US embassy cable - 04QUITO2497

S E C R E T SECTION 01 OF 03 QUITO 002497 
 
SIPDIS 
 
E.O. 12958: DECL: 09/13/2014 
TAGS: PGOV, PREL, EC, Democracy 
SUBJECT: ECUADOR: POLITICAL STABILITY AND USG SUPPORT 
 
REF: A. 03 QUITO 3813 
     B. 03 QUITO 2824 
     C. QUITO 2459 
     D. QUITO 2462 
     E. QUITO 2418 
     F. QUITO 2380 
     G. QUITO 2327 
 
Classified By: Ambassador Kristie A. Kenney for reason 1.4 (b&d). 
 
1.  (S) Summary:  With President Gutierrez increasingly 
isolated and weakened, his Cabinet divided and Congress 
hopelessly fragmented, rumors continue to swirl about a 
constitutional or extra-constitutional change in the 
Presidency.  In this context we have reviewed how political 
instability here affects USG interests and what we can do to 
support constitutional democracy in Ecuador.  In the near 
term we see many opportunities to do so, including measures 
we can take from here, President Gutierrez' UNGA attendance 
in September, and upcoming visits by senior USG officials. 
We also recognize that Gutierrez faces worrisome potential 
flash-points in coming months.  End Summary. 
 
Political Conditions Difficult 
------------------------------ 
 
2.  (S) Since late last year (Refs A-B) President Gutierrez 
has faced mounting political opposition and public 
disenchantment with his government's performance.  Much of 
this damage to Gutierrez' credibility is self-inflicted; the 
result of a series of political blunders.  The latest round 
of speculation about possible moves against Gutierrez (and 
possible desperate extra-constitutional moves by him to 
retain power) began with Gutierrez' inexplicable visit to 
Panama and meeting there with reviled ex-president Abdala 
Bucaram (see Ref C).  Gutierrez dealt with the negative 
repercussions of that move (which bought him the temporary 
support of Bucaram's PRE but lost the heftier backing of the 
PSC) by offering concessions to the PRIAN (by replacing the 
head of the national tax authority, who had been pursing 
party leader Alvaro Noboa's back taxes). 
 
3.  (S) Without the support of the PRIAN or PRE for 
impeachment, Congress has diverted itself by censuring 
provocative statements by Gutierrez' brother Gilmar and 
investigating the brothers' business dealings, searching for 
impeachable offenses.  Meanwhile, the Vice President, the 
President of the Supreme Electoral Tribunal, and the 
President of Congress have publicly criticized the 
President's campaign-like pre-electoral visits to inaugurate 
public works in districts where his party has local electoral 
hopes. 
 
Potential Flash-points 
--------------------- 
 
4.  (S) While Gutierrez has proved himself a canny survivor 
to have lasted this long into his mandate, we share the 
concern of some analysts that with each subsequent cycle of 
scandal/blunder, political opposition mounts and his 
government's vulnerability increases.  Gutierrez faces a 
series of potentially difficult challenges to his authority 
in coming months, which could include: 
 
-- a return of former President Abdala Bucaram (as soon as 
mid-October), if he is not immediately arrested and tried on 
outstanding corruption charges; 
 
-- corruption scandals associated with Gutierrez' coterie of 
corrupt family members and trusted associates; 
 
-- spill-over from mishandling of the Occidental Petroleum 
case, should the GoE proceed (October-November) to 
nationalize Oxy's assets (Refs D-G); 
 
-- the Guayaquil round of FTA talks (October 25-29), which 
could attract anti-government protests; 
 
-- new economic measures which could provoke social protests, 
including elimination of the subsidy on cooking gas 
(currently planned by the GoE for November); 
 
-- an incursion into Ecuadorian territory by the FARC or 
Colombian Armed Forces (anytime). 
 
USG Interests 
------------- 
 
5.  (S)  Despite his political vulnerability (and perhaps 
contributing to it), Gutierrez is a U.S. ally on many key 
issues (e.g. bolstering Northern Border security to prevent 
spill-over from Plan Colombia, fighting narcotics 
trafficking, supporting an FTA).  His growing weakness make 
him increasingly ineffective implementing this shared agenda. 
 But any scenario providing for his departure is unlikely to 
produce a more amenable ally or a noticeably stronger (lame 
duck) president.  Furthermore, support for the Vice President 
is nonexistent among the political parties, and within 
Congress there is no consensus candidate to replace the 
President should he be removed.  (Congress has the 
Constitutional power to replace the President if the Vice 
President resigns.) 
 
6.  (S) Particular USG interests are trumped by the broader 
U.S. interest in supporting constitutional democracy in a 
country with a shaky democratic track record.  Ecuador's 
irregular curtailment of presidential terms in 1997 and 2000 
were only loosely cloaked in constitutional guise, and 
continue to serve as an invitation to those whose interests 
would be served by Gutierrez' early departure. 
 
7.  (S) The corruption that swirls within Gutierrez' inner 
circle undermines public perceptions of this government and 
the public's commitment to democracy.  It also indirectly 
undermines public perceptions of the U.S. role.  While we 
publicly distinguish between USG support for constitutional 
democracy and Lucio Gutierrez, the man, the public makes no 
such distinction. 
 
8.  (S) We see no indications of military support among the 
middle ranks for a Gutierrez self-coup, and believe those at 
higher ranks loyal to Gutierrez support will ultimately 
support the constitution.  A constitutional move against 
Gutierrez is certainly conceivable, given the challenges he 
faces.  It is in the U.S. interest to prevent any such move, 
which most believe would only result in an even weaker 
government, and in the process would set back Ecuadorian 
democracy.  That there is no politically attractive 
alternative to replace Gutierrez (although the crusading 
Solicitor General is being mentioned by some as an aspirant) 
contributes to his longevity and may ultimately salvage 
Gutierrez' term of office, despite his unpopularity and 
weakness. 
 
What We Can Do To Support Constitutional Democracy 
--------------------------------------------- ----- 
 
9.  (S) We see opportunities in the political disorder that 
characterizes Ecuador's relatively young democracy, and see 
the following opportunities to support Ecuadorian democracy: 
 
By the Embassy and Consulate Guayaquil: 
 
-- make it clear to Gutierrez and the political opposition 
that the USG would not tolerate a Fujimori-style self-coup; 
 
-- similarly, reach out to the military leadership to send 
the same message; 
 
-- press Gutierrez to address perceptions of corruption 
within his inner circle; 
 
-- continue outreach to key GoE officials who represent 
maturity and stability in the Cabinet (Government Minister 
Baca, Economy and Finance Minister Yepez); 
 
-- continue outreach to political parties to encourage 
democratic stability; 
 
-- continue outreach to the indigenous movement to promote 
constitutional democracy; and, 
 
For Consideration by Washington Agencies or USG Visitors to 
Ecuador: 
 
-- support electoral democracy by supporting an OAS 
observation mission for upcoming October 17 local elections; 
 
-- use the UNGA as an opportunity to press Gutierrez to stay 
the democratic course; 
 
-- use high-profile visits to Ecuador to emphasize our 
messages to the Government, opposition, public and military; 
 
-- use visits to the U.S. of key GoE ministers to fortify 
democracy and economic reform. (The willingness of key USG 
economic officials to see Finance Minister Yepez as well as 
International Trade Minister Baki last week were very useful.) 
 
10.  (S) Ecuador Visit Specifics 
-------------------------------- 
 
-- General Hill's upcoming (early October) visit provides an 
excellent opportunity to press these themes with the military 
leadership. 
 
-- We recommend a visit by U/S Grossman, preferably after the 
October 17 local elections and before the Guayaquil FTA 
round, to send a signal of support for electoral processes 
and economic opportunity that is inherent to successful 
democracy. 
 
-- Senior NSC or WHA visits (October/November). 
KENNEY