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### Viewing cable 06BUENOSAIRES677, CONVERSATION WITH CARLOS ZANNINI

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06BUENOSAIRES677 | 2006-03-22 18:06 | 2011-03-27 00:12 | CONFIDENTIAL | Embassy Buenos Aires
Appears in these articles: http://www.lanacion.com.ar/1360704-de-vido-eje-de-las-sospechas-de-eeuu

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    VZCZCXYZ0000
    RR RUEHWEB

    DE RUEHBU #0677/01 0811835
    ZNY CCCCC ZZH
    R 221835Z MAR 06
    FM AMEMBASSY BUENOS AIRES
    TO RUEHC/SECSTATE WASHDC 3916
    INFO RUEHAC/AMEMBASSY ASUNCION 5433
    RUEHBR/AMEMBASSY BRASILIA 5229
    RUEHLP/AMEMBASSY LA PAZ MAR MONTEVIDEO 5427
    RUEHSG/AMEMBASSY SANTIAGO 5036
    RHEHNSC/NSC WASHDC
    RUEAIIA/CIA WASHDC
    RUEATRS/DEPT OF TREASURY WASHDC

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    C O N F I D E N T I A L BUENOS AIRES 000677

    SIPDIS

    SIPDIS

    E.O. 12958: DECL: 03/23/2016
    TAGS: PREL PGOV ECON PTER AR
    SUBJECT: CONVERSATION WITH CARLOS ZANNINI

    REF: A. 05 BUENOS AIRES 141

         ¶B. BUENOS AIRES 625

    Classified By: CDA Hugo Llorens for Reasons 1.4 (b) and (d).

    ¶1.  (C) Summary:  DCM, accompanied by PolCouns, met on March

    20 with Carlos Zannini, the Secretary for Legal and Technical

    Affairs in the Casa Rosada.  This was our first face to face

    meeting with Zannini since last November's Summit of the

    Americas.  Zannini is widely considered to be the

    intellectual force within President Nestor Kirchner's inner

    circle (see Reftel A for biographic information).  With the

    departure of heavyweights such as former Economy Minister

    Roberto Lavagna and Foreign Minister Rafael Bielsa and the

    recent resignation of Santa Cruz governor Sergio Acevedo,

    Zannini is probably second only to Planning Minister Julio De

    Vido in shaping political and economic strategy within the

    government.  End Summary.

    ¶2.  (C) Zannini opened the conversation with a defense of

    government economic policy.  He pointed to the reductions in

    unemployment and poverty rates and the increase in the

    investment rate to 26 percent of GDP as vindication of the

    GoA's policies.  Asked about inflation concerns and what he

    considered were tolerable levels of inflation, Zannini

    responded the government's goal was to keep the inflation

    rate to 10 percent.  He defended the use of price controls

    and the recent decision to ban the export of beef products

    for 180 days as legitimate and effective measures to control

    inflation.  He justified these measures by claiming that

    markets didn't work freely in Argentina and that ""cartels""

    in, for instance, the meat industry manipulated supply and

    demand to affect prices.  The DCM noted that while price

    controls may well reduce sector prices in the short term,

    continued prudent fiscal and monetary policies were still

    required to prevent a sustained inflation spillover as money

    supply increased.

    ¶3.  (C) Turning to politics, Zannini claimed the abrupt

    resignation (Reftel B) of Santa Cruz governor Acevedo had

    come as a ""complete surprise"" to the Casa Rosada.  He

    acknowledged that Acevedo's ""style"" of handling difficult

    issues was perhaps not what Kirchner would have preferred and

    that mistakes had clearly been made in the labor dispute in

    Las Heras during which a policeman was killed.  But he denied

    accusations that Kirchner had forced the resignation of his

    former vice governor and confidant and even expressed a

    certain amount of disgust that Acevedo had not given the Casa

    Rosada advance notice of his intentions.  Comment:  The

    timing of Acevedo's resignation may well have taken the Casa

    Rosada by surprise.  But the open and well-documented

    interference in provincial affairs by Kirchner insiders such

    as De Vido and Alicia Kirchner, particularly in the

    appropriation of public works monies, had clearly put Acevedo

    in an untenable position.  End Comment.

    ¶4.  (C) Moving to presidential politics, Zannini claimed

    Kirchner was still undecided about his intentions for 2007.

    He said Kirchner was very much aware that there were ""no

    popular two-term ex-presidents in Argentina"" and that he was

    more concerned with ensuring that the political agenda he had

    begun was continued beyond 2007 than he was in seeking

    reelection.  He said Kirchner was willing to ""walk away"" in

    2007 if he felt that was the best way to preserve his legacy

    and policies.  That said, Zannini said Kirchner would easily

    win reelection should he decide to run and acknowledged there

    was a certain amount of political advantage to be gained from

    delaying any official announcement.

    ¶5.  (C) Finally, the DCM took the opportunity to seek

    Zannini's support in pushing for legislation in the Argentine

    Congress to combat money laundering and terrorism financing.

    The legislation, which is required for the implementation of

    the Inter-American Convention Against Terrorism and the UN

    Convention on the Suppression of the Financing of Terrorism,

    has been stalled in the Congress since last year.  Zannini,

    who was well versed on the subject, expressed his support for

    the measures and his confidence that the appropriate

    legislation would be passed and enacted this year.

    ¶6.  (C) Comment:  With the resignations of Cabinet

    heavyweights such as former Economy Minister Lavagna and

    Foreign Minister Bielsa who were both willing to disagree

    with Kirchner, Zannini has become the principal intellectual

    force in the President's shrinking circle of close advisors.

    In terms of overall power to influence both economic and

    political policy, Zannini currently is probably second to

    none.  End Comment.

    ¶7.  (U) Reftels available at

    http://www.state.sgov.gov/p/wha/buenosaires.< /a>

    LLORENS

    =======================CABLE ENDS============================

    "

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