATES AS COLLECTION IMPROVED, AND STRONGER PROSECUTION OF TAX 
EVASION.  HE ALSO PLEDGED TO PURSUE A NEW PROVINCIAL 
REVENUE-SHARING ARRANGEMENT THAT WOULD NOT ONLY IMPLY "NEW 
DISTRIBUTION AND NEW RESPONSIBILITIES" BUT A "NEW MODEL OF 
THE COUNTRY" AS WELL. 
 
5.  (U)  FOREIGN POLICY:  FIRST, LATIN AMERICA.  HE 
REITERATED HIS WELL-WORN THEME THAT ARGENTINA'S TOP FOREIGN 
POLICY PRIORITY WOULD BE STRENGTHENING TIES WITH LATIN 
AMERICA, BEGINNING WITH MERCOSUR.  DISCARDING ANY TYPE OF 
"AUTOMATIC ALIGNMENT" WITH THE UNITED STATES, HE STRESSED HIS 
DESIRE FOR "A SERIOUS, BROAD, AND MATURE RELATIONSHIP WITH 
THE UNITED STATES AND THE EUROPEAN UNION."  HE ALSO PLEDGED 
THAT HIS ADMINISTRATION WOULD COOPERATE FULLY IN THE FIGHT 
AGAINST TERRORISM. 
 
-------------------------------------------- 
FIRST STEP:  MASS DISMISSALS IN THE MILITARY 
-------------------------------------------- 
 
6.  (U)  IN CONTRAST TO THE MODERATE IMAGE PRESENTED IN THE 
INAUGURAL SPEECH, THE KIRCHNER TEAM SURPRISED ALL OBSERVERS 
HERE BY ANNOUNCING OVER THE INAUGURAL WEEKEND A MASSIVE 
OVERHAUL OF THE MILITARY LEADERSHIP.  KIRCHNER'S DESIRE TO 
PUT GEN. ROBERTO BENDINI, COMMANDER OF THE XI MECHANIZED 
DIVISION IN RIO GALLEGOS, SANTA CRUZ PROVINCE (WHERE KIRCHNER 
SERVED AS GOVERNOR FOR MORE THAN A DECADE), IN CHARGE OF THE 
ARMY APPEARS THE PRIMARY CAUSE OF THE SHAKEUP.  DEFENSE 
MINISTER JOSE PAMPURO, FOR HIS PART, PUBLICLY ACKNOWLEDGED 
THAT KIRCHNER WANTED A CLOSE CONFIDANT AS ARMY CHIEF.  GIVEN 
THAT BENDINI WAS 28TH ON THE ARMY LEADERSHIP SUCCESSION LIST, 
HIS REPLACEMENT OF CURRENT ARMY HEAD RICARDO BRINZONI WOULD 
HAVE MEANT, ACCORDING TO A STRICT INTERPRETATION OF MILITARY 
PROMOTION NORMS, THE RETIREMENT OF 27 ARMY GENERALS (75 
PERCENT OF THE TOTAL).  PRESS REPORTS, HOWEVER, INDICATE THAT 
BENDINI -- WHO WILL FORMALLY TAKE OVER THE ARMY LEADERSHIP 
TODAY, MAY 28 --  WILL ASK EIGHT ARMY GENERALS FORMERLY AHEAD 
OF HIM ON THE PROMOTION LIST TO REMAIN IN THE SERVICE, WHICH 
WOULD MEAN THAT "ONLY" 19 ARMY GENERALS WOULD BE RETIRED.  AT 
THIS POINT, IT IS UNKNOWN IF KIRCHNER WILL ACCEPT THIS 
PROPOSAL. 
 
7.  (U)  THE OTHER SERVICES FACE SIMILAR RETIREMENTS BASED ON 
KIRCHNER'S SELECTION OF JUNIOR FLAG OFFICERS TO BECOME 
SERVICE CHIEFS (E.G., 13 NAVY ADMIRALS, OR 50 PERCENT OF THE 
TOTAL, AND 12 AIR FORCE GENERALS, ALSO 50 PERCENT OF THE 
TOTAL, WILL APPARENTLY BE FORCED INTO RETIREMENT.)  ALL OF 
THOSE RETIRING WILL BE REPLACED BY THOSE WITH PAST TIES TO 
THE PROVINCE OF SANTA CRUZ AND KIRCHNER.  ON MAY 30, JORGE 
ALBERTO CHEVALLIER WILL TAKE OVER AS CHAIRMAN OF THE JOINT 
CHIEFS, A POST CURRENTLY HELD BY JUAN CARLOS MUGNOLO.  ON 
JUNE 4, CARLOS ROHDE WILL TAKE CHARGE OF THE AIR FORCE, 
REPLACING WALTER BARBERO.  THE FOLLOWING DAY, JORGE GODOY 
WILL REPLACE JOAQUIN STELLA AS THE HEAD OF THE NAVY. 
 
8. (C)  LOCAL MILITARY EXPERT ROSENDO FRAGA SUMMARIZED THE 
WIDESPREAD SENTIMENT OVER THE UNEXPECTED MOVES, ACKNOWLEDGING 
THAT KIRCHNER HAD THE CONSTITUTIONAL AUTHORITY TO MAKE THE 
CHANGES, BUT ARGUING THAT THE PURGE DID NOT MAKE MUCH SENSE 
FOR A NEW PRESIDENT TRYING TO ENSURE INSTITUTIONAL 
CONTINUITY.  IN GENERAL BRINZONI'S PARTING ADDRESS TO THE 
ARMY ON MAY 28, HE AFFIRMED THE ARMY'S COMMITMENT TO 
UPHOLDING THE CONSTITUTION AND ARGENTINE LAW, BUT ADMITTED, 
"THIS DISMISSAL HURTS, NOT FOR PERSONAL REASONS, BUT RATHER, 
FOR THE UNEXPLAINED CIRCUMSTANCES SURROUNDING IT."  THE MOST 
IMPORTANT REASON FOR THE NEW APPOINTMENTS APPEARS TO BE 
KIRCHNER'S DESIRE TO HAVE PEOPLE HE KNOWS WELL AND TRUSTS IN 
THE LEADERSHIP OF THE ARMED SERVICES.  OTHER SPECULATION IS 
THAT HE AND SOME OF HIS MORE LEFTIST LEANING ALLIES IN THE 
NEW GOVERNMENT ARE USING THIS MASS DISMISSAL TO REMOVE ALL OF 
THE MOST SENIOR MILITARY OFFICERS WHO POTENTIALLY HAVE ANY 
INVOLVEMENT IN THE 1976-83 "PROCESO" PERIOD OF MILITARY 
DICTATORSHIP.  (COMMENT:  LEFT-LEANING HUMAN RIGHTS NGOS HAVE 
OFTEN ACCUSED MEMBERS OF THE SENIOR MILITARY LEADERSHIP OF 
HAVING PLAYED ACTIVE ROLES IN "EL PROCESO" BUT WHEN PRESSED 
TO PROVIDE EVIDENCE HAVE BEEN UNABLE TO SUBSTANTIATE THEIR 
ALLEGATIONS.  IN ADDITION, ALL MILITARY PROMOTION LISTS ARE 
SUBJECT TO STRICT CONGRESSIONAL SCRUTINY, WHICH PRESUMABLY 
WOULD HAVE EXPOSED ANY CREDIBLE EVIDENCE OF WRONGDOING.  END 
COMMENT). 
 
------------------------------- 
NEXT TARGET:  THE SUPREME COURT 
------------------------------- 
 
9.  (C)  THE NEW ADMINISTRATION'S ZEAL FOR CHANGE DOES NOT 
END WITH THE ARMED FORCES, BUT APPARENTLY INCLUDES THE 
SUPREME COURT AS WELL.  KIRCHNER'S NEW MINISTER OF JUSTICE, 
GUSTAVO BELIZ, SAID ON HIS FIRST DAY IN OFFICE THAT THE 
SUPREME COURT SHOULD NOT ESCAPE "THE NECESSARY RENOVATION OF 
ALL THE POWERS OF THE STATE."  HE WAS QUICK TO ADD THAT THE 
ADMINISTRATION WOULD STRICTLY ADHERE TO CONSTITUTIONAL 
PROCEDURES IN THIS AREA.  (OF COURSE, THE CONSTITUTIONALITY 
OF IMPEACHING THE MEMBERS OF THE COURT HAS NOT BEEN THE 
CENTRAL QUESTION OVER THE PAST TWO YEARS, BUT RATHER, THE 
ADVISABILITY OF SUCH AN EFFORT.)  THE MEMBERS OF THE SUPREME 
COURT FACED A DUHALDE-INSPIRED IMPEACHMENT VOTE IN THE 
CHAMBER OF DEPUTIES LAST YEAR, AN INSTITUTIONAL TIT-FOR-TAT 
THAT CAUSED THE COURT TO RULE ON REPEATED OCCASIONS AGAINST 
THE DUHALDE ADMINISTRATION'S ECONOMIC POLICIES.  IN THE FACE 
OF THOSE COURT DECISIONS, THE DUHALDE ADMINISTRATION 
ULTIMATELY BACKED DOWN, BUT IT APPEARS THAT THE KIRCHNER TEAM 
IS NOW SIGNALING ITS WILLINGNESS TO DO BATTLE WITH THE COURT 
AGAIN.  IN FACT, AS NOTED IN REF B, KIRCHNER'S NEW 
INTELLIGENCE CHIEF AND CONFIDANT SERGIO ACEVEDO PRESIDED OVER 
THE IMPEACHMENT EFFORT AGAINST THE MEMBERS OF THE COURT 
DURING THE DUHALDE ADMINISTRATION FROM HIS POST AS CHAIRMAN 
OF THE IMPEACHMENT COMMITTEE OF THE CHAMBER OF DEPUTIES.  OF 
THE NINE MEMBERS OF THE SUPREME COURT, ONLY CHIEF JUSTICE 
NAZARENO AND THE DUHALDE-APPOINTED JUSTICE JUAN CARLOS 
MAQUEDA ATTENDED KIRCHNER'S INAUGURATION CEREMONY, A CLEAR 
SIGN OF DISAPPROVAL BY THE MEMBERS OF THE COURT. 
 
10.  (U)  THE FIRST TARGET REPORTEDLY WILL BE JUSTICE CARLOS 
FAYT, WHO DID NOT RECUSE HIMSELF FROM PARTICIPATING IN A 2002 
COURT DECISION THAT DECLARED UNCONSTITUTIONAL THE GOA'S 
"CORRALITO" BANK DEPOSIT RESTRICTIONS, DESPITE HOLDING A USD 
200,000 DEPOSIT IN BANCO NACION THAT HE LATER EXCHANGED FOR 
BODEN BONDS.  THERE IS WIDESPREAD SPECULATION THAT THE LOWER 
HOUSE COULD SEEK FAYT'S SUSPENSION AS EARLY AS THIS MONTH 
WHILE PURSUING THE IMPEACHMENT CASE AGAINST HIM, ALTHOUGH 
THERE IS SOME DEBATE OVER WHETHER THE AUTHORITY TO TEMPORARY 
SUSPEND A JUDGE FACING IMPEACHMENT RESTS WITH THE SENATE OR 
THE CHAMBER OF DEPUTIES.  IF THOSE DEPUTIES LOYAL TO THE 
KIRCHNER ADMINISTRATION SUCCEED IN IMPEACHING FAYT, THEY 
ALMOST CERTAINLY WOULD SEEK TO DO THE SAME WITH THE MEMBERS 
OF MENEM'S SO-CALLED "AUTOMATIC MAJORITY":  JULIO NAZARENO, 
ANTONIO BOGGIANO, GUSTAVO LOPEZ, ADOLFO VAZQUEZ, AND EDUARDO 
MOLINE O'CONNOR. 
 
---------------------- 
CASTRO GRABS HEADLINES 
---------------------- 
 
11.  (U)  THE VISIT OF FIDEL CASTRO TO ARGENTINA FOR THE MAY 
25 INAUGURATION CAPTURED WIDESPREAD MEDIA AND PUBLIC 
ATTENTION, WITH THE OVERWHELMING PUBLIC SENTIMENT CLEARLY 
FAVORABLY DISPOSED TO THE CUBAN LEADER.  CASTRO'S VISIT 
COMPLETELY OVERSHADOWED THOSE OF BRAZILIAN PRESIDENT LULA AND 
VENEZUELAN PRESIDENT CHAVEZ.  THE TRIP WAS CASTRO'S THIRD 
VISIT TO ARGENTINA, FOLLOWING EARLIER TRIPS IN 1959 (SHORTLY 
AFTER THE REVOLUTION) AND 1995 (DURING THE MENEM 
ADMINISTRATION TO ATTEND THE IBERO-AMERICAN SUMMIT IN 
BARILOCHE).  NEWSPAPERS CARRIED PHOTOS OF A BEAMING KIRCHNER 
LAUGHING AND CONVERSING WITH CASTRO AND THE TWO HAD THE 
LONGEST OF THE FORMER'S MEETINGS WITH VISITING HEADS OF 
STATE.  ON MONDAY MAY 26, CASTRO DELIVERED A TWO-HOUR-PLUS 
SPEECH ON THE OUTSIDE STEPS OF THE UNIVERSITY OF BUENOS AIRES 
LAW FACULTY BEFORE 5,000 ENTHUSIASTIC SUPPORTERS.  AT ANOTHER 
EVENT THE SAME DAY, BUENOS AIRES CITY MAYOR ANIBAL IBARRA 
PINNED A MEDAL ON CASTRO'S CHEST AND DESCRIBED HIM AS "ONE OF 
THE MOST RESPECTED MEN IN THE WORLD."  THE FOLLOWING DAY, A 
SPANISH DAILY PUBLISHED AN INTERVIEW WITH FOREIGN MINISTER 
RAFAEL BIELSA, WHO SAID:  "I DO NOT DARE TO SAY OPENLY THAT 
HUMAN RIGHTS ARE BEING VIOLATED IN CUBA.  I DO NOT HAVE THE 
MORAL AUTHORITY, NOR A POST WHICH WOULD ALLOW ME TO SAY 
SOMETHING SO SUPERFICIAL." 
 
----------------------------------------- 
GOA SAYS KIRCHNER-BUSH TO MEET IN 90 DAYS 
----------------------------------------- 
 
12.  (U)  NEWSPAPER HEADLINES ON MAY 27 TRUMPETED GOVERNMENT 
DECLARATIONS THAT KIRCHNER WOULD VISIT WASHINGTON ON AN 
OFFICIAL VISIT WITHIN 90 DAYS, FOLLOWING PUBLIC CONFIRMATION 
BY THE FOREIGN MINISTER THAT PRESIDENT BUSH, IN HIS MAY 23 
PHONE CONVERSATION WITH KIRCHNER, HAD INVITED THE NEW 
PRESIDENT TO VISIT WASHINGTON.  IN A CONFUSED STATEMENT ON 
MAY 26, FOREIGN MINISTER BIELSA, EXPLAINED THAT KIRCHNER WAS 
TRAVELING TO WASHINGTON BECAUSE "ARGENTINA HAD TO DISCUSS 
ISSUES THAT ARE VERY IMPORTANT, SUCH AS IN THE DISPUTE 
RESOLUTION ORGANIZATION THAT THE WORLD BANK HAS, AND IN THE 
MULTILATERAL CREDIT ORGANIZATIONS AND THE INTERNATIONAL 
MONETARY FUND.  THERE, THE VOICE OF THE UNITED STATES IS VERY 
IMPORTANT."  THESE GOA DECLARATIONS CAME ABOUT DESPITE THE 
FACT THAT A SPECIFIC TIMETABLE FOR A KIRCHNER VISIT TO 
WASHINGTON WAS NOT BROACHED IN SECRETARY MARTINEZ'S OFFICIAL 
MEETINGS WITH KIRCHNER. 
 
13.  (U)  IN OTHER NEWS OF IMMEDIATE BILATERAL INTEREST, JOS 
OCTAVIO BORDN WAS TAPPED BY THE INCOMING ADMINISTRATION AS 
ARGENTINA'S NEW AMBASSADOR TO THE UNITED STATES.  THE 
APPOINTMENT OF THE WELL-RESPECTED BORDN -- THE 1995 
PRESIDENTIAL CANDIDATE AND LATER, FREPASO LEADER -- IS A 
POSITIVE DEVELOPMENT, DESPITE THE FACT THAT BORDN DOES NOT 
HAVE A PARTICULARLY STRONG RELATIONSHIP WITH KIRCHNER.  OTHER 
SIGNIFICANT APPOINTMENTS INCLUDE JUAN PABLO LOHLE AS THE NEW 
AMBASSADOR TO BRASILIA AND JORGE VAZQUEZ AS THE NEW 
AMBASSADOR TO THE OAS AND JORGE TAIANA AS THE NEW MFA UNDER 
SECRETARY FOR FOREIGN RELATIONS (REPLACING FERNANDO 
PETRELLA). 
 
 
DRUCKER