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