OXY DEMARCHE DELIVERED--FM REJECTS GOE SHIFT

C O N F I D E N T I A L QUITO 001249

SIPDIS

SIPDIS

PLEASE PASS TO USOAS

E.O. 12958: DECL: 05/17/2016
TAGS: PGOV OAS ETRD PREL EC
SUBJECT: OXY DEMARCHE DELIVERED--FM REJECTS GOE SHIFT
TOWARD CHAVEZ

REF: SECSTATE 81565

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

This is an action request for WHA and USOAS. See para 4.


1. (C) Summary: The Ambassador conveyed USG regret (per
instructions RefTel) over the GOE decision against Occidental
Petroleum (Oxy) to FM Francisco Carrion on May 22. Carrion
said he would convey the U.S. position to President Palacio
later the same day. Carrion rejected press speculation that
the Oxy decision represented a GOE shift toward Venezuela and
Bolivia, and said the GOE was working hard to resolve other
commercial disputes involving U.S. companies to signal its
commitment to the bilateral commercial relationship. The
Ambassador encouraged speedy resolution of these disputes as
well as the Oxy international arbitration, if Ecuador hopes
to attract future U.S. investment. Carrion also requested a
meeting with the head of USDel to the upcoming OAS General
Assembly meeting. End Summary.


2. (C) Carrion was joined by VFM Diego Ribadeneria in the
meeting requested by us. Per RefTel, the Ambassador
expressed to Carrion the points included in RefTel.

Carrion's Response:
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3. (C) Carrion took pains to reject press speculation that
the decision against Oxy represented a strategic shift by the
GOE toward the governments of Venezuela or Bolivia. The Oxy
decision, he said, had no such link to external factors, and
was based purely on domestic Ecuadorian legal requirements.
After hearing from the Ambassador the possible consequences
of the Oxy decision, Carrion asked whether the USG also
planned to review OPIC projects, vote against Ecuadorian
projects in the IFIs, or terminate ATPDEA benefits before
they expire in December. The Ambassador said she did not
have instructions on these issues, but urged speedy
resolution of the Oxy compensation claim and other
outstanding commercial disputes. Carrion said that he
personally and the GOE generally were "working hard" to
resolve other pending commercial disputes involving other
U.S. companies, including Machala Power, City Oriente oil
company, and Duke Energy. The Ambassador encouraged concrete
settlements of these disputes, which also involve
compensation.

Comment
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4. (C) We expect Carrion to faithfully convey the substance
of the USG reaction to President Palacio. We are hopeful
that the potential costs to the GOE are beginning to sink in.
Although there is little or no chance of a policy reversal
by the GOE on the Oxy caducity issue, that realization could
lead the GOE to seek resolution of unrelated commercial
disputes, and probably prompted Carrion's pre-emptive
rejection of a supposed Ecuador-Venenzuela-Bolivia axis.
Please advise whether USDel will accept Carrion's request for
a bilateral meeting at the OAS General Assembly.
JEWELL