The people of Ecuador are rising up to refound their country as a pluri-national homeland for all. This inspiring movement, with Ecuador's indigenous peoples at its heart, is part of the revolution spreading across the Americas, laying the groundwork for a new, fairer, world. Ecuador Rising aims to bring news and analysis of events unfolding in Ecuador to english speakers.

Wednesday, May 27, 2009

Ecuador Buyback Participation Likely High; Future Uncertain

By Claudia Assis and Mercedes Alvaro

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Ecuador's clearing price of 35 cents on the dollar for its defaulted global bonds and likely high bondholder participation signal a victory of sorts for the Andean country.

But risk from the way it conducted the repurchase and the price it finagled will likely run far into the future, investors and analysts warn.

Ecuador Tuesday announced a higher clearing price for the Global 2012 and Global 2030 bonds, and set a new deadline for bondholders to resubmit their bids. It had offered a base price of 30 cents on the dollar when it announced the buyback offer, but Tuesday said it would pay a nickel more.

The strategy is to have as few "holdouts" as possible, market participants said. Potential holdouts - investors who don't turn in their bonds and instead want to challenge the default in court - were never able to publicly announce a unified front to fight the default, further strengthening Ecuador's position.

Cost of litigation amid the ongoing credit crisis was an often-cited reason for the lack of bondholder committee. Another key reason an organized front never emerged was that Ecuador is widely believed to have secretly bought between a third and a half of the 2012s and 2030s over the past five months at beaten-down prices in the open market. Government officials have not confirmed or denied the allegations.

The Andean country may have played a good endgame, but it is now virtually shut out of international markets, with lending from regional multilaterals and friendly states such as Venezuela its main remaining creditor options.

"They arguably shot themselves in the foot," said Stuart Culverhouse, chief economist at London's Exotix brokerage. The country's future "in the near term is probably pretty bleak, really," having to contend with its lower oil production, weaker business environment, and an emboldened President Rafael Correa, a self-described socialist who just handily won re-election.

Ecuador will not be able to come back to the market for many years, at least not on "reasonable terms," he added. "The general investor community is furious at what Ecuador has done, I don't think there's any appetite for them for many years, if not for longer."

Ecuador's default is widely viewed as a political decision, as the country spent only a small portion of its revenue servicing its foreign debt.

Finance Minister Maria Elsa Viteri said Tuesday that investor participation on the buyback offer was "excellent," but she declined to be more specific. Viteri also said she doesn't see Ecuador as out of capital markets because it had been "transparent" about its decision to default.

If need arises and for specific projects, Ecuador could ask for help from countries such as China, Canada, Venezuela, Iran and others, the minister added. Viteri also said the country will continue to service its 2015 Global bonds.

The country has indeed shown willingness to continue to service the 2015s, but ability to pay could be another matter down the road, Royal Bank of Scotland debt strategist Siobhan Morden said.

Ecuador's needs for this year are likely taken care of, Morden said, but Ecuador probably tapped out multilateral borrowing for this year. And while other countries would likely cut down on spending, Ecuador has shown no indication of turning thrifty.

Julio Prado, from Quito-based IDE Business School, said it is unlikely that Ecuador will face financial problems in what remains of the year, but its future will depend on whether oil prices continue to drift upward.

Given the country's seizures of private-sector assets in the oil and mining industries and market unfriendly regulatory framework, few believe it will be able to count on investment inflows to keep its external accounts in balance. Internally, the government has limited sources for financing itself.

"In the short term the government won't have financial problems, and if luck continues to help the country with higher oil prices, the government can get easy financing from oil countries such as Venezuela or Iran," Prado said.

If the price falls significantly, however, Ecuador will have serious problems, he warned.

That's because its oil-producing allies will be in similar straits and in no position to lend to Ecuador. Multilateral support will be limited following the tough terms imposed on bondholders, who will be in no hurry to lend Ecuador money anytime soon, several have said. Multilateral money also usually comes with strings attached, being project-specific.

Ecuador Pays 35 Cents for Defaulted Bonds in Buyback

By Stephan Kueffner

May 26 (Bloomberg) -- Ecuador paid 35 cents on the dollar to holders of as much as $3.2 billion of defaulted bonds and gave creditors a second chance to sell back their securities.

The payout is 5 cents more than the minimum price set by the government and the 30-cent payout offered by Argentina in its 2005 debt restructuring. Ecuador didn’t say how many investors participated in the buyback.

The government, seeking to pressure bondholders into participating, said it won’t improve the offer to those creditors who hold out of the buyback auctions. President Rafael Correa halted 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.” A drop in oil exports has sparked a tumble in Ecuador’s reserves.

The repurchase prices “reflect the resources of the republic and are responsive to the majority of the offers received,” Finance Minister Maria Elsa Viteri said in a statement. “The republic will not offer equal or more favourable terms to those being offered to holders of bonds presently.”

Ecuador’s stance is similar to that of Argentina after its 2005 debt settlement. Creditors holding $20 billion of the bonds Argentina defaulted on in 2001 rejected the government’s offer of about 30 cents on the dollar. Then-President Nestor Kirchner pushed legislation through congress that blocks the government from making a second offer to creditors.

“Ecuador will take a hard line in terms of holdouts,” said Igor Arsenin, an emerging-market strategist at Credit Suisse Group in New York.

Bond Prices

The 2012 and 2030 securities rose 2 cents to 33 cents, according to JPMorgan Chase & Co. The bonds, which were sold as part of Ecuador’s 2000 restructuring after its default in 1999, should be trading at the 35-cent clearing price until the auction is completed, said Siobhan Morden, a Latin America debt strategist at RBS Securities Inc. in Greenwich, Connecticut.

The current level may reflect a “blended price” that also takes into account the potential decline in the bonds’ value after the auction is finished, Morden said.

Bond prices may also indicate that investors are unclear about whether bondholders who didn’t submit a bid initially will be allowed to participate in the auction now , said Alberto Bernal, a fixed-income strategist at Bulltick Capital Markets in Miami.

Viteri is scheduled to hold a press conference May 28, Finance Ministry spokesman Victor Carvajal said. The government won’t release further details until that time, he said. Viteri said on May 18 that more than 75 percent of bondholders had participated in the auction.

Default Threats

The government will provide information by June 12 on the amount repurchased at the conclusion of the second buyback offer, Viteri said in the statement.

The completion of the buyback will cap more than two years of default threats by Correa, a 46-year-old economist who earned his PhD at the University of Illinois at Urbana-Champaign. In December 2006, a month after winning a landslide victory, he said he wouldn’t “hesitate” to default on the country’s debt in order to maintain government spending on the poor.

Werner Baer, an economics professor who taught Correa at the University of Illinois at Urbana-Champaign, said his former student is not a “radical.”

“You have to look into really the circumstances, not just cry default without understanding the motivation,” Baer said. “I think he’s been unfairly caricatured as a leftist radical president. Correa was always interested in the poor, in the distribution of income. You don’t have to take an ideological side to see that traditionally income has been very concentrated in most Latin American countries and he was concerned with that.”

Venezuela and Ecuador Deepen Latin American Integration with Bilateral Agreements

Venezuela’s Hugo Chavez and Ecuador’s Rafael Correa in Independencia Square, Quito (Presidencia del Ecuador)

Mérida, May 26th 2009 (Venezuelanalysis.com) - Over the weekend Venezuelan president Hugo Chavez visited President Rafael Correa in Ecuador to review various bilateral agreements. In what was their fifth meeting, the two presidents discussed the creation of a Latin American Human Rights Commission, and also discussed joint oil exploration, food sovereignty, tourism, and mining initiatives.

In a press conference, Chavez and Correa proposed the creation of a Human Rights and Freedom of Expression Commission in the South American Union of Nations (UNASUR) to overcome what Chavez called the "manipulation by United States imperialism" of existing institutions.

The Chavez administration has been very critical of what it says is malicious and politically biased criticism by US-based human rights organisations and the Inter-American Commission on Human Rights of the Organization of American States (OAS).

Correa added that stronger laws are necessary to combat the power of the private media. He said he would propose the creation of legal avenues that would defend citizens against what such media shows.

The presidents also observed the beginning of drilling on the island of Puna in the Gulf of Guayaquil, Ecuador, to search for hydrocarbons. The search is being carried out by Venezuela's state oil company, PDVSA.

According to the Venezuela-Ecuador agreement, if they find hydrocarbons at a depth of less than 3 meters the two countries will create a joint company to extract the fuel. Venezuelan government press stated that the project on Puna Island will also contribute to the improvement of the quality of life of local inhabitants through social development projects, including health and education.

The two presidents also signed a memorandum of understanding to create a system of compensation between their countries as a kind of trade integration treaty to work out the settlement of payment transactions.

The tourism ministers from both countries agreed on a schedule of cooperation which would see their ministries exchanging information about the tourist destinations in each country. They plan to combine these destinations into a tourist trip covering Simon Bolivar's route in the battle for independence. Simon Bolivar is revered as an independence leader in Venezuela, Colombia, Ecuador, Panama, Peru, and Bolivia.

Venezuela and Ecuador also want to deepen agricultural cooperation with specific projects to generate and diffuse food production technology in order to guarantee food security and sovereignty to their peoples.

The two administrations want to help each other's countries to change to sustainable agriculture through the exchange of biological supplies, technical cooperation in producing and processing cacao, education and technology transference.

Further, Chavez and Correa signed a new series of documents for cooperation in production, trade, and increased mutual support for mining infrastructure, as well as the creation of a bi-national fund.

On Sunday Evo Morales, president of Bolivia, joined Correa and Chavez in celebrating 187 years since the Battle of Pichincha. This battle took place on a slope of a volcano next to Quito, Ecuador's capital, and was a key victory in the struggle for Ecuador's independence.

Correa said, "We [Latin American countries] have a common past and our common destiny is unavoidable. The vast majority of Latin American leaders are fighting for this Latin American integration."

Ecuador's Correa: To Audit Media, Root Out 'Corrupt' Press

Monday May 25th, 2009
QUITO -(Dow Jones)- President Rafael Correa said over the weekend that his government will review the licenses granted to media outlets to root out the "corrupt press."
Last year, Ecuador's National Council of Radio and Television, Conartel, started to review licenses for 229 radio and television frequencies and said that some stations could go under state control.
Correa, a close ally of Venezuelan President Hugo Chavez, has come under fire for allegedly trying to curb press freedom.
In his weekly radio address, Correa said that the Ecuadorian media regulator Conartel has found "terrible things" and his government "will correct all the corruption" that has led to the awarding of radio and television frequencies.
Correa said that the government will soon release a Conartel report about the "complete corruption in the concession of frequencies."
He said many frequencies were granted because of influence trafficking.
Later at a joint press conference with Chavez, Correa said that a sector of the press is trying to discredit him.
Correa said that the government will prepare "stronger laws" to punish the "misinformation, bad faith and corruption," even if the costs are high.
Correa also promised to clean up the "corrupt press," which he called an instrument of the oligarchy.
Chavez, who has also been criticized for allegedly curbing press freedom, said Ecuador has Venezuela's support in its internal fight against "this phenomenon, which borders on fascist madness."

Ecuador's Correa, Venezuela's Chávez and Bolivia's Morales to Radicalize Revolutions


In Quito, Ecuador's President Rafael Correa, with Venezuela President Hugo Chavez and Bolivia President Evo Morales, promised to “radicalize and deepen” their revolutions “now, not tomorrow.”

QUITO – Ecuadorian President Rafael Correa, flanked by his Venezuelan and Bolivian counterparts, Hugo Chávez and Evo Morales, respectively, on Sunday commemorated the 187th anniversary of the Battle Pichincha, whereby Ecuador assured its independence, and said that he will take even more radical measures to implement his “citizen’s revolution.”

Correa also reiterated his commitment to Latin American integration.

During the speech he gave at the Templo de la Patria, a huge historical museum built on the slopes of the Pichincha volcano, which rises above Quito, Correa said that Ecuadorians were celebrating “two liberating births,” the first one of which threw off Spanish colonial domination in 1822 and the second of which occurred this past April 26.

The second “birth” he referred to were the general elections in which he was returned to office for another four-year term, a fact that, he said, shows the public’s support for his “citizen’s revolution.”

He said that the Ecuadorian people have opted for “profound, rapid and peaceful revolution,” and he promised to “radicalize and deepen” that revolution “now, not tomorrow.”

“We will radicalize the citizen’s revolution, continuing with the policy of openness to all countries of the world, within a framework of mutual respect, seeking Latin American integration, to continue building this Great Fatherland of which Jose Marti spoke,” Correa said.

He emphasized the visits of Chávez and Morales, the latter of which was unscheduled, to attend the independence day ceremonies, and he paraphrased Latin American liberator Simon Bolivar, saying that “the unity of our peoples is not simply a chimera of men, but the inexorable decree of destiny.”

He said he had been meeting since Saturday with Chávez and reviewing bilateral projects, and he emphasized the advances the two countries had made jointly in the energy sector, noting in particular the project to exchange Ecuadorian crude for Venezuelan petroleum derivatives, an effort he said had saved Quito $252 million over the past two years, as well as the petrochemical complex construction project in Manabi.

He and Chávez both criticized capitalism and insisted that the international financial crisis was the fault of neoliberalism.

It is expected that both Chávez and Morales will return to their countries later on Sunday.

Socialist South American presidents meet in Quito

Monday 25 May 2009
The presidents of Ecuador, Bolivia and Venezuela have held a series of meetings in the Ecuadorian capital Quito. The three socialist presidents Rafael Correa, Evo Morales and Hugo Chávez were in Quito to commemorate the Battle of Pichincha, which heralded the end of Spanish colonisation 183 years ago.

In a speech, Ecuadorian President Correa said that in spite of the victory in 1822, Latin America still did not have real democracy. He announced a socialist revolution and further radicalisation of Ecuador, following the example of Presidents Chávez and Morales. He also made a proposal to UNASUR, the South American cooperation organisation, on behalf of all three presidents to set up a commission to protect governments from the press.

The Ecuadorian president described the press in Ecuador as a corrupt instrument of an oligarchy and as an enemy of change.

Colombian refugees in Ecuador brought `out of invisibility'

As millions fleeing civil strife come to Ecuador, the government is working to fast-track the asylum process for refugees.

Special to The Miami Herald

José Nelo remembers all too well the rainy night three months ago when he fled his home in Colombia, taking with him only his family and a small handbag. Armed men entered their home, murdered his brother and threatened to kill the rest of the family if they did not vacate the town within 48 hours.

''We had no choice but to leave fast. It didn't matter that we didn't know where we would go. They were going to kill us,'' said Nelo, standing on a plank in front of the tiny thatched shack his family has recently made home.

The refugee crises spawned by ongoing conflict in neighboring Colombia has left millions displaced, making the nation second only to Sudan in nations with the most internal refugees. Rural farmers and families are frequently intimidated by guerrilla and paramilitary groups, who send them fleeing amid death threats, forced recruitment, the demand of unaffordable taxes, persecution for political organizing, land seizures and intolerable violence in their villages and towns.

FLOCKING TO ECUADOR

As violence has been pushed south into the jungles near the border, more displaced Colombians have sought refuge in Ecuador, a country known to have open policies concerning asylum. Though the nation claims 22,000 registered refugees, the government and the Office of the U.N. High Commissioner for Refugees (UNHCR) estimate that there is a much larger ''invisible population'' of 135,000 people in need of international protection.

Nelo's family traveled for three days by land and canoe through dense jungle and mangrove tributaries arriving in Pampanal about three months ago. The small community on the northwestern border of Ecuador is within one of the nation's poorest and most neglected regions. Though the family of six shares a cramped one-room home with no potable water, they feel safe in Ecuador.

Refugees have long been making Ecuador home, but families such as the Nelos may have a better chance at integrating into Ecuadoran society than those before them, thanks to a government initiative to speed up the process of recognizing refugees.

The $2 million ''Enhanced Registration'' project takes the asylum process to the field and shortens the waiting period -- from several months to just one day -- for a government decision on refugee status to those seeking asylum.

''It is very important that we bring refugees out of invisibility so that they can get jobs and function legally in society,'' said Alfonso Morales, general director of the department for refugees for Ecuador's Ministry of Foreign Affairs. ``For a long time, they have been vulnerable; without documentation it is very difficult to get legal work and integrate into society.''

While asylum seekers legally have access to public programs, such as health and education, the moment they arrive in Ecuador they are not permitted to work without obtaining a refugee visa. Many find themselves joining the informal sector, where they are enslaved to employers who pay off police to prevent deportation.

IN THE SHADOWS

Some have been making their way in Ecuador for years without documentation, and many have little knowledge about the application process. They enter the country through ''blind spots'' on the border and never receive information about their rights, or know they have rights but are scared or unable to visit a major city to register. Others fear further persecution or deportation, or are simply unaware they may qualify for asylum.

''The Enhanced Registration is revolutionary in that it brings refugee politics to the border, rather than waiting for the people to come to the government,'' said Xavier Orellana, Spokesman for UNHCR in Ecuador.

''I used to feel like a prisoner here. I was afraid to go out because there may have been police checking papers,'' said Martha Montilla, who had been in Ecuador for five years without documentation until recently being granted a refugee visa through the Enhanced Registration. ``Now I can go anywhere and I don't worry that they'll send me back.''

Since mid-March, more than 4,700 people have received a refugee ID from the Ecuadoran government within the framework of the Enhanced Registration, a figure equal to 20 percent of the total refugee population who have been registered since 2000. The project plans to provide documentation to at least 50,000 Colombian refugees over the course of one year.

Concerns have been raised over whether the process is too speedy to be thorough, easing the requirements for asylum and opening the nation's borders to a flood of new migrants.

Morales insists this is not the case.

``This is not a process of migratory amnesty, it is for people who are already here in Ecuador and have rights. We are recognizing these rights.''

Monday, May 25, 2009

South American Leaders Reaffirm Socialist Trinity

Monday May 25th
QUITO, Ecuador (AFP)--The presidents of Ecuador, Bolivia and Venezuela reaffirmed Sunday their commitment to a trilateral socialist alliance as they gathered here to celebrate Quito's anniversary of independence from Spain.
Ecuador's newly reelected leader Rafael Correa vowed in the wake of his poll victory to take further steps to "radicalize" the country's socialist direction, in sync with constitutional reforms championed by his ideological kin, Bolivia's Evo Morales and Venezuela's Hugo Chavez.
"We will not change course," Correa said in a speech marking the victorious 1822 Battle of Pichincha, near present-day Quito, as he reaffirmed his country's commitment to integrating socialism in the region.
"On the contrary, we are going to deepen and radicalize our citizen's revolution, accelerating the process," he said.
Correa also questioned the existence of full democracy in the region.
"Despite being victors, we continue to maintain that Ecuador and Latin America still does not have democracy," he said. "At most, we have elections."
The three leaders boosted trade ties during multiple weekend meetings, with Venezuela and Ecuador on Saturday moving ahead on cooperation agreements in the energy, mining and banking sectors.
As the global economic downturn continues, Chavez also proposed accelerating socialist initiatives, within his country and as a strategic move to cement the leftist direction of South American politics.
"We will not delay, we will speed up the pace," he said, noting that the economic crisis "opens up the way to build a new world."
The ideological overtures came as the leaders called on the newly formed Union of South American Nations, or Unasur, to create a specific body that can defend governments against "press abuses."
At a joint news conference with Chavez on Saturday, Correa promised when he takes on the rotating role of Unasur leader he would seek to battle press corruption that targets the continent's "lawfully elected governments."
With his Venezuelan counterpart's support, Correa vowed to "clean up" the country from a press he described as a "corrupt instrument of the oligarchy" and the main "enemy of change" in both nations.
"Ecuador has the full backing of Venezuela in its internal fight against this phenomenon, which borders on fascist madness that is open, blatant (and) cynical," said Chavez.
For his part Morales concurred with the sentiment but stopped short of publicly backing the proposal of a Unasur mechanism, although he also joined in with lambasting his country's media.
Morales said that he will raise the issue when he soon meets with the Inter American Press Association which defends press freedoms.
The president said he plans to discuss with the IAPA "how much of the Bolivia media are corrupt liars."
On Sunday, Morales also proposed that people suspected of acts of secession or treason in Bolivia are tried by military justice "because they are traitors of the motherland."
In recent months, Morales, who joins Correa and Chavez as having tense relations with the United States, has accused Washington of conspiring with his opponents to incite violence in Bolivia, and even accused it of having a hand in an assassination plot against him.

Correa, Chávez and Morales to Radicalize Revolution

LAHT, May 24, 2009

QUITO – Ecuadorian President Rafael Correa, flanked by his Venezuelan and Bolivian counterparts, Hugo Chávez and Evo Morales, respectively, on Sunday commemorated the 187th anniversary of the Battle Pichincha, whereby Ecuador assured its independence, and said that he will take even more radical measures to implement his “citizen’s revolution.”

Correa also reiterated his commitment to Latin American integration.

During the speech he gave at the Templo de la Patria, a huge historical museum built on the slopes of the Pichincha volcano, which rises above Quito, Correa said that Ecuadorians were celebrating “two liberating births,” the first one of which threw off Spanish colonial domination in 1822 and the second of which occurred this past April 26.

The second “birth” he referred to were the general elections in which he was returned to office for another four-year term, a fact that, he said, shows the public’s support for his “citizen’s revolution.”

He said that the Ecuadorian people have opted for “profound, rapid and peaceful revolution,” and he promised to “radicalize and deepen” that revolution “now, not tomorrow.”

“We will radicalize the citizen’s revolution, continuing with the policy of openness to all countries of the world, within a framework of mutual respect, seeking Latin American integration, to continue building this Great Fatherland of which Jose Marti spoke,” Correa said.

He emphasized the visits of Chávez and Morales, the latter of which was unscheduled, to attend the independence day ceremonies, and he paraphrased Latin American liberator Simon Bolivar, saying that “the unity of our peoples is not simply a chimera of men, but the inexorable decree of destiny.”

He said he had been meeting since Saturday with Chávez and reviewing bilateral projects, and he emphasized the advances the two countries had made jointly in the energy sector, noting in particular the project to exchange Ecuadorian crude for Venezuelan petroleum derivatives, an effort he said had saved Quito $252 million over the past two years, as well as the petrochemical complex construction project in Manabi.

He and Chávez both criticized capitalism and insisted that the international financial crisis was the fault of neoliberalism.

It is expected that both Chávez and Morales will return to their countries later on Sunday.

Ecuador, Venezuela Reinforce Ties

Quito, May 24 (Prensa Latina) Ecuador and Venezuela have reinforced bilateral ties after signing five cooperation agreements on energy, mining, tourism, agriculture and banking, Ecuadorian President Rafael Correa confirmed.

With these agreements, Liberator Simon Bolivar's dream of working on the construction of a large homeland comes true, Correa noted last evening after attending the signature ceremony along with Venezuelan President Hugo Chavez.

In a press briefing with Chavez, Correa said that since the first oil agreement with Venezuela in 2007, Ecuador has managed to save $252 million in oil costs.

Correa announced construction works for a $10-billion oil refinery on Ecuador's Pacific coast by Petroleos de Venezuela (PDVSA) will begin in 2010.

He also said Ecuador is planning to become a full member of the Bolivarian Alternative for the Americas (ALBA), an integration initiative so far comprising Venezuela, Cuba, Bolivia, Nicaragua, Dominica and Honduras.

Ecuador has been attending ALBA meetings as an observer.

President Correa added said that the accords signed with Venezuela confirm achievements made by his government's foreign policy.

Ecuador says mining, oil must be in state hands

QUITO (Reuters) May 24 - Ecuador's President Rafael Correa said Saturday that key sectors of the economy, including oil and mines, must be in government hands.

During his first two years in office Correa has taken a tough stand with mining and oil companies, pushing for new contracts more favorable to the state, but has so far shied away from nationalizing any firms.

"We will fulfill the goal of having strategic sectors in government hands," Correa said.

The U.S.-educated economist has recently said he will not nationalize foreign oil companies, but will push for more state control in the key industry via new contracts.

During a joint news conference with his Ecuadorean counterpart, Venezuelan President Hugo Chavez said his drive to nationalize strategic sectors of his own country's economy would continue.

Many sectors of Venezuela's economy, including energy and telecommunications, have passed into state hands since Chavez took office 10 years ago. In recent weeks he has nationalized oil service companies and iron producers.

Chavez also said that Venezuela and Brazil were in talks to create a joint fund worth billions of dollars. It is likely it would be for infrastructure investment.

"One of the subjects we will discuss is the creation of a joint strategic fund ... worth billions of dollars," said Chavez, adding the fund will have funds from the Brazilian Development Bank, BNDES. He said he will meet with Brazilian President Luiz Inacio Lula da Silva next week.

He said earlier his country and Ecuador had signed a deal for a joint fund for investment in energy projects.

Ecuador planned to control oil and mines

President Chavez (L) and his counterpart Correa in a news conference in Quito
May 24 - The Ecuadorian government has planned to control main sectors of the economy, including oil and mines, says President Rafael Correa.

"We will fulfill the goal of having strategic sectors in government hands," Correa was quoted as saying by Reuters.

The Ecuadorian president pushed for new mining and oil contracts more favorable to the state during his first two years in office.

However, he refused to nationalize any companies unlike his Venezuelan counterpart Hugo Chavez.

In recent weeks, the Venezuelan leader has nationalized oil service companies and iron producers.

During a joint press conference with Correa on Saturday, Chavez said his drive to nationalize strategic sectors of his own country's economy would continue.

Correa, however, has recently said he will not nationalize foreign oil companies, but will push for more state control in the key industry via new contracts.

Ecuador's Correa says to fight media corruption

QUITO (Reuters) - Ecuador's government plans to crack down on media companies that used corruption to get state-issued radio and television concessions, President Rafael Correa said on Saturday.

The announcement by the leftist Ecuadorean leader came amid fears a probe into radio and television frequencies could be used to punish his critics. Correa has clashed with the media, accusing some of favoring the opposition and business groups.

"Even if the costs are high we will correct all this corruption that has led to the awarding of radio and television frequencies," Correa said during his weekly media address.

"Be ready, because this fight against corruption... will be called an attempt against freedom of speech," he said.

Ecuador's national assembly, dominated by Correa's party, ordered the probe into media frequencies last year. Government officials have said the state could remove concessions awarded to private companies if corruption is proven.

Correa, who has vowed to push more radical socialist policies since his April re-election, said the probe was aimed at media who made a business out of selling frequencies and used political influence to get government concessions.

He added that it would not target political opponents or infringe on press freedoms.

But there are concerns that Correa may follow in the footsteps of his leftist ally, Venezuelan President Hugo Chavez, who threatened this week to close a top anti-government television station for fomenting civil unrest.

Ecuadorean media regulators are investigating Teleamazonas, a private broadcaster often critical of Correa's government, for reporting opposition charges of vote fraud in the April 26 general election.

The station broadcast live shots of opposition politicians storming a computer data company they said was manipulating electoral results. It could be fined or its license temporarily suspended if found guilty of violating the media law.

Amazonian Leaders from Ecuador Arriving for Showdown with Chevron at Annual General Meeting

AMAZON WATCH

FOR IMMEDIATE RELEASE – MEDIA ADVISORY 2009-05-22

Kevin Koenig, Amazon Watch - 415-726-4607 - Kevin@amazonwatch.org
Karen Hinton, Amazon Defense Coalition - 703-798-3109 - karen@hintoncommunications.com

Amazonian Leaders from Ecuador Arriving for Showdown with Chevron at Annual General Meeting

With Record Court Judgment Looming, Goldman Prize Winner and Cofán Indigenous Leader to Confront Chevron CEO

Major Public Pension Funds in California & New York Lining up Against Chevron Management on Ecuador Resolution

(For interviews, contact Kevin Koenig, Amazon Watch, 415-726-4607)

When: Wednesday, May 27 at 08:30 a.m.

Where: Chevron Headquarters - 6001 Bollinger Canyon Road, San Ramon, California 94583

What: Representatives of indigenous and farming communities from Ecuador's Amazon will be present to bring their 15 year battle for justice to Chevron's doorstep. They will address CEO David O'Reilly before shareholders. There will be an accompanying protest by a large coalition of human rights and environmental organizations outside the building.

Who: Luis Yanza, winner of the 2008 Goldman Environmental Prize, and Emergildo Criollo, a leader of the Cofán indigenous people who were decimated by oil operations on their territory. Both will be in San Francisco from May 25 to May 27 and are available for interviews by contacting Kevin Koenig at: 415-726-4607

BACKGROUND: Chevron faces a multi-billion dollar judgment in a historic lawsuit in which a decision is expected later this year. The lawsuit, which was filed in New York in 1993 and is now in trial in Ecuador at Chevron's request, is believed to be the largest environmental case in history. Yanza and Criollo represent 30,000 rainforest plaintiffs who accuse the company of environmental damage while Texaco, acquired by Chevron in 2001, was the exclusive operator of a large oil concession in the rainforest between 1964 and 1990. During that time, Texaco utilized substandard operational practices that deliberately dumped over 18 billion gallons of toxic waste water into Amazon waterways and abandoned approximately 1,000 open waste pits that continue to contaminate drinking water to this day.

This year's shareholder meeting is rapidly becoming an indictment of how Chevron management is handling the case. Several major public pension funds from California, New York, New York City and Philadelphia, among others, are supporting a resolution on the Ecuador issue that asks Chevron's management to assess whether Chevron is complying with host country laws relating to environmental protection. Shareholders also have expressed concern over senior management's failure to adequately disclose the risk of any potential adverse judgment in the case. New York State Attorney General Andrew Cuomo has opened a probe of Chevron to determine if it is misleading shareholders.

Yanza and Criollo are featured in the acclaimed documentary film "Crude" by award winning filmmaker Joe Berlinger, slated for theatrical release in September. The legal battle was featured this month on the CBS program "60 Minutes" and has been the subject of recent coverage in the Wall Street Journal, The New York Times, The Washington Post, and National Public Radio.

Luis Yanza grew up in the Amazon rainforest where he witnessed the oil industry's devastating impact on the environment. He founded the Amazon Defense Coalition in 1994 and has been at the forefront of the effort by more than 80 rainforest communities to hold Chevron accountable. Emergildo Criollo was just a young child when he first encountered Texaco workers on Cofán lands. He later lost two children who he believes died from ingesting toxins relating to oil contamination.
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For more information:
http://www.chevrontoxico.com

Chevron Management Dealt Major Blow With CalPERS Announcement On Ecuador

Amazon Defense Coalition

FOR IMMEDIATE RELEASE 2009-05-21

Karen Hinton (703) 798-3109;
Karen@hintoncommunications.com

Chevron Management Dealt Major Blow With CalPERS Announcement On Ecuador

California Pension Fund Voting for Resolution Stemming From Chevron's $27 Billion Ecuador Liability in Rainforest

Pressure Grows as Funds from Connecticut, Philadelphia, Detroit Defy Recommendation of Chevron Management

San Francisco, CA (May 21, 2009) – Chevron is facing a shareholder rebuke at its annual meeting next week over the company's $27 billion Ecuador liability with the announcement that the nation's largest public pension fund in California is defying the recommendation of company management and voting for a resolution on the issue.

CalPERS, which owns an estimated $600 million of Chevron stock and controls $170 billion in assets, announced on its website today that it will vote for a resolution calling on Chevron to examine whether it complies with host country laws and environmental regulations. Chevron has been heavily criticized for violating such laws in Ecuador, leading to a humanitarian crisis among indigenous and farmer communities in an area of rainforest where Texaco admitted to dumping billions of gallons of toxic waste from the mid-1960s to the early 1990s.

New York State Attorney General Andrew Cuomo has also opened an investigation of Chevron to determine if it is misleading shareholders about the financial risks the company faces in Ecuador.

"The CalPERS vote is a significant announcement that puts enormous pressure on Chevron's management in the investor community," said Dan Orlow, a private American investor who is advising the Amazonian communities. "It demonstrates that important pension funds are now lining up against Chevron on Ecuador."

CalPERS and the two New York funds – the state's Common Retirement Fund and the Employees Retirement System of New York City – are three of the largest public pension funds in the U.S. and together control more than $1 billion of Chevron stock. Other public pension funds that have announced their support of the resolution include those of Connecticut, Pennsylvania, Maryland, and the pension funds of firefighters and police in Detroit and other large cities.

Funds from three large unions – the AFL-CIO, Teamsters, and AFSCME – have announced their support of the resolution along with several smaller private funds, such as Trillium Asset Management in Boston.

The Ecuador liability was featured earlier this month on 60 Minutes in an unflattering report for Chevron. Thousands of rainforest residents have been fighting a legal battle against the company for clean-up of their lands since 1993.

The case is in Ecuador at Chevron's request after it was initially filed by the communities in U.S. federal court. The company agreed to be subject to jurisdiction and be bound by any ruling in Ecuador as a condition of the case being transferred out of U.S. court, which makes the enforceability of a judgment out of Ecuador likely despite what the company is saying to shareholders, said Steven R. Donziger, an American legal advisor to the Amazonian communities.

The liability appears to be the largest ever faced by an oil company for environmental damage, and almost surpasses the $31 billion price tag paid by Chevron to purchase Texaco in 2001. Chevron's management has announced it expects an adverse judgment in the case but has said it would appeal, while the plaintiffs have announced they plan to ask the court to hold the amount of any judgment in escrow pending appeals – a move that could severely hinder the company's cash position in a time of relatively low oil prices, according to analysts.

Previously, the Securities and Exchange Commission denied an attempt by Chevron management to prevent the Ecuador resolution from coming to a vote.

The announcement by CalPERS comes the same week that Chevron's management filed with the SEC an open letter to shareholders urging them to vote against the Ecuador resolution. That letter – signed by Chevron Corporate Secretary Lydia I. Beebe – contains incorrect and misleading information and appeared to backfire, said Donziger.

"Each assertion in the Beebe letter is either false, materially misleading, or incomplete except for the part where the company admits it might lose the legal case," said Donziger.

"Our team is being contacted repeatedly by shareholders and analysts who are concerned that Chevron management is not fully and honestly disclosing the company's exposure in Ecuador," said Orlow. "There is a real concern that Chevron is not playing it straight and that it might have overpaid for Texaco."

The Cuomo investigation is being brought under New York's Martin Act, which allows for both civil and criminal liability for fraud. Several New York-based shareholders, including Amnesty International, had requested the probe to determine if the company's public disclosures complied with securities regulations.

The annual meeting is scheduled for May 27 at Chevron headquarters in San Ramon, CA. Indigenous leaders from Ecuador's Amazon are expected to attend and confront Chevron's management about Ecuador.

"In past annual meetings, Chevron CEO David O'Reilly occasionally has treated the Ecuadorian visitors with a discourteous tone and shut down the microphone when they attempted to speak," said Donziger.

Ecuador's Future for Canadian Transnationals: An Exchange of Indigenous Perspectives

Written by Jennifer Moore for Upside Down World
Wednesday, 20 May 2009

“The sorrows are ours; the cows are not.”

Translation of a lyric written by Atahualpa Yupanqui (born Hector Roberto Chavero; died 1992), an Argentinian Communist exiled to Paris and who lived out his life there. The original Spanish is “las penas son de nosotros, las vaquitas son ajenas.”

Image“Welcome to the future,” says the sign behind the gated area where Vancouver-based Corriente Resources is developing an open-pit copper mine in Ecuador's Southern Amazon. Bumping along in the back of a pick-up truck on her way to visit one of several communities slated to be displaced by the project, the idea that the future is fenced off with restricted entry for local communities that have lived on the land for years, even generations, hit home for Anne Marie Sam.

From the Nak'azdli First Nation in central British Colombia, Sam is one of two indigenous representatives who visited communities affected by Canadian-financed mining activities in Ecuador earlier this month. “We don't even want Canadian companies in our territory, so we don't blame Ecuadorians for not wanting them here either.” The Nak'azdli Nation opposes a proposed gold and copper mine on their territory that they have determined “would not strengthen them as a community” which includes about 1,700 members.

The trip was a critical response to President Rafael Correa's recent invitation to the Canadian Embassy to help delegitimate the position of various indigenous leaders who are critical of his mining policy. The Embassy is still responding and will soon host a second delegation of indigenous leaders. This most recent visit was coordinated by the Quito-based Pachamama Foundation in cooperation with the Confederation of Indigenous Nationalities of Ecuador (CONAIE).

The CONAIE has criticized Correa for continuing with World Bank-backed policies to substitute the country's dwindling oil reserves with metal extraction. Ecuador has been an oil producer for more than forty years, but no large scale mining project has yet entered production here. The CONAIE is worried about possible impacts on both water and local livelihoods. They further argue that indigenous peoples and other affected communities should have the right to consent over what projects take place on their lands or territories. A position substantiated by international law.

However, Correa is unequivocally opposed to local communities having “a veto” over what he sees as a matter of national interest. He calls his critics “infantile environmentalists” and the “greatest threat” to his political project.

Coming from Canada - the world's principal source of financing for global mining activities – Robert Lovelace, a leader from the Ardoch Algonquin First Nation in Eastern Ontario, says his experiences in the Andean nation reveal that indigenous communities in both countries “share a heck of a lot in common.” Not only does Canada have its share of environmental disasters from extractive industry and not uphold the right to consent for indigenous communities, it also lags behind Ecuador for not having ratified international conventions that recognize these rights including the American Convention on Human Rights, Convention 169 of the International Labour Organization and the UN Declaration on the Rights of Indigenous Peoples.

“We need to see much more of each other and we need to compare notes,” Lovelace says. An ongoing relationship, he believes, could be mutually beneficial. “When people in Ecuador stand strong,” he says, “it also helps us because it tells the mining companies that nobody is going to take the stuff that they've been giving out regardless of where they are.”

Canada's Glowing Reputation

While Correa hopes that indigenous leaders invited by the Canadian Embassy will drown out the CONAIE's criticisms, the recent visit by Sam and Lovelace revealed that Canada's story is not as harmonious as Correa would lead Ecuadorians to believe.

“[Canada] has understood how to respect and benefit its ancestral peoples,” said Correa during a national radio address. The first people to benefit in Canada from mining, he added, “are the ancestral peoples.”

But Lovelace, speaking during two events in Quito which included members of Ecuador's Constitutional Court, the Ministry of Mines and Petroleum and an international group of lawyers, called Canadian mining a “two fold problem: for us and the rest of the world.” He insisted that within Canada it has to be seen within the context of colonialism and poor regulation.

The firm but soft-spoken leader explained that indigenous peoples are the most impoverished group in Canada, with high rates of suicide particularly for those who have lost their traditional ways of life, and that they have suffered official attempts to destroy their social and cultural fabric leading to rampant addictions and many broken homes. This, he explained, is a cost of the extractive and commercial mindset with which Canada was founded and continues to operate.

Lovelace has been opposing a proposed uranium mine on Ardoch territory, and shared his experience about how his community was sued for $77 million dollars by Frontenac Ventures and about his three and a half months in jail as a result of efforts to prevent mining activities on their lands.1 Radioactive contamination of lakes and rivers from uranium mining, occupational health hazards, and the uses of uranium for nuclear energy and arms are a few reasons why they do not support the mine.

Speaking to the national press, he added that the proliferation of Canadian mining companies can be explained by the fact that “we don't have tough rules” and have poor infrastructure to enforce the rules that we do have. The Toronto Stock Exchange (TSX) lists almost 60% of mining companies worldwide with over 1,400 projects in Latin America and more than 8,000 around the globe.2

He thinks stronger regulation, backed up by good monitoring and enforcement, should be “the cost of doing business for companies that are invited into other countries and invited onto indigenous land, as a bare minimum. Canada has to acknowledge that and do that because it is immoral not to.” The United Nations Committee on the Elimination of Racial Discrimination (CERD) has also urged Canada to develop such legislation.

But Canada has been reticent. It took the government four years to respond to parliamentary recommendations to strengthen its mining legislation for extractive industry abroad, and its recent decision reinforces voluntary guidelines rather than tightening regulations.

Interestingly, Ecuadorians from the northwestern valley of Intag recently launched a lawsuit against the TSX with the objective that the case will help lead to stronger regulations in Canada. Inteños have broadly opposed open-pit copper mining for over twelve years, but this has not stopped current project owner Copper Mesa Mining (formerly Ascendant Copper) from trying to use forceful means to try to reach its concessions. The TSX was warned before the company was listed that further financing could lead to human rights violations and violence in the valley.3

ImageThe Environment, an Afterthought

However, Correa would have Ecuadorians believe that TSX-listed companies who are irresponsible, well, they are simply not Canadian. “Be careful!” he has warned on national radio. “There are some companies that try to pass themselves off as Canadian because they trade on the Canadian stock market, but they're not Canadian. Canada has strict, very strict, environmental requirements.”

But the Canadian public does not even know how much pollution mining operations have generated.

Only several weeks ago, the Federal Court released a “strongly worded decision” ordering the Canadian government to “stop withholding data on one of Canada's largest sources of pollution - millions of tonnes of toxic mine tailings and waste rock from mining operations throughout the country.”4 Indicating the strength of Canada's mining lobby, it has taken sixteen years since the National Pollutant Release Inventory was created for the sector to be held to the same reporting requirements as every other industrial sector.

When Anne Marie hears a question translated for her from an audience in Quito: “Mining companies say that their projects will be clean, that they won't have serious enviromental impacts, what do you think?” she laughs at the coincidence. “We hear the same thing,” she remarks. “But the question isn't whether a company will contaminate our water, it's when.”

Given the industry's track record in her home province, Anne Marie's nation has not been swayed by company promises that environmental impacts will be mitigated. A recent press release from the Nak'azdli Nation states, “There are close to 2,000 abandoned or closed mines in BC and two third of them are still polluting the land and water.”5

So, when the Nak'azdli First Nation was approached by Terrane Metals to develop a gold and copper mine on their lands at the headwaters of the Peace River watershed, they did not jump at the opportunity for an agreement with the company. They did, however, take the chance to do some of their own investigations and accepted the company's offer of $150,000 CDN without promising any further agreement.

Anne Marie was appointed to study the issue.

“Our elders advised us not to focus just on the economic aspect, but to also seriously consider the social and cultural implications,” she said.

With the company funds, they hired their own experts and examined the social, cultural, economic, environmental and legal ramifications of the project put together in what she calls an “Aboriginal Interest and Use Study.”

They concluded that they could not support the project. Even when they hit a period during which many of their members were without work, they determined that the kinds of jobs they could qualify for based upon their education and experience – cleaning, cooking and construction – did not outweigh the impacts.

Their disapproval has not stopped the company from seeking other nearby First Nation communities that would accept the project. Nor did it stop the provincial government from recently approving the company's Environmental Assessment despite not having consulted the Nak'azdli Nation. However, it has been a key tool in their resistance.

It is a challenge because “time is not on the side of First Nations when it comes to a mining project. It's always the timeline of the company.” But, she laughs, thinking about the time it took to read through the 6,000 page environmental assessment that the company provided and in which they found many weaknesses, “if I didn't read [the study], I wouldn't be able to tell you this story.” Education and communication, she says, “are key.”

ImageSorrow is Ours, the Cows are Not

The newly elected Prefect of Ecuador's southernmost Amazonian province, Salvador Quishpe, welcomed the Canadian delegation to their final event in El Pangui. The Condor Mountain Range stretches along the eastern horizon of this steamy jungle town situated near some of the most contentious mining developments in the country.

Whereas Bob Lovelace contextualizes Canadian mining in terms of colonialism, Quishpe frames Ecuadorian mining around twenty five years of neoliberalism that he says continues despite Correa's slogan “Our patrimony belongs to all.” He jokes for a moment: “the Canadians came along and said, “Belongs to all, eh?” “Hey, that's good, then that includes us too!”

Quishpe reminded the 400-strong crowd that UNESCO has declared part of the Condor Mountains a World Bioreserve which has over 48 distinct ecosystems and is one of the highest priority areas for scientific research in the neotropics. He also reminded the audience that vast stretches have been claimed for mining exploration and that the principal concession holders are Vancouver-based Corriente Resources and Toronto's Kinross Gold.

He observes that the industry's principal proponents - the Ecuadorian representatives of Canadian transnationals - are in large part former officials from the Ministry of Mines and Petroleum. So, he remarks, the same people who helped institute the neoliberal framework for mining in the 1990s are now sitting on top of some of the best deposits of gold and copper. “It is ultimately the companies, not the government, who makes mining policy in this country,” he concludes. “And while it's a mortal sin to say it,” he continues, “mining should be nationalized.”

Having recently been called “an enemy of the government” and a “dumb leftist” by Correa, Quishpe adds, “We are not against development.” Rather, he emphasizes, his province needs proper planning with strong participation. He proposes at least one industry – tourism - that he plans to promote during his upcoming term in local office. “We want development for the well-being of our peoples, not so-called development by which a transnational company takes away our riches for itself.”

Sam has a similar comment. “Our community has always said, we're not against development. But we need to have a say in what development happens in our area and where, and right now we're not being given that opportunity.”

The Waterkeepers

As the event wraps up, Anne Marie hands Salvador a card. She explains that the image of a red and green frog was drawn by an artist from her community. The frog represents the waterkeepers, she says, and Salvador is a water defender just like she and the rest of her clan from the Nak'azdli First Nation.

“Coming here has opened my eyes to how connected we are,” says Sam reflecting on the visit shortly later, “and how similar the fight we have to protect the land and the connection [we have with the land] whether indigenous or not.” She thinks about El Pangui's struggle at the headwaters of the Amazon, and recalls her own at the headwaters of the Arctic. “What we need,” she says, “is a stronger role for indigenous people that is not after the fact or after claims are made on the land.”

In British Colombia, she says they are using new technology that enables helicopters to identify and take images of what minerals are in the ground just by flying over their territories. “Instead of this information going direct to the internet so that people can begin staking claims,” she says, “the information should go to First Nations first. And then we can decide if we want to do small scale mining, or if we want to do something else because open pits are not a nice site to look at and a recreational lake in an open pit (which is what the Terrane Metals promises to leave behind in her territory) isn't an ideal situation for us.”

Robert Lovelace also believes that a much more meaningful participation is necessary. He describes it as a spectrum that usually begins with information sessions or token consultations. “Consultation,” he explains, “is still a form of tokenism because to consult with someone does not mean that you're going to agree with them or even take their advice into account especially when there's a power differential, whether based on capital or politics.”

“But when the values of each of the parties are truly recognized,” he says “and we look at consensual partnerships where both parties are able to give consent, then if one party can't give consent, a project or development doesn't go ahead. But that's honest partnership.”

“As long as the power of First Nations are recognized then they may assign their authority to a corporation or a level of government in order to facilitate something happening. But that's their choice, they're not being forced or imposed upon to do that. The last stage is true self-governance. That's having full authority to choose to move forward with development or not, or to choose another future altogether.”

While it has yet to be seen what the Canadian Embassy's upcoming delegation will share with Ecuadorian's, it will most definitely get broader coverage from the Ecuadorian press. As well, one can be almost sure that free, prior, and informed consent; recognition of the inherent rights of indigenous peoples; and the possibility of different futures other than the Canadian-owned, open-pit and underground mines envisioned for El Pangui, Yantzaza, Intag, Victoria del Portete, Molleturo, Ponce Enriquez, and many other parts of Ecuador will not be up for discussion.

Notes:

1. For further detail see: Justin Podur, “Canada's latest political prisoners” http://www.zcommunications.org/znet/viewArticle/17019
2. 2007 figures based upon the Toronto Stock Exchange's Mining Presentation
3. For more information see http://www.ramirezversuscoppermesa.com/index.html
4. Press release “Court victory forces Canada to report pollution data for mines” available at http://www.commondreams.org/newswire/2009/04/24-0
5. Press release “Proposed BC mines cannot proceed without Nak'azdli First Nation” available at http://www.rightsaction.org/articles/Nakazdli_abuse_031909.html

Ecuador, Chevron and pollution - Justice or extortion?

May 21st 2009 | LAGO AGRIO
From The Economist print edition

The hounding of an American oil company

Reuters The gunk that unleashed the dogs of law

HIDDEN behind a row of trees and a rusted barbed-wire fence on a rutted dirt road in the Ecuadorean jungle, Shushufindi 61, a pit in which oil waste is dumped, is hardly a beauty spot. But it has attracted a string of visitors ranging from Hollywood actresses to Ecuador’s president, Rafael Correa, and managers from Chevron, an American oil company. It is one of several hundred such pits that are at the centre of a long-running legal wrangle between Ecuadorean and American activists and Chevron. For the activists, the case shows that oil companies are nowadays held accountable for their actions in developing countries. For Chevron’s supporters, the case amounts to an attempt at judicial extortion that throws doubt on whether multinational oil companies can ever get a fair deal in parts of Latin America today.

At issue is waste dumped by Texaco (bought by Chevron in 2001) as long ago as the 1960s in the region around Lago Agrio in the Ecuadorean jungle. From 1977 onwards, Ecuador’s state-owned oil company (now called Petroecuador) took a 62.5% stake in the field, though Texaco continued to operate it. In 1992 Petroecuador took over the whole operation and Texaco withdrew from Ecuador.

In a suit first filed in a New York court in 1993, lawyers representing 30,000 people in the Lago Agrio area argued that billons of gallons of waste dumped by Texaco in several hundred pits such as Shushufindi 61 caused damage to human health as well as to the jungle. They also argued that the oil company should compensate Indian people for their forced displacement. American judges ruled three times that they had no jurisdiction over the matter.

But as a result of the publicity generated by the cases, Texaco agreed with the Ecuadorean government that it would clean up 161 pits, or its share of the total, at a cost of $40m. The work was done by 1998 and the government signed an agreement releasing Texaco from any further liability. Petroecuador was supposed to clean up the rest of the pits, but didn’t do so, partly because it continues to use some of them (including Shushufindi 61).

Meanwhile Ecuador enacted an environmental law, something it had previously lacked. This is not retroactive. Nevertheless the plaintiffs filed a claim against Chevron under this law in 2003 in a court in Lago Agrio. They sought $6 billion in damages. Last year a court-appointed expert, Ricardo Cabrera, filed a 4,000-page report arguing that Chevron was liable for no less than $27.3 billion in damages. Of this $9.5 billion is compensation for 1,400 deaths from cancers that he alleges were caused by the pollution; $8.4 billion is for “unjust enrichment”; the remainder is for environmental clean-up.

Chevron has filed a 9,000-page rebuttal of Mr Cabrera’s report. It disputes his fitness as an expert, arguing that he has little experience of the oil industry. It found evidence that he used the Amazon Defence Front, a group working for the plaintiffs, to collect soil samples from sites. Sections of his report repeat verbatim documents filed by the plaintiffs. Chevron also notes that in 2007 a California court dismissed as fabricated some individual claims that the pollution caused cancers; it fined one of the plaintiffs’ lawyers for this. As for “unjust enrichment”, a Chevron manager points out that Texaco’s total profits from its operations in Ecuador were only $497m, while over the 20 years to 1992 Ecuadorean governments received $25.3 billion in profits, taxes and royalties from the field.

The judge in Lago Agrio, Juan Nuñez, is expected to rule on the case later this year. He has made no secret of his sympathy for the plaintiffs. The lawsuit appears to have the backing of Mr Correa’s government. Last year it objected to the 1998 agreement with Texaco, arguing that since the company was the operator of the field it should have cleaned up all of the pits. The attorney-general charged seven former senior officials who had signed the agreement with fraud, as well as two Ecuadorean lawyers for Chevron.

Chevron has filed a claim in an international arbitration court in The Hague and has asked the American government to review Ecuador’s trade preferences. But it faces political pressure in the United States as well as in Ecuador. On May 4th Andrew Cuomo, New York’s attorney-general, sent a letter to Chevron requesting information on the case on behalf of the state’s pension funds, which have more than $1 billion invested in the company.

If the Ecuadorean courts rule against Chevron, the plaintiffs’ lawyers can be expected to file suit in the United States to collect the settlement. Since they are working on a contingency basis, they stand to gain a substantial portion of any damages.

Texaco may have benefited from Ecuador’s past lack of environmental standards. It is questionable whether any of the pits would have been cleaned up had it not been for the campaigners. But the lawsuit may now be preventing Chevron from helping Petroecuador to clean up the rest. Ecuadoreans were the main beneficiaries from the oil—although some of them suffered some damage from it. They will also be the most important victims if the Chevron case shows that the rule of law is the servant of politics in Ecuador.

Chevron: lawyers behind environment report proposal

* Chevron urges 'no' vote on environment report proposal

* Plaintiffs' lawyer calls Chevron letter 'misleading'

* Chevron shareholder meeting May 27

By Braden Reddall

SAN FRANCISCO, May 20 (Reuters) - Chevron Corp (CVX.N) criticized a shareholder proposal for an environmental protection report as part of a "trial lawyer"-led campaign to force the company to settle a long-running case over oil pollution in the Ecuadorean jungle.

Chevron is fighting a $27 billion claim in court in Ecuador, with a ruling expected this year. That case is among a few cited in the proposal, which is also backed by U.S. state and municipal funds and will face a vote at the company's shareholder meeting next week.

In a letter on Wednesday urging investors to vote it down, Chevron said proposal backer Trillium Asset Management, a Boston-based manager of socially responsible funds, had waged carefully orchestrated media campaigns every year over the past half-decade.

"In their campaign for this year's annual stockholder meeting, the plaintiffs' lawyers and their colleagues have added a new dimension to their pressure strategy: a campaign to generate fear in the investment community," Chief Governance Officer Lydia Beebe wrote in the letter filed with regulators.

Two days earlier, Trillium filed with the U.S. Securities and Exchange Commission a report from late April by public policy specialist Potomac Research Group flagging the risks to Chevron of a U.S. congressional spotlight on the Ecuador case.

Potomac also said Chevron lobbying efforts to alter Ecuador's trade status in response were unlikely to be well-received by the administration of President Barack Obama because in 2006 Obama had written a letter to the U.S. Trade Representative in favor of letting the case play out.

Separately, in a letter to Chevron this month, New York Attorney General Andrew Cuomo had asked the company to disclose information to investors about its potential liability in Ecuador. [ID:nN07374919]

"This is their first filing on the issue with the SEC since Cuomo opened his investigation, and they don't even mention it," Steven Donziger, a lawyer for the Ecuador plaintiffs, said of Chevron's letter, which he called "misleading."

Chevron had said it would respond to Cuomo's letter but argued that it had "communicated fully" with its shareholders.

Trillium could not be immediately reached for comment.

PROTECTION BY PROXY

The shareholder proposal, or item 10 on the proxy statement, calls for a report on the protection of people and the environment wherever Chevron operates. [ID:nN08517735]

Chevron has said that votes on similar issues at meetings in the past garnered support of 8 to 10 percent.

The shareholder group, holding about 20 million of Chevron's 2 billion-plus shares, includes pension funds from the city and state of New York, Pennsylvania's treasury, and Amnesty International.

The annual meeting will take place on May 27 at Chevron headquarters in San Ramon, California, about 30 miles (48 km) east of San Francisco.

Plaintiffs in the Ecuador case, first brought by local peasants in the early 1990s, say Texaco -- bought by Chevron in 2001 -- polluted the jungle and damaged their health by dumping billions of gallons of contaminated water from 1972 to 1992.

Chevron, in its letter, repeated its arguments that public denouncements of the company by Ecuador President Rafael Correa make a fair trial impossible; that the $27 billion claim could not be enforced because Chevron had "virtually no assets" in the country; and that the claim is based on a retroactive law.

Donziger countered by saying Chevron had sought to move the case to Ecuador from the United States, and argued that a country's president can discuss a case without influencing it.

"Ultimately, it will be a court that determines whether Chevron is liable, not Chevron itself," Donziger said.

Ecuador could directly sell Perenco's seized oil

QUITO, May 19 (Reuters) - Ecuador could sell directly 1.4 million barrels of oil seized from French oil company Perenco over a debt dispute, Oil Minister Derlis Palacios said on Tuesday.

"We are looking for ways of selling it directly," Palacios told a local radio station. "One option is to sell it to Venezuela."

Ecuador got no bids for an auction of Perenco's oil after a foreign court ordered the OPEC-member nation to halt the sale. Ecuador wants to collect more than $300 million the company owns the state over a controversial windfall tax.

Palacios said the government is investigating whether Perenco pressured buyers to halt their bids in the auction and if the charge is proved the state will take "strong resolutions against the company."

He did not say what actions the government could take against Perenco, but in the past Ecuador has threatened to terminate its deals with companies over contractual rows.

Ecuador seized part of Perenco's production in March after the government failed to reach an agreement with the company to settle the pending debt.

Perenco launched an international suit against Ecuador and Petroecuador last year to dispute the legality of the windfall tax it argues violates its contract.

Perenco extracts around 27,000 barrels per day from the Coca-Payamino oilfield and blocks 7 and 21 in Ecuador's Amazon jungle.

Ecuador's Correa: The Citizen’s Revolution

by Nora Fernandez
Global Research, May 17, 2009
Alternativa Latinoamericana

When Rafael Correa came to power in 2006, he said that he was not a traditional politician. We could add that he is not a traditional economist either –at least not like the economists who have dominated the field in favour of “free-market” economics. Correa served briefly as Minister of Economy and Finances in 2005, under President Alfredo Palacio, and even at that time he advocated for the reduction of poverty and the increase of economic sovereignty for
Ecuador. He did not follow the advice of the International Monetary Fund (IMF) and he did not believe much in signing free trade agreements with the United States. Correa’s focus was, however, in increasing cooperation between Ecuador and other Latin American countries.

Correa resigned to his post when the World Bank (WB) withheld a loan to pressure president Palacios because of a proposal Correa made about issuing bonds at lower interest rate –half of which were to be bought by
Venezuela. The proposal, which had been fully authorized by Palacio, became an issue and the president of Ecuador gave way; Correa resigned. In a press conference following his resignation, Correa referred to the strong foreign and domestic pressure against any move towards economic cooperation and energy integration with Venezuela. He said that he felt “a very strong pressure and a direct boycott to impede the operation with Venezuela ....the situation was unsustainable...the lack of support for the policies and work of the Minister were intolerable and I could not tolerate it. It’s impossible for an economy minister to operate without the support of the President” and he resigned (By Panorama, in www.aporrea.org 06/08/05).

People understood, somehow the reasons behind Correa’ resignation and Correa became very popular. Just before Correa resigned he was the only of the minister of the government of Palacio who had much credibility. In
Ecuador, 57% of the people were saying they trusted Correa, while the popularity of Palacio himself was falling (By Solo, Znet 15/08/05).

It is the beginning of Correa’s political ascent in
Ecuador. Correa, born in Guayaquil, and 46 year old now, is also a very educated man. He earned a degree in Economics from Universidad Católica de Santiago de Guayaquil in 1987, a MA in Economics from Université Catholique de Louvain, Belgium, and later a MSc in Economics (1999) and a Ph D in Economics (2001) from the University of Illinois, USA. Correa speaks Spanish, and also French and English. Still, Correa is not just an educated economist. He has had experience with the poor when he worked years ago as a missionary with the aboriginal population of Cotopaxi, where he learnt Quechua. As a result improving the living conditions of the poorest of Ecuador has been openly his concern.

In 2006 Correa founded Alianza PAIS (Patria Altiva y Soberana or Proud and Sovereign Fatherland Alliance). The party’s principles: political sovereignty, regional integration, and economic relief for the poor in
Ecuador. During his political campaign he proposed the formation of an Assembly to rewrite the Constitution of Ecuador; and committed himself to call for a referendum to draft the new Constitution. Alianza PAIS signed a political alliance with the Socialist Party of Ecuador.

Alianza PAIS favoured a reform of the oil industry and a new Hydrocarbons Law (Ley de Hidrocarburos), because the Law in
Ecuador was allowing foreign companies to take four of the five barrels of oil they produced, leaving only one for the state. Alianza also favoured limiting offshore deposits made by local banks, to no more than 10% of their holdings. Social development was declared a priority that would take precedence over the payment of foreign debt service. Correa, openly critical of neoliberal policies, planned to move away from the dollar as Ecuador’s currency, as well as of the draft made for a free trade agreement with the United States. He declared himself in favour of open markets with other countries and of the integration of South American economies. In external policy, Correa favoured close relations with Venezuela while staying away from the Colombian conflict. During the 2006 elections Correa was second to Alvaro Noboa, the Ecuadorian millionaire, but Correa became president in the runoff election (November 2006) and was sworn into office in January 2007.

Once in power Correa fulfilled his promises, setting up an Assembly for the draft of a new Constitution and calling a referendum in September 2008. The new constitution was approved by more than 60% of the population. The new Constitution tightens state control of vital industries and reduces monopolies; it also provides free health care for older citizens and allows idle farm land to be expropriated for redistribution. It allows the president to be re-elected for a second four year term (at the end of 2013) and it allows civil marriage for gay partners. Social development took precedence as promised: during his short 2 year term (2006-2008) Correa’s government spent billions of dollars on social projects (Daniel and Soto, Reuters).

The challenge for the future is the external debt. In December 2008, Correa announced that
Ecuador was officially defaulting on billions of dollars of foreign debt considered illegitimate by the government as it was contracted by military regimes. He threatened also to suspend review of the country by either IMF or WB and mentioned publicly that he plans to close the US military base in Manta -its contract expires and he is not planning on renewing it.

A new Constitution and the call for the 2009 Elections

It is impossible not to acknowledge the extremely hard work of the government of Ecuador during its two years of government, in only two years a new Constitution was drafted that involved the entire country, transforming a frustrated citizenship into one energized to participate and change the country. Correa counts with amazing level of support, considering the humble beginnings of Alianza PAIS -a movement born only three years ago and with very limited time to develop political know how contending, surprisingly well, with much experienced and structured political forces.

This past April, Rafael Correa was re-elected during the first round with an impressive 51.7 percent of the vote. He is the first president to have such an electoral triumph in Ecuador
in 20 years. The Council on Hemispheric Affairs commented that “it could be argued that Correa is one of the most successful contemporary Latin American political leaders of the era. Since taking office, he has come forth with a very specific socio-political program which has significantly alleviated the country’s political instability and hobbling strategic and economic conditions, while at the same time advancing his overt leftist platform aimed at job creation and lifting the country’s living standards.” (COHA, press release, 27/04/09)

After this last election, and while talking with the press, president Correa ratified his commitment in working for an inclusive country which would prioritize the well being of its most vulnerable citizens. He said: “This (victory) is for the poor and the most vulnerable…it is because of them we are here…so finally Ecuador
is for all of us…Together we have made history. Today is a happy day...we focus in consolidating our Citizen Revolution…I have only words of thank and commitment with our people who has proved its dignity…”

He later ratified again some of its government believes and values saying: “We are the tool of the people, this is not my victory…the people has given us the most splendorous victory!” Socialism will continue. The Ecuadorian people voted for that…When have we concealed our ideological orientation? We are going to emphasize this.”

Thus, even though president Correa has avoided going against the
US for the sake of it, he has shown limited concern for US approval on his decisions. He announced, for example, that the Manta base contract will not be renewed, a position he has ratified often. He expelled a pair of U.S. diplomats stationed in Quito on allegations of their “unacceptable meddling” in Ecuadorian matters, and again he seemed little concerned about whether the US would be offended by the clear message of non-interference on internal affairs. Ecuador has its new Constitution and now president Correa has a four year term to implement more changes, there is even the possibility of re-election in 2013.

Eric Toussaint -the
Belgium historian and political scientist president of the Committee for the Abolition of Third World Debt and author of The World Bank: a never-ending coup d’Etat, regards the new Constitutions as an important change. “The new Constitution guarantees increased cultural, economic and social rights for the population and it has set up a democratic mechanism through which elected representatives can be dismissed at mid-mandate whatever the level they operate at, including the President of the Republic (this is also the case in the Constitutions set up in Venezuela in 1999 and in Bolivia in 2009).” He argues that “democratic political changes in Ecuador are hardly ever mentioned in the major media of industrialized countries. He mentions the defamatory campaign implemented by the press. President Correa denounced a similar issue in Ecuador during his interview with the press after the elections pointing to the many distortions promoted by the press as an issue. The press campaign, argues Toussaint, presents not only Correa but also the heads of State of Bolivia and Venezuela as “authoritarian populist leaders” (Touissant, Ecuador at the crossroads, Global Research, 28/04/09).

Constant comments about these heads of state working together as part of an “axis” – had encouraged Correa to deny the existence of such “axis” even though, he said, it would not be a crime. Whether or not a fiction few would question the coming together of heads of state but would see them as productive, even positive. The coming together of the “three amigos” (México, Canada and the US) including first Reagan, Mulroney and Fox and more recently, Bush, Harper and Calderón was never challenged by mainstream media. And, what about the European Union? Yet, there is concern when Latin American heads of state work together, particularly if it is for the benefit of their most disenfranchised citizens.

The hottest issues, however, it would be the no payment of the debt. Since November 2008,
Ecuador has stopped repaying part of the loans contracted by previous government as bonds, based on the results of the Commission for a Complete Auditing of the Public Debt –which found that these debts are nullified by the very conditions in which they were issued. Toussaint himself a member of the Commission supports to stop payment. , the Belgium historian and political scientist president of the Committee for the Abolition of Third World Debt and author of The World Bank: a never-ending coup d’Etat, and a member of the mentioned Commission, favours with other Commission members, to just stop payment. But this past April the government of Ecuador proposed an alternative 70% devaluation of the debt –or a payment of only 30% of those debts. Whether this would be sufficient for Ecuador to cope with the current challenges presented by the world crisis is to be seen. The no payment position is a challenge because Ecuador has been the only government in the world to launch a complete audit of its public debt during the 2000s. It is possible that this changes with the new public debt crisis which involves other countries and they may follow Ecuador´s lead in challenging the legitimacy of these debts.

Translated from Spanish