ECUADORIAN TRADE WITH IRAN

C O N F I D E N T I A L QUITO 000023 SIPDIS USTR FOR BENNETT HARMAN E.O. 12958: DECL: 01/16/2019 TAGS: ETRD ECON EFIN IR EC SUBJECT: ECUADORIAN TRADE WITH IRAN REFTEL A: 08 Quito 1162 B: 08 State 114408 Classified by:... id: 187399 date: 1/15/2009 17:07 refid: 09QUITO23 origin: Embassy Quito classification: CONFIDENTIAL destination: 08QUITO1162|08STATE114408 header: VZCZCXYZ0000 RR RUEHWEB DE RUEHQT #0023 0151707 ZNY CCCCC ZZH R 151707Z JAN 09 FM AMEMBASSY QUITO TO RUEHC/SECSTATE WASHDC 9865 INFO RUEHBO/AMEMBASSY BOGOTA 7918 RUEHCV/AMEMBASSY CARACAS 3341 RUEHLP/AMEMBASSY LA PAZ JAN LIMA 2982 RUEHGL/AMCONSUL GUAYAQUIL 4027 RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHDC -------------- header ends -------------- C O N F I D E N T I A L QUITO 000023 SIPDIS USTR FOR BENNETT HARMAN E.O. 12958: DECL: 01/16/2019 TAGS: ETRD ECON EFIN IR EC SUBJECT: ECUADORIAN TRADE WITH IRAN REFTEL A: 08 Quito 1162 B: 08 State 114408 Classified by: DCM Andrew Chritton, Reasons 1.4 (b) and (d). ¶1. (C) Summary: Following his participation in President Correa's trip to Iran in December, an Ecuadorian business leader explained to Emboff how potential commerce with Iran could work. To disguise trade with Iran, goods would be routed through Singapore and payments through Dubai. Funds from the Export Development Bank of Iran loan to Ecuador were not yet available; the Embassy plans to notify Ecuador's business community of the Bank's status as U.S.-designated. End Summary. ¶2. (C) At the end of December, Emboff met with the head of Ecuador's public-private export promotion agency, Ricardo Estrada, who accompanied President Correa on his December 5-9 trip to Iran. The visit of Correa's 95-member delegation, the first by an Ecuadorian president, was part of his effort to increase political and economic ties with Iran (ref A). Estrada discussed the trip and how trading with Iran could potentially work. ¶3. (C) During the visit, the Export Development Bank of Iran (EDBI) approved a $40 million line-of-credit for Ecuador. Estrada told us that his understanding was that the EDBI loan was only for imports from Iran, although he had not been involved closely with the transaction. At the end of December, as far as he knew, the funds were not yet available to Ecuador. ¶4. (C) Estrada explained how trading with Iran would physically occur. The trade would be circuitous so that transactions would not be readily identifiable as being with Iran. Trade would be routed through Singapore, which he reported was Iran's logistics hub. He said that Iran had a very large fleet of cargo ships (147 vessels) based in Singapore. For example, an Iranian ship could bring urea (powdered fertilizer) to Ecuador, possibly receive subsidized fuel in Ecuador (per Correa's offer to subsidize trade between the two countries),and return with a shipload of Ecuadorian bananas. Fertilizer and bananas were the most likely products to be traded, he claimed, and noted that it would be inexpensive to ship from Ecuador using Iran's fleet and that bananas could easily last 30 days in transit. Payments would be routed through Dubai, reportedly Iran's money hub, he said. STATISTICS ON ECUADOR'S TRADE WITH IRAN -------------- ¶5. (C) According to data from Ecuador's Central Bank, trade with Iran increased significantly in 2008, virtually all of which was imports of petroleum derivatives from Iran. Ecuadorian exports to Iran were zero in 2006 and 2007. In 2008, Ecuador exported $14,000 worth of goods to Iran; almost all of this was citrus fruit purees, with $110 worth of roses exported. Companies that exported to Iran in 2008 were Industrias Borja Inborja, S.A., and Terraroses CIA., Ltda. In 2007 Ecuador imported $21,000 in construction stone (alabaster, etc). In 2008, with the bulk of imports starting in August, Ecuador imported $201.3 million from Iran, with $201 million of that being petroleum derivative products. Petroecuador (Ecuador's state oil company) is the only recognizable petroleum company listed on the Central Bank list of importers from Iran, and is probably the importer of the petroleum products. Other importers included the Commercial Office of the Iranian Embassy, a few Ecuadorian and Arabic-named companies, and Bristol Myers Squibb of Ecuador (subsidiary of U.S. Bristol Myers Squibb). COMMENT: -------------- ¶6. (C) Estrada told us that the business people on the trip to Iran were investigating trade opportunities with Iran largely because of pressure from President Correa, but were extremely reluctant to do anything that might jeopardize their business opportunities with the U.S. We have already alerted the GOE to the EDBI designation under E.O. 13382 (ref B). Since it appears that the EDBI loan will be used for imports from Iran, we plan to notify Ecuador's business community of the designation as well, so that they are fully aware of the implications of being involved with the EDBI. HODGES =======================CABLE ENDS============================