Conflict threatens Ecuador’s socialist government

Author: W. T. Whitney Jr.
People's Weekly World Newspaper, 04/10/09 11:50

Ecuador's Pres. Correa, fifth from left, accompanied by supporters in Quito Feb. 4. Patricio Realpe/AP

Prevailing opinion places Ecuador in company with Venezuela and Bolivia as exemplars of “socialism of the 21st century.” The three countries rely upon sub-soil natural resource extraction to fund social programs. Falling oil and natural gas prices have forced their governments to improvise.

They are allies in a war of intrigue emanating from the United States. Venezuela and Bolivia expelled U.S. ambassadors and Ecuador recently ousted CIA station head Mark Sullivan. He is accused of helping both to engineer the deadly March 1, 2008, Colombian Army attack on a FARC encampment inside Ecuador and to doctor computer files found at the attack site to paint a picture of hydra-headed regional terrorism.

Yet Ecuador’s course is different, with special perils and contradictions. A law suit filed March 25 by the indigenous CONAIE federation, for example, claims that a Mining Law passed in January violates provisions of the constitution approved in September. CONAIE’s member organizations represent 90 percent of Ecuador’s indigenous population. Together with social movements, they were instrumental in putting President Rafael Correa in office in January, 2007 with a 56.7 percent majority.

CONAIE alleges that indigenous people were excluded from early discussions of the law, that revisions will be impossible given the Mining Law’s characterization as “organic,” and that the law violates environmental protections written into the constitution. Throughout the 1990s CONAIE struggled for a “multinational” state and fairness in exploiting natural resources.

Responding to the law, thousands of indigenous people and representatives of Ecuador’s environmental movement marched, protested and blocked highways. Splashed on walls in Quito were slogans like “Water is worth more than gold” and “All mining exterminates.” Correa castigated “the infantile left, the infantile pro-indigenous movement, the infantile ecological movement” for holding meetings to push for an uprising opposed to mining,”

In mid-March, Correa’s health minister declared the important group Environmental Action illegal. The government backed down in the face of worldwide protests.

Indigenous groups in Azuay Province in Ecuador’s mineral-rich south filed another claim before the Constitutional Court on March 31 alleging potential environmental abuses under the law and disregard of indigenous land rights. Opposition to the Mining Law intensified on Feb. 25 when a pipeline in Chaco leaked 14,000 barrels of crude oil. Four rivers were contaminated affecting water used by 30,000 people in 47 communities.

At issue are 14 million acres of land representing 20 percent of the nation’s land surface, set aside for industrial mining. Foreign corporations have eyed newly discovered copper, gold and silver deposits. They anticipate concessions in land previously reserved for indigenous use, for natural preserves and parks.

Described as “artisanal,” mining in Ecuador was the province of small businesses, cooperatives and community groups. In April, 2007 the government suspended almost all concessions pending formulation of the Mining Law. Now a legal framework exists for explorations, licensing and royalty payments to the state set at a low 5 percent. Plans are under way for gigantic open pit mines.

Why did the government promote legislation threatening to break up the multinational, people-centered mobilization that brought Correa to power? First, oil production is projected to decline this year by 8.8 million barrels, leaving state coffers $268 million short. Ecuador’s oil and natural gas deposits have waned and the oil industry has decayed.

Second, on top of cuts in state income caused by previous oil price reductions and diminished yield from oil exports, the government recently lost almost $3 billion in income when oil prices fell from $80 to $20 per barrel. The state’s fiscal deficit now exceeds $7 billion, an amount approaching half the spending projected under this year’s budget. Meanwhile capital flight ranges into the billions, while interest rates for state loans rise and liquidity is reduced on state assets.

“This country’s mineral wealth is immense, exceeding $200 billion,” declared Correa. “Are we going to leave it untouched in the name of not running up against a bird or a tree?” Promised social spending is lagging while 56 percent of the population is unemployed or underemployed. Late last year Correa announced Ecuador’s external debt would remain unpaid.

In Ecuador’s version of “socialism of the 21st century,” nationalization of underground resources, as in Venezuela and Bolivia, is apparently not in the cards. Under Ecuador’s new constitution Correa faces an election on April 26. He is favored to win in a landslide.