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Cablegate: Oxy: Pressing the Goe to Negotiate

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS QUITO 000681

SIPDIS

SENSITIVE

DEPT PLEASE PASS TO USTR BENNETT HARMAN

E.O. 12958: N/A
TAGS: EINV EPET ETRD ECON EC
SUBJECT: OXY: PRESSING THE GOE TO NEGOTIATE

REF: A. QUITO 667
B. QUITO 611
C. QUITO 601

1. (SBU) Summary. Ambassador met March 28 with President
Gutierrez to urge him to allow time for the parties to
negotiate a solution to Occidental Petroleum's (Oxy) problems
in Ecuador. The DCM phoned newly appointed commercial
dispute czar with the same message. Econoffs also met with
the Ministers of Trade and Economy and PetroEcuador President
Bonilla to express concerns about the latest threat to
expropriate Oxy's assets in Ecuador. The AmCham is providing
a legal analysis to Bonilla that will give him additional
legal grounds for not declaring caducity. Though Bonilla
said he has a report finding grounds for caducity, Gutierrez
will meet with his cabinet March 28 to press for additional
time for negotiations. End summary.

Heading Off GOE Caducity Declaration
------------------------------------

2. (SBU) The Ambassador met with President Gutierrez March 28
to explain that a declaration of caducity (contract
nullification and seizure of assets) against Oxy would cost
the GOE the support of the USG. Gutierrez said he understood,
but that the Social Christian (PSC) and Democratic Left (ID)
parties had threatened him with an impeachment trial in
Congress if he did not declare caducity. The Ambassador
suggested that Gutierrez buy some time to allow the parties
to negotiate a solution. She noted that Oxy was willing to
talk on that and other pending problems it had in Ecuador.
Gutierrez said he would meet with his cabinet on March 28 to
press for additional time for negotiations.

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3. (SBU) The DCM spoke with newly designated commercial
dispute czar and Presidential confidant Carlos Polit over the
Easter holiday weekend. He urged Polit to reach out to the
Procurador and PetroEcuador President Bonilla to encourage
them to permit serious negotiations to take place and keep
the matter out of the press. Econ Counselor met with
Minister of Economy Yepez and Minister of Trade Baki with
similar messages. Polit also joined Econ Counselor's meeting
with Baki and called Procurador Borja urging him to permit
time for the parties to negotiate before publicly challenging
the GOE to declare caducity. Econoff met with Bonilla March
22 urging him to talk with Oxy. The AmCham is providing
Bonilla with its Energy Committee's legal analysis on the
lack of legal grounds to declare caducity against Oxy.

Oxy Meetings with PetroEcuador
------------------------------

4. (SBU) Oxy officials met with Bonilla on March 23. As a
result, they will meet again March 28 to offer more details
toward a possible resolution of outstanding problems between
Oxy and the GOE. Oxy told econoff on March 28 that Oxy would
submit a "generous" written offer for consideration, but it
will be conditioned on resolving a number of matters. We
will keep Washington advised of further developments.
KENNEY

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