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Cablegate: Argentine Chief Cabinet Minister Meets Codel Meeks

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #1763/01 3651751
ZNR UUUUU ZZH
R 301751Z DEC 08 ZDK
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 2800
INFO RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001763

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL OREP ECON AR
SUBJECT: ARGENTINE CHIEF CABINET MINISTER MEETS CODEL MEEKS

REF: BUENOS AIRES 1680

1. (SBU) Summary and introduction: Argentine Cabinet Chief Minister
Sergio Massa received in his office at Casa Rosada presidential
palace Rep. Gregory Meeks (D-NY), Rep. Ruben Hinojosa (D-TX), and
Rep. Paul Ryan (R-WI) December 17. The codel conveyed a strong U.S.
desire for dialogue and strengthening bilateral relations. Massa
agreed with the codel on the need for international cooperation in
addressing the global financial crisis, and he said the GOA had
great expectations for the incoming administration of
President-elect Obama. Rep. Meeks concluded the meeting with an
appeal for the GOA to reach a satisfactory settlement with Met Life
and New York Life to compensate them for the business they lost when
the GOA confiscated private pension (AFJP) accounts. The
Ambassador, DCM and polcouns (notetaker) accompanied the codel. End
summary.

2. (SBU) After the Ambassador introduced the codel, Massa apologized
for his delay in starting the meeting, noting that with President
Cristina Fernandez de Kirchner (CFK) out of the country, he had to
deal with a lot of pressing issues. Rep. Meeks invited Massa to go
with him to the codel's following event, lunch with the AmCham.
Massa said he enjoys good relations with AmCham president Juan
Bruchou but would have to stay in the office. Meeks said the lunch
invitation remained pending, in Buenos Aires or Washington.

Global Financial Crisis
-----------------------

3. (SBU) Massa requested codel's views on the global financial
crisis. Meeks noted the dimensions of the crisis and the tough
challenges it presented. He said the U.S. Congress was doing
everything it could to stem the tide, employing every stopgap
measure available, including the $700 billion rescue package. He
expressed his belief that President Bush would use at least $10
billion of that to help the automobile industry. Meeks pointed out
the bipartisan nature of the codel, stressing that leaders of both
parties in Washington were looking to work with other countries like
Argentina since the impact of the crisis was global. The crisis was
a tremendous challenge, but together we could turn it into an
opportunity.

4. (SBU) Rep. Hinojosa noted congressional desire to help the
outgoing and incoming administrations head off growing unemployment
when major employers were laying off thousands of workers. He
stressed congressional support for extraordinary measures, such as
the stimulus package, to get the economy back on track and generate
jobs.

U.S. Economy the Global Tractor
-------------------------------

5. (SBU) Massa said that, from his perspective, it looked like many
good initiatives were underway in the United States, which was a
relief, because the ""U.S. economy is the tractor for the global
economy."" He criticized the speculative bubbles that preceded the
crisis, and he worried that U.S. leaders were bumping up against the
false dilemma of having to ""choose between Wall Street and Main
Street,"" but then he hastened to add that he considered the rescue
of the financial sector to be essential for the recovery of the
""real"" economy. He also thought the President-elect and his team
were doing a good job of tempering public expectations in advance of
the inauguration.

6. (SBU) Rep. Ryan noted that among the many tools being deployed to
address the crisis, careful attention was being paid to monetary
policy, which previously had sought to contain inflation but now
needed to target potential deflation. He called ""historic"" the
Federal Reserve's decision the previous day to lower interest rates
to near zero. Ultimately, the important thing was to fix the
financial system by requiring greater transparency and to keep
speculation from spinning out of control. He noted the most
optimistic projection for the duration of the present recession was
18 months.

A Short Recession?
------------------

7. (SBU) Massa disagreed, said he expected the recession to be
shorter, explaining his belief that the lightning speed of modern
communications (compared to the pace of information in the 1930s)
would accelerate the recovery. Rep. Ryan recalled that Federal
Reserve Chairman Bernanke was one of the most prominent scholars of
the Great Depression in the 1930s, and that two lessons he had drawn
from Bernanke's academic work were the negative consequences in this
type of crisis of taking liquidity out of the system and of enacting
protectionist measures.

8. (SBU) Rep. Hinojosa warned against assuming the recession might
last only 6-12 months. He acknowledged there were many differences
between circumstances on the eve of 2009 and those that existed in
the 1930s, starting with the size of the U.S. population and
economy. He expressed concern for the credit crunch, noting how
difficult it was to get money churning in the economy. Rep.
Hinojosa assured Massa the United States would not build a wall of
protectionism, and that, convinced that trade could be mutually
beneficial, we were looking to trade with others like Argentina. He
also spoke, as Chairman of the Subcommittee on Higher Education, of
his interest in expanding opportunities for educational exchanges
between the two countries.

9. (SBU) Rep. Meeks said the United States and Argentina enjoyed
good relations, but we could always make them better. ""You've been
our ally,"" he said, stressing his appreciation for ongoing bilateral
cooperation in areas such as narcotics interdiction and
counter-terrorism. He said he hoped there would be greater dialogue
because, in recognition of Argentina's leadership role in the
region, we wanted to work with the GOA to strengthen the region.
President-elect Obama will seek the GOA's opinion and cooperation.
He recalled that Senator Hillary Rodham Clinton, the designated
Secretary of State, had visited Argentina ""and she will be back.""
Argentina is key to a peaceful, stable, and prosperous region.

10. (SBU) In stressing the importance of building parliamentary ties
between Argentina and the United States, Rep. Meeks noted, as
evidence of U.S. congressional desire for dialogue, the
establishment of a caucus of House members focused on OAS member
states, an Argentina caucus, and a Dialogue Caucus.

11. (SBU) Massa welcomed a change in paradigm for U.S. engagement
with the region and the world. He noted there had been some ""ups
and downs"" in the bilateral relationship over the previous four
years, but there were great expectations for improving relations
with Washington's new incoming administration. He hastened to say
this was not a criticism of the current administration but simply
the result of President-elect Obama's much-appreciated gesture of
calling CFK. The new year would be tough, but CFK was looking
forward to seeing President Obama at the Summit of the Americas in
Trinidad and Tobago in April. Cultural and educational ties were
important, but the GOA considered trade and investment to be key to
generating jobs. He added CFK's belief that there should be no
double standard on UN obligations; all nations must obey UN
resolutions. (Comment: Massa was previewing with the codel a theme
that CFK would touch upon publicly later in the day. Media quoted
CFK making a similar point, claiming the UK had been ignoring UN
calls for Argentina and the UK to negotiate on the
Malvinas/Falklands.)

U.S. interests in nationalization of private pensions
--------------------------------------------- --------

12. (SBU) Rep. Meeks said he hoped the GOA would be able to work out
satisfactory compensation to MetLife and New York Life for the
business they lost when the GOA nationalized the country's private
pension funds (reftel). He said it was important to address the
issue in a manner that would send a positive message to investors,
who were always looking to invest where the rules are clear and
contracts are enforced. Rep. Meeks said U.S. legislators were
""lying low for now,"" hoping an amicable settlement could be reached
without congressional intervention. Massa said the nationalization
of the private pension system had been poorly explained in the
press. He remarked on the problems of providing pension coverage in
a labor market where 40% of workers were ""informal,"" or off the
books, and unemployment was as high as 25% only a few years ago. He
noted that the private pension funds' commissions were as high as
30% of contributions, yet the conventional wisdom was that the state
remained the ultimate guarantor for workers at retirement. With the
incorporation of the private pension systems' assets into the public
retirement system, ""we now all have defined retirement benefits plus
the possibility of a complementary 401(k)-type system.""

13. (U) The codel did not have the opportunity to clear this
report.

WAYNE

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