Quito cables: Exposing a pro-US line

Venezuelan President Hugo Chavez greets his former Ecuadorean counterpart Alfredo Palacio during a ceremony at the Carondelet Presidential Palace [EPA]

Lookifng at South America today, one would have to conclude that the region’s so-called “Pink Tide” turn to the left has been more or less consolidated. Yet recent US cables released by whistle-blowing outfit WikiLeaks demonstrate just how difficult and fraught such a transition can be. Take, for example, Ecuador, a small, poverty-stricken and politically turbulent nation caught between the US on the one hand and rising leftist sentiment on the other. 

In April, 2005 a new caretaker government led by Alfredo Palacio took power and sought to keep Ecuador on a pro-US course. WikiLeaks cables, however, demonstrate just how futile, polarising, and ultimately counter-productive such a strategy turned out to be.

A 66-year old cardiologist, Palacio apparently thought he could keep restive social discontent at bay while remaining a firm US ally. Previously, Palacio had served as vice president in the government of Lucio Gutiérrez, who himself had sought to pursue conservative economic policies favoured by the US and opposed by Ecuador’s many indigenous peoples and labour unions. 

A delicate transition

WikiLeaks cables reveal that the US had reservations about Gutiérrez, in particular the Ecuadorian’s alleged links to leftist Hugo Chávez in Venezuela, but backed him nevertheless. It was only when Gutiérrez sought to hollow out Ecuador’s institutions and stack the Supreme Court with his own supporters that US ambassador Kristie Kenney turned against him. 

Palacio came to power, then, at a particularly delicate time for Ecuador. After two people died in anti-government protests, the Attorney General issued a warrant for Gutiérrez’s arrest and Congress voted to remove the president from power. Gutiérrez was obliged to request diplomatic asylum in the Brazilian embassy, and Palacio took power just a day after his former boss’s ousting. 

Speaking to reporters during the transition of power, both Palacio and his newly appointed minister of economy, leftist Rafael Correa, denounced Gutiérrez’s austerity measures. It was immoral, Palacio argued, for Ecuador to use 40 per cent of its budget to service the country’s debt. 

Appointing Correa was a shrewd nod to Ecuador’s social movements. A leftist economist, Correa had criticised Ecuador’s trade pacts as well as the country’s deals with the International Monetary Fund. A nationalist, Correa declared that Ecuador should reconsider a previous decision to lease a military airbase to the US in the coastal city of Manta. The charismatic young minister even lambasted Ecuador’s decision to replace its legal tender, the sucre, with the dollar. What is more, shortly after taking up his job Correa met with Hugo Chávez to discuss the financing of Ecuadoran debt. 

In Quito meanwhile, the US embassy was busy keeping tabs on the new Palacio government. Diplomats noted, for example, an energy deal with Hugo Chávez involving the exchange of Ecuadoran crude for Venezuelan refined products. In other disturbing developments, Ecuadorian foreign minister Antonio Parra flew to Caracas and remarked that he would prefer to “cut off his hand” rather than renew the US lease of the Manta airbase. 

Such inflammatory statements may have given some pause to Palacio, or led the president to fear that that he was losing control over his own staff. Just two months after taking over, Public Administration Secretary Luis Herreria remarked on television that Chávez’s politics were “horrible and diabolical” and threatened to destabilise the region. According to US ambassador Kenney, Herreria was one of the closest figures to Palacio, suggesting that the remarks may have been sanctioned or condoned at the top.

Perhaps Palacio, who was a critic of many of his predecessor’s policies but hardly a radical, was doing his utmost to rein in uppity new ministers Parra and Correa. In August 2005, the US embassy in Quito alerted Washington to serious fissures within the upper echelons of the Palacio government. 

According to diplomats, Parra scheduled a lunch between Palacio and the Venezuelan foreign minister without the president’s prior knowledge or consent. “Palacio was clearly angered by Parra’s actions,” wrote US officials, “and seems disinclined to get as cozy with Venezuela as his Ministers of Foreign Affairs and Economy would like.” When he learned of the invitation, Palacio was apparently “livid” and proceeded to “yell profanities” at Parra over the phone before cancelling the lunch with the Venezuelan foreign minister. 

The incident, US diplomats noted, “supports suspicions” that Parra and Correa were “largely behind Ecuador’s increased coziness with Venezuela. Palacio, in contrast, is skeptical of having such a close relationship with the government of Venezuela.” In a later meeting with the US chargé d’affaires, Palacio expressed exasperation,noting that Parra and Correa had gone so far as to form a “friends of Venezuela society” which had limited his options.

Appeasing the US

Seeking to limit the PR damage and appease the US, Palacio told American diplomats that he sought US assistance with international financial institutions to ensure that Ecuador could meet its financing requirements. Expressing concern, Palacio added that his country would need Washington’s support as it was facing more than $200m in debt payments.

Confronting a difficult dilemma, Palacio added that he was still awaiting the details of a Venezuelan proposal to lend Ecuador the oil it lacked to meet its export commitments. 

Perhaps, Palacio hoped to extract concessions from Washington by dangling the Venezuelan oil deal under the nose of US diplomats. Chávez himself had called to make the offer, Palacio told the Americans. It was a proposal that Ecuador could hardly refuse as it seemed so generous, the Ecuadorian added, almost half apologetically. Palacio, wrote US diplomats, “was clearly aware of the political implications of accepting the Chávez offer, and wanted us to know he was factoring that into his deliberations.”

If Palacio hoped that Washington would offer him generous financial terms so as to head off Chávez’s support, the Ecuadorian would be sorely disappointed. Indeed, the Americans informed Palacio that while the Bush administration was more than happy to put in a good word with financial institutions, Ecuador would have to swallow a bitter pill by submitting to conservative fiscal policies. 

In truly Machiavellian fashion, US diplomats wrote that Palacio’s “request for our help with the international financial institutions and its juxtaposition against the Venezuelan offer is transparently designed to convince us to raise Chávez’s bet. That said, if we can get a commitment by the government of Ecuador to pursue responsible fiscal policy, international financial institution financing might be forthcoming again.”

Damage control

Needless to say, Palacio’s efforts to appease Washington did not go down very well with the likes of Rafael Correa, who resigned in August 2005, following disagreements over the Venezuelan debt financing deal. The following month, Palacio followed up with his first ever meeting with the US ambassador. Hoping to make a good impression, Palacio also invited none other than the Ecuadoran representative of the Inter-American Development Bank as well as minister Luis Herreria. 

Speaking frankly, Palacio stated that Correa had indeed jeopardised Ecuador’s economic standing in the international community. Because of Correa’s meddling, Palacio would have to work hard to “salvage” Ecuador’s reputation at the World Bank. Moreover, in words which would not have pleased Ecuador’s social movements, Palacio pledged to bring about “labour reform” as part of the country’s move toward implementation of a free trade agreement with the US.

In an effort at damage control, Palacio declared that he could serve as a necessary “counterweight” to Chávez and international financial institutions would surely support his government’s economic policies. While Álvaro Uribe had the “charisma and smarts” to serve as such a counterweight, the former Colombian president was “too far to the right and too close to the US”, Palacio said. Alejandro Toledo of Peru meanwhile was too weak internally to perform such a role, and needless to say neither Lula of Brazil nor Kirchner in Argentina would have the nerve to stand up to Venezuela. 

Somewhat brashly, Palacio declared that only he could carry out such a role, but “he would need US assistance to do so”. When the ambassador followed up and asked what kind of assistance, Palacio responded that he would first need help “strategising.” What could Palacio be thinking up? 

Interestingly, the cables state that the Ecuadorian hoped to lasso the US into providing security on Amazonian oil fields, the site of recent social and environmental protest. Somewhat oddly, Palacio had apparently approached the World Bank on the matter, but it seemed unlikely that the financial entity would provide vital assistance. In couching his proposal to the US, Palacio stressed the need to protect oil installations from Marxist FARC rebels operating from the other side of the Colombian border. 

The ambassador “promised to look into possibilities”, but it’s unclear whether Palacio’s Amazon strategy bore any fruit or led the US to shore up the Quito administration. It seems the US may have toyed with the idea of creating a more moderate Latin American axis involving Palacio, and diplomats noted “perhaps we could help bring him together with Chilean or Costa Rican officials”.

Palacio responded “enthusiastically” to this suggestion, but in the final analysis the Americans seemed skittish to invest too much effort. “While his ambition is laudable,” US diplomats remarked, “it is clear that he will be lucky to accomplish” his goals. 

The Quito embassy noted that Palacio had “come a long way” since taking over, but the Ecuadorian had “yet to understand that, as a caretaker government with no mandate and only 16 more months to serve, his ambition to become a major Latin American leader and counterweight to Chávez would be unrealistic, even if he had the charisma necessary to play the role.”

The Rise of Rafael Correa

In the final analysis, Palacio proved to be an anachronism. At first, the caretaker president suggested that he would pursue different policies from the disgraced Gutiérrez, but behind the scenes he sought to placate Washington just like his predecessor. WikiLeaks cables suggest that the new president thought he could continue to keep Ecuador’s social movements at bay if he could just secure crucial US support. Ultimately, however, the Bush administration never invested a lot of political capital in Palacio and the Ecuadorian people lost patience with the president’s style of leadership.

Recent trends in volatile Ecuador suggest that history repeats itself. When Palacio proved to be a compliant US partner, social movements threw their support to former finance minister Rafael Correa. In the election of 2006, Palacio did not run for office and Correa capitalised on a wave of economic and political discontent to capture the presidency. 

Eschewing the approach of his predecessors, Correa has distanced himself from Washington and brought Ecuador into a geopolitical alliance with Hugo Chávez. So far, Correa has proven himself to be a relatively adept and popular politician, but in notoriously unstable Ecuador, the charismatic young president will have to do his utmost to secure the support of social movements if he wants to survive politically.

Nikolas Kozloff is the author of Revolution!: South America and the Rise of the New Left (Palgrave-Macmillan, 2008). He has a doctorate in Latin American history from the University of Oxford and is a former Senior Research Fellow at the Council on Hemispheric Affairs in Washington.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.