US embassy cable - 05QUITO2463

C O N F I D E N T I A L SECTION 01 OF 03 QUITO 002463 
 
SIPDIS 
 
PLEASE PASS TO USOAS 
 
E.O. 12958: DECL: TEN YEARS 
TAGS: PGOV, PINR, PREL, EC 
SUBJECT: PALACIO CONSIDERS COMPROMISE, CONGRESS APPEALS TO 
OAS 
 
Classified By: PolChief Erik Hall for reason 1.4 (b&d). 
 
1. (C)  Summary: President Alfredo Palacio told the 
Ambassador on October 27 that he was considering sending a 
new referendum proposal to Congress which would allow voters 
to decide between constituent and constitutional assemblies 
to make political reform.  The Ambassador urged strict 
adherence to the constitution and respect for international 
treaty commitments.  Palacio later pledged both while calling 
on the military to act as custodians of Ecuador's democracy. 
Congress, meanwhile, passed a resolution on October 27 
rejecting a constituent assembly and calling for OAS 
intervention under the Democratic Charter to defend democracy 
here.  Thus far, Palacio has not crossed constitutional 
lines, despite rumors that he might.  If Palacio follows 
through by submitting his proposal to Congress, a 
constitutional crisis could be averted.  Our efforts will 
seek to ensure respect for the constitution by all sides. 
The situation on the streets remains calm.  We offer 
suggested press guidance and action recommendations in paras 
10-14.  End Summary. 
 
2.  (C) Palacio met with the Ambassador at her request on 
October 27 to discuss the current confrontation with Congress 
over his proposal to convoke a national constituent assembly 
to make political reforms.  Palacio said that despite the 
political crisis at home, he would travel to the Summit of 
the Americas meetings at Mar del Plata next week.  He will be 
accompanied by FM Francisco Carrion and presidential advisor 
Luis Herreria, among others.  Trade Minister Jorge 
Illingworth would not attend due to a personal schedule 
conflict involving medical treatment, and would be 
represented by Vice Minister Manuel Chiriboga. 
 
Palacio Considering Surprise Proposal to Congress 
--------------------------------------------- ---- 
 
3.  (C) Turning to the ongoing confrontation with Congress 
over procedural issues involved in convoking a referendum, 
President Alfredo Palacio told the Ambassador that he was 
planning a surprise move:  to send to Congress on October 28 
a referendum proposal asking the public whether they approve 
of a national assembly, and if so, whether they prefer a 
constituent or constitutional assembly.  This corresponded to 
what Pol and EconCouns heard from Palacio's legal advisor 
earlier.  With rumors running rampant that Palacio intended 
to bypass the constitution as well as Congress by convoking a 
referendum by presidential decree, Palacio held that sending 
the measure to Congress would help calm political tensions 
which are uniting much of Congress against him.  Press 
reported Palacio's intentions to submit a new referendum 
proposal to Congress on October 28. 
 
Plan B:  If Congress Rejects, Back to TSE 
----------------------------------------- 
 
4.  (C) Palacio told the Ambassador that he now has the 
majority four votes in the Supreme Electoral Tribunal (TSE) 
needed to convoke a constituent assembly, and that he would 
consider calling them in if Congress rejected his new 
proposal.  The Ambassador told Palacio that this could 
potentially be a very controversial move, noting that most 
observers believe any proposal involving changes to the 
constitution must go through the Congress.  She stressed 
repeatedly the importance for the U.S. and the international 
community of staying within a constitutional framework. 
 
Plan C?  Enlisting Military Support 
----------------------------------- 
 
5. (C) Earlier the same day, at the Air Force 85th 
anniversary and promotion ceremonies, Palacio addressed the 
military in a regularly-scheduled event.  Press quoted him 
calling on the Armed Forces, "in the spirit of your historic 
role as custodian of the democratic spirit of the people" to 
"protect what our people are creating in this powerful 
democratic process to bring to a referendum the decisions on 
the destiny of our people."  He also said his "absolute 
commitment to the constitution, the law, and national 
interests, is what distinguishes my presence in the 
presidency."  He also called on the armed forces to respect 
all forms of expression adopted by the citizenry to rebuild 
democracy. 
 
OAS Calling, Congress Inviting 
------------------------------ 
6.  (C) Palacio told the Ambassador that he had received a 
call from OAS SecGen Insulza expressing concern that he was 
contemplating actions that could be construed as 
unconstitutional.  Palacio asked the Ambassador to help him 
allay OAS concerns.  On October 28 Palacio convoked all OAS 
ambassadors to a palace event in which he offered an extended 
self-justification and revealed his new intention to send a 
new referendum proposal to Congress, along the lines he had 
described the night before to the Ambassador. 
 
7.  (U) Apparently unbeknownst to Palacio at the time of his 
meeting with the AMB, the Congress passed on the same day a 
resolution requesting that the OAS intervene in Ecuador's 
political process, citing the OAS Democratic Charter.  The 
resolution passed with 68 votes, from all parties except the 
MPD, Pachakutik, and the Socialists.  The resolution also 
urged Palacio to respect the constitution and questioned the 
constitutionality of an undefined constituent assembly. 
 
8.  (C) The resolution was delivered to the OAS 
representative later on October 27.  During his October 28 
address to the OAS diplomatic corps, Palacio referred 
obliquely to the Congressional appeal, referring to it as an 
"international conspiracy" to bypass his constitutional 
authority.  He denied the existence of a conflict between the 
executive and Congress, defended himself against accusations 
of undemocratic moves, and said that sending his new proposal 
to congress would obviate any need for outside help. 
 
FTA Clarification 
----------------- 
 
9.  (C) Palacio also told the Ambassador that his public 
comments that the FTA with the U.S. and the resolution of the 
Occidental Petroleum commercial dispute could be decided by 
the constituent assembly were taken out of context.  He 
assured her that a constituent assembly would not be 
empowered to overturn prior agreements, including the Manta 
CSL agreement.  He said he believed the FTA would be passed 
by Congress prior to a constituent assembly, making it 
untouchable. 
 
Comment, Suggested Guidance, and Action Plan 
-------------------------------------------- 
 
10.  (C) Thus far, Palacio has stayed within democratic 
bounds.  The move to send the assembly issue back to Congress 
is a welcome development which should help lower political 
temperatures somewhat, at least temporarily.  The exhortation 
to the military is exaggerated in press reports intent on 
fomenting confrontation with Congress.  Our military contacts 
reported satisfaction with the president's remarks, which 
they interpreted as restrained, given the political 
situation.  The street, meanwhile, remains calm after minor 
disturbances earlier in the week. 
 
11.  (C) Palacio is clearly sincere in his desire to make 
political reforms, but he still fails to recognize the full 
political implications of his plans, and overestimates his 
ability to control the outcome of a constituent assembly.  We 
will continue to emphasize the absolute necessity of staying 
within constitutional bounds, and safeguarding our bilateral 
interests. 
 
12.  (U) Public diplomacy strategy:  The situation here is 
still unfolding, and we recommend responding to press queries 
with our usual points, with a slight modification to 
emphasize staying within the bounds of the constitution: 
 
-- the call for a constituent or constitutional assembly is 
an internal matter to be decided by the Ecuadorian government 
and people; 
 
-- the Ecuadorian people deserve a democratic system which 
works to the benefit of all citizens; and, 
 
-- we are committed to help Ecuadorians find ways to 
strengthen democratic institutions, as long as these efforts 
respect constitutional bounds. 
 
13.  (C) OAS Role:  Palacio has rejected Congress' call for 
OAS help, and it may not be necessary yet, given his change 
of tactics with Congress.  We see an OAS mediating role as 
potentially helpful in educating Palacio about the restraints 
on his constitutional role, but do not recommend invocation 
of the Democratic charter without Palacio's consent at this 
time. 
 
14.  (C) Next Steps:  We will continue to encourage dialogue, 
restraint, and respect for democratic institutions, including 
Congress.  The POTUS meeting with Andean Presidents in Mar 
del Plata will offer another possible opportunity to 
emphasize respect for democratic processes. 
 
JEWELL