PRESIDENT PALACIO SENDING MIXED SIGNALS

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 001256

SIPDIS

E.O. 12958: DECL: 06/01/2015
TAGS: PGOV PREL PINR MOPS KCRM EC
SUBJECT: PRESIDENT PALACIO SENDING MIXED SIGNALS


Classified By: Ambassador Kristie A. Kenney for reasons 1.4 (b&d).


1. (C) Summary: In a meeting which failed to inspire great
confidence in his leadership ability or vision, President
Palacio told the Ambassador on May 31 that his government is
focused on achieving durable political reforms. Palacio
expressed continued concern about disloyalty in the police
and military, and distanced himself somewhat from
controversial security advisors. At the Ambassador's
suggestion, Palacio committed his government to convert an
unfavorable upcoming USG report on efforts to combat
trafficking in persons into an opportunity to move forward.
He requested USG support help keep the GOE "on the right
path," and expressed interest in meeting with President Bush
to discuss his agenda. Unless the new GOE starts producing
better results, we would not support such a this request.
End Summary.


2. (SBU) Palacio met with the Ambassador and DCM alone, at
our request. He opened by thanking the Ambassador for
facilitating his recent emergency visit to Florida to attend
the operation of his US-resident daughter Llinka, who was
recovering nicely after unspecified surgery.

Reform Agenda Underway
--------------


3. (C) After commenting on economic issues (SepTel) Palacio
turned to his political agenda. Vice President Serrano would
lead the GOE effort to consult with citizens through dialogue
roundtables, he said. The goal was to put a referendum of
4-5 questions to the people by December 11. Palacio did not
specify what reforms he hoped to achieve, saying that would
require citizen input to decide. Government spokespersons
later made the new timeline public, saying public comment
would be welcome through July 15, and a proposed referendum
would be submitted to Congress by September 15. The dialogue
process would be led by the Vice President, implemented by
CONAM, the government modernization secretariat, and advised
by the UN. The December 11 deadline for a possible
referendum was reportedly chosen to pre-date the holiday
season.

TIP: Making the Most of the Report
--------------


4. (C) The Ambassador warned Palacio that trafficking in
persons (TIP) is a serious problem that remains to be
addressed seriously in Ecuador. A report to be issued
shortly by the Department would publicize the GOE's lack of
progress on this issue over the past year. Palacio responded
that the GOE "has to face the hard truth," and would seek
opportunities to move forward on this important issue. He
noted that the first lady was also committed to address this
issue, and had appreciated the Ambassador's briefing on the
subject. The Ambassador offered USG collaboration and
support to help the GOE address the issue.

Concern about Security Team
--------------


5. (C) Palacio commented that he still lacked full
confidence in some elements of the police and military
security apparatus, hinting that purges of some units were
impending. Asked for her views on the chief of national
police, Gen. Jose Vinueza, the Ambassador responded that the
Embassy was impressed by his leadership of the
counter-narcotics unit before assuming his current position.
Palacio said he shared the Ambassador's positive opinion, but
added that controversial presidential security advisor Jorge
Brito had impugned Vinueza's loyalty. Brito was no longer a
presidential advisor, Palacio hastened to add. Palacio
claimed he had barred Brito from re-entering the national
palace since Brito had commandeered a vacant office and
assumed powers beyond his initial mandate.


6. (C) Asked for USG views on Brito and another
controversial security advisor, discredited Social Welfare
Minister Patricio Acosta, the Ambassador responded that we
are concerned by the Bolivarian circles both men are known to
associate with. Palacio said he did not know what to do with
these allies, who had served him well before he became
president. (He denied they were "plotting" to usurp
ex-president Gutierrez.) He had refused Acosta a position as
head of UDENOR, the northern border security and development
agency, and as head of CONAM. Instead, he was considering
appointing Acosta to head the customs office in the booming
port of Manta. The Ambassador warned that Acosta has the
added distinction of being the only Ecuadorian ever denied a
visa based on grounds of corruption affecting USG interests.

Pitch for White House Photo Op
--------------


7. (C) Palacio requested a meeting with President Bush,
preferably before the UNGA in September, to discuss his
government's reform and security agenda. In requesting a
personal meeting, he hinted that it would be important to
help "keep the GOE on the right path."

Comment
--------------


8. (C) With both sides continuing to tread lightly, we find
the president somewhat difficult to read. Palacio never
fails to privately claim to seek good bilateral relations
with us, and seeks to portray his government as committed to
shared interests. Nevertheless, his suggestion that without
proper attention from the USG, the GOE could veer dangerously
"off the tracks," smacks of a veiled threat. In the near
term, we will test GOE commitment on TIP and maritime
cooperation. But until Palacio shows greater vision and
takes steps to address important USG interests, we would not
recommend a White House meeting or other special treatment
for this government.


9. (C) This meeting was also notable for what was left
unsaid. Despite making public comments questioning USG
treatment of a boarded Ecuadorian fishing vessel, Palacio
chose not to raise the issue with the Ambassador. (We have
since received a diplomatic note requesting a USG
investigation into allegations of ill-treatment and damages
by the crew of the Ecuadorian-flagged "Ochossis.")

Kenney