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Wednesday, January 07, 2009

Ecuador Military To Shed Stakes In Non-"Strategic" Companies

Latin American Herald Tribune
QUITO -- Ecuador's armed forces have begun a process of shedding companies under their control that do not contribute to national security, but they will maintain controlling stakes in those considered to be of "strategic" importance, the press reported Monday.

The military chief, Gen. Ernesto Gonzalez, told El Universo daily that the armed forces have begun a process of divesting or selling off stakes in several of the roughly 30 firms they have established over the past three decades.

That, according to Gonzalez, is due to a constitutional mandate requiring that the armed forces only participate in economic activities related to national security.

Among the businesses now owned by the military are companies dedicated to steel, dairy and clothing production; the exporting of flowers, bananas and shrimp; and the transport of oil to foreign countries.

According to El Universo, the military brass has hired an auditor to assess the value of the armed forces' share packages in several companies, including a hotel in Quito, a vehicle assembly plant, a medical insurance firm, lands for flower cultivation and a steel distributor.

But Gonzalez also said the military's investment in some areas outside of its realm of expertise was justified on "strategic" grounds.

"Support for development is a constitutional mission of the armed forces. The strategic areas are linked to national defense; resources like steel, oil, water should be regulated by the state," he said.

Gonzalez said the military will retain its stake in Omnibus BB, which assembles and markets cars and trucks, because the plan is for the firm to manufacture military vehicles.

"We're going to continue on there because we're thinking about the military industry, making a shift and entering into a strategic partnership for the manufacture of all-terrain military vehicles," he said.

"The important thing is that those resources serve to finance the armed forces' budget" because that means "removing that burden from the government," Gonzalez said.

Yet the defense minister, Javier Ponce, said the goal of President Rafael Correa's leftist government is to bolster the military's stake in companies considered strategic, so that their profits are used to fund the state's budget and "discretionality" in profit distribution is avoided.

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