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Nikolas Kozloff

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WikiLeaks: Paul Ryan's Delicate South American Dance

Posted: 08/16/2012 5:42 pm

We're just a few days into the new Republican ticket, and already, it seems, Mitt Romney has been having second thoughts about his running mate Paul Ryan. A big aficionado of radical right wing views and philosopher Ayn Rand, Ryan favors dramatically scaling back social benefits. Though Romney may have felt that he was obliged to pick Ryan, a darling of the anti-Obama Tea Party, the boyish Congressman from Wisconsin may represent more of a liability than a plus for the GOP ticket. Perhaps fearing that Americans' may wise up to Ryan's extremist ideas, Romney recently remarked that he would run on his own budget and not that of his running mate.

Over the next few months, will Ryan be forced to walk back some of his controversial views in the interests of political expediency? It would not be the first time, as revealed in classified documents recently disclosed by whistle-blowing outfit WikiLeaks. In late 2008, in the midst of Washington's financial crisis, Ryan traveled to South America to meet with political and business leaders as part of a congressional delegation. At the time, countries throughout the region feared contagion as a result of the economic meltdown and, needless to say, few had any great regard for the outgoing Bush administration.

During his tour, Ryan steered clear of South America's leftist bloc comprised of Venezuela, Ecuador and Bolivia. Perhaps that was a wise move: politicians such as Hugo Chávez, Evo Morales and Rafael Correa had earlier steered clear of the kind of right wing austerity so favored by Ryan and his ilk. Indeed, when implemented such views had proven so disastrous that they had given rise to great political instability and tumult. It would not be an understatement, in fact, to argue that it was precisely the kind of austerity and "fiscal discipline" advocated by the International Monetary Fund which had propelled Chávez, Morales and Correa into power in the first place.

From Lima to Santiago

While touring through Peru, Chile and Argentina, Ryan was accompanied by New York Democratic Congressman Gregory Meeks, a big Chávez critic on the Hill and a booster of Colombia free trade. No longer on friendly turf, Ryan toned down the rhetoric while speaking with his hosts. In Lima, the Wisconsin lawmaker met with Peruvian President Alan García, a former leftist who had jettisoned such ideals in favor of anti-Chávez sentiment and corporate free trade.

Ryan was careful to be diplomatic just the same so as not to come off as an economic extremist. Reportedly, the Congressman expressed concern for the ailing U.S. automotive industry, declaring that if such an important industrial sector were to go bankrupt then this would naturally have consequences for the entire economy.

Concluding his Peru trip, Ryan then headed to Santiago where the Wisconsin legislator probably had little to fear. Indeed, Chile was one of America's staunchest allies in the region and had already signed a free trade agreement with Washington in 2004. In addition, according to WikiLeaks cables Chilean President Michelle Bachelet had referred sarcastically to Venezuela's Chávez during private conversations with the Americans. The Chilean added that neighboring Argentina under the rule of power couple Néstor and Cristina Fernández de Kirchner had "problems with credibility as a country."

Once in Santiago, Ryan and Meeks met with Chile's Minister of Trade and "underlined the success of the U.S.-Chile Free Trade Agreement." Meeks proudly noted that all members of the congressional delegation to Chile "had voted for every major FTA [Free Trade Agreement] in the last 10 years, including with Chile." Ryan meanwhile "cited the FTA as a model of success that should be replicated across the continent."

Praising Chile's Pension System

In the event, Bachelet was out of town on business though Ryan and his entourage was able to meet with Chile's Minister of Interior and Acting President Edmundo Pérez Yoma. A conservative figure, Pérez Yoma had developed a tight rapport with the Americans in private. According to WikiLeaks documents, the draconian official had requested the assistance of the FBI no less in monitoring the Mapuche, a restive indigenous group which had resisted the encroachments of the pro-corporate and pro-free trade Chilean state.

Ryan must have felt right at home with such folk, remarking to Pérez Yoma that he was "impressed with the Chilean pension system." Ryan's comments here are telling, since Santiago's reforms have long served as a model for the U.S. right which also seeks to overhaul social security. Under the Chilean system, millions of people began to pay 10 percent of their salaries to private investment accounts rather than the state, workers and employers contributing to pensions.

Larry Rohter, normally a rather conservative reporter for the New York Times, admitted in a piece that the reforms had fallen "far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet." Rohter added, "For all the program's success in economic terms, the government continues to direct billions of dollars to a safety net for those whose contributions were not large enough to ensure even a minimum pension approaching $140 a month. Many others -- because they earned much of their income in the underground economy, are self-employed, or work only seasonally -- remain outside the system altogether. Combined, those groups constitute roughly half the Chilean labor force. Only half of workers are captured by the system."

Ryan's praise of the Chilean pension system was somewhat bemusing to Pérez Yoma, who was worried that the global financial crisis would hit Chile "hard" in 2009. To be sure, the Interior Minister added, the pension system was still functioning well in the midst of the downturn, "although pension holdings had dropped dramatically." Pérez Yoma added that he had been "surprised by the relatively low level of 'political criticism' the losses had generated. Perhaps, the Minister added hopefully, there is faith in the system; if it can survive this, it can survive anything."

Managing Public Relations

What seems to have concerned Meeks and Ryan most was that Washington might have difficulty extending its free trade model to the rest of the hemisphere. Indeed, when speaking with the Trade Minister both "urged Chile to spread the message about its successful economic and democratic model throughout the region. They also encouraged Chile to highlight support for the Colombia FTA."

Ryan in particular was preoccupied with public relations. How might Chile react, he asked, if the Colombia FTA failed to pass? Gloomily, the Minister replied that this "would send a negative signal to the region. There was a split in the hemisphere between countries that espoused the democratic and open-market economy model (e.g., Brazil, Chile, Colombia, and Peru) and those that had turned away from that model (e.g., Argentina, Bolivia, Ecuador, and Venezuela). The position of the latter group could only be reinforced if the U.S. Congress failed to approve the Colombia FTA."

Surely aware of the public's low regard of the lame-duck Bush administration and Washington's economic agenda, Ryan seemed intent on walking a fine diplomatic line. Speaking to Pérez Yoma, the Republican asked if there was anything the congressional delegation should "watch out" for when interacting with Argentine interlocutors in Buenos Aires. Then, in an apparent attempt to walk back some of his extreme positions, Ryan defended the Treasury Department's bailout plan, noting that "we felt we needed to prevent the collapse of the entire financial system."

The Delicate Argentine Tango

Perhaps, Ryan was right to feel a bit wary about heading on to Buenos Aires. Though both Néstor and Cristina Fernández de Kirchner sought to appease Washington in private and to de-emphasize strategic and economic links with Chávez, public attitudes toward the U.S. were still relatively negative. That is not too surprising in light of Argentina's negative experience with the International Monetary Fund and financial turmoil going back to 2001.

Argentina, the U.S. Embassy in Buenos Aires warned Meeks, "consistently registers the highest levels of anti-Americanism in the hemisphere in public opinion polls." Going into overdrive, the U.S. Embassy had sought to reverse such perceptions through a slick and elaborate PR campaign which sponsored everyone from "visiting American rock groups and sports heroes to Nobel Prize winners and U.S. companies," all of whom would "carry the positive agenda forward."

No doubt aware that he was walking on eggshells, Ryan was careful to stress American goodwill in Buenos Aires. In a meeting, he told members of the local U.S. Chamber of Commerce to "help the new U.S. administration to find opportunities to improve the bilateral relationship with Argentina." Speaking with his counterparts in the Argentine Congress, Ryan opined that 2009 might be a difficult year for the world, yet the Congressman "expressed hope that the new U.S. administration would deploy the right economic policies to ensure a strong recovery in 2010."

During a second and somewhat testier meeting, Ryan conversed with Foreign Minister Jorge Taiana, who noted that "Argentina had suffered many crises of its own making, but this crisis was made in the First World, and Argentina did not want to pay the price for the mistakes or neglect of other governments."

Going Back on Tea Party Rhetoric

Having gotten an earful, Ryan was later careful not to go overboard with extremist rhetoric and in fact made some rather surprising statements which the Tea Party faithful would have disapproved of. Take, for example, Ryan's meeting with Cabinet Chief Minister Sergio Massa, who "criticized the speculative bubbles that preceded the crisis." Remarkably, Ryan noted that "among the many tools being deployed to address the crisis, careful attention was being paid to monetary policy, which previously had sought to contain inflation but now needed to target potential deflation."

The Federal Reserve, Ryan continued, had made a "historic" decision to lower interest rates to near zero, and "ultimately, the important thing was to fix the financial system by requiring greater transparency and to keep speculation from spinning out of control." The Congressman added that "Federal Reserve Chairman Bernanke was one of the most prominent scholars of the Great Depression in the 1930s," and the two lessons which Ryan had drawn from Bernanke's academic work "were the negative consequences in this type of crisis of taking liquidity out of the system and of enacting protectionist measures."

Such views, notes an article in Salon, conflict with Ryan's own stated policy of opposing interventionism. "Ryan himself has recognized, in times of crisis, the merits of currency devaluation," the article notes. "With the cameras off, Ryan expressed confidence in the Fed's fight against deflation, and he recognized 'the negative consequences ... of taking liquidity out of the system' in times of a sharp downturn." Ryan's support for interventionist policies seems to undermine the Congressman's carefully cultivated image as a vocal critic of the Federal Reserve and the latter's efforts to stimulate growth.

Ryan's Untenable Position

Looking back on Ryan's South America trip in light of the WikiLeaks documents, it seems the Wisconsin lawmaker was locked in an untenable political position. Forced to defend savage capitalism in a region with long and bitter experience with austerity programs, Ryan seems to have realized that he could not in good conscience defend right wing orthodoxy. It is also worth noting that Ryan chose to avoid traveling to the most anti-U.S. countries in South America, and even so found himself frequently on the defensive.

Now that Ryan has been tapped as Romney's VP pick, it will be interesting to see how the Wisconsin lawmaker defends his views on the campaign trail. Perhaps he will find that, as in South America, it's extremely difficult to defend the indefensible.

Nikolas Kozloff is the author of Revolution! South America and the Rise of the New Left. Follow him on Twitter: @NikolasKozloff

 

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