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UNCLAS QUITO 002041 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL KDEM EC
SUBJECT: PALACIO AND EHLERS RE-IGNITE REFORM DEBATE 
 
 
¶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. 
 
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 
 
SIPDIS 
------------- 
 
¶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 
needed." 
 
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. 
 
Comment 
------- 
 
¶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 
choice. 
JEWELL