Ecuador, China to create oil joint venture

AFP - QUITO — Ecuador and China will form a joint venture to develop an oil bloc in the South American country that has proven reserves of 120 million barrels of crude, an Ecuadoran official said Wednesday.

Germanico Pinto, the minister of non-renewable natural resources, announced the creation of a joint venture between Ecuador's state-owned Petroecuador and China's Sinopec International Petroleum at a meeting in Quito with about 20 Chineses business representatives, said a statement.

Pinto said the new company will seek an investment of one billion dollars to "explore and exploit" Bloc 42 in the eastern part of the Andean country.

Petroecuador was to hold a 60 percent stake in the joint venture, and Sinopec the remaining 40 percent.

Ecuador is OPEC's smallest-producing member, pumping out 500,000 barrels of crude a day.

The Andean nation has become an investment magnet for the energy-hungry Asian giant. Companies such as Andes Petroleum y Petroriental have attracted Chinese capital, and Petrochina has signed a two-year contract for crude oil that "assures Ecuador of the sale of its oil," the statement noted.

The Bloc 42 area is located in the eastern Pastaza province and includes two oilfields with combined proven reserves of 120.1 million barrels of heavy crude.

On Tuesday Ecuador and China signed three cooperation agreements worth 442 million dollars and Quito obtained credit to buy four warplanes, officials said.

The agreements were signed during the visit of Jia Qinglin, chair of the National Committee of the Chinese People's Political Consultative Conference, who met with President Rafael Correa in the Ecuadoran capital as part of a tour of Latin America.

According to the socialist president's office, the economic and technical cooperation agreements include a 1.4 million dollar donation, as well as two lines of credit -- one for 2.9 million dollars payable within 10 years, and another for 438 million dollars to buy four Chinese military planes for Ecuador's air force.

Beijing's direct investment in Ecuador has reached 2.2 billion dollars, making it one of the top targets of Chinese investment in Latin America, Qinglin told reporters through an interpreter.

Trade between the two countries reached 2.4 billion dollars in 2008, a 50 percent increase from the previous year, he said.

China, Ecuador pledge further cooperation of mutual benefit

By Luan Xiang, Liao Lei

QUITO, Nov. 24 (Xinhua) -- There is plenty of room to explore further mutually beneficial development between China and Ecuador, Jia Qinglin, China's top political adviser, said here on Tuesday.

Jia, chairman of the Chinese People's Political Consultative Conference (CPPCC) National Committee, met with Ecuador's President Rafael Correa and Speaker of the Ecuadorian National Congress Fernando Cordero during his visit here.

Jia Qinglin (R), chairman of the National Committee of the Chinese People's Political Consultative Conference, meets with Ecuadorian President Rafael Correa in Quito, capital of Ecuador, on Nov. 24, 2009. (Xinhua/Li Xueren) Photo Gallery>>>

All agreed to work together to achieve better-balanced trade and broaden the fields of cooperation.

Jia, who met with Ecuadorian President Rafael Correa here on Tuesday, said China attached great importance to its relationship with Ecuador and was willing to make joint efforts to widen and deepen their cooperation.

He noted the China-Ecuador relationship had entered a new phase of fast development, as political trust grew, mutual benefit widened and cultural exchange increased.

China highly appreciates Ecuador's adherence to the one-China policy on issues of Taiwan and Tibet, and its support during Beijing Olympic and Paralympic Games.

Jia suggested China and Ecuador should pursue key areas of collaboration.

Also, in line with the principle of mutual benefit, the two countries should further explore the potential of cooperation by developing existing channels and creating new mechanisms to optimize trade balance, he said.

Jia called for a broader exchange in all social sectors and vowed to strengthen collaboration in culture, education, sports and tourism to promote mutual understanding and friendship between the Chinese and Ecuadorian peoples.

China and Ecuador will celebrate the 30th anniversary of the establishment of diplomatic ties, which Jia described as a mature bilateral relationship and a starting point of a brand new page of China-Ecuador ties.

Correa said Ecuador had made a strategic decision to enhance its relationship with China.

Ecuador appreciates China's long-standing support and is content with the progress made in important cooperative projects with China, he said.

National Assembly Speaker Cordero echoed his president's sentiments, saying China's win-win approach to cooperation and its assistance was highly valued.

Jia Qinglin (L), chairman of the Chinese People's Political Consultative Conference (CPPCC) National Committee, shakes hands with Fernando Cordero, President of the National Congress of Ecuador, in Quito, capital of Ecuador, on Nov. 24, 2009. (Xinhua/Fan Rujun) Photo Gallery>>>

He highlighted the encouraging outlook for economic-commercial cooperation between Ecuador and China and said the Ecuadorian Congress wished to intensify exchange and communication with its Chinese counterpart.

After their meeting, Jia and Correa signed a series of commercial technology cooperation agreements.

Earlier on Tuesday, Jia also attended a Chinese-Ecuadorian Entrepreneurs' Symposium on Investment Cooperation.

Lenin Moreno, Ecuador's Vice President, who attended the symposium, highly praised China's impressive achievements in all fields, taking as examples the Olympic Games and China's 60th Anniversary celebration.

Moreno expressed Ecuador's willingness to contribute to China's future development by intensifying cooperation.

Jia arrived in Quito for an official good-will visit to Ecuador on Monday and will continue his four-leg tour in Brazil. He has already visited the Philippines and Peru.

Colombia/Ecuador re-establish trade relations after 21 months

Mercopress, 24 Nov, 2009
Ecuador and Colombia formally established this week ties at trade representation level, official sources said in Quito and Bogotá. The two governments announced that “full normalization” will take place when the so called “sensitive” issues have been addressed and solved.

This puts an end to almost 21 months of severed diplomatic ties and a serious diplomatic rift between the neighbouring countries. Ecuador Trade representative Andres Terán, took office in Bogotá, while his Colombia counterpart Ricardo Montenegro, in Quito.

The appointment of trade representatives follows the agreement signed on October 3 in New York, as a consequence of ongoing negotiations that culminated during the UN General Assembly.

Ecuadorian Foreign Minister Fander Falconi said that Teran will be in charge of representing Ecuador’s trade and the country’s interests in Colombia. “Terán must work on promoting bilateral ties, trade and investment and equally important the quick normalization of diplomatic ties" said Falconi.

Regarding the so called “sensitive” issues Falconi said Ecuador would appeal to mechanisms and support from the Carter Centre and from the Organization of American States, OAS.

Relations were severed by Quito when on March 2008 Colombian troops bombed and raided a FARC camp on Ecuadorian border territory where the Colombian guerrilla’s organization number two man, Raúl Reyes was surprised and killed. The total toll of the attack resulted in the deaths of some 26 people including Raul Reyes, his armed guardsmen and several visiting foreign students and journalists.

Last week Defence ministers of Ecuador Xavier Ponce and of Colombia Gabriel Silva re-launched in Bogotá, activities of the Bi-national Borders Commission (COMBIFRON), created in 1996. Both countries also agreed to appoint before next 10 December, military and police attaches as well as a high level group of the COMBIFRON.

Meanwhile Ecuadorean President Rafael Correa during a routine inspection of border areas and the opening of two military outposts again called on Colombia to increase surveillance along their shared frontiers.

"I wish you, dear journalists, bear witness to what we are experiencing here: new military outposts to guard our national sovereignty against whatever" said Correa, in a speech at the Ecuadorean border town of El Palmar.

"This is the reality of the northern border - dozens of Ecuadorean outposts and yet, the Colombian state is unfortunately absent," Correa explained to the military high command and a hundred or so soldiers.

Ecuador and Colombia share a frontier extending some 720km. It is a volatile region highly active with guerrilla groups, paramilitaries and drug traffickers.

Ecuadorian government proposes new salary measures for businesses

Nov 23, 2009
A press release from Ecuador’s government website discussed on Nov. 21 a reform for minimum wages for the Ecuadorian workforce. Businesses will be forced to distribute the profits among employees within the companies they work for.

President Rafael Correa called it a just and dignified salary change for families to cover basic living expenses. The figure that was calculated is approximately $320, according the government report.
Correa emphasized there are no salary incentives for employees in numerous sectors. He pointed out employees working in the oil sector made commissions or salary bonuses while workers that specialize in Arts and Crafts make nothing.

The legislative changes are to change the capitalistic exploitation and level out the field for wages. President Correa said he is not going after private companies or looking to close them down. He wants to pursue social changes that have plagued the country with previous administrations, according to the report.

Ecuador’s president has faced in recent weeks sharp opposition due to with massive blackout and growing concerns over of economy. A recent report from the Wall Street Journal has the producer price index in September rose 1.14 percent for Ecuador. The sector for Agricultural and fishing products were down 12.64 percent and the minerals, electricity and water fell 21.44 percent from a year ago.

The socialism agenda in South America is in its infancy and will continue to transform the region. There has been little exchange and growing tension with Washington because of the debate over the addition of the military bases in Colombia, neighboring country to Ecuador.

The dialogue may change under the new administration but will require negotiation and diplomacy. Until tensions ease collaborations between the U.S and Ecuador will remain a work in progress.

Ecuador’s Correa Struggles to Maintain Popularity

November 17, 2009

(Angus Reid Global Monitor) - Fewer people in Ecuador are expressing support for Rafael Correa, according to a poll by Cedatos-Gallup. 44 per cent of respondents approve of the president’s performance, down five points since September.

Correa, a former finance minister, ran for president as an independent leftist under the Alliance Country (AP) banner. In November 2006, Correa won a run-off with 56.69 per cent of the vote. He officially took over as Ecuador’s head of state in January 2007. Correa’s party nominated no candidates to the National Congress.

In September 2008, Ecuadorian voters ratified a new constitution in a nationwide referendum. The draft was approved by the pro-government majority in the Constituent Assembly. Under the terms of the new constitution, Ecuador held a presidential election in April. Final results gave Correa 51.95 per cent of the vote. For the first time in 30 years, the Ecuadorian presidential election did not require a run-off.

Last month, Ecuadorian defence minister Javier Ponce confirmed the country’s purchase of two transport helicopters from Russia—at a cost of $ 22 million U.S.—adding, "There is also an opportunity to reach an important support at aerial and ground transport fields, with trucks, buses and other vehicles of military transportation."

Polling Data

Do you approve or disapprove of Rafael Correa’s performance as president?

	Oct. 2009	Sept. 2009	Aug. 2009
Approve	44%	49%	51%
Disapprove	49%	44%	44%

Source: Cedatos/Gallup
Methodology: Face-to-face interviews with 1,668 Ecuadorian adults, conducted from Oct. 28 to Oct. 31, 2009. Margin of error is 3.4 per cent.

Chevron's lobby campaign backfires

Politico.com
By: Kenneth P. Vogel
November 16, 2009

Facing the possibility of a $27 billion pollution judgment against it in an Ecuadorean court, Chevron launched an aggressive lobbying and public relations campaign to try to prevent the judgment as well as reverse a deeply damaging story line.

Chevron’s tactics — ranging from quietly trying to wield U.S. trade policy to compel Ecuador’s government to squelch the case, to producing a pseudo-news report casting the company as the victim of a corrupt Ecuadorean political system — were designed to win powerful allies in Congress and the Obama administration as well as to shape public opinion and calm shareholders.

But many of the company’s moves have backfired, drawing fire from environmentalists, media ethicists, state pension funds, New York’s attorney general, members of Congress and even Barack Obama when he was a senator.

“Their lobbying and PR efforts are really clumsy and very heavy handed, and I think that that’s why they’re experiencing a degree of backlash,” said Rep. Linda Sanchez (D-Calif.), who is circulating the first of what she promises will be three letters to colleagues blasting what she calls the company’s “misguided approach” to dealing with the case.

The case stems from a class action suit brought by well-connected U.S. trial lawyers on behalf of 30,000 Ecuadoreans alleging that from 1964 to 1990, Texaco — which was purchased by Chevron in 2001 — dumped billions of gallons of toxic waste into Ecuador’s Amazon rain forest, leaving behind an unprecedented environmental and public health disaster including a wave of cancers, birth defects and miscarriages.

Chevron has been pushing the U.S. government to revise Ecuador’s trade preferences since soon after the lawsuit was filed in Ecuador in 2003 (it originally had been in U.S. federal court in 1993). But with a years-long trial in a tiny courtroom in the Ecuadorean rain forest expected to culminate in a ruling early next year, Chevron has turned up the heat, arguing that it can’t get a fair trial in Ecuador, an assertion that Sanchez and other Chevron critics point out seems to conflict with the company’s previous efforts to move the trial from U.S. courts to Ecuador.

In part, Chevron wants the office of U.S. Trade Representative Ron Kirk, as well as Congress, to revoke the preferential treatment Ecuador gets for its oil exports under the 1991 Andean Trade Preferences Act, unless the country enforces an agreement it entered into with Texaco in the mid-1990s, under which the company paid for a three-year, $40 million cleanup and was relieved of liability. The plaintiffs contend that Chevron botched the cleanup, but if the court were to recognize the agreement, it could essentially end the suit.

“When a government is in violation of its contractual obligations to a company, there are only a few avenues a company has to seek resolution,” Chevron spokesman Kent Robertson said in explaining his firm’s lobbying over the trade preferences. “If we were able to call a timeout and make the lawsuit disappear, then this entire issue disappears,” he added.

Chevron says its lobbying campaign — which has included more than $1.6 million in fees this year to a bipartisan roster of Washington heavyweights including Democrats Mickey Kantor, a former U.S. trade representative; Mack McLarty, a former White House chief of staff; and former Sen. John Breaux (D-La.); as well as big-time GOP bundler Wayne Berman — is not at all unusual.

Advocates for the plaintiffs, whose suit is financed by a Philadelphia law firm, have rallied their own impressive response in Washington. Led by Steven Donziger, a New York-based lawyer who was a Harvard Law School classmate of Obama, it includes Democratic fundraiser and lobbyist Ben Barnes; Tom Downey, a former Democratic congressman who is married to Obama climate czar Carol Browner and who recently registered to lobby Congress for Donziger; and public relations consultant Karen Hinton. The team has helped persuade a number of influential members of Congress to sign on to letters urging Kirk to reject Chevron’s efforts.

In 2006, after multiple visits from Donziger, then-Sen. Obama joined with Sen. Patrick Leahy (D-Vt.) in signing a letter to then-U.S. Trade Representative Rob Portman, asking him “not to interfere in the Chevron case” and asserting that the Ecuadoreans “deserve their day in court.”

Robertson rejected the suggestion that the company’s lobbying had backfired, pointing to a report Obama transmitted to Congress this summer that allowed the preferences to continue but referenced Chevron’s concerns about the trial, including the company’s allegations of interference by Ecuadorean officials up to and including President Rafael Correa.

In an interview, Sanchez, who will testify Tuesday at a hearing her House Ways and Means subcommittee is scheduled to hold on free trade agreements, said Chevron is “trying to leverage our trade policy in order to get a lawsuit dismissed that is currently pending before the Ecuadorean court. It is a way of trying to undermine the rule of law, and I just find that completely abhorrent. It’s shocking.”

This summer, Chevron thought it had made major progress toward proving its point that it could not receive a fair trial in Ecuador, when it revealed that it had obtained videos — purportedly taped secretly by a pair of whistleblowers using recorders implanted in watches and pens — that the company said exposed a bribery scheme in the case involving Ecuadorean officials and possibly the judge in the case. The company turned the recordings over to authorities in the U.S. and Ecuador and circulated excerpts of the recordings on Capitol Hill. The judge recused himself.

But late last month, Hinton — who is paid by the Philadelphia law firm financing the suit to advocate on behalf of a nonprofit called the Amazon Defense Coalition — released a report revealing that the American who helped make the recordings was a convicted drug trafficker, while his Ecuadorean partner was a Chevron contractor.

Robertson called the report “character assignation” and said it “doesn’t change what was caught on film. We have a judge who is corrupt. … We’re not measuring the release of the videos as success or failure.”

He did count as a success, though, the fact that Chevron shareholders in May, after a letter-writing campaign by the company, voted down a resolution citing the lawsuit and calling on the company to examine whether it complies with host country laws and environmental regulations.

Nonetheless, state pension funds that hold a combined $1 billion in Chevron shares have expressed concern about how the company plans to handle a potentially huge adverse judgment in the case. And in a May letter demanding more information from Chevron, New York Attorney General Andrew Cuomo said he had recently “received complaints regarding Chevron’s disclosures of the potential litigation risks and Chevron’s characterization of available legal defenses.”

Chevron also got dinged for a curious PR effort back in April, when — after catching wind that CBS’s “60 Minutes” was preparing a damaging report about its handling of the Ecuador case — it released a video it paid for featuring former CNN reporter Gene Randall delivering what looked like a news report giving Chevron’s side of the story.

Posted on YouTube and the company’s website and bearing the logo “Gene Randall reporting,” the report was produced with help from the conservative Beltway consulting firm CRC Public Relations. It cast Ecuador’s politicians as out to get Chevron and blamed the pollution on Ecuador’s state-owned oil company, which took over Texaco’s operations.

Columbia Journalism Review assailed the report as “deceptive” and posited that it “might be unprecedented for how it blurred the line between public relations and journalism.”

Chevron’s Robertson said Hinton and the lawyers in the case are “trying to take Chevron’s reputation hostage and to ransom it back to us” for a settlement. “So getting our side of the story out there is important.”

Robertson also said Hinton and her allies are in a bit of a “glass houses situation” when it comes to alleging sneaky techniques. He pointed out that Hinton’s group paid a private investigator to expose the background of the video maker, that a group linked to Hinton’s issued press releases insinuating that the murder of a brother of one of the plaintiff’s lawyers may be linked to the case (though the lawyer initially told the police otherwise) and that Hinton’s own husband, Howard Glaser, a financial services industry analyst, late last month posted an item bashing Chevron on The Huffington Post — to which he is a contributor — without noting their marriage.

Hinton asserted her side’s tactics have been above board, adding that, though “no one knows who murdered [the lawyer’s] brother,” the killing came at a time when the lawyer “and other members of the plaintiffs’ legal team had received a number of anonymous death threats connected to the work on the case.”

Meanwhile, even the addendum Hinton’s husband posted at the request of Chevron noting his wife’s relationship to the case somehow seemed to ricochet against Chevron.

“My spouse works with the indigenous people of Ecuador who are the plaintiffs in the lawsuit against Chevron for the massive pollution the company left behind in the rain forest,” he wrote. “While Chevron conducts a multimillion-dollar media spin campaign to paint themselves as the environmental ‘good guys,’ said spouse working out of her house with her two cats and cell phone appears to have gotten under Chevron’s corporate skin.”

Ecuador's Amazonians sue Chevron over poison waterways

Tens of thousands of Ecuadoreans living in the Amazon rainforest are suing Chevron, the US oil company, for poisoning their waterways in what is billed as one of the biggest environmental lawsuits in history.

By Aislinn Laing

The Telegraph UK
Published: 15 Nov 2009

Some 30,000 Amazonians are behind a lawsuit to be heard by an Ecuadorian judge

The claimants say the company illegally dumped toxic waste from its oil production which filtered into the waterways and lakes used by thousands of people for washing, drinking and cooking

The claimants say the company illegally dumped toxic waste from its oil production which filtered into the waterways and lakes used by thousands of people for washing, drinking and cooking.

The result, they say, was an environmental disaster worse than the 1989 Exxon Valdez oil spill, which in turn has provoked a public health crisis, with soaring levels of cancer, birth defects and miscarriages.

Some 30,000 Amazonians are behind a lawsuit to be heard by an Ecuadorian judge. Experts say the company might have to pay up to $27bn (£16bn) in damages.

The company insists there is no proof that any illnesses were caused by its operations, and says the responsibility for cleaning the area lies with the Ecuadorian government and Petroecuador, the state oil firm.

Chevron says the court case is the result of the exploitation of the indigenous population by US trial lawyers in connivance with a corrupt government.

But the Amazon campaign has attracted some high profile supporters, including Trudie Styler, the wife of musician Sting, and human rights campaigner Kerry Kennedy, a member of the US dynasty. Chevron's reputation for corporate social responsibility has already taken a blow.

The issue is also the subject of Crude, a recent and critically-acclaimed documentary by Joe Berlinger. The rags-to-riches tale of the chief Ecuadorian lawyer fighting the case has also earned it a place on the front cover of Vanity Fair.

Texaco, which is owned by Chevron, first started operating in Sucumbíos, in northeastern Ecuador in 1964 and in 26 years made $490m (£294m) and produced 1.7 billion barrels of oil.

As the operator of a consortium with Petroecuador, it drilled hundreds of wells in an area of 1,500 square miles and for each one, a series of pits in which to put the water produced as a byproduct of the oil.

Those fighting Chevron claim the 18 billion gallons of water put into the pits was toxic and was allowed to overflow into nearby rivers. They also claim Texaco spilled an additional 17 million gallons of crude oil.

The resulting contamination has increased cancer rates in the area threefold, they claim, and led directly to the deaths of 1,400 people.

"Texaco treated Ecuador's Amazon like a garbage dump," said Douglas Beltman, a former official at the US Environmental Protection Agency who serves as a scientific consultant to the affected indigenous groups. "Almost everything an oil company could do wrong, Texaco did do wrong."

One of the families allegedly affected is that of five-year-old Yahaira Sanchez. Yahaira's grandmother died of cancer and her parents are terrified the girl could fall ill too, but they are forced by lack of options into using the local water.

Yahaira's father William, who farms his own smallholding, said: "We want to move to protect Yahaira's health but we are too poor."

Another local man, known only as Roberto, told Penny Marshall, an ITN correspondent who investigated the issue, that his son had died of leukemia and his wife was suffering from cancer. Asked why, he said: "I think it's the contamination."

Kent Robertson, a spokesman for Chevron, said there was no evidence that any death or illness had been caused by its operations. He said that when Texaco left Ecuador in the early 1990s, it arranged for 40 per cent of the pits to be decontaminated and signed a contract with the Ecuadorian government that Petroecuador would deal with the rest. Any sign of contamination now was Petroecuador's work, he said.

Asked whether the firm had fulfilled its moral obligations to the Ecuadorians, he said: "We are in the business of producing energy for the future, not the cleaning up after other companies or making trial lawyers rich."

Despite this, he said, the Ecuadorian judge hearing the case in Lago Agrio, the provincial capital, was likely to rule against Chevron later this year.

"If the case is based on the legitimate evidence which has been produced, Texaco will be exonerated," he said. "The concern on our part is that the evidence doesn't matter and the government of Ecuador has already determined what the outcome is going to be. The trial is largely a formality."

Ecuador Eases Power Rationing

QUITO – Ecuador’s government announced plans to ease the power rationing it imposed as a result of a sharp fall in output from a hydroelectric plant that normally supplies 40 percent of the Andean nation’s electricity.

The acting minister of Electricity and Renewable Energy, Juan Espinoza, said the length of programmed blackouts will be reduced by half once the power Peru agreed to sell Ecuador becomes available.

“If (power) is being cut four hours in a sector or a city, the cut will be two hours from here on,” he said, adding that Ecuador was also in the process of activating two petroleum-fueled electric plants.

Espinoza spoke to Ecuavisa television shortly after the office of Peruvian President Alan Garcia announced that the head of state, now traveling in Asia, had signed an executive order authorizing the sale of electricity to Quito.

The reservoir at the Paute River dam that powers Ecuador’s key hydroelectric complex is 20 meters (65 feet) below optimal levels.

Only two of the plant’s 10 turbines are currently functioning.

Paute can supply up to 20,000 MW per hour under normal conditions, but present output has fallen to just 4,000-5,000 MW per hour amid a severe drought.

Low rainfall amounts began causing alarm in September, traditionally a rainy month in Ecuador, and concerns grew further when the drought continued into October.

But Ecuavisa reported that some rain fell Thursday at Paute, though forecasters do not call for significant precipitation over the coming days in the areas near the dam.

The head of the Quito Chamber of Commerce, Blasco Peñaherrera, said he expected the power shortages to last for at least another three months, costing the country’s economy as much as $1.8 billion in lost output.

President Rafael Correa blames the crisis on neglect by previous administrations that failed to build new power plants. He says his government has already started work on around a dozen new facilities. EFE

Colombia, Ecuador Move Toward Restoring Relations

By Alexander Cuadros

Nov. 13 (Bloomberg) -- Colombia and Ecuador named charges d’affaires in a step to restore full diplomatic relations severed last year following a Colombian cross-border raid on a guerrilla camp in Ecuadorean territory.

Ricardo Montenegro will assume Colombia’s diplomatic duties in Ecuador, while Andres Teran will be his Ecuadorean counterpart in Bogota, according to statements from the countries’ foreignministries.

Relations between the two neighbors worsened this year after Ecuadorean judges called for the arrest of Colombian officials involved in the March 2008 raid. In July, Colombia released a video showing a leader of the Revolutionary Armed Forces of Colombia saying the rebels contributed to Ecuadorean President Rafael Correa’s 2006 election campaign. Trade diminished after Ecuador imposed tariffs on Colombian goods.

“We’re trying to smooth relations. There are delicate issues on both sides,” Colombian Foreign Minister Jaime Bermudez said today on Bogota-based RCN Radio.

Falling Exports

Colombia’s exports to Ecuador, its third-biggest trading partner, fell 17 percent in the nine months through September to $894 million, according to the government statistics agency. Colombia in October cut energy exports to its neighbor by almost two-thirds from the previous month as dry weather reduced water supplies for generating electricity, forcing Ecuador to ration.

Since August, Ecuador has removed all but about a quarter of the tariffs it imposed earlier this year.

The FARC, as Colombia’s biggest rebel group is known, operates in the jungles along the South American countries’ porous 400-mile border. A campaign by President Alvaro Uribe, who took office in 2002, has reduced their numbers and pushed them away from major cities.

Correa and Venezuelan President Hugo Chavez criticized Colombia for agreeing to allow the U.S. military to use seven bases for anti-drug operations previously run out of Ecuador’s Manta base. Correa refused to renew the U.S. lease at Manta earlier this year.

To contact the reporter on this story: Alexander Cuadros in Bogota at acuadros@bloomberg.net

Colombia releases list of alleged FARC contacts in Ecuador

ColombiaReports.com, 12 November 2009

Colombia's police intelligence released a list of alleged FARC guerrilla contacts in Ecuador, Peru and Bolivia after it was published Thursday in an Ecuadorian newspaper.

The Directorate of Police Intelligence (DIPOL) released the list after its was published in Ecuador's newspaper El Universo, detailing the list of alleged contacts, five of which are believed to be in Ecuador.

The contacts were identified after DIPOL's tracking for the last four years of Nubia Calderon, who is considered a member of the FARC International Commission, reported newspaper El Espectador from information in El Universo's article.

According to the 'top sectre' document, among the suspected FARC contacts features Maria Augusto Calle (current member of the official movement PAIS) who supposedly maintained consistent communication with Calderon.

In addition to Calle, Wilson Sigfredo Basantes is believed to be responsible for the recruitment of youngsters into the FARC's Southern Bloc.

Additionally, Luis Hernan Muñoz Pasquel is mentioned, a former president of the National Ecuadorian Judicial Federation and according DIPOL he had contact with FARC leaders, though the identities of which were omitted.

Muñoz is reported saying that Calderon, in order to conceal her identity and FARC connections, borrowed computers and held an Ecuadorian cell phone.

The DIPOL report claimed Calderon maintained contacts with deans of major universities in Ecuador as well as with leftist newspaper editors and political leaders.

Furthermore it states that she was in charge of coordinating the movement of Brazilians, Bolivians, Peruvians and Ecuadorians into the jungle where they were to be trained in terrorism and guerrilla warfare in FARC camps.

Ecuador and Colombia are engaged in the process of restoring diplomatic relations after they were broken in March 2008 following Colombia's bombing of a FARC camp on Ecuadorian soil.

The bombardment, known as Operation 'Phoenix' killed some 26 people, including Calderon's partner Franklin Aisalla and the FARC's international spokesman 'Raul Reyes'.

Colombia denies using foreign intelligence in Ecuador attack

Colombia Reports, 12 November 2009

Colombian authorities on Thursday denied Ecuadorean press allegations that they collaborated with CIA spies in the bombardment of 'Raul Reyes' FARC camp.

Ecuadorean newspaper El Comercio suggested that Ecuadorian Julio Rivera Cesar alias 'Pirata', who was killed when Colombian security forces bombed the guerrilla camp on March 1 2008, had been in contact with the CIA and Colombian intelligence agencies prior to the operation.

El Comercio further stated that the CIA were able to contact 'Pirata' and Franklin Aisalla, a guerrilla who also died in the bombardment and was the alleged partner of 'Nubia Calderon' - one of the leaders of the FARC International Front.

'Pirata', according to the paper, moved easily through FARC networks but was in reality, serving the CIA and Colombian intelligence and was able to gain intimate access to the FARC boss 'Raul Reyes'.

Colombian sources responded to the press suggestions by claiming that they had not been in contact with any foreign intelligence regarding the bombardment, known as operation 'Phoenix', and claimed that it was not based on information delivered by 'Pirata'.

Colombia further assured that information about operation 'Phoenix' had never been shared and due to its confidential nature it was handled solely by Colombian authorities.

These authorities claimed that even if 'Pirata' was an important informant, he would not have had access to 'Raul Reyes' himself, much less be able to disclose his location and turn him in. They assured that 'Phoenix' was a distinctly Colombian operation.

Drought Blamed for Blackouts in Ecuador

PAUTE, Ecuador – Alarmingly low water levels at the hydroelectric power station in this southern Ecuadorian city are to blame for recurrent blackouts in the Andean nation over the past week, authorities say.

The reservoir water level at the dam on the Paute River, one of Ecuador’s largest, stood at 1,968 meters (6,450 feet) above sea level on Tuesday, compared with an average level of 1,991 meters and and a minimum level of 1,965 meters.

This 25-year-old facility meets approximately 40 percent of Ecuador’s total power needs, but at present only two of its 10 turbines are in operation and cannot guarantee more than 200 MW of electricity between them.

“I’d never seen this so empty,” said one of the employees who accompanied reporters on a quick tour of the state-owned plant’s installations.

Paute can supply up to 20,000 MW per hour under normal conditions, but present output has fallen to just 4,000-5,000 MW per hour amid a severe drought.

Low rainfall amounts began causing alarm in September, traditionally a rainy month in Ecuador, and concerns grew further when the drought continued into October.

Residents of Quito, Guayaquil and other cities were hit with surprise nationwide blackouts last Thursday, while the government has called on citizens to reduce consumption as it seeks ways of mitigating the energy crisis.

Just a few miles from Paute, work is continuing on the new Mazar dam “to increase power generation at the Paute plant,” National Electricity Council Chairman Fernando Izquierdo said, though he added that production at Mazar would not start until next April.

Although drought conditions are expected to persist until December, an optimistic Izquierdo said expectations are for the country’s energy supply to increase next week. However, he still urged consumers to continue to conserve energy.

In that sense, he predicted that the current electricity rationing program – which includes power cuts of roughly four hours a day – could be reduced in half beginning next week.

A key factor in the improved outlook is a possible deal to import 1,200 MW per hour from northern Peru to meet demand in the southern Ecuadorian province of El Oro, Izquierdo said.

Colombia’s contribution will be smaller since that country is also suffering from drought conditions and, in a best case scenario, could offer Ecuador some 450 MW per hour. EFE

Ecuador rejects media warnings on freedom of speech

QUITO, Nov. 10 (Xinhua) -- The Ecuadorian government on Tuesday rejected warnings by the Inter-American Press Society (SIP) of "aggressions" against the freedom of speech in the country.

Ecuadorian Secretary of Communication Fernando Alvarado said the SIP did not have "moral authority" to make such statements.

"No journalist or media in Ecuador can be said to have been threatened by the government," Alvarado said.

The criticism of certain media by the government of Ecuadorian President Rafael Correa does not mean "a threat to the freedom of speech" but "enriches the democracy of the information," he said.

He said the SIP sought "to protect their private business of communication management, because they represent the economic and political interests of big media businesses."

Alvarado said Ecuador presented to the SIP in October evidence of what the government considered "abuses of the press," adding that a communication law was necessary to "protect the citizens, journalists and to guarantee the access to information."

The Ecuadorian government would boost "a vision of respect without conditions for the freedom of speech and democratization of citizens' right to exercise it," he said.

Ecuador steel sector idles 30pct of installed capacity

Via SteelGuru.com

Wednesday, 11 Nov 2009

BNamericas quoted Mr Ramiro Garzón president of Ecuador's metalworking industries association Fedimetal as saying that thanks to investments, the Ecuadorian steel sector has idle installed capacity of around 30%, which could be used within four years.

Mr Garzón said that "Steel sector investments are made with the medium and long term in mind. In Ecuador investments are done thinking about the country's major infrastructure needs and that at some point we will reach the limit of installed capacity."

According to Fedimetal data, Ecuador has a population of 13 million and total national steel consumption of roughly 1.2 million tonnes per annum, meaning that per capita consumption is 92.5 kilogram. This consumption level is a good sign for future steel sector developments.

According to Mr Garzón, idle capacity is available to supply the local market and even tap into the export market as well.

Currently there are three steel companies operating in Ecuador namely, Andec Funasa, which recently increased production capacity to 250,000 tonnes per annum, Adelca, with capacity of some 200,000 tonnes per annum and Novacero, with initial production capacity of 120,000 tonnes per annum and projected capacity of 250,000 tonnes per annum.

(Sourced from www.bnamericas.com)

Ecuador requests meeting with Obama on U.S.-Colombia military deal

QUITO, Nov. 10 (Xinhua) -- Ecuadorian Defense Minister Javier Ponce requested on Tuesday a meeting with U.S. President Barack Obama on the U.S. military cooperation agreement signed with Colombia.

Colombia and the United States signed an agreement on Oct. 30 to boost the United States' presence by up to 1,400 people across seven military bases in Colombia to fight against drug trafficking and terrorism, a deal that has prompted objections from Colombia's neighbors.

Neighbors such as Bolivia, Ecuador and Venezuela have been criticizing the agreement since it was first discussed in July.

According to Ponce, the agreement says that the military base of Planquero in Colombia "guarantees the operations in all Latin America."

"I think there is enough reason to talk with Obama. The problem is that the proposal of Brazilian President Luiz Inacio Lula da Silva did not succeed, possibly it did not find all the necessary support at that moment," Ponce said.

During the Summit of the Union of South American Nations (Unasur) held in Quito in August this year, Lula proposed the organization should have a meeting with Obama for him to explain the range of the military agreement with Colombia.

"The proposal of President Lula is pending and I think we have to insist on that," Ponce said.

Ponce added that the Ecuadorian government had concerns on the military agreement, and urged the defense ministers of the member countries of Unasur to have an urgent meeting to analyze the U.S.-Colombia agreement.

Ecuador's 2010 Budget Plan Raises Fiscal Stability Doubts

Dow Jones 9 Nov 2009 --Ecuador's proposed budget for 2010 is raising concerns over its medium-term fiscal outlook and external debt repayments.

Jaime Carrera, secretary of the Fiscal Policy Observatory think-tank, described the 2010 budget as "populist" and "destructive."

"The spending increases are not sustainable," he said. The result, Carrera said, could be internal social problems, and potential non-fulfillment of external debt payments.

Last week Ecuador's government submitted budget proposals to the National Assembly worth $21.28 billion for 2010, an 11% increase on the 2009 budget proposal of $19.17 billion.

The 2010 budget proposal forecasts a 6.81% increase in gross domestic product, including 7.67% growth in the non-oil sector and 1.3% growth in the oil industry.

The government has established an average price assumption for crude oil of $65.9 per barrel, with production forecast at 178.4 million barrels.

A former member of Ecuador's Central Bank board, Marcos Lopez, told Dow Jones Newswires Ecuador lacks an economic plan. "There is an ideological-political model," Lopez said, which is based on the government's desire for "political effects and popularity."

According to Lopez, the 2010 budget will mean a deficit of at least $4 billion, because revenue forecasts are too optimistic.

Government revenue expectations in the 2010 budget proposal are $13.84 billion - $8.16 billion of which should come from taxes and $3.21 billion from oil-related activities. An estimated $5.84 billion will be needed simply to cover salaries for the public sector in 2010.

Mauricio Pozo, a former Economy Minister, said it is impossible for Ecuador to increase its tax collections when it is in recession.

Ecuador expects to receive external financing of about $2.18 billion and internal financing of $1.9 billion in 2010.

Last month, President Rafael Correa announced his government will repatriate around $2.5 billion from the nation's international reserves. The money, Correa said, will be used to generate local employment and reactivate the economy, which contracted 0.26% in the second quarter and 1.62% in the first quarter this year.

Economists say the use of international reserves is a sign of the current lack of liquidity.

Another problem is the government's high subsidy levels. A study from the Fiscal Policy Observatory estimates subsidies cost $4.0 billion in 2009. For 2010 that will increase to an estimated $5.0 billion.

"There's going to come a moment where revenues can't cover the fixed costs," said Carrera. Lopez said the budget was a time bomb, with high social costs that will lead to economic problems and social conflicts.

-By Mercedes Alvaro, Dow Jones Newswires

Ecuador Government Declares Electricity Emergency Due to Blackouts

QUITO – The Ecuadorian government declared an emergency in the electricity sector due to a generating shortfall at the nation’s biggest hydroelectric plant, which has forced the adoption of energy rationing programs across the country.

The coordinating minister of strategic sectors, Galo Borja, said that the measure was determined at a Cabinet meeting Friday in the town of Joya de los Sachas in the eastern Amazonian province of Orellana.

Borja, in a statement published in the official online daily El Ciudadano, said that President Rafael Correa issued a decree in which he declared a state of electrical emergency nationwide for the next 60 days.

The measure seeks to guarantee the continuity and supply of electricity, the minister said, adding that the decision responds to the nationwide power shortage caused by a drop in production at the Paute hydroelectric power station, the nation’s largest, affected by severely low water levels.

Borja said that the state of emergency will allow the Finance Ministry to take the corresponding measures to guarantee imports of the fuel needed by thermoelectric plants, which use fossil fuels to generate electricity.

He also said that the ruling, which includes a series of measures to deal with the power shortage, requires the state oil corporation Petroecuador to deliver fuel on an emergency basis and without prerequisites to electricity generators.

The government announcement came two days after the energy rationing program went into effect across the country that will continue until Saturday, the minister of electricity and renewable energy, Esteban Albornoz, said Thursday.

The drought affecting Ecuador’s southern Andean region for some weeks has caused a “drastic decrease” in the volume of water flowing into the dam at the Paute plant, which supplies 35 percent of the nation’s internal electricity demand.

Albornoz said that rationing will mean daily cuts of between 5 and 10 percent of the usual electricity supply.

Correa Defends Alliance Between Petroecuador and PDVSA

QUITO – President Rafael Correa defended the strategic alliance between Petroecuador and Venezuelan state-owned oil giant PDVSA for the operation of the Amazon’s Sacha field, one of Ecuador’s largest oil fields.

Correa criticized politicians who oppose the alliance, arguing that Petroecuador holds a 70 percent stake in the venture while PDVSA has only a 30 percent interest.

The state-owned companies formed the Rio Napo consortium, which will be a “service provider” in the Sacha field, Correa said on Saturday.

Rio Napo will only receive reimbursement for production costs from the 50,000 barrels per day (bpd) currently produced at Sacha, the president said, adding that the benefits from the deal would come from increased production due to new investment by the consortium.

The alliance will make it possible to increase Sacha’s output by some 20,000 bpd, with Rio Napo barely receiving $1 for each additional barrel produced and Petroecuador getting 70 cents out of each of those dollars, Correa said.

Ecuador is also receiving environmental protection technology in the deal, the president said.

An average of 48 oil spills used to occur annually in the Ecuadorian Amazon, but this year there have been only three spills, Correa said.

Ecuador produces some 480,000 bpd of crude, with Petroecuador accounting for some 60 percent of output and about a dozen private companies the rest.

Oil is Ecuador’s main export product and revenues from its sale finance about 35 percent of government spending.

President Correa Praises Research in the Amazon

QUITO - Ecuadorian president, Rafael Correa, congratulated young research engineers who work at the Center of Environment Technologies of Petroecuador in La Joya de los Sachas, in the Amazonic province of Orellana. This center is aimed at developing biotechnologies for environmental protection. "With these new techniques they develop from microorganisms we can remedy problems without major contamination," the president said.

Correa pointed out that the Center is in charge of designing and applying research projects to recover soil and waters affected with contaminants from the oil industry.

Its specialists will apply technologies to improve environmental processes and include the in vitro cultivation of native vegetable species.

It will also be in charge of checking microorganisms not cultivable, design and implementation of a treatment system of black and gray waters and design a physics-chemical-biological system for treatment of sedimentary mud.

Correa pointed out that reduction of oil spills through the formation of a Corporate Vice presidency of the Environment, Social Responsibility, Security and Health of Petroecuador that have been working hard to prevent the number of spills of previous years.

Petroproduction vice president, Brummer Vazquez, informed the president that according to annual figures 45 spills were reported in 2007 and in 2008 these were reduced to 18 and this year only three contaminating spills have been registered.

Ecuador 2010 Budget Draft Totals $21.28Bln

(Dow Jones) 6 Nov 2009 --Ecuador's government has proposed a $21.28 billion budget for next year, an 11% increase from the $19.17 billion budget proposed for 2009, according the proposals submitted on Friday to the National Assembly.

Ecuador's government submitted the 2009 and the 2010 budget proposals to the National Assembly, along with the required four yearly budget proposals covering the years 2009 to 2013.

The 2010 budget proposal has a deficit of around $3 billion. It forecasts a 6.81% increase in gross domestic product, including 7.67% growth in the non-oil sector and 1.3% growth in the oil industry.

The GDP is forecast at a level of $56.96 billion for 2010.

Ecuador expects external financing of about $2.18 billion and internal financing of $1.9 billion in 2010.

Inflation for 2010 is forecast at 3.4%.

The government expects revenues of $13.84 billion, $8.16 billion of which should come from taxes and $3.21 billion from oil-related activities.

The government has established an average price assumption for crude oil of $65.9 per barrel, with production forecast at 178.4 million barrels.

Ecuador's central government is forecast to end 2010 with a primary deficit of 4.2% of gross domestic product and with a global deficit of 5.3% of GDP. The data include Central government as well as autonomous entities.

According to the new constitution, approved last year, the executive branch must submit a budget forecast for each four-year period, in addition to the annual budget.

So far this year, the government has been working with a referential budget of $15 billion.

The 2010 budget includes around $3 billion for oil product imports that in previous years were not included in the fiscal budgets.

The amount earmarked for salaries for 2001 is $5.84 billion.

Local analysts said the 2010 budget maintains the government's heavy public spending which is unsustainable in the long term.

As of Friday, the National Assembly has 30 days to vote on the budget proposals.

On Friday, the Assembly also received the national development plan for the 2010-2013 period.

Depending on oil prices, Ecuador plans to invest between $18.9 billion and $22.30 billion from 2010 through 2013.

-By Mercedes Alvaro, Dow Jones Newswires

City looks to Ecuador to cut ‘carbon footprint’

Donations would help save tropical forestland

By Tanya Mannes

SignonSanDiego.com, Friday, November 6, 2009.

Solana Beach city officials are seeking to preserve a tropical forest 3,500 miles away, as part of an effort to lessen the city's effect on the environment.

City officials are suggesting that residents and businesses make “carbon offset” donations earmarked for conservation in Ecuador. The money will go through a tax-exempt nonprofit, Del Mar-based Nature & Culture International, in what may be the first such partnership of its kind.

There is no cost to taxpayers, and no one will be required to donate money.

All the money collected will pay for forestland in southern Ecuador. Nature & Culture International will handle the land purchase and ongoing preservation. An Ecuador-based nonprofit will own the land.

The goal is to buy enough forestland to equal the size of the 2,016-acre city, which would cost about $100,000, Solana Beach Councilwoman Lesa Heebner said.

Heebner said she proposed the arrangement early this year to augment local efforts to reduce the city's “carbon footprint,” a term that represents its projected effect on climate change.

“Global warming is a global issue,” Heebner said. “It's not just in our own backyard.”

The City Council voted unanimously last week to approve a formal agreement that allows the nonprofit to solicit donations using the city's name. Solana Beach will promote the nonprofit through its Web site. Nature & Culture International will list the city as a conservation Partner.

Mike McColm, the nonprofit's international director, said the program is a cost-effective way to help the environment.

“For the price of buying a fraction of a lot on (Highway 101) in Solana Beach, we're going to buy an area the size of Solana Beach of critically important tropical rain forest,” McColm said.

Del Mar resident Ivan Gayler, who founded Nature & Culture International in 1997 and is chairman of its board of directors, said Ecuador is renowned for its biological diversity. For example, it has more than 1,600 species of birds, compared with 600 in the continental United States, he said.

When the City Council first discussed the idea in February, 14 residents wrote to the city expressing support for the partnership. Officials received one letter from a resident who opposed the idea, saying that fundraising for an international cause is “outside the purview of the city.”

Solana Beach officials say the program could one day help the city meet state environmental mandates. A state law known as AB 32 requires cities to reduce their greenhouse-gas emissions to 1990 levels by 2020.

Heebner said the city has approached elected representatives in Sacramento about the possibility of counting the Ecuador program toward the city's carbon-reduction goal.

“There's only so much that a small city like Solana Beach can do. We don't have fleets of cars; we don't have landfills,” Heebner said. “We're hoping that a city the size of ours can do something like this and have it count toward our goals.”

Solana Beach is known for its environmental initiatives. For example, the city collects plastic bags in a partnership with Trex, a manufacturer that uses them in weather-resistant decking. The city also provides incentives for environmentally friendly construction projects by placing them first in line for permit processing.

Nature & Culture International's 2008 budget was $3.4 million, according to its annual report. Its main source of revenue is from foundations; it also receives government funding and donations from individuals, among other sources.

All of its board members are unpaid and receive no money for expenses, according to Internal Revenue Service filings.

Last year, the organization helped establish the Alto Nanay-Pintuyacu-Chambira Regional Conservation Area, which set aside 2.4 million acres of primate habitat in the Peruvian Amazon, according to its 2008 annual report.

The organization has a three-person staff in the United States and employs 90 people in Ecuador, Peru and Mexico. It focuses on the conservation of threatened ecosystems in the dry forests, cloud forests and rain forests of the Latin American tropics.

Former Solana Beach Mayor Doug Sheres is on the board of directors. Sheres said he became involved because “the work that they're doing is remarkable, and unlike anything I've seen anywhere else.”

For more information, go to natureandcultureinternational.org and click on “Solana Beach Fund.”

Ecuador Says New Regulations Will Foster Responsible Mining

QUITO – Ecuador’s new mining regulations, which among other things give the government a 50 percent participation in companies’ operations, will set the country on a path toward “responsible mining development,” a top official said Thursday.

In statements to Radio Sonorama, Non-Renewable Natural Resources Minister Germanico Pinto commented on the executive orders that were issued Wednesday and which serve to enact new mining regulations contained in a law passed in January.

Referring to criticism from environmentalists and Indians about the supposed threats to the environment and indigenous communities, Pinto acknowledged that some aspects of the law could be improved and said the government is “absolutely open” to dialogue.

However, he said the executive orders signed by President Rafael Correa highlight the “virtues of the law regarding the management, government control and citizen supervision” of initiatives to develop Ecuador’s reserves of gold, silver, copper and iridium.

In addition to a decree enacting a general law for the industry, Correa also signed executive orders implementing laws on the development of small-scale mining and environmental regulations for the operations, as well as several documents enabling the creation of the ENM national mining company.

The president also decreed the creation of other regulatory agencies and an institute for geological, mining and metallurgy research.

The mining law stipulates, among other aspects, that only the central government is empowered to approve multinational companies’ bids for mining projects and that 50 percent of the earnings from mining projects must be handed over the government.

In addition, under the new regulations, mining companies must present complete technical and environmental-impact studies before embarking on extractive activities and employ clean, cutting-edge technology.

As the regulations are applied, “serious problems with mining in Ecuador will be corrected,” including environmental pollution and the lack of oversight and training and of government monitoring of development projects, Pinto said.

He added that “not only will the problems be corrected, but we’ll turn the page: it’s a turning point for the development of responsible mining” in the environmental and social sense.

Pinto denied that the government has already given the green light to international mining companies to carry out development projects and stressed that, for the moment, “only advanced exploratory activity” is being carried out.

“What we did through the mining mandate (a degree issued last year halting large-scale mining in the country) is to verify that companies are complying with the law and legal requirements,” Pinto said. EFE

Ecuador To Launch Buyback Offer In Italy For 2012,2030 Bonds

(Dow Jones) Nov 4, 2009 --Ecuador's Finance Ministry said Wednesday that Ecuador has obtained approval from the Commissione Nazionale per le Soceita e la Borsa, or CONSOB, in Italy, to launch a public tender offer in Italy on November 5 to holders of its Global 2012 and 2030 bonds to participate in a cash buy-back.

Last December, President Rafael Correa's government refused to pay the interest on its 2012 and 2030 bonds, saying they considered such payments "illegal" and "illegitimate."

On April 20, the government launched a modified Dutch auction for the 2012 and 2030 Global bonds. It originally offered a minimum price of 30 cents on the U.S. dollar to buy back the bonds, but later raised that to 35 cents on the dollar.

Last June, the government said that it had spent $900 million for 91% of the Global 2012s and 2030s, and about $95.37 million of the Global 2012s and $194.4 million of the Global 2030s remain in the market.

According the government, Lazard Freres Banque and Lazard Freres & Co. LLC, as joint dealer managers, were not permitted to directly contact holders of the bonds in Italy, due to regulatory restrictions.

"The Republic (of Ecuador) is now launching the Italian offer for the benefit of holders of the bonds in Italy in order to give the same opportunity to tender their bonds to the Republic as holders of the bonds in other countries," the Finance Minister, Maria Elsa Viteri, said in a press release.

The press release added that "holders of the bonds should be aware that the Republic (of Ecuador) has no intention of launching other invitations or offers aimed at either holders of the 2012 or 2030 bonds on equivalent or more favorable terms to those of the Italian Offer," the release said. "Neither does the Republic intend to pay interest or principal on either the 2012 bonds or 2030 bonds."

The Republic, the statement said, looks forward to restoring normal relations with the international investor community.

According to Viteri, the Italian offer is designed to assist in allowing both the bondholders and Ecuador to close, on an acceptable basis, "a very challenging period in the Republic's external debt history."

The press release added that the Italian offer requires an exceptional use of resources, and despite the negative impact of the global financial crisis and the decrease in growth of the Ecuadorean economy, the government has set aside the resources.

Ecuadorean analysts have said that the sharp "haircut" that Ecuador effectively forced bondholders to accept has cut off the country from private overseas capital markets.

-By Mercedes Alvaro, Dow Jones Newswires

Chevron and Cultural Genocide in Ecuador

Kerry Kennedy,
The Huffington Post
4 November 2009

Traces of paradise are still visible. From the air, the rainforest region in northern Ecuador--known as the Oriente--appears as silvery mist and swaths of verdant green.

But beneath the cloud cover and canopy, the jungle is a tangle of oil slicks, festering sludge, and rusted pipeline. Smokestacks sprout from the ground, spewing throat-burning fumes into the air. Wastewater from unlined pits seeps into the groundwater and flows into the rivers and streams.

This nightmarish landscape is the legacy of Texaco. Between 1964 and 1990, Texaco (which was acquired by Chevron in 2001) drilled roughly 350 wells across 2,700 square miles of Amazon rainforest. It extracted some $30 billion in profits while deliberately dumping 18 billion gallons of toxic soup, known as production water--a mixture of oil, sulpheric acid, and other carcinogens--into the streams and rivers where people collect drinking water, fish, bathe, and swim.

In the process, Texaco constructed over 900 oil sludge pits, many the size of Olympic swimming pools. Unlike swimming pools, these pits were unlined punctures in the earth. With no concrete to protect the surrounding soil, poison seeped into the ground water.

I had heard about what has been called "Chevron's Chernobyl in the Amazon" for years. But nothing could prepare me for the horror I witnessed this week in Ecuador.

I held a dragonfly covered in oil in my hands, desperately and hopelessly trying to flutter its wings. I saw pig footprints in the mud next to the oily gunk, where it had eaten contaminated grass, and will soon be contaminating the children, women, and men, who in turn feed on Chevron's waste.

I met a man who told me his two children died after swimming in contaminated water. One died within 24 hours. The other writhed in agony for six months before his poor body gave way.

I met another man whose home is just a few hundred yards from one of the pits. He has 10 children. All of them have become sick, some covered with sores. His chickens and pigs have died. Nothing grows near his home.

I saw a poisonous pit abandoned by Texaco in 1974 and never used by any other company. The pipes leading from that pit have clear liquid running from them. When I put the liquid to my nose, it smelled like gasoline. It runs directly into an adjoining stream, which is the main source of drinking water for people who live along its banks.

We heard terrifying stories of mistreatment by Texaco workers: women raped; shamans taken by helicopter to far mountain ranges to see if they could find their way back; Indians told that rubbing oil on their bald scalps would make their hair grow long and thick; and Texaco trucks that dumped oil waste on roads where people walked and suffered the burns of sticky tar in hot sun.

This is not a matter of misty-eyed nostalgia. This is an issue of human rights - clear violations of the indigenous Ecuadoreans' rights to life, security, and self-determination.

When Texaco oilmen descended from helicopters into the jungle in the early 1960s, they gifted the locals with bread, cheese, plates, and spoons. To this day, this is the only compensation any of the indigenous groups have ever received.

Never were they asked for their permission before Texaco executives negotiated a contract with Ecuadorean government officials.

Texaco knew people would die because of what they were doing, and they ignored it. At last count, 1,400 children, women, and men have died of illnesses directly attributed to Texaco's contamination. Cancer rates in communities affected by oil activity are 30 times higher than anywhere else in the country. Other medical teams have documented elevated rates of birth defects, miscarriages, skin disease, and nerve damage.

Two nomadic groups that once inhabited the region, the Tetetes and the Sansahuari, have been wiped out. What Texaco did arguably amounts to criminally negligent homicide.

Now, the remaining indigenous peoples of the Oriente - the Cofán, Siona, Secoya, Kichwa, and the Huaorani people - have taken the fight to Chevron. Organized by a grassroots organization called the Frente de Defensa de la Amazonia--the Amazon Defense Coalition--they are simply demanding through an unprecedented class action lawsuit that Chevron clean up its mess.

The case is now in its 16th year. Chevron (whose human rights statement reads, "We value and respect the cultures and traditions of the many communities in which we work") has tossed up one delay after another.

Yet, the evidence of Texaco's wrongdoing is plain for all to see. Last year, an unnamed Chevron lobbyist was quoted as saying the lesson of Ecuador is that "We can't let little countries screw around with big companies like this--companies that have made big investments around the world."

But as an American, I am appalled that a corporation from our country would treat innocent people with such disdain. We--consumers investors, elected officials, journalists, activists, and citizens--must hold Chevron accountable for its actions, and see that justice is done.

Here in the Oriente, 45 years after Texaco first bore into the ground--16 years after the Ecuadoreans began their fight for justice--traces of paradise are still visible. We must not allow them to vanish.

Ecuador Concerned Over Spying Ahead of Talks with Colombia

QUITO – Ecuadorian Vice President Lenin Moreno said that espionage allegations against Colombia – if proven – could adversely affect next week’s talks aimed at improving bilateral ties.

“If (the allegations by Ecuador’s close ally, Venezuela,) prove to be true, in a certain sense” that would affect Tuesday’s meeting between the foreign ministers in the northern Ecuadorian town of Cotacachi, Moreno said Friday.

Ecuador’s leftist government broke off diplomatic ties with its neighbor on March 3, 2008, two days after a Colombian military strike in its territory killed more than a score of people, including a high-ranking member of the Revolutionary Armed Forces of Colombia, or FARC, guerrilla group.

The two countries began efforts last month to improve ties, although the process has been complicated by Ecuadorian courts’ efforts to prosecute Colombia’s former defense minister and a police general for the military incursion.

On Friday, Ecuadorian President Rafael Correa described Venezuelan counterpart Hugo Chavez’s allegations of Colombian spying operations in his country, Ecuador and Cuba as “extremely serious,” warning that if they prove to be true they could further harm relations with Colombia.

Moreno, for his part, said Ecuador’s Foreign Ministry and Internal and External Security Ministry must investigate whether there is any truth to the allegations. “If so, they will have to register the necessary (diplomatic) complaints” with the neighboring country.

Ecuadorian Security Minister Miguel Carvajal told Ecuavisa television that Quito’s probe into the alleged spying indicates Colombia may have conducted “human intelligence activities at the (Ecuadorian) embassy (in Bogota)” and at its “consulates in Colombia, as well as ... in Ecuadorian territory in 2008 and 2009.”

On Thursday, the Venezuelan government presented in Caracas what officials called “irrefutable evidence” that neighboring Colombia has dispatched spies to Venezuela, Ecuador and Cuba as part of an ambitious, CIA-financed operation.

Interior Minister Tarek El Aissami detailed the contents of documents allegedly originating with Colombia’s DAS security service and unearthed since the apprehension of two suspected Colombian on Venezuelan soil.

He said Colombian President Alvaro Uribe was fully aware of the espionage carried out by the DAS, which reports directly to the office of the head of state and has been repeatedly caught spying on journalists, judges and opposition politicians in its own country.

Uribe’s conservative government has already announced that the DAS will be dismantled.

El Aissami said the purported DAS documents refer to three operations: “Salomon,” targeting Ecuador; “Phoenix,” aimed at Cuba, and “Falcon,” directed at Venezuela.

He said the information was compiled in the course of a DAS internal investigation about a leak of classified information.

The minister did not say how he obtained the DAS report.

Caracas obtained the documents pursuant to the capture of two DAS agents in Venezuela, El Aissami told the National Assembly.

In announcing the arrests of the suspected DAS agents earlier this week, Chavez recalled that he had previously alerted Uribe “about the conspiratorial activities” of Colombian operatives in Venezuela.

Those activities will continue, the Venezuelan leader said, after this week’s signing of an accord with Washington giving the U.S. Armed Forces access to seven Colombian military bases.

Chavez, survivor of a 2002 coup attempt that former U.S. President Jimmy Carter says took place with Washington’s advance knowledge if not active collusion, says the basing agreement poses a threat to his “Bolivarian Revolution.”

Ecuador Announces Decision to Bypass Patents

QUITO – The Ecuadorian government said Thursday in justifying its decision to bypass patents and facilitate the production of lower-cost versions of certain medicines that health “takes precedence” over commercial interests.

Health Minister Caroline Chang told Efe that principle is enshrined in Ecuador’s constitution and noted the existence of international accords that authorize each country to prioritize health “over any commercial interest.”

Left-leaning President Rafael Correa, therefore, “has given priority to public health to guarantee we not only have universal access to free health services, but also to cutting-edge technology and even more so to medicines,” she said.

Chang said that at the moment “some sectors are having difficulty” acquiring low-cost medicines, especially (to combat) cancer and AIDS.

The IFI pharmaceutical industry association, composed of 14 laboratories of multinational companies such as Bayer and Pfizer, on Wednesday accepted the government’s decision to bypass patents to facilitate the production of less expensive generic versions of certain drugs.

The IFI said, however, that it was regrettable that the association had not been consulted before the decision was made.

Asked about the IFI’s concern, the minister said only that Correa’s government made a “public policy” decision.

The Ecuadorian Intellectual Property Institute estimates that 870 patents for medicines have been registered, although its president, Andres Ycaza, said that does not mean that “compulsory licenses” for the production of generic drugs should be granted in each case.

Correa said Saturday that such licenses would be issued to bypass patents and ensure affordable access to more than 2,000 products considered to be in the public interest.

Under intellectual property rules issued by the World Trade Organization, countries can issue compulsory licenses to bypass patents after negotiating with the patent owners and paying them adequate compensation.

Such licenses enable the local production, for example, of generic medicines or certain products for agriculture to meet the needs of the domestic market. Products manufactured under this regime cannot be exported.

The Ecuadorian government also plans to issue compulsory licenses for agrochemical products. EFE