VZCZCXYZ0000
OO RUEHWEB

DE RUEHQT #1758/01 2182042
ZNR UUUUU ZZH
O 062042Z AUG 07
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7494
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 6784
RUEHCV/AMEMBASSY CARACAS PRIORITY 2620
RUEHLP/AMEMBASSY LA PAZ AUG 0664
RUEHPE/AMEMBASSY LIMA PRIORITY 1808
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 2607
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS QUITO 001758 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR MMALLOY AND MEWENS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PINR EC
SUBJECT: A REVOLVING DOOR IN ECUADOR'S ECONOMIC MINISTRIES 
 
REFTEL: QUITO 1182 
 
¶1.  (U) In the past month, the Correa administration has implemented 
a number of high-level changes in Ecuador's economic ministries. 
The country now has new ministers of Electricity, Petroleum and 
Mining, Transportation, and Economy and Finance. 
 
Ministers Leave to Run for Constituent Assembly 
--------------------------------------------- -- 
 
¶2.  (SBU) Two ministers, Transportation Minister Trajano Andrade and 
Energy Minister Alberto Acosta, left office to run as 
representatives of President Correa's movement for the Constituent 
Assembly (elections for the Assembly will be held September 30). 
Following their departures, the Transportation and Energy Ministries 
were run temporarily by acting Ministers.  On July 9, Hector 
Villagran became the new Minister of Transportation.  Villagran is 
favorably inclined towards the United States and appears eager to 
work with the USG on bilateral issues (his mother is the long-term 
director of the U.S.-Ecuadorian binational cultural center in 
Guayaquil, a private institution originally founded with USG 
assistance that remains closely engaged with the U.S. Consulate 
General). 
 
Energy Ministry Splits to Focus on Electricity Issues 
--------------------------------------------- ------- 
 
¶3.  (SBU) On July 10 the Energy Ministry split in two, creating the 
Ministry of Electricity and Renewable Energy and the Ministry of 
Petroleum and Mining, to focus more attention on problems in the 
electricity sector.  These include lack of investment, inadequate 
supply, inefficiency in the state-run distributors, and collection 
and payment problems.  Alecksey Mosquera, former Under Secretary of 
Electricity in the Energy Ministry, was named the new Minister of 
Electricity.  Mosquera is a technician with extensive experience in 
the sector, and proposes some major changes to streamline the sector 
and make it more efficient (whether these changes would result in 
enhanced collection, payment, and investment is unclear). 
 
¶4.  (SBU) Galo Chiriboga was appointed as the new Petroleum Minister 
on July 23.  Chiriboga, briefly head of state oil company 
Petroecuador during the previous administration after a longer stint 
as Labor Minister (and also a few weeks as Minister of Government), 
is well-regarded by industry as a calm, reasonable interlocutor who 
realizes the importance of foreign investment in the petroleum 
sector.  Although he has vowed to renegotiate contracts with foreign 
oil companies, this has been Correa's position since the beginning 
of the administration and is also consistent with the policies of 
the previous administration. 
 
Controversies Finally Shake Up Economy Ministry 
--------------------------------------------- -- 
 
¶5.  (SBU) After a long-running series of major missteps related to 
Economy Minister Patino's possible involvement in market 
manipulation (reftel), and his controversial statements about the 
illegitimacy of foreign debt, he was transferred July 25 to head up 
the newly-created Ministry of the Coast.  Correa created this 
Ministry in an attempt to consolidate power in coastal Ecuador, 
where his popularity is rivaled by that of Guayaquil Mayor Nebot. 
Correa has strongly supported Patino throughout the scandals, but he 
had become a liability at the Finance Ministry and had never engaged 
the Ministry's technical policy issues.  This new post offers a 
face-saving switch, and also positions Patino to act as a constant 
thorn in Nebot's side. 
 
¶6.  (SBU) Fausto Ortiz, former Vice Minister of Finance, replaced 
Patino as Minister of Economy and Finance.  Ortiz's appointment was 
favorably viewed by the market; while he has not articulated his own 
views on debt restructuring since working for the Correa 
administration, he is seen as someone who will take a more moderate 
and pragmatic approach than Patino.  For example, he illustrated to 
USG officials how the government could meet its pledge to reduce the 
debt burden on the budget primarily by lengthening domestic debt 
maturities.  He is considered to be more technically competent than 
Patino, and some say he was already running the Ministry "behind the 
scenes" while Patino was in charge.  However, like Patino, he is 
seen by some as tainted (although to a much lesser extent) because 
his inconsistent statements and actions on debt payments early in 
the administration raise questions about possible market 
manipulation.  Ortiz reportedly enjoys a personal connection to 
Correa by virtue of a friendship dating back to university days. 
 
COMMENT 
------- 
 
¶7.  (SBU) During the Palacio administration, Ecuador experienced 
chronic instability in its ministries.  The Correa administration, 
with an election mandate that Palacio lacked, as well as better 
defined economic views, could have brought more stability in senior 
economic positions.  Instead, there has been a major reshuffling at 
the top of most of economic ministries after only six months.  To 
date, most commentators see the government as ineffective in 
implementing its economic programs.  This turnover may, in the short 
run, further disrupt implementation of economic programs.  The 
longer term implications are hard to judge, since the newly 
appointed ministers, for the most part, appear to be more pragmatic 
and technically experienced than their predecessors, but few doubt 
that major decisions will continue to be made personally by Correa 
himself. 
 
BIOGRAPHICAL NOTES 
------------------ 
 
¶8.  (SBU) BIO NOTES: 
 
RICARDO PATINO AROCA 
Minister of the Coast 
 
Ricardo Patino's move from Minister of Economy (January-July 2007) 
to the head of the newly-created Ministry of the Coast is seen by 
many as a demotion.  As Minister of Economy, Patino was involved in 
several turbulent developments.  His statements implying Ecuador 
might not honor its international debt obligations roiled the 
financial markets, although Ecuador subsequently has paid its debt 
on time.  Later, he was seen in a video (surreptitiously filmed at 
his request) making comments that seemed to imply (but not confirm) 
manipulation of the debt market, for which he was censured by 
Congress. 
 
Prior to becoming Minister of Economy, Patino was the national 
political director for Alianza PAIS, President Correa's political 
movement.  He also worked with Correa when Correa was Minister of 
Economy in 2005, first as his Chief of Staff and then as the Vice 
Minister of Economy.  In 1999 Patino helped establish the Ecuador 
branch of Jubilee 2000, an international NGO calling for forgiveness 
of developing country debt. 
 
Patino was the coordinator of the Technical Advisory Committee of 
Ecuador's Inter-ministerial Employment Commission, and a consultant 
for the International Labor Organization.  He taught at the 
Department of Economics of the University of Guayaquil and the 
Superior Polytechnic School of Litoral.  Patino has a B.A. in 
economics from the Autonomous Metropolitan University of Iztalapa, 
Mexico, and a M.A in Development Economics from the International 
University of Andaluca, Spain.  Before studying in Mexico, Patino 
was enrolled at the Agrarian Reform Institute in Nicaragua in the 
1980s. Patino was born in 1954 in Guayaquil.  He is married to 
Miriam Alcivar, and they have a 22 year-old daughter, Maria Isabel. 
 
FAUSTO ORTIZ DE LA CADENA 
Minister of Economy and Finance 
 
Fausto Ortiz is seen as more pragmatic on debt issues than his 
predecessor Ricardo Patino, who frequently criticized Ecuador's 
international debt obligations.  Ortiz served under Patino as Vice 
Minister of Finance from January to July 2007, and some believe 
that, in practice, he actually ran the Ministry during that time. 
During his stint as Vice Minister, Ortiz was best known for first 
announcing that Ecuador would not make a large international debt 
payment coming due, and then two days later announcing that Ecuador 
would make the payment on time.  Ortiz also worked in the Ministry 
of Economy during the Palacio administration as Under Secretary of 
Public Credit and as Treasurer. 
 
Ortiz is from Guayaquil and held positions as university professor 
at Casa Grande, Catholic University of Guayaquil and the Polytechnic 
University of the Litoral. Ortiz was the manager of economic and 
trade studies at the Chamber of Commerce in Guayaquil. He also 
advised the private sector on finance, loan structure, and the 
development of Ecuador's stock exchange. Ortiz has a B.A. in 
Economics from the Catholic University of Guayaquil (1989), and a 
M.A. in Business Economics from INCAE, Costa Rica (1992). During his 
years in college, he was President of the Students Federation of 
Catholic University and the Faculty of Economics, Business 
administration and Accounting.  Ortiz understands English but is not 
comfortable speaking it. 
ALECSKEY MOSQUERA 
Minister of Electricity and Renewable Energy 
 
Mosquera served as the Under Secretary of Electricity in the 
Ministry of Energy and Mines in the Correa administration until he 
was appointed Minister of Electricity when the Ministry was split in 
two (as the government sought increased focus on the problems in the 
electricity sector).  As part of the change and to increase the 
Electricity Ministry's control over the sector, he was also 
appointed head of the National Council for Electricity (CONELEC), 
Ecuador's electricity regulator. 
 
Mosquera has extensive technical experience in the electricity 
sector, and appears bright and ready to make changes.  According to 
his official bio, Mosquera led the Commission for the Promotion of 
Investment in Electricity Generation and was Coordinator for the 
Inter-institutional Electric Sector Commission for the creation of 
the National Emergency Plan for 2005-2007.  He also worked in 
CONELEC previously, covering financial analysis of the electricity 
sector.  Mosquera has a Masters degree in Business Administration 
and Mechanical Engineering from the Polytechnic School of Quito.  He 
graduated Cum Laude in both degrees. 
 
GALO CHIRIBOGA 
Minister of Petroleum and Mines 
 
Galo Chiriboga held three senior positions in the Palacio 
administration:  President of Petroecuador from July 2006 to January 
2007, Minister of Labor (2006), and Minister of Government (2005). 
Chiriboga has described himself as a "modern leftist," although his 
relationship with unions soured over a minimum wage dispute in 
January 2006.  He was perceived as one of the more pragmatic, 
results-oriented members of the Palacio administration.  Chiriboga 
was part of the Quito Assembly that opposed former President 
Gutierrez and helped bring about his ouster. 
 
Chiriboga was president of the American Association of Jurists from 
1998-2003.  He was legal advisor to CEOSL, the largest union 
confederation, since 1984. Chiriboga also held positions as 
alternate magistrate to the Constitutional Tribunal (1999-2003), 
Director of Filanbanco Bank (March 2001), and Pichincha police 
intendant (1980-1983). 
 
Chiriboga received a law degree from the Catholic University of 
Quito. He also has a M.A. in Administration and a Doctorate in Law. 
He has post-graduate specializations from Ecuador, Colombia, Spain 
and France on financial, securities and stock exchange law, labor 
law, human rights and contracts. He has published several works on 
human rights, worker rights, and ethics. 
 
HECTOR VILLAGRAN CEPEDA 
Minister of Public Works and Transportation 
 
Villagran will preside over development of Ecuador's transportation 
infrastructure, including supervision of airports, seaports and the 
road and rail systems.  Villagran is perceived as favorable towards 
the United States.  He was formerly President of the Ecuadorian 
Railroad Corporation, when he informally inquired about U.S. support 
to help improve Ecuador's railway system.  He previously served as 
General Manager of a World Bank-funded "International Trade and 
Integration" program at the Ministry of International Commerce, 
Industries, and Fishing, and Special Assistant to Vice President 
Pedro Aguayo Cubillo (in the 1998 interim presidency of Fabian 
Ernesto Alarcon Rivera).  Villagran also held positions as Editor of 
El Financiero magazine, National Representative of the Bolivar 
Program, Legal Director at the Superintendency of Companies, and law 
associate at the Villagran Lara & Villagran Cepeda law firm. 
 
A Guayaquil native, Villagran studied law at the Law Department of 
the University of Guayaquil and holds a business degree from Florida 
International University. 
BROWN