US embassy cable - 05QUITO2416

UNCLAS SECTION 01 OF 06 QUITO 002416 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR WHA/AND 
DEPT PASS USAID 
 
E.O. 12958: N/A 
TAGS: KDEM, PGOV, ECON, EAID, EC 
SUBJECT: TRANSFORMING ECUADOR: ACTION PLAN FOR DEMOCRACY 
AND STABILITY 
 
REF: QUITO 2235 
 
SENSITIVE BUT UNCLASSIFIED. 
 
------- 
Summary 
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1. (SBU) Ecuador is one of the most unstable, undemocratic, 
and corrupt countries in Latin America.  Its political and 
economic systems, based on competition by entrenched elites 
for lucrative state-provided economic privileges, threaten 
U.S. interests directly where they impinge on U.S. 
anti-narcotics programs, cheat U.S. investors, and drive 
Ecuadorians to emigrate to the U.S.  Perhaps more 
importantly, Ecuador seems to totter constantly on the verge 
of becoming a failed state -- and we cannot afford a failed 
state on the southern border of Colombia. 
 
2. (SBU) Over the past several months the Embassy has 
reviewed in depth the fundamental problems of Ecuador in 
order to develop a strategy for advancing U.S. interests on 
this difficult terrain.  We believe that a new approach, 
targeting our long-term interests in democracy, economic 
growth, and the resultant stability, and based on a clear 
understanding of Ecuador's fundamental problems is required. 
The plan that we outline below focuses on building momentum 
for change by developing leadership, changing attitudes, 
improving education, improving incentives and attacking 
corruption.  It also directly focuses on the judiciary and 
military, two sectors of particular concern for Ecuadorian 
democracy and stability. 
End Summary. 
 
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Overview 
-------- 
 
3. (SBU) In the aftermath of the fall of the Gutierrez 
government on April 20, 2005, the Embassy established several 
working groups to review U.S. policy toward and assistance to 
Ecuador, identifying challenges and opportunities in the 
short, medium and long terms.  After several months of 
discussions involving all agencies at post, we have 
identified a series of impediments to desirable political and 
economic change in Ecuador and outlined U.S. Mission actions 
to address them.  Initial short-term ideas were reported 
reftel in response to Department's request.  This action plan 
does not attempt to cover the full spectrum of issues 
included in the MPP.  Rather, it focuses on the fundamental 
problems that have made it impossible for Ecuador to break 
out of its self-destructive downward spiral of political and 
economic instability. 
 
4. (SBU) The Mission identified the following core issues: 
 
--  Leadership:  A lack of emerging leaders and networks 
prepared to challenge the entrenched elites who currently 
hold power. 
 
--  Attitudes:  Attitudinal resistance to democratic and 
economic change at both elite and popular levels, based in 
part on their failure to understand democracy and market 
economics. 
 
--  Education:  Weak educational institutions at both basic 
and upper levels, and little push for change from either 
elite or popular sectors. 
 
--  Incentives:  Inadequate incentives to challenge existing 
power and push for political, social or economic change. 
 
--  Corruption:  Endemic corruption throughout the public and 
private sectors at all levels. 
 
--  Military:  A military  that remains too willing to 
involve itself in politics and business. 
 
--  Judiciary:  Judicial institutions that are not 
independent, transparent or efficient. 
 
5. (SBU) Regional and class divisions stymie efforts for 
reform.  Inequalities permeate society, business, and the 
political life of the country. Those at the top of the 
pyramid do not necessarily accept, as possible or even 
desirable, the premise that "a rising tide lifts all boats." 
Meanwhile, regional rivalries -- especially between Quito in 
the highlands and Guayaquil on the coast -- are so deeply 
divisive that they seriously impede any initiatives of 
national scope and vision. 
6. (SBU) It is also impossible to list Ecuador,s fundamental 
problems without reference to the challenges it faces as a 
result of its location between major producers of narcotics 
and terrorism.  Huge quantities of illegal narcotics pass 
through Ecuador from its neighbors, especially Colombia, and 
the return flow of dollars through Ecuador is also 
substantial.  Colombian terrorists use Ecuadorian territory 
frequently for rest and recuperation, and as a supply route 
for weapons and other materiel.  Although narcotraffickers 
have not yet targeted Ecuador for production of drugs, and 
terrorists seem content to use Ecuador as a staging area and 
not a target, either of those situations could change without 
notice.  Further, it is clear that both Fidel Castro and Hugo 
Chavez view Ecuador as potentially fertile terrain for 
revolutionary ferment, and are making investments to that 
end.  While thus far they have not made significant progress, 
that too could change. 
 
7. (SBU) Analysis of these problems lays bare the reasons why 
Ecuador has had seven presidents in the past nine years.  The 
Ecuadorian political system sets the president up for a fall. 
 Elected popularly, the president is opposed by a congress 
elected from party lists controlled, in the main, by 
entrenched elites who have a stake in maintaining the status 
quo; a corrupt system that enriches them.  Ecuadorians have 
elected several presidents who ran against the oligarchy, 
most recently Lucio Gutierrez.  However, the entrenched 
elites have worked assiduously to remove them.  President 
Alfredo Palacio's continued insistence on political reform is 
damaging prospects for completion of this term, and the 
president who next assumes office will be similarly 
challenged to serve out his term. 
 
8. (SBU) Clearly, profound changes in the political, 
economic, and social systems of Ecuador is necessary for the 
country to become a stable democracy with a healthy economy. 
The changes must come from Ecuadorians themselves, and it may 
take decades and several generations to accomplish the goal. 
The actions needed to trigger and sustain that process must 
be taken in the short and medium term, even if many of the 
results may be measurable only in the long term.  With this 
in mind, we propose the following initial action plan to 
address some of these root causes of instability. Continued 
engagement will yield new ideas and initiatives that can be 
added to this plan, which should therefore be considered a 
living document. 
 
--------------------------------------------- 
Developing Leadership and Networks for Change 
--------------------------------------------- 
 
9. (SBU) Objective:  Bring together Ecuadorians committed to 
change, motivate and activate them.  Develop leaders for the 
future. 
 
10. (SBU) Context:  Cutting across all elements of this 
action plan is the need for a network of Ecuadorians 
committed to change, who agree on the problems to be 
addressed and a general approach for solutions.  We have 
already begun building this network, discussing fundamental 
problems with close embassy contacts and likely allies.  We 
have found a tremendous validation of our conclusions and an 
enthusiasm to work together.  Some of our contacts have taken 
matters into their own hands since our first discussion. 
Three of them have joined together and are broadcasting a new 
radio show dedicated to changing attitudes.  Another group 
has proposed the establishment of a think-tank to commission 
studies and use them to change the public discourse on 
numerous issues.  Still, years of successive failure to build 
a consensus for reform has bred a great deal of pessimism and 
fatalism among Ecuadorians.  Our steady encouragement, plus 
our power of convocation, can make a difference. 
 
11. (SBU) Actions: 
------------------ 
 
--  Develop new networks and strengthen existing networks of 
individuals and organizations that share our goals. 
Establish or assist in the establishment of new alumni 
associations including alumni of U.S. exchange programs and 
of U.S. universities to promote sharing of experiences and 
build support for reforms. 
--  Assist private groups looking to establish a think-tank 
geared to increasing scholarship and policy promotion on an 
agenda focused on democracy, stability, and economic 
liberalization. 
 
--  Establish one or more awards programs administered by 
Ecuadorian allies to recognize leadership in public and 
private sectors. 
 
------------------ 
Changing Attitudes 
------------------ 
 
12. (SBU) Objective:  Help change Ecuadorian attitudes, 
improving perceptions of democracy, of economic 
liberalization, of responsible foreign policy and of the U.S. 
 
13. (SBU) Context:  Ecuador is plagued by a series of 
self-defeating attitudes that present a serious barrier to 
the consolidation of democracy, to responsible economic 
policy and political stability.  The first is a paternalism 
that dates back to the pre-Colombian period, was sharply 
reinforced by the colonial experience, and has continued in 
the modern era with statist policies at all levels.  There is 
a general consensus among Ecuadorians that the patron, now 
the state, must provide.  Ecuadorians also embrace a 
chauvinistic nationalism in which any idea or act can be 
shown to be traitorous if it cedes sovereignty in any sense. 
These factors make the terrain ripe for populist appeals, 
leftist rhetoric and classic anti-American dogma. 
 
14. (SBU) The Ecuadorian public is highly skeptical of USG 
motives.  Campaigns focused on bringing outside experts to 
Ecuador on various policy issues, economic, political and 
foreign, to help change Ecuadorian attitudes, can be used 
both to improve Ecuadorian perceptions of the U.S. and to 
change attitudes toward needed substantive reforms.  We need 
to show that the USG is interested in Ecuador's social, 
economic, and political development and we must be more 
visible in taking public credit for the many things we do for 
the people of Ecuador. 
 
15. (SBU) Actions: 
------------------ 
 
--  Establish a public outreach working group to expand 
outreach activities to more effectively explain USG 
interests/goals to Ecuadorians.  Identify sectors, regions, 
institutions relevant to US policy interests that we are not 
engaging consistently.  Monitor the advance and success of 
the plan. 
 
--  Bring in U.S. and foreign experts and communicators to 
expand debate on priority issues including democracy, 
education reform, pension reform, health care systems, 
petroleum sector reforms, electric sector reforms, 
telecommunications.  Identify other countries within Latin 
America that can serve as examples for different reforms. 
 
--  Support studies geared to generating understanding of the 
price Ecuador pays for its lack of reform.  For example, a 
study comparing the telecommunications sector of a country 
that has privatized/liberalized the sector, with the sector 
in Ecuador.  The purpose would be the generation of 
unassailable sound bites for Ecuadorians to use in promoting 
reform. 
 
--  Repackage how we present ourselves to the Ecuadorian 
public.  Find new outlets to communicate what we do for 
individual Ecuadorians, be it through AID programs, U.S. 
military humanitarian assistance, Embassy family volunteer 
efforts, or US company community outreach. 
 
---------------- 
Education Reform 
---------------- 
16. (SBU) Objective:  To raise the quality of education, 
create a base of Ecuadorian human capital that is more 
economically competitive and better prepared to participate 
in a democracy as responsible, engaged citizens. 
 
17. (SBU) Context:  Ecuadorian access to education is on par 
with similarly sized countries of comparable development, but 
Ecuador lags badly with respect to the quality of the 
education.  Leftist dogma pervades curricula from basic 
education up through the universities.  Cubans and 
Venezuelans are increasing their presence in education here; 
exceptional children from the lower classes are more likely 
to find higher education abroad in Cuba than in the U.S. 
There is little incentive for elites to promote educational 
improvement, since their children attend private schools and 
private or foreign universities. 
 
18. (SBU) Actions: 
------------------ 
 
--  Establish a mission education working group.  Assess USG 
ability to expand its work directly in basic education or to 
support the efforts of international foundations or the 
multilateral banks.  Identify success stories from other 
Latin American countries that could serve as models.  Review 
programs of both official and private binational educational 
exchange and possibilities for expansion. 
 
--  Bring in experts from other Latin American countries to 
promote debate of education reform. 
 
-- Explore ways that we might expand number of private high 
school youth exchange programs.  Encourage binational 
university-to-university links. 
 
-- Expand and more sharply target programs for promotion of 
U.S. higher education among Ecuadorian students, e.g. through 
more scholarships. 
 
-- Explore opportunities to expand English-language programs 
as a vehicle to improve youth understanding of U.S. 
democracy, market economics and to improve teacher quality. 
 
---------------------------- 
Incentives: Rewarding Reform 
---------------------------- 
 
19. (SBU) Objective:  Develop examples of Ecuadorian 
localities where comprehensive reform and development 
programs are working. 
 
20. (SBU) Context:  Repeated failure at the central 
government level to improve people's lives has left 
Ecuadorians pessimistic about change and suspicious of 
reforms that have been promised but never delivered. 
 
21. (SBU) There remains, however, a positive attitude about 
the ability of local government to deliver.  By highlighting 
the many positive examples of successful reform at the local 
level, we can help expand the safe political space for those 
who pursue change, while constraining the power of those who 
actively sabotage those efforts. 
 
22. (SBU) Actions: 
------------------ 
 
--  Develop a project, mirroring the concept of the 
Millennium Challenge Account, in which mid- to-small-sized 
localities would compete for a program of development on the 
basis of their reform-oriented policies. 
 
-------------------- 
Attacking Corruption 
-------------------- 
 
23. (SBU) Objective:   Reduce corruption. 
 
24. (SBU) Context:  The Ecuadorian political and economic 
systems are based on the distribution of wealth, generally 
via corrupt channels, rather than the creation of wealth. 
Ecuador's deficit of sound, credible and well-functioning 
institutions cannot be overcome unless corruption becomes the 
exception rather than the norm.  Ecuador fell another five 
places to number 117 in Transparency International's 2005 
Corruption Perceptions Index. 
 
25. (SBU) Actions: 
------------------ 
 
-- Establish Embassy Anti-Corruption Working Group. 
 
-- Collect information for submission to Department in 
support of 212F visa ineligibility for corrupt Ecuadorians. 
 
-- Work with State Department and Department of Justice to 
energize investigations of corrupt Ecuadorians in the U.S. 
 
-- Develop proposals to promote reforms to decrease 
discretion and increase the public's wariness and intolerance 
toward corruption. 
 
-- Support effective implementation of the new money 
laundering legislation that provides, for the first time, 
tools to attack this problem. 
 
-- Support development, passage and implementation of a 
competition law providing the GOE with anti-trust powers. 
 
-- Develop citizen oversight proposals for local government 
finances. 
 
--------------------------------- 
Promoting a Professional Military 
--------------------------------- 
 
26. (SBU) Objective:  An Ecuadorian military with a better 
understanding of the appropriate role of the military in 
democracy. 
 
27. (SBU) Context:  Although none of the changes in 
government over the past 25 years can be classified as a 
military coup, the Ecuadorian military has played an 
important role in bringing down all of the past decade's 
three democratically elected presidents.  The military must 
understand that its role does not allow the "withdrawal of 
support" from a sitting elected president, allowing his fall. 
 The military must also be removed from competition with 
private enterprise, refocusing it on its legitimate role and 
ending its involvement in numerous commercial enterprises 
which either compete with or crowd out the development of the 
private sector. 
 
28. (SBU) Actions: 
------------------ 
 
-- Promote military respect for civilian government to 
prevent an irregular change of government. 
 
-- Assist the Ministry of Defense in getting the "Ley 
Organica de las Fuerzas Armadas," approved so that military 
members will not serve in other government institutions (such 
as customs). 
 
-- Assist the military to continue providing an operational 
presence on the northern frontier, its appropriate priority. 
 
-- Support efforts to have the military and national police 
cooperate and collaborate on narcotics trafficking, arms 
smuggling, illegal migration, and anti-trafficking. 
 
-- Assist the Ministry of Defense in getting the "Ley 
Organica de Administracion y Control de los Espacios 
Acuaticos," approved so the Navy may better control the 
illicit movement of drugs, arms, and persons. 
 
-- Assist in removing the military from commercial 
enterprises. 
 
--------------------------------------------- --- 
Promoting an Effective and Independent Judiciary 
--------------------------------------------- --- 
 
29. (SBU) Objective:  Independent, transparent, objective, 
and competent Supreme and Constitutional Courts that preside 
over a modern judicial system respected by the population for 
its efficient and just operation. 
30. (SBU) Context:  Ecuador's judicial system is infamous for 
its corruption and its subservience to political interests. 
The key Constitutional and Supreme Courts were closed and 
justices removed as a result of political party attempts to 
re-stack the courts in late 2004 and early 2005.  The 
position of Attorney General (Fiscal General) has been filled 
by an interim appointee for three years as has the Controller 
General position, as the political parties attempt to place 
their own people in these powerful positions.  An 
internationally monitored effort to choose new justices for 
the Supreme Courts is now underway, but is complicated by the 
fact that the process being used is technically 
unconstitutional.  Ecuador is halfway through a difficult 
transition toward an oral accusatory system of justice, 
supported in part by USAID and NAS. 
 
31. (SBU) Actions: 
------------------ 
 
--  Support local oversight of the selection of Supreme Court 
magistrates and Constitutional Tribunal judges, appointment 
of attorney general and comptroller general. 
 
--  Provide training and assistance to new justices in taking 
up their positions.  Perhaps fund travel to the U.S. both for 
training purposes and to help build their credibility. 
 
--  Provide training and assistance to lower levels of the 
judicial system  that appear clean. 
 
-- Increase outreach programs to law schools, to help build a 
more professional and ethical new class of lawyers who can 
function in the recently implemented oral advocacy system. 
 
-- Develop programs for citizen oversight of judicial 
activities. 
 
-- Target corrupt judges and lawyers for 212f visa 
ineligibility. 
 
-- Promote more equal access to justice through support for 
local services for vulnerable groups.  Encourage and support 
oversight mechanisms for local level judicial performance and 
a   National Public Defense System. 
JEWELL