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### Viewing cable 10QUITO101, Ecuador's Push for Conditions-Free Foreign Assistance has

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
10QUITO101 | 2010-02-24 20:08 | 2011-04-10 17:05 | CONFIDENTIAL//NOFORN | Embassy Quito
Appears in these articles: http://www.eluniverso.com/2011/04/10/1/1355/cable-250564.html

`

    VZCZCXYZ0013
    OO RUEHWEB

    DE RUEHQT #0101/01 0552059
    ZNY CCCCC ZZH
    O 242056Z FEB 10
    FM AMEMBASSY QUITO
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 1094
    INFO RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC IMMEDIATE
    RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
    RHMFISS/DEPT OF JUSTICE WASHINGTON DC IMMEDIATE
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
    RUEABND/DEA HQS WASHINGTON DC IMMEDIATE
    RUEAIIA/CIA WASHINGTON DC IMMEDIATE
    RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
    RUEHBO/AMEMBASSY BOGOTA IMMEDIATE
    RUEHBR/AMEMBASSY BRASILIA IMMEDIATE
    RUEHCV/AMEMBASSY CARACAS IMMEDIATE
    RUEHGL/AMCONSUL GUAYAQUIL IMMEDIATE
    RUEHLP/AMEMBASSY LA PAZ FEB LIMA IMMEDIATE
    RUEHQT/AMEMBASSY QUITO

` `

    C O N F I D E N T I A L QUITO 000101

    SIPDIS
    NOFORN

    E.O. 12958: DECL: 2020/02/24
    TAGS: EAID ECON EFIN PREL SNAR MARR EC
    SUBJECT: Ecuador's Push for Conditions-Free Foreign Assistance has
    Major Implications for USG Operations

    REF: R...

    id: 250564
    date: 2/24/2010 20:56
    refid: 10QUITO101
    origin: Embassy Quito
    classification: CONFIDENTIAL//NOFORN
    destination: 09QUITO885|10QUITO79|10QUITO83|10QUITO91
    header:
    VZCZCXYZ0013
    OO RUEHWEB

    DE RUEHQT #0101/01 0552059
    ZNY CCCCC ZZH
    O 242056Z FEB 10
    FM AMEMBASSY QUITO
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 1094
    INFO RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC IMMEDIATE
    RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
    RHMFISS/DEPT OF JUSTICE WASHINGTON DC IMMEDIATE
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
    RUEABND/DEA HQS WASHINGTON DC IMMEDIATE
    RUEAIIA/CIA WASHINGTON DC IMMEDIATE
    RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
    RUEHBO/AMEMBASSY BOGOTA IMMEDIATE
    RUEHBR/AMEMBASSY BRASILIA IMMEDIATE
    RUEHCV/AMEMBASSY CARACAS IMMEDIATE
    RUEHGL/AMCONSUL GUAYAQUIL IMMEDIATE
    RUEHLP/AMEMBASSY LA PAZ FEB LIMA IMMEDIATE
    RUEHQT/AMEMBASSY QUITO

    ----------------- header ends ----------------

    C O N F I D E N T I A L QUITO 000101

    SIPDIS
    NOFORN

    E.O. 12958: DECL: 2020/02/24
    TAGS: EAID ECON EFIN PREL SNAR MARR EC
    SUBJECT: Ecuador's Push for Conditions-Free Foreign Assistance has
    Major Implications for USG Operations

    REF: REF A) QUITO 83; REF B) QUITO 91; REF C) 09 QUITO 885
    REF D) QUITO 79

    CLASSIFIED BY: Christopher A. Landberg, Economic Counselor, U.S.
    Department of State, Economic Section; REASON: 1.4(B), (D)

    Summary

    ¶1. (C) Events over the last year demonstrate that the Correa
    government is intent on exerting as much control as possible over
    assistance flows and projects in Ecuador, although so far not to
    the extent of losing assistance Ecuador needs.  The GoE's
    hyper-nationalistic philosophy has economic nationalism, state
    control of strategic economic and national security assets,
    protecting Ecuador's "sovereignty," and opposing traditional
    Ecuadorian and international power structures as major tenets.
    Correa's rejection of foreign control over aspects of the Yasuni
    ITT initiative and continuing demands for greater control over
    foreign development assistance are examples of how this philosophy
    affects relations with the international community.  Our constant
    difficulties in implementing USG law enforcement and military
    programs - exemplified by recent indications that the GoE is
    reconsidering aspects of our bilateral law enforcement agreements
    (ref A) - are further evidence of the GoE's particularly complex
    relationship with the U.S., which Correa sees as the epitome of the
    international order that he rejects.  The expulsions of two USG
    officials in February 2009 can themselves be seen as a GoE attempt
    to reject conditional assistance, although the signing of our law
    enforcement agreements in August is also an example of co-existent
    pragmatism.  The GoE's obsession with sovereignty and conflicted
    relations with donors have continuing implications for our
    operations in this country.  End Summary.

    Sovereignty: GoE Code for Collaborating on Its Terms

    ¶2. (C) A broad GoE theme, not directed at the U.S. per se, is the
    GoE's desire for ownership of the development/poverty reduction
    agenda.  The GoE insists on donors fulfilling to the maximum extent
    the GoE's interpretation of the Paris Declaration (PD) and Accra
    Agenda for Action (AAA), which enshrine the concept of host
    government leadership and ownership of development efforts.  (The
    2005 PD and follow-up 2008 AAA are international agreements under
    which over 100 countries committed to improving coordination among
    donors and giving recipient countries more ownership of poverty
    reduction strategies and programs.)  As the U.S., EU, and other
    major donors have signed these agreements, the GoE expects us not
    only to collaborate more with GoE institutions in the
    implementation of assistance programs, but also to give the country
    direct control of the funds with few or no conditions.  However,
    donors have serious questions regarding Ecuador's limited capacity
    to manage such resources and programs, and are also concerned about
    the high-level of corruption in Ecuador (the country ranks poorly -
    146 out of 180 and fourth lowest in Latin America -- on
    Transparency International's 2009 Corruption Perceptions Index).

    ¶3. (C) A second theme, which impacts the U.S. directly, is that the
    GoE sees the U.S. as the representative of the existing world power
    structure that Ecuador wants to see changed.  Correa's
    political-economic philosophy is charged with grandiose ideas,
    wrapped up in his "citizens' revolution" rhetoric and occasional
    references to "21st Century Socialism," and enshrined in Ecuador's
    2008 Constitution.  These ideas include asserting Ecuador's
    sovereignty, rejecting foreign interference, and ensuring state
    control of strategic economic assets and the national security
    apparatus.  Although not to the degree as in Venezuela, the U.S.
    serves as Correa's foil, and his government's ideas and policies

    contain more than a tinge of anti-Americanism.

    ¶4. (C) Without question there are GoE officials who do not want a
    close relationship with the U.S. and are actively working to
    undermine relations.  There are also many GoE officials who value
    the relationship and want to preserve and improve upon it.  Correa
    himself, given his background, is likely conflicted.  The balance
    of power shifts daily between these two groups, and our bilateral
    relationship is caught up in this power struggle.  There are some
    concerns that with the appointment of Ricardo Patino as Foreign
    Minister, the forces that wish to limit U.S. influence are
    ascendant.  Another take on Patino would be that his overriding
    objective is to ensure the longevity of the Correa government
    through whatever means necessary, which would not necessarily rule
    out a constructive relationship with the USG.

    Correa and Yasuni ITT: His Way or the Highway

    ¶5. (C) President Correa's rejection in January of the proposed UNDP
    trust agreement established to manage contributions to the Yasuni
    ITT conservation initiative - on practically the eve of signing -
    is an example of his impulse to reject foreign control and preserve
    Ecuador's sovereign right to manage its affairs.  Although the
    trust fund document contained few "guarantees" protecting
    contributors' donations, Correa demanded absolute control over the
    funds, with no strings attached, and even told potential
    contributors that they could "stick their money in their ear."
    Reported in more detail in ref B, Correa's outburst led to the
    resignations of the Yasuni ITT negotiators and former Foreign
    Minister Falconi and unleashed a storm of local protest.  While
    questions remain as to how much Correa really supports the
    initiative, he bowed to public pressure, reconstituted the
    negotiating team, and has pledged support for the initiative
    without foreign conditions.  Nevertheless, the episode is
    indicative of Correa's core philosophy that Ecuador must have more
    than an equal footing with foreign donors.

    Paris Declaration and Exerting Control of Development Assistance

    ¶6. (C) USAID signed its 2010 bilateral assistance agreement with
    the MFA on December 30, after roughly six months of at times
    difficult negotiations.  Upon signing the agreement, then-Foreign
    Minister Falconi declined to participate in a public ceremony to
    publicize the accomplishment, and his office even scotched the idea
    of an MFA press release on the subject.  The main area of
    difference during the lengthy negotiations was GoE agencies'
    demands for greater control over assistance funds and programs.
    These demands were directed against the entire donor community
    (both bilateral and multilateral), and the GoE justified the
    demands as called for under the Paris Declaration and Accra Agenda
    for Action.

    ¶7. (C) Complicating this situation is that the GoE has expressed
    concerns about directing assistance via NGOs, a common practice of
    USAID and other donors, and has proposed that donors follow a new
    model for the approval and implementation of assistance projects.
    Under this plan, donors would be asked to deposit funds in a
    Central Bank "unified account," from which the GoE counterpart
    agencies would finance projects (with the GoE Finance Ministry
    approving withdrawals).  This assistance model, which is not yet in
    force, has similarities to budget support, a modality USAID seldom

    uses because of the control and accountability challenges it
    presents.

    ¶8. (C) With regards to the 2010 agreement, USAID compromised for
    this year with commitments of greater inclusion in reviewing
    workplans, and a potential pilot-project where USAID may use GoE
    systems to contract implementation of an infrastructure activity
    along the northern border.  This initiative would be subject to a
    successful assessment of the GoE development assistance
    coordination agency's capacity to manage and account for resources.
    (As elsewhere, the EU and multilateral organizations engage more in
    direct budget support, making them more amenable to acceding to GoE
    demands.)

    ¶9. (C) The more complicated question is what happens with the 2011
    and subsequent bilateral USAID agreements.  While the U.S. has
    signed onto the concept of country leadership, we have done so to
    the extent that we are still able to meet our national requirements
    (assuring our taxpayers and Congress that we are responsibly
    managing U.S. resources).  The question is whether the GoE has the
    capacity to manage these resources and programs and also has
    reliable country systems of control and accountability.  While GoE
    systems do not currently appear to meet PD/AAA control
    requirements, the European Union is conducting a review of country
    systems at present.  But this is beside the point from the GoE's
    perspective, because the real story is Correa's political-economic
    philosophy of national primacy, and the PD appears to be the tool
    his government is using with aid agencies to make it a reality.

    U.S. Military Aid: Pawn in GoE Game to Control Ecuador's Military?

    ¶10. (C) Embassy military officials have not seen the same attempts
    by their Ecuadorian uniformed counterparts to assert full control
    over IMET, FMF, and other programs, very possibly because they
    already have a large say in how the funds are spent.  However, the
    civilian Minister of Defense has periodically sought to exert
    greater control over training decisions and exercises.  The Embassy
    Military Group's difficulties over the last months in obtaining GoE
    approval of the annual diplomatic note that provides status of
    forces protections for U.S. temporary-duty personnel, appears
    related to the GoE's interest in asserting sovereignty concerns
    (ref C).  During a February 11 meeting (ref D), MFA officials
    informed the DCM and a MilGroup officer that the GoE could not
    accept the reference to "military exercises" in the agreement.

    ¶11. (C) Note: A potentially larger and separate issue is the GoE's
    apparent unwillingness to agree to the protections of U.S. service
    personnel included in the agreement, although it is unclear at this
    point whether the GoE is referring to "immunities" or lesser
    "administrative and technical status."  The assessment of the MFA's
    legal office was that immunity violates the 2008 constitution,
    which provides full immunity only to full-fledged diplomats.  Given
    that assessment, no one at the MFA is willing to advocate that the
    Foreign Minister sign such a dipnote.  The MFA pointed out that the
    GoE did not grant immunities to recent Cuban and Venezuelan
    military contingents.  Defense Minister Javier Ponce, however, has
    listened to the Ecuadorian military and is reportedly anxious to
    conclude the exchange of diplomatic notes.  We remain hopeful that
    there will be a way to accommodate the constitutional language
    while still providing necessary protections to U.S. military
    personnel.  End Note.

    Vetted Units: Holding Strong Works, Although GoE Reconsiders
    Polygraphs

    ¶12. (C) An argument can be made that the February 2009 expulsions
    by the GoE of two U.S. officials (one declared "persona non grata")
    fit the GoE's philosophy of refusing conditions on foreign
    assistance.  Correa and GoE officials were prompted into objecting
    to our polygraphing members of vetted units and were likely opposed
    to a set-up that ensured significant USG control over the actions
    of Ecuadorian law enforcement personnel and teams.  During
    subsequent negotiations of agreements with DHS and DEA, GoE
    officials regularly pushed NAS to give them counter-narcotics funds
    with few controls.  However, the final result may also be an
    example of how the USG retains significant leverage, and how the
    GoE can act pragmatically.  By the U.S. refusing to disburse funds
    until the agreements were signed, GoE officials faced the prospect
    of losing access to needed equipment and training.  In the end they
    almost completely capitulated, signing in August agreements that
    were very similar to the verbal/informal agreements that Correa had
    rejected in February.

    ¶13. (C) Nevertheless, Ecuadorian touchiness on "sovereignty"
    resurfaced recently with the disturbing indications that the GoE
    was reconsidering aspects of our bilateral law enforcement
    agreements (reported ref A).  While our GoE counterparts have
    regularly emphasized the importance of bilateral counternarcotics
    cooperation, this latest potential conflict, coming almost exactly
    on the one-year anniversary of the February 2009 expulsions, once
    again brings into question the sustainability of the current
    agreements and our ability to maintain a long-term, mature
    partnership with Ecuadorian law enforcement institutions.

    Comment

    ¶14. (C) The expressed attitudes of GoE officials are coherent.
    This is their country, and they do not want other governments
    deciding what is best for it.  The U.S. has become a part of this
    discussion in signing both the Paris Declaration and the Accra
    Agenda, i.e., recipients of foreign assistance should have a say in
    how funds are spent in their countries and what programs take
    priority.  Current U.S. assistance programs in Ecuador, both
    security and development-related, have been successful and have
    enjoyed strong support from within the GoE and with civil society.
    Many GoE officials are willing and eager to work with us to address
    joint economic development, poverty reduction, law enforcement, and
    military priorities, and privately they are extremely grateful for
    our assistance.  However, it is not clear to what extent these
    supporters sway Correa and overall GoE policies.  While the
    evolution of international development is pushing us to cede
    greater control over at least development/poverty reduction
    assistance, the reality is that Ecuador is not a reliable and
    credible partner.  Correa and his government's obsession with
    ensuring sovereign control, their insular attitudes towards dealing
    with international donors and institutions, and their bi-polar
    relationship with the U.S., will continue to complicate our
    operations in this country.
    HODGES

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