WHY DID GUTIERREZ FALL?

C O N F I D E N T I A L SECTION 01 OF 06 QUITO 000919

SIPDIS

DEPT FOR WHA/AND

E.O. 12958: DECL: 04/25/2010
TAGS: PGOV ECON EC
SUBJECT: WHY DID GUTIERREZ FALL?

Classified By: AMBASSADOR KRISTIE KENNEY, REASONS 1.5 (B,D)


1. (C) Summary: Early analyses of the overthrow of
Gutierrez in Ecuador in the U.S. press and elsewhere have
relied on facile, but erroneous comparisons between Ecuador
and Venezuela or Bolivia. In most, either Gutierrez or
Palacio is Ecuador's Chavez. In fact, little can be
understood about what has happened in Ecuador via such
comparisons. Gutierrez' fall was the result of a complex
interplay of interests and actions, but the crucial factors
were: Gutierrez' and his government's own repeated, foolish,
tactical errors, plotting by traditional political elites,
especially Leon Febres Cordero's Social Christians and the
Democratic Left, to bring down the outsider and take back
control of the government, and, finally, the frustration of
Quito's middle class with the misdeeds of the political elite
combined with their fear of the "great unwashed" from the
coast. In fact, the fall of Gutierrez is simply the dramatic
peak of the established Ecuadorian political cycle which has
come to consist of elections every four years and the
overthrow of the elected president at the mid-term. End
Summary.


2. (U) We have reported on a day-to-day basis over the past
six months the ongoing political crisis in Ecuador. Although
political crisis is, for all practical purposes, a constant
in this country, and although this crisis is by no means
over, the removal of Gutierrez and installation of a new
president on April 20 ended the latest in Ecuador's sad
series of political cycles. It offers an opportunity to
reflect on a political process which is most certainly
broken. We hope to offer some lessons for attempting to
build democracy in Ecuador and the region.


3. (C) Ecuador is the banana republic of banana republics.
Six of the fourteen Latin American governments which have not
finished their terms since 1989 were in Ecuador. Each of the
last three democratically elected presidents of Ecuador has
been deposed, and each ex-president has been forced into
exile by the prospect of questionable criminal proceedings
against him. President Palacio is the tenth president of
Ecuador since 1996 (counting a presidential triumvirate which
lasted three hours, and another president who lasted a day).

Who Lost Ecuador?
--------------


4. (C) With the support of a spectacularly favorable
external economic climate, responsible economic management,
and strong support from the USG for democratic stability,
Gutierrez just scraped by three significant attempts to bring
down his government in its first two years. Finally,
Gutierrez succumbed after two years and three months, mostly
to his own mistakes. Following is an initial attempt to look
at who was responsible for the fall of Gutierrez and who has
gained and lost from the process.

The Outlaws (Los Forajidos)
--------------


5. (C) The final days of the Gutierrez government saw the
formation of a "new" political force in Quito. The
forajidos, or outlaws, taking on as a badge of honor an
epithet spat at protestors by Gutierrez, were actually made
up principally of middle and upper-middle class Quito
residents disgusted by the corruption and petty political
infighting of the entire political class and fearful of the
prospect of another Bucaram presidency. The ranks of the
forajidos were filled out by radical university students and
troublemakers, many connected to the Popular Democratic
Movement (MPD),the quasi-communist party. Los forajidos
first came together in response to a call to action launched
by Radio La Luna the night of Friday, April 16 after
Gutierrez' announcement of a state of emergency in Quito.
Ultimately, it was the radical protesters who intimidated the
military to withdraw its support from Gutierrez, to prevent
bloodshed. The government is more willing to credit its
creation to the more moderate forajidos, and seeks to placate
them before they turn out again. The forajidos call, "Todos
fuera" or "everyone out," now emblazoned on bumper stickers
around the city, represents a continuing challenge to a
political establishment which has completely lost credibility
before a large portion of the population.

Old Politicos
--------------


6. (C) The big parties, the Democratic Left (ID) and Social
Christians (PSC),in many ways precipitated the crisis and
benefited from it, but it is not clear how long-lasting the
benefits will be. Led by former President Leon
Febres-Cordero (LFC),the PSC flirted with Gutierrez in the
first half of 2004, but actively sought his overthrow both
before their short-lived collaboration, and, with more
vehemence, since mid-2004. The ID under ex-president
Rodrigo Borja has been gunning for Gutierrez since the first
day of his government. Though the parties are ideologically,
geographically (PSC=coast, ID=sierra),and personally opposed
to one another, they increasingly worked together against
Gutierrez over the past months. Their congressional blocks
formed the core of the majority that removed Gutierrez on
April 20.


7. (C) That said, the PSC had little to do with the protests
which actually brought Congress to the point of removing the
President, and the ID played only a limited role.
Nonetheless, it is increasingly clear that the two parties
had reached agreement with Palacio before he was placed in
the Presidency. It seems unlikely that these traditional
opponents will be able to work together now that their common
enemy is gone, and the prospect for tearing the new
government asunder is real. The ID and PSC are clear winners
from the fall of Gutierrez.

The Indigenous
--------------


8. (C) The indigenous supported Gutierrez' presidential
campaign in 2000, but left his government after only six
months when Gutierrez did not implement the left-leaning
platform he had run upon. Gutierrez' political team was
consistently at the top of its game in dealing with the
indigenous. They split the Evangelical indigenous movement
from the Catholics and the sierra indigenous from the
lowlanders of both jungle and coast. The indigenous
political party, Pachakutik, found no better option by
mid-2004 than joining with its long-time enemies, the Social
Christians and the Democratic Left, in a coalition of
opposition. The Catholic sierra indigenous, a key force
behind the destitution of Mahuad in 2000, were practically
impotent and mostly invisible in the run-up to Gutierrez's
overthrow. The Evangelical and coastal indigenous
participated in protests, but in support of the Gutierrez
government. Similarity between the overthrow of Goni in
Bolivia and that of Gutierrez is almost nonexistent.
Ecuador's indigenous people have lost every major political
conflict since they were conquered by the Incas some 500
years ago. However, they may have made some short-term gains
this time. The indigenous were the first to call for
Gutierrez' ouster, and they will regain some of the
institutional benefits Gutierrez took from them over the past
two years. They also hope to kill the FTA, and have much
better prospects for that with the Palacio government.

Bananas and Nuts
--------------


9. (C) Ecuador's two mid-sized populist political parties
played an important role in bringing the Gutierrez government
to the brink, and then giving it a little nudge. The PRE, as
always, has had only one goal throughout the period, bringing
back Abdala Bucaram, the self proclaimed "crazy" former
president of Ecuador, who, it seems, would like nothing more
than another cameo role as president-for-a-day. Bucaram's
return was a fateful mistake by Gutierrez, and lit up the
opposition. With Bucaram's disappearance and almost certain
re-exile on April 21, the PRE has gained nothing and probably
lost credibility once again. PRIAN, the personal property of
banana magnate and serial presidential candidate Alvaro
Noboa, may win the award for least consistent position. From
opponent of the government in the fall, it switched to
supporting the government and helped with the naming of a new
Supreme Court in December, 2004 which everyone knew the PRE
intended to use to bring Bucaram, Noboa's nemesis, back from
exile. Only when Bucaram actually arrived did the PRIAN
finally react, pulling out of the coalition. PRIAN has
looked silly, uncertain, and used, throughout the process.
Now it wants early elections, and is desperate to prevent its
opponents from regaining control of the electoral tribunal.

The Businessmen
--------------


10. (C) The business community of Quito, closely tied to the
PSC, took an active and early role, with the President of the
Chamber of Commerce of Quito declaring Gutierrez a dictator
as early as December and making repeated calls in the last
days of the government, for his resignation or ouster. Two
different, but compatible, concerns motivated the Quito
business class. First, the leadership of the Quito Chamber
of Commerce was closely and personally tied to the PSC and
LFC, specifically. Second, the business class of Quito
feared the class politics which Bucaram brought back to
Ecuador with his return. Many of them cannot tolerate the
idea of another Bucaram presidential term, yet they fear that
the charismatic Bucaram can win again. Ultimately, however,
the business community is likely to be the big loser as the
new government appears less likely to conclude a FTA, resolve
commercial disputes, or maintain responsible economic
policies.

The Press (and, more to the point, the radio)
--------------


11. (U) Always irresponsible, both the print press and
television were totally overshadowed by a tiny player which
has now taken center stage in Ecuador - Radio La Luna. For
background on Radio La Luna, see Quito 875.

The Military
--------------


12. (C) "Mixed" best describes Gutierrez, relations with
Ecuador,s military leadership. Many saw in him a
comrade-in-arms, champion pentathlete and first-in-class
student. Others saw a mutineer who led a 2000 coup that
toppled an elected president and irrevocably damaged the
armed forces, standing with the Ecuadorian populace.
Practically his first move upon taking office in 2003 was to
purge the military of those general officers who opposed the
coup and/or sanctioned him afterward.


13. (C) Former military pepper the ranks of Gutierrez,s
Patriotic Society Party (PSP),and he turned to many to fill
spots in the administration, regardless of their
qualifications (or lack there of). The president also placed
key GoE entities like Customs under direct military control,
both to placate them and because he trusted and was
comfortable with that leadership style. Gutierrez invested
time, effort, and money in cultivating the armed forces, and
we don,t consider them the chief element in his downfall.
It was, however, Joint Forces Chief Admiral Victor Rosero,s
early-afternoon "withdrawal of military support" for
President Gutierrez that precipitated his April 21
abandonment of the presidential palace. By doing so, Rosero
returned the military to its traditional role as governmental
arbiter, weakening its credibility.

The Interloper
--------------


14. (C) Gutierrez beat all the traditional political parties
in taking the Presidency in 2002. Clearly the indigenous and
other traditionally unrepresented classes voted for change in
voting for Gutierrez. Most thought they were voting for a
shift to the left, and Gutierrez' rhetoric was distinctly
Chavez-like during the campaign. Lower classes were
disillusioned with Gutierrez soon after his election when he
opted to maintain a responsible (if not really tight) fiscal
policy, negotiate an agreement with the IMF, and then a FTA
with the U.S. Traditional political parties, both the old
parties and the populists, have detested Gutierrez as an
interloper ever since his election, though most have worked
with him on different political conspiracies against each
other at one time or another during his presidency.


15. (C) For his part, Gutierrez surrounded himself with a
varied assortment of advisors and listened to all of them in
turn, resulting in wild swings in policy and political
strategy, some inspired and others simply stupid. On
numerous occasions over the past six months it has seemed as
though Gutierrez had finally ensured his survival through the
end of his term. Each time, he reacted to his success by
overreaching, and each time he ended up stumbling, creating a
new crisis. Responsible fiscal policy, a mini-boom in oil
production, and high oil prices kept the government's books
balanced and the population out of the streets, and is one of
the key reasons the Gutierrez government lasted as long as it
did. His counter-offensive against Febres Cordero's
sinecures in the justice system was a constitutional breach
which sowed the seeds of Gutierrez' destruction, four months
later, when an illegitimate court permitted the return of
Bucaram. Gutierrez' last-ditch state of emergency was the
nail in the coffin, energizing the protest movement.

Setting the Stage
--------------


16. (C) The "revolution of the forajidos," as some are
calling it, was the last stage in a long downward spiral of
Ecuadorian politics beginning with a failed impeachment
attempt against Gutierrez by the PSC in November, 2004. In
breaking up the impeachment attempt, the GOE managed to forge
a slim congressional minority in coalition with the PRE,
PRIAN, MPD, and independents. The basis for the coalition
was an agreement to end the impeachment proceedings and
replace the corrupt and PSC/ID-controlled Supreme Court,
Supreme Electoral Court, and Constitutional Court, taking
advantage of a questionable interpretation of the
constitution. Congress voted to do so on December 8,
replacing the justices with others selected by Congress, and,
specifically, by the PRE, PRIAN, and GOE. Gutierrez
announced that the new Supreme Court was temporary, and that
he would submit a constitutional reform package to create an
independent supreme court.


17. (C) The new court was rejected by the opposition
political parties, judicial workers, who went on strike, and
many representatives of civil society. However, over the
following four months repeated attempts to call the
population into the streets in protest against what some were
labeling "dictatorship," failed to be convincing. While
middle class protestors did show up for major marches in
Guayaquil in January and Quito in February, the bulk of the
population of Ecuador seemed unmoved by what many clearly saw
as a change in the ownership, but not the nature, of the
judicial system. Congress, in the succeeding four months,
has been unable to come to agreement on any formula for a
independent court, and it is clear that many, if not all,
political parties, are only interested in capturing the
judicial system for themselves.

"Crazier than Ever"
--------------


18. (C) On March 31, the President of the Supreme Court
annulled the criminal charges outstanding against former
presidents of Ecuador Abdulla Bucaram and Gustavo Noboa, and
former vice president Alberto Dajik. Over the next few days
the three, all charged with various acts of corruption by the
PSC-controlled criminal justice system, returned to the
country. The returns of Dajik and Noboa raised only muted
complaints about impunity. (The criminal process against
Noboa for his role in negotiating a debt restructuring were,
on their face, blatantly political and unfair; those against
Dajik were too complex to make a clear determination.)
However, Bucaram organized a political rally for his return
at which he anounced that he had come back "crazier than
ever." (Bucaram's nickname has long been "El Loco," and
Congress fittingly, if unconstitutionally, removed him from
the Presidency in 1997 for mental illness.) He began
immediately hinting broadly about his intent to run for the
presidency again and his class-warfare and nationalist rants,
in which he explicitly associated himself with Chaves, became
ubiquitous on TV and radio.


19. (C) Bucaram's return quickly became the ralling cry for
the opposition, especially among Quitenos, who have always
felt particularly threatened by the crazy man from the coast.
Still, protests mostly fell flat. Once again, we and others
counseled Gutierrez to take advantage of his strengthened
position and come to a negotiated settlement of the court
issue. Once again, and probably the fault lies on both
sides, no solution could be reached.

Pride Cometh Before a Fall
--------------


20. (C) The final act of the Gutierrez administration began
with April 13's failed national strike. The Quito
opposition, disappointed with all its previous attempts to
force Gutierrez to back down on the court issue and Bucaram
return, called an "indefinite nationwide strike" to try and
finally force Gutierrez to relent.


21. (C) In the event, the strike was neither national nor
indefinite in duration. Most of the country, including
Guayaquil, refused to participate, and even in Quito the
strike lasted only one day. Although small protests continued
over the next few days, most significantly, including marches
to the homes of GOE ministers and high officials, it was
clear that Gutierrez had won again. Gutierrez and his
spokespeople disregarded (again) the advice of many,
including the Embassy, to refrain from gloating and take the
opportunity to seek dialogue and compromise. Instead, once
again, Gutierrez overreached.


22. (C) On the advice of his political inner circle, and
without informing or consulting the cooler heads in his
cabinet, Gutierrez declared a state of emergency, in part to
prevent the forajidos from harassing the families of his
ministers at home, and sought to placate the opposition by
simultaneously removing the Supreme Court on the evening of
Friday, April 15. The reaction was immediate. Radio La Luna
began convoking the population to a popular demonstration
site at a large park, and the middle class turned out by the
thousands. The nights of April 15, 16, 17, and 18 all saw
large crowds gathering at the park, calling for Gutierrez's
overthrow. The crowds were mostly middle class, including
women, old people, and children. Police sensibly kept their
presence at these protests minimal, and no violence was
reported.


23. (C) On Saturday, April 16, considering opposition from
his Minister of Economy in Washington, Minister of Trade,
and, most importantly, from MinDef Herrera and General Aguas,
Gutierrez reversed course again, ending the state of
emergency. At this time he made another attempt to reach
agreement with the opposition on resolution of the court
crisis, but the lack of trust between him and his opposition
made meaningful negotiations impossible.


24. (C) Radio La Luna, as well as the protestors were
clearly beginning to taste blood. The protest convoked for
Tuesday, April 19 was to be different. The crowd would meet
at a park in the center of town and proceed to the
Presidential Palace to remove Gutierrez, physically, if
necessary. The Government ginned up a display of support for
itself, helping to bus in thousands of evangelical indigenous
for their own protest in support of Gutierrez, but the
indigenous sensibly got out of the way before the main event
began.


25. (C) Police showed admirable restraint during the April
19 demonstrations, using large quantities of teargas to keep
demonstrators from getting to the palace. Only one death
resulted, that of a Chilean journalist who died of a heart
attack, likely brought on by exposure to tear gas.
Demonstrators failed to reach the palace.

The Bare-Chested Monkeys from the Coast
--------------


26. (C) Most of our contacts were suggesting on April 20
that, if that night's assault on the palace did not bring
down the government a respite would be likely, as
demonstrators were tired and becoming discouraged.
Presidential brother-in-law Renan Borbua single-handedly kept
temperaments from cooling. He got on TV the night of April
20 to announce that busloads of Gutierrez supporters would
arrive in Quito from the coast the next morning to defend the
constitution. Rumors spread throughout the city, fueled by
Radio Luna which reported that the "bare-chested monkeys from
the coast" were coming up with shotguns and machetes to put
down the demonstrations. ID-connected mayor Paco Mancayo
ordered city busses and heavy machinery to block the roads
into the city and the forajidos, strongly reinforced by MPD
and other thugs, began again the demonstrations, including
attacks on various government buildings. When police opened
the roads and traffic was allowed through, La Luna reported
that the costeno thugs were being "escorted by the police"
into the city, and that looting was taking place in the lower
reaches of the city (as far as we know, no looting took
place).

Police and Military Step Down, and Up
--------------


27. (C) Police Chief Jorge Poveda announced his resignation
at mid-day on April 21, suggesting that he could no longer
defend the regime. Police presence on the streets began to
thin. Left with the prospect of facing the crowds
themselves, the military high command decided the situation
was no longer tenable and that they would withdraw support
from Gutierrez. They considered installing a junta of
civilians and called the Ambassador to make that proposal.
She told them absolutely not. It would be a military coup,
and suggested they go back to Gutierrez and try one more time
to find a solution. At about noon, the military announced
that it could no longer support Gutierrez. Congress voted
shortly afterward to remove Gutierrez on the grounds that he
had abandoned his position as constitutional president some
four months previously when he acquiesced in Congress' own
removal of the Supreme Court, thereby becoming a "dictator."
All that was left was for Gutierrez to flee the President
Palace, which he did shortly.

Conclusions
--------------


28. (U) This story obviously doesn't end here. In fact, it
hasn't ended yet. But the story to date does allow one to
draw certain conclusions about what happened and what did not
happen in Ecuador. Among the most prominent are the
following:

Ecuador Is Not Bolivia
--------------


29. (C) The indigenous played only a bit part in the fall of
Gutierrez. Rather than a force to be reckoned with, the
indigenous appear to have peaked in their political power and
influence with the election of Gutierrez. They may well
recover with time and again play an important role, but for
the time being, they are a politically marginal force.

Ecuador Is Not Venezuela,
Though Chavez Will Seek to Exploit the Chaos
--------------


30. (C) Some analysts have attempted to draw parallels with
Chavez, both for Gutierrez and for Palacio. Any similarities
are superficial. With some success with the lower classes,
Gutierrez portrayed his survival as a class struggle, with
the corrupt political and economic elites fighting to regain
absolute control. In fact, the change in government was very
Ecuadorian in nature, and neither Gutierrez nor Palacio is in
any real sense a Chavez figure. Although Radio La Luna, the
indigenous, and the radicals such as the MPD have Venezuela
connections, the overthrow of Gutierrez was mostly the making
of the Quito middle class and business class, the ID and the
PSC. In fact, the makeup of the demonstrations and the way
in which the overthrow was carried out were both quite
similar to the overthrow of Abdala Bucaram eight years ago.
In the end, this was the middle class of Quito acting on its
fear of the coastal rabble. Bucaram represented that coastal
rabble in both overthrows, this time with his return, and the
busloads of costenos may have been the most important trigger
for immediate action.

The Old Politicos: Back in the Saddle Again
--------------


31. (C) Many of our contacts, life-long top notch conspiracy
theorists, are concluding that the overthrow of Gutierrez
was, in effect, orchestrated by the two major political
parties, the ID and PSC, and especially by LFC and the Social
Christians. While we do not see LFC pulling the strings
behind Radio La Luna and the MPD trouble makers like some of
them do, it is clear that the old politicos have been
scheming, and Palacio with them, on and off throughout
Gutierrez' presidency and constantly since mid-2004. It is
also clear that they are the big winners, with Palacio
appointing numerous ID and PSC-connected politicos to
positions already (though some effort is being made to find
people who do not have formal affiliations to any political
party). That said, the gain may be temporary. The disgust
felt by the forajidos, and their new-found sense of power,
may manifest itself again if they feel they have ousted
Gutierrez only to bring the old politicos back to power.

The Sad, Sad Story of Ecuador
--------------


32. (C) In the final analysis, the overthrow of Gutierrez is
nothing more than the end of one more political cycle in
Ecuador. Presidents of Ecuador are elected to be overthrown,
and the great majority of them meet that fate. Since
government officials enter office knowing that they will be
there for a very short time, and then might well be forced
into exile, it should surprise no one (and certainly no
Ecuadorian is ever surprised by this) that most of them steal
everything they can get their hands on while they are in
power. Most political parties in Ecuador have no
recognizable or consistent political philosophy, and those
which do, are consistently leftist. Parties, rather, exist
to distribute patronage. Ecuador, a country rich in natural
resources, will remain desperately poor until and unless it
can break out of its self destructive cycles of political
cannibalism.
KENNEY