VICE PRESIDENT BIDEN'S MARCH 27 MEETING WITH ARGENTINE PRESIDENT CRISTINA FERNANDEZ DE KIRCHNER

C O N F I D E N T I A L SECTION 01 OF 02 SANTIAGO 000312

SIPDIS

E.O. 12958: DECL: 04/02/2019
TAGS: OVIP BIDEN JOSEPH PREL ECON PGOV SOCI ETRD AR
SUBJECT: VICE PRESIDENT BIDEN'S MARCH 27 MEETING WITH
ARGENTINE PRESIDENT CRISTINA FERNANDEZ DE KIRCHNER

Classified By: Ambassador Paul Simons for reasons 1.4 (b/d).


1. (U) March 27, 2009; 7:15 pm ) 7:55 pm; Vina del Mar,
Chile.


2. (U) Participants:

U.S.
Joseph Biden, Vice President
Antony Blinken, National Security Advisor to the
Vice President
Brian McKeon, Deputy National Security Advisor to
the Vice President
Dan Restrepo, Senior Director, Western Hemisphere
Affairs, National Security Council
Craig Kelly, Principal Deputy Assistant Secretary
of State for Western Hemisphere Affairs, U.S.
Dept. of State
Jennifer Spande (notetaker),Senior Political
Officer, U.S. Embassy Santiago

ARGENTINA
Cristina Fernandez de Kirchner, President
Jorge Taiana, Foreign Minister
Hector Timerman, Argentine Ambassador to the U.S.
Carlos Zannini, Legal and Technical Secretary


3. (C) Summary: During a cordial and relaxed meeting on the
margins of the Progressive Governance Leaders Summit in
Chile, Vice President Biden and Argentine President Kirchner
agreed that the current economic crisis presents an
opportunity to promote equitable economic growth and address
structural issues about new financial instruments and
practices. Kirchner signaled the "second chance" the U.S.
and Latin America have to build a strong relationship under
the Obama administration, called for specific economic
policies and tools to emerge from G20 and Summit of the
Americas meetings, and spoke repeatedly about Argentina's
struggles with capital flight. End Summary.

-------------- --------------
Kirchner: Obama Administration A Second Chance to Establish
Strong U.S.-Latin America Relations
-------------- --------------


4. (C) President Fernandez de Kirchner opened the meeting by
describing the upcoming Summit of the Americas as Obama's
"christening" in Latin America. With the election of
President Obama and his very positive image, both the United
States and Latin America have a "second chance" to establish
strong relations, she said. Under the previous
administration, Latin Americans felt that they were treated
as distant and unimportant, and were frustrated by U.S.
policies that did not meet their needs or desires.

-------------- --------------
Kirchner: G20 and Summit Must Lead to Specific Commitments
and Tools
-------------- --------------


5. (C) Kirchner emphasized that it would be critical to
fulfill the high expectations that Latin Americans hold for
the Summit of the Americas. The Summit must lead to
well-defined policies and tools to deal with the financial
crisis. If the world does not believe that the Summit has
left strong and effective policy instruments in place to deal
with the crisis, the dashed expectations of the meeting could
be worse than having no meeting at all, she asserted.


6. (C) Ensuring that emerging economies do not suffer the
worst damage from the financial crisis must be a chief goal
of the Summit of the Americas and the G-20 meeting, she
urged. In addition to their efforts to address the banking
crisis, world leaders also need to take steps to stem capital
flight and agree on new infrastructure programs, perhaps
funded by the World Bank or Inter-American Development Bank,
to restore global demand and create jobs.

--------------
Biden: Crisis is an Opportunity to Push for Equitable
Economic Growth
--------------


7. (C) Vice President Biden assured the Argentine leader
that he and President Obama are "painfully aware" of their
responsibility to address the financial crisis.
Policies--including American policies--from the last 8 to 15
years have put the U.S. and the world in a difficult economic
position, and now the U.S. and other leading countries must

SANTIAGO 00000312 002 OF 002


work both to stimulate demand and develop policies to address
new financial structures such as derivatives, extreme
leveraging, and hedge funds. The crisis presents an
opportunity for us to work with international financial
institutions to address structural issues that have not been
addressed for the past 20 years, he noted.


8. (C) While climbing out of the "deep hole" of the economic
crisis, the U.S. and other leaders must also work to lay a
new foundation for sustained and equitable economic growth,
similar to the efforts of the post-World War II generation.
President Obama and the Vice President believe there is a
societal responsibility to ensure that the living standards
of the middle class and those aspiring to be middle class
increase as a result of the government's response to the
economic crisis. Their plan is focused on creating growth
that does not leave some Americans behind.


9. (C) The Vice President described the administration's
stimulus plan as a gamble. He noted that their vision would
increase spending by USD 2 trillion on economic stimulus,
improved credit availability, and neutralizing bad assets,
when they had already inherited a USD 1.2 trillion debt. The
President's USD 3.7 trillion proposed budget focuses on
education, health, environment, and a more transparent and
disciplined approach to budgeting.


10. (C) The Vice President acknowledged that U.S. efforts to
address the crisis and outcomes of these efforts are
connected to the rest of the global economy, and called for a
collaborative approach. "Your success is essential to our
success," he told President Kirchner, and alluded to
Argentine efforts to distribute the benefits of economic
growth. He also assured the President that the Obama
Administration would have a different attitude toward the
Americas than past Administrations.


11. (C) The Vice President acknowledged that capital flight
was a serious issue, noting that its causes went beyond
inadequacies of international financial institutions to the
internal and external political stability in affected
countries.

--------------
Kirchner: Worried about Capital Flight
--------------


12. (C) President Kirchner strongly agreed with the Vice
President's emphasis on economic equality and the need to not
just address the immediate causes of the crisis but to also
tackle broader policy changes. She highlighted her country's
recent economic success: the highest economic growth in its
history over the past 5 1/2 years and a drop in unemployment
from 25 percent in 2003 to 7.3 percent today. The Argentine
dream and the American dream are the same--the ability of
people from humble circumstances to rise to prominence and
responsibility, she said, highlighting her own rise from a
working class background. She also echoed Biden's comments
about the interconnectedness of global economies, noting that
stimulating the U.S. economy was key to the global recovery.


13. (C) While she acknowledged that internal political
factors can play a role in capital flight, she asserted that
the U.S. could play a role in stemming Argentina's capital
flight because the dollar is used as a reserve currency.
Argentina has been a "good student" of global economics in
recent years, implementing a responsible economic policy that
has led to current account, fiscal, and trade surplus. This
warrants special consideration from the U.S. in developing
policies that would affect the movement of capital from
Argentine pesos to U.S. dollars.


14. (C) Biden and Kirchner closed the meeting by agreeing
that avoiding protectionism is critical. They and other
leaders must work together to develop effective solutions to
the crisis and gain full funding for international financial
institutions so as to avoid calls for protectionist policies.


15. (U) The Office of the Vice President cleared this
message.
SIMONS