A Conversation with Cristina Fernández de Kirchner

PRESIDENT CRISTINA FERNANDEZ DE KIRCHNER: (In progress) -- of the fall of the twin towers, 9/11 became a milestone which may well vie with the Berlin Wall, which is something we'll leave up to historians to decide in 50 years time, for them to say which of these two events had the deepest impact.

I would daresay 9/11 was the watershed. And here we all feel a strong, common identity in terms of foreign relations with the U.S., which is the fight against international terrorism.

But while in 2001 the Twin Towers collapsed right at the heart of New York, in the Latin American region, the Argentine Republic was about to collapse -- my own country, a country which had been hailed as a perfect example of the Washington consensus in the field of social affairs. And as a result of the advice of monetarism, the country collapsed in the context of the largest default in memory.

This also meant the beginning of a new phase for the region, not just for Argentina. Looking back now in September 2008, almost ending the first decade of the 21st century, we can see what has happened since 2001. We can see what has happened from this perspective from the U.S., the leading power of the world -- that is definitely beyond all debate -- and we can also see what happened in our region.

In the international arena, ever since the decision for -- or in terms of multilateralism and when we think about the invasion of Afghanistan, as a result of the attacks on 9/11, we can see what happened starting at that point and what happened since then with broken multilateralism. You know, we have seen unilateral decisions which have been heavily criticized not only within the U.N., but have also come under criticism from natural allies of the U.S.

This breaking of multilateralism is, in our view, a decision which has made the world less safe. And we must -- in order to give legitimacy and credibility to the fight against terrorism, we must make sure that decisions are universal and multilateral, acknowledging the United Nations as the appropriate instrument that can blend all of our differences, that can represent us all based on authority, relying not only on might, on the use of force, but on international law.

And why is it so important to reaffirm the concept of international law and of democratic civilization? Because that is right at the heart of the fight against terrorism. If we use similar instruments to those used by terrorism, in other words, not abiding by international law, we may run the risk of might, of sheer force not being enough in this fight that is profoundly cultural and political, a fight which we must wage from the democratic world. And we firmly believe that the basic premise must be respect for international humanitarian law and international law as such. That will give us legitimacy in the face of others.

Now, what has happened in the region in the meantime? Governments began to emerge in which their leaders, the presidents, began to look more and more like their own peoples, like their constituents. If you look at Evo Morales, President Morales, he looks very much like the vast majority of the Bolivian people. If you look at the face of President Lula, the first trade union leader who became president of the leading Latin American economy, well, he also represents Brazil. And we could continue to look at each of the presidents of our region and we would notice the profound change that's been taking place in the region ever since the failure of the neo-liberal experiments in the region, those monetarist policies.

The Argentine Republic -- what about our own country, then? Well, at home, following that formidable disaster of 2001 and from 2003 a slow reconstruction process began which was aimed at paying off that major social debt which had led to unemployment in 2003 reaching 23 percent. Former President Kirchner, who's joining me today, took office with 22 percent of the vote. In Argentina, at the time, the unemployment figures were higher than the percentage of vote he got to become president. It may seem a paradox, but it clearly goes to show what situation our country was in at the time.

Argentina's debt accounted for 160 percent of the country's GDP. Poverty levels and extreme poverty levels exceeded -- well, for poverty were about 54 percent and for extreme poverty the figure was 30 percent. Foreign currency reserves at the Central Bank were under $10 billion.

After five years in office -- after five and a half years in office, our country went from -- if our country continued to have the growth figures we've had during these last five years, we would be having the most substantial growth period in our entire history. Argentina will be marking its 200th anniversary in 2010. And during the first five years, actually, in 2007, we had the largest growth figures in Argentina's last hundred years.

If we continue to have similar figures, during the rest of this year, we could be marking the end or the continuation of the most virtuous circle in our entire history as a country.

Now, what other developments have there been in the region, the region which Argentina has withdrawn from? Because as a result of the currency board system, this convertibility system which was a fiction that led us to believe that the Argentine peso had the same value as the U.S. dollar, there was this idea that a legislative fiction could allow Argentina to become part of the First World in a varied commerce.

As part of this disaster of 2001, following that period, Argentina decided to go back to its own region and to make a strong bet on integration and on Mercosur, the common market of the South. And the country decided to actually feel part of the region.

So how do things now stand? I think for all the difficulties, we can now say that the region is acting, in terms of crisis management and of the handling of its foreign relations, in quite an exceptional manner. Latin America is rebuilding multilateralism, which is not to say that our countries, South American countries or governments are all exactly the same or think exactly the same.

But we can now display a quality which is that despite our differences in our historical experiences, our different policies, political affinities and ideologies, we can pursue a much level approach to serious conflicts, which would have otherwise been impossible to solve. And we can offer appropriate responses in terms of resolution and always abiding by international law.

Let me give you some examples. We had too very serious incidents. One was the incident between Colombia and Ecuador, when the Colombian armed forces entered Ecuadorean territory, chasing a FARC leader and killed this leader.

Well, this is in the public knowledge. We don't need to go into that. But the fact is that the region really started to have serious crisis signs. And again we seemed to be hearing the war drums beating, as had been the case so many other times before, in other situations which had led to conflict, in a region that has always been red hot.

So our countries gathered within the (Rio ?) groups in the Dominican Republic, and in a true exercise of multilateral politics and of conflict management and coordination of positions we were able to put back on track the situation which seemed unsolvable, and we were able to arrive at a solution abiding by international law and with OAS interventions.

And of late, the situation in Bolivia -- which again, in an exercise of multilateralism by UNASUR, all of the presidents of South America except for President Alan Garcia, who sent his foreign minister, since he couldn't attend himself, at an emblematic venue for the region's politics at the Palacio de la Moneda in Santiago de Chile, we were also able to get all the presidents with the different orientations and visions, but with a common vision to achieve peace in the region and to prevent secession in Bolivia. So we were able to somewhat put the conflict on the path towards resolution.

So one major conclusion of the development of events in our region since 2001 is that we have succeeded in building growth as emerging countries. We have been able to improve the quality of life of our constituents and we have been able to build diplomacy. We have been able to enhance multilateralism, so as to help resolve conflict.

Finally, my old country, the Argentine Republic, which is part of the Latin American region and an active member, and which has issues it needs to -- it needed to sort out, which had to do with the default in 2001, which lead to problems for our country. Again, the close affinities, when you think of our common views on the fight against terrorism and the fight against drug trafficking, which unites us with the United States. But the fact remains that since the default of 2001, Argentina had certain problems in its relations with the rest of the world due to the events it had gone through.

And how did we settle the issues of default in Argentina? First, during the year 2004, we proposed a restructuring of the debts, which was accepted by a significant majority of Argentine debtholders and which successfully led up to the restructuring in 2005. After that came the payment, along with the Republic of Brazil, of the debts we had had since 1957 to the International Monetary Fund, a -- qualitatively in a country which had consistently engaged in successive refinancing and in putting off payment of its commitments, and before 2003, always in a framework of constant indebtedness and an administration based on twin deficits of trade and fiscal balance deficit.

The administration which took office in 2003 made debt reduction and twin surplus policies state policies. So we set about thoroughly and painstakingly reducing our debt then, because we knew that this was a very important problem not just because a debtor must pay their debts in all contexts, but essentially because this is also a way to boost your relations based on credibility and trust vis-a-vis the rest of the world.

The third stage began some days ago in the city of Buenos Aires when, as president of the Argentine Republic, I announced that we intended to pay our debt to the Paris Club -- a debt, ladies and gentlemen, which had a cutoff date of December 10th, 1983. Forty-five percent of the Paris Club debt dates back to the (pure ?) triad, to that cut-off date. The first restructuring took place in 1991 and 1992. Well, that was defaulted on along with the rest of the debt in 2001.

Today here I am giving you the fresh news during this visit to the Council on Foreign Relations. Here and now I am very excited and optimistic to tell you that we have received in Buenos Aires a proposal from three very important international banks dealing with two basic matters; the first one, the situation of the holdouts, the bondholders who did not enter the debt swap in 2005.

And these banks have submitted a very interesting proposal to us to deal with this matter, subject to terms which are much more favorable to the Argentine Republic than those of the swap in 2005, which goes to show one first point, the success of the design, which perhaps wasn't quite understood at the time because Argentina had this bad reputation as someone who lied and didn't honor the commitment.

But thanks to this proposal and to our own performance, we feel very optimistic in view of this possible approach, based on three key components. First is this proposal submitted by these three banks on behalf of the holdouts; the bondholders, that is, who didn't agree to the terms of the 2005 debt swap. And the proposal now made is a lot more favorable to Argentina than that of 2005.

And the second part of the proposal made by these three banks relates to the refinancing of PGS (sp), which, you know, is what was negotiated in 2001, the PGR (sp), as we call them in Argentina, the secured loans, which were negotiated by the administration of 2001 in Argentina, which allows refinancing for Argentina for the fiscal years 2009 and 2010.

Now, what do these two essential matters actually mean? Well, first, it has to do with the definitive normalization of Argentina and its relations with the rest of the world. This consists of three steps: First is the proposal submission, the actual proposal made by these three leading banks. The second part is the analysis, which I myself, as head of the executive, will have to perform with the help of my ministers. And the third part is, if we find this proposal feasible and acceptable, our government will have to refer this to the Argentine congress, because as you may know, the government debt law enacted in 2005 requires that the congress of Argentina be consulted and deal with these matters. So this applies to the bondholders who didn't answer the debt swap in 2005.

So we feel optimistic and enthusiastic because we have been able to rebuild a country that had been institutionally, economically and socially almost on the brink of extinction. The images of 2001 in the city of Buenos Aires with people pounding at the doors of banks, with bankers who couldn't even walk down the streets, business people and politicians who couldn't walk out in the street, you know, with Argentine leaders traveling to other countries and getting complaints about the Paris Club or the situation with the (hold outs ?) -- so everyone had something to demand or claim from Argentina, some reason to be cross with our country. And I think if you look at that situation back then and now consider possibility of the successful completion of this proposal, that will definitely be a milestone.

And I think this contributes not only to the welfare of my own country, Argentina, but it also allows us all to review and reconsider dogmas and paradigms which were hailed as gospel truth in the contemporary world. And in light of the events -- not only the policies pursued by Argentina but also what is going on even here, at the heart of the world's economy, in New York, we should all first make a point of what I call intellectual humility.

And secondly, we should understand the need to revise our concepts. A while ago, over lunch, I talked about my perceptions with regard to what's going on in the markets here, again at the heart of world capitalism, in Wall Street. And I was saying that capitalism was designed to earn money but through the production of goods, of services and of knowledge. But money, on its own, won't make money. Money you earn by producing goods, services or knowledge, which may be demanded by societies.

I believe -- and of course, this is an opinion that has a lot to do with my own views as political leader -- I think the distortion of the financial system has been to think that without producing services, goods and knowledge, merely by adopting sophisticated instruments, you could reproduce money. That is not the logic of capitalism. The logic of capitalism is to produce money or rather to earn money by producing goods, services and knowledge demanded by society through technological innovation or other means. But that is the rationale.

And that is the rationale that has made this country, the United States, a great country. And again I said this over lunch, this country was not built on a gambling-based economy. The greatness of this country and its preeminent position in the world -- (audio break) -- what we call financial gambling in Buenos Aires. (Remarks in Spanish) -- is the word in Spanish. That's quite an Argentine word.

This country, even due to its religious beliefs and convictions, always made a point of producing, of creating genuine works and wealth. I think and again I don't want to try to invent a theory here. But you know, it's good to try and take a look at some of the issues that are our concern today.

One of them is the lack of regulation of -- (inaudible) -- financial assistance that developed with no controls literally. And consider this. Central banks around the world exercise strict control over their own operation, well, the Basel rules and so on, what we all know about.

But in parallel, you get to see the emergence of mutual funds that, subject to no regulation or control, enter and exit countries. And I'm not talking only about financial institutions but also certain activities and commodities and energy. And a lot of distortions are created in the basic fundamentals of economics. And we need to consider the importance of energy and food, in the world, and the sort of tragedies that may arise unless we properly deal with this.

So we should agree on common ground in our discussions and our relations. That is, the exercise of multilateralism as one of the pillars to build a safer world. And on the other hand, we need to reconsider and rethink instruments, economic instruments that may allow us to go back to a more real economy, in which work and production again become the central basis to build up wealth.

I don't think we should be frightened or be dramatic. But we should at least rethink and reflect upon these matters. Argentina, and I will be concluding now, so that we can go into our Q&A. Argentina has come a long way since 2001. It has acknowledged its membership in its own region. It has pursued multilateralism.

It has discovered that it can use its own instruments to settle conflicts that seemed impossible to solve and, through a policy of our administration, of its own resources and based on setting its own policies, is now making a point of rebuilding credibility and trust as a country, through debt reduction, thanks to an accumulation of genuine resources and transparent conduct.

I thank you. Have a good afternoon. (Applause.)

MODERATOR: Well, thank you for that thorough, you know, and far-ranging and thoughtful address. Many of the prerogatives of my job -- and ask one or two questions, then we will quickly open it up.

You've come to the United States approximately 45 days, give or take, before an election in this country. If you could advise the next president of the United States, what is it you would want to see in the way of changes or continuity when it comes to U.S. policy towards your part of the world?

KIRCHNER: Well, in terms of -- and please allow me to say I do not intend to meddle with the internal political life of the U.S., particularly only a few days away from your election on November the 4th. But I must confess that I was never this excited to follow both the primaries of the Democrats and Republicans, as well as both conventions. And this is not just because I'm now president of Argentina, but because as a citizen of the world I recognize the importance the new president of the U.S. will have in a world as ours.

What do we actually expect at the universal level from the next U.S. administration? I will say a reconstruction of multilateralism, which is not to do only with our own convictions -- which of course, have a lot to do with it, too. You know, the fact that we believe that you can give more legitimacy to the fight against terrorism or against drug trafficking, a fight which must be waged by all democratic societies, but also we think that the decision to pursue unilateral policies, as was the case with this current administration, that has had an impact on the world and has actually had a negative impact on the interests of the U.S. as a country.

I would dare say, based on the polls one sees, the image of the U.S. around the world has been negatively affected, and this is something we talked about during our luncheon. And politics is about results. You know, there might have been (good ?) intentions, but politics is about results.

MODERATOR: Wouldn't Argentina -- wouldn't Argentina act unilaterally if it felt that its national interests required it?

KIRCHNER: In terms of aggression? You mean a war?

Well, I would dare say respect for international law, observance of international law in order to accept the rules -- (inaudible) -- would prevent us from doing that. In fact, we have made a strong contribution for no country in the region to take such (status ?). Look, if that were may view, I could have justified Ecuador's responding with an aggression to Colombia due to Colombia's invasion of its territory, but my own attitude, the attitude of Argentina, has been at all times to go all the way back to undo that and to prevent the adoption of unilateral measures by Colombia against -- by Ecuador against Colombia, because there were higher interests in the region which had to do precisely with preserving peace.

Preventive action or preventive war is not something we endorse as a measure, and even less so outside the framework of international law. I believe that unilateralism has been bad for the United States. And let me point out the difference between the U.S. invasion of Afghanistan with the consensus of all nations and with the support of all nations, as opposed to the U.S. when dealing with the situation in Iraq, when even some of the allies of the U.S. withdrew their support.

I'm not talking about intentions, only about results. Again, in politics you may have the best intentions, but if the results are not good and you are left in isolation, it means that your policies have perhaps not been the best ones. I try to remain as objective as possible.

So, what do we expect from the U.S. with regard to our own region? Well, first, I would say, a different look and a different presence in a region. In a way, the United States has distanced itself from our region, and we think that there should be a different position and look at South America.

You know, this is something we raised at a meeting of the Americas, I believe in Monterrey. Back then, it was a time when the situation of emerging countries was not yet the one we now get to see in economic or growth terms, and we even talked about the help of the United States. I actually talked to a representative, who is now a senator, a Democrat. He also -- can I mention him or can I say who he was or -- (inaudible). I remember I met with him while he was still a representative; he is now a senator. And I remember he was in favor of setting up a Latin America fund to give assistance to the region with a different, more intensive U.S. presence.

The governments of the region now reflect the nature of their own peoples. Again, as I was saying earlier, presidents have never been so close to their peoples and have never resembled their people as much. So we would like more presence from the U.S. in our region. That's what we would expect from your new president.

MODERATOR: I have a lot more questions, but I will show uncharacteristic restraint and not -- people have raised their hands. Try to keep your questions short.

We'll go to Baldas (sp).

QUESTIONER: Thank you. Baldas (sp) from -- (affiliation inaudible). Madame President, you made a very strong cause for multilateralism. I think many of us here -- (inaudible). I'd be interested in your views about the working U.S.-United Nations -- (inaudible) -- multilateral framework. It seems to be quite broken, oftentimes. (Inaudible.)

MODERATOR: When you get around to Security Council reform, does Argentina believe it deserves a seat on the Security Council?

KIRCHNER: Well, you know, the reform of multilateral organizations, whether multilateral lending agencies or the U.N. itself has been a recurrent topic for Argentina and is something we mention at all U.N. addresses ever since 2003.

I think we need to recreate the core, the heart of the Security Council, primarily because the U.N. -- the Security Council was created in light of the charter of San Francisco in a post-war world in which there was bipolarity. This tension between the U.S. and the Soviet Union, which was the hallmark of the whole second half of the 20th century, right up to the fall of the Berlin Wall, made the Security Council necessary, due to the constant tension in face of the nuclear threats in the world. If someone did something outside this framework, there might be some kind of universal nuclear holocaust.

And that tension, which was always played out within the Security Council with the veto right, enabled more or less acceptable functioning of the body during the second half of the 20th century.

Now, what is the problem? When the Berlin Wall fell and the bipolarity ended, with the U.S. clearly rising above the rest of the world as the leading economic, scientific power, also in terms of its weapons and technology, becoming the absolute number-one world power, that created an imbalance which can no longer be processed within the Security Council, and this is why unilateral policies arise.

You can exercise force unilaterally when there's no other force to counteract and resist you now. This is a principle of physics, but which must also apply to politics. In other words, American unilateralism is a result of its own repositioning as the one and only world power.

But therein lies as well the problem of a possible weakening of someone who is too strong, although this may sound like a contradiction. This is why, in my own view, it is necessary to reengineer the U.N. and essentially the Security Council.

If I were to have a formula as to what the right Security Council would be to guarantee the ballot box, I might be the president of the U.S. and not the other candidates, because that would be finding the way to achieve balance in the 21st century, as was the case with the Security Council to create balance in a highly conflicted world after the Second World War.

But the fact that we need to tackle Security Council reform, that we need to give participation opportunities to the new regional players, is out of the question. We must do that. But we should also bear in mind that this breakage of bipolarity and the emergence of this undisputed power that made the current Security Council no longer as adequate.

Now, knowing that that is a problem doesn't mean that we have a solution. But it is certainly a big step towards finding a solution as part of an open debate and discussion among all countries.

MODERATOR: Yes, ma'am. All the way in the back.

QUESTIONER: Thank you, President Kirchner. Kathy Hicks (sp) with Citizen Rights Watch.

Argentina was recently elected to the U.N. Human Rights Council, a body that's been extremely ineffective at holding human rights abusers to account, in part because of the ability of abusers to say that initiatives are directed from the north. Will Argentina be a voice (of ?) leadership within the council on ongoing crises like those in Georgia, Somalia and Zimbabwe currently?

KIRCHNER: Well, you know that the policy on absolute respect for human rights is one of the basic pillars of our policy and is actually a state policy. Argentina, as you will all know, had one of the most terrible dictatorships in memory, which ended up with 30,000 people disappeared and 500 children who have not yet been found. We have already found 94 children of disappeared persons thanks to the wonderful work of the Mothers of Plaza de Mayo, and tomorrow there will be a ceremony headed by U.N. Secretary General Ban Ki-Moon.

Argentina and another 73 countries have signed the Treaty Against Enforced Disappearances, which, by the way, we have given a strong boost to. We are actually, as you pointed out, on the U.N. Human Rights Council. But only four countries have so far ratified the treaty -- Albania, Argentina, Honduras and Mexico. I think over the next few days, the Republic of France will be ratifying it as well.

But the fact is that Argentina's commitment to respect for human rights is -- it's unlimited and unfaltering. And I think we have made quite a lot of progress.

Last year I had a meeting with Ann Arbour in Geneva -- with Louise Arbour in Geneva. And, you know, when talking about the Initiative of the Right to the Truth, which was adopted in the U.N., something that had been encouraged by our country, other countries that hadn't been able to advance, you know, we actually had laws that -- (new ?) obedience and -- (inaudible) -- laws, which prevented prosecution of those responsible for the genocide.

Actually Mrs. Arbour, the human rights commissioner of the U.N., has acknowledged the key role played by Argentina is the field of human rights by leading to the adoption and creation of instruments such as the Right to the Truth or the Treaty on the Enforced Disappearance of Persons, which at least are instruments to fight for human rights in a world in which human rights are violated on a daily basis.

Our commitment -- and I think here again, we may be an example -- we should always be accountable for our actions, and it is true that until the administration of President Nestor Kirchner, impunity had prevailed in Argentina.

We had some pre-democratic issues, as I like to say, because people who commit crimes may evade justice and punishment, but in Argentina, those who had committed genocide evaded punishment and the law, not because they escaped, but because one of the powers -- the legislative -- had enacted laws that afforded impunity, which, as I always say, took us back to a pre-democratic stage in our society. When the state itself institutes, punishes and legislates for impunity, it's a pre-democratic state, you know. So I think that the progress in the field of human rights made in Argentina, which has been recognized around the world, and these instruments I have referred to and any other actions we may undertake will help us along.

Let me give you some more interesting news. We're working on a worldwide genetic database to work on issues of enforced disappearances, something that we are also going to support at the international level. This is something we think all countries should adopt. And we should take concrete steps every day in this unfaltering fight for the observance of human rights.

Thank you for that question, because it gives a chance to tackle an issue which, to my country and due to its own historical experience and to myself personally and due to my political beliefs, represents a policy of state.

Thank you.

MODERATOR: (Inaudible) -- for one more question. Is there a question on Latin America? I specifically want to make sure that we focus on this part of the world. John? Brief question and hopefully a brief answer, and I apologize for taking a few minutes late, but we started a few minutes late.

QUESTIONER: Thank you. I'm John Brademas, a member of the U.S. Congress -- (inaudible). In 1961, I made a trip to Buenos Aires as a member of Congress to look at the state of universities in Argentina, and I've left with your assistant a copy of the report. Can you comment on the -- I was not a senator, I was a congressman). Can you comment on the state of universities in Argentina today and say anything about the possibility of developing relationships with universities in the United States?

KIRCHNER: In 1961 when you visited, I was still very little, so I can't remember your visit. But Argentine universities have substantially improved, just as all of the educational system has improved through greater financing. That was also one of the achievements of the administration of President Nestor Kirchner.

And actually I had to vote as a senator on the bill on education financing, and for the first time we're going to allocate 6 percent of GDP to education. Of course, our GDP's substantially higher than it was at the time the law was first adopted, and now we can approach the issue of education in Argentina in quite a different way.

Universities now have larger projects. The universities and faculty get more money and better pay. We are developing a scholarship system which is aimed at favoring study choices that we consider essential for Argentina's current production model.

Argentina used to be a country with a very strong bias towards social sciences, while leaving aside hard science, which is essential for technological development. This is why we are developing a very intensive scholarship program for our high school students to be able to pursue studies in fields that Argentina needs for its production model, and this also targets low-income families with support from the government. And we are making a very strong point of this policy.

Besides, one of the economic policies that has most grown in Argentina over the last five years has been in the field of technological software and IT and telecommunications companies. Those are the companies with the largest number of birth rates, and they have grown exponentially.

Why is this so? Because our country stands out in Latin America due to its highly qualified human resources. We are the only Latin American country to have three Nobel Prize winners in scientific fields. You can check other Latin American countries and you may find Nobel Prizes for literature, but not for medicine or biology or what we call the strictly scientific world.

You know, the public, free universal education system since the end of the 19th century and the upward social mobility typical of this very substantial middle class places us in a very interesting position in Latin America in terms of the education of our human resources.

MODERATOR: Well, I want to thank President Cristina Fernandez de Kirchner for getting us off to such an interesting start this week, one of the first women presidents we've ever been able to welcome a the Council on Foreign Relations. So thank you very much. (Applause.)

.STX

 

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THIS IS A RUSH TRANSCRIPT.

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PRESIDENT CRISTINA FERNANDEZ DE KIRCHNER: (In progress) -- of the fall of the twin towers, 9/11 became a milestone which may well vie with the Berlin Wall, which is something we'll leave up to historians to decide in 50 years time, for them to say which of these two events had the deepest impact.

I would daresay 9/11 was the watershed. And here we all feel a strong, common identity in terms of foreign relations with the U.S., which is the fight against international terrorism.

But while in 2001 the Twin Towers collapsed right at the heart of New York, in the Latin American region, the Argentine Republic was about to collapse -- my own country, a country which had been hailed as a perfect example of the Washington consensus in the field of social affairs. And as a result of the advice of monetarism, the country collapsed in the context of the largest default in memory.

This also meant the beginning of a new phase for the region, not just for Argentina. Looking back now in September 2008, almost ending the first decade of the 21st century, we can see what has happened since 2001. We can see what has happened from this perspective from the U.S., the leading power of the world -- that is definitely beyond all debate -- and we can also see what happened in our region.

In the international arena, ever since the decision for -- or in terms of multilateralism and when we think about the invasion of Afghanistan, as a result of the attacks on 9/11, we can see what happened starting at that point and what happened since then with broken multilateralism. You know, we have seen unilateral decisions which have been heavily criticized not only within the U.N., but have also come under criticism from natural allies of the U.S.

This breaking of multilateralism is, in our view, a decision which has made the world less safe. And we must -- in order to give legitimacy and credibility to the fight against terrorism, we must make sure that decisions are universal and multilateral, acknowledging the United Nations as the appropriate instrument that can blend all of our differences, that can represent us all based on authority, relying not only on might, on the use of force, but on international law.

And why is it so important to reaffirm the concept of international law and of democratic civilization? Because that is right at the heart of the fight against terrorism. If we use similar instruments to those used by terrorism, in other words, not abiding by international law, we may run the risk of might, of sheer force not being enough in this fight that is profoundly cultural and political, a fight which we must wage from the democratic world. And we firmly believe that the basic premise must be respect for international humanitarian law and international law as such. That will give us legitimacy in the face of others.

Now, what has happened in the region in the meantime? Governments began to emerge in which their leaders, the presidents, began to look more and more like their own peoples, like their constituents. If you look at Evo Morales, President Morales, he looks very much like the vast majority of the Bolivian people. If you look at the face of President Lula, the first trade union leader who became president of the leading Latin American economy, well, he also represents Brazil. And we could continue to look at each of the presidents of our region and we would notice the profound change that's been taking place in the region ever since the failure of the neo-liberal experiments in the region, those monetarist policies.

The Argentine Republic -- what about our own country, then? Well, at home, following that formidable disaster of 2001 and from 2003 a slow reconstruction process began which was aimed at paying off that major social debt which had led to unemployment in 2003 reaching 23 percent. Former President Kirchner, who's joining me today, took office with 22 percent of the vote. In Argentina, at the time, the unemployment figures were higher than the percentage of vote he got to become president. It may seem a paradox, but it clearly goes to show what situation our country was in at the time.

Argentina's debt accounted for 160 percent of the country's GDP. Poverty levels and extreme poverty levels exceeded -- well, for poverty were about 54 percent and for extreme poverty the figure was 30 percent. Foreign currency reserves at the Central Bank were under $10 billion.

After five years in office -- after five and a half years in office, our country went from -- if our country continued to have the growth figures we've had during these last five years, we would be having the most substantial growth period in our entire history. Argentina will be marking its 200th anniversary in 2010. And during the first five years, actually, in 2007, we had the largest growth figures in Argentina's last hundred years.

If we continue to have similar figures, during the rest of this year, we could be marking the end or the continuation of the most virtuous circle in our entire history as a country.

Now, what other developments have there been in the region, the region which Argentina has withdrawn from? Because as a result of the currency board system, this convertibility system which was a fiction that led us to believe that the Argentine peso had the same value as the U.S. dollar, there was this idea that a legislative fiction could allow Argentina to become part of the First World in a varied commerce.

As part of this disaster of 2001, following that period, Argentina decided to go back to its own region and to make a strong bet on integration and on Mercosur, the common market of the South. And the country decided to actually feel part of the region.

So how do things now stand? I think for all the difficulties, we can now say that the region is acting, in terms of crisis management and of the handling of its foreign relations, in quite an exceptional manner. Latin America is rebuilding multilateralism, which is not to say that our countries, South American countries or governments are all exactly the same or think exactly the same.

But we can now display a quality which is that despite our differences in our historical experiences, our different policies, political affinities and ideologies, we can pursue a much level approach to serious conflicts, which would have otherwise been impossible to solve. And we can offer appropriate responses in terms of resolution and always abiding by international law.

Let me give you some examples. We had too very serious incidents. One was the incident between Colombia and Ecuador, when the Colombian armed forces entered Ecuadorean territory, chasing a FARC leader and killed this leader.

Well, this is in the public knowledge. We don't need to go into that. But the fact is that the region really started to have serious crisis signs. And again we seemed to be hearing the war drums beating, as had been the case so many other times before, in other situations which had led to conflict, in a region that has always been red hot.

So our countries gathered within the (Rio ?) groups in the Dominican Republic, and in a true exercise of multilateral politics and of conflict management and coordination of positions we were able to put back on track the situation which seemed unsolvable, and we were able to arrive at a solution abiding by international law and with OAS interventions.

And of late, the situation in Bolivia -- which again, in an exercise of multilateralism by UNASUR, all of the presidents of South America except for President Alan Garcia, who sent his foreign minister, since he couldn't attend himself, at an emblematic venue for the region's politics at the Palacio de la Moneda in Santiago de Chile, we were also able to get all the presidents with the different orientations and visions, but with a common vision to achieve peace in the region and to prevent secession in Bolivia. So we were able to somewhat put the conflict on the path towards resolution.

So one major conclusion of the development of events in our region since 2001 is that we have succeeded in building growth as emerging countries. We have been able to improve the quality of life of our constituents and we have been able to build diplomacy. We have been able to enhance multilateralism, so as to help resolve conflict.

Finally, my old country, the Argentine Republic, which is part of the Latin American region and an active member, and which has issues it needs to -- it needed to sort out, which had to do with the default in 2001, which lead to problems for our country. Again, the close affinities, when you think of our common views on the fight against terrorism and the fight against drug trafficking, which unites us with the United States. But the fact remains that since the default of 2001, Argentina had certain problems in its relations with the rest of the world due to the events it had gone through.

And how did we settle the issues of default in Argentina? First, during the year 2004, we proposed a restructuring of the debts, which was accepted by a significant majority of Argentine debtholders and which successfully led up to the restructuring in 2005. After that came the payment, along with the Republic of Brazil, of the debts we had had since 1957 to the International Monetary Fund, a -- qualitatively in a country which had consistently engaged in successive refinancing and in putting off payment of its commitments, and before 2003, always in a framework of constant indebtedness and an administration based on twin deficits of trade and fiscal balance deficit.

The administration which took office in 2003 made debt reduction and twin surplus policies state policies. So we set about thoroughly and painstakingly reducing our debt then, because we knew that this was a very important problem not just because a debtor must pay their debts in all contexts, but essentially because this is also a way to boost your relations based on credibility and trust vis-a-vis the rest of the world.

The third stage began some days ago in the city of Buenos Aires when, as president of the Argentine Republic, I announced that we intended to pay our debt to the Paris Club -- a debt, ladies and gentlemen, which had a cutoff date of December 10th, 1983. Forty-five percent of the Paris Club debt dates back to the (pure ?) triad, to that cut-off date. The first restructuring took place in 1991 and 1992. Well, that was defaulted on along with the rest of the debt in 2001.

Today here I am giving you the fresh news during this visit to the Council on Foreign Relations. Here and now I am very excited and optimistic to tell you that we have received in Buenos Aires a proposal from three very important international banks dealing with two basic matters; the first one, the situation of the holdouts, the bondholders who did not enter the debt swap in 2005.

And these banks have submitted a very interesting proposal to us to deal with this matter, subject to terms which are much more favorable to the Argentine Republic than those of the swap in 2005, which goes to show one first point, the success of the design, which perhaps wasn't quite understood at the time because Argentina had this bad reputation as someone who lied and didn't honor the commitment.

But thanks to this proposal and to our own performance, we feel very optimistic in view of this possible approach, based on three key components. First is this proposal submitted by these three banks on behalf of the holdouts; the bondholders, that is, who didn't agree to the terms of the 2005 debt swap. And the proposal now made is a lot more favorable to Argentina than that of 2005.

And the second part of the proposal made by these three banks relates to the refinancing of PGS (sp), which, you know, is what was negotiated in 2001, the PGR (sp), as we call them in Argentina, the secured loans, which were negotiated by the administration of 2001 in Argentina, which allows refinancing for Argentina for the fiscal years 2009 and 2010.

Now, what do these two essential matters actually mean? Well, first, it has to do with the definitive normalization of Argentina and its relations with the rest of the world. This consists of three steps: First is the proposal submission, the actual proposal made by these three leading banks. The second part is the analysis, which I myself, as head of the executive, will have to perform with the help of my ministers. And the third part is, if we find this proposal feasible and acceptable, our government will have to refer this to the Argentine congress, because as you may know, the government debt law enacted in 2005 requires that the congress of Argentina be consulted and deal with these matters. So this applies to the bondholders who didn't answer the debt swap in 2005.

So we feel optimistic and enthusiastic because we have been able to rebuild a country that had been institutionally, economically and socially almost on the brink of extinction. The images of 2001 in the city of Buenos Aires with people pounding at the doors of banks, with bankers who couldn't even walk down the streets, business people and politicians who couldn't walk out in the street, you know, with Argentine leaders traveling to other countries and getting complaints about the Paris Club or the situation with the (hold outs ?) -- so everyone had something to demand or claim from Argentina, some reason to be cross with our country. And I think if you look at that situation back then and now consider possibility of the successful completion of this proposal, that will definitely be a milestone.

And I think this contributes not only to the welfare of my own country, Argentina, but it also allows us all to review and reconsider dogmas and paradigms which were hailed as gospel truth in the contemporary world. And in light of the events -- not only the policies pursued by Argentina but also what is going on even here, at the heart of the world's economy, in New York, we should all first make a point of what I call intellectual humility.

And secondly, we should understand the need to revise our concepts. A while ago, over lunch, I talked about my perceptions with regard to what's going on in the markets here, again at the heart of world capitalism, in Wall Street. And I was saying that capitalism was designed to earn money but through the production of goods, of services and of knowledge. But money, on its own, won't make money. Money you earn by producing goods, services or knowledge, which may be demanded by societies.

I believe -- and of course, this is an opinion that has a lot to do with my own views as political leader -- I think the distortion of the financial system has been to think that without producing services, goods and knowledge, merely by adopting sophisticated instruments, you could reproduce money. That is not the logic of capitalism. The logic of capitalism is to produce money or rather to earn money by producing goods, services and knowledge demanded by society through technological innovation or other means. But that is the rationale.

And that is the rationale that has made this country, the United States, a great country. And again I said this over lunch, this country was not built on a gambling-based economy. The greatness of this country and its preeminent position in the world -- (audio break) -- what we call financial gambling in Buenos Aires. (Remarks in Spanish) -- is the word in Spanish. That's quite an Argentine word.

This country, even due to its religious beliefs and convictions, always made a point of producing, of creating genuine works and wealth. I think and again I don't want to try to invent a theory here. But you know, it's good to try and take a look at some of the issues that are our concern today.

One of them is the lack of regulation of -- (inaudible) -- financial assistance that developed with no controls literally. And consider this. Central banks around the world exercise strict control over their own operation, well, the Basel rules and so on, what we all know about.

But in parallel, you get to see the emergence of mutual funds that, subject to no regulation or control, enter and exit countries. And I'm not talking only about financial institutions but also certain activities and commodities and energy. And a lot of distortions are created in the basic fundamentals of economics. And we need to consider the importance of energy and food, in the world, and the sort of tragedies that may arise unless we properly deal with this.

So we should agree on common ground in our discussions and our relations. That is, the exercise of multilateralism as one of the pillars to build a safer world. And on the other hand, we need to reconsider and rethink instruments, economic instruments that may allow us to go back to a more real economy, in which work and production again become the central basis to build up wealth.

I don't think we should be frightened or be dramatic. But we should at least rethink and reflect upon these matters. Argentina, and I will be concluding now, so that we can go into our Q&A. Argentina has come a long way since 2001. It has acknowledged its membership in its own region. It has pursued multilateralism.

It has discovered that it can use its own instruments to settle conflicts that seemed impossible to solve and, through a policy of our administration, of its own resources and based on setting its own policies, is now making a point of rebuilding credibility and trust as a country, through debt reduction, thanks to an accumulation of genuine resources and transparent conduct.

I thank you. Have a good afternoon. (Applause.)

MODERATOR: Well, thank you for that thorough, you know, and far-ranging and thoughtful address. Many of the prerogatives of my job -- and ask one or two questions, then we will quickly open it up.

You've come to the United States approximately 45 days, give or take, before an election in this country. If you could advise the next president of the United States, what is it you would want to see in the way of changes or continuity when it comes to U.S. policy towards your part of the world?

KIRCHNER: Well, in terms of -- and please allow me to say I do not intend to meddle with the internal political life of the U.S., particularly only a few days away from your election on November the 4th. But I must confess that I was never this excited to follow both the primaries of the Democrats and Republicans, as well as both conventions. And this is not just because I'm now president of Argentina, but because as a citizen of the world I recognize the importance the new president of the U.S. will have in a world as ours.

What do we actually expect at the universal level from the next U.S. administration? I will say a reconstruction of multilateralism, which is not to do only with our own convictions -- which of course, have a lot to do with it, too. You know, the fact that we believe that you can give more legitimacy to the fight against terrorism or against drug trafficking, a fight which must be waged by all democratic societies, but also we think that the decision to pursue unilateral policies, as was the case with this current administration, that has had an impact on the world and has actually had a negative impact on the interests of the U.S. as a country.

I would dare say, based on the polls one sees, the image of the U.S. around the world has been negatively affected, and this is something we talked about during our luncheon. And politics is about results. You know, there might have been (good ?) intentions, but politics is about results.

MODERATOR: Wouldn't Argentina -- wouldn't Argentina act unilaterally if it felt that its national interests required it?

KIRCHNER: In terms of aggression? You mean a war?

Well, I would dare say respect for international law, observance of international law in order to accept the rules -- (inaudible) -- would prevent us from doing that. In fact, we have made a strong contribution for no country in the region to take such (status ?). Look, if that were may view, I could have justified Ecuador's responding with an aggression to Colombia due to Colombia's invasion of its territory, but my own attitude, the attitude of Argentina, has been at all times to go all the way back to undo that and to prevent the adoption of unilateral measures by Colombia against -- by Ecuador against Colombia, because there were higher interests in the region which had to do precisely with preserving peace.

Preventive action or preventive war is not something we endorse as a measure, and even less so outside the framework of international law. I believe that unilateralism has been bad for the United States. And let me point out the difference between the U.S. invasion of Afghanistan with the consensus of all nations and with the support of all nations, as opposed to the U.S. when dealing with the situation in Iraq, when even some of the allies of the U.S. withdrew their support.

I'm not talking about intentions, only about results. Again, in politics you may have the best intentions, but if the results are not good and you are left in isolation, it means that your policies have perhaps not been the best ones. I try to remain as objective as possible.

So, what do we expect from the U.S. with regard to our own region? Well, first, I would say, a different look and a different presence in a region. In a way, the United States has distanced itself from our region, and we think that there should be a different position and look at South America.

You know, this is something we raised at a meeting of the Americas, I believe in Monterrey. Back then, it was a time when the situation of emerging countries was not yet the one we now get to see in economic or growth terms, and we even talked about the help of the United States. I actually talked to a representative, who is now a senator, a Democrat. He also -- can I mention him or can I say who he was or -- (inaudible). I remember I met with him while he was still a representative; he is now a senator. And I remember he was in favor of setting up a Latin America fund to give assistance to the region with a different, more intensive U.S. presence.

The governments of the region now reflect the nature of their own peoples. Again, as I was saying earlier, presidents have never been so close to their peoples and have never resembled their people as much. So we would like more presence from the U.S. in our region. That's what we would expect from your new president.

MODERATOR: I have a lot more questions, but I will show uncharacteristic restraint and not -- people have raised their hands. Try to keep your questions short.

We'll go to Baldas (sp).

QUESTIONER: Thank you. Baldas (sp) from -- (affiliation inaudible). Madame President, you made a very strong cause for multilateralism. I think many of us here -- (inaudible). I'd be interested in your views about the working U.S.-United Nations -- (inaudible) -- multilateral framework. It seems to be quite broken, oftentimes. (Inaudible.)

MODERATOR: When you get around to Security Council reform, does Argentina believe it deserves a seat on the Security Council?

KIRCHNER: Well, you know, the reform of multilateral organizations, whether multilateral lending agencies or the U.N. itself has been a recurrent topic for Argentina and is something we mention at all U.N. addresses ever since 2003.

I think we need to recreate the core, the heart of the Security Council, primarily because the U.N. -- the Security Council was created in light of the charter of San Francisco in a post-war world in which there was bipolarity. This tension between the U.S. and the Soviet Union, which was the hallmark of the whole second half of the 20th century, right up to the fall of the Berlin Wall, made the Security Council necessary, due to the constant tension in face of the nuclear threats in the world. If someone did something outside this framework, there might be some kind of universal nuclear holocaust.

And that tension, which was always played out within the Security Council with the veto right, enabled more or less acceptable functioning of the body during the second half of the 20th century.

Now, what is the problem? When the Berlin Wall fell and the bipolarity ended, with the U.S. clearly rising above the rest of the world as the leading economic, scientific power, also in terms of its weapons and technology, becoming the absolute number-one world power, that created an imbalance which can no longer be processed within the Security Council, and this is why unilateral policies arise.

You can exercise force unilaterally when there's no other force to counteract and resist you now. This is a principle of physics, but which must also apply to politics. In other words, American unilateralism is a result of its own repositioning as the one and only world power.

But therein lies as well the problem of a possible weakening of someone who is too strong, although this may sound like a contradiction. This is why, in my own view, it is necessary to reengineer the U.N. and essentially the Security Council.

If I were to have a formula as to what the right Security Council would be to guarantee the ballot box, I might be the president of the U.S. and not the other candidates, because that would be finding the way to achieve balance in the 21st century, as was the case with the Security Council to create balance in a highly conflicted world after the Second World War.

But the fact that we need to tackle Security Council reform, that we need to give participation opportunities to the new regional players, is out of the question. We must do that. But we should also bear in mind that this breakage of bipolarity and the emergence of this undisputed power that made the current Security Council no longer as adequate.

Now, knowing that that is a problem doesn't mean that we have a solution. But it is certainly a big step towards finding a solution as part of an open debate and discussion among all countries.

MODERATOR: Yes, ma'am. All the way in the back.

QUESTIONER: Thank you, President Kirchner. Kathy Hicks (sp) with Citizen Rights Watch.

Argentina was recently elected to the U.N. Human Rights Council, a body that's been extremely ineffective at holding human rights abusers to account, in part because of the ability of abusers to say that initiatives are directed from the north. Will Argentina be a voice (of ?) leadership within the council on ongoing crises like those in Georgia, Somalia and Zimbabwe currently?

KIRCHNER: Well, you know that the policy on absolute respect for human rights is one of the basic pillars of our policy and is actually a state policy. Argentina, as you will all know, had one of the most terrible dictatorships in memory, which ended up with 30,000 people disappeared and 500 children who have not yet been found. We have already found 94 children of disappeared persons thanks to the wonderful work of the Mothers of Plaza de Mayo, and tomorrow there will be a ceremony headed by U.N. Secretary General Ban Ki-Moon.

Argentina and another 73 countries have signed the Treaty Against Enforced Disappearances, which, by the way, we have given a strong boost to. We are actually, as you pointed out, on the U.N. Human Rights Council. But only four countries have so far ratified the treaty -- Albania, Argentina, Honduras and Mexico. I think over the next few days, the Republic of France will be ratifying it as well.

But the fact is that Argentina's commitment to respect for human rights is -- it's unlimited and unfaltering. And I think we have made quite a lot of progress.

Last year I had a meeting with Ann Arbour in Geneva -- with Louise Arbour in Geneva. And, you know, when talking about the Initiative of the Right to the Truth, which was adopted in the U.N., something that had been encouraged by our country, other countries that hadn't been able to advance, you know, we actually had laws that -- (new ?) obedience and -- (inaudible) -- laws, which prevented prosecution of those responsible for the genocide.

Actually Mrs. Arbour, the human rights commissioner of the U.N., has acknowledged the key role played by Argentina is the field of human rights by leading to the adoption and creation of instruments such as the Right to the Truth or the Treaty on the Enforced Disappearance of Persons, which at least are instruments to fight for human rights in a world in which human rights are violated on a daily basis.

Our commitment -- and I think here again, we may be an example -- we should always be accountable for our actions, and it is true that until the administration of President Nestor Kirchner, impunity had prevailed in Argentina.

We had some pre-democratic issues, as I like to say, because people who commit crimes may evade justice and punishment, but in Argentina, those who had committed genocide evaded punishment and the law, not because they escaped, but because one of the powers -- the legislative -- had enacted laws that afforded impunity, which, as I always say, took us back to a pre-democratic stage in our society. When the state itself institutes, punishes and legislates for impunity, it's a pre-democratic state, you know. So I think that the progress in the field of human rights made in Argentina, which has been recognized around the world, and these instruments I have referred to and any other actions we may undertake will help us along.

Let me give you some more interesting news. We're working on a worldwide genetic database to work on issues of enforced disappearances, something that we are also going to support at the international level. This is something we think all countries should adopt. And we should take concrete steps every day in this unfaltering fight for the observance of human rights.

Thank you for that question, because it gives a chance to tackle an issue which, to my country and due to its own historical experience and to myself personally and due to my political beliefs, represents a policy of state.

Thank you.

MODERATOR: (Inaudible) -- for one more question. Is there a question on Latin America? I specifically want to make sure that we focus on this part of the world. John? Brief question and hopefully a brief answer, and I apologize for taking a few minutes late, but we started a few minutes late.

QUESTIONER: Thank you. I'm John Brademas, a member of the U.S. Congress -- (inaudible). In 1961, I made a trip to Buenos Aires as a member of Congress to look at the state of universities in Argentina, and I've left with your assistant a copy of the report. Can you comment on the -- I was not a senator, I was a congressman). Can you comment on the state of universities in Argentina today and say anything about the possibility of developing relationships with universities in the United States?

KIRCHNER: In 1961 when you visited, I was still very little, so I can't remember your visit. But Argentine universities have substantially improved, just as all of the educational system has improved through greater financing. That was also one of the achievements of the administration of President Nestor Kirchner.

And actually I had to vote as a senator on the bill on education financing, and for the first time we're going to allocate 6 percent of GDP to education. Of course, our GDP's substantially higher than it was at the time the law was first adopted, and now we can approach the issue of education in Argentina in quite a different way.

Universities now have larger projects. The universities and faculty get more money and better pay. We are developing a scholarship system which is aimed at favoring study choices that we consider essential for Argentina's current production model.

Argentina used to be a country with a very strong bias towards social sciences, while leaving aside hard science, which is essential for technological development. This is why we are developing a very intensive scholarship program for our high school students to be able to pursue studies in fields that Argentina needs for its production model, and this also targets low-income families with support from the government. And we are making a very strong point of this policy.

Besides, one of the economic policies that has most grown in Argentina over the last five years has been in the field of technological software and IT and telecommunications companies. Those are the companies with the largest number of birth rates, and they have grown exponentially.

Why is this so? Because our country stands out in Latin America due to its highly qualified human resources. We are the only Latin American country to have three Nobel Prize winners in scientific fields. You can check other Latin American countries and you may find Nobel Prizes for literature, but not for medicine or biology or what we call the strictly scientific world.

You know, the public, free universal education system since the end of the 19th century and the upward social mobility typical of this very substantial middle class places us in a very interesting position in Latin America in terms of the education of our human resources.

MODERATOR: Well, I want to thank President Cristina Fernandez de Kirchner for getting us off to such an interesting start this week, one of the first women presidents we've ever been able to welcome a the Council on Foreign Relations. So thank you very much. (Applause.)

.STX

 

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THIS IS A RUSH TRANSCRIPT.

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PRESIDENT CRISTINA FERNANDEZ DE KIRCHNER: (In progress) -- of the fall of the twin towers, 9/11 became a milestone which may well vie with the Berlin Wall, which is something we'll leave up to historians to decide in 50 years time, for them to say which of these two events had the deepest impact.

I would daresay 9/11 was the watershed. And here we all feel a strong, common identity in terms of foreign relations with the U.S., which is the fight against international terrorism.

But while in 2001 the Twin Towers collapsed right at the heart of New York, in the Latin American region, the Argentine Republic was about to collapse -- my own country, a country which had been hailed as a perfect example of the Washington consensus in the field of social affairs. And as a result of the advice of monetarism, the country collapsed in the context of the largest default in memory.

This also meant the beginning of a new phase for the region, not just for Argentina. Looking back now in September 2008, almost ending the first decade of the 21st century, we can see what has happened since 2001. We can see what has happened from this perspective from the U.S., the leading power of the world -- that is definitely beyond all debate -- and we can also see what happened in our region.

In the international arena, ever since the decision for -- or in terms of multilateralism and when we think about the invasion of Afghanistan, as a result of the attacks on 9/11, we can see what happened starting at that point and what happened since then with broken multilateralism. You know, we have seen unilateral decisions which have been heavily criticized not only within the U.N., but have also come under criticism from natural allies of the U.S.

This breaking of multilateralism is, in our view, a decision which has made the world less safe. And we must -- in order to give legitimacy and credibility to the fight against terrorism, we must make sure that decisions are universal and multilateral, acknowledging the United Nations as the appropriate instrument that can blend all of our differences, that can represent us all based on authority, relying not only on might, on the use of force, but on international law.

And why is it so important to reaffirm the concept of international law and of democratic civilization? Because that is right at the heart of the fight against terrorism. If we use similar instruments to those used by terrorism, in other words, not abiding by international law, we may run the risk of might, of sheer force not being enough in this fight that is profoundly cultural and political, a fight which we must wage from the democratic world. And we firmly believe that the basic premise must be respect for international humanitarian law and international law as such. That will give us legitimacy in the face of others.

Now, what has happened in the region in the meantime? Governments began to emerge in which their leaders, the presidents, began to look more and more like their own peoples, like their constituents. If you look at Evo Morales, President Morales, he looks very much like the vast majority of the Bolivian people. If you look at the face of President Lula, the first trade union leader who became president of the leading Latin American economy, well, he also represents Brazil. And we could continue to look at each of the presidents of our region and we would notice the profound change that's been taking place in the region ever since the failure of the neo-liberal experiments in the region, those monetarist policies.

The Argentine Republic -- what about our own country, then? Well, at home, following that formidable disaster of 2001 and from 2003 a slow reconstruction process began which was aimed at paying off that major social debt which had led to unemployment in 2003 reaching 23 percent. Former President Kirchner, who's joining me today, took office with 22 percent of the vote. In Argentina, at the time, the unemployment figures were higher than the percentage of vote he got to become president. It may seem a paradox, but it clearly goes to show what situation our country was in at the time.

Argentina's debt accounted for 160 percent of the country's GDP. Poverty levels and extreme poverty levels exceeded -- well, for poverty were about 54 percent and for extreme poverty the figure was 30 percent. Foreign currency reserves at the Central Bank were under $10 billion.

After five years in office -- after five and a half years in office, our country went from -- if our country continued to have the growth figures we've had during these last five years, we would be having the most substantial growth period in our entire history. Argentina will be marking its 200th anniversary in 2010. And during the first five years, actually, in 2007, we had the largest growth figures in Argentina's last hundred years.

If we continue to have similar figures, during the rest of this year, we could be marking the end or the continuation of the most virtuous circle in our entire history as a country.

Now, what other developments have there been in the region, the region which Argentina has withdrawn from? Because as a result of the currency board system, this convertibility system which was a fiction that led us to believe that the Argentine peso had the same value as the U.S. dollar, there was this idea that a legislative fiction could allow Argentina to become part of the First World in a varied commerce.

As part of this disaster of 2001, following that period, Argentina decided to go back to its own region and to make a strong bet on integration and on Mercosur, the common market of the South. And the country decided to actually feel part of the region.

So how do things now stand? I think for all the difficulties, we can now say that the region is acting, in terms of crisis management and of the handling of its foreign relations, in quite an exceptional manner. Latin America is rebuilding multilateralism, which is not to say that our countries, South American countries or governments are all exactly the same or think exactly the same.

But we can now display a quality which is that despite our differences in our historical experiences, our different policies, political affinities and ideologies, we can pursue a much level approach to serious conflicts, which would have otherwise been impossible to solve. And we can offer appropriate responses in terms of resolution and always abiding by international law.

Let me give you some examples. We had too very serious incidents. One was the incident between Colombia and Ecuador, when the Colombian armed forces entered Ecuadorean territory, chasing a FARC leader and killed this leader.

Well, this is in the public knowledge. We don't need to go into that. But the fact is that the region really started to have serious crisis signs. And again we seemed to be hearing the war drums beating, as had been the case so many other times before, in other situations which had led to conflict, in a region that has always been red hot.

So our countries gathered within the (Rio ?) groups in the Dominican Republic, and in a true exercise of multilateral politics and of conflict management and coordination of positions we were able to put back on track the situation which seemed unsolvable, and we were able to arrive at a solution abiding by international law and with OAS interventions.

And of late, the situation in Bolivia -- which again, in an exercise of multilateralism by UNASUR, all of the presidents of South America except for President Alan Garcia, who sent his foreign minister, since he couldn't attend himself, at an emblematic venue for the region's politics at the Palacio de la Moneda in Santiago de Chile, we were also able to get all the presidents with the different orientations and visions, but with a common vision to achieve peace in the region and to prevent secession in Bolivia. So we were able to somewhat put the conflict on the path towards resolution.

So one major conclusion of the development of events in our region since 2001 is that we have succeeded in building growth as emerging countries. We have been able to improve the quality of life of our constituents and we have been able to build diplomacy. We have been able to enhance multilateralism, so as to help resolve conflict.

Finally, my old country, the Argentine Republic, which is part of the Latin American region and an active member, and which has issues it needs to -- it needed to sort out, which had to do with the default in 2001, which lead to problems for our country. Again, the close affinities, when you think of our common views on the fight against terrorism and the fight against drug trafficking, which unites us with the United States. But the fact remains that since the default of 2001, Argentina had certain problems in its relations with the rest of the world due to the events it had gone through.

And how did we settle the issues of default in Argentina? First, during the year 2004, we proposed a restructuring of the debts, which was accepted by a significant majority of Argentine debtholders and which successfully led up to the restructuring in 2005. After that came the payment, along with the Republic of Brazil, of the debts we had had since 1957 to the International Monetary Fund, a -- qualitatively in a country which had consistently engaged in successive refinancing and in putting off payment of its commitments, and before 2003, always in a framework of constant indebtedness and an administration based on twin deficits of trade and fiscal balance deficit.

The administration which took office in 2003 made debt reduction and twin surplus policies state policies. So we set about thoroughly and painstakingly reducing our debt then, because we knew that this was a very important problem not just because a debtor must pay their debts in all contexts, but essentially because this is also a way to boost your relations based on credibility and trust vis-a-vis the rest of the world.

The third stage began some days ago in the city of Buenos Aires when, as president of the Argentine Republic, I announced that we intended to pay our debt to the Paris Club -- a debt, ladies and gentlemen, which had a cutoff date of December 10th, 1983. Forty-five percent of the Paris Club debt dates back to the (pure ?) triad, to that cut-off date. The first restructuring took place in 1991 and 1992. Well, that was defaulted on along with the rest of the debt in 2001.

Today here I am giving you the fresh news during this visit to the Council on Foreign Relations. Here and now I am very excited and optimistic to tell you that we have received in Buenos Aires a proposal from three very important international banks dealing with two basic matters; the first one, the situation of the holdouts, the bondholders who did not enter the debt swap in 2005.

And these banks have submitted a very interesting proposal to us to deal with this matter, subject to terms which are much more favorable to the Argentine Republic than those of the swap in 2005, which goes to show one first point, the success of the design, which perhaps wasn't quite understood at the time because Argentina had this bad reputation as someone who lied and didn't honor the commitment.

But thanks to this proposal and to our own performance, we feel very optimistic in view of this possible approach, based on three key components. First is this proposal submitted by these three banks on behalf of the holdouts; the bondholders, that is, who didn't agree to the terms of the 2005 debt swap. And the proposal now made is a lot more favorable to Argentina than that of 2005.

And the second part of the proposal made by these three banks relates to the refinancing of PGS (sp), which, you know, is what was negotiated in 2001, the PGR (sp), as we call them in Argentina, the secured loans, which were negotiated by the administration of 2001 in Argentina, which allows refinancing for Argentina for the fiscal years 2009 and 2010.

Now, what do these two essential matters actually mean? Well, first, it has to do with the definitive normalization of Argentina and its relations with the rest of the world. This consists of three steps: First is the proposal submission, the actual proposal made by these three leading banks. The second part is the analysis, which I myself, as head of the executive, will have to perform with the help of my ministers. And the third part is, if we find this proposal feasible and acceptable, our government will have to refer this to the Argentine congress, because as you may know, the government debt law enacted in 2005 requires that the congress of Argentina be consulted and deal with these matters. So this applies to the bondholders who didn't answer the debt swap in 2005.

So we feel optimistic and enthusiastic because we have been able to rebuild a country that had been institutionally, economically and socially almost on the brink of extinction. The images of 2001 in the city of Buenos Aires with people pounding at the doors of banks, with bankers who couldn't even walk down the streets, business people and politicians who couldn't walk out in the street, you know, with Argentine leaders traveling to other countries and getting complaints about the Paris Club or the situation with the (hold outs ?) -- so everyone had something to demand or claim from Argentina, some reason to be cross with our country. And I think if you look at that situation back then and now consider possibility of the successful completion of this proposal, that will definitely be a milestone.

And I think this contributes not only to the welfare of my own country, Argentina, but it also allows us all to review and reconsider dogmas and paradigms which were hailed as gospel truth in the contemporary world. And in light of the events -- not only the policies pursued by Argentina but also what is going on even here, at the heart of the world's economy, in New York, we should all first make a point of what I call intellectual humility.

And secondly, we should understand the need to revise our concepts. A while ago, over lunch, I talked about my perceptions with regard to what's going on in the markets here, again at the heart of world capitalism, in Wall Street. And I was saying that capitalism was designed to earn money but through the production of goods, of services and of knowledge. But money, on its own, won't make money. Money you earn by producing goods, services or knowledge, which may be demanded by societies.

I believe -- and of course, this is an opinion that has a lot to do with my own views as political leader -- I think the distortion of the financial system has been to think that without producing services, goods and knowledge, merely by adopting sophisticated instruments, you could reproduce money. That is not the logic of capitalism. The logic of capitalism is to produce money or rather to earn money by producing goods, services and knowledge demanded by society through technological innovation or other means. But that is the rationale.

And that is the rationale that has made this country, the United States, a great country. And again I said this over lunch, this country was not built on a gambling-based economy. The greatness of this country and its preeminent position in the world -- (audio break) -- what we call financial gambling in Buenos Aires. (Remarks in Spanish) -- is the word in Spanish. That's quite an Argentine word.

This country, even due to its religious beliefs and convictions, always made a point of producing, of creating genuine works and wealth. I think and again I don't want to try to invent a theory here. But you know, it's good to try and take a look at some of the issues that are our concern today.

One of them is the lack of regulation of -- (inaudible) -- financial assistance that developed with no controls literally. And consider this. Central banks around the world exercise strict control over their own operation, well, the Basel rules and so on, what we all know about.

But in parallel, you get to see the emergence of mutual funds that, subject to no regulation or control, enter and exit countries. And I'm not talking only about financial institutions but also certain activities and commodities and energy. And a lot of distortions are created in the basic fundamentals of economics. And we need to consider the importance of energy and food, in the world, and the sort of tragedies that may arise unless we properly deal with this.

So we should agree on common ground in our discussions and our relations. That is, the exercise of multilateralism as one of the pillars to build a safer world. And on the other hand, we need to reconsider and rethink instruments, economic instruments that may allow us to go back to a more real economy, in which work and production again become the central basis to build up wealth.

I don't think we should be frightened or be dramatic. But we should at least rethink and reflect upon these matters. Argentina, and I will be concluding now, so that we can go into our Q&A. Argentina has come a long way since 2001. It has acknowledged its membership in its own region. It has pursued multilateralism.

It has discovered that it can use its own instruments to settle conflicts that seemed impossible to solve and, through a policy of our administration, of its own resources and based on setting its own policies, is now making a point of rebuilding credibility and trust as a country, through debt reduction, thanks to an accumulation of genuine resources and transparent conduct.

I thank you. Have a good afternoon. (Applause.)

MODERATOR: Well, thank you for that thorough, you know, and far-ranging and thoughtful address. Many of the prerogatives of my job -- and ask one or two questions, then we will quickly open it up.

You've come to the United States approximately 45 days, give or take, before an election in this country. If you could advise the next president of the United States, what is it you would want to see in the way of changes or continuity when it comes to U.S. policy towards your part of the world?

KIRCHNER: Well, in terms of -- and please allow me to say I do not intend to meddle with the internal political life of the U.S., particularly only a few days away from your election on November the 4th. But I must confess that I was never this excited to follow both the primaries of the Democrats and Republicans, as well as both conventions. And this is not just because I'm now president of Argentina, but because as a citizen of the world I recognize the importance the new president of the U.S. will have in a world as ours.

What do we actually expect at the universal level from the next U.S. administration? I will say a reconstruction of multilateralism, which is not to do only with our own convictions -- which of course, have a lot to do with it, too. You know, the fact that we believe that you can give more legitimacy to the fight against terrorism or against drug trafficking, a fight which must be waged by all democratic societies, but also we think that the decision to pursue unilateral policies, as was the case with this current administration, that has had an impact on the world and has actually had a negative impact on the interests of the U.S. as a country.

I would dare say, based on the polls one sees, the image of the U.S. around the world has been negatively affected, and this is something we talked about during our luncheon. And politics is about results. You know, there might have been (good ?) intentions, but politics is about results.

MODERATOR: Wouldn't Argentina -- wouldn't Argentina act unilaterally if it felt that its national interests required it?

KIRCHNER: In terms of aggression? You mean a war?

Well, I would dare say respect for international law, observance of international law in order to accept the rules -- (inaudible) -- would prevent us from doing that. In fact, we have made a strong contribution for no country in the region to take such (status ?). Look, if that were may view, I could have justified Ecuador's responding with an aggression to Colombia due to Colombia's invasion of its territory, but my own attitude, the attitude of Argentina, has been at all times to go all the way back to undo that and to prevent the adoption of unilateral measures by Colombia against -- by Ecuador against Colombia, because there were higher interests in the region which had to do precisely with preserving peace.

Preventive action or preventive war is not something we endorse as a measure, and even less so outside the framework of international law. I believe that unilateralism has been bad for the United States. And let me point out the difference between the U.S. invasion of Afghanistan with the consensus of all nations and with the support of all nations, as opposed to the U.S. when dealing with the situation in Iraq, when even some of the allies of the U.S. withdrew their support.

I'm not talking about intentions, only about results. Again, in politics you may have the best intentions, but if the results are not good and you are left in isolation, it means that your policies have perhaps not been the best ones. I try to remain as objective as possible.

So, what do we expect from the U.S. with regard to our own region? Well, first, I would say, a different look and a different presence in a region. In a way, the United States has distanced itself from our region, and we think that there should be a different position and look at South America.

You know, this is something we raised at a meeting of the Americas, I believe in Monterrey. Back then, it was a time when the situation of emerging countries was not yet the one we now get to see in economic or growth terms, and we even talked about the help of the United States. I actually talked to a representative, who is now a senator, a Democrat. He also -- can I mention him or can I say who he was or -- (inaudible). I remember I met with him while he was still a representative; he is now a senator. And I remember he was in favor of setting up a Latin America fund to give assistance to the region with a different, more intensive U.S. presence.

The governments of the region now reflect the nature of their own peoples. Again, as I was saying earlier, presidents have never been so close to their peoples and have never resembled their people as much. So we would like more presence from the U.S. in our region. That's what we would expect from your new president.

MODERATOR: I have a lot more questions, but I will show uncharacteristic restraint and not -- people have raised their hands. Try to keep your questions short.

We'll go to Baldas (sp).

QUESTIONER: Thank you. Baldas (sp) from -- (affiliation inaudible). Madame President, you made a very strong cause for multilateralism. I think many of us here -- (inaudible). I'd be interested in your views about the working U.S.-United Nations -- (inaudible) -- multilateral framework. It seems to be quite broken, oftentimes. (Inaudible.)

MODERATOR: When you get around to Security Council reform, does Argentina believe it deserves a seat on the Security Council?

KIRCHNER: Well, you know, the reform of multilateral organizations, whether multilateral lending agencies or the U.N. itself has been a recurrent topic for Argentina and is something we mention at all U.N. addresses ever since 2003.

I think we need to recreate the core, the heart of the Security Council, primarily because the U.N. -- the Security Council was created in light of the charter of San Francisco in a post-war world in which there was bipolarity. This tension between the U.S. and the Soviet Union, which was the hallmark of the whole second half of the 20th century, right up to the fall of the Berlin Wall, made the Security Council necessary, due to the constant tension in face of the nuclear threats in the world. If someone did something outside this framework, there might be some kind of universal nuclear holocaust.

And that tension, which was always played out within the Security Council with the veto right, enabled more or less acceptable functioning of the body during the second half of the 20th century.

Now, what is the problem? When the Berlin Wall fell and the bipolarity ended, with the U.S. clearly rising above the rest of the world as the leading economic, scientific power, also in terms of its weapons and technology, becoming the absolute number-one world power, that created an imbalance which can no longer be processed within the Security Council, and this is why unilateral policies arise.

You can exercise force unilaterally when there's no other force to counteract and resist you now. This is a principle of physics, but which must also apply to politics. In other words, American unilateralism is a result of its own repositioning as the one and only world power.

But therein lies as well the problem of a possible weakening of someone who is too strong, although this may sound like a contradiction. This is why, in my own view, it is necessary to reengineer the U.N. and essentially the Security Council.

If I were to have a formula as to what the right Security Council would be to guarantee the ballot box, I might be the president of the U.S. and not the other candidates, because that would be finding the way to achieve balance in the 21st century, as was the case with the Security Council to create balance in a highly conflicted world after the Second World War.

But the fact that we need to tackle Security Council reform, that we need to give participation opportunities to the new regional players, is out of the question. We must do that. But we should also bear in mind that this breakage of bipolarity and the emergence of this undisputed power that made the current Security Council no longer as adequate.

Now, knowing that that is a problem doesn't mean that we have a solution. But it is certainly a big step towards finding a solution as part of an open debate and discussion among all countries.

MODERATOR: Yes, ma'am. All the way in the back.

QUESTIONER: Thank you, President Kirchner. Kathy Hicks (sp) with Citizen Rights Watch.

Argentina was recently elected to the U.N. Human Rights Council, a body that's been extremely ineffective at holding human rights abusers to account, in part because of the ability of abusers to say that initiatives are directed from the north. Will Argentina be a voice (of ?) leadership within the council on ongoing crises like those in Georgia, Somalia and Zimbabwe currently?

KIRCHNER: Well, you know that the policy on absolute respect for human rights is one of the basic pillars of our policy and is actually a state policy. Argentina, as you will all know, had one of the most terrible dictatorships in memory, which ended up with 30,000 people disappeared and 500 children who have not yet been found. We have already found 94 children of disappeared persons thanks to the wonderful work of the Mothers of Plaza de Mayo, and tomorrow there will be a ceremony headed by U.N. Secretary General Ban Ki-Moon.

Argentina and another 73 countries have signed the Treaty Against Enforced Disappearances, which, by the way, we have given a strong boost to. We are actually, as you pointed out, on the U.N. Human Rights Council. But only four countries have so far ratified the treaty -- Albania, Argentina, Honduras and Mexico. I think over the next few days, the Republic of France will be ratifying it as well.

But the fact is that Argentina's commitment to respect for human rights is -- it's unlimited and unfaltering. And I think we have made quite a lot of progress.

Last year I had a meeting with Ann Arbour in Geneva -- with Louise Arbour in Geneva. And, you know, when talking about the Initiative of the Right to the Truth, which was adopted in the U.N., something that had been encouraged by our country, other countries that hadn't been able to advance, you know, we actually had laws that -- (new ?) obedience and -- (inaudible) -- laws, which prevented prosecution of those responsible for the genocide.

Actually Mrs. Arbour, the human rights commissioner of the U.N., has acknowledged the key role played by Argentina is the field of human rights by leading to the adoption and creation of instruments such as the Right to the Truth or the Treaty on the Enforced Disappearance of Persons, which at least are instruments to fight for human rights in a world in which human rights are violated on a daily basis.

Our commitment -- and I think here again, we may be an example -- we should always be accountable for our actions, and it is true that until the administration of President Nestor Kirchner, impunity had prevailed in Argentina.

We had some pre-democratic issues, as I like to say, because people who commit crimes may evade justice and punishment, but in Argentina, those who had committed genocide evaded punishment and the law, not because they escaped, but because one of the powers -- the legislative -- had enacted laws that afforded impunity, which, as I always say, took us back to a pre-democratic stage in our society. When the state itself institutes, punishes and legislates for impunity, it's a pre-democratic state, you know. So I think that the progress in the field of human rights made in Argentina, which has been recognized around the world, and these instruments I have referred to and any other actions we may undertake will help us along.

Let me give you some more interesting news. We're working on a worldwide genetic database to work on issues of enforced disappearances, something that we are also going to support at the international level. This is something we think all countries should adopt. And we should take concrete steps every day in this unfaltering fight for the observance of human rights.

Thank you for that question, because it gives a chance to tackle an issue which, to my country and due to its own historical experience and to myself personally and due to my political beliefs, represents a policy of state.

Thank you.

MODERATOR: (Inaudible) -- for one more question. Is there a question on Latin America? I specifically want to make sure that we focus on this part of the world. John? Brief question and hopefully a brief answer, and I apologize for taking a few minutes late, but we started a few minutes late.

QUESTIONER: Thank you. I'm John Brademas, a member of the U.S. Congress -- (inaudible). In 1961, I made a trip to Buenos Aires as a member of Congress to look at the state of universities in Argentina, and I've left with your assistant a copy of the report. Can you comment on the -- I was not a senator, I was a congressman). Can you comment on the state of universities in Argentina today and say anything about the possibility of developing relationships with universities in the United States?

KIRCHNER: In 1961 when you visited, I was still very little, so I can't remember your visit. But Argentine universities have substantially improved, just as all of the educational system has improved through greater financing. That was also one of the achievements of the administration of President Nestor Kirchner.

And actually I had to vote as a senator on the bill on education financing, and for the first time we're going to allocate 6 percent of GDP to education. Of course, our GDP's substantially higher than it was at the time the law was first adopted, and now we can approach the issue of education in Argentina in quite a different way.

Universities now have larger projects. The universities and faculty get more money and better pay. We are developing a scholarship system which is aimed at favoring study choices that we consider essential for Argentina's current production model.

Argentina used to be a country with a very strong bias towards social sciences, while leaving aside hard science, which is essential for technological development. This is why we are developing a very intensive scholarship program for our high school students to be able to pursue studies in fields that Argentina needs for its production model, and this also targets low-income families with support from the government. And we are making a very strong point of this policy.

Besides, one of the economic policies that has most grown in Argentina over the last five years has been in the field of technological software and IT and telecommunications companies. Those are the companies with the largest number of birth rates, and they have grown exponentially.

Why is this so? Because our country stands out in Latin America due to its highly qualified human resources. We are the only Latin American country to have three Nobel Prize winners in scientific fields. You can check other Latin American countries and you may find Nobel Prizes for literature, but not for medicine or biology or what we call the strictly scientific world.

You know, the public, free universal education system since the end of the 19th century and the upward social mobility typical of this very substantial middle class places us in a very interesting position in Latin America in terms of the education of our human resources.

MODERATOR: Well, I want to thank President Cristina Fernandez de Kirchner for getting us off to such an interesting start this week, one of the first women presidents we've ever been able to welcome a the Council on Foreign Relations. So thank you very much. (Applause.)

.STX

 

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