Cablegate: Goe Defensive On Benefits of Correa's Trip to Uk and Russia

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C O N F I D E N T I A L QUITO 000963

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E.O. 12958: DECL: 2019/11/17
TAGS: PREL PGOV ECON EFIN MARR KPKO KHDP EC RS GG UK
SUBJECT: GOE Defensive on Benefits of Correa's Trip to UK and Russia

REF: MOSCOW 2719; QUITO 937; QUIT...

id: 235219
date: 11/17/2009 21:36
refid: 09QUITO963
origin: Embassy Quito
classification: CONFIDENTIAL
destination: 09MOSCOW2719|09QUITO206|09QUITO937
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C O N F I D E N T I A L QUITO 000963

SIPDIS

E.O. 12958: DECL: 2019/11/17
TAGS: PREL PGOV ECON EFIN MARR KPKO KHDP EC RS GG UK
SUBJECT: GOE Defensive on Benefits of Correa's Trip to UK and Russia

REF: MOSCOW 2719; QUITO 937; QUITO 206

CLASSIFIED BY: Andrew Chritton, Charge d'Affaires, State Department;
REASON: 1.4(B), (D)

1. (SBU) Summary: President Rafael Correa's visits to the UK and
Russia on October 26-30 have elicited media carping on the large
delegation, Correa's statement about considering recognition of
Ossetia and Abkhazia, and what were seen as meager outcomes.
Correa's backers and the MFA defended the seven agreements signed
with Russia as the beginning of a new strategic relationship for
Ecuador. An MFA official told us that although the possibility of
Ecuador's recognition of South Ossetia and Abkhazia was played up
in the press, Correa made no commitments to the Russian government.
End Summary.

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Big Trip, Big Cost - Correa on the Defensive

--------------------------------------------

2. (SBU) The Ecuadorian press has covered President Correa's
October 26-30 trip to England and Russia heavily, with numerous
conflicting reports on who participated in the trips and what was
accomplished for Ecuador. The Embassy followed up with the MFA
Director General of European Affairs Pablo Villagomez on November
12 to get his take on the trip's outcome.

3. (SBU) The cost of the President's foreign travel, during a
period of economic challenges for Ecuador, was a major complaint of
Correa's critics. Press reports that the GOE's cost for the
President and more than 40 other officials totaled approximately
$108,000. A request for a list of the officials traveling from
each ministry was denied by the Presidency. Correa defended the
large delegation to Russia during his November 7 radio and TV
address, detailing the number who went and emphasizing the results
of the trip. He took on directly the newspaper El Comercio,
challenging it to identify what additional members of the
delegation were not related to the objectives of the trip.

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Correa Pays Unofficial Visit to the U.K.

----------------------------------------

4. (SBU) Correa's visit to London on October 26-38 did not involve
officials meetings with the government. Instead, he spoke at
Oxford University and the London School of Economics, and met with
Ecuadorian residents, Noam Chomsky, and two members of House of
Lords. UK Ambassador Linda Cross expressed frustration over the
GOE's mishandling of the planning for the visit and stated that she
had done everything possible to get him a meeting with the
government but without results, in part due to an official Indian
visit at the same time. Correa stated during his November 7 radio
address that only his Foreign Minister, Environment Minister,
Secretary of Migration, National Planning Secretary and a
representative of the Yasuni-ITT initiative traveled with him to
the U.K.

-------------------------------

To Russia, With (Official) Love

-------------------------------

5. (SBU) By contrast, the visit to Moscow on October 29-30 was
official, and President Correa was accompanied by a delegation of
over 100 people, including ministers, advisers and 59 commercial
representatives from various sectors. During this first ever
official visit by an Ecuadorian President to Russia, Correa met
with President Dimitri Medvedev, Prime Minister Putin, Patriarch
Kirill of the Russian Orthodox Church, Moscow Mayor Yuriy Luzhkov,
and Russian business executives. After over 20 years of
inactivity, the Russian-Ecuadorian Intergovernmental Commission for
Economic and Energy Issues met on October 28, chaired at the
ministerial level. MFA Director General Villagomez described the
purpose of the trip to us on November 12 as strengthening ties and
establishing a strategic partnership with Russia, "as the bilateral
relationship had languished due to minimal assistance from the GOR
and lack of Russian investment in Ecuador." Contrary to his
positive spin, the Embassy has heard rumors that two
recently-departed senior MFA officials were replaced because Correa
was displeased with the results of the visit.

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Ecuador to "Consider" Recognition of Abkhazia and South Ossetia

--------------------------------------------- ------------------

6. (C) On recognition of Abkhazia and South Ossetia, President
Correa announced on October 30 that "if both territories officially
ask Ecuador to recognize Abkhazia and South Ossetia as independent
states, we will seriously consider this request." MFA DG
Villagomez told Poloff that the GOR did not officially raise the
subject during the visit, that neither of the two territories had
formally made a request, and that no decisions had been made.
Villagomez speculated that the President's statement came as a
response during his interview with RIA Novosti. He repeated an MFA
mantra that the GOE supports the peaceful handling of such issues
by multilateral fora, the U.N. in this case.

7. (C) The President's comment was criticized by some commentators
as following in the footsteps of other ALBA members. So far,
Nicaragua and Venezuela are the only countries in the region who
have recognized Abkhazia and South Ossetia as independent. A
number of commentators considered the political price was too high,
and did not rise to the level of what Ecuador was getting from the
exchange. Political analyst Grace Jaramillo argued that if the GOE
were ready to recognize South Ossetia and Abkhazia, it should also
recognize Chechnya.

--------------------------------------------- -------------

Agreements Promise Increased Cooperation, but No Timelines

--------------------------------------------- -------------

8. (C) The presidents signed a Declaration on the Strategic
Partnership focusing on trade, economic development, education,
technology and cultural exchange. Correa kept with his tradition
of asking new partners for financial assistance by seeking a loan
from the Russian government; he announced on November 4 that
Ecuador would receive $2.5 billion in financing for its strategic
sectors, although only two of the seven agreements included
specific promises of financing, totaling $185 million. MFA
Director General Villagomez clarified that no formal agreement had

been signed regarding the loans, and that this financing and all
bilateral agreements likely would be realized in the long-term, but
without specific timelines.

9. (SBU) According to an MFA press bulletin, the presidents also
signed four Memoranda of Understanding in the areas of alternative
energy sources and petroleum exploration, peaceful uses of nuclear
energy, fourth generation communication and wireless data
transmission technology (with $50 million in financing for the
project), and customs assistance. A Letter of Intention was also
signed for Russian company OAO Interrao UES to complete
construction and supply equipment to two Ecuadorian hydroelectric
power plants along theToachi andPilaton rivers, with $135 million
in financing for both projects. In addition, an agreement to
establish Manta and Vladivostok as sister cities was signed by the
two mayors. In the MOU on petroleum exploration, Russian oil
companies OAO Zarubezhneft and OAO Sroytransgaz have agreed to
participate in the development of oil block 31 inside the Yasuni
National Park -- Ishpingo-Tambococha-Tipuni (ITT) area (Ref B).
The visit also defined cooperation in education, including an
agenda of bilateral meetings to establish the work plan for four
research projects in bioremediation, petroleum, satellite systems
for hydroelectric and natural risk management, and information
technology.

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Looking for Investors

---------------------

10. (U) Correa met with approximately 80 business leaders on
October 30 to speak on investment opportunities in Ecuador,
asserting that "according to our constitution, (international)
investment can enjoy absolute judicial security." He stipulated,
however, that any interested investors must meet four basic ethics
criteria: social (respect for workers' rights), market (offer of
goods and services at fair prices), environmental (respect for
environmental rights), and fiscal (adherance to tax obligations).
Correa clarified in his November 7 radio address that not all
foreign investment is desirable, and that it ideally should
establish companies, create jobs, offer competitive prices, pay
taxes and transfer technology.

11. (SBU) Contrary to press reports and MFA bulletins, the Central
Bank's database shows that Russia is Ecuador's largest importer of
bananas, second largest importer of flowers, third largest importer
of coffee and non-petroleum products in general, and the fifth
largest overall importer of Ecuadorian products. Ecuador
specifically produces a type of rose, with longer stems and larger
bulbs, that is targeted to the Russian market. Correa announced
during the visit that the Russian air company Polet would begin
direct charter cargo flights with its IL-96-400T and AN-124
aircraft by the end of November; MFA DG Villagomez noted these
potential charter flights are intended specifically to assist in
transporting Ecuador's flowers, and are still to be confirmed.
Exports to Russia increased by 33% from $412 million in 2007 to
$549 million in 2008, but only an annualized 4% in the first three
quarters of 2009. Exports from January through September of 2009
totaled $427 million and imports totaled $28 million, and are not
likely to reach the MFA's estimated $1 billion for calendar year
2009.

--------------------------------------------- ---

Military Purchases: Not Really Part of the Visit

--------------------------------------------- ---

12. (C) While press reports that the visit resulted in an
agreement to buy two Russian Mi-171E troop transport helicopters
for $22 million, MFA DG Villagomez said that the contract had been
signed before the visit, and were being purchased without any
Russian financing. (Note: Purchases of military equipment without
financing has not been the case recently in Ecuador. End Note.)
Defense Minister Ponce announced on October 30 that Russia would
provide military air and ground transport assistance, such as
trucks and buses. According to the press, Ecuador also is
considering the purchase of Su-30MK2 fighter planes and
anti-aircraft defense systems at a total value of $200 million.
However, Villagomez observed that nothing had been agreed, and that
these eventual purchases remained only an initial discussion.

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Comment

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13. (C) The media and educated opposition have found a ripe target
for criticizing Correa, given the appearance of profligacy, few
benefits for Ecuador, and intellectual hypocrisy of the Abkhazia
and South Ossetia issue. Nonetheless, this issue is far from the
minds of ordinary Ecuadorians who are more concerned with the poor
economy and disruptive blackouts. Therefore, Correa is unlikely to
suffer much political harm, assuming Abkhazia and South Ossetia
fade away as an issue. We do not expect President Correa to
recognize South Ossetia and Abkhazia unless it is part of a tit for
tat where he gets something more significant than we have heard
about so far in return. Even considering recognition seems
inconsistent with the GOE's past opposition to independence of
Kosovo and recognition of separatist movements (Ref C), probably in
part because some in the Correa government fear of separatist
tendencies in Ecuador's largest city of Guayaquil.
CHRITTON

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