Obama's Latin America Envoy Gets An Earful In Argentina

Date : 12/18/2009 @ 5:31PM
Source : Dow Jones News

Obama's Latin America Envoy Gets An Earful In Argentina

President Barack Obama's senior Latin America diplomat came to Argentina this week determined to listen, and left with an earful.

"I want to stress again that the purpose of my trip is not to go down with a series of specific issues that I want to explore," Arturo Valenzuela, assistant secretary of state for Western Hemisphere affairs, said before leaving Washington for a trip which also included Brazil, Uruguay and Paraguay. "I want to listen."

Talking to local press in Buenos Aires as his trip was wrapping up Wednesday, Valenzuela relayed some criticism he'd heard from the representatives of U.S. companies about the local investment climate. That triggered a ferocious response from the Argentine government that has been front-page news for the last two days.

The episode highlights the difficulty of diplomacy in a region where attitudes toward the U.S. can often be ambivalent, particularly among the more populist administrations, including Argentina's.

On the one hand, they blame the U.S. for many of the region's historical woes and most recently for triggering the global financial crisis. On the other hand, after frosty relations with former President George W. Bush, many are trying to figure out how best to handle their relationship with Obama, who's often viewed more favorably in local opinion polls.

Valenzuela's meetings earlier this week with a number of senior government officials went off without a hitch, as did discussions with opposition leaders. It was during a session with local representatives of U.S. companies that Chilean-born Valenzuela, who held the same job as the top Latin America diplomat for President Bill Clinton, said there was a different tone.

"I noticed a change: In 1996 there was much more enthusiasm and intentions to invest; today I heard concerns about legal insecurity and concerns about economic management; unless there are changes, the expected investments can't be carried out," he told local press on Wednesday.

In many respects, that's unsurprising. Argentina was booming in 1996, and private-sector investors piled into privatizations as the government withdrew from large parts of the economy. Yet pressures were already starting to build, particularly with regard to the heavy debt load. In 2001, the country's economy collapsed, leading to the largest debt default in history.

A remarkable recovery followed, helped along by massive government subsidies and a windfall from international commodities, mainly agricultural, which are a major source of revenue for Argentina. Until the global crisis broke, stellar economic growth eclipsed most figures from the 1990s.

Yet private-sector investments have lagged, and many companies have pointed to fears about the expanding role of the government and the autocratic nature of decision-making. The government has leaned heavily on companies in a number of industries through price controls and imposed punitive export quotas and tariffs to guarantee domestic supplies.

The government, however, disagreed, accusing the U.S. official of interfering in Argentina's internal affairs.

"Valenzuela has enormous preconceptions about our country and that isn't good," said Anibal Fernandez, cabinet chief to President Cristina Fernandez, who bears no relation. "There is no legal insecurity in this country."

Fernandez had met with Valenzuela, and he said the two had a "a very good discussion" about issues such as terrorism and narcotics trafficking. Fernandez said questions about Argentina's regulatory framework weren't raised.

"Recently I met with the chamber of companies from the United States and they only brought routine things to my attention," Fernandez said. The AmCham declined comment for this article.

Other Argentine officials joined in, including the former president and husband of the incumbent, Nestor Kirchner, Interior Minister Florencio Randazzo and the Argentine ambassador in Washington, Hector Timerman.

Some Argentine commentators were mystified by the government's harsh reaction to the words which, compared with the bitter barbs often thrown around locally, were relatively innocuous.

Valenzuela's appointment provides a "great opportunity" for the Argentine government to improve its dialogue with the White House, said Rosendo Fraga, a political commentator, in a column in the La Nacion newspaper. That was wasted, and "it's not clear why," he said.

-By Matthew Cowley, Dow Jones Newswires; +54 11 4103 6740; matthew.cowley@dowjones.com

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