NEW MINISTER OF INDUSTRIES COMES FROM CUENCA,S

C O N F I D E N T I A L GUAYAQUIL 000174 SIPDIS E.O. 12958: DECL: 07/28/2018 TAGS: PGOV ECON EC SUBJECT: NEW MINISTER OF INDUSTRIES COMES FROM CUENCA,S PRIVATE SECTOR Classified By: Consul General Douglas Griffiths for reasons 1.4 (b) and (d) ¶1. (C) Summary: Xavier Abad replaced Raul Sagasti as Minister of Industry and Competition. Both are businessmen who are not affiliated with Correa,s party, but Abad may be a more effective advocate for the private sector than the low-profile Sagasti. Abad is from the prosperous southern highland town of Cuenca, and his appointment may signal Correa's interest in promoting Cuenca as a neutral ground between Quito and Guayaquil industrialists. End summary. ¶2. (SBU) Raul Sagasti,s departure in late June from the Ministry of Industry and Competition, or Ministerio de Industrias y Competitividad (MIC),was no surprise, as he had twice presented his resignation to President Correa in the hopes of returning to the private sector. Sagasti publicly announced that he would return to the metal industry sector and that he would work with the government in its national cement industry. ¶3. (SBU) Xavier Abad, a native of Cuenca, had been Executive Director of the Chamber of Industries of Cuenca since 2005. An attorney, he was Under Secretary for Industry in the government of ex-President Lucio Gutierrez and a lead negotiator in the Free Trade Agreement talks with the U.S. He is not affiliated with the President,s Movimiento Pais. Abad has been a good contact of ConGen Guayaquil, and he told the Consul General at our Independence Day celebration in Cuenca that he hoped to "sensitize the government to the concerns of business leaders". He went on to explain that he shared President Correa,s goal of creating a more just and inclusive country, but he felt that some of the President,s initiatives were putting a burden on the private sector and that there were not the proper incentives for investing in Ecuador. ¶4. (C) Pol/Econoff spoke with the Executive Director of the American Chamber of Commerce (AmCham) in Cuenca, Geovany Osorio, about Abad's appointment. He said a contact in the President,s staff reported that Correa had said a week prior to the announcement that he was "sick of the Quito and Guayaquil industrialists who only cared about their own interests". Osorio speculated that Correa sees Cuenca, Ecuador,s third largest city, as the "happy neutral" site and selected Abad as its representative. ¶5. (C) This sentiment was echoed by conversations with former President of the Cuenca AmCham Esteban Crespo, who is currently president of Cuenca,s Chamber of Industries. Crespo outlined to Pol/Econoff his interest in creating a strategy in which Cuenca could be the broker for private industry interests. Crespo has been planning a private meeting with Correa and Abad to discuss this strategy. He has not yet held this meeting with the president. ¶6. (C) Upon hearing of Abad,s appointment, Executive Director of the Guayaquil Chamber of Commerce Teodoro Maldonado told Pol/Econoff that he believed it was a symbolic gesture on the part of Correa, as the job now has fewer responsibilities. (Note: In early 2007, the Ministry of Foreign Affairs took the trade policy portfolio away from the MIC. End note.) Maldonado stated that Abad clearly has a different ideology than the current administration in terms of industrial policy, but he doubted Correa,s sincerity in appointing someone who represents the official private industry sector. Fernando Carvajal, an ex-candidate for the Constitutional Assembly for Movimiento Pais, stated to the press that he recognized the nomination as the government,s effort to achieve some kind of national agreement on industrial policy, "considering (Abad) has questioned the government,s policies". ¶6. (C) Comment: Sagasti, a Quito businessman, was expected to be the liaison with the private sector, but he had few ties and did not appear to be able to bring the president and the business community closer together. While he apparently helped modify a few decrees, he did not appear to be an effective player in the Correa administration. Indeed, it was newly appointed Coordinating Minister for Production Susana Cabeza de Vaca who successfully pushed Correa to begin holding meetings with business representatives, but those meetings excluded representatives of the big Guayaquil and Quito business chambers. Therefore, Correa's selection of an official from the third largest industry chamber represents an interesting choice. Like Sagasti, Abad is not part of the president's inner team. However, he will likely be more active than Sagasti and has closer ties to the established business community, so he may be a better interlocutor between the government and the private sector. Abad is very open to the U.S. and attended the Embassy,s 4th of July event in Cuenca. End comment. GRIFFITHS