Cablegate: Argentina: Japanese Ambassador Expresses Concern

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DE RUEHBU #1006/01 2051526
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P 231526Z JUL 08

FM AMEMBASSY BUENOS AIRES
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UNCLAS BUENOS AIRES 001006

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN PGOV EAGR AR JA
SUBJECT: ARGENTINA: JAPANESE AMBASSADOR EXPRESSES CONCERN
OVER ARGENTINA'S PARIS CLUB DEBT

REF: BUENOS AIRES 0976

1. (SBU) Summary: In an early July meeting among embassy
teams, Japanese Ambassador to Argentina, Hitohiro Ishida,
stressed the importance of Paris Club solidarity in dealing
with Argentina's outstanding Paris Club debt and emphasized
the need to send a strong message to the GOA to develop a
repayment schedule soon. Ambassador Wayne noted that
President Cristina Fernandez de Kirchner (CFK) was not yet
prepared to discuss the topic. Ishida expressed concern with
CFK's unilateral and zero-sum approach to politics, one that
does not consult with interested parties prior to launching
initiatives. He noted that, despite the political damage
done by the agricultural conflict, the Kirchners appear
firmly in control and opposition parties remain weak. In
closing, Ambassador Ishida reaffirmed the close relationship
between Japan and the United States and suggested that the
two Embassies meet on a regular basis to discuss common
interests. End summary.

2. (SBU) On July 7, Ambassador Wayne met with Ambassador
Hitohiro Ishida and discussed Argentina's outstanding Paris
Club debt as well as the current political climate given the
GOA's protracted conflict with the agricultural sector.
Ambassador Hitohiro was accompanied by DCM Masaru Watanabe,
Political officer Satoshi Hishiyama, Economic Counselor
Tomomi Yamazaki, and Economic Officer Ryu Murasawa.
Ambassador Wayne was accompanied by DCM, Econcouns, Polcouns
and Polintern.

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Concern over Outstanding Paris Club Debt
----------------------------------------

3. (SBU) Ambassador Ishida outlined Japan,s primary
interests in Argentina, which included: 1) protecting
Japanese investment; 2) developing and implementing green
technologies; and 3) urging the GOA to pay off its
outstanding debt to the Paris Club. Ambassador Ishida asked
Ambassador Wayne several times whether A/S Shannon would
raise Argentina's outstanding Paris Club debt during his
bilateral consultations July 10-11. He expressed great
concern over the GOA's inaction in addressing its Paris Club
debt and noted that Japanese companies are hesitant to invest
further in Argentina as a result of the GOA's delay in
resolving the issue. Ambassador Wayne indicated that the
Paris Club debt was not on A/S Shannon,s agenda because
Cristina Fernandez de Kirchner (CFK) was not yet prepared to
discuss the topic. Ambassador Ishida underscored the
importance of Paris Club solidarity and emphasized the need
to send a strong message to the GOA that it should develop a
repayment schedule soon. The costs to the GoA of financing
its Paris Club repayment are increasing in line with
Argentina's growing country risk premium and Ishida wondered
whether the GOA fully appreciates the potential costs
involved. Argentine media coverage of Paris Club debt
routinely referred to the GoA's Paris Club obligations in the
$6 billion range, while the true amount is closer to $8
billion, he said. Ambassador Wayne said the U.S. agrees on
the importance of Paris Club Solidarity and shared
frustration that Argentina had not been able to put forward a
serious offer for dealing with the debt.

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Kirchners in Control Despite Unilateral Approach to Governance
--------------------------------------------- ------

4. (SBU) Ambassador Ishida observed that he had arrived in
Argentina on March 10, the day before the GOA,s ill-fated

announcement of Resolution 125 and its sliding scale of
levies on agricultural exports. His tenure in Argentina had
been dominated by the GOA's protracted conflict with the
agricultural sector (Ref A). He criticized the process by
which the GOA arrived at its export tax regime, regarding it
as a unilateral measure imposed without the consultation of
Argentina's interested parties. The Kirchners' zero-sum
attitude, he said, favors only those who follow their
political lead. He also criticized the administration's
failure to tackle growing inflationary pressures.

5. (U) Ambassador Ishida offered his views on Argentina's
political parties, noting that the opposition remains weak,
but that the conflict has exposed fissures within the
Kirchners' "transversal alliance" and particularly in the
Kirchners, Peronist Party (PJ) and the Kirchner-allied
Victory Front (FPV). Elements within the parties are
beginning to distance themselves from the Kirchners, he said,
though they are doing so very carefully, waiting to see what
happens as political developments unfold. The Kirchners,
however, appear to be firmly in control of the reins of
government. He predicted that the Kirchners should be able
to maintain a majority in the Senate in the 2009 legislative
elections. He expresseddoubts, however, that they could
maintain a majority in the entire Congress next year. DCM
Kelly, Political Counselor Featherstone, and Economic
Counselor Climan shared U.S. Embassy perspectives on all of
these issues.

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Strengthening U.S. - Japan Ties in Argentina
--------------------------------------------

6. (U) In closing, Ambassador Ishida noted the importance of
relations between Japan and the United States and emphasized
that allies such as our need to maintain close relationships,
even when outside of our respective countries. He recognized
the U.S. Embassy,s breadth of resources when compared to
Japan's much smaller mission, and expressed an interest in
meeting with the Ambassador at least once a year to discuss
common interests. He suggested that each Embassy,s
counselors meet with greater frequency. Ambassador Wayne
agreed that the U.S.-Japanese bilateral relationship is
important and agreed to maintain close
contact.

WAYNE

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