ECUADOR ANALYSTS DEBATE CORREA'S INTENTIONS DURING

C O N F I D E N T I A L QUITO 002533 SIPDIS SIPDIS E.O. 12958: DECL: 11/21/2017 TAGS: PGOV PREL ECON EC VE CO SUBJECT: ECUADOR ANALYSTS DEBATE CORREA'S INTENTIONS DURING DAS MCMULLEN LUNCHEON Classified By: Ambassador Linda Jewell FOR REASON 1.4 (D) ¶1. (C) Summary: Ecuadorian analysts reflected differing assessments of President Correa's policies during a November 13 luncheon with visiting WHA DAS Christopher McMullen, hosted by the Ambassador. Participants highlighted the difficulty of predicting the economic model that President Correa might adopt, although most believed it would likely be state-driven. While there was general skepticism that Correa was following the Venezuela economic/political model, some analysts expressed concern that the lack of a viable opposition meant that Correa could impose his will on the Constituent Assembly that begins its work on November 29. These analysts characterized Correa's foreign policy as prudent, independent, nationalistic, and distinct from the anti-American policy of Chavez. (End Summary) CHANGE WITHOUT LIMITS ¶2. (C) Latin American Faculty for Social Sciences (FLACSO) political scientist Simon Pachano emphasized the wide agreement within Ecuador that the country's political and economic model of the past decade was corrupt and that radical change was in order. The question that remained, he said, was how to bring about that change. Calling Ecuador's former power groups mafias, Universidad San Francisco economist and former finance minister Magdalena Barreiro stressed the difficulty of actually changing the model rather than only the groups in power. ¶3. (C) FLACSO international relations expert Grace Jaramillo thought the GOE had taken the change diagnosis too far and was destroying important institutions in the process. Pachano noted that Correa was only the most recent in a series of Ecuadorian presidents since 1996 who were elected as outsiders who promised to fix the system. Andean Simon Bolivar University Latin American studies professor Pablo Andrade believed the government might end up occupying all political space like the PRI in Mexico did (implying at least a veneer of democracy) or could become more authoritarian. ¶4. (C) Responding to McMullen's question about limits on the Correa administration's power, the group saw no real limits. El Comercio newspaper editorialist Marco Arauz said the MEDIA would try to be a critical observer of events, but could not play the role of a political opposition or a significant counterweight to government power. Andrade commented that the Armed Forces had been either coopted or marginalized sufficiently that they should also not be expected to play such a role with the government, as they sometimes have in the past. Pachano, joking that as an expert on Ecuador's now defunct political parties he had suddenly become a historian, predicted it would be a number of years before stable political parties re-emerged. CORREA'S ECONOMIC MODEL ¶5. (C) Jaramillo said Correa wanted to make the state the motor of development, but had not yet decided exactly how to achieve that end. She did not think the GOE rejected having a private sector, but rather wanted to restructure it. Andrade agreed that the private sector as currently constituted would not survive. Andean Simon Bolivar University international relations and democratic theory professor Cesar Montufar saw Correa's policies as aimed at political rather than economic goals, via centralization and strengthening the state, arguing that they fundamentally reflected the Chavez political model, if not necessarily in intent than in probable outcome. Pachano expressed concern that the government sought to control key areas of the economy in a clientelistic and paternalistic manner, which denied resources for more productive purposes. He mentioned the irony of Correa's anti-neoliberal rhetoric of the "long, dark night" given that Ecuador had implemented fewer neoliberal reforms than other Latin American economies (a fact that the charts accompanying Correa's own "Economist" article in 2002 revealed). ¶6. (C) Jaramillo noted that while Venezuela imports all products it needs, Correa is essentially a nationalist who seemed to be pursuing a self-sustaining national economy. Participants agreed that Ecuador,s more diversified economy made it fundamentally different than that of the Venezuela example, but still thought that an economic policy of this type was untenable in the long run. Arauz highlighted the economic plan drafted by the National Secretariat of Planning and Development (SENPLADES),which relied on micro-enterprises and implicitly encouraged isolation rather than international trade and investment. The DCM termed the SENPLADES plan utopian, a characterization that participants agreed with. ¶7. (C) Barreiro criticized the GOE for essentially neglecting economic policy and unwisely believing that state investment could substitute for that from the private sector. She lamented the loss of independence of institutions like the Central Bank. Barreiro noted that Correa did not allow anyone in the GOE to make any significant decisions without his personal involvement and that political objectives were his priority. VENEZUELA AND COLOMBIA ¶8. (C) The Ecuadorian guests did not believe that President Correa could be cast simply as a disciple of Venezuelan President Chavez even though Correa (and the Ecuadorian public) viewed Chavez positively. Pachano termed the GOE prudent and careful in its dealings with Chavez, noting that Correa had publicly opposed unlimited re-election. Barreiro highlighted Correa's remark in Miami that he had learned from Chavez' errors. Arauz pointed out that Correa did not hesitate to offer advice to Chavez, such as in regard to the Central Bank. Andrade considered Correa's foreign policy generally independent, based on cost-benefit calculations. ¶9. (C) Jaramillo compared Correa to Colombian President Uribe in terms of the importance of a strong leader who was remaking institutions. McMullen pointed out that we knew exactly what Uribe planned to do once elected, but with Correa his intentions appear to remain a matter of debate. Arauz suggested this reflected a higher Ecuadorian tolerance for ambiguity. COMMENT ¶10. (C) The debate among the analysts illustrated the continuing lack of clarity on the Correa government's future political and economic policies. While some in the group were more critical of Correa than others, no one disputed that the model of the past was corrupt and that changes were in order. They also agreed that his unprecedented base of support and purview for action meant that he almost alone would determine ultimate success, failure and direction, almost regardless of other internal and external factors over the medium term. ¶11. (U) DAS McMullen cleared this message. JEWELL