MINISTER OF ECONOMY RODAS RESIGNS

C O N F I D E N T I A L QUITO 002549

SIPDIS

SIPDIS

TREASURY FOR STEVE GOOCH

E.O. 12958: DECL: 10/18/2016
TAGS: EFIN ECON EINV PGOV PINR EC
SUBJECT: MINISTER OF ECONOMY RODAS RESIGNS

REF: QUITO 1924

Classified By: DCM Jeff Brown. Reasons: 1.4 b and d.


1. (C) Summary. Minister of Economy and Finance Armando
Rodas submitted his resignation late on October 17. On
October 18 President Palacio named Jose Jouvin as the new
Minister of Economy, the fifth to occupy that position since
Palacio became president in April 2005. While Rodas's
resignation was purportedly for "personal reasons," Embassy
believes he resigned because he was not willing to approve
additional spending during the last thee months of the
Palacio administration. End Summary.


2. (SBU) In his resignation statement, Rodas said that he
was leaving for strictly personal reasons, and that "I am a
technician, and I am leaving the President of the Republic
the freedom to have absolute political liberty to manage the
last three months of his government." Rodas had been
appointed as Minister in July and only served in that
capacity for three-and-half months (about average for a
Minister of Economy under this administration). One of
Rodas's major accomplishments was the introduction of a law
that defines how revenue from the former Occidental Petroleum
fields will be used; ironically, the Ecuadorian congress will
likely approve the law in final on October 18 (septel).
Rodas had also committed to finding a solution to the arrears
that the GOE owes Machala Power, a U.S.-owned electricity
generating company (reftel),had presented a proposal to
Machala, and Machala representatives were planning to meet
with him on October 19 to provide their response.


3. (C) We understand from the IMF Resident Representative
that Rodas had been relatively cautious about approving
expenditures and looking for "creative" ways to identify
funding for additional expenses, in part because he was
concerned about his potential liability after leaving office.
We had also heard recently from former Minister of Economy
Magdalena Barreiro that the Ministry was under significant
pressure from the President's office to approve additional
expenditure; Barreiro assumed that Under Secretary for
Finance Proano was going to resign as a result.


4. (U) Prior to becoming Minister of Economy, Jose Jouvin
Vernaza had been President of the Banco del Estado, a
government-owned development bank responsible for lending to
municipalities. Jouvin had been appointed to that position
shortly after Palacio became president; previously, Jouvin
had served as Secretary General of the Vice President's
office when Palacio had been Vice President under Lucio
Gutierrez. Jouvin, who is from Guayaquil, is also a
businessman active in the paper industry, and had previously
served as the Commercial Counselor in the Ecuadorian Embassy
in Lima. He received a Commercial Engineering degree from
the Universidad Catolica Santiago de Guayaquil and a Masters
in Administration from the Instituto Superior Ecuatoriano.


5. (C) Comment: We assume that Rodas either resigned or was
asked to resign because he was not willing to approve
extraordinary spending at the request of President Palacio.
Jouvin, who is close to the President, may be more willing to
approve such spending -- and the opportunities for 11th hour
personal enrichment that may represent for the Palacio inner
circle. Although Palacio is supportive of settling the
Machala issue, we fear Rodas's departure may also complicate
Machala Power's hopes of reaching a deal to address its
arrears before the end of this government.
JEWELL