ECUADOR: ASIAN DIPLOMATS EAGER FOR DIALOGUE

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 001578

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/24/2016
TAGS: PREL ETRD ECON LA CH JA KS EC
SUBJECT: ECUADOR: ASIAN DIPLOMATS EAGER FOR DIALOGUE

REF: STATE 70035

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


1. (C) Summary: Our recent outreach to diplomatic
counterparts from China, Japan and Korea found them highly
aware of USG coordination efforts (described RefTel),and
eager to engage in dialogue about the political and economic
situation in Ecuador and the region. In deference to USG
concerns about the recent confiscation of Occidental
Petroleum's assets, Asian diplomats have urged caution to
national companies interested in acquiring those assets.
They also expressed concern about Venezuelan inroads in
Ecuador, and regional trends toward populism. We will
continue to engage in dialogue to promote shared interests in
Ecuador and the region. End Summary.

Chinese Laying Low on Oxy; Jealous on Taiwan
--------------


2. (C) Political Counselor Li Dong told PolChief on June 15
that Beijing had sent a detailed accounting of A/S Shannon's
meeting with his Chinese counterpart, and the GOC is very
open to dialogue with us on Ecuador and the region. He was
already in contact with various Embassy officers, and found
it useful to exchange views, especially on the stability of
Ecuador's notoriously unstable presidency. He noted that he
had differed with us in 2003, when we were predicting
ex-president Lucio Gutierrez' downfall (which came in 2005).
More generally, Dong said, Chinese policy here in Ecuador is
one of absolute respect for non-intervention, "somewhat
different from the U.S. approach." Chinese interests are
focused principally on energy sector cooperation and Taiwan.
FM Carrion's recent visit to Beijing had been positive, and
included an agreement for China to provide credits.


3. (C) On the Oxy case, Dong said the Chinese, who bought
Encana's oil fields (sold by Oxy, fueling the controversial
GOE decision to cancel Oxy's contract and confiscate its
assets),are "keeping a low profile." (Note: the Chinese
bought shortly before the GOE enacted its controversial
hydrocarbons law, effectively reducing the value of what
China purchased. Other sources have told us the Chinese feel
burned by the experience and will refrain from further
investments for the near term. End Note.) On Taiwan,
despite instability, Dong claimed good relations with the
GOE. The exception was under FM Heinz Moeller (under
president Gustavo Noboa, 2000-02),who he called
"two-faced"--telling them what they wanted to hear, but
entertaining separate deals with Taiwan. Ex-president Lucio
Gutierrez visited Taiwan as a candidate, and took money, but
as president respected the one-China policy. Gutierrez'
brother Gilmar told Dong that Taiwan was offering $2 billion
for full diplomatic recognition. Dong said he did not make a
counter-offer, warning Gutierrez to scrutinize the Taiwanese
offer carefully. In the end, no such deal was made. Much of
Chinese activity in Quito is focused on monitoring the
Taiwanese interest section. On the Gutierrez-era visa
scandal and the furor over Chinese aid including arms, Dong
claimed no proof was ever developed.


4. (C) Turning to regional issues, Dong denied any Chinese
military assistance to Cuba, and refuted US NGO critics who
claimed dynamite donated for road building was for military
purposes. In response to USG concern over the sale of radars
to Venezuela, he said China's aid was purely logistical, and
as long as the U.S. and Venezuela maintain commercial
relations, there were no grounds to criticize China. China
views the Garcia and Uribe victories in Peru and Colombia as
stabilizing factors in the region. The recent meeting of the
Community of Andean Nations in Quito seemed to smooth things
over among the Andeans (absent Venezuela).

Japanese Stay Out of Politics, While Blessing Roldos
-------------- --------------


5. (C) Japanese PolChief Ryu Murasawa was also well aware of
the Shannon initiative, and had received recent reports from
other capitals in the region reporting on recent outreach
efforts by our colleagues. Murasawa assured us that the
Japanese Embassy here is very disposed to engage in dialogue
with us on Ecuador and regional issues. He noted that
dialogue is already ongoing between our nation's ambassadors
in Quito.


6. (C) Murasawa commiserated over the Oxy case and noted
that Japanese firms also find the business and political

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environment in Ecuador difficult. For example, a Japanese
oil firm (Teiko) is frustrated by GOE delays permitting
access to Teiko's exploration fields--the Energy Ministry has
not responded to the Japanese request for over a year. Teiko
is also interested in bidding for Oxy's former property
(referred to as Block 15),but is not inclined to take
another risk while its other operations are suspended. The
largest Japanese private investment in Ecuador, a forestry
operation in tropical Esmeraldas, gave up and left Ecuador
recently, after the Environment Ministry had delayed acting
on a permit request.


7. (C) Murasawa expressed concern about regional trends
toward populism, and satisfaction with the Garcia victory in
Peru, where Japan has strong interests. Asked whether Japan
might consider supporting civil society efforts to promote a
shared political agenda among presidential candidates,
Murasawa said Japan shies away from political assistance or
interference of any sort in its foreign assistance to
Ecuador. Nevertheless, presidential front-runner Leon Roldos
recently visited Japan at GOJ invitation. Murasawa said the
visit was deliberately "low-key," and did not share details
about who Roldos met with in Tokyo.

Korea
--------------


8. (C) June Seo Park, Korean Pol/Econ officer expressed
appreciation to PolChief for A/S Shannon's recent
consultations in Asia. Korea is a staunch ally of the U.S.,
he professed, and its highest foreign policy priority is to
achieve an FTA with us. One of only three Korean diplomats
here, Park said there were approximately 800 Koreans resident
in Ecuador, mostly engaged in sales of Korean manufactures.


9. (C) Park said Korean investors had come to him recently
to express interest in winning Oxy's former contract to
exploit the Block 15 oilfield. Park warned the investors,
(from ILDO Energy Resources) to stay away from the former Oxy
fields, since the issue between the US and Ecuador remains
open. Park later informed the GOE that ILDO did not have the
support of the Korean government. (The Korean Ambassador
later reiterated his government's position against the
investment to the Ambassador.) Bigger, more established
Korean firms (Park mentioned Samsung) have no interest in
entering the Ecuadorian market for lack of confidence in the
government's commitment to rule of law.


10. (C) Park served in Korea's consulate in San Francisco,
California, and seemed eager to share his views, official and
personal. Park said Korea considered China to be a threat to
Korea in all dimensions (economic, financial, military,
etc.). The GOK also finds the Venezuela/Cuba/Bolivia
relationship troubling. Dark horse presidential candidate
Rafael Correa mystified Parks--"how could an academic
economist be against open markets and the U.S.?" Parks also
implied some personal dissatisfaction with the current Korean
president, whom he characterized as "too Leftist--less
friendly to the U.S., too friendly to N. Korea, less
supportive of open markets."

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


11. (C) Our Asian counterparts were uniformly aware of and
eager to build on A/S Shannon's outreach efforts to their
capitals. Each signaled respect for USG interests in Ecuador
and more broadly in the region, and seemed reluctant to let
energy sector competition compromise relations with us.
Though reluctant to play a direct political role, the Asians
disdained the growth of populist forces in the region, and
share our interest in enhanced democratic stability based on
rule of law. We will maintain the dialogue to share
perspectives and explore shared interests.
JEWELL