GUTIERREZ PARTY DOWN BUT NOT OUT

C O N F I D E N T I A L QUITO 000477 SIPDIS E.O. 12958: DECL: 06/02/2028 TAGS: PGOV PTER ECON EC SUBJECT: GUTIERREZ PARTY DOWN BUT NOT OUT Classified By: DCM Jefferson Brown for reason 1.4 (D) ¶1. (C) Summary: The Patriotic Society Party, although discredited and diminished, has not lost the fire in its belly or the support of an important segment of the Ecuadorian public. Its leader, former president Lucio Gutierrez, regained his political rights in May. The party is strongly on the attack within the Constituent Assembly, especially on the issue of the government's ties to the FARC. It recently won a local election, possibly a barometer for future gains. While still by far the underdog, the Patriotic Society Party will likely be a key advocate for a "no" vote in the September constitutional referendum and the most significant, well-organized national opposition to Correa's movement in the congressional and local elections that follow. (End Summary) FIGHTING ITS WAY BACK ¶2. (C) Given President Correa's popularity and the corrupt image of Ecuador's traditional political parties, many judged the old parties dead following their weak showing in the September 2007 Constituent Assembly elections. In that race, Correa's Proud and Sovereign Fatherland (PAIS) movement won 80 of 130 seats, while no opposition party reached even 20. Political analyst Simon Pachano of FLACSO told us at that time that he expected Correa would remain dominant until new opposition parties were formed and gained strength -) a process likely to take several years. ¶3. (C) The Patriotic Society Party (PSP),whose leader, Lucio Gutierrez, was forced from the presidency by popular protest just three years ago, might seem the least likely party to be revived. Yet the PSP is showing signs of life and a refusal to be marginalized from the Ecuadorian political scene. In what may be a harbinger of renewed strength, the PSP scored a win May 18 in a mayoral election in the new canton of Quinsaloma in Los Rios province. The outcome prompted Correa to call on his followers to organize in favor of a yes vote in the constitutional referendum so that the corrupt leader of the bankers and the parties of the past (referring to Gutierrez) could not divide Ecuador. FARC TIES AND WEAK ECONOMY THE PRONGS OF ATTACK ¶4. (C) The PSP has been one of the strongest opposition voices in the Constituent Assembly over the past six months, consistently attacking the positions of Correa's PAIS movement on every issue that comes to the floor. The PSP holds 17 seats in the Assembly (down one due to a defection), less than a quarter the size of the PAIS bloc but the largest of any opposition party. ¶5. (C) One issue the PSP has seized on to try to tar Correa's image domestically is the GOE's ties to the FARC. PSP Assembly bloc leader Gilmar Gutierrez (Lucio's brother) and member Fausto Lupera were called traitors for visiting Colombia to seek documentation on this issue (reftel). Lupera got into yet another shouting match May 23 with PAIS member Maria Augusta Calle over the Colombian Prosecutor General's investigation of her relationship with the FARC (although his arguments did not stop the PAIS majority from passing a resolution in Calle's support). PAIS members have counterattacked by pointing to Lucio Gutierrez' meeting with the FARC when he was a presidential candidate. ¶6. (C) PSP supporters also criticize Correa for the weak economy, contrasting the country's economic strength under the Gutierrez administration, when GDP growth was 8% in 2004, to approximately 2% growth in 2007. Rising inflation, particularly for food, is another emerging vulnerability for the government that PSP will try to exploit. Pointing to the drop in economic growth, Roberto Salazar of the Hexagon consulting firm (considered linked with the PSP) told visiting WHA/AND deputy director Bowen and Polcouns that many Ecuadorians do remember the economic stability of the Gutierrez years and now see Gutierrez as their best hope for a brighter future. LUCIO BACK AT PSP HELM, WITH "CHOLO" SUPPORT ¶7. (C) On May 13, the Supreme Electoral Tribunal restored Gutierrez' political rights, which he lost two years earlier when the PSP failed to report a $1,051 campaign contribution. This allowed Gutierrez to resume his official role as PSP's leader, a position his brother Gilmar had occupied as caretaker. Gutierrez did not rule out the possibility of running for president against Correa in the next elections (in early 2009),saying, "I am a fighting man, and if the opportunity presents itself, I will be there." ¶8. (C) Political analyst Grace Jaramillo emphasized to us that PSP support remains strong among the "cholos" -- the lower middle class mestizos who attended public schools and work in small businesses or the informal economy. Hexagon's Salazar pointed out that this segment of people identify more with Gutierrez than Correa because Gutierrez' darker skin color is more like their own. Pascual del Chioppo, President of the Social Christian Party (PSC),recently shared with Guayaquil CG his party's delight with the PSP's resurgence. His analysis of Gutierrez' appeal tracked closely with the above, adding that he also had the ability to "talk like rural people." Del Chioppo said that the PSC and PSP are "cooperating" and that the PSC would not run any candidates in upcoming elections in rural areas where the PSP was strong. Likewise, the PSP is ceding Guayaquil to Mayor Jaime Nebot and other PSC elements. ¶9. (C) Nancy Cordova of the Cedatos polling firm explained to us that PSP's popularity was often underestimated because it was strongest in rural areas, where there was less polling and media coverage. Polcouns witnessed PSP's rural connections in a remote area along the Napo River last December when a boat bringing Christmas candy from the PSP attracted crowds of local children and their parents. ¶10. (C) Others discount PSP's possible resurgence. Omar Simon of the NGO Citizen Participation, for example, indicated to us that he saw no way PSP could come back given continued popular support for Correa's change agenda. Many Ecuadorians remember well that Gutierrez, who ran in 2002 on an anti-oligarchy platform, was seen as corrupt and too close to bankers and the United States once in office. COMMENT ¶11. (C) While not positioned to topple Correa from the presidency, the Patriotic Society Party cannot be counted out of Ecuadorian political battles. Despite its political baggage from the past, the party's feisty moves, tireless campaign reach into remote corners of the country, and strong rural support look to put it in the lead of opposition efforts to block the overwhelming wins Correa seeks in the constitutional referendum and subsequent local and congressional elections. The odds at this point are that Correa will pull off solid wins in both forays to the ballot box, but the PSP's fight back will ensure some tough sparring -- and likely some extra government spending -- along the way. Jewell