GOE Defensive on Benefits of Correa's Trip to UK and Russia

C O N F I D E N T I A L QUITO 000963 SIPDIS E.O. 12958: DECL: 2019/11/17 TAGS: PREL PGOV ECON EFIN MARR KPKO KHDP EC RS GG UK SUBJECT: GOE Defensive on Benefits of Correa's Trip to UK and Russia REF: MOSCOW 2719; QUITO 937; QUIT... id: 235219 date: 11/17/2009 21:36 refid: 09QUITO963 origin: Embassy Quito classification: CONFIDENTIAL destination: 09MOSCOW2719|09QUITO206|09QUITO937 header: VZCZCXYZ0008 OO RUEHWEB DE RUEHQT #0963/01 3212136 ZNY CCCCC ZZH O R 172136Z NOV 09 FM AMEMBASSY QUITO TO RUEHC/SECSTATE WASHDC IMMEDIATE 0339 INFO RHMFISS/CDR USSOUTHCOM MIAMI FL RHMFISS/HQ USSOUTHCOM MIAMI FL RUCNDT/USMISSION USUN NEW YORK 0020 RUEHBR/AMEMBASSY BRASILIA 0099 RUEHCV/AMEMBASSY CARACAS RUEHGL/AMCONSUL GUAYAQUIL RUEHGV/USMISSION GENEVA 0015 RUEHLO/AMEMBASSY LONDON 0010 RUEHLP/AMEMBASSY LA PAZ RUEHMO/AMEMBASSY MOSCOW 0001 RUEHPE/AMEMBASSY LIMA RUEHQT/AMEMBASSY QUITO RUEKJCS/SECDEF WASHINGTON DC -------------- header ends -------------- C O N F I D E N T I A L QUITO 000963 SIPDIS E.O. 12958: DECL: 2019/11/17 TAGS: PREL PGOV ECON EFIN MARR KPKO KHDP EC RS GG UK SUBJECT: GOE Defensive on Benefits of Correa's Trip to UK and Russia REF: MOSCOW 2719; QUITO 937; QUITO 206 CLASSIFIED BY: Andrew Chritton, Charge d'Affaires, State Department; REASON: 1.4(B),(D) ¶1. (SBU) Summary: President Rafael Correa's visits to the UK and Russia on October 26-30 have elicited media carping on the large delegation, Correa's statement about considering recognition of Ossetia and Abkhazia, and what were seen as meager outcomes. Correa's backers and the MFA defended the seven agreements signed with Russia as the beginning of a new strategic relationship for Ecuador. An MFA official told us that although the possibility of Ecuador's recognition of South Ossetia and Abkhazia was played up in the press, Correa made no commitments to the Russian government. End Summary. -------------- Big Trip, Big Cost - Correa on the Defensive -------------- ¶2. (SBU) The Ecuadorian press has covered President Correa's October 26-30 trip to England and Russia heavily, with numerous conflicting reports on who participated in the trips and what was accomplished for Ecuador. The Embassy followed up with the MFA Director General of European Affairs Pablo Villagomez on November 12 to get his take on the trip's outcome. ; ¶3. (SBU) The cost of the President's foreign travel, during a period of economic challenges for Ecuador, was a major complaint of Correa's critics. Press reports that the GOE's cost for the President and more than 40 other officials totaled approximately $108,000. A request for a list of the officials traveling from each ministry was denied by the Presidency. Correa defended the large delegation to Russia during his November 7 radio and TV address, detailing the number who went and emphasizing the results of the trip. He took on directly the newspaper El Comercio, challenging it to identify what additional members of the delegation were not related to the objectives of the trip. -------------- Correa Pays Unofficial Visit to the U.K. -------------- ¶4. (SBU) Correa's visit to London on October 26-38 did not involve officials meetings with the government. Instead, he spoke at Oxford University and the London School of Economics, and met with Ecuadorian residents, Noam Chomsky, and two members of House of Lords. UK Ambassador Linda Cross expressed frustration over the GOE's mishandling of the planning for the visit and stated that she had done everything possible to get him a meeting with the government but without results, in part due to an official Indian visit at the same time. Correa stated during his November 7 radio address that only his Foreign Minister, Environment Minister, Secretary of Migration, National Planning Secretary and a representative of the Yasuni-ITT initiative traveled with him to the U.K. -------------- To Russia, With (Official) Love -------------- ¶5. (SBU) By contrast, the visit to Moscow on October 29-30 was official, and President Correa was accompanied by a delegation of over 100 people, including ministers, advisers and 59 commercial representatives from various sectors. During this first ever official visit by an Ecuadorian President to Russia, Correa met with President Dimitri Medvedev, Prime Minister Putin, Patriarch Kirill of the Russian Orthodox Church, Moscow Mayor Yuriy Luzhkov, and Russian business executives. After over 20 years of inactivity, the Russian-Ecuadorian Intergovernmental Commission for Economic and Energy Issues met on October 28, chaired at the ministerial level. MFA Director General Villagomez described the purpose of the trip to us on November 12 as strengthening ties and establishing a strategic partnership with Russia, "as the bilateral relationship had languished due to minimal assistance from the GOR and lack of Russian investment in Ecuador." Contrary to his positive spin, the Embassy has heard rumors that two recently-departed senior MFA officials were replaced because Correa was displeased with the results of the visit. -------------- -------------- Ecuador to "Consider" Recognition of Abkhazia and South Ossetia -------------- -------------- ¶6. (C) On recognition of Abkhazia and South Ossetia, President Correa announced on October 30 that "if both territories officially ask Ecuador to recognize Abkhazia and South Ossetia as independent states, we will seriously consider this request." MFA DG Villagomez told Poloff that the GOR did not officially raise the subject during the visit, that neither of the two territories had formally made a request, and that no decisions had been made. Villagomez speculated that the President's statement came as a response during his interview with RIA Novosti. He repeated an MFA mantra that the GOE supports the peaceful handling of such issues by multilateral fora, the U.N. in this case. ¶7. (C) The President's comment was criticized by some commentators as following in the footsteps of other ALBA members. So far, Nicaragua and Venezuela are the only countries in the region who have recognized Abkhazia and South Ossetia as independent. A number of commentators considered the political price was too high, and did not rise to the level of what Ecuador was getting from the exchange. Political analyst Grace Jaramillo argued that if the GOE were ready to recognize South Ossetia and Abkhazia, it should also recognize Chechnya. -------------- -------------- Agreements Promise Increased Cooperation, but No Timelines -------------- -------------- ¶8. (C) The presidents signed a Declaration on the Strategic Partnership focusing on trade, economic development, education, technology and cultural exchange. Correa kept with his tradition of asking new partners for financial assistance by seeking a loan from the Russian government; he announced on November 4 that Ecuador would receive $2.5 billion in financing for its strategic sectors, although only two of the seven agreements included specific promises of financing, totaling $185 million. MFA Director General Villagomez clarified that no formal agreement had been signed regarding the loans, and that this financing and all bilateral agreements likely would be realized in the long-term, but without specific timelines. ¶9. (SBU) According to an MFA press bulletin, the presidents also signed four Memoranda of Understanding in the areas of alternative energy sources and petroleum exploration, peaceful uses of nuclear energy, fourth generation communication and wireless data transmission technology (with $50 million in financing for the project),and customs assistance. A Letter of Intention was also signed for Russian company OAO Interrao UES to complete construction and supply equipment to two Ecuadorian hydroelectric power plants along theToachi andPilaton rivers, with $135 million in financing for both projects. In addition, an agreement to establish Manta and Vladivostok as sister cities was signed by the two mayors. In the MOU on petroleum exploration, Russian oil companies OAO Zarubezhneft and OAO Sroytransgaz have agreed to participate in the development of oil block 31 inside the Yasuni National Park -- Ishpingo-Tambococha-Tipuni (ITT) area (Ref B). The visit also defined cooperation in education, including an agenda of bilateral meetings to establish the work plan for four research projects in bioremediation, petroleum, satellite systems for hydroelectric and natural risk management, and information technology. -------------- Looking for Investors -------------- ¶10. (U) Correa met with approximately 80 business leaders on October 30 to speak on investment opportunities in Ecuador, asserting that "according to our constitution, (international) investment can enjoy absolute judicial security." He stipulated, however, that any interested investors must meet four basic ethics criteria: social (respect for workers' rights),market (offer of goods and services at fair prices),environmental (respect for environmental rights),and fiscal (adherance to tax obligations). Correa clarified in his November 7 radio address that not all foreign investment is desirable, and that it ideally should establish companies, create jobs, offer competitive prices, pay taxes and transfer technology. ¶11. (SBU) Contrary to press reports and MFA bulletins, the Central Bank's database shows that Russia is Ecuador's largest importer of bananas, second largest importer of flowers, third largest importer of coffee and non-petroleum products in general, and the fifth largest overall importer of Ecuadorian products. Ecuador specifically produces a type of rose, with longer stems and larger bulbs, that is targeted to the Russian market. Correa announced during the visit that the Russian air company Polet would begin direct charter cargo flights with its IL-96-400T and AN-124 aircraft by the end of November; MFA DG Villagomez noted these potential charter flights are intended specifically to assist in transporting Ecuador's flowers, and are still to be confirmed. Exports to Russia increased by 33% from $412 million in 2007 to $549 million in 2008, but only an annualized 4% in the first three quarters of 2009. Exports from January through September of 2009 totaled $427 million and imports totaled $28 million, and are not likely to reach the MFA's estimated $1 billion for calendar year ¶2009. -------------- --- Military Purchases: Not Really Part of the Visit -------------- --- ¶12. (C) While press reports that the visit resulted in an agreement to buy two Russian Mi-171E troop transport helicopters for $22 million, MFA DG Villagomez said that the contract had been signed before the visit, and were being purchased without any Russian financing. (Note: Purchases of military equipment without financing has not been the case recently in Ecuador. End Note.) Defense Minister Ponce announced on October 30 that Russia would provide military air and ground transport assistance, such as trucks and buses. According to the press, Ecuador also is considering the purchase of Su-30MK2 fighter planes and anti-aircraft defense systems at a total value of $200 million. However, Villagomez observed that nothing had been agreed, and that these eventual purchases remained only an initial discussion. -------------- Comment -------------- ¶13. (C) The media and educated opposition have found a ripe target for criticizing Correa, given the appearance of profligacy, few benefits for Ecuador, and intellectual hypocrisy of the Abkhazia and South Ossetia issue. Nonetheless, this issue is far from the minds of ordinary Ecuadorians who are more concerned with the poor economy and disruptive blackouts. Therefore, Correa is unlikely to suffer much political harm, assuming Abkhazia and South Ossetia fade away as an issue. We do not expect President Correa to recognize South Ossetia and Abkhazia unless it is part of a tit for tat where he gets something more significant than we have heard about so far in return. Even considering recognition seems inconsistent with the GOE's past opposition to independence of Kosovo and recognition of separatist movements (Ref C),probably in part because some in the Correa government fear of separatist tendencies in Ecuador's largest city of Guayaquil. CHRITTON =======================CABLE ENDS============================