Identifier | Created | Classification | Origin |
---|---|---|---|
07QUITO2142 | 2007-09-19 14:36:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Quito |
VZCZCXYZ0027 OO RUEHWEB DE RUEHQT #2142 2621436 ZNR UUUUU ZZH O 191436Z SEP 07 FM AMEMBASSY QUITO TO RUEHC/SECSTATE WASHDC IMMEDIATE 7749 INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 6908 RUEHCV/AMEMBASSY CARACAS PRIORITY 2680 RUEHLP/AMEMBASSY LA PAZ SEP 0717 RUEHPE/AMEMBASSY LIMA PRIORITY 1940 RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 2814 RUEATRS/DEPT OF TREASURY WASHDC PRIORITY |
UNCLAS QUITO 002142 |
1. (U) The following is a weekly economic update for Ecuador that reports notable developments that are not reported by individual cables. Oil Contract Renegotiations Imminent -------------------------- 2. (U) Minister of Petroleum and Mining Galo Chiriboga announced September 11 that the GOE will begin "amicable" oil contract renegotiations in mid-September. Chiriboga noted that the renegotiations are mainly designed to increase the State's share of revenues, which he claims is 20% but should be 50% with last year's reform to the hydrocarbons law. He asserts that Chinese oil company Andes Petroleum and Spanish firm Repsol YPF have already lined up for renegotiations. Although Chiriboga claims the renegotiations are "voluntary," President Correa has commented several times that oil companies should "renegotiate or leave," and Brazilian firm Petrobras is once again being threatened with contract annulment for unknowingly operating "unified fields" that may not be unified (reftel). Customs Law Reform -------------------------- 3. (SBU) Congress approved on September 13 an administration proposal to reform the Customs Law and utilize risk analysis performed by Ecuadorian Customs in lieu of the current system of pre-shipment inspections performed by contract companies. Exporters and importers appear largely in favor of the change as it would save them time and money (they currently pay close to $75 million per year for inspections). However, they noted a potential problem that arose when Congress amended the proposal to eliminate the current inspection system immediately. The contract companies claim that changing over to a new system requires more time and terminating pre-shipment inspections immediately would violate their contracts that are valid through 2009. President Correa could use his partial veto to modify the transition period. In a related development, the GOE has formed a working group (composed of representatives from the MFA, Customs, the Anti-Narcotics Police, the Competitiveness Council, and CORPEI - the export promotion agency) to improve container security in Ecuador's ports, consistent with elements of the new law. They have requested a meeting with the Embassy to discuss plans and seek assistance. Proposed Changes to the Fiscal Transparency Law -------------------------- -- 4. (U) President Correa sent a draft "Social Responsibility" law to Congress on August 21 that would set the legal framework to fulfill his campaign promise to increase education and health spending by 0.5% of GDP per year, until education expenditures reach 6% of GDP and health spending reaches 4% of GDP. Former Minister of Economy Mauricio Pozo criticized the bill for eliminating one of the key elements of Ecuador's Fiscal Responsibility Law, which stipulates that current expenditures cannot grow in real terms by more than 3.5% of GDP each year. BROWN |