CORREA TELLS D: ECUADOR WELCOMES ECONOMIC

C O N F I D E N T I A L QUITO 001114 SIPDIS SENSITIVE SIPDIS E.O. 12958: DECL: TEN YEARS TAGS: ECON EFIN PREL PGOV EC SUBJECT: CORREA TELLS D: ECUADOR WELCOMES ECONOMIC DIALOGUE, SUPPORTS FIGHT AGAINST DRUGS, WANTS SOCIAL EQUALITY Classified By: Ambassador Linda Jewell for reasons 1.4 (b&d). ¶1. (C) SUMMARY: In an hour and a half May 9 meeting with the Deputy Secretary, Ecuadorian President Rafael Correa avoided controversial topics, stressed the importance of the bilateral relationship, and stuck to his core themes. He assured the Deputy Secretary that the United States has nothing to fear from recent events in Ecuador or the rest of Latin America - that to the contrary, Ecuador is a friend and wants to be a strong trade partner. Correa welcomed the idea of a bilateral economic dialogue. He discussed plans to elect a Constituent Assembly in September, expressed concern about fighting corruption, and said he wants to see an end to the conflict in Colombia and its negative effects on Ecuador. Finally, he added that Ecuador needs more help in its efforts to fight drug trafficking. End Summary. ¶2. (SBU) Additional participants in the meeting included: Assistant Secretary Tom Shannon and Ambassador Jewell; Minister of Foreign Affairs Maria Fernanda Espinosa, Minister of Government and Policy Gustavo Larrea Cabrera, Minister of Defense Loreno Escudero, Minister for Economic Coordination, Mauricio Davalos, Coordinating Minister for Security Fernando Bustamente, Chief of Staff Vinicio Alvarado and Communications Director Monica Chuji. ¶3. (C) Correa began the meeting with the Deputy Secretary before a flood of press cameras, which he allowed to stay in the room for his opening remarks and the Deputy Secretary,s response. He said the Ecuadorian people had decided on April 15 that a new, reformed Constitution is necessary - one that would create voting districts in order to increase citizenship participation and decentralize the country,s administration, and de-politicize the courts. The Deputy Secretary assured Correa that the Constituent Assembly was an SIPDIS Ecuadorian concern that should be resolved internally, and that the USG supported democratic changeprocesses. ¶4. (SBU) Correa continued by saying that trade relations are important to Ecuador, as is ATPA renewal. The Deputy Secretary said that the USG understands perfectly the SIPDIS importance of renewing ATPA to Ecuador and supports it, but that it is a decision that the U.S. Congress will make. ¶5. (SBU) When the press departed Correa expressed his concern with fighting corruption in Ecuador. He said he wants to see an end to the conflict in Colombia, noting that his government was "profoundly pacifist." For this reason, and to help develop border communities, his government had created Plan Ecuador. He also hopes to resolve the situation of 500,000 Colombian refugees that currently live in the border region of Ecuador. ¶6. (SBU) The Deputy Secretary asked how Ecuador would integrate itself into the global economy, and stressed that the continued functioning of an efficient trading system would be beneficial to both countries. Correa responded that nothing was more important than international trade for development. He said that his government did not favor "private groups deciding public issues" - that society, in its collective form, should drive the way in which the country approaches markets. His government supports a "free market," but not an "ultra-liberal" market. Noting that an FTA would have further threatened wages and would have detracted from local development, he said he supported "fair trade" instead of "free trade". That said, he noted that at any time, his government would gladly begin some sort of economic dialogue, exchange, or treaty related to trade with the U.S. ¶7. (SBU) The Deputy Secretary responded that it would indeed seem to be an opportune time to begin an economic dialogue in which we could discuss topics of mutual interest. Correa responded that he would be delighted. ¶8. (C) When the Deputy Secretary asked Correa,s opinion of Ecuador,s progress in the war on drugs, Minister of Government Gustavo Larrea answered that in recent years, Ecuador has seized more drugs than it has in all of its previous history. He said the GOE also hopes to make significant progress this year in anti-money laundering efforts, and has created a police entity to support this. The GOE is aware the production of white gas (a pre-cursor used in cocaine production) by four main criminal groups in one border province. Larrea added that UDENOR (a GOE agency dedicated to social development and infrastructure in the northern border area,s poorest provinces) is working to cut off this production, but needs more economic support. ¶9. (C) Correa added that UDENOR is also trying to educate Colombian refugees in the border region about how to regularize their situation. Most important in all of this, he said, was social development. He stressed that the fight against drugs must be accompanied by greater local development. Minister of Government Larrea added that if ATPA were not renewed, many of the small businesses that currently export to the United States would turn to drug activities due to a lack of viable alternatives. ¶10. (C) Deputy Negroponte raised the issue of aerial drug spraying, and Minister Espinosa responded that though an agreement has been reached on this issue, the GOE still believes the spraying causes harmful effects to public health. President Correa agreed. When asked about Ecuador,s engagement with the Government of Colombia, Correa said that communication exists, but there is no pro-active political will in Colombia to change the policy of spraying. The Deputy Secretary said that the most logical way to improve the situation in Colombia is to increase communication with Colombia. He pointed out that the GOC has made much progress eradicating paramilitaries in recent years. Minister Espinosa noted that the GOE is "permanently worried" about this problem, and that Colombia receives much more funding through Plan Colombia than Ecuador. Correa agreed, and said that more help was needed to reinforce efforts to improve living conditions in the border regions. ¶11. (C) COMMENT: While the meeting was cordial, and President Correa mentioned his affection for the United States multiple times, it is far too early to render a verdict on Correa,s intentions. His relative ease after the cameras stopped rolling, as compared with his more tense performance for the public, was very telling. Given that his base rests with the masses, he clearly felt the need to appear tough and professorial on television. But in private, his tone was calmer and he avoided raising controversial topics (such as the possible cancellation of the BIT, the UNITAS issue and the future of the Manta FOL). His reliance on his core themes of Plan Ecuador, the exploitation of workers and economic democracy, which he himself has labeled "a new socialism for the twenty-first century", speaks volumes about his world view -- passionately felt and less open to outside advice. That said, the time remains ripe for the United States to engage Correa while the majority of Ecuadorians still look with hope to the upcoming Constitutional Assembly as the best means to achieve some measure of constructive reform for what is currently a thoroughly broken system. ¶12. (U) This cable has been cleared by the Deputy Secretary,s party. SIPDIS JEWELL