ARTICLE 98: GOE AWARE OF NETHERCUTT-BACKS

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 003256

SIPDIS

E.O. 12958: DECL: 12/16/2014
TAGS: PREL MASS MARR PGOV EC KICC
SUBJECT: ARTICLE 98: GOE AWARE OF NETHERCUTT-BACKS

REF: A. QUITO 3151


B. QUITO 3150

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


1. (C) SUMMARY: Word of the Nethercutt Amendment, which
mandates reductions in Economic Support Funds (ESF) available
to non-Article 98 signers, has reached GoE leaders, and they
are worried. In a pull-aside at a diplomatic reception
recently, the foreign minister requested clarification and
inquired about the possibility of a waiver for Ecuador. The
Ambassador, expressing USG frustration over Ecuador's refusal
to negotiate Article 98 seriously, suggested an alternative
strategy: that the GoE's new Ambassador in Washington engage
U.S. Article 98 interlocutors immediately, in hopes of
finding mutually acceptable language. END SUMMARY.


2. (U) On December 16, the Ambassador joined third-country
counterparts at a GoE-hosted diplomatic corps lunch.
President Gutierrez and Foreign Minister Patricio Zuquilanda
cornered her at its conclusion, seeking a discreet
pull-aside. The foreign minister did most of the talking.


3. (C) Zuquilanda was troubled over news of Congressional
passage of the Nethercutt Amendment, which President Bush
recently had signed into law. The legislation forced ESF
reductions, if not complete cutoffs, to nations, like
Ecuador, not having entered into Article 98 agreements with
the United States. According to the Ecuadorian embassy's
analysis, which the FM requested the Ambassador peruse,
Nethercutt's impact on Ecuador could reach $13 million. The
reduction's effects on USAID Quito's Northern Border program
worried Zuquilanda the most. Ecuador's precarious security
situation and compelling needs mandated a Nethercutt waiver,
the FM asserted.


4. (C) The Ambassador agreed that ESF cutbacks might occur,
were Ecuador not to sign Article 98, but cautioned Zuquilanda
that Washington had not yet fully analyzed the implications
for Ecuador. She emphasized that waiver relief was not
possible, since the total of Article 98-signing nations was
nearing 100. Besides, USG frustration over Ecuadorian
intransigence was growing -- any request for special
treatment, as long as the GoE refused to engage in good-faith
Article 98 negotiations, would fall on deaf ears in
Washington (DCM had transmitted same message in a December 16
lunch with GoE Chief of Staff Xavier Ledesma).


5. (C) Instead, the Ambassador suggested the GoE consider an
alternate track. Roberto Betancourt, Ecuador's U.S.
ambassador-designate (Ref B),was well-versed in Article 98,
owing to his short-lived role as the MFA's point of contact
for negotiations with the Embassy. Upon arriving in
Washington, the Ambassador offered, Betancourt should engage
State, DoD, even U.S. Congress contacts, to begin
negotiations of an accord. To be taken seriously, however,
Betancourt must be prepared to talk specifics -- no "we're
continuing to analyze various texts" or "we're seeking our
legislature's green light to negotiate" allowed. Neither
Zuquilanda nor the president responded substantively.


6. (C) COMMENT: We are impressed that the GoE's Washington
embassy did its homework on Nethercutt Amendment implications
to USAID's Ecuador program. A week ago, Zuquilanda's cryptic
public comments regarding $4 million in imminent U.S.
assistance cutbacks left us wondering whether he referred to
ASPA's military assistance reductions (actually closer to $7
million) or to possible, Nethercutt-related sanctions. Now
we know. But we are left questioning the real reasons for
Zuquilanda's concern. Do the ESF cutbacks represent threats
to important GoE initiatives on the northern frontier, thus
spurring the MFA to engage constructively on Article 98? Or
does Zuquilanda simply want confirmation of Nethercutt
assistance reductions, in order to polish a strategy to
temper negative Ecuadorian media coverage that undoubtedly
awaits?


7. (C) We lean toward the latter, unfortunately. Recent
press on Article 98 has been uniformly negative, with
journalists demanding the GoE not barter Ecuador's
sovereignty for $7 million in U.S. military assistance. News
of the potentially graver ESF cutbacks, rather than push the
MFA to the table, might actually raise further hackles. We
understand the Department is analyzing the Nethercutt
Amendment and soon will issue guidance to embassies. Until
then, we will answer private and public inquiries by noting
that Nethercutt is U.S. law, adding that Washington agencies
continue to study its implementation and effects on foreign
nations. END COMMENT.
KENNEY