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C O N F I D E N T I A L QUITO 000943 
 
SIPDIS 
 
E.O. 12958: DECL: 2019/11/09 
TAGS: ECON EFIN EC IR PREL MNUC PARM KNNP
SUBJECT: Ecuador Minister states that the GoE will not do business 
with Export Development Bank of Iran 
 
REF: A) IRA...


id: 233955
date: 11/9/2009 20:51
refid: 09QUITO943
origin: Embassy Quito
classification: CONFIDENTIAL
destination: 09QUITO863|09QUITO869|09QUITO875
header:
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C O N F I D E N T I A L QUITO 000943 
 
SIPDIS 
 
E.O. 12958: DECL: 2019/11/09 
TAGS: ECON EFIN EC IR PREL MNUC PARM KNNP
SUBJECT: Ecuador Minister states that the GoE will not do business 
with Export Development Bank of Iran 
 
REF: A) IRAN STATE 98748; B) QUITO 875 
C) JOHNSTON/LANDBERG EMAIL 10/01/09; D) QUITO 863; E) QUITO 869 
 
CLASSIFIED BY: chritton, DCM, DOS, Exec; REASON: 1.4(C), (D) 
 
¶1. (C ) Summary:  Ecuador's Coordinating Minister for Economic 
Policy, Diego Borja, assured EconCouns November 4 that the GoE will 
not maintain commercial relations with the Export Development Bank 
of Iran, a USG-designated entity.  Borja asked EconCouns if the USG 
could provide background information on how other countries are 
managing their commercial elations with Iran, so that Ecuador can 
emulate others' actions and avoid violating international and U.S. 
regulations.  End Summary. 
 
 
 
¶2. (C) On November 4, EconCouns delivered Ref A demarche to 
Ecuador's Coordinating Minister for Economic Policy, Diego Borja, 
highlighting the possible repercussions of doing business with 
Iran's Export Development Bank (EDBI) given the U.S. Treasury's 
designation of EDBI for supporting Iran's WMD program.  Central 
Bank of Ecuador (CBE) Managing Director Karina Saenz, Deputy 
Managing Director Diego Zapater, and other CBE staff also attended 
the meeting. EconCouns had delivered the same demarche to Saenz on 
September 29 (Ref B), during which she recommended that Post 
address the issue with Borja, an influential minister ideologically 
close to President Correa, since "Ecuador's dealings with EDBI are 
more geopolitical than financial." Saenz set up the meeting with 
Borja after becoming concerned about the EBDI issue from meetings 
with Econoffs and subsequently with Treasury Deputy Assistant 
Secretary Nancy Lee on the margins of the IMF annual meetings in 
Istanbul.  Borja himself requested the meeting, at the last minute, 
in order to obtain information on the EDBI issue prior to 
participating in the GoE cabinet meeting with President Rafael 
Correa on November 5. 
 
 
 
¶3. (C)  EconCouns emphasized to Borja exactly as presented in the 
Ref A.  The only deviation was to emphasize to Borja that the 
demarche was focused on EDBI and the purpose of this particular 
demarche was not to question Ecuador's broader relations with Iran. 
(Comment: this was an area of confusion in earlier demarches, where 
our MFA interlocutor reacted as if the U.S. was criticizing 
Ecuador's right to establish any kind of relations with Iran.) 
EconCouns explained that he had already delivered the demarche to 
the Director General of the Central Bank, Ecuador's Banking 
Superintendent, the Director of Multilateral Affairs at the MFA, 
and the General Director of Ecuador's Financial Intelligence Unit. 
He also explained that the Treasury Department had already 
demarched Ecuadorian Ambassador Luis Gallegos on the EDBI issue. 
 
 
 
¶4. (C) In response to the demarche, Borja said that the GoE had no 
intention of supporting any entity involved in terrorism financing 
or the proliferation of WMD.  Furthermore, in light of the 
information just provided, he stated that Ecuador could not 
continue to develop a relationship with EDBI.  Borja noted that 
because Ecuador was a dollarized economy it needed to preserve the 
integrity of the dollarized system and could not risk getting 
involved with an institution (like EDBI) that would potentially 
impact financial relations with the U.S. 
 
 
 
¶5. (C) Borja commented that "at the highest levels" Ecuador had 
made a "political decision" to explore and expand political, 
economic, and commercial relations with Iran.  Borja said that this 
was part of Ecuador's logical effort to expand and diversify its 
trading base, with the goal of reducing Ecuador's dependency on a 
few markets and reducing its vulnerability to external shocks, 
particularly those resonating from the U.S. 
 
 
¶6. (C) Borja asked the other Ecuadorian officials and his staff 
about the status of BCE discussions with EDBI.  BCE officials 
answered that beyond the initial "agreement" neither side had moved 
forward with the proposal for a line of credit and EDBI had not 
advanced on its plan to open a branch in Ecuador. BCE Deputy 
Manager Zapater noted that the BCE had already informed EDBI that 
Ecuador could not move forward with any deal without clear 
assurances that EDBI was not involved in terrorist financing or 
weapons of mass destruction activities.  When Borja asked why 
Ecuador was dealing with EDBI, CBE explained that Iran had proposed 
working through that organization. 
 
 
 
¶7. (C) Borja asked the CBE officials how other countries around the 
world maintained commercial relations with Iran without running 
into the problems Ecuador was now facing.  They responded that 
Brazil, Colombia, Venezuela, Mexico, and many European countries 
all maintain some level of commercial relations with Iran.  Borja 
postulated that there must be some way for Ecuador to deal with 
Iran without going through a U.S.- designated entity. Borja then 
asked EconCouns for any information that the USG could provide on 
how other countries manage their relations with Iran without 
violating UN, FATF, and U.S. resolutions and laws. 
 
 
 
¶8. (C) During the meeting, BCE Managing Director Saenz highlighted 
her concern over the EBDI issue in front of Borja, noting that even 
Venezuela's Central Bank does not have any direct contact with 
either EDBI or the Banco Internacional de Desarollo, CA 
(International Development Bank, CA), located in Venezuela and 
designated by the U.S. along with EDBI.  After departing the 
meeting, Saenz reiterated her concern over the EDBI issue to 
EconCouns, and requested that he communicate to U.S. officials in 
Washington that the BCE and GoE have no intention of having any 
dealings with an entity linked to weapons of mass destruction or 
terrorist financing. 
 
 
 
¶9. (C) Comment: The tone of the Borja meeting was constructive and 
an improvement over previous meetings with the MFA on the EBDI 
issue.  Also, recent attempts by the Embassy to meet with the 
President of the Central Bank Board and the Ministry of Finance 
have been rebuffed, leaving some question as to how willing the 
upper levels of the GoE were to engage on the issue.  It is unclear 
whether Borja was being sincere on this issue.  However, seeing as 
he called for the meeting at the last minute, it seems possible 
that he will communicate the EDBI issue to President Correa.  For 
her part, Saenz appears sincere in her concern over BCE involvement 
with EDBI.  End Comment. 
CHRITTON 

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