PRESIDENT CRACKS DOWN ON PETROLEUM PROTESTS -

C O N F I D E N T I A L QUITO 002575

SIPDIS

SIPDIS

TREASURY FOR MEWENS
DEPT FOR WHA/EPSC FAITH CORNEILLE

E.O. 12958: DECL: 12/01/2017
TAGS: EPET ECON PGOV PREL EC
SUBJECT: PRESIDENT CRACKS DOWN ON PETROLEUM PROTESTS -
REPLACES HEAD OF STATE OIL COMPANY, MINISTER OF GOVERNMENT

REF: A. QUITO 7933

B. QUITO 2277

Classified By: Ambassador Linda Jewell, Reasons 1.4 (b&d)


1. (SBU) Summary: President Correa declared a state of
emergency for Petroecuador after community protestors
demanding additional benefits damaged oil wells and blocked
access to Petroecuador's Auca camp, severely impeding
production. Correa replaced Petroecuador's President with
Guillermo Zurita, a Navy official, who has been tasked with
restoring order. Correa also accepted the resignation of
Minister of Government Gustavo Larrea, for allegedly
erroneously reporting that the situation was under control.
Coordinating Minister for Security Fernando Bustamante will
temporarily replace Larrea. End Summary.


2. (U) Community protestors damaged wells in state oil
company Petroecuador's Auca camp over the weekend on November
24-25, demanding that Petroecuador provide additional funds
for roadwork, 2,000 new jobs, and other public works. Since
November 26, the protestors have blocked road access to the
site, so technicians have been unable to enter to repair the
damage. This has affected approximately 47 wells, resulting
in a major production drop and estimated losses of between
USD 2.4 and 3 million per day.


3. (U) On November 29, President Correa decreed a state of
emergency for the entire Petroecuador system and designated
Guillermo Fernando Zurita Fabre, Director of General Maritime
Interests for the Navy, as the new head of the parastatal
(replacing Carlos Pareja). Zurita's first task will be to
re-establish order and seek the prosecution of those involved
in "the sabotage" of the Auca camp. The decree also noted
the Navy will mobilize to address declining production in the
petroleum sector.


4. (U) In addition to replacing Carlos Pareja, on November
29 President Correa accepted the resignation of Minister of
Government Gustavo Larrea, due to his "totally erroneous
report" claiming that the Petroecuador situation was under
control. Correa then designated Coordinating Minister for
Internal and External Security Fernando Bustamante to occupy
this post temporarily.


5. (C) Comment: President Correa reacted strongly to the
petroleum shutdown due to protests which affected Brazilian
firm Petrobras in April, stating that "the anarchy" must be
stopped and reprimanding regional mayors who organize
invasions (reftel a). This time he went beyond rhetoric. In
contrast to the previous administration that sent GOE teams
to negotiate with communities on additional benefits, Correa
is sending a strong signal that he is not going to stand for
protests that affect the country's key petroleum revenues.
However, these protests may have been an excuse to implement
changes that were already in train. Even before these
protests, we had heard rumors that there might be changes at
Petroecuador, and some commentators have noted other
"failures" on the part of Pareja: falling production,
failure to reform Petroecuador, failure to fully collect
"extraordinary" income payments from foreign oil companies
(reftel b). It is unclear why President Correa selected the
Navy to overcome the current "emergency situation" rather
than the Army, particularly given Zurita's apparent lack of
petroleum experience (according to the GOE's Presidential
website, Zurita has a degree in Naval Science and a masters
degree in Marine Biology).


6. (C) Correa's replacement of Larrea was a greater
surprise, since he has been a close confidant of Correa, and
was seen as one of the ministers who could persuade Correa to
change his mind. He was also an effective interlocutor for
the Embassy on law enforcement issues, although Bustamante
has also been a good interlocutor for us. We have heard
rumors that Larrea may take on a new role as Correa's
go-between with the Constituent Assembly. End Comment.
JEWELL