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

UNCLAS SECTION 01 OF 02 QUITO 001747 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV KDEM EC
SUBJECT: PALACIO ANNOUNCES POLITICAL REFORM, RAISING HACKLES 
 
REF: QUITO 1734 
 
¶1.  (SBU) Summary:  In a nationally televised address, 
President Alfredo Palacio has called for Congress to return 
from summer recess to hold an extraordinary session on July 
26, to discuss political reforms he proposes be put to a 
popular referendum.  Palacio made the reform proposal while 
also announcing a partial veto of popular social security 
rebate legislation (reftel), perhaps to blunt the bad news. 
By acting impulsively to promote specific political reforms, 
Palacio may have done himself more harm than good, raising 
the ire of Congress, leadership and supporters of the 
national dialogue process run by his Vice President.  End 
Summary. 
 
Palacio Takes Charge of Reform 
------------------------------ 
 
¶2.  (U) Invoking Article 133 of the constitution, Palacio on 
July 21 called on Congress to reconvene on July 26 to vote on 
his partial veto of the social security rebate law (reftel) 
and to rule on the national urgency of Palacio,s proposed 
reforms.  Under the constitution, the president has the right 
to propose constitutional reforms, but Congress must declare 
them to be of national urgency to avoid a mandatory one-year 
analysis period. 
 
¶3.  (U) Palacio's move came as a surprise to most people 
here, and apparently also to Vice President Alejandro 
Serrano, who has been directing a process of "national 
consultation" soliciting and collating suggestions for 
reforms to be put to a national referendum December 11. 
Serrano has remained silent since Palacio made the surprise 
announcement, but politicians and civil society 
representatives were quick to criticize it.  Media sources 
speculate that the impetus for Palacio's impulsive gesture 
was to prove to the public that political reform is his 
priority. 
 
Seven Reforms 
------------- 
 
¶4.  (U)  Palacio outlines seven key issues to be submitted 
for popular consideration in the national referendum, 
including: 
-- election of Congressional deputies by district; 
-- creation of a Senate of 22 (one per province), House of 
Representatives of 53 members; 
-- selection of a new Supreme Court (ratifying the existing 
law currently being implemented); 
-- selection of a new constitutional court; 
-- selection of an apolitical electoral tribunal; 
-- new grounds for impeachment of the president and Congress 
for corruption or incompletion of their election platform; 
-- a constitutional clarification of regional and provincial 
autonomy. 
 
Reaction:  Congress Peeved, Public Confused 
------------------------------------------- 
 
¶5.  (U) Congress President Wilfredo Lucero, clearly taken by 
surprise by the president's proposal, objected strenuously, 
calling it an act of "disrespect" towards the Congress. 
Lucero had earlier called his own special session to discuss 
other issues, for July 27.  After the president's 
announcement, Lucero threatened to call the special session, 
and then immediately close it and move on to his own agenda, 
as planned.  Other civil society leaders and Democratic Left 
leader Guillermo Landazuri, questioned Palacio's decision to 
short-circuit the consultative process underway under the 
leadership of his vice president.  Doing so would seem to be 
a move to ignore the will of the people, they said.  Only the 
Social Christian party supported the president's request for 
a special session, although it differed with the specifics of 
his proposals. 
 
Comment 
------- 
 
¶6.  (SBU) Palacio's announcement took most by surprise here, 
and the reaction was generally negative as a result.  It is 
widely perceived as intended to blunt the impact of the 
partial veto and answer criticisms of foot-dragging on 
reform.  But by revealing his reform agenda before the 
national consultation process was complete, Palacio appears 
to have forsaken additional legitimacy that could process 
could have bestowed, and put the fate of the referendum in 
doubt. 
¶7.  (SBU) Congress' generally prickly reaction has thus far 
overshadowed the actual content of the proposals.  That 
content is somewhat controversial, but not unreasonable. 
Resistance in Congress to creating electoral districts 
crosses the aisles, and others have rejected bicameralism as 
impractical.  Promises of increased autonomy, in contrast, 
are always popular here, especially on the coast.  Likewise, 
creating new grounds for removal of the president and 
congress members is an obvious effort to appease public 
demands for greater government accountability. 
 
MEMMOTT 
MEMMOTT