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S E C R E T SECTION 01 OF 03 SANTIAGO 000324

SIPDIS

E.O. 12958: DECL: 04/03/2019
TAGS: OVIP BIDEN JOSEPH PREL ECON PGOV SOCI UK PK
AF
SUBJECT: VICE PRESIDENT BIDEN'S MARCH 27 MEETING WITH
BRITISH PRIME MINISTER GORDON BROWN

SANTIAGO 00000324  001.2 OF 003

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

¶1.  (U) March 28, 2009; 8:30 am; 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
Brian Harris (notetaker), Political/Economic
Officer, U.S. Embassy Guatemala City

United Kingdom
Gordon Brown, Prime Minister
Thomas Fletcher, Private Secretary to the Prime
Minister
Stuart Wood, Special Advisor to the Prime Minister
Douglas Alexander, Secretary of State for
International Development

¶3.  (C) Summary:  During a bilateral meeting on the margins
of the Progressive Governance Leaders Summit in Chile, Vice
President Joseph Biden and British Prime Minister Gordon
Brown discussed the economic crisis in terms of the upcoming
G-20 Summit and Afghanistan and Pakistan.  On economic
issues, Brown pressed Vice President Biden to push the
Germans to move forward with $250 billion in special drawing
rights (SDRs) for the IMF, to use IMF gold sales to support
poorest countries and to take the initiative to restart
sectoral negotiations related to Doha.  On Pakistan and
Afghanistan, Vice President Biden noted our increased troop
commitment to Afghanistan and the need to lower expectations
as to what is achievable in Afghanistan given enormous
governance issues.  End Summary.

-------------------------
TRADE AND ECONOMIC ISSUES
-------------------------

¶4.  (C) PM Brown opened the meeting by thanking Vice
President Biden for recent statement on revising the
supervisory structure for the G-20.

¶5.  (C) Vice President Biden asked whether capital flight
from developing countries would be high on the G-20 agenda
and noted that Argentinean President Fernandez has requested
additional assistance without the usual IMF conditionality.
Brown responded that he was worried about capital flight,
particularly in Eastern Europe.  The current financial crisis
will test whether Eastern European nations have developed
sufficiently strong institutions since the fall of communism
to withstand the downturn politically and socially as well as
economically.  It is a test of whether freedom can be
successfully combined with economic stability.  IMF
conditionality has long been an area of contention for Latin
America and it is not surprising that Argentina would ask for
preventative funds without conditions.

------------------------------
BROWN PRESSES ON IMF AND TRADE
------------------------------

¶6.  (C) Prime Minister Brown delivered several requests on
economic issues to Vice President Biden.  The first was the
need to secure financing for an additional $250 billion in
Special Drawing Rights (SDRs) for the IMF to help vulnerable
economies withstand the economic downturn.  Brown commented
that his understanding was this was an amount that the
administration could support without the need to consult
Congress.  U.S. support on the issue would be particularly
helpful with the Germans who, as yet, do not support
additional SDRs.  Parallel discussions were going on with
China, Japan, Saudi Arabia, and several other Gulf nations to
secure $400 billion in additional financing.  Rapid approval
of the IMF portion would help catalyze these parallel
negotiations.

¶7.  (C) PM Brown also noted that the IMF was being forced to
sell gold to raise funds to pay its administrative staff.
There had been far fewer loan programs this decade than in
the 1990s.  The result was reduced revenue from countries
repaying loans and a consequent budget shortfall.  There is a

SANTIAGO 00000324  002.2 OF 003

pending sale of $11 billion in IMF gold that should be used
to help the poorest countries rather than pay IMF staff.  The
U.S. position had been that interest from gold reserves could
be devoted to IMF programs, but that capital sales should
not.  PM Brown asked Vice President Biden to reconsider this
position.

¶8.  (C) PM Brown said successfully concluding the Doha round
would be difficult but the Obama administration should agree
to deal with environmental and labor commitments outside the
formal trading framework in relevant institutions such as the
ILO.  Brown suggested that if the United States allowed
resumption of the next round of sectoral discussions, it
would create momentum for the rest of the world, including
India, to re-engage in the discussions.  Opening new sectoral
discussions on Doha would garner the Administration
international support without needing to make difficult
political compromises or commitments for the time being.

¶9.  (C) UK Secretary of State for International Development
Douglas Alexander said it was important to find a way to move
forward on the Doha Agreement.  Trade discussions are like
riding a bike, i.e., you have to keep moving forward or you
fall down.  If we do not proactively move forward and
eventually come to a successful conclusion to the Doha round,
the United States could be blamed in some quarters.  The Doha
round was meant to be the &development8 round of
negotiations with significant aid from donor nations
contingent upon the agreement's successful conclusion.  If it
did not pass, some governments that stand to lose aid, such
as Brazil, would likely blame the United States.

¶10.  (C) Vice President Biden did not commit on any of these
issues but noted that labor interests in the United States
were not satisfied and were looking to the Administration to
establish its labor &bona fides.8  In a year, he said,
movement on economic and trade issues would either be easier
or impossible depending on the direction of the world
economy.

--------------------
AFGHANISTAN/PAKISTAN
--------------------

¶11.  (C) Turning to Afghanistan and Pakistan, Vice President
Biden described the importance of combating terrorism and
noted the different elements of the Obama administration's
policy.  First, the focus in Afghanistan is on Al Qaida.  The
Obama administration will not make an open-ended commitment
to building freedom and democracy in Afghanistan because it
is not realistic.  Second, there is no real possibility of
defeating Al Qaida without also dealing with Pakistan.
Third, he recognized that the United States cannot solve the
problem on its own.  The whole world needed to engage.

¶12.  (C) Vice President Biden said he worried that NATO
countries in Europe underestimated the threat from the region
and viewed the problem as an economic development issue
rather than a security issue, despite the fact that Afghan
opium is primarily exported to Europe and Europe has been the
victim of several terrorist attacks originating from the
region.  Vice President Biden described the complex nature of
the security problem in Afghanistan, commenting that
&besides the demography, geography and history of the
region, we have a lot going for us.8

¶13.  (C) Vice President Biden noted that the current U.S.
commitment of 63,000 troops to Afghanistan is the result of a
vigorous internal policy debate and would not be sustainable
politically for more than two years without visible signs of
progress.  After two years, the extraordinary cost of
maintaining a robust military presence in Afghanistan would
make additional commitment increasingly difficult.  After
Afghan elections the Administration intends to review the
situation again.  Currently there is little capacity for the
Afghan government to execute many of the functions of
government.  In many areas of the country, local officials
have close to no knowledge of how to govern or even basic
knowledge of payroll or budget.  Part of the reason the
Taliban is strengthening is since the Taliban has the local
capacity to settle basic disputes quickly while central
government courts can take six to eight months to process a
case.

¶14.  (C) The idea of a strong rule of law under a centralized

SANTIAGO 00000324  003.2 OF 003

Karzai government was not realistic.  New policy towards the
Taliban should reflect the reality of the Afghan government's
lack of capacity.  Our policy should first aim to stabilize
the urban areas and surrounding rural communities and then
seek to exploit divisions within the Taliban, co-opting
moderate elements rather than simply defeating militarily all
elements of the Taliban.

¶15.  (C) On Pakistan, Vice President Biden commented that it
was difficult to convince Pakistan to commit to developing
its counter-insurgency potential.  The threat from India
leads Pakistan to devote the bulk of its defense spending to
conventional warfare capabilities.  However, something must
be done in the meantime.  We need to develop our relationship
with Pakistan beyond its current transactional nature to a
long-term strategic partnership.  We should begin with $1.5
billion per year in economic assistance that is unconditional
and supplement that with military assistance that is
conditioned on the modernization of its command structure and
active action in the field to combat insurgents.  It would be
difficult to convince Congress to support such a plan,
particularly the unconditional civilian component.

¶16.  (C) Vice President Biden noted that the United States
wants to empower the UN and wants active European
participation in resolving the threats in Pakistan and
Afghanistan.  With the exception of the UK and a few others,
very few Europeans are taking action.  Germany completely
dropped the ball on police training but NATO countries should
continue to provide assistance that is within their capacity
to deliver.

¶17.  (C) Brown agreed that there was a significant terrorist
threat emanating from the region.  More than 30,000
Pakistanis travel back and forth to the UK each year and
two-thirds of the terrorist threats that UK security forces
investigate originate in Pakistan -- including one on-going
investigation.  The roots of terrorism in Pakistan are
complicated and go beyond the madrasas to, in some areas, a
complete societal incitement to militancy.  Zedari's
commitment to combating terrorism is unclear, although he
always says the right things.

¶18.  (C) Brown agreed on the need for a shared commitment and
noted that the only way to reduce the threat and eventually
draw down NATO's commitment to the region was by increasing
the capacity of Afghanistani and Pakistani security services.
Dividing the Taliban would greatly reduce its effectiveness,
though doing this made the Iraq problem look easy by
comparison.

¶19.  (S) Vice President Biden commented that Zedari had told
him two months ago that ISI director &Kiyani will take me
out.8  Brown thought this unlikely and said that Kiyani did
not want to be another Musharraf, rather he would give
civilian leadership scope to function.  However, he was wary
of the Sharif brothers and Zedari.

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