Cablegate: Media Reaction; Argentine President-Elect Cristina Kirchner

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OO RUEHWEB

DE RUEHBU #2155/01 3051402
ZNR UUUUU ZZH
O 011402Z NOV 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9628
INFO RHMFISS/CDR USSOCOM MACDILL AFB FL//SCJ2//
RULGPUA/USCOMSOLANT

UNCLAS BUENOS AIRES 002155

SIPDIS

STATE FOR INR/R/MR, I/GWHA, WHA, WHA/PDA, WHA/BSC,
WHA/EPSC
CDR USSOCOM FOR J-2 IAD/LAMA

SIPDIS

E.O. 12958: N/A
TAGS: KPAO OPRC KMDR PREL
SUBJECT: MEDIA REACTION; ARGENTINE PRESIDENT-ELECT CRISTINA KIRCHNER
CHALLENGES; US-PERUVIAN FTA; 11/01/07

1. SUMMARY STATEMENT

Major international stories today include foreign analysts' and
Argentine businessmen's expectations on the challenges ahead for
Argentine President-elect Cristina Fernandez de Kirchner; and US
House Ways and Means Committee passing an FTA between the US and
Peru.

2. OPINION PIECES AND EDITORIALS

- "Businessmen hail CFK, foreign analysts frown"

Cole Perry, contributor to liberal, English-language "Buenos Aires
Herald," writes (11/01) "Local businessmen hailed the victory of
Cristina Fernandez de Kirchner as the continuation of the
government's economic policies and the promise of improvement in the
industrial sector in Buenos Aires, a group of six chamber presidents
said. The optimism contrasts with the predictions of foreign
economists, who believe the next four years will mark the end of
President Nestor Kirchner's luck and a difficult future for
Fernandez.

'With the arrival of Cristina not only do we anticipate the
advancement of previous policies supporting the growth of the
Argentine economy, but also an increase in investment that will
allow us to move forward in the development of our sector,' Alberto
Sellaro, president of the Chamber of Shoe Manufacturers, affirmed.

"... Argentina's economy has grown roughly eight percent per year
since President Nestor Kirchner came to power in 2003... Yet,
consumer confidence is down 21% from an all time high in January and
most Argentines expect inflation to rise above 20% next year - a
problem for investment when more than 40% of the country's bonds are
indexed by inflation, according to a survey by Torcuato Di Tella
University. Added to that, the country has lost around 6 billion
dollars a year in direct foreign investment between 2001 and 2005.

"One of the main issues causing investor despondency is the
lingering 6.3 billion dollar Paris Club debt. The Paris Club
requires countries to have an IMF-sponsored economic program before
they can renegotiate their Paris Club debt, but Argentina refuses to
talk to the IMF...

"Another complication is Argentina's inability to issue debt due to
international restrictions stemming from Argentina defaulting on $
100 billion dollars in sovereign debt in 2002... This is part of the
reason many believe if Cristina Fernandez continues her husband's
economic model the economy may drift out of control, despite the
certainty of local businessmen.

"'There must be changes, otherwise inflation is not going to
disappear and the Kirchners are going to lose power...' Michael
Shifter, of the Inter-American Dialogue told 'Clarin' yesterday. His
comments have been echoed by various foreign authorities.

"'The consequence of Kirchner's policies has been to boost economic
growth in the short term at the expense of growth in the medium and
longer term,' Ricardo Amorim, chief Latin American economist at West
L B AG in New York, told Bloomberg.co. Adding, 'Who is going to pay
the bill? Very likely the next president: his wife.'

"These criticisms hit their strongest pitch in the caustic
Washington Post editorial published on Monday...

"But, the pessimism of foreign analysts fails to dismay (Aldo)
Karagozian, president of Argentina's largest textile lobby, or
Sellaro. 'The 'Seora Presidenta' elect has the conviction that one
of the pillars of the economy's growth is the industrial sector.
This encourages us to believe in a future of development,' Sellaro
said."

- "The US emphasizes (CFK's) victory, although asking for
'corrections'"

Hugo Alconada Mon, daily-of-record "La Nacion's" Washington-based
correspondent, comments (11/01) "Republicans, Democrats, US analysts
and mass media share the same view regarding Cristina Fernandez de
Kirchner. They underline her grand victory and hope she makes some
'corrections' in order to meet the country's 'challenges,' but they
are not that hopeful.

"When opening a debate about Argentina's post-election reality,
Peter Hakim, head of the Inter-American Dialogue, said yesterday:
'Argentina is today better off than four years ago, although it
faces some challenges. The question is when those challenges will be
met.'

"Claudio Loser, former IMF director for the Western Hemisphere, and
Mark Falcoff, head of the American Enterprise Institute, agreed that
the horizon seems more complicated than in recent years.

"'Indicators suggest that patience with Cristina will be limited,'
Loser explained, after seeing a gradual slump in the government's
image. 'This will be in addition to serious economic difficulties,
which is why Argentina is entering a very complicated period.' He
calculated that local inflation is already over 20% per year.

"Falcoff mentioned some areas of concern - security, inflation, and
a deteriorated infrastructure, among others. 'But most worrisome is
institutions... What happens is that when institutions do not work,
people go out to the streets.'

"... The Bush administration, just like Democrats, believes that the
enigma will start to be solved with Cristina's first measures, such
as the formation of her Cabinet...

"The unknown questions about Argentina's future under a Cristina
administration were also reflected in the US mass media...

"The 'Los Angeles Times' said Fernandez de Kirchner 'will face
serious challenges,' like inflation, the energy crisis or 'probably,
an economic deceleration,' although it highlighted that she 'seems
acutely aware that Argentina's economic well-being could be on
tenuous ground.'

"... Regarding the international scenario, 'The Houston Chronicle'
said that Cristina will have to balance her friendly ties to the US
and to Venezuelan Hugo Chavez.'"

- "Another step towards a FTA between the US and Peru"

Ana Baron, leading "Clarin's" Washington-based correspondent,
comments (11/01) "After two years of ups and downs, a key US
Congressional committee finally approved an FTA between the US and
Peru, which means a great victory for the Bush administration's
trade strategy in the region.

"The US House Ways and Means Committee unanimously approved the
deal, which practically assures its approval by Congress...

"In November 2003, vis-`-vis the stagnation in FTAA negotiations,
former USTR Bob Zoellick announced that the US would make progress
on bilateral or bloc FTAs...

"The US also seeks an FTA with Uruguay although this is not possible
because Mercosur bylaws ban country-members from making such
bilateral arrangements.

"The agreement will ensure tax-free access for Peruvian goods to US
markets... Peru expects this access will pave the way for a better
climate for foreign investment... For the US, the deal will
eliminate tariffs on 80% of US exports to Peru and more than
two-thirds of agricultural exports. Remaining tariffs will be
removed within 10 to 15 years. Under the deal, Peru will also open
its banks, insurance companies and other services to US
corporations."

To see more Buenos Aires reporting, visit our
classified website at:
http://www.state.sqov.gov/p/wha/buenosaires

KELLY

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