ELECTIONS, NOT GOVERNANCE, DRIVING GUTIERREZ

C O N F I D E N T I A L QUITO 002598

SIPDIS

E.O. 12958: DECL: 09/23/2014
TAGS: PGOV KDEM PREL EC
SUBJECT: ELECTIONS, NOT GOVERNANCE, DRIVING GUTIERREZ


Classified By: Ambassador Kristie A. Kenney, Reasons 1.4 (b),(d)


1. (C) SUMMARY: President Lucio Gutierrez, consumed with
improving his Patriotic Society Party's performance in
Ecuador's October 17 local elections, is pressuring Cabinet
officials to adopt populist, poorly conceived economic
measures designed to garner votes. Should the PSP fare
poorly in October, as most experts expect, the president
might throw blame at his recalcitrant ministers and
ultimately clean house. END SUMMARY.


2. (C) Minister of Government Raul Baca, a rare Gutierrez
administration bright light, was the Ambassador's guest at
breakfast September 24. Baca lamented that Gutierrez lately
had cloistered himself with such "inner circle" denizens as
brother Gilmar, brother-in-law Napoleon Villa, and cousin
Renan Borbua. All were PSP founders and had the boss's ear.
They had convinced Gutierrez that his and the PSP's actual
popularity dwarfed that reported in opinion polls (an August
"Monitor" poll, for example, showed Villa garnering only 1.5
percent in the Pichincha province prefect race). They
believed that GoE funds, spent correctly, could buoy the
party further in October. Xavier Ledesma, the
administration's secretary general but not PSP, shared the
three's position, Baca added.


3. (C) Their analyses were ridiculous, the minister
decried. In one, the PSP leaders surmised that, by raising
one stipend that Ecuador's poor received by $15, Gutierrez
would win the votes of the entire affected population.
"Serious" Cabinet officials, such as Finance Minister
Mauricio Yepez, Trade Minister Ivonne Baki, and Baca himself,
had pointed out holes in the PSP logic, but to little avail;
Gutierrez appeared ready to adopt the populist measures.
Worse, the president resented the Cabinet's attempts to keep
him focused on good governance and sound economics. Should
the PSP fare as poorly as Baca thought it would, Gutierrez
was likely to blame him and the financial team, claiming that
more spending would have delivered more votes. A putsch or
mass resignation would surely follow.


4. (C) Baca did not want to go. "We're doing some great
things now," he claimed, pointing in particular to recent
progress combating trafficking in persons (Septel). But the
inner circle, and Gutierrez's faith in them, was making his
public service difficult. Baca saw no immediate solution.


5. (C) COMMENT: We have long lamented that PSP party hacks
and assorted hangers-on crowd Gutierrez's office and craft
his agenda. They are most often behind the president's worst
decisions, from visiting disgraced ex-President Abdala
Bucaram in Panama to picking fights with respected
journalists. Yet Gutierrez mostly has resisted their efforts
to derail the GoE's admirable fiscal probity. In
working-level outreach and in coming calls on the president,
we will emphasize the dangers of populist economic policies
while lauding Ecuador's recent fiscal responsibility. END
COMMENT.
KENNEY