US embassy cable - 05QUITO897

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 000897 
 
SIPDIS 
 
E.O. 12958: DECL: 04/22/2015 
TAGS: PGOV, PREL, ASEC, EC 
SUBJECT: ECUADOR: ENGAGING THE NEW GOVERNMENT 
 
REF: QUITO 894 
 
Classified By: Amb. Kristie A. Kenney for reasons 1.4 (b) and (d) 
 
1.  (C) Summary:  The Palacio government is gradually 
consolidating its hold on power, and beginning to send 
disturbing signals on issues.  With ex-President Gutierrez 
still in the country, the situation remains unsettled--it is 
far from clear how long this government will last.  In line 
with the OAS resolution, we have begun engaging with the 
government and others to encourage "full respect for 
democratic order, the constitutional framework, and the rule 
of law, through dialogue and constructive participation." 
The Ambassador will meet with President Palacio on April 25, 
and will begin calling on other cabinet members shortly, to 
encourage GOE cooperation with the OAS mission and protect 
key USG interests (FTA, Oxy, Manta) to the maximum extent 
possible.  We had already begun engaging with the new 
military and police commands, and government officials at a 
lower level.  End Summary. 
 
Getting Gutierrez Out 
--------------------- 
 
2.  (C) Gutierrez remains in the Brazilian Ambassador's 
residence.  The GOE is now publicly signaling that it will 
grant Gutierrez safe passage out of the country, but is not 
saying when, exactly.  Media and a minimal group of 
protesters remain camped outside.  Sources indicate that 
Gutierrez' departure may be imminent. 
 
GOE Welcomes OAS Visit 
---------------------- 
 
3.  (C) In our initial contacts with GOE officials (RefTel), 
all have strongly welcomed the prospect of an OAS delegation 
visit.  Initial reaction to the OAS declaration has been 
muted, with the exception of Guayaquil mayor Jaime Nebot, who 
defended the Palacio government's sovereignty and said he 
would defend the new government "in the streets if 
necessary." 
 
4.  (C) For our part, we are offering to assist the OAS 
mission here in any way to ensure the success of the visit, 
including coordination on the agenda, facilitation of 
meetings, and care of US delegation members. 
 
Elements of an Engagement Strategy 
---------------------------------- 
 
5.  (C) The new government is trying to distinguish itself 
early from its discredited predecessor on a range of issues, 
some of which affect USG interests.  To open dialogue with 
the goal of preventing costly short-term mistakes by this 
government, it is urgent that we begin to engage at the 
highest levels. 
 
6.  (C) Of critical concern are early indications that brash 
young Economy Minister Rafael Correa is considering a debt 
moratorium.  Ardent nationalist Government Minister Gandara 
has signaled that although Palacio has not made any 
decisions, he will recommend review of the Manta CSL 
agreement.  Gandara has also publicly declared that there 
will be no Article 98 agreement with the U.S. 
 
7.  (C) Unfounded rumors swirled on April 22 of unrest in the 
military over the replacement of the high command, confirming 
the need for continued engagement with the security forces. 
We have confirmed with outgoing and incoming military leaders 
that these rumors had no substance, and are in close touch 
with the new national police chief on security issues. 
 
Comment 
------- 
 
8.  (C) Nebot's posturing aside, we expect the OAS mission to 
be warmly received here by the government.  That said, on the 
streets, it is possible the protest movement might be 
reactivated to demonstrate popular support for the government 
against foreign interference.  Regardless, we will work with 
the OAS mission here to ensure a successful visit. 
 
9.  (C) At this point, the new government is strongly 
signaling that it will track a different course than 
Gutierrez on most issues, including key USG interests in 
trade, Manta CSL, investment issues.  Some of this, we 
believe, can be blunted through engagement.  No USG interest 
is served by leaving the GOE alone to make serious early 
missteps.  Our efforts are focused on preventing or at least 
holding off those decisions until the OAS mission determines 
its recommendations. 
KENNEY