Ecuador rejects provocative charges against Correa by Colombia

Colombia Reports, July 8, 2009

Ecuador rejects the legal actions of Colombian lawyers against Ecuadorean President Rafael Correa for his alleged links to the FARC. It "only deepens the political differences between the two countries", Ecuador's Foreign Minister said Wednesday.

The denouncement against Correa is only a "political action" in response to the arrest warrant against Colombia's former Defense Minister Juan Manuel Santos, Ecuadorean Foreign Minister Fando Falconi claimed.

Ecuador is a peaceful country which respects human rights. Ecuador is firmly committed to peaceful settlement of disputes and to International Law, Falconi said. "We have never assaulted the Republic of Colombia in any way. But Colombia assaulted Ecuador by bombing our territory without permission."

Falconi added that "Ecuador has suffered many attacks by the Colombian government and rebel groups [...] and it will not allow that somebody from outside intends to restrict the right to seek truth and justice. The arrest warrant against a Colombian citizen [Santos] is part of a legitimate judicial process which complies with all legal and constitutional requirements of due process. Ecuador will continue its course without interference."

Ever since the March, 2008 bombing, the diplomatic relations between Colombia and Ecuador are tense.

First, Ecuador sued Colombia for the death of Ecuadorean citizen Franklin Aisalla during the bombing of the FARC camp on Ecuadorean territory last year, claiming that it was an extrajudicial execution carried out by the Colombian military. Colombia denied its responsibility.

Then, an Ecuadorean judge issued an arrest warrant against Santos for being responsible for the bombing. Colombia's President Alvaro Uribe heavily rejected the arrest warrant saying that the judge is a terrorist ally and staging a coup in Colombia.

Ecuador demands 'respect' from Colombia

Colombia Reports, July 7, 2009

Ecuador demands "respect" from Colombia before fractured diplomatic relations can be repaired, Security Minister Miguel Carvajal said Tuesday.

The country views Colombia's denouncement of Ecuadorean President Rafael Correa for his alleged links to the FARC as "political" not judicial.

"This is a country that deserves and demands respect," said Carvajal. He added that he hoped Ecuador's relations with Colombia "don't deteriorate more".

Colombian investigators allegedly found emails from Correa to slain FARC leader "Raul Reyes" on a computer seized after the Colombian military bombed a FARC camp just over the Ecuadorean border on 1 March, 2008.

The Minister said accusations of FARC ties against Correa were "political reactions" to Ecuador's order to arrest former Colombian Defense Minister Juan Manuel Santos.

Ecuador says Santos is responsible for the bombing of the FARC camp, in which 25, including 'Raul Reyes' and Ecuadorean citizen Franklin Aisalla died.

The incident led to the breakdown in diplomatic relations between the two countries.

Interpol recently turned down a petition from Ecuador to put Santos on the international police's list of wanted persons.

Colombian President Alvaro Uribe reacted strongly to allegations against Santos, calling the judge who ordered the arrest a "terrorist ally entrenched in Ecuadorean justice."

Ecuador to End Correa Brother’s Contracts to ‘Restore Faith’

By Stephan Kueffner

July 4 (Bloomberg) -- Ecuador’s President Rafael Correa said his administration will unilaterally rescind government contracts with companies controlled by his brother Fabricio, a Guayaquil-based entrepreneur.

An end to the contracts, valued at at least $80 million with state-owned oil company PetroEcuador and other public companies, is the best way to show the integrity of his administration, Correa said today in his regular Saturday radio- and-television broadcast.

“This is necessary to re-establish the public faith,” Correa said. “I never let him into the inner circle of decision making.”

Fabricio Correa, in a radio interview yesterday with local newswire Ecuador Inmediato, said that he didn’t break the constitution, which prohibits relatives of high-ranking government officials from doing business with the state. He said he is only a partner in companies that won contracts through public tenders.

“I have no privileged information,” Fabricio Correa said in the interview. “I have the right to work legitimately.”

Attempts by Bloomberg News to contact Fabricio Correa or his lawyer were unsuccessful.

Ecuador quits World Bank arbitration tribunal

QUITO, July 2 (Reuters) - Ecuador has withdrawn from the World Bank body that arbitrates between countries and private companies, the government said on Thursday, becoming the second South American country to do so in two years.

Leftist Ecuadorean President Rafael Correa issued a decree "condemning and therefore terminating the Convention on the Settlement of Investment Disputes between States and Nationals of Other States."

Ecuador joined the World Bank's International Center for Investment Disputes, ICSID, in 1986, allowing foreign investors to file for arbitration at the institution if they disagreed with the country's policies.

Bolivia pulled out from the ICSID in late 2007 after the government officially accused it of favoring multinational companies in its rulings.

Correa, who is striving to exercise greater control over the economy, has lashed out at the ICSID in the past for considering demands from oil companies operating in Ecuador, including Spain's Repsol-YPF (REP.MC: Quote, Profile, Research) and France's Perenco.

He has even threatened companies with expulsion from the OPEC nation if they file for arbitration at the ICSID.

US-ECUADOR: Chevron Fails in Effort to Lift Trade Benefits

By Jim Lobe*

WASHINGTON, Jul 2 (IPS) - In the latest in a string of setbacks that could cost the U.S. oil giant Chevron billions of dollars in damages, President Barack Obama decided this week to extend trade preferences for Ecuadorean exports for another six months under the 1991 Andean Trade Preferences Act (ATPA).

Chevron, which is waiting for an Ecuadorean judge to rule on a pending 27-billion-dollar class-action environmental lawsuit, conducted a high-powered lobbying campaign to persuade the Obama administration to cancel the preferences as a way of exerting leverage over the government of President Rafael Correa to settle the case on favourable terms.

But, while he suggested Washington was concerned about a possible "politicisation" of the case, Obama stated in a message to Congress that Ecuador had not violated any legal requirements that would render it ineligible for ATPA benefits.

"Concerns have been raised that statements by top Ecuadorian officials in favor of the plaintiffs have politicized the proceedings," the message, which was prepared by the Office of the U.S. Trade Representative's (USTR). "The U.S. Government has encouraged Ecuadorian government officials to refrain from commenting on ongoing judicial cases."

While Chevron offered no public reaction to the extension, major business groups of which it is a member welcomed the wording of the report, claiming that it signaled growing concern here about Ecuador's treatment of foreign investors.

"We welcome the increased scrutiny of Ecuador's eligibility going forward," said Myron Brilliant, senior vice president for international affairs at the U.S. Chamber of Commerce, who claimed that U.S. investors "have faced an increasingly hostile environment in Ecuador and Bolivia".

Bolivia has been denied ATPA benefits since the administration of U.S. President George W. Bush determined late last year that that it was not cooperating adequately with Washington's counter-drug efforts, a condition for eligibility.

Obama determined that La Paz has continued to fall short on that front and extended its suspension from the programme, drawing a sharp protest from President Evo Morales who accused the U.S. president acting like a "boss" toward Latin American countries.

"With much respect, I want to tell President Obama: while in the United States the faces of the leaders have changed, the policies of the empire have not changed," he said.

Obama's decision to extend Ecuador's benefits until at least the end of the year marks another reversal for Chevron in what the New York Times recently called "the world's largest environmental lawsuit".

Earlier in the week, the U.S. Supreme Court announced that it would not overturn a federal judge's ruling that Chevron could not compel Petroecuador, the state company that partnered with Chevron in the affected area, to join negotiations to settle the lawsuit because the two companies had never formally signed a joint operating agreement.

The case was first filed in the U.S. federal court in 1993 on behalf of 30,000 mostly indigenous residents of the Lago Agrio region of the Ecuadorean Amazon where Texaco, which was acquired by Chevron in 2001, had operated continuously from the 1960s until 1992. For much of that period, it worked in partnership with Petroecuador, which took over all of Texaco's operations in the region when the U.S. oil giant left.

The plaintiffs claim that Texaco dumped more than 70 billion litres of toxic liquids, left some 910 waste pits filled with toxic sludge, and flared millions of cubic metres of toxic gases – poisoning the environment in one of the most biologically diverse areas in South America and creating serious health problems, including an unusually high incidence of cancer, for people in the region.

Apparently concerned that U.S. courts would be more sympathetic to the plaintiffs' case, Texaco persuaded Judge Jed Rakoff to have the case transferred to Ecuador, then ruled by a conservative government eager for foreign investment, in 2002 on the condition that the company waive certain defences, such as the expiration of the statute of limitations, and ensure that any judgement would be enforceable in the U.S.

Chevron has long argued that the damages cited by the plaintiffs are exaggerated and that, in any case, Texaco extinguished its obligations when it carried out a 40-million- dollar environmental remediation project as part of a 1995 agreement with the Ecuadorean government that covered 37.5 percent of the well sites and waste pits in the concession area.

The remaining sites were to be cleaned up by Petroecuador, according to Chevron.

But the plaintiffs, who are backed by a number of local and international green groups, have argued that Chevron, having drilled all of the original sites, also remains responsible for Petroecuador's portion, as well as for the continuing health and other impacts of its operations that are not covered by the 1995 agreement.

Ecuadorean officials, including Nunez himself, have indeed openly expressed sympathy for the plaintiffs' case, and President Correa has called the damages caused by the company's operations a "crime against humanity".

Chevron and its lobbyists, including former USTRs Mickey Kantor and Carla Hills, have used those statements to press the company's case both in Congress and with the administration that it can no longer get a fair trial in Ecuador and that trade preferences should be denied unless the government intervened to stop it.

That effort has also included the production and distribution of a 14-minute video by the company to counter a negative report by CBS' "60 Minutes" public-affairs programme that is viewed weekly by some 12 million people. The company's sponsorship of the video, which purports to be objective journalism and is narrated by a well-known former CNN reporter, was exposed by the Times and appears to have backfired.

"Chevron's lobbying effort was based on the theory that Ecuador's president could be forced to violate his country's Constitution by interfering in a private litigation," said Steven Donziger, one of the plaintiffs' legal advisers. "By engaging in these heavy-handed tactics reminiscent of the worst days of Uncle Sam, Chevron has damaged its own image and that of other U.S. investors in Latin America."

Several Democratic lawmakers have also tried to counter Chevron's lobbying efforts. In a letter to USTR Ron Kirk last week, four senators urged him to "allow the legal proceedings in Ecuador to take their course with any undue intervention from the U.S. government."

Similarly, Reps. Jim McGovern and Joe Sestak wrote a letter to Kirk in which they called on him not to "interfere in this judicial matter, particularly when this case involves environmental, health and human rights issues that have regional, and even global, importance."

Kirk and the Obama administration appear for now to be following that advice, although Chevron does not lack for powerful friends in Congress, which will likely have to vote on whether to extend ATPA before it expires at the end of the year.

*Jim Lobe's blog on U.S. foreign policy can be read at http://www.ips.org/blog/jimlobe/.

Latin American Parliament Meets in Ecuador

Quito - Latin American Parliament leaders meet Wednesday in this capital to evaluate the democratic crisis gripping Honduras and possible consequences for the region.

Fernando Cordero, chairman of the Ecuadorian Legislative Commission, stated Tuesday that participants in this special meeting will adopt actions for the return of democracy in the Central American nation and Latin America.

"The recent military coup perpetrated in the brother Republic of Honduras is, undoubtedly, an abominable action that not only affects the noble Honduran people, but also the international community in general," Cordero stressed.

The Assembly's top representative noted this military coup in Honduras also works against the gradual processes of change underway in the Americas.

"I think this brutal coup against the legitimately constituted government of President Manuel Zelaya deserves open condemnation from parliaments of our region," he noted.

"We are also going to examine the role of those bodies in the resolution of conflicts and approve a final declaration at the end of the event," the top legislative pointed out.

Parliament leaders from Argentina, Chile, Cuba, Venezuela, Mexico and Bolivia have so far confirmed their attendance to this forum.

Top representatives from the Andean Legislature, the Latin American Parliament, the Inter-Parliamentary Forum of the Americas, the Parliamentary Confederation of the Americas, the Central American Parliament and Indigenous Parliament of the Americas are invited to this meeting, to be run until Thursday.

U.S. Supreme Court Refuses to Hear Chevron Appeal Over $27 Billion Ecuador Environmental Case

Amazon Defense Coalition

FOR IMMEDIATE RELEASE

2009-06-29

Karen Hinton at 703-798-3109 or karen [at] hintoncommunications.com
Mitch Anderson at 415-342-4783 or mitch [at] amazonwatch.org

U.S. Supreme Court Refuses to Hear Chevron Appeal Over $27 Billion Ecuador Environmental Case

Latest in Series of Legal Setbacks for Oil Giant

WASHINGTON – The U.S. Supreme Court today refused to hear an appeal by Chevron of a decision by a U.S. federal trial judge that denied the oil giant's attempt to shift a $27.3 billion liability for environmental contamination in the Amazon rainforest to Ecuador's state-owned oil company.

The Supreme Court's move is the latest of several legal and political setbacks recently suffered by Chevron in the 16-year-old case, considered the largest environmental matter in the world. Experts have dubbed the contamination in Ecuador the "Amazon Chernobyl" and say a clean-up would dwarf any decontamination effort ever undertaken.

The dispute before the Court was between Chevron and Ecuador's government, but it was spawned by a private lawsuit for environmental damages brought against Chevron by thousands of private citizens in the country's Amazon region.

Damages in the private lawsuit, expected to end later this year, were estimated in 2008 at up to $27.3 billion by a team of court-appointed experts. Texaco (now Chevron) is accused of dumping billions of gallons of toxin-laden waste water into the Amazon rainforest from 1964 to 1990, when it operated a large oil concession in the area covering a 2,000 square mile area.

Indigenous groups complain their cultures have been decimated, while the Ecuador court report found high cancer rates related to oil contamination have caused roughly 1,400 excess deaths.

Chevron was challenging an order by U.S. federal district court judge Leonard B. Sand that denied its attempt to obligate Ecuador's government to take part in a binding arbitration over the liability from the private lawsuit based on a provision in a 1965 contract signed by Texaco and Gulf to operate a large oil concession in Ecuador's rainforest. Last October, a unanimous three-judge panel for the U.S. Court of Appeals for the Second Circuit found Chevron's argument was "without merit" and denied its appeal, prompting the petition to the Supreme Court.

The narrow legal issue involved whether Ecuador's government could be subject to an arbitration provision under a contract that it never signed, and whose only signatories were two American oil companies. The implications of any arbitration between Chevron and Ecuador's government would have been highly significant given the amount of damages, however.

"From the beginning, the attempt by Chevron to tie up the nation's highest court on a relatively obscure legal issue was more of a delay tactic than anything," said Andrew Woods, an American legal advisor to the Amazonian communities who brought the underlying legal case.

The private lawsuit originally was filed in U.S. federal court in New York in 1993 against Texaco (now Chevron) and is currently on trial in Ecuador at Chevron's request. To transfer the case to Ecuador in 2002, the oil company filed 14 sworn affidavits praising Ecuador's courts and agreed to submit to jurisdiction and be bound by any ruling there.

Once evidence in the Ecuador trial pointed to Chevron's culpability, the oil company began to claim Ecuador's courts were biased against it and tried to shift the liability to Ecuador's government. It also launched a public relations and lobbying campaign in Washington to try to convince the U.S. government to pressure Ecuador's government to quash the case, a strategy that up to this point has backfired.

Among Chevron's recent setbacks:

* Four Democratic Senators (Wyden, Leahy, Casey, Jr., and Durbin), in a letter sent June 25 to the office of the United States Trade Representative, accused the oil giant of meddling in the private lawsuit by lobbying to cancel trade preferences for Ecuador – a move that could cost Ecuador 350,000 jobs.
* Two Chevron lawyers are under criminal indictment in Ecuador, along with seven former Ecuadorian government officials, for lying about the results of a purported remediation in the mid-1990s. One of those lawyers, Ricardo Reis Veiga, had been supervising the case for Chevron but is now unable to travel to Ecuador.
* New York Attorney General Andrew Cuomo has opened a probe of the company to determine if it is misleading shareholders about its financial risk in Ecuador.
* More than $37 billion in Chevron shares (about 28% of all shares outstanding) voted in May to support resolutions criticizing the company's human rights record in Ecuador, Myanmar and elsewhere.

If Chevron had won the right to arbitrate, it would have argued that a provision in the 1965 operating contract required Ecuador to indemnify it for all or part of the losses associated with the environmental lawsuit. A second issue – whether Ecuador breached a 1995 release given to Chevron – will now be litigated before Judge Sand in the coming months.

Ecuador was represented by C. MacNeil Mitchel (NY) and Eric W. Bloom (DC) at Winston & Strawn in Washington, D.C. Chevron was represented by Paul Clement of King & Spalding in Washington, D.C., and Thomas F. Cullen and Louis K. Fisher of Jones Day in Washington, D.C.

New Evidence of Chevron Fraud From Final Judicial Inspections in $27 Billion Environmental Case

Amazon Defense Coalition

FOR IMMEDIATE RELEASE

2009-06-24

Karen Hinton, 703-798-3109 karen@hintoncommunications.com

New Evidence of Chevron Fraud From Final Judicial Inspections in $27 Billion Environmental Case

Latest Evidence from Paid Chevron Expert Clears Path to Final Decision

QUITO, Ecuador - (Business Wire) Evidence that two Chevron lawyers committed fraud in Ecuador apparently has grown stronger with a new court-ordered report finding extensive levels of toxic contamination at two oil well sites that the company claimed to have "remediated" in the mid-1990s, representatives of indigenous and farmer communities said today.

The report was submitted this week to an Ecuador trial court in a high-profile environmental lawsuit where Chevron faces a $27.3 billion liability for dumping billions of gallons of toxic waste into the waterways of the Amazon rainforest over an area roughly the size of Rhode Island. It covers information from the final eight judicial inspections of 102 total performed in the case, clearing the way for a decision in the coming months.

The plaintiffs had charged that the eight inspections were requested by Chevron earlier this year as part of an 11th-hour effort to further delay the end of the trial. That move clearly backfired against Chevron with the results, which were submitted by Dr. Marcela Munoz, a respected Ecuadorian scientist who was appointed by the court but paid by Chevron for the work, said Pablo Fajardo, the Ecuadorian lawyer who represents the communities in the class action case who have pressed the lawsuit since 1993.

"In this case, more inspections produces more evidence against Chevron," he said.

Chevron has reported it expects an "adverse" decision in the case and is preparing for appeals, while representatives from the communities say they will seek to enforce any judgment against the oil giant immediately in U.S. courts based on evidence that Chevron has tried to corrupt the trial process and has stated it will refuse to pay any judgment.

The latest results likely will be used in a criminal fraud indictment pending in Ecuador against two Chevron lawyers and seven former Ecuadorian government officials for lying about the results of the purported remediation in the mid-1990s in exchange for a release from government claims against the company, said Fajardo.

Chevron has attempted to use the remediation as a defense in the trial, but in light of the evidence it has little or no value, said Fajardo. Chevron's continued use of the defense in the face of scientific evidence clearly exposing the remediation as a sham calls into question the company's credibility on all aspects of the trial, he added.

"Not only does the remediation fail as a defense at trial, it has backfired into a criminal indictment against Chevron lawyers who orchestrated a fake clean-up with the apparent help of corrupt Ecuadorian government officials," Fajardo said.

The so-called remediation, performed by Texaco between 1995 and 1998, consisted largely of dumping dirt over a small portion of the 916 unlined pools of toxic waste to hide them from local residents, said Fajardo. All 45 of the "remediated" sites previously inspected during the trial showed extensive and illegal levels of Total Petroleum Hydrocarbons (TPHs), some thousands of times higher than Ecuadorian norms, according to a damages assessment produced in April 2008 by a team of court-appointed experts.

Of the final eight inspections, two were of well sites that Texaco claimed to have "remediated" in the mid 1990s. Both of the sites – Auca 17 and Auca 19 – contained levels of TPHs in the soil and water at levels several times higher than the maximum allowed by Ecuadorian law.

For example, Auca 19 had TPHs at 5,710 ppm, or more than five times the maximum tolerance allowed under Ecuadorian law. Auca 17 reported TPHs at 1,580 ppm, or more than 50% higher than the norm. Chevron had certified both sites as "remediated" to Ecuador's government in the mid-1990s as part of its clean-up plan.

Results from three other sites inspected – Yulebra, Yuca Central, and Auca Central – also reported soil contamination several times higher than Ecuadorian norms, according to reports submitted by Dr. Munoz. (No samples were tested for hydrocarbons at three of the eight sites because the parties did not request them.)

The results are consistent with the damages assessment from April 2008, which found that 100% of the 94 Chevron well sites previously inspected during the trial were extensively contaminated with cancer-causing toxins, some at rates hundreds of times higher than permitted by Ecuadorian law.

The earlier damages report found the oil giant might be liable for up to $27.3 billion in damages for polluting the soils with the unlined waste pits and systematically dumping billions of gallons of toxic waste into Amazon waterways while Texaco (now Chevron) was the sole operator of an oil concession from 1964 to 1990. Experts have dubbed the disaster the "Amazon Chernobyl" and said a clean-up would involve the largest decontamination effort in history.

Chevron's top lawyer in Ecuador, Rodrigo Perez Pallares, signed checks to Dr. Munoz totaling more than $20,000 for his work in preparing the reports on the final eight sites. This is significant because Chevron has tried to claim that similar checks signed by the plaintiffs to other experts in the case prove undue influence, when in fact they were ordered by the judge consistent with Ecuador court rules – as were Chevron's payments to Munoz.

Perez Pallares is one of two Chevron lawyers under indictment in Ecuador. The other is Ricardo Reis Veiga, who is Chevron's associate general counsel for Latin America litigation.

The case was transferred to Ecuador from U.S. federal court in 2002 at Chevron's request. As a condition of the transfer, Chevron agreed to submit to jurisdiction in Ecuador and be bound by any ruling there. The trial in Ecuador began in 2003.

Obama decision puts Ecuador on notice – US groups

July 2, 2009

WASHINGTON, (Reuters) – President Barack Obama has put Ecuador on notice that it could lose valuable U.S. trade benefits unless the Andean country improves its treatment of foreign investors, U.S. business groups said yesterday.

Although Obama decided on Tuesday to extend Ecuador’s trade benefits for six months, the concerns raised in a report he sent to Congress suggests the preferences may not be extended again, said Myron Brilliant, vice president for international affairs at the U.S. Chamber of Commerce.

“We welcome the increased -scrutiny of Ecuador’s eligibility going forward,” Brilliant said in a statement.

The Emergency Committee for American Trade, which lobbies on behalf of U.S. multinational firms, said Obama’s report reflected “the negative experiences of many U.S. companies that have operated in Ecuador over time.”

Without mentioning any company by name, Obama noted concerns about two outstanding investment disputes involving U.S. companies in Ecuador.

One appeared to refer to a case brought by 30,000 Ecuadorean plaintiffs against Chevron Corp, which bought Texaco in 2001.

The plaintiffs say Texaco polluted the jungle and damaged their health by dumping billions of gallons of contaminated water over more than two decades before leaving in the early 1990s. “The company argues that the Ecuadorian government bears legal responsibility for any damage under the terms (of) a release agreement,” Obama noted in his report.

“The government contests that argument. Concerns have been raised that statements by top Ecuadorian officials in favor of the plaintiffs have politicized the proceedings. The U.S. government has encouraged Ecuadorian government officials to refrain from commenting on ongoing judicial cases,” Obama said.

Santos' reaction to arrest warrant is excessive: Ecuador

Colombia Reports

The reaction of Colombia's former Defense Minister Juan Manuel Santos to the warrant for his arrest by an Ecuadorean judge is disproportionate, Ecuadorean Defense Minister Javier Ponce said Tuesday.

Santos had qualified the arrest warrant as "absurd" and said the arrest warrant was not so much for him, but for Colombia as a country.

Ponce considers this reaction "absolutely disproportionate" and told journalists that the arrest warrant only is for one person and part of the investigation to establish Santos' personal responsibility in the March 1, 2008 cross border attack on a FARC camp.

The Minister said the arrest warrant shouldn't be interpreted as an act of aggression against Colombia, but a judicial act against individual criminal suspects.

Government Minister Gustavo Jalkh did not rule out the arrest warrant will be turned into an extradition request or an international arrest warrant, but that this is upto the court.

An Ecuadorean judge Monday ordered the arrest of Santos as part of an ongoing investigation into his alleged personal criminal responsibility for the attack on a FARC camp that killed the guerrillas' number two, Raul Reyes, and 25 others. Ecuador's leftist government cut ties with Colombia's conservative government after that. Attempts to restore relations failed so far.

Colombia minister's arrest sought

A court in Ecuador has ordered the arrest of Colombia's ex-defence minister over an air raid against a rebel base in Ecuador last year. The minister, Juan Manuel Santos, ordered the attack on a camp of the Revolutionary Armed Forces of Colombia (Farc), which killed 25 rebels. Colombia has said the raid, which took place in March 2008, was necessary in the "fight against terrorism". Ecuador and Colombia severed diplomatic ties over the incident. The attack was condemned by the Organization of American States. Those killed in the operation included senior Farc commander Raul Reyes and an Ecuadoran national. According to Ecuadorean media, Mr Santos is wanted for murder and violating Ecuadorian internal security. He recently resigned as Colombia's defence minister.

Rafael Correa on DemocracyNow!

Democracy Now!

June 29, 2009

Ecuadorian President Rafael Correa on Global Capitalism, Why He Won’t Renew the US Base in Manta, Chevron in the Amazon, Obama’s War in Afghanistan, and More

In a national broadcast exclusive, we speak with the President of Ecuador, Rafael Correa. He was in New York attending the United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development. In a wide-ranging interview, we speak with President Correa about global capitalism, his decision not to renew the license for the US military base in Manta, the $12 billion lawsuit against Chevron brought by thousands of Amazon residents for toxic oil pollution, Ecuador’s relationship with Colombia, and his advice to President Obama: “To learn more and come to better understand the region, and that [Obama] not let himself be taken along by the power of certain media outlets that are compromised with certain ideological fundaments, and that the heroes aren’t necessarily heroes, and the villains aren’t necessarily villains.” [includes rush transcript]

Guest:

Rafael Correa, President of Ecuador.

Rush Transcript

This transcript is available free of charge. However, donations help us provide closed captioning for the deaf and hard of hearing on our TV broadcast. Thank you for your generous contribution.
Donate - $25, $50, $100, More...

AMY GOODMAN: We turn now to our national broadcast exclusive, a wide-ranging discussion with Ecuador’s President Rafael Correa, who today is in Nicaragua, a meeting with Zelaya.

Last week, President Correa was in New York attending the United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development. Correa was the only world leader to attend the conference.

He spoke at the General Assembly last Thursday. And President Correa is an economist by training. He outlined the steps by which Latin America could free itself from relying on international financial institutions like the International Monetary Fund and the World Bank. The former finance minister of Ecuador was elected president in 2006, then reelected to a second term earlier this year.

I interviewed President Correa on Thursday in the Ecuadorian mission here in New York. It was before the coup in Honduras. I began by asking him to comment on the absence of so many heads of state at the UN conference. According to press reports, Western diplomats said the conference was just a platform to attack capitalism.

PRESIDENT RAFAEL CORREA: [translated] Well, if this is an attack on capitalism, I think it’s well deserved. Look at the problem it’s got us into. So I don’t understand those who say they’re not here because it might descend into an attack on capitalism. They must have a strong ideological bias, because certainly if they thought maybe there would be an attack on socialism, or had they thought it was going to be an attack on socialism, they would have been delighted to have come.


AMY GOODMAN: Talk about why you think at this point capitalism should be criticized, what you think needs to happen now.


PRESIDENT RAFAEL CORREA: [translated] Well, what we’ve undergone in recent decades worldwide has been totally insane, and all of this in function of capitalism. If you look at what was done with the workforce in Latin America, it was treated as a vulgar instrument for capital accumulation. Mechanism of exploitation were imposed, such as outsourcing, labor intermediation and the like. Efforts were made to destroy nation states, or at least to minimize nation states, especially in key areas such as the economy, on grounds that were closer to religion than to science, that everything would be resolved by the marketplace.


I could speak at much greater length on this, but the results are plain to see: greater inequality in Latin America. We haven’t resolved the unemployment problem. Indeed, unemployment is higher than in previous decades. We haven’t resolved the problem of poverty. We’ve lost a great deal of sovereignty by implementing policies that didn’t answer to our international reality.


And finally, we’re facing a crisis that we have not provoked, yet we are the main victims, the greatest crisis since the 1930s of last century, where there was a crisis in global capitalism. But it’s not been generated by factors external to the system, but by factors that are of the very essence of the system: exacerbated individualism, deregulation, competition and so on. This clearly shows us that something has to change.


AMY GOODMAN: Ecuador is joining ALBA, the Bolivarian alliance, seen as an alternative to the whole push to expand NAFTA to Latin America. Why? Talk about what you’re doing now.


PRESIDENT RAFAEL CORREA: [in English] Why not? [translated] Why not? We are friendly countries, sister countries. We coincide on many points of view. So why not take that step towards integration, and which, among other things, is moving forward much more quickly than other integration schemes that have made the mistake of wanting to include everyone so we are moving at the pace of those who don’t want integration? Those of us who have acceded to ALBA voluntarily want to see the integration of Latin American peoples. And it’s gone forward much more quickly than other integration arrangements. In any event, my answer is “why not?” Why not join ALBA?


Now I’ll tell you why. Just one piece of information to illustrate. At this time in the ALBA, we have 30 percent of all the votes in the Organization of American States. So we now have very specific weight in order to propose other points of view. For example, the Organization of American States—that’s just mentioned in the Organization of American States. But we could say something similar about the United Nations. That alone would justify our entering ALBA, but there are many additional factors.


AMY GOODMAN: You are not talking about a free trade agreement with the United States, but you are with the European Union. Why?


PRESIDENT RAFAEL CORREA: [translated] No, we’re not talking about a free trade agreement with the European Union; we’re talking about fair trade for development. And that’s how the agreement was originally posed. First, a block-to-block agreement between the European Union and the Andean community, with three pillars: a political dialogue, cooperation and trade. And this last one, trade, is understood as trade for development.


Unfortunately, all of that has been deteriorating. Among the reasons, because two of the Andean community countries already have a free trade agreement with the United States, and I’m referring to Colombia and Peru. And they have very little to lose in the negotiations with the European Union. So, the first thing that collapsed was the block-to-block negotiation.


And it’s clear that the emphasis was focused on the trade aspect. And I should also recognize that from the European Union, they tried to approach it as a free trade agreement, which has always been rejected by Ecuador. We’re interested in all three dimensions of the agreement: political dialogue, cooperation and trade. And within trade, we’re talking about fair trade, not the idea of free trade, which we see as simplistic, liberalizing everything. And we’re engaged in tough negotiations with the European Union on this.


Now, in the event that we’re not satisfied with the agreements that result, then we simply won’t sign. But I reiterate, we’re not negotiating a free trade agreement with the European Union.


AMY GOODMAN: The US contract with Ecuador over one of the largest US military bases in Latin America, Manta, expires later this year. You will not renew it. Why?


PRESIDENT RAFAEL CORREA: [translated] Why renew it? Now, if you’d like, I would renew it with one condition: that they allow me to set up an Ecuadorian military base here in New York. If there’s no problem with foreign bases, then let’s reach an agreement on that. I think that everybody listening is going to find that impossible. And for us Ecuadorians, it also seems impossible, based on our outlook informed by sovereignty, at least with the current government, to have a foreign military base on our soil.


AMY GOODMAN: You also recently threw out a US diplomat, Armando Astorga, calling him insolent and foolish and saying he treated Ecuador like a colony.


PRESIDENT RAFAEL CORREA: [translated] Yes. I don’t know if you’re aware that, among other things, because of the dismantling of the state that Ecuador has suffered in recent years, but money for certain police units to operate, including certain intelligence units, police and military, was provided by the US embassy. Well, this itself is sufficiently serious. But it wasn’t even unconditional or spontaneous assistance. Rather, they would choose the directors of those police units. They had them take lie-detector tests at the US embassy. So those units answered more to the US embassy than to the Ecuadorian state.


And we, in the exercise of our sovereignty, wanted to change the director of one of those units. Mr. Astorga, in a totally arrogant manner, sent a letter saying that we need to return or give back everything that the United States has given us—computers, automobiles and so on. Well, they should take it all back then. But Mr. Astorga would also have to leave the country, because we are no one’s colony.


AMY GOODMAN: Mr. President, do you think President Obama represents something different to Latin America and specifically to Ecuador?


PRESIDENT RAFAEL CORREA: [translated] Yes, I’m convinced that that is the case. Indeed, we’ve already begun very fruitful bilateral dialogues at a very high level, which never happened with the Bush administration. And not just that, there’s a question of building trust, and I think that President Obama offers trust. Personally, I think he is a transparent individual with the right intentions. So I think things are going to change in terms of foreign policy, US foreign policy, especially with respect to Latin America.


AMY GOODMAN: Let me ask you about President Chavez and his comments recently supporting the Iranian president Ahmadinejad. What are your views toward what’s happening right now in the disputed Iranian elections?


PRESIDENT RAFAEL CORREA: [translated] We’ve spoken with our chargé d’affaires in Tehran, and he tells me that it’s an exaggerated reaction, because President Ahmadinejad won by too large a margin. We’re talking about at least six million votes. All the surveys show that he was the winner. So this reaction on the part of the opposition can’t be explained. Now, I don’t want to meddle in internal Iranian affairs, but a response of this sort vis-à-vis such a broad victory is somewhat suspect.


In any event, it’s my understanding that the Council of Guard has ordered that the vote be recounted and so on. I would hope that things could be worked out peacefully and that a determination is reached as to who won that electoral contest. But I reiterate, the reports that we are getting from Tehran is that President Ahmadinejad’s victory is too broad, and therefore there’s no way to imagine that he could have lost or that he would have won by fraud.


AMY GOODMAN: And the killings of a number of the protesters, do you condemn that?


PRESIDENT RAFAEL CORREA: [translated] Well, one would have to see in what situation those deaths took place. We’re talking about a country of 80 million, in which there have been serious street protests. I am not familiar with the specific conditions in which the lamentable deaths have taken place. Everybody should lament their deaths and be in solidarity with the victims and their families. But obviously, if there’s protest and violence in a country of 80 million, it’s likely that such things can come to pass without that necessarily meaning repression, violations of human rights and so forth. But all the investigations should be undertaken to determine.


AMY GOODMAN: Let me ask you, Mr. President, about another violent crackdown, and it was in Peru against those in the Amazon who were protesting the opening up of the area to mining interests, that has ultimately led to the resignation of the prime minister. Do you condemn President Garcia for what happened in Peru?


PRESIDENT RAFAEL CORREA: [translated] Well, I insist we are not going to meddle in the internal matters of any country. That will have to be worked out within Peru’s institutional framework determining the responsibilities that lie in this matter.


AMY GOODMAN: Now, you know exploitation by large corporations in your own country. Tens of thousands of indigenous people have brought suit against Chevron, now ChevronTexaco. An expert appointed by the Ecuadorian judge has said that Chevron should pay $27 billion. Where do you stand on this?


PRESIDENT RAFAEL CORREA: [translated] This is private litigation brought by social organizations in the Amazon region against this transnational corporation, Texaco Chevron. And there, the Ecuadorian government has nothing to do, in judicially speaking. Obviously, we have borne witness to the harm caused in the Amazon, and we’re in solidarity with those social organizations. But I reiterate, as the executive branch, we are not a party, and we cannot meddle in judicial matters.


AMY GOODMAN: You have gone to the area, though, and shown support. What is the harm done?


PRESIDENT RAFAEL CORREA: [translated] It’s terrible. The oil companies continue doing whatever they please. But at that time, it was really the law of the jungle. There was no processing of waste, of contaminated water. Everything was dumped in the rivers. There were pits created that were totally non-technical. If you go into the Ecuadorian Amazon and you stick your hand in the ground, what you get is oil sludge. They dumped the oil wherever with total impunity, because there was no oversight by the state. And these countries really did abuse the country. These countries have done in our country something they never would have dared to have done even by far in the United States. And it is time that they answer to the justice system.


AMY GOODMAN: Have you heard about Shell settling with the Saro-Wiwa family, the Nigerian activist who was killed in Nigeria fourteen years ago? He was protesting Shell’s exploitation of the Niger Delta. And they just settled for something like $15 million to be paid to the family and the Ogoni people. Do you see that as a positive example?


PRESIDENT RAFAEL CORREA: [translated] Well, of course. I’m not familiar with the case, but, of course, for these countries need to be held accountable for and answer for everything they’ve done, because I am indignant as a Latin American about the dual reality of certain transnationals. It’s not that they couldn’t have done it otherwise. The technology existed, the measures were available, to prevent environmental harm and so forth. But they didn’t want to do so, probably because we’re poor countries, so they consider that we’re inferior. But what they did in our country, they never would have dared to have done that in the United States.

AMY GOODMAN: We’ll return to my conversation with the Ecuadorian president Rafael Correa after break.

[break]

AMY GOODMAN: We return to our national broadcast exclusive, my conversation with the Ecuadorian President Rafael Correa.

AMY GOODMAN: Now, indigenous people, campesinos, recently protested your policies around the issue of large-scale mining and opening up the region. You called them extremists and nobodies.

PRESIDENT RAFAEL CORREA: [translated] I didn’t call them “nobody.” I said they didn’t represent anyone. And the last elections gave [inaudible] right. The person who headed up the effort against mining won only four percent, and we won, by overwhelmingly so, in all the mining regions. And the areas with the greatest protests are in the province of Azuay. That’s where we have good, strong support. So, clearly the population trusts us. But three or four people are enough to make a lot of noise, to appear in the media, and so on. But, quite sincerely, they don’t have the popular backing or the representation.

In any event, there are many contradictions on these kinds of positions. First, it’s not that we’re inaugurating mining in Ecuador. Mining goes back to the Preclassic Inca period in Ecuador. To the contrary, finally, we’re regulating mining in Ecuador—because it was a matter of total anarchy—with a very tough law that protects the state, that protects the environment, that protects society.

Second, one of the main criticisms of the groups that oppose mining, or, as you put it, large-scale mining, is the environmental impact of mining. But this is where the contradiction comes up. Small-scale mining causes much more pollution than large-scale mining. So if that’s the reason why they oppose large-scale mining, there is a big contradiction there. And if you begin to analyze, some of these leaders—not all of them, but some—have their own interests in small-scale mining.

So I would say, in general—indeed, we’ve carried out surveys—there’s more than 70 percent support for the new mining law, but as I say, three or four fundamentalists who take over a highway are enough to appear in the newspaper and for them to say that there’s opposition to such mining in Ecuador.

AMY GOODMAN: President Correa, in the Wall Street Journal, there was just a piece talking about documents that the Colombian government uncovered on a laptop when Colombia raided Ecuador and killed a FARC leader, linking you to the FARC. What is your response?

PRESIDENT RAFAEL CORREA: [translated] If they show that I have some connection to the FARC, then I’ll step down. It’s a big lie, and we have presented a denunciation through the Foreign Ministry. And if they don’t rectify that, we will take the appropriate legal actions. We are tired of such infamies, which are not based on facts. They’re based on interests that seek to treat certain governments which are their allies as superheroes and other governments as villains.

So, we think that a daily newspaper should report the news, not play at geopolitics. In any event, the editorial—I think it was an editorial—is based on information that long ago was shown to be unreliable: supposed computers with supposed messages in which supposedly there is talk of a former member of the national government, not the president of the republic, negotiating with the FARC. Indeed, those computers also talk about—supposedly talk about the Workers’ Party of Lula da Silva having ties with FARC, but they don’t say that. So, as I say, it’s really just a geopolitical game that they’re pursuing.

And the woman who wrote the article recently admitted to RCN that she published that article resenting President Obama, because he called me to offer his support upon my reelection. And this is an extremely right-wing journalist who’s angry because he didn’t call Alvaro Uribe. Instead, he called Rafael Correa. That reflects the level of professionalism of the person who wrote that.

AMY GOODMAN: How do you think peace can be achieved in Colombia, and do you think the US can play a role in that? I mean, the US has poured a tremendous amount of money into the war on terror there, into the war on drugs, so-called, so-called. What do think could achieve peace in Colombia?

PRESIDENT RAFAEL CORREA: [translated] Einstein said if somebody time and again does something, or tries to do something, with the same negative results, and continues to insist on doing so, then he’s a fool. This strategy carried out, applied by the United States in Colombia has been a total failure. Drugs have not been eradicated. It could be that the FARC have been weakened. But quite sincerely, I don’t think there’s any military solution to the conflict with the FARC, but rather a political solution. And what they have accomplished in pursuing a military solution is extending the conflict to neighboring countries and destabilizing the region.

Ecuador has about 700 kilometers of border with Colombia, and a lot of it is impenetrable jungle. Colombia’s strategy has been to attack the FARC from north to south. They have two military units in the south, but far from the border. We have thirteen. So, it seems to be a strategy to try to draw us into the conflict.

So I hope that the United States and the Obama administration understand this, that as [inaudible] into drawing us in neighboring countries into this conflict, which is not our own, which pains us greatly, but it’s not ours, and that they carefully analyze the matter, whether the anti-drug strategy, despite the billions spent, has yielded no results and whether this conflict with the FARC has any military solution.

AMY GOODMAN: Last two questions. One is, do you support President Obama expanding the war into Afghanistan and Pakistan?

PRESIDENT RAFAEL CORREA: Can you say again, please?

AMY GOODMAN: Do you support President Obama expanding the war in Afghanistan and Pakistan?

PRESIDENT RAFAEL CORREA: [translated] Well, I’m a pacifist by nature. I would hope that the Afghanistan problem could be solved as quickly as possible. I also think the strategy there, as in Iraq, was totally mistaken, that the United States has a big problem on its hands that’s going to be very complex to resolve. But I’m practically convinced that it’s not going to be resolved by more war.

AMY GOODMAN: And finally, your overall advice to the new President of the United States, President Obama, in how he approaches Latin American and, just overall, how he approaches the world?

PRESIDENT RAFAEL CORREA: [translated] Well, I’m not accustomed to giving advice to those who haven’t asked for it. I would just want to wish President Obama the best of luck, and that he should bear in mind that just as he is a good person, there are many of us presidents in Latin America who are also good people.

AMY GOODMAN: And is there one single message you could give to President Obama to improve relations with Latin America, what he could do?

PRESIDENT RAFAEL CORREA: [translated] To learn more and come to better understand the region, and that he not let himself be taken along by the power of certain media outlets that are compromised with certain ideological fundaments, and that the heroes aren’t necessarily heroes, and the villains aren’t necessarily villains, that he should get to know the region better and get to understand the region a little better.

AMY GOODMAN: President Correa, thank you very much.

PRESIDENT RAFAEL CORREA: Thank you.

AMY GOODMAN: Ecuadorian President Rafael Correa. He’s in Nicaragua today meeting with other Latin American leaders as well as the ousted Honduran President Manuel Zelaya over the coup in Honduras. Meanwhile in Washington, DC, President Obama is meeting with Colombian President Alvaro Uribe.

Ecuador President's Bold Economic Plan

By Barbara Crossette
The Nation, 26/6/09

If the last three days of economic debate at the United Nations proves to be a guide, President Rafael Correa of Ecuador may be emerging as the leading intellectual of the Latin American left, at least among Spanish-speaking countries that have been most vociferous in their opposition to the United States.

An urbane politician and a recognized economist with European and American degrees, Correa came to the United Nations this week armed with the expected rhetoric he shares with Hugo Chávez, Daniel Ortega and Fidel Castro. But he also came with a plan. In a speech in the General Assembly on Thursday, he laid out some concrete ideas about how Latin America could, by creating its own regional financial institutions, fiscal cushions and eventually perhaps a regional central bank and common currency, build an economic future much less reliant on international lending institutions and the damaging swings of fortune caused by a dependence on the industrial countries and the "clan of the powerful."

Correa's presence may turn out to be the highlight of the beleaguered Conference on the World Financial and Economic Crisis and Its Impact on Development, which was first billed as a summit, then a high-level meeting. As it headed toward a mostly bash-capitalism session planned for early June, various nations began objecting to a draft declaration being written, and the meeting was postponed for three weeks to achieve some consensus on a final document. Even with that in place, almost all government leaders opted out. Along with several Caribbean prime ministers, Correa was the only president to appear, and he made the most of it.

Notably absent from the UN meeting, attended mostly by ministerial-level delegates from around the world, were Correa's friends and allies. President Evo Morales of Bolivia canceled out at the last moment and, to the personal disappointment of Miguel d'Escoto Brockmann, the General Assembly president from Nicaragua who had staked so much on this event, his own President Ortega stayed away. Hugo Chávez, the Venezuelan president, did not attend, and the Cuban leadership sent a trade minister.

But the forward-looking, take-charge projects proposed by Correa (who spoke by telephone with President Obama early this month) have resonance in other regions. In seminars and round tables on the margins of the larger gathering, African Union members spoke of the necessity for strong regional institutions on their continent as well as national stimulus plans, enhanced intraregional trade and investment in regional infrastructure so that, as one ambassador described it, he wouldn't need to fly from East Africa to West Africa by way of Paris. In Asia, regional organizations have been working on projects along these lines for years, with mixed success. The model is the European Union.

Chile's UN ambassador, Heraldo Muñoz, also spoke in a panel discussion about the importance of long-range national economic planning, describing how his country had banked or invested the profits of boom years so that it could "loosen its belt" to sustain social programs in tougher times.

The man of the moment this week--and not just because he was the only president in attendance--Rafael Vicente Correa Delgado, 46, was born in Guayaquil and got his first economics degree there from the Universidad Catóolica. He later earned a master's degree in economics from the Catholic University of Leuven in Belgium and both an MS and PhD in economics from the University of Illinois, Urbana-Champaign. He is fluent in French and English, but speaks publicly only in Spanish as a matter of policy, he told reporters. He had been finance minister of Ecuador before being elected president in 2006 and re-elected in 2009.

Correa has been a thorn in the side of the United States, questioning the value of a hemispheric free trade agreement and putting oil and mining companies on notice that they will have to turn over much more of their earnings to Ecuador, though he has stopped short of nationalization. (He has also had a long-running dispute with a Brazilian construction company, Odebrecht.) In a nod to Chávez, Correa praises the Bolivarian Alternative for the People of our Americas, an alternative free trade zone, which Ecuador signed on to this week.

On Thursday he repeated in his General Assembly speech that he would like to see the International Monetary Fund and World Bank abolished, but since that won't happen any time soon, they should be stripped of much of their power. (He also added in an aside that he gets tired of seeing Latin American finance ministers rounding out their careers in IMF and World Bank jobs.)

In Ecuador, he has expanded his presidential powers in a Chávez-like referendum. Last December, he renounced the country's foreign debt, calling it "immoral" and "illegitimate," but subsequently bought back 91 percent of it, according to the Wall Street Journal. Even his critics say he understands how economies work.

One international institution Correa wants to strengthen is the United Nations and its agencies, through which he called for the channeling of development funds. There would be problems here, too. The Economic and Social Council has all but failed to function, and the General Assembly, while dominated by the developing nations, lacks unity even among them, with richer developing nations looking to join the North and not to represent the South. Giving the lumbering UN some of the policy and disbursement powers of the IMF and World Bank certainly would not get support from industrial nations.

Still, said Correa, "This meeting is the beginning."

ECUADOR: Chevron's Amazon 'fake cleanup' trial

United Press International June 25th, 2009

A report submitted this week to a court in Ecuador finding dangerous levels of contamination at oil wells Chevron says it cleaned up in the 1990s is expected to reinforce a fraud indictment against two Chevron lawyers in a $27.3 billion environmental lawsuit against the oil company. Seven Ecuadorian officials were also included in the indictment last September for helping the Chevron lawyers orchestrate a fake cleanup of toxic waste at two oil wells in the 1990s. Chevron dumped more than 18 billion gallons of toxic waste into Amazon waterways from the mid-1960s to 1990. The disaster was dubbed the "Amazon Chernobyl" by the international media for the extent of destruction of pristine rainforest an area the size of Rhode Island, and which is estimated at 30 times worse than the Exxon Valdez spill. Texaco entered Ecuador's rainforests in the mid-1960s, and at the time it was the sole operator of the largest oil concession in the rainforest. Chevron is also accused of creating nearly 1,000 unlined waste pits for toxic sludge that seeped into groundwater that Amazon residents drank. It is also accused of being responsible for hundreds of oil spills. Health studies have shown that cancer and other toxic-related health problems have spiked among indigenous Amazon tribes and other communities in the area. Texaco claimed to have "remediated" the 45 sites in question between 1995 and 1998 with an extensive cleanup. But Pablo Fajardo, an Ecuadorian lawyer who is representing the communities in the northern Amazon in the class-action lawsuit, said the so-called remediation was little more than the dumping of dirt over a few toxic waste pools. Independents tests, including from Chevron itself, have shown massive levels of life-threatening toxins still residing in the northern Amazon area where the oil company operated. Earlier this year Chevron requested eight more inspections, a move that the plaintiffs argued was a last-ditch attempt to delay the end of the trial. The latest results of two sites that were purportedly "remediated" showed toxin levels several times above permitted levels. The findings were consistent with all the earlier tests. A damages assessment made last year on all 45 sites showed toxic levels beyond the legal limit, in some cases thousands of times higher. With damages estimated at between $7.2 billion and $16.3 billion, the lawsuit is expected to result in one of the largest civil judgments in history. Fajardo was named last December as a CNN "Hero" for leading the fight to hold Chevron accountable. Chevron claims the trial is a "farce" and "rigged" and in full expectation of an "adverse" decision is preparing to appeal. In 1992 Texaco turned over its entire operation to Ecuador's state-owned oil company Petroecuador, which, studies show, is continuing to contaminate the environment.

Ecuador to sue WSJ over FARC allegations

26/6/09

President Rafael Correa at the UN

Ecuador's President Rafael Correa has vowed to sue the Wall Street Journal for linking his government to the Colombian FARC rebels.

"We will sue this newspaper because we are sick of their lies," Correa told reporters on Thursday after addressing the UN General Assembly's Conference on the world financial crisis, Reuters reported.

"We demand the Wall Street Journal provide proof," he said, dismissing the journal's accusations that he is affiliated with the Revolutionary Armed Forces of Colombia (FARC).

WSJ writer Mary Anastasia O'Grady alleged in a column published on June 22 that she had obtained information linking Correa and his government to the FARC guerrillas.

O'Grady based her claims on data she said was retrieved from the personal computer of slain rebel commander Raul Reyes, who was killed when Colombian forces with the help of the US conducted a cross-border attack on his group in Ecuador in 2008.

The Column-writer further alleged that the computer data provides concrete evidence that the rebels had correspondence and met Ecuadorian officials.

The US and Colombia have long accused Ecuador and Venezuela of supporting and sheltering FARC insurgents -- an allegation strongly denied by Caracas and Quito.

Preparations in Ecuador for Solidarity- with- Cuba Assembly

Ecuadorians from Cuba friendship movements are putting the final touches to the 14th National Assembly in Solidarity with Cuba, to be held on Saturday in Quevedo, Los Ríos province.

The meeting, to be held at the "Palacio de Cristal" of Quevedo, expects attendance of some 1,000 delegates of solidarity groups from 24 provinces of this Andean nation, said Fidel Chiriboga, president of the National Coordinating Committee of Friendship with the Caribbean island.

The assembly will evaluate activities carried out in the last 12 months, and coordinate actions to demand the end of the US economic, trade, financial and information blockade on the island, Chiriboga stressed. "This cruel policy, impugned several times by over 180 nations in the UN General Assembly, has to be eliminated and we are going to reinforce actions to request its end," he noted.

Also on the list are measures to demand the release of Fernando Gonzalez, Gerardo Hernandez, Rene Gonzalez, Ramon Labanino and Antonio Guerrero, condemned to harsh sentences ranging from 15 years to double life terms.

The Five, as they are universally known, need international support to end the silence of the US press and the White House, and the people of that northern country must learn of the barbarity that nation's justice has committed against them, he stated.

The event will conclude Saturday afternoon with the approval of the Final Declaration. This document will support the government, the Revolution, socialism and peoples power in the Caribbean nation, Chiriboga indicated.

The 14th Assembly of Solidarity will also take place in the year of the 200th anniversary of the first Declaration of Independence, and the 50th anniversary of the triumph of the Cuban Revolution. / PL

Ecuador's Correa tough, but avoids takeovers

* Leftist president unlikely to nationalize oil, mines

* Correa sees nationalization as inefficient

* Lower oil revenues make future takeovers difficult

By Alonso Soto

QUITO, June 18 (Reuters) - Ecuadorean President Rafael Correa will likely keep from nationalizing oil and mining industries even as he promises to get tough on investors and his leftist allies in the Andes step up takeovers.

Correa believes nationalizations are inefficient for a government struggling to run its own companies, like state oil firm Petroecuador, aides and analysts say. Paying for takeovers would also be difficult as the global crisis trims the OPEC member's oil revenues.

Nationalizations were never part of Correa's government plan when he was first elected in 2006, backed by a broad leftist alliance that ranged from old-school communists to well-off businessmen.

Correa's "21st century socialism" aims to bolster state control and squeeze more benefit from companies extracting natural resources that are already owned by the state under the constitution, officials say.

"Nationalizing companies is not on the horizon. Our goal is to defend the interests of Ecuadoreans and there are other mechanisms to do just that," Minister of Politics Ricardo Patino, one of Correa's closest allies, told Reuters.

"We want to change the role of the state, but not turn it into a socialist state like in the 19th century."

Correa's close ally Venezuelan President Hugo Chavez, an ex-paratrooper, has increased nationalizations of key sectors of the economy from oil to steel and telecommunications as part of his drive to forge a socialist state.

Bolivia's Evo Morales, a former coca farmer, has also keep up takeovers of assets that range from jet fuel companies to natural gas pipeline firms. Last month, he nationalized a division of British oil company BP.

"You will never understand us if you compare us to Venezuela or Bolivia," said Patino, who briefly worked for the socialist government of Nicaragua in the 1980s.

Like his allies, Correa, a former economics professor, has shocked foreign investors, first with a surprise tax hike on oil companies that sparked international lawsuits and more recently with a default on $3.2 billion in global bonds.

But after two years in office, the academic has refrained from taking over oil companies and never mentioned nationalization when he terminated deals with a Brazilian construction company and a small U.S. oil company.

"We never discussed nationalizations," said Galo Chiriboga, who was Correa's oil and mines minister for a year. "President Correa is very clear that an economy works with both the private and public sectors."

With less oil cash in hand, Correa has also moved quickly to promote foreign investment in mining to jump-start the nascent sector worth billions of dollars. Canadian miners such as Kinross and Corriente have found world-class precious metals deposits in the Andean country.

MORE THREATS AHEAD

After a re-election win in April, Correa has renewed threats to toughen his stance on investors, but close aides and analysts said that is part of a negotiation strategy to get more benefits for the state in new oil deals.

Ecuador is gearing up for what are expected to be tough negotiations with private oil companies, like Spain's Repsol, to overhaul agreements that will give the state more control over the sector.

In an April interview with Reuters, Correa said there was no need for oil nationalizations, but his government will continue with its hard line with investors.

"With the right contracts, that (oil nationalization) will not be necessary. We need to be smart and make these foreign companies work for the country," Correa said. "We will have exactly the same position, absolute toughness to defend the interests of the country."

Still, Walter Spurrier, an economic analyst with Grupo Spurrier, says Correa's threats and risky negotiation tactics have hurt investment in Ecuador.

"Correa wants more state intervention, but he doesn't believe in an economy completely run by the state," Spurrier said. "But he needs to be careful with his threats as investors confidence erodes quickly."

Ecuador's moves against foreign investors

QUITO, June 18 (Reuters) - Ecuadorean President Rafael Correa will not likely nationalize key oil and mining industries even as he vows to be tougher on investors and his leftist allies in the Andes step up state takeovers.

The U.S.-educated economist, who often shocks investors, believes outright nationalizations could be counter-productive for a state struggling to run its own companies, like state oil company, Petroecuador.

Here are some of Correa's measures against foreign investors since taking office:

FOREIGN DEBT DEFAULT: Last year Correa refused to repay $3.2 billion in global bonds over charges the debt was "illegally" acquired by investors in league with corrupt government officials. His government later bought back most of the debt at very low prices, but analyst say the default will keep the Andean nation out of the debt markets for years.

OIL TAX HIKE: In 2007, Correa surprised investors by taking nearly all of the extra revenues generated by foreign oil companies because of record high oil prices.

He hiked to 99 percent a tax on those revenues to pressure oil companies to rework contracts. Companies filed lawsuits and slashed investment, arguing the tax hike threatened their businesses in South America's No. 5 oil producer. Correa has so far failed to convince companies to switch to new service deals under which the state would keep all the oil they produce in exchange for a fee.

MINING BAN: Correa last year supported a one-year ban on mining exploration, a decision that battered the stocks of some foreign mining companies working in Ecuador.

Correa, who had vowed to jump-start the sector, said the decree issued by a government-controlled assembly was meant to bring order to an industry in disarray.

Smaller mining companies with operations in Ecuador have struggled since then to secure financing, pushing some to leave the country or sell assets to larger miners.

MASS CONFISCATION: Police and military in August seized hundreds of companies owned by a powerful business group because of a debt dispute with the state. The takeovers included two national broadcasters that are still under government control.

Correa said the seizures aimed to recover millions of dollars the state used to rescue a bank owned by the conglomerate during a financial crisis in the late 1990s. Ecuadoreans, many of whom lost their life savings during the crisis, widely backed the move.

But the mass confiscation led to the resignation of Finance Minister Fausto Ortiz, a Wall Street favorite.

EXPULSION OF BUILDER: Correa in September sent troops to expel top Brazilian constructor Odebrecht and seize projects worth $800 million because of a contractual row.

The expulsion fueled tensions with Brazil, one of the OPEC nation's key sources of financing.

Correa filed an international lawsuit to halt payments of a Brazilian loan linked to Odebrecht, prompting Brazil to threaten to limit further financing to the Andean country.

Ecuador moves toward control of oil output

QUITO, Ecuador, June 18 (UPI) -- Oil provides Ecuador with around half its export earnings, but its populist President Rafael Correa has vowed to take greater control over the nation's natural resources. Using a swearing-in ceremony of his new oil and mining minister to lay out his intentions, Correa threatened to crack down on all multinational oil companies "that still believe they can continue to abuse our country."

The government would radicalize the ongoing "citizen revolution," he said Monday as Germanico Pinto, the new minister, stood by, and this means he will demand international "respect for our country."

The president said he tasked Pinto, who was deputy minister of strategic areas, to take "a firmer posture" with private oil companies that "refuse to pay taxes, take us to arbitration process, start international claims against us and request million-dollar compensations."

He was referring to unresolved disputes with a number of foreign oil companies that have resorted to international arbitration against the government over issues ranging from the seizure of oil production to arbitrary taxes.

Pinto replaced Derlis Palacios, who resigned after failing to resolve several key disputes with these companies.

In one dispute, oil and gas company Perenco SA declined to pay $338 million in taxes after the Ecuadorian government imposed a windfall oil earnings tax of 99 percent in 2007.

Perenco took the case to the World Bank's International Center for Settlement of Investment Disputes, claiming the windfall tax violated its contract. But the government responded by seizing 70 percent of Perenco's output.

In another case put before the ICSID, Occidental Petroleum Corp. is claiming $1 billion in compensation for oil fields that were seized in 2006.

Other extractive industries have appealed to the ICSID, prompting Ecuador on May 31 to complain that the institution was biased toward Western corporations and threatening to withdraw from it.

Meanwhile, Ecuador is trying to rework other oil deals to increase its control over the lucrative sectors.

At the same time the government intends to increase its metallic mineral output, which presently is minimal. By doing so the government hopes to open the door to a potentially lucrative and underdeveloped industry, which it thinks could generate around $110 billion.

But Pinto's warning Monday that he will promote "a deep change in … how we have been developing productive activities as well as energy and environment activities" does not encourage the multinationals.

Oil and gas analyst BMI said it expects the government to try to restrict oil operators to the role of service providers to state-run Petroecuador, which will drive foreign oil firms away from Ecuador, leaving an industry of national oil companies and small independent firms.

Spain, Ecuador sign debt swap agreements

QUITO, June 17 (Xinhua) -- The Ecuadorian and Spanish governments on Wednesday signed seven agreements on a 30-million-U.S.-dollar debt swap program.

The Ecuadorian government said this is the second stage of the program since both countries agreed in 2005 to use the debt of 30 million dollars "for development actions."

The new agreements are aimed at "improving the life conditions of more than 1.5 million people" through infrastructure, education, and housing projects in Ecuador.

The agreements foresee the construction of "Education Units of the Millennium," which will promote access to the education system by building four new schools in Imbabura Province.

A total of 12 million dollars will be spent in repairing 36 schools and training teachers.

The Ecuadorian Public Health Ministry will receive 10.1 million dollars to work in the provinces of Esmeraldas, Carchi, Imbabura, Orellana and Scumbios, benefiting one million people.

In addition, a 6.1-million-dollar "National Network of Houses" will be created to support immigrants in Ecuador, according to the agreements.

The agreements also include a program on water supply mainly at the northern Ecuadorian border.

Interview with Ecuadoran President Rafael Correa

NACLA.org, Jun 18 2009

Translated by Justin Delacour

Correa casts his ballot on election day. (Courtesy Presidencia)

The numbers speak for themselves: In April, Rafael Correa was reelected president of Ecuador with 51 percent of the vote. Correa had a 23-point advantage over the second-place candidate, ex-President Lucio Gutiérrez, and he won in 17 of the country's 24 provinces. In this interview the day after his victory with Spanish magazine Diagonal, Correa says that Ecuador's government-backed “Citizens’ Revolution” will accelerate at an intensifying pace over the next four years. With a majority in the National Assembly, and a Constitution that was drafted and approved during his first government by a broad convergence of allied forces, Correa’s path seems wide open.


You are now in a scenario that you dreamed of two years ago, with the approval of the constitution and your reelection…

I don’t have the scenario that I dreamed of two years ago, I assure you. I have dreamed of a scenario in which there is no misery, there is no inequality, there is no injustice. And we’ve yet to achieve that. You say that I had a democratic triumph, but that’s only in the formal sense of democracy. I maintain that Ecuador and Latin America have elections but have yet to arrive at what is democracy. In truth, I don’t believe that there is democracy in a country where there is so much injustice, so much inequality.

Whoever knows Latin America well, knows that it is the most inequitable region of the world. And Ecuador, within the most inequitable region of the world, is one of the most inequitable countries. One can find here the most insulting opulence alongside the most intolerable misery. That has to change, and only when that changes will we have true democracy. That is the scenario that I have always dreamed of, and that is why we are here. What are the means to reach that end? A country that is more just, with greater solidarity and equity. The electoral results have supported us broadly. That is a strong base of political support to continue deepening the changes. Rather than changing course, we are talking about deepening the changes that we have initiated, carrying them out more radically, in a more accelerated way.

With regard to the economic plan, we are going to continue deepening the reforms, continue emphasizing the popular economy (informal businesses, micro-enterprises, artisans, cooperatives, etc.), a sector that was made largely invisible by public policies. Today more than ever we have to support the popular economy. While in the modern capitalist sector you spend $10,000 to create a job position, in the popular sector, you create a position of employment with just $800.

In terms of social policy, we are going to continue with this social revolution that we began two years and three months ago, in which the characteristics of the government have become clear. In the economic sector too. We should continue with this revolution putting an end to the impunity for bankers, this is an urgent challenge. By December we are going to close the curtain on this tragedy that the banking system created and that still goes unpunished. That is urgent.

Finishing off this nightmare, continuing to collect taxes, recovering our natural resources, struggling against corruption and continuing also with this politics of opening to all the countries of the world, in a context of mutual respect, and especially pursuing Latin American integration and constructing this pan-regional country (“patria grande”) of which Jose Martí spoke of. What Ecuador did on Sunday was to ratify the project. What we are going to do is deepen and ratify that project: the Citizens’ Revolution.

From a more global perspective, the change that is needed is much more radical and relates to the architecture of global power of the corporations and mega-banks. Do you believe that it is possible to democratize this capitalist system that we live in now? Do you believe that it is possible to accomplish this change?

Within the system, no. By changing the system, yes, and that is what we are doing. But we can’t be naïve. The changes and revolutions in a society depend upon the correlation of forces. With this strong base of political support that we had Sunday, we can greatly deepen our revolution. But remember all the psychological trauma that they’ve inflicted upon us. For someone who doesn’t know Ecuador but reads its newspapers, we were the most unpopular, corrupt and incompetent government in the country’s history, in spite of the fact that we’ve had more than 70 percent popular support for the government’s performance – and popular support for the government’s performance isn’t the same thing as voter intention, to be sure. We always had about 56 percent of voter intention.

Correa greets voters on election day. (Courtesy Presidencia)

And there was a very interesting phenomenon in the elections. The opposition didn’t take one vote away from me; they split their vote among themselves. The right saw that little Alvaro Noboa didn’t have a chance, so they ditched him and bet everything on Lucio Gutiérrez. That also demonstrates the amorality of our powerful sectors, of the Ecuadorian right, because they put their interests before their principles. You know that nobody sensible can vote for a person with such serious moral and intellectual limitations as Lucio Gutiérrez. But the interest groups of the country bet their fortunes on him in an attempt to boycott the Citizens’ Revolution. But they shot themselves in the foot, thank God.

In any case, change depends upon the correlation of forces. On Sunday the Ecuadorian people clearly demonstrated their support for the government, they’ve given us more democratic legitimacy, and we can advance with much greater strength, thus giving greater legitimacy to these changes that, little by little, go on changing the correlation of forces in favor of the people. That means many things.

Six kids drowned a week ago in an absurd tragedy.¹ They were poor kids. Go look how many times that story came out in the newspaper. If they had been the children of powerful families, I assure you it would have been covered by the newspapers for two months, and a commission would have been ordered, etc. So Ecuador has to change this correlation of forces, and we are going to continue doing it. Little by little the force of the people gains space and this translates into real changes in terms of the devotion of resources and public policies to the needs of the weak. That’s outside the capitalist system, and inside the socialist system of the 21st Century.

The crisis of global capitalism that we are living through in this moment does not come from outside the system, it comes from within. Among the recurring crises of capitalism, this is one of the most serious, but from within the system. We are not going to find solutions within the same system that is collapsing. We have to construct something new and better. I believe that there exists a consciousness among the majority of Latin American governments and leaders, so that that they are taking this opportunity to construct something new and different.

Correa in Guaytacama, Cotopaxi. (Courtesy Presidencia)

For example, we are constructing our own regional financial architecture to overcome our dependency. Nowadays they don’t need bombs, ships or planes to subjugate our countries; they need dollars. These have been the “arms” for subjugating us by means of the International Monetary Fund and World Bank. There is no reason it has to be this way. With the resources that Latin America has, we could self-finance, but we engage in the absurdity of sending our resources, in the form of reserves, to the First World, by way of autonomous Central Banks.

With a regional financial architecture, our resources could stay in the region and we would do away with one of the principle forms of dependency that has served to subjugate us, which is financial dependency. That much is clear to us. We are advancing. We just created, at the level of ALBA (the Bolivarian Alternative for the Americas), the only system of regional compensation that will lessen the need for dollars, but there is still much to go over, to make the Bank of the South effective, and I hope that, in the short term, or at least in the medium term, we will create this fund of the reserves of the South, so that we can keep our money here in the region instead of sending it to the First World to finance the developed countries.

What are the goals and projects that you want to achieve in the next four years in your relations with Latin America and the United States?

With respect to Latin America, consolidating UNASUR (the Union of South American Nations) and making it effective, because we can no longer keep talking about integration as an ethereal issue that nobody understands well, that nobody feels. Integration has to translate into concrete actions that benefit our population. And what are these concrete actions? One of the great errors of all the integrationist focus in most recent years – not necessarily at the beginning of integration, with the CAN (the Andean Community), etcetera – is that it was a commercial integration. It dealt with seeking out bigger markets based on the absurdity of competition.

Competition is a concept that is already very debatable at the level of economic agents, but at the level of countries – fraternal countries – are you going to compete? It’s a complete absurdity. And how have they competed? Whoever mistreats the labor force most, whoever puts it in the most precarious position, because that is the only way to gain competitiveness. And we deteriorate the standard of living of our population and, above all, our working class. And the ones that most benefit from the cheapest products are the First World.

We can’t keep falling into this trap. We have to create an integration with a different focus, a focus upon coordination, complementarity and cooperation among fraternal countries, transcending the merely commercial. For example, with energy integration. Latin America can be self-sufficient in energy, and that will also do away with a source of vulnerability. Also food security and financial integration… We have to work on all of these aspects. Advancements are being made, but they have to be made more rapidly. Within the UNASUR, basically one of the most immediate objectives is to look for a new regional financial architecture that does away with the absurdity that Latin America exports capital, finances the First World, and then gets down on its knees for them to give us some dollars. This cannot continue one more day.

---

Justin Delacour translated this interview for NACLA. It was first published in Spanish by the Madrid-based biweekly newspaper Diagonal.

---

1. Correa is referring to an incident that occurred on April 20 in Lumbisí, a small village in the northeast of Quito where a group of children were swept away by the current of the San Pedro River. Six children drowned.

Ecuador to Offer Bond Holdouts Less Than 35 Cents

By Stephan Kueffner

June 17 (Bloomberg) -- Ecuador will offer holdouts from its buyback of defaulted debt less than the 35 cents on the dollar paid to holders who tendered their securities earlier, Finance Minister Maria Elsa Viteri said.

Bondholders who for regulatory reasons weren’t able to participate in the buyback by the June 3 deadline will still be able to sell their bonds at the 35-cent price, Viteri told reporters today in Quito.

“For the rest of holders, if any of them would like a definite solution at some moment, that will have to be at a revised price that I’m working on right now,” Viteri said. “It would be inferior to 35” cents.

The government estimates that most of the bondholders who didn’t participate are Italian, Viteri reiterated. Through the buyback, Ecuador retired 91 percent of its $3.2 billion bonds due 2012 and 2030, close to a third of its foreign debt, after declaring a default in December.

Ecuador won acceptance for its 35-cent offer from 91 percent of the bondholders, Viteri said on June 11.

Viteri today said she has spoken to officials at Italy’s National Corporations and Bourse Commission about extending the original bond offer to holders there.

“We understand that Italian bondholders have begun to contact their regulator and are interested in getting a solution as soon as possible,” Viteri said.

Ecuador will continue to try to reduce its debt load, mostly owed to foreign governments and multilateral lenders, through dialogue, she added.

Viteri spoke after signing an agreement with Spanish diplomats that writes off $30 million Ecuador owes that country in exchange for pledges to invest that amount in local schools and health programs.

Ecuador: Dollarization on the chopping block

by Chloe Hayward, Euromoney, June 2009

Correa considers new currency regime; Oil price collapse stifles growth

Ecuador’s president, Rafael Correa, is a step closer to dropping dollarization, according to analysts.

"It’s definitely realistic that Correa will start looking at ways to get rid of dollarization," says David Dowsett, senior portfolio manager at BlueBay Asset Management. "He would prefer to not be in charge of a dollarized economy. At the moment it is potentially too risky but it is difficult to say anything with certainty. In time I could definitely foresee a situation where Correa will take this route away from dollarization." By using the dollar as the national currency, Ecuador’s central bank lacks the ability to print money and stimulate growth. In 2008 public spending drove Ecuador’s growth of 6.5%. This year Correa’s government expects the economy to grow only 2.5%.

The slow-down is largely a result of the collapse in the oil price since mid-2008, although the commodity markets are showing signs of recovery. Oil accounts for more than 50% of Ecuador’s fiscal accounts and central bank foreign reserves have tumbled 30% since December 2008.

Two years ago Correa announced that he thought dollarization, which was adopted in 2000, was a "complete failure". However in April he said: "We have said that we will maintain the dollarization system, and as an economist I know how to do that." But Correa’s pledge is likely to have been rattled by recent banking data. Ecuador’s banking system has seen its profits tumble since Correa defaulted on the country’s 2012 and 2030 bonds six months ago.

In the first four months of 2009, the combined net profit for the 24 private banks and one state bank that operate in Ecuador was $72.3 million, according to a report from the local regulator. Banco del Pichincha topped the list with $17.75 million. In the same time period, deposits in the financial system have reportedly fallen by around $750 million. According to Fernando Pozo, chief executive of Banco del Pichincha and the head of the association of banks in Ecuador, this decline in deposits has been partly driven by a drop off in remittances.

The economic slow-down will put further pressure on the banks, which have taken their own measures to try and avoid increasing bad-debt ratios by restricting new loans and increasing interest rates on personal loans. This year loans have slid 7.3% already.

But the timing of Correa’s move out of dollarization is still uncertain. "The government is worried about the implications of a disorderly exit from the dollar," says Patrick Esteruelas, Latin American analyst at Eurasia Group. "Correa has even opened the vaults of the central bank to dispel widespread rumours that cargo containers delivered coinage for the new currency that he planned to introduce after the elections. But Correa’s current policy mix is incompatible with dollarization. If oil prices drop and credit lines dry up Correa will face one of two choices in the coming months – to eat some humble pie and ask the IMF for money or de-dollarize. But I don’t think this trade-off will happen this year."

IATTC accepts Ecuadorian tuna ban proposal

ECUADOR
Wednesday, June 17, 2009, 02:40 (GMT + 9)

The member states of the Inter-American Tropical Tuna Commission (IATTC) approved the application of a 59-day ban on tuna fishing in the Eastern Pacific Ocean (EPO), as called for by the Ecuadorian Government.

The decision to extend the fishing prohibition from 42 to 59 days received a positive vote from 15 of the 16 countries that attended the 80th Meeting of the IATTC held last week in La Joya, the United States.

Ecuador, Costa Rica, Mexico, France, Nicaragua, the United States, Japan, Venezuela, Guatemala, Spain, El Salvador, Panama, Peru, Republic of Korea and Vanuatu were the members that accepted the Ecuadorian proposal.

Meanwhile, Colombia asked for an ad referendum, which signifies a ‘yes’ subject to a rectification per government advisory. The country has until 15 July to decide if it adheres to the resource conservation proposal or not.

According to Ecuador’s proposal, the prohibition would begin on 1 August and extend until 29 September 2009.

Besides the accepted annual prohibition, an additional ban of 30 days will be carried out to the west of the Galapagos Islands (between 96º and 100º West, 4º North and 3º South), in an effort to conserve the long-beaked tuna, Guillermo Moran, Subsecretary of Fisheries Resources indicated.

The Colombian authorities sought to have the tuna prohibition be carried out in stages, that is, that each shipowner choose when to comply with the catch prohibition at any time of the year, Moran explained. But this condition did not satisfy the IATTC's technical recommendations.

Meanwhile, the executive director of the National Fisheries Chamber, Bruno Leone, called the accord reached in the IATTC meeting “important,” in spite of not reaching a definitive consensus, which had been expected, EL Telegrafo reports.

“It is a major accomplishment for Ecuador, because there was an atmosphere of negative perception, as if the country was the one that had been against the measures taken last year, something that was not true,” the executive indicated.

In terms of the possibility that Colombia not adhere to the agreement, “the most likely is that it will face a closing of markets,” Leone said.

The new regulations that Europe and the United States will apply to combat illegal fishing presuppose major restrictions for the countries that do not comply with the resolution of their regional entities, Leone highlighted.

Ecuador wants talks to solve other "illegal" debt

* Top official says Ecuador to seek friendlier approach

* Patino says government to keep fulfilling commitments

* Patino says no need to return to debt markets now

By Alonso Soto

QUITO, June 16 (Reuters) - Ecuador will seek talks with multilateral and country lenders to deal with "illegal" debt instead of the bold strategy that led to the default of its global bonds, a top government debt strategist told Reuters.

Leftist President Rafael Correa succeeded in buying back most of the $3.2 billion in 2012 and 2030 global bonds that it defaulted on, charging that the debt was riddled with irregularities when issued by corrupt government officials.

While celebrating the buyback with dozens of supporters, Correa rekindled fears of further defaults by saying he was mulling actions to target other "illegal" debt from multilateral lenders and bilateral government loans.

However, Minister of Politics Ricardo Patino, a close Correa aide considered the architect of the country's debt overhaul, said the government will seek a friendlier approach to solve the remaining bad loans.

"Our strategy was very aggressive (with bondholders) and I think that this new strategy will be different, seeking more dialogue," Patino said in an interview late on Monday.

He declined to say if the government rules out further defaults in the bilateral and multilateral debt.

Ratings agencies have raised the Andean country's credit standing after the buyback, but warned of the administration's weak willingness to keep repaying loans.

Many analysts say it is unlikely Correa will opt to default on other debt as his government seeks financing from multilateral lenders and allied governments as the global financial crisis has hurt key exports.

A RETURN TO THE MARKETS?

Patino said investors could be confident that Ecuador will fulfill its commitments and saw no reason for the country to be kept out of the debt markets.

"Under the new rules of the game, investors can be calm because we keep our word," Patino said. "Countries that have access to financing are those that responsibly manage their finances, and we have handled our finances with responsibility.

"If it is necessary, we will return (to markets) but for the moment we have privileged relations with multilateral lenders and governments to get financing."

Correa has kept good ties with regional multilateral lenders and promised to keep paying the 2015 global bonds issued in 2005.

Ecuador holds $4.3 billion in multilateral debt, mostly owed to the Inter-American Development Bank and the Andean Development Corp. It also owes $598 million to the World Bank, which the country has criticized for its credit policies.

Quito has $1.4 billion in debt from countries ranging from Brazil to Italy.

In November, Ecuador filed an international suit to halt payment of millions of dollars in loans from Brazil, linked to a construction company expelled over contract violations. Despite Correa's apparent win in the debt default, analysts say Ecuador will have to deal with aggressive holdouts and a stigma that will keep it out of debt markets for years.

Correa could also face attacks from some investors who refused to participate. These holdouts could seek repayment via lawsuits to seize Ecuador's assets abroad, including oil shipments.

Ecuador Plays Bond ‘Market for Fools,’ Aberdeen Says

By Lester Pimentel

June 16 (Bloomberg) -- Ecuador President Rafael Correa “played the market for fools” by defaulting on $3.2 billion of debt six months ago and then repurchasing the bonds at less than 40 cents on the dollar, Aberdeen Asset Management Plc said.

The government’s bonds due in 2015, the only of three global notes Correa kept servicing, rose to an eight-month high today, a day after Standard & Poor’s raised the country’s rating to CCC+, two levels higher than when he defaulted in December. Ecuador has bought back 91 percent of the defaulted bonds due in 2012 and 2030, Finance Minister Maria Elsa Viteri said June 11.

“Ecuador won,” Edwin Gutierrez, who manages $5 billion at Aberdeen and sold his Ecuador holdings before the default, said in a telephone interview from London. Correa’s government “played the market for fools. Remind me never to play poker with that guy,” he said.

Correa, a 46-year-old economist who counts Venezuelan President Hugo Chavez as one of his closest allies, halted payments on the bonds because he said they were issued illegally. He called the bondholders “true monsters who won’t hesitate to crush the country” when he announced the default on Dec. 12 and said in a national radio address the next day that he wanted to force them to accept a “big discount.”

S&P may raise Ecuador’s rating again if the government “can weather the next few months,” Richard Francis, a New York-based analyst at the company, said in a telephone interview yesterday.

‘Ridiculous Ideology’

The 9.375 percent bonds due in 2015 jumped to 70.25 cents today from 17 cents in December, according to JPMorgan Chase & Co. The yield on the bonds, which Correa says he will keep honoring, fell to 17.15 percent from 62 percent. Ecuador’s dollar bonds have returned 61 percent this year, more than all other securities in JPMorgan’s EMBI+ index except for Ukrainian debt.

“The exchange has been such a success for Ecuador,” said Igor Arsenin, an emerging-market strategist at Credit Suisse Group in New York. “It is surprising how far” the bonds have rallied, he said.

Last year’s default was triggered by the combination of declining oil prices and Correa’s “ridiculous ideology,” Claudio Loser, the former director of the International Monetary Fund’s Western Hemisphere department, said in a December interview. Oil, the South American country’s largest export, sank to a four-year low of $32.40 a barrel in December before rebounding this year. Oil traded at $72.11 as of 11 a.m. in New York.

‘Mistake’

The default, while reducing Ecuador’s debt load, was still a “mistake” because Correa won’t be able to sell bonds in foreign markets for the “foreseeable future,” Arsenin said.

The government’s ability to ward off an investor demand to accelerate payments on the 2030 bonds helped it repurchase most of the benchmark securities at a discount, said Gutierrez at Aberdeen, Scotland’s biggest independent money manager.

Correa pulled that off by buying back about 50 percent of the 2012 and 2030 bonds in the secondary market before holding the repurchase auction in May, according to Siobhan Morden, a Latin America debt strategist at RBS Securities Inc. in New York. Those purchases prevented bondholders from reaching the 25 percent threshold needed to demand immediate principal payment on the 2030 bonds, she said.

Debt Reduction

Unable to seek an acceleration of payments, many investors opted to take the 35 cents on the dollar that Ecuador offered in the auction, Gutierrez said. Hamilton, Bermuda-based Lazard Ltd. advised the government on the buyback.

Viteri didn’t rule out that the government may have bought bonds prior to the auction, saying in a May 12 statement to creditors that the country “has the right to purchase or acquire bonds in any manner.” The bonds due in 2012 and 2030 sank to as low as 20 cents on the dollar ahead of the default.

“He took advantage of the prices,” Gutierrez said. Correa “played it very intelligently,” he said.

Ecuador’s foreign debt equals about 17 percent of gross domestic product after the buyback, S&P said. Neighboring Peru, which has an investment-grade rating of BBB- from S&P, had a foreign debt that equaled 24 percent of GDP as of January, according to the central bank. Ecuador’s CCC+ rating is seven levels below investment grade and in line with Ukraine’s.

‘Greed Always Prevails’

The reduction in principal buoyed Ecuador’s “near-term ability to pay,” helping spark the rally in the bonds due in 2015, Morden said.

The default was Ecuador’s second in the past decade and seventh in its 179-year history, according to a study by Federico Sturzenegger, a former secretary of economic policy in Argentina, and Jeromin Zettelmeyer, a former assistant to the Western Hemisphere Department director at the IMF. In 1999, Ecuador halted payments on $6.5 billion of bonds that had been restructured just five years earlier.

“They defaulted in 1999 and then we all bought the bonds,” Gutierrez said. “The market forgets. Greed always prevails.”

Andean Parliament elections close in Ecuador

June 15, 2009

The Andean Parliament elections in Ecuador closed on Sunday after voters cast ballot to elect five parliament members and 3,985 members of the district boards.

The poll, from 7:00 a. m. to 5:00 p. m. local time (1200 GMT to 2200 GMT), saw very low turnout, officials from the National Electoral Council (CNE) said.

They didn't give the specific time when the results would come out.

In Ecuador, citizens above the age of 18 are eligible to vote.

Some 30,600 police officers have been deployed to ensure order. Delegates from the Organization of American States (OAS) and the Andean Community of Nations (CAN) also took part in poll monitoring as observers.

The Andean Parliament, established in 1979, is the Andean Integration System's deliberative body that represents members of the CAN, which groups Bolivia, Colombia, Ecuador and Peru.

Source: Xinhua

Ecuador Fights Child Malnutrition

Quito - The government of Ecuador is promoting a National Program of Integral Nutritional Territorial Intervention, INTI, to put an end to child malnutrition.

Ecuador President Rafael Correa launched the program in the locality of Tixan, in the province of Chimborazo, where he also announced their declaration to fight this cruel evil of society, so as to allow integral development and a better society.

The eradication of child malnutrition is a social activity that can no longer wait, he said.

According to the Ministry Coordinator of Social Development, MCDS, 26 percent of children under five years old in Ecuador suffer from malnutrition, but in the mountains the number of infants may top the 50 percent mark.

Ecuadorian leader also said this problem, caused by, among other things, the growing rate of poverty, also negatively affects a child's ability to learn.

We have destined a 33 million dollar-package so as to end it, he stressed. How can it be that this country spent 14 millions for Ecuador Miss Universe Pageant in 2004 and the same quantity or more is not available to fight this tragedy of infants?, he asked.

He also announced another program, aimed at initiating a campaign to aid and relocate those children and adolescents whose lives revolve around garbage dumps. Official data revealed the national government has already rescued 1,524 minors living around dumps, in conditions of high risk for their health, who were then returned to schools.

Correa Says Ecuador to Review Other Debt After Bonds

By Stephan Kueffner

June 12 (Bloomberg) -- Ecuador will review the legitimacy of loans from multilateral lenders and other governments in the coming months after completing a buyback plan on $3.2 billion in defaulted bonds, President Rafael Correa said.

The government must decide how to treat the debts, which accounted for two-thirds of the $10 billion the country owed as of December, when it defaulted, Correa said yesterday in Quito. The loans from institutions such as the World Bank involved criminal acts by previous governments, just like the bonds’ issuance, he said.

In questioning the legitimacy of the multilateral debt, Correa revisited an issue the government hadn’t discussed since November. In the end, it’s most likely that Correa will demand arbitration rather than quit paying on the multilateral loans, said Ramiro Crespo, head of Quito-based brokerage Analytica Investments.

“When Correa gets an issue into his head, it means he’s going to do something,” Crespo said.

Arbitration would avoid disgruntling important partners such as France or Brazil, Crespo said. Ecuador filed for arbitration last year in a dispute over a $250 million loan backed by a Brazilian state development bank. In the meantime, it has kept up interest payments.

The country’s bond due in 2015, which the government said didn’t involve illegal activity and pledged to honor, has rallied to 67.8 cents on the dollar today from 44.75 cents on April 20 when the government made its buyback offer.

Fitch Ratings

“Ecuador’s creditworthiness will continue to be constrained by the sovereign’s weak willingness to honor its debt commitments,” Erich Arispe, director of Fitch Ratings’s Latin America Sovereigns team, said in an e-mailed statement today.

Correa has given the Caracas-based Andean Development Corporation and the Washington, D.C.-based Inter-American Development Bank assurances he’ll continue to service their debt.

“They paid him back with public support for his buyback proposal,” Crespo said.

Ecuador bought back 91 percent of its defaulted bonds due 2012 and 2030, Finance Minister Maria Elsa Viteri told reporters last night. The offer, which closed on June 3, will be reopened later to bondholders who didn’t participate, she said.

Viteri said 18.7 percent of the holders of the 2012 bonds didn’t accept compared with 7.2 percent 2030 holders. The government will offer the holdouts the same 35 cents on the dollar later, she said.

‘Imposed by Force’

“These debts were imposed by force,” Correa said last night in Quito after the government disclosed the buyback results. “We have rebelled against the system that established odious, unfair, illegal, immoral debts.”

An audit commissioned by Correa reported on Nov. 20 that much of the debt is illegal because usurious rates were charged and there were numerous conflicts of interest among lawyers, lenders, and government officials.

Ecuador would be willing to negotiate with lenders in the event of a dispute, rather than defaulting as it did with bondholders, Viteri told reporters after Correa spoke.

“If there’s any problem, there will always be an option to sit down and talk as the first option, however there’s no definitive strategy yet,” Viteri said. “The Republic continues to be willing to have a positive and balanced relationship with the international financial community.”

At the same time, the recovery in the price of crude oil, Ecuador’s top export, has eased financing pressure on the government.

Correa will probably focus his anger at multilateral lenders on the World Bank, which he has often criticized in the past, without having to ask that institution for money, Crespo added.

Ecuador Buys Back 91% Of Defaulted Debt; Spent $900M

QUITO (Dow Jones)--Ecuadorian Finance Minister Maria Elsa Viteri said Thursday that a total of 91% of bondholders had tendered their Global 2012 or 2030 bonds in a buyback offer.

"We have bought 91% of global 2012 and 2030 bonds; we have retired 91% of the bonds. It is a success," Viteri said Thursday in a public ceremony in Quito.

Viteri added the auction was "a resounding victory for our people."

According to Viteri, $95.37 million of Global 2012 and $194.40 million of Global 2030 remain in the market and the government will attempt to repurchase those bonds.

Viteri said that the government will re-open its offer to bondholders who didn't participate in the auction, but she didn't give details.

At the ceremony, President Rafael Correa said that the government had spent about $900 million on the bond buyback and had repurchased about $2.9 billion worth of the debt.

The president said that servicing the global bonds deprives Ecuador of resources for development.

"We are very close to declaring Ecuador a country free of illegitimate foreign debt," Correa said. "We are analyzing what actions we should take with other segments of the debt, like bilateral and multilateral debt."

Last November, a government-appointed debt audit commission which analyzed Ecuadorian debt contracted between 1976 and 2006 said that most of the debt were "illegitimate" or "illegal."

The commission said that it found irregularities in various segments of the debt, such as double payments, abusive clauses and signs of negligence on the part of high-level government officials.

The commission said multilateral lenders like the Inter-American Development Bank, the World Bank, and the International Monetary Fund, have shifted loans, breaking their rules to use these loans to pay debt and aid creditors.

However, Viteri said that Ecuador maintains its willingness to keep positive and balanced relations with the international financial community and Ecuador could sit down with multilateral lenders to discuss how to deal with "illegal" debt.

According to Viteri, there are several options for multilateral and bilateral debt.

Ecuador had three overseas bond issues outstanding: $510 million in bonds due 2012, which carry a 12% coupon; $650 million of 9.375% bonds due 2015; and $2.7 billion of 10% bonds due 2030.

Correa, a socialist, said the debt had led to a "generalized bankruptcy for Ecuadorians."

"We are dangerous as we could be a bad example for the rest of the indebted nations," Correa said.

He also said that Ecuador has received international financing of about $2.7 billion from November 2008 to April 2009.

Last December, the government refused to pay the interest on its 2012 and 2030 bonds, contending they are "illegal" and "illegitimate, " based on the report of the debt commission.

On April 20, the government launched a modified Dutch auction for its defaulted bonds.

Correa's administration offered a minimum price of 30 cents on the U.S. dollar to repurchase those global bonds, but on May 26 it announced that had set a price of 35 cents on the dollar.

The government has said that it will continue to pay "normally" the Global 2015 bonds.

The Andean country defaulted on its foreign debt obligations in 1999. In August of 2000, it carried out an exchange of Brady bonds and Eurobonds for new 30-year and 12-year bonds, which involved a 40% haircut for creditors.

Ecuador to sue Colombia over citizen's death

Kirsten Begg, Colombia Reports, 11 June

Ecuador will sue Colombia before the Inter-American Commission on Human Rights (the IACHR) for the death of an Ecuadorean citizen during the Colombian army operation which led to the capture of FARC guerrilla 'Raul Reyes', BBC Mundo reported Thursday.

Ecuador claims that the death of 38 year old Ecuadorean citizen Franklin Aisalla Molina was the result of an extrajudicial execution carried out by the Colombian military.

The Colombian army claims that Reyes fled Colombian territory and into Ecuador to seek refuge in a FARC camp 1.8 kilometers from the Colombian border. They maintain that Aisalla was killed in the bombing of this camp.

However Ecuador's lawsuit maintains that there is forensic evidence that Aisalla died from "numerous blows inflicted with force to the cranium". Ecuador blames these blows on the Colombian armed forces who entered Ecuadorean territory.

Colombia's incursion on Ecuadorean land led to the breakdown of diplomatic relations between the two countries.

The IACHR must evaluate if it will accept the lawsuit or not, which could take up to three years.

BBC Mundo stated that this the first time in the 50 year history of the IACHR --which as a body within the Organization of American States --that one country has attempted to sue another.

Chevron Providing Misleading Information to Shareholders about Failed Remediation

Amazon Defense Coalition

FOR IMMEDIATE RELEASE

2009-06-04

Karen Hinton at 703-798-3109 or karen [at] hintoncommunications.com

Chevron Providing Misleading Information to Shareholders about Failed Remediation

Evidence Shows Oil Giant Continues to Deceive Shareholders

Quito, Ecuador (June 4, 2009) – Battered by negative publicity and shareholder pressure over a potential $27 billion environmental liability in Ecuador, Chevron's legal team is mischaracterizing the scientific evidence in a lawsuit to try to claim billions of gallons of toxic waste it dumped in the Amazon pose no risk to human health, representatives of the Amazon communities charged today.

"Chevron is again distorting the scientific evidence as part of a public campaign to mislead the public and shareholders about material information," said Julio Prieto, a lawyer in Ecuador who represents farmer and indigenous communities that have brought the lawsuit against Chevron.

Texaco (now Chevron) is accused in the lawsuit of dumping 18 billion gallons of toxic-laden waste water into the Amazon and abandoning more than 900 unlined waste pits which continue to leach toxins into fresh water sources and soils. The pollution has decimated the traditional lifestyles of six indigenous groups and caused 1,400 excess deaths from cancer, according to a team of 15 scientific experts assigned by the court to review the evidence in the case.

The 4,000-page expert report found that Chevron could owe up to $27.3 billion in damages, an amount that analysts believe would create solvency problems for the company. A final decision by the court is expected later this year.

Separately, New York Attorney General Andrew Cuomo has launched a probe of Chevron management - done at the request of Chevron shareholders – to determine if the company is putting out misleading information to downplay the Ecuador liability.

On Wednesday, Chevron claimed in a Dow Jones report that results collected during a final series of eight judicial inspections in March of this year demonstrate that a remediation performed in the mid 1990s by Texaco was effective. The assertion - made without any supporting documents – contradicts the evidence in the case as confirmed by independent laboratories and seems bizarre given that only two of the final eight sites inspected had been "remediated" by Texaco.

At the March inspections themselves, oil was visible on the ground and Chevron's lawyers exploded in anger when a court-appointed expert began to take soil samples that clearly contained oil contamination, according to news reports. The evidence from the March inspections has yet to be released officially to the court by a technical expert, so it seems "suspicious" that Chevron is making pronouncements about it, said Prieto. All 94 sites previously inspected as part of the trial, in a process that began in 2004, found extensive levels of toxic contamination at Chevron's former sites. Numerous results were thousands of times higher than Ecuadorian norms that establish when human health is at risk.

For example, Chevron claimed to have remediated a well site called Lago 2 to less than 5,000 parts per million of Total Petroleum Hydrocarbons (TPHs), which measures oil contamination in soils (Ecuadorian law stipulates that TPH contamination cannot be higher than 1,000 ppm). Yet evidence taken in 2006 at the trial found TPHs at the same site at 325,000 ppm, or hundreds of times higher than maximum tolerances under U.S. law and far above what Chevron had certified to Ecuador's government to get the remediation approved.

A similar pattern was found at 100% of Texaco's formerly "remediated" sites, according to the expert court report. Two Chevron lawyers and seven former Ecuadorian government officials are now under indictment for lying about the results of the remediation so the company could obtain a release from government claims.

The Dow Jones report quoted a Chevron press release claiming that all water samples of the region taken by the company during the trial show there is no risk to human health. In fact, roughly nine out of ten water samples taken by scientists for the communities show levels of hydrocarbon contamination that threaten human health, according to the court report.

"Chevron's mischaracterization of the evidence against it in Ecuador is a clear example of insensitivity to human suffering and a failure to comply with the company's legal obligations," said Pablo Fajardo, the lead lawyer in Ecuador for the Amazon communities.

Chevron's purported remediation also covered only 16% of the total number of waste pits that it built, according to the court report.

"It has become a pure money game for Chevron," Fajardo added. "Chevron has decided it is cheaper to let poor people die from cancer than pay for a clean-up, but they are running a major risk because ultimately the liability issue will be decided by the courts."

Chevron's latest mischaracterization of the evidence follows a stunning rebuke last week of Chevron management over growing human rights problems in Ecuador, Burma, and Nigeria. Three stockholder resolutions questioning the company's handling of these problems garnered the support of shareholders holding more than $79 billion in Chevron stock at the company's annual meeting.

It is likely that more than half of Chevron's $133 billion in outstanding shares voted to defy company management on one or more of the three human rights-related shareholder resolutions, said Mitch Anderson, who monitors Chevron's human rights record for Amazon Watch, an environmental group based in San Francisco. Those voting against Chevron's management included some of the nation's largest pension funds, including two from Chevron's home state of California

"Chevron's management is reeling from increased media focus on the Ecuador humanitarian disaster and a general worsening of Chevron's human rights record," Anderson said. "As a result, [Chevron CEO] O'Reilly just suffered a major vote of no confidence from a good portion of his own shareholders."

Ecuador sees no need for OPEC cut as oil rises

By Nelson Bocanegra and Alonso Soto

QUITO, June 9 (Reuters) - Ecuador Oil Minister Germanico Pinto told Reuters on Tuesday he sees no need for an OPEC output cut at the moment as world oil prices recover on the back of an improving economy and past production reductions.

"I don't think it is necessary at the moment," said Pinto, who was named to the top post on Monday. "Prices are higher not only because of an improving economy but also because of the effectiveness of past production cuts."

Oil prices have more than doubled since since February, rising with equities and helped by currency movements as a weaker greenback makes dollar-denominated commodities cheaper.

Oil prices climbed above $69 per barrel on Tuesday as the U.S. dollar retreated.

The Organization of the Petroleum Exporting Countries decided to keep its production unchanged at its last meeting and will gather again in September to analyze market conditions.

Ecuador, the smallest OPEC member, has seen private oil investment fall partly due to the dramatic plunge of oil prices earlier this year and its drive to rework oil deals to increase state control over the key industry.

NEW DEALS

Pinto, a former lawmaker, said his government is moving rapidly to rework oil agreement so the state can keep all the oil that foreign companies produce in exchange of a fee.

Current participation contracts allow companies to keep part of the oil they extract in Ecuador's Amazon jungle.

"We have said that those (companies) that don't want to play by these (new) rules of the game can leave," said Pinto. "But we are willing to sit down with companies to reach agreements."

He said he doesn't expect the upcoming negotiations to hurt investment, adding that there are many countries and companies interested in doing business with the Andean country.

President Rafael Correa, a leftist known for shocking investors, told Pinto on Monday to adopt a tougher line against oil companies. The U.S.-trained economist often threatens investors to get more benefits from them in negotiations.

Since he took office in 2007 Correa has raised taxes and threatened to end contracts if oil companies don't switch to new service deals. His aggressive line has prompted many companies to sue the country in foreign courts and cut investment.

The government has said it expect to ink the new deals later this year.

Ecuador continues exit from ICSID

By Fernando Carbrera Diaz, Investment Treaty News
8 June 2009

Ecuadorian president Rafael Correa announced on May 30 that his country would be denouncing the International Centre for Settlement of Investment Disputes (ICSID), calling the World Bank’s arbitration facility an atrocity and claiming that his government was working on a regional alternative involving the South American Union (UNASUR).

In remarks made on the weekly radio program, ‘Dialogue with the President,’ Correa said withdrawing from ICSID is necessary for “the liberation of our countries because this [ICSID] signifies colonialism, slavery with respect to transnationals, with respect to Washington, with respect to the World Bank and we cannot tolerate this.”

As ITN reported in August 2008, Ecuador’s Oil and Mining Minister at the time, Galo Chiriboga, also questioned the impartiality of ICSID arbitration, at a point when Ecuador faced over US$10 billion in claims at the World Bank’s arbitration facility. Most of the pending claims stem from a 2006 tax on oil company ‘windfall profits’.

Ecuadorians approved a new constitution in September which makes it unconstitutional for the country to submit itself to arbitration outside of Latin America.

Hernán Pérez Loose, a partner at Quito-based Coronel & Pérez Abogados and former Attorney General of Ecuador, maintains that the constitutional change does not affect existing contracts or Bilateral Investment Treaties (BITS), on the grounds that governments cannot use domestic legislation to shield themselves from commitments made under international law.

Ecuador has been working vigorously to renegotiate existing contracts with oil companies. Last year agreements were reached with Andes Petroleum (owned by China’s state oil company) and Brazilian state-owned Petrobras. A source with knowledge of the negotiations tells ITN that in both these cases the renegotiated contracts include arbitration clauses under UNCITRAL Rules administered by the Permanent Court for Arbitration in Chile.

In March, Ecuador also reached an interim deal with Argentinean-Spanish oil company Repsol, under which both sides agreed not to advance their ICSID arbitration pending final negotiations. Repsol has also agreed to begin to pay US$444.7 million owed under the windfall profits tax. A final agreement with the company is expected later this year, and will presumably include regional arbitration.

However, Ecuador has not reached agreements with the oil companies Burlington and Perenco, both of which have initiated ICSID arbitration against the Andean nation.

Ecuador has also denounced 9 BITs, mostly with other developing countries in the region. The Attorney General Diego García Carrión said that these BITs were cancelled because they did not foster foreign investment. Many of these BITs included ICSID arbitration clauses which have now been eliminated.

A government official who wished to remain anonymous tells ITN that Ecuador is currently working on a model BIT that will be used to initiate negotiations with other states on the remaining 17 BITs it is a party to. The Ecuadorean model BIT is also expected to limit dispute settlement to regional arbitration fora.

Ecuador defies provisional measures in dispute with French oil company

By Damon Vis-Dunbar, Investment Treaty News
8 June 2009

An ICSID tribunal authorized provisional measures on May 8th in an effort to stop the Government of Ecuador from seizing assets belong to the French oil company Perenco. Nonetheless, the state-owned Petroecuador attempted a week later to auction 1.4 million barrels of oil confiscated from Perenco, although no bidders stepped forward to purchase the oil.

Ecuador is seeking US$327 million owed under a windfall tax enacted in 2006 (Law 42)—a tax Perenco contests is in violation of its contract with Ecuador and the France-Ecuador bilateral investment treaty.

Perenco’s application for provisional measures was in response to “coercive measures” announced by Ecuador in February, which led to the seizure of oil produced by Perenco a month later. Perenco requested provisional measures to preserve its existing contract with Ecuador, and prevent Ecuador for taking action to collect the payments due under the windfall tax.

In its May 8th decision, the Tribunal granted the provisional measures, having concluded that the seizure of Perenco’s assets risked “crippling” the company’s business in Ecuador.

The tribunal also recommended that Perenco deposit the contested tax payments into an escrow account, which would be released to Ecuador in the case that the tribunal declines jurisdiction, or finds that Ecuador is within its rights to enforce payment of the taxes. Ecuador and Perenco have been given 3 months to agree on terms and conditions for the escrow account.

Tribunal stresses legal consequences of provisional measures

Although ICSID tribunals are empowered to “recommend” rather than “order” provisional measures, the tribunal maintains that ICSID provisional measures carry “legal consequences”. After referring to case law from ICSID, the International Court of Justice, and the European Court of Justice, the tribunal submits that state parties to the ICSID Convention are inherently “under an international obligation to comply with provisional measures issued by an ICSID tribunal”.

However, the repercussions of non-compliance are not provided; the tribunal simply states that it “would have to take a serious view of any failure to comply with its request.”

A tribunal hearing a contract dispute over the oil windfall tax (City Orient v. Ecuador) also issued provisional measures against Ecuador in a 2007 decision. In this case, the tribunal called on Ecuador to refrain from prosecuting representatives of the oil company City Oriente, and to cease demanding payment of the windfall royalty tax. Yet Ecuador’s General Prosecutor proceeded to seek the arrest of several of City Oriente’s Quito-based in employees, despite the provisional measures.

Andean indigenous propose international tribunal for “environmental crimes”

Mercopress, 1 June 2009

Latinamerican indigenous peoples are proposing the creation of an international court to address actions which harm the environment, according to the regional representatives meeting in the Peruvian highlands city of Puno

The tribunal according to the proposal would depend from the United Nations and its members named by countries belonging to the world organization.

Indigenous representatives from Bolivia, Colombia, Ecuador, Peru and Chile drafted the initiative arguing that “aggression” against the environment, by multinational corporations has become one of the most serious problems facing Indian communities.

Among the emblematic cases named is the Peruvian city of La Oroya which, according to international data, has become one of the world’s ten most contaminated mainly because of the mines exploitations by the US Corporation Doe Run.

The coordinator of the meeting Miguel Palacín Quispe from Peru said that the tribunal proposal would be improved in a coming meeting to be held in Bolivia.

Doe Run Peru has operated the La Oroya smelter – which produces lead, zinc, copper, silver and gold, as well as by-products such as sulphuric acid and indium – in the central region of Junin since 1997 and the Cobriza copper mine in the Huancavelica region since 1998.

Doe Run Peru which is the country's fourth largest metals exporter said last week that completing a mandatory environmental cleanup at La Oroya smelter before the October deadline would be "difficult."

When Doe Run Peru bought the smelter in 1997, it was expected to take 10 years to clean up La Oroya but in 2006 the company got a three-year extension, which expires in October 2009.

The company alleges to have already has spent 307 million on remediation and total costs will hit 500 million US dollars.

Ecuador: Correa vows to deepen the citizens' revolution

Duroyan Fertl

Green Left Weekly,
30 May 2009

On May 24, Ecuadorian President Rafael Correa marked national independence day ceremonies with a promise to “radicalise and deepen” the “citizens’ revolution” his government is seeking to lead.

Correa was joined the slopes of the Pichincha volcano, which rises above the capital Quito, by Bolivian President Evo Morales and Venezuelan President Hugo Chavez. The event celebrated the 187th anniversary of the Battle of Pinchincha, when Ecuador won its independence from Spanish rule.

Speaking one month after becoming the first Ecuadorian president to win re-election in 30 years, Correa said Ecuadorians were celebrating “two liberating births”. One was from Spanish rule, and the other through his April 26 election victory on a platform of pro-people economic development.

Correa said the Ecuadorian people had chosen a “profound, rapid and peaceful revolution”. He promised to “deepen and radicalise” the process of change, “now, not tomorrow”.

“We will not change course”, Correa said.

Indicating how far the process of change has to go from the system of domination by corporate interests, Correa said: “Ecuador and Latin America still do not have democracy. At most, we have elections.”

Correa announced that Ecuador would become a full member of the Bolivarian Alternative for the Americas (ALBA). ALBA is a trading bloc promoting pro-people regional integration based on solidarity and cooperation. Its current members are Venezuela, Cuba, Bolivia, Nicaragua, Honduras, Dominica and Saint Vincents and the Grenadines.

He said all Latin American countries “have a common past and our common destiny is unavoidable. The vast majority of Latin American leaders are fighting for Latin American integration.”

On the same weekend, Chavez and Correa signed five bilateral cooperation agreements on oil exploration, tourism, food sovereignty, mining and banking.

Correa said key sectors of the economy, including oil and mining, must be in government hands: “We will fulfil the goal of having strategic sectors in government hands.”

So far, he has shied away from nationalisations.

Correa vowed to “clean up” the press, which he described as a “corrupt instrument of the oligarchy” and the main “enemy of change”. He said his government would conduct a review into the granting of media licences and provide greater legal rights to challenge media assertions.

With Chavez, Correa proposed the creation of a Human Rights and Freedom of Expression Commission in the South American Union of Nations.

Ecuador has also sought to dump much of its sizeable foreign debt, accumulated by previous corrupt governments.

In December, Correa halted payments on US$510 million of its 2012 bonds and, in March, on a further $2.7 billion of 2030 bonds. He said the debts were “illegitimate and illegal”.

Since then, Ecuador has offered to buyback up to $3.2 billion of defaulted bonds for as little as 30 cents in the dollar, an offer lifted to 35 cents.

There are indications this move will be successful in ridding Ecuador of much of its debt.

Correa has also increased the minimum wage and social welfare, introduced new laws on rights for nature and a legal right to drinking water.

However, his government has also come under increasing criticism from environmental and indigenous groups.

There are criticisms of moves such as allowing genetically modified organisms and denying communities a right of veto over potentially harmful mining in indigenous and ecologically vulnerable areas.

These organisations — led by CONAIE, which represents the 40% of Ecuadorian people who are indigenous — have helped overthrow three presidents in the past decade.

As Correa seeks to deepen his “citizens' revolution”, he will need to overcome the rift with the social movements or face deepening discontent.

[Duroyan Fertl edits Ecuador Rising.]

Ecuador requires local banks to repatriate $1.2B

By GABRIELA MOLINA
31 May 2009
Ecuador's private banks will be required to repatriate $1.2 billion in assets they now hold abroad, President Rafael Correa said on Saturday, as low crude prices and a debt default sap cash from the country's flagging economy.

Private banks must now keep more than 45 percent of their assets in Ecuador to draw cash and boost "domestic liquidity" in the oil-dependent country, Correa said.

The central bank ordered the measure into effect late Friday and central bank President Carlos Vallejo planned to announce additional details on Monday.

"The party is over for certain bankers," Correa told his weekly radio show. "We're not going to let them keep taking our money."

Ecuador adopted the U.S. dollar as its currency amid a 2000 economic crisis, making it even easier for local banks to invest cash overseas without risking depreciation. They now have $4 billion invested abroad, Correa said _ a fact he called "economic stupidity."

Ecuador relies on oil exports for about 30 percent of its federal budget, but lower oil prices have slashed a key source of income, contributing to a $1.5 billion budget deficit this year. The country defaulted on $3.2 billion in bonds in December, about a third of its total foreign debt, likely cutting it off from world debt markets just as other fundraising options appear to be dwindling.

Economy Minister Diego Borja has previously asked banks to return funds kept abroad, especially in Panama. He also urged them to boost lending, which banks said has slowed because the global economic crisis dried up deposits.

Correa on Saturday dismissed the notion that Ecuador offers few viable investment opportunities, calling for the creation of a local stock exchange to "efficiently mobilize" resources. He said banks are obligated to find profitable projects within Ecuador and urged the central bank to set an example by investing the country's reserves at home.

"Ecuadorean money, at the service of Ecuadoreans," Correa said.

Ecuador wants billions to not drill in biosphere reserve

QUITO (AFP) — President Rafael Correa on Saturday said that he wants the world to pay Ecuador some 5.2 billion dollars in exchange for not drilling for oil in the Yasuni National Park, a UNESCO world biosphere reserve.

Until now, the government had asked for 350 million dollars a year for not drilling in Yasuni, where there are some 920,000 barrels of untapped crude.

The figure is half of the profits expected from extracting the oil.

However Correa on Saturday changed gears, saying that he wants Ecuador to receive 5.2 billion dollars instead -- taking into consideration the pollution that would be avoided.

According to Correa, the international community should compensate Ecuador for "prevented contamination," maintaining biodiversity and fighting poverty in the area.

"Calculating the tonnes of carbon that we will avoid sending into the atmosphere, because we are not going to drill for oil in Yasuni, we consider that ... we could or should receive close to 5.195 billion dollars," he said.

The oil deposits, located in the Yasuni Biosphere Reserve and National Park, have presented a dilemma for the Correa administration, which on one hand advocates strong ecological policies, but on the other depends on revenue from oil sales and is a member of the Organization of Petroleum Exporting Countries (OPEC).

Yasuni is located 300 kilometers (186 miles) southeast of Quito and is 950,000 hectares (2.3 million acres) large.

Ecuador in 2008 produced on average 506,000 barrels a day.

Ecuador orders banks to repatriate some assets

QUITO, May 30 (Reuters) - Ecuador's government-run central bank has ordered private banks to repatriate $1.2 billion in overseas deposits and investments to help jump-start the economy, leftist President Rafael Correa said on Saturday.

The central bank board imposed a domestic liquidity requirement to force banks to keep at least 45 percent of their assets and investments inside the Andean country.

"This means the party is over for some bankers ... Now banks will have to bring back lots of money they held abroad," Correa, who accuses bankers of funding opposition politicians, said during his weekly media address.

Since winning re-election last month Correa has threatened to take action against private banks that don't bring back deposits held abroad and extend credit to clients as the OPEC-nation struggles to weather the global financial crisis.

Correa, a former economy minister, said financial institutions are holding nearly $4 billion in assets abroad that he says should be invested in Ecuador. He also accuses some banks of slashing their credit portfolios to undermine his leftist government.

He added that repatriated money should go into new credits to boost the economy.

Private bankers have said they are keeping some assets abroad to protect their liquidity amid the economic uncertainty generated by Correa's leftist programs and the global crisis.

Banks also said the government has not fulfilled its part of a deal agreed earlier this year to keep about $1 billion in public-sector deposits in the financial system and inject extra liquidity into banks.

Falling deposits due to the crisis and Ecuador's default on its foreign debt last year have pushed banks to lower credit levels as a way to safeguard liquidity, bankers said.

Ecuador president says will leave arbitration body

By GABRIELA MOLINA

Ecuador's president said Saturday that his country plans to pull out of an international arbitration body that is considering complaints by several oil companies, arguing the process infringes on his country's sovereignty.

The Washington-based International Center for Investment Disputes, with 143 participating countries, helps assure investors that governments will not arbitrarily toss out contracts or confiscate property.

During his weekly radio address, Rafael Correa acknowledged the pullout could risk international legal battles.

He said all active cases "will have to continue" - apparently indicating his government will honor rulings involving several foreign oil companies that are battling Ecuador's efforts to cancel concessions or raise taxes.

The arbitration institute, an affiliate of the World Bank, dealt a setback to Ecuador this month when it told the government to hold off collecting disputed tax money from Paris-based Perenco SA and to avoid canceling the company's contracts until a final ruling is reached.

The government earlier had threatened to seize 70 percent of Perenco's oil production, nearly quadrupling its cut, until it collects enough money to cover a windfall profits tax imposed in 2007.

Los Angeles-based Occidental Petroleum Corp. is challenging Ecuador's cancellation of its contract.

Correa complained that the arbitration judges "can decided that the law of a sovereign country like Ecuador is too strong" and slash penalties "even if it recognizes that the foreign company violated the law."

He said that while international human rights courts require people to exhaust legal options at home before taking their case abroad, the International Center for Investment Disputes gives companies the right to bypass Ecuadorean courts and "bring us to Washington, to a center of arbitration."

"That is inadmissible. That cannot be tolerated even one minute more in a sovereign country."

Ecuador relies on oil exports for 40 percent of its national budget. It has renegotiated energy deals with Spanish oil company Repsol-YPF, China's Andes Petroleum and Brazil's state-run Petrobras SA to boost its share in oil profits by trying to switch to fee-for-service rather than per-barrel contracts.

Ecuador Won’t Sweeten Buyback Offer as Oil Rises, Viteri Says

By Stephan Kueffner

May 28 (Bloomberg) -- Ecuador’s government won’t sweeten its offer to buy back defaulted bonds for 35 cents on the dollar even as the price of oil rises and makes it easier to meet investment targets, Finance Minister Maria Elsa Viteri said.

The buyback could shave about $2 billion off the country’s $10 billion in foreign bonds, Viteri said today in an interview in Guayaquil.

“The potential is pretty obvious for all too see,” Viteri said. “I can’t say what the exact savings will be yet.”

Ecuador made the offer to buy back defaulted bonds with a face value of $3.2 billion on May 26. The government, seeking to pressure bondholders into participating, has said it won’t improve the offer to those creditors who hold out from the buyback.

As oil, the country’s biggest export, tumbled from record highs reached in July 2008, President Rafael Correa halted payments in December of that year on $510 million of 2012 bonds and in March on $2.7 billion of 2030 bonds, saying the securities were “illegitimate” and “illegal.”

Ecuador will shut US base, expand Iran ties

Press TV, 28 May 2009
Ecuadorian Defense Minister Javier Ponce Cevallos says his country is going beyond the Cold War rules and seeking defense ties with Iran.

In a snub to US complaints, Ponce said, "we have our own policies, our own geostrategic positions, and what interests us, with Iran for instance, is boosting information technology and our national defense strategies," he told a radio channel in Ecuador.

He explained that Ecuador is trying to "open up to collaboration with nations that are very willing to help Ecuador develop its own defense industry."

The Ecuadorian and Iranian presidents in 2008 agreed to expand relations by establishing embassies in Tehran and Quito. This comes as the White House has expressed discomfort with Iran's growing influence in Latin America.

Ponce commented on the issue and said that his country plans to shut the US military base at Manta in western Ecuador within four months.

"I believe that eventually there will be nothing left, and the US is removing all its infrastructure," he said.

Despite strong domestic opposition, former Ecuadorian president Jamil Mahuad signed a deal that allowed the US in 1999 to use the base for ten years.

In February, US Defense Secretary Robert Gates said Iran's close alliance with certain Latin American countries has caused more concern for him than Russia's recent naval maneuvers in the region.

"I'm concerned about the level of frankly subversive activity that the Iranians are carrying on in a number of places in Latin America," Robert Gates told a Senate committee, without elaborating on what he meant by “subversive.”

A number of leftist states in the region, namely Venezuela, Cuba, Ecuador, Nicaragua, and Bolivia, have all become allies of Iran in recent years and support Tehran's opposition to the unipolar international order built around US interests.

Gates also accused Iran of “opening a lot of offices” in the region to meddle in the internal affairs of Latin American countries, despite the fact that the US has been meddling in Latin America's internal affairs -- often violently -- for over a century.

By adopting the so-called “Monroe Doctrine” [(named after James Monroe, the fifth US president 1817-1825)], the US has claimed for itself paternalistic oversight in Latin American affairs, in what it considers its 'backyard'. This view is rejected by the new set of democratically-elected, left-leaning governments of that continent which have replaced the US-backed military juntas.

Ecuador May Default on 2015 Bonds, Credit Suisse Says

By Drew Benson

May 27 (Bloomberg) -- Ecuador may halt payments on its $650 million of bonds due in 2015 as the government’s finances deteriorate and the “economic cost” of defaulting on other securities has been low, Credit Suisse Group AG said.

The government said yesterday it paid 35 cents on the dollar to holders of as much as $3.2 billion of its defaulted 2012 and 2030 bonds in a buyback auction. President Rafael Correa stopped payments in December on $510 million of 2012 bonds and in March on $2.7 billion of 2030 bonds, saying the securities were “illegitimate” and “illegal.”

Ecuador, which has been hit by a decline in oil exports, has continued to make interest payments on its 9.375 percent bonds maturing in 2015. The government views that bond’s legality differently than that of its 2012 and 2030 notes, Finance Minister Maria Elsa Viteri said in January. Ecuador’s foreign reserves have tumbled 30 percent since December amid the drop in oil prices. Crude is down 57 percent from a July record.

“The central government fiscal accounts still look very precarious,” New York-based analysts Diego Sasson and Alonso Cervera wrote in a report. “If the reputational and economic cost of the buyback of the defaulted debt has been low, why wouldn’t the government follow the same route with the 2015 bonds?”

Ecuador’s defaulted debt buyback offer will likely be accepted by more than 75 percent of bondholders, Credit Suisse said. Reaching that threshold would allow the government to alter the terms of the defaulted bonds, according to Sasson and Cervera.

‘Government’s Threat’

Investors are selling back their bonds in part because of the “government’s threat” to change the terms of the securities and because of the lack of success that holdout creditors have had in seizing assets from Argentina following its 2001 default, Sasson and Cervera wrote.

Creditors holding $20 billion of the bonds that Argentina defaulted on in 2001 rejected the government’s offer of about 30 cents on the dollar. The holdouts have yet to succeed in winning payment in court as the government has managed to shield its overseas assets from the lawsuits.