VZCZCXYZ0002
OO RUEHWEB

DE RUEHQT #0672/01 2032239
ZNY SSSSS ZZH
O 212239Z JUL 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9163
INFO RUEHBO/AMEMBASSY BOGOTA 7653
RUEHBR/AMEMBASSY BRASILIA 3944
RUEHCV/AMEMBASSY CARACAS 3107
RUEHLP/AMEMBASSY LA PAZ JUL LIMA 2713
RUEHGL/AMCONSUL GUAYAQUIL 3694
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RHEFDIA/DIA WASHINGTON DC
RHMFISS/CDR USSOUTHCOM MIAMI FL

S E C R E T QUITO 000672

NOFORN
SIPDIS

E.O. 12958: DECL: 07/21/2028
TAGS: PGOV PREL PHUM CVIS SNAR MASS ENRG EINV EC
SUBJECT: AMBASSADOR'S FAREWELL MEETINGS WITH CORREA, OTHER
GOE OFFICIALS

REF: A. QUITO 616
¶B. QUITO 633

Classified By: Ambassador Linda Jewell for reason 1.4 (D)

¶1. (C) Summary: The Ambassador had farewell meetings with
President Correa, VP Moreno, and Government Minister
Bustamante; attended a farewell event FM Salvador hosted in
her honor; and received a farewell visit from Armed Forces
Commander General Varela. She urged the GOE to return to the
private sector the television channels and other properties
it had seized, which Correa and Bustamante assured her they
planned to do. The Ambassador expressed concern that the new
GOE policy of not requiring visas for any nationality would
allow many entrants then to travel illegally to the U.S.
Other subjects were the GOE's change agenda, Machala Power,
counternarcotics and military cooperation, and programs to
assist the disabled. The Ambassador received a presidential
award in recognition of her efforts to strengthen
U.S.-Ecuadorian relations. End Summary

Seizure of Isaias' Properties

¶2. (C) The Ambassador emphasized to both President Rafael
Correa and Government Minister Fernando Bustamante in
separate meetings on July 17 the importance of resolving the
dispute over properties the GOE seized from Roberto and
William Isaias, who are believed to have embezzled hundreds
of millions of dollars in funds the GOE provided their
failing bank and then fled to the United States (reftels).
Both Correa and Bustamante acknowledged the Ambassador's
concerns, agreeing that they did not have the skills to run
the companies, and said that the GOE plans to sell the
properties that are confirmed to be property of the Isaias
family. They explained the need first to allow time for
appeals so current owners can demonstrate where they obtained
funds to purchase the properties; if they can show they are
the legitimate owners and not just front people funneling
profits back to the Isaias family, then the GOE will return
the properties.

¶3. (C) The Ambassador particularly stressed that the two
television channels need to be disposed of promptly. Correa
said he understood the need to do so, noting that the GOE
might give one of them to depositors who are owed funds by
the failed Isaias-owned bank, Filanbanco. Correa expressed
frustration that justice had not been done over the past ten
years for so many Ecuadorians who lost their savings while
the Isaias family profited, saying that impunity had
prevailed for far too long.

Visa Policy and Illegal Immigration

¶4. (C) The Ambassador expressed USG concern to Government
Minister Bustamante about the GOE decision not to require
visas for nationals of any country. Bustamante replied that
he also was concerned about this aspect, but that Correa was
unlikely to change his mind on the subject. He stated that
it was not the GOE's intention to allow Ecuador to serve as a
trampoline for those intending to immigrate to the United
States. Bustamante asked that the USG inform him if we have
specific information about the entry of any individuals who
are intending to travel illegally to the United States.
(Comment: We will follow up with Bustamante.)

GOE Transformational Vision

¶5. (C) Correa said that many Ecuadorians were unable to
understand the changes he was trying to bring about because
they lack a sense of their responsibility to promote the
common good and continue to promote narrow, personal agendas.
Along with the usual frustration with the entrenched elite
who refuse to acknowledge the injustice that has prevailed in
Ecuador, he expressed disappointment over indigenous leaders
who he said were acting like "caudillos" in manipulating
their constituencies, the same sort of rent-seeking behavior
common among the Ecuadorian elite. He mused philosophically
about the greater success of Anglo-Saxon societies in
development compared to Latin countries, attributing a large
part of this difference to a sense of personal responsibility
and an ability for self-criticism and correction that he

feels is lacking in Ecuador. He reiterated his desire to
maintain a positive relationship with the United States.

¶6. (C) Correa said he was anxious that the Constituent
Assembly conclude. He noted that he had tried hard to get
the Assembly (where the pro-government Proud and Sovereign
Fatherland, called PAIS, holds the majority) to work on
behalf of bigger principles. Nonetheless, many Assembly
members' small personal agendas ended up getting into the
constitutional text. Correa was furious about language that
had been inserted at the last minute that he thought made no
sense, such as a prohibition on genetically-modified
organisms.

¶7. (S/NF) Bustamante described what the GOE is trying to
accomplish as changing Ecuador from a post-colonial society,
where the elite only cared about themselves and their
families on their big haciendas (estates). He described what
he saw as the extraordinary blindness of Ecuador's
traditional ruling class not to care about the rest of the
society, saying he was now in the government to try to ensure
attention to the needs of the entire society. Bustamante
pointed to the tremendous fear of change among the Ecuadorian
elite, even if they are not actually being harmed, because
they no longer feel they can manage the government. He
suggested that they would only get over this fear with time,
when they see that the Correa administration's actions do not
adversely affect their interests. Bustamante expressed an
awareness of the importance of avoiding an overly intrusive
state, referring to the GOE's new wiretap program and the
need to ensure advance judicial authorization.

Business Relations, Counternarcotics and Military Cooperation

¶8. (C) The Ambassador thanked Correa for meeting with
representatives of Machala Power and encouraged him to
expeditiously resolve their lingering issues. (Note:
Machala Power is a U.S. electricity company owed back
payments by GOE entities; it would likely invest further if
the GOE made the payments.) Correa assured her that it was a
"win-win" proposition that had unfortunately dragged on too
long. He noted that he had given his team a deadline to come
up with a solution.

¶9. (C) The Ambassador raised with Bustamante the problems
the embassy had with obtaining approval for entry of products
that are destined to assist the GOE, such as vehicles for the
police. While joking that perhaps the embassy should buy
General Motors vehicles made in Ecuador, Bustamante took the
problem seriously and offered his assistance.

¶10. (C) During a July 17 call by Armed Forces Commander
General Fabian Varela, the Ambassador expressed concern that
Defense Minister Ponce intended to reduce training programs
and other cooperation with the U.S. military. Varela said
that increasing military ties with other countries did not
need to mean reducing cooperation with the U.S., and that,
while he did not believe cooperation with the U.S. would in
fact be diminished, if Ponce moved to limit ties with the
U.S. military he would oppose it.

Presidential Award and Assistance to Disabled

¶11. (SBU) As an indication of the President Correa's
personal regard for the Ambassador and his appreciation of
the importance of Ecuador's relationship with the United
States, Correa decided to bestow on the Ambassador the
National Order of Merit "Honorato Vasquez" at the level of
the Great Cross. FM Maria Isabel Salvador presented the
award in a July 16 ceremony attended by five GOE cabinet
members, other senior Foreign Ministry officials, and
representatives of the diplomatic corps. In offering the
toast at the luncheon that followed, Coordinating Minister
for Internal and External Security Gustavo Larrea emphasized
Ecuador's friendship with the United States and highlighted
our bilateral cooperation.

¶12. (C) Vice President Lenin Moreno expressed heartfelt
appreciation to the Ambassador July 15 for USAID's work to
improve the opportunities available to disabled Ecuadorians.
He indicated a clear understanding of the importance of

U.S.-Ecuador friendship and cooperation in this and many
other fields.

CDA Griffiths