PRESIDENT PUSHES "PLAN B" FOR REFERENDUM

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 002748

SIPDIS

E.O. 12958: DECL: TEN YEARS
TAGS: PGOV PINR PREL EC
SUBJECT: PRESIDENT PUSHES "PLAN B" FOR REFERENDUM


Classified By: PolChief Erik Hall for reason 1.4 (b&d)


1. (C) Summary: After being rebuffed by the Supreme
Electoral Tribunal and Congress, President Palacio on
December 1 announced he had issued a decree ordering the
Supreme Electoral Tribunal to hold a referendum on January

22. The referendum would ask voters whether to convoke a
national assembly to reinvent Ecuador's institutions and
create a new constitution. The Tribunal is expected to rule
on the validity of the decree by December 7. If it approves,
voters will decide whether Ecuador enters a new period of
uncertainty threatening important USG interests. End Summary.


2. (U) Palacio's controversial action came on the eve of
Quito holidays and a Congressional recess, and, in the
continued absence of a Constitutional Tribunal (since April),
cannot be appealed on constitutional grounds. (Note: only
the constitutional court, not the Supreme Court, can judge
issues of constitutional interpretation here.) It came just
after the constitutional committee of Congress ruled against
authorizing his pending proposal to allow voters to decide
between a constitutional reform assembly and an unbounded
constituent assembly. This new move seeks the same outcome
by a different means.


3. (U) In his presidential decree Palacio cites the
sovereignty of the people and his constitutional authority to
convoke referenda directly under Article 104 (2),which
permits him to do so when "in his judgment, it deals with
issues of transcendental importance for the nation," and
apart from reform of the constitution. Critics charge that
an assembly would inevitably involve reforming the
constitution, and the referendum therefore must be certified
as a matter of national urgency by Congress before being
submitted to the TSE.


4. (U) The question to be put to the people by referendum on
January 22, by decree, is: "Do you agree that a universal,
direct election be convoked for representatives to a
Constituent Assembly to reform institutionally the State and
create a new constitution?"
Assembly members would be selected by the same numerical
formula currently used to select the 100 Congress members
(two per province and additional representatives for every
200,000 inhabitants),each candidate would require petitions
with support from .25 percent of the provincial electorate
and be listed alphabetically. Qualifications would be the
same as for congressional deputies. The assembly would be
installed by 125 days after the referendum (May 27).
Approval requires a simple majority of valid votes. Voting
is obligatory.

Initial Reaction: Congress Furious
--------------


5. (U) Palacio sent a letter of explanation of his action to
Congress president Wilfredo Lucero on December 1, which
congressional sources shared with us. In it, Palacio cites
as his mandate the demand of the Ecuadorian people, expressed
in the events leading to the removal of ex-President
Gutierrez, to "transform the state." After listing the
litany of his previous attempts to respond to this demand,
with no positive response from Congress, Palacio concludes
that "it is clear that the Congress is not able or willing to
tackle such reforms," prompting his unilateral action of
going directly to the people. He then expressly disavows any
electoral motive for doing so, and vows his government "will
never give up the search for mechanisms to hold a national
assembly to re-institutionalize the country and guarantee a
democratic, fair and equal order."


6. (U) Congressional reaction to the president's move was
swift, with congressional leaders going into extended session
to plot strategy. The next morning, PSC congressman Luis
Fernando Torres told the press that Palacio's move was
unconstitutional and provided grounds (undermining the
security of the state) to move to impeach. Congress will
reconvene on December 7 to discuss the issue further.

TSE Votes

SIPDIS
--------------


7. (SBU) Action on the referendum proposal now moves to the
Supreme Electoral Tribunal (TSE),comprised of the seven
largest political parties. TSE president Gilberto Vaca (PSC)
said the TSE would act on the president's request by December

7. Presidential spokespersons claimed the TSE was not
empowered to vote on the issue, but must follow the
presidential order without question.

8. (U) Most here expect the TSE to vote on whether the
presidential decree is valid. The TSE had rejected Palacio's
last attempt to bypass Congress with a referendum proposal,
by a margin of 5-2, on October 20. The measure was supported
only by indigenous Pachakutik and the (virtually
non-existent) New Country Movement. The PSC, ID, PRIAN, PRE
and MPD voted against. Some speculate (we have no
confirmation) that the MPD and PRE might now also be willing
to support Palacio's new referendum proposal. In return for
a vote in favor, the MPD and Pachakutik are likely to demand
that the fate of the FTA with the U.S. be turned over to the
assembly to decide.

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


9. (C) Palacio's move, just a day after the swearing in of
the new Supreme Court, returns his government to
confrontation with Congress. Although well-timed to mute
immediate reaction, it faces several hurdles before being
implemented. It could well be blocked in the TSE, avoiding
major repercussions. But if not, Congress could challenge
the TSE or even seek to impeach Palacio. Failing that, the
initiative could also be blocked at the polls, if the
opposition is successful convincing voters that Palacio's
motives are impure. Already critics are accusing Palacio of
seeking to extend his mandate by delaying the October 2006
elections, since elections would presumably be affected by
structural reforms. Given the opposition of major political
parties, each step towards an assembly is also a step towards
the premature end of Palacio's mandate. Palacio has
repeatedly said he is willing to step down if the assembly
requests.


10. (C) The assembly proposal is dangerous to USG interests
because it would undermine stability by creating an alternate
government which could dissolve Congress, dismiss the
president, delay elections, and generate political and
economic uncertainty. That said, barring fundamental
changes, the next elected government will likely be weak and
vulnerable to Ecuador's recent cycle of irregular changes of
government. Given the level of political fragmentation here,
we doubt an assembly can achieve positive reforms and fear it
could become hostage to radical elements intent on
symbolically asserting sovereignty by rejecting the FTA,
expropriating Occidental Petroleum, and reviewing the status
of the Cooperative Security Location at Manta. The
Ambassador has made USG concerns about an assembly abundantly
clear to Palacio, but Palacio remains insistent on expansive
political reform. We will continue to urge caution, while
seeking to shield USG interests from this latest populist
storm.
BROWN