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Cablegate: Palacio and Ehlers Re-Ignite Reform Debate


DE RUEHQT #2041/01 2262332
O 142332Z AUG 06




E.O. 12958: N/A

1. (SBU) Summary: In a ceremonial speech on August 10
President Palacio renewed his call for a public referendum to
force political reforms. The surprise proposal would be
non-binding and administered in conjunction with the second
round of presidential elections on November 26. It would
include 15 questions on political representation, social
investment with new petroleum revenue, educational reform,
and healthcare financing and support. Clearly surprised by
the announcement was Electoral Tribunal President Xavier
Cazar, who told reporters he had not been consulted in
advance of Palacio's announcement. While elements of the
proposal dovetail with reform proposals advocated by some
presidential candidates, opposition has already been
expressed by PSC leader Leon Febres Cordero and Roldosista
leader Abdala Bucaram, whose parties will attempt to block
the measure. End Summary.

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Palacio Calls for Political Reform

2. (U) In a speech commemorating Ecuador's call for
independence from Spain in 1809 (which Ecuadorians proudly
note was the first such proclamation in the Americas) on
August 10, Palacio called for a national accord to consult
the people on a non-binding referendum or "second ballot" to
overhaul Ecuador's fragile political system. Stressing the
need to end self-interested politics that undermine the
Ecuadorian state, Palacio reaffirmed his commitment to allow
the Ecuadorian public to decide the reform agenda. The goal
is to create a more sound state through better use of
resources and more legitimate political representation. He
also reaffirmed his administration's goal of rebuilding the
rule of law, and promoting economic policies that prioritize
social investment, with greater citizen participation (the
other ballot questions would also ask for the public's
opinion on these proposed investments).

3. (U) Palacio's proposed non-binding referendum would be
administered in conjunction with the second round of
presidential elections and would include 15 questions under
four central themes: political representation; social
investment using new oil revenue; education reform; and
healthcare financing and support. The general points
outlined in the August 10 speech are noted below.

-- Political Representation: Guarantee the universal right to
direct election of public officials (which we understand to
mean voting for individuals rather than the current system
also permitting voting for party lists); create new rules for
popular referendums and presidential recall votes; and give
all candidates equal access to the media during campaigns.

-- Social Investment: Voters would be asked if they agree
with the principle of earmarking extra oil revenue for social
investment and economic development activities.

-- Education: Voters would be asked if they support universal
preschool from ages zero to five years and required schooling
from first to twelfth grade; increase high school
matriculation rates to a minimum of 75%; eradicate
illiteracy; improve adult education; improve school
infrastructure and equipment; implement a national student
evaluation system; institute permanent training programs for
teachers; improve working conditions and quality of life for
teachers; and increase education funding from 0.5% of the GDP
to 6% by 2012.

-- Health: Voters would be asked if they support a universal
healthcare insurance program; and increased healthcare
funding from 0.5% of the GDP (no desired percent given).

TSE Surprised


4. (U) The Electoral Tribunal (TSE) was apparently unaware
of Palacio's initiative which they are expected to
administer. TSE President Xavier Cazar (PSC) stated publicly
that Palacio's proposal was a surprise and that the TSE would
need a presidential decree before it could evaluate the
legality of its inclusion in the November 26 elections. PSC
leader Leon Febres Cordero and PRE's Abdala Bucaram
immediately rejected Palacio's proposal, saying their parties
would oppose the measure. Cordero told the press on August
11 that "it is not the appropriate time for such drastic
measures which would perturb the public when social peace is

Another Political Reform Proposal from the Left
--------------------------------------------- --

5. (U) Also on August 10, popular TV presenter and two-time
presidential aspirant Freddy Ehlers withdrew from the race
and announced an accord of the center-left on political
reform. Joining Ehlers for the public signing ceremony were
presidential candidate Rafael Correa (PAIS) and vice
presidential candidate Ramiro Gonzalez (ID-RED).
Presidential front-runner Leon Roldos (ID-RED) signed on
several days later. Ehlers expressed hope that Pachakutik
candidate Luis Macas might also eventually join the accord.
Radical leftist party Alfaro Vive Carajo also reportedly
supports the proposal.

6. (U) Under Ehler's agreement, all signatories agree that
if elected, they would submit to Congress a proposed
referendum calling for a constituent assembly to reform the
constitution. Signatories also committed to govern with a
representative, qualified team of public officials. Each
leader also committed to promote:

-- the de-politicization of the Constitutional Court and
Supreme Electoral Tribunal;

-- a change to voting rules permitting votes for individuals
only, not by party list;

-- a new mechanism to permit presidential and vice
presidential recall votes;

-- and new presidential power to dissolve Congress once in
his/her term.

If the new Congress blocks this agenda, the members of the
signatory's party would resign en masse.

7. (U) While adding his signature on August 12, Leon Roldos
told the press that he would agree to submit the referendum
request to Congress, but would give Congress 90 days to act
before calling for a constituent assembly (note: which
Congress must approve). Roldos also stipulated that if the
president chooses to dissolve Congress, ratification of his
own mandate should be put to the people.


8. (SBU) Palacio's surprise initiative may have been
inspired by Chilean President Michelle Bachelet's visit,
during which she exhorted Ecuadorians to achieve national
accords to strengthen democracy. Palacio's move appears
characteristically impetuous and lacking in both substance
and political support. His repeated previous failed attempts
at binding political reforms raise doubts this initiative
will actually be implemented. That will require TSE
concurrence, and the TSE is controlled by the largest
political parties.

9. (SBU) Ehler's initiative is more significant, since it
may bind the front-runner, Roldos, to an agenda with
destabilizing elements. These include the possibility of a
constituent assembly, the recall vote (making it easier for
the populace to legally turn out presidents), and the
provision permitting the dissolution of Congress. Roldos was
willing to pay this price (with some qualifications,
described above), to convince Ehlers to stand down and avoid
splitting the center-left vote. That could prove a fateful

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