VZCZCXYZ0002
RR RUEHWEB

DE RUEHQT #0566 1891932
ZNR UUUUU ZZH
R 081932Z JUL 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0606
INFO RUEHBO/AMEMBASSY BOGOTA 8244
RUEHCV/AMEMBASSY CARACAS 3626
RUEHLP/AMEMBASSY LA PAZ JUL LIMA 3297
RUEHGL/AMCONSUL GUAYAQUIL 4461
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS QUITO 000566 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EC
SUBJECT: ECUADOR ECON NEWS: ECUADOR JOINS ALBA, BANKS REQUIRED TO 
LOWER FEES, POSSIBLE SAFEGUARD ON COLOMBIAN IMPORTS 
 
¶1.  (U) The following is a periodic economic update for Ecuador that 
reports notable developments that are not reported by individual 
cables. 
 
Ecuador joins ALBA 
------------------ 
 
¶2.  (SBU) On June 24, an extraordinary Summit of the Bolivarian 
Alternative for the Americas (ALBA) was held in Venezuela to welcome 
Ecuador (together with San Vicente and the Grenadines and Antigua 
and Barbuda) as ALBA's newest members.  Ecuador had been an observer 
of the Venezuelan-led group, which Chavez has touted as a regional 
economic integration forum, for some time.  In general, there do not 
appear to be significant economic benefits to Ecuador joining ALBA, 
particularly since member countries do not share borders, but 
President Correa has justified the move by claiming that ALBA is a 
like-minded political forum which promises shared energy projects, 
joint social development, and new regional bodies for dispute 
settlement. 
 
Banks Required to Lower Fees for Services 
----------------------------------------- 
 
¶3. (SBU) According to a resolution by the Ecuadorian Banking Board, 
the decision-making body of the government-controlled 
Superintendence of Banks, financial institutions will be required to 
eliminate or lower fees for a large number of financial services 
beginning July 1.  The resolution, issued on June 22, will be in 
effect for 3 months, and will eliminate fees for ATM transactions 
and lower fees for account maintenance, credit card issuance, and 
other services.  Ecuador's Superintendent of Banks, Gloria Sabando, 
has said the resolution aims to benefit customers and will not 
affect banks' profits significantly.  However, banking sector 
representatives project the policy could cause profits to drop by 
$70 million/year and are concerned that it could affect financial 
sector stability.  In addition, private sector bankers have warned 
that this policy could force their banks to reduce the number of 
available ATMs. 
 
Ecuador May Establish Safeguard on Colombian Imports 
--------------------------------------------- ------- 
 
¶4. (U) On June 26, Ecuador submitted a request to the Andean 
Community (CAN) to apply a foreign exchange safeguard to Colombian 
imports (in the form of a tariff), due to the fact that Colombia has 
significantly devalued its currency and Ecuador's products are less 
competitive in the Colombian market.  According to Ecuador's 
Minister for the Coordination of Production, Nathaly Celi, the 
Colombian peso devaluation has caused a reduction in Ecuador's 
exports to Colombia of about $29 million over the past two years. 
President Correa has stated that he has evidence the Colombian 
Central Bank intervened to increase the devaluation.  The 
announcement follows indications that Ecuador will reinstate CAN 
preferences, removed as part of a balance of payments safeguard 
measure in January, and may well be an attempt to continue limiting 
CAN imports. 
 
¶5.  (SBU) The issue has already provoked a reaction from the head of 
the Ecuadorian-Colombian Chamber of Commerce, Mara Rosa Fabara, who 
questions why the measure would only be applied to Colombia when the 
currencies of other countries in the region have also devalued 
during the last few months.  Manuel Chiriboga, head of the trade 
policy think tank Foreign Trade Observatory, noted that Ecuador will 
need to justify why the measure would only be applied to Colombia, 
as it could be easily seen as retaliation for Ecuador's diplomatic 
problems with Colombia. 
 
HODGES