VZCZCXYZ0048
RR RUEHWEB
DE RUEHBU #1947/01 2711844
ZNR UUUUU ZZH
R 281844Z SEP 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 9381
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6608
RUEHMN/AMEMBASSY MONTEVIDEO 6805
RUEHSG/AMEMBASSY SANTIAGO 0815
RUEHBR/AMEMBASSY BRASILIA 6478
RUEHLP/AMEMBASSY LA PAZ SEP CARACAS 1521
RUEHFR/AMEMBASSY PARIS 1334
UNCLAS BUENOS AIRES 001947
SIPDIS
SENSITIVE
SIPDIS
EMBASSY PARIS PASS USOECD PAUL REID
PASS NSC FOR MICHAEL SMART
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN
TREASURY FOR MATT MALLOY
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD
E.O. 12958: N/A
TAGS: EINV ECON PGOV PREL AR
SUBJECT: ARGENTINA'S INVESTMENT PITCH MARRED BY POOR GRADES ON
CORRUPTION, DOING BUSINESS
REF: Buenos Aires 1938
1. (U) Summary: During President and Mrs. Kirchner's New York
business-focused visit (reftel), two highly respected and widely
read international business reports released their annual surveys -
and Argentina came up wanting. Transparency International's
""Corruption Perceptions Index 2007"" (CPI) and the World Bank's
""Doing Business 2008"" both released their findings on September 25,
were widely publicized in local media, and gave Argentina poor
grades in the areas of corruption and ease of doing business. The
reports largely tracked with previous years' ratings. End Summary.
2. (U) Transparency International's CPI, the preeminent comparative
international measure of corruption, ranked Argentina 105 out of
180, ranking it alongside Mongolia, Albania, Bolivia and Burkina
Faso. The 2007 CPI survey ranked 180 countries and territories by
their perceived levels of corruption, as determined by expert
assessments, opinion surveys and business people, and ranges between
10 (highly clean) and 0 (highly corrupt). Denmark, Finland and New
Zealand, all at 9.4, led the list. The United States ranked 20th,
at 7.2. Among Latin American nations, Chile (#22, 7.0) and Uruguay
(#25, 6.7) again led the region in 2007. Argentina's index was 2.9.
Venezuela (#162, 2.0) and Haiti (177, 1.6) bottomed out the list
for the Western Hemisphere.
3. (U) In the World Bank's Doing Business 2008 survey, Argentina
ranked 109 of 178, alongside Bangladesh, Nigeria, Belarus, and
Nepal. The survey is a composite, ""ease of doing business"" index
comprised of the following factors: starting a business, dealing
with licenses, employing workers, registering property, getting
credit, protecting investors, paying taxes, trading across borders,
enforcing contracts, and closing a business. Singapore, New
Zealand, and the United States occupied top three spots. Among
Latin America and the Caribbean, Puerto Rico (28), Chile (33), and
St. Lucia (34) were the highest ranking; Haiti, Venezuela and
Ecuador were the worst.
4. (SBU) One of the most noteworthy and wide disseminated factors
that comprised this overall ""doing business"" survey picked up by the
local press was the number of salary weeks payment required to
terminate an employee. Employers must pay a fired worker 139 weeks
of salary in Argentina (compared to zero in the United States,
Denmark, and New Zealand). Note that this 139-week figure does not
take into account GOA's recent termination of its onerous ""double
indemnification"" labor termination policy; if it had, this number
would have been less. Nevertheless, even if this policy change had
been incorporated into the survey, according to the survey's
methodology, Argentina's overall Doing Business score would not have
changed much.
5. (U) The Doing Business 2008 survey highlighted other serious
policy challenges facing Argentina. While it takes only one legal
procedure to start a new business in Australia (four in the United
States), it takes 14 in Argentina. While it takes two days to start
a new business in Australia (six in the United States), it takes 31
in Argentina. These and other findings serve as reminders of why
employers are reluctant to hire new workers (an estimated 41% of the
Argentine labor force is informal) or make new investments.
6. (SBU) Comment: Unfortunately for the GOA, these reports were
released at precisely the time that its first couple was pitching
Argentina to investors in New York. On the one hand, they were a
rude reminder to prospective investors about the challenges of doing
business here. However, on the other hand, the reports tracked
almost exactly with previous years' ratings, and thus there was a
sense of resignation and ""nothing new"" to the reports. And, in an
almost perverse sense, as GOA officials are constantly saying that
there is ""money to be made in Argentina,"" perhaps the real message
to these damaging reports is that, yes, there is money to be made,
as long as you know how - and with whom - ""doing business"" is really
done in Argentina. Local banking and business sources noted that
presidential candidate Cristina Fernandez de Kirchner missed and
opportunity to address these and other issues during her September
24-28 visit to New York. End comment.
WAYNE
=======================CABLE ENDS============================
"