By Darrall Cozens in Quito, Ecuador
from Marxist.com
Friday, 14 December 2007
There is no doubt that the bourgeoisie in Latin America is seriously worried about the political developments in the subcontinent, especially the movements towards some kind of socialism in Venezuela, Bolivia and Ecuador.
In Venezuela, they rubbed their hands with glee when Chavez lost the referendum 9 days ago, but they did not jump for joy. The most serious of them recognised that the overwhelming balance of forces is still with Chavez, as the main winner in the vote was not the opposition but abstentionism. The reasons for this have been analysed elsewhere in Alan Wood's excellent article.
In Bolivia, the Constituent Assembly has just approved a new Constitution that will be put to a referendum in two stages, the issue of the Constitution and that of the latifundia in the countryside where it is proposed that land that is not being used productively will be expropriated by the State. The bourgeoisie is foaming at the mouth over these proposals and is threatening civil disobedience, strikes and even the secession of part of Bolivia with the formation of a new State called Sucre. Rather than accept a democratic vote, even one that is carried out on bourgeois electoral terms, they are making plans to balkanise Bolivia.
In Ecuador, the situation is not as clear-cut because you have Rafael Correa, elected as president by an electoral alliance called Alianza Pais which has now metamorphosed into Acuerdo Pais with 80 members in the 130 member Constituent Assembly (CA).
For over a week now this CA has been meeting and discussing the draft of a new Constitution and new laws. While it has been meeting, the government has been governing and the State machine of a capitalist Ecuador has been brutally suppressing any form of protest that may harm the production of national wealth.
Take the example of what has been happening in the parish of Duyuma in the province of Orellana. One of the more serious bourgeois papers, El Universo, published a detailed account of what happened.
Until the 1960's, the area was all jungle and home to the Huaorani and Tagaeri people. Then the oil exploration started, oil was found, and the indigenous people were driven out. The area was then repopulated by poor farmers forced to migrate because of drought in their home areas. The parish was called Duyama after one of the Huaorani people.
Today a large part of the population in the area has fled into the jungle due to police and military repression and 22 men and boys have been imprisoned. A population of 2,800 has been confronted by an armed military presence of 1,000. There is a state of siege from 9 in the evening to 5 in the morning.
Three weeks ago a strike began in the area which had nothing to do with the oil industry. It was in protest over an access road into the area not being finished. The private contractor claimed that the government owed money for work that had been done; so all work was stopped until the government paid up. The local people were angry because they had been waiting for decades for a tarred road and now they had a partially completed one.
On November 24th an assembly was called and delegates from 89 communities in the area attended. They came from areas where there are 49 oil wells. They decided to block the access road on Monday, 26th November. They decided that the only way to get the government to do anything to provide basic services was by direct action.
This was the 11th protest in the area since 1998 and each one had basically involved three issues: the provision of the access road and basic services; the oil companies must recruit unskilled labour from the local area and oil leakages must stop.
The oil industry has therefore not benefited the local area. There is now electricity but the supply keeps breaking down. There is no safe drinking water so it has to be brought in by tankers. Women wash clothes in the streams that are often contaminated by spills.
"The wealth that comes out of these oil pipes is not for the poor, it is for those higher up. As you are poor, you have no right to make any claims," said a 55-year-old female resident.
When the roads were blocked by the protesters from the area, oil production was paralysed and losses amounted to $3million per day as daily output was around 36,000 barrels.
A sate of emergency was declared and on Friday November 30th the Army came in. Local people said it was like a war as the Army came in firing, forcing their way into homes, dragging out the men and almost throttling them before tying them up like sacks.
22 men and boys are in prison in Tena, 7 hours away from Dayuma, accused of terrorism and sabotage by endangering national security and public goods and services. If they are convicted, they face years in prison.
When family members went to a meeting of the CA on Friday, December 7th, the president of the CA promised to set up an enquiry. While this promise was being made, the Catholic Church, that hates President Correa for his "socialist" views, jumped into the political vacuum along with human rights organisations, and expressed their support for the 22 prisoners.
And what was the action of the Socialist President Correa? He threatened to resign if the CA came out in favour of the 22. He claims that in the area of Dayuma, "there are certain mafia elements connected with minor local politicians who are trying to carry out an extortion of the oil company."
The whole episode highlights two things: the needs of ordinary people are not being met and when they protest, they suffer the full weight of the State machine; and secondly, the CA is discussing and deciding on the content of a new Constitution and new laws while ignoring the reality of the lives of ordinary people. In the words of one activist on the left in the Acuerdo Pais, "They (Assembly members) are concentrating on the process and are not thinking about what they will be able to do with the new laws." Another activist claimed that "the people are becoming restless" because nothing is being done about meeting their basic needs.
It goes further. Many socialist activists in the AP are making the claim that the new laws and the new Constitution will actually create a more powerful and more efficient state machine to protect the interests of the bourgeoisie!
The issues now being raised are what is the function of a "socialist" President and what are the functions of an elected CA? Whilst Correa is proposing some meaningful reforms, such as keeping private companies out of the national Social Security system, he is also allowing the Sate machine to take action against anyone that may stop the production of national wealth. And while the CA debates and decides, it appears to be floating in mid air unconnected with real life. One opinion poll put the credibility of the CA at 52% and that of Correa at 62%. This is far below the figure of 82% support that the statute to set up the CA and close the Congress received back in April of this year.
The electoral coalition of AP is now, inevitably, facing divisions as different class pressures are put on its members. There is a sizeable grouping of left wing members, many of whom belonged to revolutionary movements in the 1970s, such as the MIR. They see the need to formulate a coherent left wing identity that can present plans and proposals to the CA, but they also believe that if they drive too hard in that direction, the fragile coalition may split and Correa will lose his majority.
While these issues are being discussed amongst the left, surveys have reported a massive shift in the consciousness of ordinary people in Ecuador in relation to the role of the State, private industry and class conflict. 38% of people now think that the State can solve all problems compared to 25% in 1998. Only 44% now believe that a market economy is the best for the country, while 73% believed that in 1998. 43% believe that private industry is essential for development, but in 1998 66% believed that. A staggering 90% believed that the conflict between rich and poor is very strong.
We know that surveys are often unreliable, but we also know that they can contain a grain of truth. What these figures seem to indicate is a massive shift in people's opinions away from capitalism and towards another way of managing society where the state has a greater role.
Such a shift must have an effect on the attitudes and perspectives of the more socialist elements in the AP. At the moment they are at the stage of trying to gather information on important areas of the economy, such as the oil industry and telecommunications, so that they can perform more effectively in the CA. Perhaps more than anything the need for the Assembly members to organise alternative sources of information, rather than relying on civil servants to provide them, demonstrates how little say the elected CA has over the State machine. The CA is not the government!
If the CA does not form and control the government, does not discuss and decide on issues that affect ordinary people, isn't it no more than a talking shop despite the best of intentions of many of its members?
Some on the left in the AP see the answer in putting key people who are politically reliable into key positions in areas of the economy in order to fight corruption. In other words they see the possibility of changing the system by changing the people in charge - a concept that comes from Liberalism and Anarchism, not Socialism.
Another section on the left sees the need to develop a coherent left wing/socialist political identity that can formulate ideas and programmes, and to develop organisational structures to fight for their proposals. In other words they are raising the need to form a socialist party to give a political and social base to Correa, even if at this time they do not want to recognise that that is what they are doing.
The fundamental question however that needs to be addressed is whether the capitalist class in Ecuador, which is tied to the interests of multinational corporations and US imperialism, is capable of developing the productive forces that will create the necessary wealth to pay for the programme of reforms that Correa wants to put in place. Will the bourgeoisie be able to play an independent role, independent of foreign interests, in developing the economy for the benefit of all the people of Ecuador? Neither the economic perspectives, both short and long term, nor past experience support such a role.
The real weakness of the bourgeoisie is reflected in the fact that the CA is developing laws and a Constitution that will strengthen the workings of a bourgeois state machine. If the state machine has to be strengthened, then it must have been weak to start with, a weakness that reflects the weakness of the ruling class.
If this is the case, then a serious question has to be directed towards the many excellent, ideologically committed and capable socialist comrades who form an essential part of the AP. Is it the task of socialists to work towards the strengthening of a capitalist state machine? Is it the task of socialists to make the capitalist class more efficient and more productive?
Such ideas, the so-called Two Stage Theory, were prevalent for over 50 years, beginning in the 1930s. The theory was put forward by Stalin and his supporters in the Soviet Union that before socialism could be established, it was necessary to create a healthy developed capitalist system that would develop the productive forces to lay the material basis that would facilitate the development towards socialism. When the bourgeois state machine collapsed in many parts of Spain during the Civil War, the Spanish Communist Party, following the Two Stage Theory, worked to recreate the bourgeois state machine and destroyed the Spanish revolution in the process. Is this the task of serious socialist comrades in the Acuerdo Pais? To put off the issue of Socialism until a later date and concentrate on building a "healthy" capitalist system? If it isn't, what should the task be when the comrades themselves recognise that capitalism worldwide is in a serious crisis.
I was fortunate enough to be invited to a political discussion on this very theme where two CA members were present. The general trend of the discussion was the need to create a coherent left political ideology that would give a political leadership and direction to the discussions in the CA. It was recognised that part of this process must be to strengthen the base organisations and fight for these ideas within them. The aim should be to develop ideas and perspectives, along with a structure to implement them - in other words a party that would fight to change society.
And what a marvellous opportunity the comrades have in Ecuador where they have political representation in the CA that could be used as a platform to speak over the heads of the CA members to a society at large that is already developing in the direction of rejecting capitalism. The fundamental aim however of any process of raising the political level of the members in the base organisations of AP must not be to strengthen the base of capitalism but to explain patiently with facts, figures and ideas that capitalism and the bourgeoisie in Ecuador are incapable of taking society forward.
The comrades in the CA have made a start. They have rejected the intrusion of private companies in the state Social Security system. They now see the need to thoroughly analyse the workings of the oil industry. For what purpose? To speak in the CA with more authority on the subject? No, it must be to expose the corruption and fabulous salary levels paid to the managers and directors in the oil industry. The demand should be to open the books to see where all the wealth that has been generated is going. In order to fight corruption the demand should be made for the nationalisation of the oil industry under workers' control and management. The industry is still in private hands although the state takes 99% of profits.
The comrades want to analyse how the banking system works. Marx spent many years studying to understand the inner workings of capitalism in order to overthrow it and create a new form of society. Banks exist to make profits for their shareholders. If greater profits can be made in commodity speculation, increasing land prices or paintings by Rembrandt, then the banks will invest in these. If greater profits cannot be made from investment in the productive forces, there will be a strike of capital. They will simply not invest.
But if the productive forces are not developed, then the material resources will not be there to solve the problems of housing shortages, lack of sufficient schools and hospitals, as well as job opportunities. If the banks do not play this role, then the demand must be to take them into public ownership. Meeting needs requires planning development. You cannot plan what you do not control and you cannot control what you do not own. What goes for the banks also goes for the large multinational corporations that live off Ecuadorian society like leeches.
Imagine what levels of living standards could be achieved when the democratically planned development of Ecuadorian society unites the rich natural resources with the ingenuity of its people. It would become a model for the rest of Latin America and the world. All of this however will be impossible on the basis of a capitalist system that is in crisis. It will only be possible on the basis of a democratically controlled and developed socialist society.
For that to be achieved however requires the development of a politically conscious revolutionary leadership and a revolutionary party that can lead and channel the energies of people in Ecuador to change society. The setting up of a socialist party at this moment in time would lay the basis for the development of such a revolutionary party. The bull must be taken by the horns. Socialists everywhere should be working to overthrow a crisis ridden capitalist system that has outlived its historical usefulness, not working to consolidate and strengthen such a system.
Darrall Cozens in Quito, Ecuador
9 December 2007
Sunday, December 23, 2007
Ecuador: Constituent assembly to `refound nation'
Duroyan Fertl
Green Left Weekly, 7 December 2007
On November 29, Ecuador’s new constituent assembly sat for the first time, beginning the process of rewriting the country’s constitution as part of self-described socialist President Rafael Correa’s project of refounding the country through a “citizen’s revolution”.
One of its first acts was to suspend the existing Congress without pay until the assembly process was completed — taking control of the country itself for the duration. While this move drew protests from the right-wing opposition parties, who refuse to recognise the assembly’s authority, Correa submitted his resignation (which was refused) to the assembly, a symbolic move to emphasis the placing of the future in the assembly’s hands.
The 130-member body now has six months, with the possibility of a 60-day extension, to draft a new constitution that will then be put to a national referendum next year. If this is accepted, new elections wiil be held.
The assembly, presided over by Correa’s former adviser, Alberto Acosta, has already agreed on a set of by-laws and created 10 commissions of 13 members each to address fundamental areas of reform, including development, fundamental rights, territorial order, work and production, and the new legislative model.
Elected in November 2006 on a pledge to “refound” the country, Correa has initiated what he calls a “citizen’s revolution” to overcome the massive exclusion that marks Ecuador, where over 50% of the population lives in poverty.
A former lecturer in economics, Correa was finance minister briefly in 2005, before being forced to resign after prioritising social spending over repaying the foreign debt. Correa was elected after more than a decade of instability in the small Andean nation, which has seen eight presidents in the past 10 years — three of whom were overthrown by popular uprisings — and a massive economic crisis in 2000, when the local currency was replaced with the US dollar.
The demand for the constituent assembly has its roots in the various Ecuadorian social movements, including the powerful national indigenous federation CONAIE that represents the country’s 40% indigenous population and played a significant role in overthrowing several presidents.
In April, a national referendum on the assembly passed with more than 80% support, and Correa’s party, Country Alliance — which refused to run for the highly unpopular Congress — received over 60% of the seats.
For Correa, however, the rewrite of the constitution is only the beginning of his project. At his inauguration in January, Correa explained the five basic “planks” of his proposed “citizen’s revolution”, consisting of five separate but related “revolutions” in Ecuadorian society.
Firstly, a “political revolution”, to transform the formal, “plasticine” democracy, which excludes citizens from the democratic process between elections, into the participatory kind where people will have the right to recall elected officials.
Secondly, an “economic revolution”, to do away with the neoliberal economic model that has caused massive poverty and exploitation, and to replace it with a system that prioritises social needs over profits.
Thirdly, an “ethical revolution” against the bureaucracy, corruption and non-payment of corporate taxes that are rife and which have cost the economy billions of dollars.
Fourthly, a “social revolution”, to recover public control over education, health care, and housing; to increase state spending in the social, cultural and environmental sectors; and to prioritise a healthy environment and encourage greater cultural diversity.
Finally, a “revolution of sovereignty”, deepening the process of Latin American integration to challenge US domination. Two central projects in this integration are already well underway — The Union of South American Nations that was officially formed in April with its capital in Ecuador; and the Bank of the South, which is a project to provide low interest credit to developing countries in opposition to the World Bank and International Monetary Fund and is due to be inaugurated on December 8.
Ecuador, the fifth-largest oil producer in South America, also returned to OPEC on December 5, and began arguing that the body should start using a stronger currency than the US dollar.
However, Ecuador’s economy is not as strong as Venezuela’s — which has embarked on a similar process of transformation. Ecuador suffers from declining oil production from decrepit infrastructure, and the destructive effects of a “dollarised” economy. Recent oil protests in Orellana province by locals demanding better infrastructure reduced overall production by 20%. In response, Correa removed the head of the national oil company, as well as interior minister Gustavo Larrea, for not heading off the crisis.
To counteract this, Ecuador has signed an energy integration accord with Venezuela that involves the construction of a refinery in Ecuador, enabling Ecuador to refine its own oil and export it at higher prices. In early October, Correa increased the state’s share in windfall oil profits, from 50-99%, and on his weekly radio program on December 1, announced a proposal to raise taxes on higher incomes, luxury items, and speculation.
Despite its reliance on oil, Ecuador is also pursuing an ambitious policy with regards to the environment, asking developed nations to subsidise Ecuador not to drill for oil in the fragile yet oil-rich Yasuni national park. Acosta has repeatedly stated that the new constitution should ban open-pit mining.
Like Venezuelan President Hugo Chavez, Correa describes the aim of this project as building a “socialism of the 21st Century”, which will be different from the bureaucratic “socialism” of the Soviet Union. Instead, Correa says, this socialism must be participatory, democratic, and without dogmas.
Like in Venezuela, the opposition to the process from the elite has been initially weak and splintered, increasingly relying on corporate power and misinformation in the private media to hinder the process of change. The assembly in Ecuador has come under the same media attacks as similar reforms in Venezuela as well as Bolivia — where elite opposition to a similar constituent assembly process has sparked a political crisis.
To counteract this imbalance, Ecuador’s first nationally-owned television station, Ecuador TV, was opened on November 29. Ecuador’s ruling class, made up of around 100 families, has relied upon its control of the country’s seven television channels, and other media, to dictate public opinion. Correa argued that for the ruling class, “Democracy is good until the danger arises that it will … redistribute the nation’s wealth. At that moment, the press becomes aggressive.”
Green Left Weekly, 7 December 2007
On November 29, Ecuador’s new constituent assembly sat for the first time, beginning the process of rewriting the country’s constitution as part of self-described socialist President Rafael Correa’s project of refounding the country through a “citizen’s revolution”.
One of its first acts was to suspend the existing Congress without pay until the assembly process was completed — taking control of the country itself for the duration. While this move drew protests from the right-wing opposition parties, who refuse to recognise the assembly’s authority, Correa submitted his resignation (which was refused) to the assembly, a symbolic move to emphasis the placing of the future in the assembly’s hands.
The 130-member body now has six months, with the possibility of a 60-day extension, to draft a new constitution that will then be put to a national referendum next year. If this is accepted, new elections wiil be held.
The assembly, presided over by Correa’s former adviser, Alberto Acosta, has already agreed on a set of by-laws and created 10 commissions of 13 members each to address fundamental areas of reform, including development, fundamental rights, territorial order, work and production, and the new legislative model.
Elected in November 2006 on a pledge to “refound” the country, Correa has initiated what he calls a “citizen’s revolution” to overcome the massive exclusion that marks Ecuador, where over 50% of the population lives in poverty.
A former lecturer in economics, Correa was finance minister briefly in 2005, before being forced to resign after prioritising social spending over repaying the foreign debt. Correa was elected after more than a decade of instability in the small Andean nation, which has seen eight presidents in the past 10 years — three of whom were overthrown by popular uprisings — and a massive economic crisis in 2000, when the local currency was replaced with the US dollar.
The demand for the constituent assembly has its roots in the various Ecuadorian social movements, including the powerful national indigenous federation CONAIE that represents the country’s 40% indigenous population and played a significant role in overthrowing several presidents.
In April, a national referendum on the assembly passed with more than 80% support, and Correa’s party, Country Alliance — which refused to run for the highly unpopular Congress — received over 60% of the seats.
For Correa, however, the rewrite of the constitution is only the beginning of his project. At his inauguration in January, Correa explained the five basic “planks” of his proposed “citizen’s revolution”, consisting of five separate but related “revolutions” in Ecuadorian society.
Firstly, a “political revolution”, to transform the formal, “plasticine” democracy, which excludes citizens from the democratic process between elections, into the participatory kind where people will have the right to recall elected officials.
Secondly, an “economic revolution”, to do away with the neoliberal economic model that has caused massive poverty and exploitation, and to replace it with a system that prioritises social needs over profits.
Thirdly, an “ethical revolution” against the bureaucracy, corruption and non-payment of corporate taxes that are rife and which have cost the economy billions of dollars.
Fourthly, a “social revolution”, to recover public control over education, health care, and housing; to increase state spending in the social, cultural and environmental sectors; and to prioritise a healthy environment and encourage greater cultural diversity.
Finally, a “revolution of sovereignty”, deepening the process of Latin American integration to challenge US domination. Two central projects in this integration are already well underway — The Union of South American Nations that was officially formed in April with its capital in Ecuador; and the Bank of the South, which is a project to provide low interest credit to developing countries in opposition to the World Bank and International Monetary Fund and is due to be inaugurated on December 8.
Ecuador, the fifth-largest oil producer in South America, also returned to OPEC on December 5, and began arguing that the body should start using a stronger currency than the US dollar.
However, Ecuador’s economy is not as strong as Venezuela’s — which has embarked on a similar process of transformation. Ecuador suffers from declining oil production from decrepit infrastructure, and the destructive effects of a “dollarised” economy. Recent oil protests in Orellana province by locals demanding better infrastructure reduced overall production by 20%. In response, Correa removed the head of the national oil company, as well as interior minister Gustavo Larrea, for not heading off the crisis.
To counteract this, Ecuador has signed an energy integration accord with Venezuela that involves the construction of a refinery in Ecuador, enabling Ecuador to refine its own oil and export it at higher prices. In early October, Correa increased the state’s share in windfall oil profits, from 50-99%, and on his weekly radio program on December 1, announced a proposal to raise taxes on higher incomes, luxury items, and speculation.
Despite its reliance on oil, Ecuador is also pursuing an ambitious policy with regards to the environment, asking developed nations to subsidise Ecuador not to drill for oil in the fragile yet oil-rich Yasuni national park. Acosta has repeatedly stated that the new constitution should ban open-pit mining.
Like Venezuelan President Hugo Chavez, Correa describes the aim of this project as building a “socialism of the 21st Century”, which will be different from the bureaucratic “socialism” of the Soviet Union. Instead, Correa says, this socialism must be participatory, democratic, and without dogmas.
Like in Venezuela, the opposition to the process from the elite has been initially weak and splintered, increasingly relying on corporate power and misinformation in the private media to hinder the process of change. The assembly in Ecuador has come under the same media attacks as similar reforms in Venezuela as well as Bolivia — where elite opposition to a similar constituent assembly process has sparked a political crisis.
To counteract this imbalance, Ecuador’s first nationally-owned television station, Ecuador TV, was opened on November 29. Ecuador’s ruling class, made up of around 100 families, has relied upon its control of the country’s seven television channels, and other media, to dictate public opinion. Correa argued that for the ruling class, “Democracy is good until the danger arises that it will … redistribute the nation’s wealth. At that moment, the press becomes aggressive.”
Ecuador says to pardon small-time drug smugglers
QUITO, Dec 22 (Reuters) - Ecuadorean President Rafael Correa on Saturday said he will ask for the pardon of small-time drug smugglers, or mules, who have spent years in prison for trying to traffic a few grams of cocaine to the United States.
"Its unthinkable that an unemployed person who is not a criminal and is desperate to feed its children spends 12 or 16 years in jail for trying to travel to the United States with 300 grams (10.6 ounces) of drugs," Correa said during his weekly radio address. "We are not going to allow this injustice."
The 44-year-old U.S.-trained economist has admitted that his own father was arrested for smuggling drugs to the United States nearly 40 years ago.
Correa, who is widely popular among the poor for his pledges to battle elites, said the United States pressured Latin American governments to slap tougher penalties on drug smugglers in the 1990s.
"I assure you that if these were American mules, the law would have been revised a long time ago, but because they are Latin Americans they go to jail for 16 years," Correa said.
He also said the government will review the current anti-drug law that is too harsh on the poor who are easily abused and mislead by crime lords to smuggle drugs.
Powerful cocaine cartels in Colombia and Peru often use neighboring Ecuador as a main thoroughfare for smuggling the white powder drug to the United States.
Smugglers are paid to carry drugs in their luggage, tapped around their bodies or sometimes inside their stomachs after swallowing condoms stuffed with cocaine or heroine.
Hundreds of small-time drug smugglers, including some foreigners but most of them Latin Americans, often spend years in Ecuadorean jails without a sentence.
"Its unthinkable that an unemployed person who is not a criminal and is desperate to feed its children spends 12 or 16 years in jail for trying to travel to the United States with 300 grams (10.6 ounces) of drugs," Correa said during his weekly radio address. "We are not going to allow this injustice."
The 44-year-old U.S.-trained economist has admitted that his own father was arrested for smuggling drugs to the United States nearly 40 years ago.
Correa, who is widely popular among the poor for his pledges to battle elites, said the United States pressured Latin American governments to slap tougher penalties on drug smugglers in the 1990s.
"I assure you that if these were American mules, the law would have been revised a long time ago, but because they are Latin Americans they go to jail for 16 years," Correa said.
He also said the government will review the current anti-drug law that is too harsh on the poor who are easily abused and mislead by crime lords to smuggle drugs.
Powerful cocaine cartels in Colombia and Peru often use neighboring Ecuador as a main thoroughfare for smuggling the white powder drug to the United States.
Smugglers are paid to carry drugs in their luggage, tapped around their bodies or sometimes inside their stomachs after swallowing condoms stuffed with cocaine or heroine.
Hundreds of small-time drug smugglers, including some foreigners but most of them Latin Americans, often spend years in Ecuadorean jails without a sentence.
Ecuador's Correa Considers Price Controls for Food Staples
By Stephan Kueffner
Dec. 22 (Bloomberg) -- Ecuador's President Rafael Correa is considering price controls along with antitrust legislation to fend off increases in everyday staples such as milk and rice.
``I don't believe much in official prices, above all if one wants to control all prices, but with five or six key products it's possible,'' said Correa today in his weekly radio address.
The government also wants to offer consumers subsidized goods out of a basic basket of products, as well as free up imports of these staples, he added.
Correa, a 44-year-old economist who studied in Belgium and the U.S., said he plans to introduce an antitrust bill, which would help insure competitive pricing, as well as push banks to improve how they operate.
This week, Agriculture Minister Carlos Vallejo got dairies to roll back a five-cent price increase in the price of milk to 60 cents from 65 cents.
Argentina and Venezuela have used price controls to try to control double-digit inflation. Ecuador has the region's lowest annual inflation rate at 2.7 percent as of November.
The government also wants to reform the financial system, introducing deposit guarantees and liquidity reserves in case a bank goes bankrupt, Correa said.
``We have one of the most inefficient banking systems in the region,'' said Correa. ``It has the highest operating costs in Latin America.'' Boosting efficiency will allow them to cut interest rates, he added, without specifying a level to which he expects them to drop. ``In January, via the central bank, a cut in interest rates will be decided,'' Correa said.
Correa pledged to push ahead a tax package that legislators in the government-dominated constitutional assembly plan to vote on by Dec. 29.
The government says reform will help fight tax evasion and introduce progressive taxation, leading the 20 percent wealthiest to pay more while easing the burden on the poor and the middle class.
Other plans for legislation include eliminating per-hour work contracts and raising the minimum wage, Correa said.
Dec. 22 (Bloomberg) -- Ecuador's President Rafael Correa is considering price controls along with antitrust legislation to fend off increases in everyday staples such as milk and rice.
``I don't believe much in official prices, above all if one wants to control all prices, but with five or six key products it's possible,'' said Correa today in his weekly radio address.
The government also wants to offer consumers subsidized goods out of a basic basket of products, as well as free up imports of these staples, he added.
Correa, a 44-year-old economist who studied in Belgium and the U.S., said he plans to introduce an antitrust bill, which would help insure competitive pricing, as well as push banks to improve how they operate.
This week, Agriculture Minister Carlos Vallejo got dairies to roll back a five-cent price increase in the price of milk to 60 cents from 65 cents.
Argentina and Venezuela have used price controls to try to control double-digit inflation. Ecuador has the region's lowest annual inflation rate at 2.7 percent as of November.
The government also wants to reform the financial system, introducing deposit guarantees and liquidity reserves in case a bank goes bankrupt, Correa said.
``We have one of the most inefficient banking systems in the region,'' said Correa. ``It has the highest operating costs in Latin America.'' Boosting efficiency will allow them to cut interest rates, he added, without specifying a level to which he expects them to drop. ``In January, via the central bank, a cut in interest rates will be decided,'' Correa said.
Correa pledged to push ahead a tax package that legislators in the government-dominated constitutional assembly plan to vote on by Dec. 29.
The government says reform will help fight tax evasion and introduce progressive taxation, leading the 20 percent wealthiest to pay more while easing the burden on the poor and the middle class.
Other plans for legislation include eliminating per-hour work contracts and raising the minimum wage, Correa said.
Ecuador to Confront Opposition Designs
Quito, Dec 22 (Prensa Latina) Ecuadorean President Rafael Correa has warned the opposition that he will mobilize the people to face attempts to destabilize the country through strikes and protests.
If you (the opposition) take to the streets 10,000 or 15,000 people using your wealth and pressing small business people operating in your areas, we will follow suit by doubling or tripling that figure, stressed Correa.
At a military promotion ceremony in Guayaquil on Friday, the Ecuadorean president said the people's revolution counts on the support from the silent, overwhelming majorities, as occurred in the polls on September 30.
If you (the opposition) take to the streets 10,000 or 15,000 people using your wealth and pressing small business people operating in your areas, we will follow suit by doubling or tripling that figure, stressed Correa.
At a military promotion ceremony in Guayaquil on Friday, the Ecuadorean president said the people's revolution counts on the support from the silent, overwhelming majorities, as occurred in the polls on September 30.
New Ecuador Constitution in May
Quito, Dec 21 (Prensa Latina) The Ecuadorian Constituent Assembly will conclude the Constitution by May 2008, announced the Alianza Pais movement.
Assembly members should approve the Constitution on May 20 and 45 days later it will be sent to the people in a referendum for its ratification, according to the Alianza Pais schedule, broadcast by national press media.
The legislators are currently defining work agendas to clarify the mechanisms of writing the new political constitution according to citizen proposals and the project presented by the National Council of Higher Education.
If the text is approved in the referendum then the next step is to call for general elections on October of 2008.
Ecuadorian president, Rafael Correa, who defends the proposal of one reelection for all high officials, will participate.
Local radio stations announced that the schedule was established in a meeting last week between Augusto Barrera, the link between the government and the Assembly, and the Alianza Pais movement.
It isnót ruled out that after general elections the Legislature or a commission chosen by the Constitutent Assembly will continue to function until the new Congress is set up in January of 2009.
Assembly members should approve the Constitution on May 20 and 45 days later it will be sent to the people in a referendum for its ratification, according to the Alianza Pais schedule, broadcast by national press media.
The legislators are currently defining work agendas to clarify the mechanisms of writing the new political constitution according to citizen proposals and the project presented by the National Council of Higher Education.
If the text is approved in the referendum then the next step is to call for general elections on October of 2008.
Ecuadorian president, Rafael Correa, who defends the proposal of one reelection for all high officials, will participate.
Local radio stations announced that the schedule was established in a meeting last week between Augusto Barrera, the link between the government and the Assembly, and the Alianza Pais movement.
It isnót ruled out that after general elections the Legislature or a commission chosen by the Constitutent Assembly will continue to function until the new Congress is set up in January of 2009.
Chavistas in Quito
From Forbes.com
by Kerry A. Dolan
Ecuador's Rafael Correa is puffing up his chest with anti-American rhetoric. Should we give him a break on tariffs anyway?
Venezuela, wallowing in anti-American populism, is a lost cause. But is Ecuador destined to go down the same chute? That's an open question.
Until recently Ecuador was on a growth path. In 2000 it stopped runaway inflation by adopting the U.S. dollar as its currency. In 2002 the U.S. granted the country favored status as a trading partner, as a reward for cracking down on the illegal drug trade. And so exports boomed, with 53% of 2006's $13 billion total going to the U.S. Out in the countryside the peasants grew broccoli and flowers instead of transporting cocaine; in the cities the factory workers churned out chefs' uniforms and indigo for jeans.
Now the political winds have shifted in both Quito and Washington. In late 2006 Ecuador elected a leftist president, Rafael Correa, who is making a career of denouncing oil corporations, banks and Americans. In the U.S. politicians are having second thoughts about promoting free trade with Latin America. The five-year-old law allowing in duty free many categories of imports from Ecuador is set to expire in February, and might well not be renewed.
The tariff exemptions have helped some export categories grow as much as 40% a year, creating work apart from the narco fare that keeps neighboring Colombia so busy. "This is the most highly successful antidrug program in the world, and it doesn't cost the U.S. taxpayer anything," pleads Jeff S. Sheedy, an American who heads the Ecuadoran association of textile manufacturers and is one himself. He says 360,000 jobs are linked to the trade rules, a significant number in a country of 13.7 million people.
But in May 2006 Ecuador seized the fields of Occidental Petroleum, claiming that the company had violated its operating contract. Oxy is seeking $1 billion in damages in an arbitration. Six months later Ecuadorians elected Correa, who, among other things, has busied himself trying to vacuum up the "windfall profits" of the remaining private oil operations. The tax rate on oil extractions (per a recent executive decree) is 99% of any yield above $24 a barrel. Not exactly conducive to attracting capital from abroad.
Correa has indulged in the antigringo rhetoric of the region, at least that directed at Washington. After Venezuela's Hugo Chávez last year called President Bush a "devil" at the UN General Assembly, Correa joked on Ecuadoran TV that Chávez had insulted the devil. Since taking office he has threatened to default on Ecuador's foreign debt, expelled the chief World Bank representative from Ecuador, sued an Ecuadoran journalist for writing a column that criticized him and threatened to pass a law further capping private banks' interest rates.
"Some of the congressional staffers ask us, 'Why should we extend [trade] preferences to a country that speaks badly about the U.S.?'" says Alfredo Zeller, an American whose Provefrut, with $30 million in revenues, is Ecuador's largest exporter of frozen broccoli.
Ecuadorians are ambivalent about free-market capitalism. Dollarization allowed more people to buy big-ticket items. There's been a 50% increase in the number of cars in Quito in the last five years. But all the while the usual disparities of wealth persisted--nearly 40% of Ecuador's population live in poverty--and the charismatic Correa marshaled a political force to exploit this. Lately he's been seeking to consolidate his victory with a proposal for a new constitution that critics say would increase the president's powers. Chávez just stumbled in his power grab; Correa's still on a roll.
A youthful-looking 44, Correa isn't letting a lack of political experience slow him down. With a doctorate in economics from the University of Illinois at Urbana-Champaign, he was teaching at a university in Quito when he was made minister of finance in 2005. He quit after four months, in part to protest the World Bank's withholding of a loan to Ecuador.
Correa's election followed a long period of instability. The country suffered through six presidents in a decade, several of whom were booted out of office. One, Abdalá Bucaram, nicknamed El Loco, was declared mentally incompetent by the country's congress and fled to Panama.
Correa denounces the former ruling elite. "The citizens' revolution marks the end of the oligarchs' party and the pretensions of those who always believed they owned the country," he boomed in a typical speech in September in the coastal province of Manabí. And he thumbs his nose north: Asked about renewing a U.S. military base lease, he advised reporters that one for Ecuador in Miami might give Americans a similar taste of foreign boots.
Much of what Correa's government says it wants to do sounds sensible: diversify the economy; add half a million jobs by 2011; improve health care and schools; build hydroelectric plants; make the roads better; and perhaps build a new refinery so the nation doesn't have to import gasoline while exporting oil.
Unemployment stands at 11% and underemployment at 47%--and that doesn't include at least 1.5 million Ecuadorians who have gone abroad to find work, primarily in Spain and the U.S. They send home $2 billion annually in remittances. The export of oil from government-owned fields--not including, that is, "windfall" taxes--accounted in 2006 for 45% of government income.
Correa faced resistance from the national legislature, which was dissolved in late November by the newly elected constitutional assembly--62% of whose members belong to Correa's party. The assembly is charged with writing a new constitution within six months, the twentieth since the country's birth in 1830.
Though the U.S. is Ecuador's most important trading partner, Alberto Acosta, who was elected to the constitutional assembly and serves as its president, opposes negotiations for a free trade agreement with the U.S. Instead, he wants "a commercial agreement"--some kind of half-step toward free trade. And Acosta vows to revise all the mining concessions, which affect several publicly traded Canadian companies preparing to unearth gold and copper, to allow Ecuadorians to vote on whether they want mining operations near their homes or not. "Our wealth is not in the ground, but in our biodiversity," he declares.
Meantime, Correa has boosted subsidies for gasoline and flour and for army and police pension funds. Subsidies, by some accounts, eat up 40% of the government budget. The president "is a very smart politician but a very bad economist," says Mauricio Pozo, a former finance minister who now runs a large private hospital in Quito. "Expenditures are growing at 32%, but the economy is only growing at 3%." Isn't the government enjoying a windfall from high oil prices? Not fully, since Petroecuador is inept. Its production in 2007 was 10% less than in 2006, estimates Vicente Albornoz of economic think tank Cordes, even though the later year includes Oxy's wells.
Nonetheless, those toughing it out for exports don't want to see any more political doors shut. Dean Edward Rule, an American whose Conectiflor consultancy introduces new flower breeds to Ecuadoran growers, wants the U.S. Congress to see strains of moderation amid the revolutionary rhetoric. Says Rule: "Ecuador is not Venezuela. It doesn't need a shove toward the Venezuelan way."
But Quito's business chiefs aren't enthusiastic and the banks especially are feeling squeezed. Their profits plaint, however, seems to fall on deaf ears. Mauricio Dávalos, a former member of Correa's cabinet who held the unwieldy title of Minister of Economic Production & Quality Coordination, smiles and says, "That's life in the tropics!"
by Kerry A. Dolan
Ecuador's Rafael Correa is puffing up his chest with anti-American rhetoric. Should we give him a break on tariffs anyway?
Venezuela, wallowing in anti-American populism, is a lost cause. But is Ecuador destined to go down the same chute? That's an open question.
Until recently Ecuador was on a growth path. In 2000 it stopped runaway inflation by adopting the U.S. dollar as its currency. In 2002 the U.S. granted the country favored status as a trading partner, as a reward for cracking down on the illegal drug trade. And so exports boomed, with 53% of 2006's $13 billion total going to the U.S. Out in the countryside the peasants grew broccoli and flowers instead of transporting cocaine; in the cities the factory workers churned out chefs' uniforms and indigo for jeans.
Now the political winds have shifted in both Quito and Washington. In late 2006 Ecuador elected a leftist president, Rafael Correa, who is making a career of denouncing oil corporations, banks and Americans. In the U.S. politicians are having second thoughts about promoting free trade with Latin America. The five-year-old law allowing in duty free many categories of imports from Ecuador is set to expire in February, and might well not be renewed.
The tariff exemptions have helped some export categories grow as much as 40% a year, creating work apart from the narco fare that keeps neighboring Colombia so busy. "This is the most highly successful antidrug program in the world, and it doesn't cost the U.S. taxpayer anything," pleads Jeff S. Sheedy, an American who heads the Ecuadoran association of textile manufacturers and is one himself. He says 360,000 jobs are linked to the trade rules, a significant number in a country of 13.7 million people.
But in May 2006 Ecuador seized the fields of Occidental Petroleum, claiming that the company had violated its operating contract. Oxy is seeking $1 billion in damages in an arbitration. Six months later Ecuadorians elected Correa, who, among other things, has busied himself trying to vacuum up the "windfall profits" of the remaining private oil operations. The tax rate on oil extractions (per a recent executive decree) is 99% of any yield above $24 a barrel. Not exactly conducive to attracting capital from abroad.
Correa has indulged in the antigringo rhetoric of the region, at least that directed at Washington. After Venezuela's Hugo Chávez last year called President Bush a "devil" at the UN General Assembly, Correa joked on Ecuadoran TV that Chávez had insulted the devil. Since taking office he has threatened to default on Ecuador's foreign debt, expelled the chief World Bank representative from Ecuador, sued an Ecuadoran journalist for writing a column that criticized him and threatened to pass a law further capping private banks' interest rates.
"Some of the congressional staffers ask us, 'Why should we extend [trade] preferences to a country that speaks badly about the U.S.?'" says Alfredo Zeller, an American whose Provefrut, with $30 million in revenues, is Ecuador's largest exporter of frozen broccoli.
Ecuadorians are ambivalent about free-market capitalism. Dollarization allowed more people to buy big-ticket items. There's been a 50% increase in the number of cars in Quito in the last five years. But all the while the usual disparities of wealth persisted--nearly 40% of Ecuador's population live in poverty--and the charismatic Correa marshaled a political force to exploit this. Lately he's been seeking to consolidate his victory with a proposal for a new constitution that critics say would increase the president's powers. Chávez just stumbled in his power grab; Correa's still on a roll.
A youthful-looking 44, Correa isn't letting a lack of political experience slow him down. With a doctorate in economics from the University of Illinois at Urbana-Champaign, he was teaching at a university in Quito when he was made minister of finance in 2005. He quit after four months, in part to protest the World Bank's withholding of a loan to Ecuador.
Correa's election followed a long period of instability. The country suffered through six presidents in a decade, several of whom were booted out of office. One, Abdalá Bucaram, nicknamed El Loco, was declared mentally incompetent by the country's congress and fled to Panama.
Correa denounces the former ruling elite. "The citizens' revolution marks the end of the oligarchs' party and the pretensions of those who always believed they owned the country," he boomed in a typical speech in September in the coastal province of Manabí. And he thumbs his nose north: Asked about renewing a U.S. military base lease, he advised reporters that one for Ecuador in Miami might give Americans a similar taste of foreign boots.
Much of what Correa's government says it wants to do sounds sensible: diversify the economy; add half a million jobs by 2011; improve health care and schools; build hydroelectric plants; make the roads better; and perhaps build a new refinery so the nation doesn't have to import gasoline while exporting oil.
Unemployment stands at 11% and underemployment at 47%--and that doesn't include at least 1.5 million Ecuadorians who have gone abroad to find work, primarily in Spain and the U.S. They send home $2 billion annually in remittances. The export of oil from government-owned fields--not including, that is, "windfall" taxes--accounted in 2006 for 45% of government income.
Correa faced resistance from the national legislature, which was dissolved in late November by the newly elected constitutional assembly--62% of whose members belong to Correa's party. The assembly is charged with writing a new constitution within six months, the twentieth since the country's birth in 1830.
Though the U.S. is Ecuador's most important trading partner, Alberto Acosta, who was elected to the constitutional assembly and serves as its president, opposes negotiations for a free trade agreement with the U.S. Instead, he wants "a commercial agreement"--some kind of half-step toward free trade. And Acosta vows to revise all the mining concessions, which affect several publicly traded Canadian companies preparing to unearth gold and copper, to allow Ecuadorians to vote on whether they want mining operations near their homes or not. "Our wealth is not in the ground, but in our biodiversity," he declares.
Meantime, Correa has boosted subsidies for gasoline and flour and for army and police pension funds. Subsidies, by some accounts, eat up 40% of the government budget. The president "is a very smart politician but a very bad economist," says Mauricio Pozo, a former finance minister who now runs a large private hospital in Quito. "Expenditures are growing at 32%, but the economy is only growing at 3%." Isn't the government enjoying a windfall from high oil prices? Not fully, since Petroecuador is inept. Its production in 2007 was 10% less than in 2006, estimates Vicente Albornoz of economic think tank Cordes, even though the later year includes Oxy's wells.
Nonetheless, those toughing it out for exports don't want to see any more political doors shut. Dean Edward Rule, an American whose Conectiflor consultancy introduces new flower breeds to Ecuadoran growers, wants the U.S. Congress to see strains of moderation amid the revolutionary rhetoric. Says Rule: "Ecuador is not Venezuela. It doesn't need a shove toward the Venezuelan way."
But Quito's business chiefs aren't enthusiastic and the banks especially are feeling squeezed. Their profits plaint, however, seems to fall on deaf ears. Mauricio Dávalos, a former member of Correa's cabinet who held the unwieldy title of Minister of Economic Production & Quality Coordination, smiles and says, "That's life in the tropics!"
Ecuador sees special credit to prevent any crisis
QUITO, Dec 19 (Reuters) - Ecuador could ask multilateral lenders for a special credit of up to $800 million to be released in case of a future economic crisis due to internal or foreign factors, Economy Minister Fausto Ortiz said on Monday.
Ortiz said the risk credit would protect the economy from a crisis as the leftist government plans to eliminate three saving funds worth about $1 billion in oil revenues.
"If I have a contingency line of this value I'm perfectly covered," Ortiz told Reuters, adding that the credit line could be between $400 million to $800 million.
Ortiz has said the government will soon introduce legislation to eliminate the funds that are earmarked for specific spending and restricted from government control.
He has said the $1 billion held in the savings funds accounts would be used for capital spending on infrastructure and energy projects.
Wall Street analysts worry that such a move could erode the country's savings capacity and make it more vulnerable for external shocks such as a drop in oil prices.
Ortiz did not say which lenders would be asked for the risk loan or specific terms on the credit.
President Rafael Correa, a former economist, has spooked investors with plans to increase state control over the Andean country's economy and natural resources.
Ortiz said the risk credit would protect the economy from a crisis as the leftist government plans to eliminate three saving funds worth about $1 billion in oil revenues.
"If I have a contingency line of this value I'm perfectly covered," Ortiz told Reuters, adding that the credit line could be between $400 million to $800 million.
Ortiz has said the government will soon introduce legislation to eliminate the funds that are earmarked for specific spending and restricted from government control.
He has said the $1 billion held in the savings funds accounts would be used for capital spending on infrastructure and energy projects.
Wall Street analysts worry that such a move could erode the country's savings capacity and make it more vulnerable for external shocks such as a drop in oil prices.
Ortiz did not say which lenders would be asked for the risk loan or specific terms on the credit.
President Rafael Correa, a former economist, has spooked investors with plans to increase state control over the Andean country's economy and natural resources.
Ecuador Erects New Financial Structure
Quito, Dec 19 (Prensa Latina) The Ecuadorian government is designing a new financial structure, aimed at creating a liquidity fund that promotes the country's economic growth.
When announcing that initiative last night, President Rafael Correa highlighted ó the idea is to create a most favourable monetary system, from savings to investment. ó
He sustained the executive's challenge is to bring back the about 5 billion dollars Ecuadorians have in foreign accounts to invest them in major works, ó for the country's development, with all safety measures, ó the president noted.
That action will allow guaranteeing resources, avoiding foreign debt, and controlling the banking system, which can be achieved with institutional reforms and ó a dynamic economy, ó he added.
The new monetary architecture taking shape will have an initial budget of 100 million dollars, Correa announced.
When announcing that initiative last night, President Rafael Correa highlighted ó the idea is to create a most favourable monetary system, from savings to investment. ó
He sustained the executive's challenge is to bring back the about 5 billion dollars Ecuadorians have in foreign accounts to invest them in major works, ó for the country's development, with all safety measures, ó the president noted.
That action will allow guaranteeing resources, avoiding foreign debt, and controlling the banking system, which can be achieved with institutional reforms and ó a dynamic economy, ó he added.
The new monetary architecture taking shape will have an initial budget of 100 million dollars, Correa announced.
Ecuador's president seeks to sell Saudi gift of jewels to fund social programs
From SignOnSanDiego
December 15, 2007
QUITO, Ecuador – Ecuadorean President Rafael Correa said he is seeking Saudi King Abdullah's permission to sell an expensive set of jewelry the royal gave his wife at the OPEC summit in Riyadh last month.
In his weekly radio address to the nation on Saturday, Correa said he wanted to sell the jewels – which include earrings and a necklace made of diamonds and emeralds and set in white gold – to finance social programs in Ecuador.
Correa said the jewelry given to his wife, Anne Malherbe, was worth “hundreds of thousands of dollars,” and he wanted the king's approval to sell it to “avoid any resentment.”
The jewels “can't stay with my wife,” Correa said. “She didn't receive them for being Anne Malherbe, but for being the president's wife. They belong to the Ecuadorean people.”
Correa said that if the Saudi king rejects his proposal, he will leave them on display for visitors at the presidential palace in Quito.
Ecuador, South America's fifth-largest oil producer, stopped paying dues to the Organization of Petroleum Exporting Countries in 1992, but rejoined the cartel during last month's summit.
December 15, 2007
QUITO, Ecuador – Ecuadorean President Rafael Correa said he is seeking Saudi King Abdullah's permission to sell an expensive set of jewelry the royal gave his wife at the OPEC summit in Riyadh last month.
In his weekly radio address to the nation on Saturday, Correa said he wanted to sell the jewels – which include earrings and a necklace made of diamonds and emeralds and set in white gold – to finance social programs in Ecuador.
Correa said the jewelry given to his wife, Anne Malherbe, was worth “hundreds of thousands of dollars,” and he wanted the king's approval to sell it to “avoid any resentment.”
The jewels “can't stay with my wife,” Correa said. “She didn't receive them for being Anne Malherbe, but for being the president's wife. They belong to the Ecuadorean people.”
Correa said that if the Saudi king rejects his proposal, he will leave them on display for visitors at the presidential palace in Quito.
Ecuador, South America's fifth-largest oil producer, stopped paying dues to the Organization of Petroleum Exporting Countries in 1992, but rejoined the cartel during last month's summit.
Ecuador Wants `Fund of the South' to Back Regional Currency
By Stephan Kueffner
Dec. 15 (Bloomberg) -- Ecuador's President Rafael Correa wants Latin American countries to merge repatriated offshore assets in a fund that would back a proposed regional currency.
Correa, with five other South American leaders, on Dec. 9 signed off on a joint development bank, the Bank of the South, promoted by Venezuelan President Hugo Chavez to counter the influence of institutions like the International Monetary Fund and the World Bank.
``The Bank of the South is an important step but the next step is missing, to create a Fund of the South, a fund that will bring back all those funds that Latin America, particularly South America, holds outside its borders, close to $250 billion, to serve as a backing in the case of financial and balance of payments crises,'' said Correa today in his weekly radio address.
The fund could be used to support countries in the event of crises, its returns could be used to fund investments in infrastructure, and its assets could serve to back a regional currency from Mexico to Patagonia, he added.
Rather than booking transactions in U.S. dollars, the countries in the region could use a transaction unit backed by such a fund. ``That's the first step to later have a currency, the latino,'' said Correa.
Latin American central banks and other government institution hold investments overseas, like U.S. Treasuries. Correa and Chavez want to bring them back to make them available for local economies.
Unified Currency
Correa, the 44-year-old economist who studied in Belgium and the U.S., has been one of the most vocal supporters of a unified Latin American or South American currency. At the same time, he acknowledged the obstacles facing the creation of a joint currency in the region.
``Obviously, a lot of institutions are missing before we can have a common currency, but we must head in that direction,'' said Correa, a critic of Ecuador's use of the dollar as a domestic currency in the year 2000. He has pledged to keep the dollar as the Andean country's currency before a unified Latin American currency is introduced.
The Bank of the South's members have yet to define how much capital each country will provide for the bank.
Correa reiterated his criticism of the central bank's holding of close to $4 billion foreign currency reserves offshore, rather than within Ecuador, where he said they could be used to finance investment. While officials close to his 11-month old administration control the bank, he wants its nominal independence scrapped in the rewriting of the constitution currently under way. Ecuador has the region's lowest annual inflation rate at 2.7 percent as of November.
Dec. 15 (Bloomberg) -- Ecuador's President Rafael Correa wants Latin American countries to merge repatriated offshore assets in a fund that would back a proposed regional currency.
Correa, with five other South American leaders, on Dec. 9 signed off on a joint development bank, the Bank of the South, promoted by Venezuelan President Hugo Chavez to counter the influence of institutions like the International Monetary Fund and the World Bank.
``The Bank of the South is an important step but the next step is missing, to create a Fund of the South, a fund that will bring back all those funds that Latin America, particularly South America, holds outside its borders, close to $250 billion, to serve as a backing in the case of financial and balance of payments crises,'' said Correa today in his weekly radio address.
The fund could be used to support countries in the event of crises, its returns could be used to fund investments in infrastructure, and its assets could serve to back a regional currency from Mexico to Patagonia, he added.
Rather than booking transactions in U.S. dollars, the countries in the region could use a transaction unit backed by such a fund. ``That's the first step to later have a currency, the latino,'' said Correa.
Latin American central banks and other government institution hold investments overseas, like U.S. Treasuries. Correa and Chavez want to bring them back to make them available for local economies.
Unified Currency
Correa, the 44-year-old economist who studied in Belgium and the U.S., has been one of the most vocal supporters of a unified Latin American or South American currency. At the same time, he acknowledged the obstacles facing the creation of a joint currency in the region.
``Obviously, a lot of institutions are missing before we can have a common currency, but we must head in that direction,'' said Correa, a critic of Ecuador's use of the dollar as a domestic currency in the year 2000. He has pledged to keep the dollar as the Andean country's currency before a unified Latin American currency is introduced.
The Bank of the South's members have yet to define how much capital each country will provide for the bank.
Correa reiterated his criticism of the central bank's holding of close to $4 billion foreign currency reserves offshore, rather than within Ecuador, where he said they could be used to finance investment. While officials close to his 11-month old administration control the bank, he wants its nominal independence scrapped in the rewriting of the constitution currently under way. Ecuador has the region's lowest annual inflation rate at 2.7 percent as of November.
Correa: Ecuador Change Possible Correa: Ecuador Change Possible
Quito, Dec 14 (Prensa Latina) Ecuador has the historic opportunity to change, because there is a national project underway that obtained large support at the polls, President Rafael Correa affirmed.
The proposed reform had nearly 70 percent of votes in 21 provinces, and a Constituent Assembly of full powers is being coordinated, according to the presidential website.
After the conference by 2001 Nobel Economy Prize winner Joseph Stiglitz at the Latin American School of Social Sciences (FLACSO) , the president questioned the theory on the disappearance of ideologies.
He rejected statements that we are living the end of history, and coming of a new era.
ó Conservative sectors tried to make us believe we were living in the best of worlds, and that we had to abandon any attempt for change, ó Correa pointed out.
After defending the need for socio-economic reform, the president warned the transformation must take place now, ó to democratize our lives, and organize society in a different way. ó
In that connection, the Ecuadorian leader highlighted planning is essential, and referred to the development plan designed by his government until 2020.
The proposed reform had nearly 70 percent of votes in 21 provinces, and a Constituent Assembly of full powers is being coordinated, according to the presidential website.
After the conference by 2001 Nobel Economy Prize winner Joseph Stiglitz at the Latin American School of Social Sciences (FLACSO) , the president questioned the theory on the disappearance of ideologies.
He rejected statements that we are living the end of history, and coming of a new era.
ó Conservative sectors tried to make us believe we were living in the best of worlds, and that we had to abandon any attempt for change, ó Correa pointed out.
After defending the need for socio-economic reform, the president warned the transformation must take place now, ó to democratize our lives, and organize society in a different way. ó
In that connection, the Ecuadorian leader highlighted planning is essential, and referred to the development plan designed by his government until 2020.
Ecuador withdraws from World Bank court for investment disputes
IHT, Dec 14, 2007
QUITO, Ecuador: Ecuador announced Thursday that it will no longer recognize a World Bank court set up to resolve investment disputes.
"The Republic of Ecuador will not allow itself to be subjected to the jurisdiction of the International Center for Settlement of Investment Disputes," a written statement from the Foreign Ministry said, noting it had informed the court of its decision in a letter last week.
Critics say the autonomous court is beholden to the World Bank and biased against developing countries. Bolivian President Evo Morales, a close ally of Ecuador's leftist leader Rafael Correa, announced plans to withdraw from the center in April.
Earlier this year, Ecuador's then-Foreign Minister Maria Fernanda Espinosa slammed the center, accusing it of ruling in favor of U.S. interests "98 percent of the time."
A spokesman for the center declined to comment on Ecuador's decision, but the court confirmed the nation's withdrawal in a statement posted on its Web site.
Ecuador's decision could exempt the country from future claims filed before the Washington-based court, but not from those that are already pending.
Those cases include an arbitration claim filed in May 2006 by Occidental Petroleum Corp., after Ecuador canceled the Los Angeles-based oil company's contract and sent troops to seize its assets.
Occidental has since asked the center to help it recover oil fields and is seeking damages of about US$1 billion (€684 million) — the amount it said it has invested in Ecuador operations since 1999.
Ecuador accuses Occidental of violating the terms of its operating agreement.
Quito-based financial analyst Ramiro Crespo called the government's decision to leave the court an "error."
"It increases the investment risk for the country," he told The Associated Press.
QUITO, Ecuador: Ecuador announced Thursday that it will no longer recognize a World Bank court set up to resolve investment disputes.
"The Republic of Ecuador will not allow itself to be subjected to the jurisdiction of the International Center for Settlement of Investment Disputes," a written statement from the Foreign Ministry said, noting it had informed the court of its decision in a letter last week.
Critics say the autonomous court is beholden to the World Bank and biased against developing countries. Bolivian President Evo Morales, a close ally of Ecuador's leftist leader Rafael Correa, announced plans to withdraw from the center in April.
Earlier this year, Ecuador's then-Foreign Minister Maria Fernanda Espinosa slammed the center, accusing it of ruling in favor of U.S. interests "98 percent of the time."
A spokesman for the center declined to comment on Ecuador's decision, but the court confirmed the nation's withdrawal in a statement posted on its Web site.
Ecuador's decision could exempt the country from future claims filed before the Washington-based court, but not from those that are already pending.
Those cases include an arbitration claim filed in May 2006 by Occidental Petroleum Corp., after Ecuador canceled the Los Angeles-based oil company's contract and sent troops to seize its assets.
Occidental has since asked the center to help it recover oil fields and is seeking damages of about US$1 billion (€684 million) — the amount it said it has invested in Ecuador operations since 1999.
Ecuador accuses Occidental of violating the terms of its operating agreement.
Quito-based financial analyst Ramiro Crespo called the government's decision to leave the court an "error."
"It increases the investment risk for the country," he told The Associated Press.
Ecuador to introduce bill to scrap key oil funds
QUITO, Dec 12 (Reuters) - Ecuador will soon introduce laws to eliminate funds holding around $1.3 billion in excess oil revenues and use the money to finance infrastructure and social projects, the economy minister told Reuters on Wednesday.
The government plans to eliminate three oil funds that are earmarked for specific spending and restricted from government control, said Ortiz. Some Wall Street analysts worry such move could erode the country's savings capacity and make it more vulnerable to external shocks such as a drop in oil prices.
"Oil resources should have never been taken out of the budget and what we are doing is backtracking those reforms and leaving it just as it was before 2002," Fausto Ortiz said in a telephone interview. "With those funds, we will also have less financing requirements."
Ortiz did not say if those funds could be used to swap foreign debt, buying back more expensive debt for cheaper paper to reduce the debt service burden.
He said the bill is being analyzed by President Rafael Correa and could be introduced later this month or in January. The funds will be part of the national budget and used to finance key energy and infrastructure projects, health and education, he added.
The legislation is expected to be easily passed by a powerful assembly rewriting the constitution and controlled by Correa's party. The assembly temporarily shut down Congress and took over its powers in November.
Correa, a U.S-trained former economy minister, has worried Wall Street with plans to introduce bills that will increase state control over the economy and hurt the country's finances.
Correa has pledged to prioritize social spending over foreign debt payments and boost state control over the economy of South America's No. 5 oil producer.
The leftist president, who is drafting bills to reform the tax and banking laws, has said he also wants billions of dollars in reserves held by the central bank to be invested in the local economy instead of being kept in banks abroad.
The three oil funds are the FAC, or savings and contingency fund, CEREPS, or special account to reactivate social development and production, and FEISEH, or energy and hydrocarbons investment fund.
A fourth fund named FEP, or oil stabilization fund, is unlikely to be eliminated, said Ortiz.
The government plans to eliminate three oil funds that are earmarked for specific spending and restricted from government control, said Ortiz. Some Wall Street analysts worry such move could erode the country's savings capacity and make it more vulnerable to external shocks such as a drop in oil prices.
"Oil resources should have never been taken out of the budget and what we are doing is backtracking those reforms and leaving it just as it was before 2002," Fausto Ortiz said in a telephone interview. "With those funds, we will also have less financing requirements."
Ortiz did not say if those funds could be used to swap foreign debt, buying back more expensive debt for cheaper paper to reduce the debt service burden.
He said the bill is being analyzed by President Rafael Correa and could be introduced later this month or in January. The funds will be part of the national budget and used to finance key energy and infrastructure projects, health and education, he added.
The legislation is expected to be easily passed by a powerful assembly rewriting the constitution and controlled by Correa's party. The assembly temporarily shut down Congress and took over its powers in November.
Correa, a U.S-trained former economy minister, has worried Wall Street with plans to introduce bills that will increase state control over the economy and hurt the country's finances.
Correa has pledged to prioritize social spending over foreign debt payments and boost state control over the economy of South America's No. 5 oil producer.
The leftist president, who is drafting bills to reform the tax and banking laws, has said he also wants billions of dollars in reserves held by the central bank to be invested in the local economy instead of being kept in banks abroad.
The three oil funds are the FAC, or savings and contingency fund, CEREPS, or special account to reactivate social development and production, and FEISEH, or energy and hydrocarbons investment fund.
A fourth fund named FEP, or oil stabilization fund, is unlikely to be eliminated, said Ortiz.
Ecuador throws down oil gauntlet
From BBC News
By Jane Monahan
Washington
When Ecuador's left-wing President Rafael Correa drastically increased the state's share of oil revenues in October, and oil minister Galo Chiriboga also announced that contracts with foreign oil companies had to change, industry analysts said the country had gone too far.
After all, foreign firms currently account for about half of Ecuador's total crude production of more than 500,000 barrels a day (bpd).
And while Petroecuador, the state oil corporation, accounts for the rest, it continues to be plagued by mismanagement and debt, analysts say.
The proposed increase in the government's share of windfall oil profits - those obtained whenever world oil prices exceed those established in existing contracts - was also huge.
The tax went up from 50% of windfall oil profits to 99%.
That would net the government $830m a year more in revenues, assuming world oil prices stay at current levels.
The principal oil companies affected - Spain's Repsol, China's Andes Petroleum, Brazil's state company Petrobras, French-owned Perenco and US-owned City Oriente - were already unhappy.
They objected strongly when the state's share of windfall oil profits was increased for the first time, to 50%, in a law passed in 2006.
But President Correa, who has been in office since January, is coming from a position of strength.
He decreed the oil tax hike within hours of winning a landslide victory in a vote and more than 60% of the seats in a new national assembly, which has started rewriting the country's constitution and forging ahead with his radical agenda.
Poverty reduction
Mr Correa, a former finance minister who has a PhD in economics, also explained the move in his decree.
He said the government would spend the extra oil money on services, roads and electricity for the poor, which was wildly popular.
Ecuador is Latin America's fifth-biggest oil producer. But World Bank estimates show that some 56% of the country's 13.4 million people live in poverty.
That figure rises to more than 80% for indigenous Ecuadoreans, who are mainly small farmers in mountainous highlands.
But confronting the foreign oil companies is risky. Take the controversy over changing the oil contracts.
In announcing the change at a recent press conference, Mr Chiriboga said the companies could comply by reducing their levels of participation in existing production-sharing contracts with Petroecuador.
Otherwise, they could switch to new service contracts, where they earn a fixed fee for specific services such as prospecting and production, but the state owns all the oil once it is extracted from the ground.
Mr Chiriboga, whose ministry is now in talks with the oil companies over the latest oil tax increase and the new contracts, said his objective was to find a solution that offered both sides "a reasonable profit".
But Simon Pachano, a professor at the Latin American University of Social Sciences in Quito, Ecuador's capital, says that in either case, "there will be much less incentive for the companies to increase exploratory work and production, or to invest in machinery."
As a result, because Ecuador's oil industry accounts for 40% of the country's exports and more than a third of government revenues, there is a risk that the nation's economy may suffer, if investment and production in the oil sector declines.
Legal wrangles
There is also a risk of litigation, as shown by the US's City Oriente, the smallest of the principal oil firms in Ecuador with only a 3,000 bpd output.
It won a favourable ruling in November from the World Bank's International Centre for the Settlement of Investment Disputes over the first oil tax increase approved last year.
And Antonio Brufau, chief executive of Repsol, the biggest oil multinational now in Ecuador, with a 65,000 bpd output, referred to Mr Correa's new oil tax hike at a meeting in Chile in November, saying: "This [measure] to us is one that does not allow us to operate within a reasonable corporate environment."
Complicating matters further, Mr Correa's repudiation of the current oil contracts is not just about foreign oil companies, but also the previous Ecuadorean governments, run by conservative political elites, that agreed to them.
"The contracts have not benefited Ecuador. The problem is also the previous governments. This is widely recognised, " Mr Pachano says.
Mr Correa is an ally of Venezuela's President Hugo Chavez - and, like him, is not shy about using colourful rhetoric on occasions.
He maintains justice is on his side. Most of the existing oil contracts were agreed when international oil prices averaged $24 a barrel, before they started rising in 2003.
But, said Mr Correa at a press conference during a state visit to China in November, Ecuador was still receiving just $3 to $4 in taxes from oil sales, even though the price of crude has risen to about $90 a barrel.
"These are the extraordinary benefits that the investors haven't done anything specific to receive. The benefits should go to the owner of the resources," Mr Correa declared - in other words, the citizens of Ecuador.
By Jane Monahan
Washington
When Ecuador's left-wing President Rafael Correa drastically increased the state's share of oil revenues in October, and oil minister Galo Chiriboga also announced that contracts with foreign oil companies had to change, industry analysts said the country had gone too far.
After all, foreign firms currently account for about half of Ecuador's total crude production of more than 500,000 barrels a day (bpd).
And while Petroecuador, the state oil corporation, accounts for the rest, it continues to be plagued by mismanagement and debt, analysts say.
The proposed increase in the government's share of windfall oil profits - those obtained whenever world oil prices exceed those established in existing contracts - was also huge.
The tax went up from 50% of windfall oil profits to 99%.
That would net the government $830m a year more in revenues, assuming world oil prices stay at current levels.
The principal oil companies affected - Spain's Repsol, China's Andes Petroleum, Brazil's state company Petrobras, French-owned Perenco and US-owned City Oriente - were already unhappy.
They objected strongly when the state's share of windfall oil profits was increased for the first time, to 50%, in a law passed in 2006.
But President Correa, who has been in office since January, is coming from a position of strength.
He decreed the oil tax hike within hours of winning a landslide victory in a vote and more than 60% of the seats in a new national assembly, which has started rewriting the country's constitution and forging ahead with his radical agenda.
Poverty reduction
Mr Correa, a former finance minister who has a PhD in economics, also explained the move in his decree.
He said the government would spend the extra oil money on services, roads and electricity for the poor, which was wildly popular.
Ecuador is Latin America's fifth-biggest oil producer. But World Bank estimates show that some 56% of the country's 13.4 million people live in poverty.
That figure rises to more than 80% for indigenous Ecuadoreans, who are mainly small farmers in mountainous highlands.
But confronting the foreign oil companies is risky. Take the controversy over changing the oil contracts.
In announcing the change at a recent press conference, Mr Chiriboga said the companies could comply by reducing their levels of participation in existing production-sharing contracts with Petroecuador.
Otherwise, they could switch to new service contracts, where they earn a fixed fee for specific services such as prospecting and production, but the state owns all the oil once it is extracted from the ground.
Mr Chiriboga, whose ministry is now in talks with the oil companies over the latest oil tax increase and the new contracts, said his objective was to find a solution that offered both sides "a reasonable profit".
But Simon Pachano, a professor at the Latin American University of Social Sciences in Quito, Ecuador's capital, says that in either case, "there will be much less incentive for the companies to increase exploratory work and production, or to invest in machinery."
As a result, because Ecuador's oil industry accounts for 40% of the country's exports and more than a third of government revenues, there is a risk that the nation's economy may suffer, if investment and production in the oil sector declines.
Legal wrangles
There is also a risk of litigation, as shown by the US's City Oriente, the smallest of the principal oil firms in Ecuador with only a 3,000 bpd output.
It won a favourable ruling in November from the World Bank's International Centre for the Settlement of Investment Disputes over the first oil tax increase approved last year.
And Antonio Brufau, chief executive of Repsol, the biggest oil multinational now in Ecuador, with a 65,000 bpd output, referred to Mr Correa's new oil tax hike at a meeting in Chile in November, saying: "This [measure] to us is one that does not allow us to operate within a reasonable corporate environment."
Complicating matters further, Mr Correa's repudiation of the current oil contracts is not just about foreign oil companies, but also the previous Ecuadorean governments, run by conservative political elites, that agreed to them.
"The contracts have not benefited Ecuador. The problem is also the previous governments. This is widely recognised, " Mr Pachano says.
Mr Correa is an ally of Venezuela's President Hugo Chavez - and, like him, is not shy about using colourful rhetoric on occasions.
He maintains justice is on his side. Most of the existing oil contracts were agreed when international oil prices averaged $24 a barrel, before they started rising in 2003.
But, said Mr Correa at a press conference during a state visit to China in November, Ecuador was still receiving just $3 to $4 in taxes from oil sales, even though the price of crude has risen to about $90 a barrel.
"These are the extraordinary benefits that the investors haven't done anything specific to receive. The benefits should go to the owner of the resources," Mr Correa declared - in other words, the citizens of Ecuador.
Ecuador GDP to Expand Least Since 1999, Ortiz Says
By Stephan Kueffner
Dec. 11 (Bloomberg) -- Ecuador's economy will probably post its smallest growth in eight years in 2007 after disruptions in oil production caused output to tumble, Economy Minister Fausto Ortiz said.
Gross domestic product may grow less than 2.5 percent, Ortiz said at a news conference today in Quito. That would be the slowest expansion since Ecuador's $40.9 billion economy contracted 6.3 percent in 1999 as the country's currency collapsed, leading the government to adopt the U.S. dollar.
``The improvements we've been making in recovering oil output haven't allowed us to outweigh the drop in production,'' said Ortiz. ``That's dragging down gross domestic product growth.''
Growth won't meet the central bank's most recent estimate from August, when it said growth would slow 3.4 percent this year, down from 4.1 percent in 2006, as a result of political and management disruptions in the oil industry. From January through October, oil output fell six percent to 154.33 million barrels from 164.33 million barrels in the same period last year.
With private and public-sector oil output recovering, GDP growth next year will probably top the 4.2 percent rate estimated in the 2008 budget, he added.
``The fear we had regarding private sector production has faded,'' Ortiz said.
Amazon Fields
The previous administration stripped U.S. oil company Occidental Petroleum of its concession, where that company produced some 100,000 barrels a day.
State oil company PetroEcuador, which inherited the fields, initially lacked the resources to manage them and only this month pushed daily output back to the levels reached by Occidental, Ortiz said.
Unrest in Ecuador's part of the Amazon basin, where it produces most of its oil, has also undermined output, and President Rafeal Correa on Nov. 29 decreed an emergency over much of that area as well as over PetroEcuador in a bid to avoid further attacks on the company.
Correa's 11-month old administration has now resolved most of the issues affecting the oil industry, though it had some start-up problems to solve, said Ortiz.
Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, averaged oil output of 509,000 barrels of oil a day from January through October.
By the end of 2008, the government aims to push oil output to some 520,000 barrels a day.
Dec. 11 (Bloomberg) -- Ecuador's economy will probably post its smallest growth in eight years in 2007 after disruptions in oil production caused output to tumble, Economy Minister Fausto Ortiz said.
Gross domestic product may grow less than 2.5 percent, Ortiz said at a news conference today in Quito. That would be the slowest expansion since Ecuador's $40.9 billion economy contracted 6.3 percent in 1999 as the country's currency collapsed, leading the government to adopt the U.S. dollar.
``The improvements we've been making in recovering oil output haven't allowed us to outweigh the drop in production,'' said Ortiz. ``That's dragging down gross domestic product growth.''
Growth won't meet the central bank's most recent estimate from August, when it said growth would slow 3.4 percent this year, down from 4.1 percent in 2006, as a result of political and management disruptions in the oil industry. From January through October, oil output fell six percent to 154.33 million barrels from 164.33 million barrels in the same period last year.
With private and public-sector oil output recovering, GDP growth next year will probably top the 4.2 percent rate estimated in the 2008 budget, he added.
``The fear we had regarding private sector production has faded,'' Ortiz said.
Amazon Fields
The previous administration stripped U.S. oil company Occidental Petroleum of its concession, where that company produced some 100,000 barrels a day.
State oil company PetroEcuador, which inherited the fields, initially lacked the resources to manage them and only this month pushed daily output back to the levels reached by Occidental, Ortiz said.
Unrest in Ecuador's part of the Amazon basin, where it produces most of its oil, has also undermined output, and President Rafeal Correa on Nov. 29 decreed an emergency over much of that area as well as over PetroEcuador in a bid to avoid further attacks on the company.
Correa's 11-month old administration has now resolved most of the issues affecting the oil industry, though it had some start-up problems to solve, said Ortiz.
Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, averaged oil output of 509,000 barrels of oil a day from January through October.
By the end of 2008, the government aims to push oil output to some 520,000 barrels a day.
Ecuador Starts Oil Co. Negotiations Ecuador Starts Oil Co. Negotiations
Quito, Dec 11 (Prensa Latina) The Ecuadorian government starts Tuesday the renegotiation of contracts with five foreign oil companies that have investments in that Andean territory.
Talks will begin with China's Andes Petroleum, the US City Oriente, France's Perezco, Spain's Repsol, and Brazil's Petrobras, whose representatives accepted to negotiate with the State.
The executive proposes to change contracts of participation for provision of services, and the process will be in charge of five multidisciplinary teams that simultaneously negotiate with foreign entities.
Oil and Mining Minister Galo Chiriboga highlighted that this renegotiation, halted since 2003, is one of the aims of the country's President Rafael Correa, interested in increasing the State's presence and profits in the hydrocarbon sector.
These talks take place after the chief of State decreed oil companies must hand over 99 percent of extra incomes obtained from the high price of crude oil in the international market.
Chiriboga stated that the country seeks to negotiate and not confiscate, and also rejected to analyze the bylaw that establishes 99 percent of extra profits to the State.
Talks will begin with China's Andes Petroleum, the US City Oriente, France's Perezco, Spain's Repsol, and Brazil's Petrobras, whose representatives accepted to negotiate with the State.
The executive proposes to change contracts of participation for provision of services, and the process will be in charge of five multidisciplinary teams that simultaneously negotiate with foreign entities.
Oil and Mining Minister Galo Chiriboga highlighted that this renegotiation, halted since 2003, is one of the aims of the country's President Rafael Correa, interested in increasing the State's presence and profits in the hydrocarbon sector.
These talks take place after the chief of State decreed oil companies must hand over 99 percent of extra incomes obtained from the high price of crude oil in the international market.
Chiriboga stated that the country seeks to negotiate and not confiscate, and also rejected to analyze the bylaw that establishes 99 percent of extra profits to the State.
Ecuador: Thousands Back Correa, Assembly
Montecristi, Ecuador, Dec 10 (Prensa Latina) Over 3,000 people arrived in Ciudad Alfaro on Monday to support Ecuadorean President Rafael Correa and reject a possible pardon to people detained in the wake of the violence in Orellana.
They were responding to Correa's call yesterday, urging Alianza Pais movement to march to Ciudad Alfaro, venue of the Constituent Assembly, to avoid the release of 27 people arrested for violent actions and sabotage.
Chanting "This has not been paid for, but Correa has earned it," the protesters said they will be carefully following all decisions adopted by the Constituent Assembly, which must not obstruct the work of government and much less assist those who are trying to destabilize the country.
We want assembly members to know that we support the head of State and his performance, said Raul Patino, a leader of the movement.
At the moment the Constituent Assembly is considering whether to discuss the Dayuma case in Orellana Province, where a state of emergency has been declared after several oil wells were taken by force.
Monday's session started in the afternoon in the presence of 114 representatives of several political organizations.
They were responding to Correa's call yesterday, urging Alianza Pais movement to march to Ciudad Alfaro, venue of the Constituent Assembly, to avoid the release of 27 people arrested for violent actions and sabotage.
Chanting "This has not been paid for, but Correa has earned it," the protesters said they will be carefully following all decisions adopted by the Constituent Assembly, which must not obstruct the work of government and much less assist those who are trying to destabilize the country.
We want assembly members to know that we support the head of State and his performance, said Raul Patino, a leader of the movement.
At the moment the Constituent Assembly is considering whether to discuss the Dayuma case in Orellana Province, where a state of emergency has been declared after several oil wells were taken by force.
Monday's session started in the afternoon in the presence of 114 representatives of several political organizations.
Ecuador, Bolivia Call for South American Currency
By Bill Faries
Dec. 9 (Bloomberg) -- The presidents of Ecuador and Bolivia called for the creation of a single South American currency as a step toward lessening dependence on international financial institutions and the U.S.
Ecuador's Rafael Correa and Bolivia's Evo Morales said a regional currency would help the nations of South America assert their financial independence. Correa and Morales spoke in Buenos Aires after helping inaugurate the Bank of the South, a development bank pushed for by Venezuelan President Hugo Chavez.
``There's no technical reason why we couldn't have our own regional currency tomorrow,'' Correa said at the presidential palace, where heads of state from Argentina, Brazil, Venezuela and Paraguay were also gathered.
Correa, Morales and Chavez criticize what they call U.S.- backed economic policies they say failed to eradicate poverty and expand their economies in the 1980s and 1990s. Correa and Chavez said South American countries should invest their central bank reserves in the continent and stop ``financing'' the U.S.
Dec. 9 (Bloomberg) -- The presidents of Ecuador and Bolivia called for the creation of a single South American currency as a step toward lessening dependence on international financial institutions and the U.S.
Ecuador's Rafael Correa and Bolivia's Evo Morales said a regional currency would help the nations of South America assert their financial independence. Correa and Morales spoke in Buenos Aires after helping inaugurate the Bank of the South, a development bank pushed for by Venezuelan President Hugo Chavez.
``There's no technical reason why we couldn't have our own regional currency tomorrow,'' Correa said at the presidential palace, where heads of state from Argentina, Brazil, Venezuela and Paraguay were also gathered.
Correa, Morales and Chavez criticize what they call U.S.- backed economic policies they say failed to eradicate poverty and expand their economies in the 1980s and 1990s. Correa and Chavez said South American countries should invest their central bank reserves in the continent and stop ``financing'' the U.S.
Ecuador ex-economy minister gets top political job
QUITO, Dec 9 (Reuters) - Ecuadorean President Rafael Correa on Sunday named his controversial former economy minister Ricardo Patino head of his political team and key government link to a powerful assembly rewriting the constitution.
Patino, who is considered part of Correa's inner circle, quit his economy ministry job in July after the opposition accused him of manipulating the debt markets. He then took the low-profile position of Coastal Affairs Minister.
During his six months as economy chief, Patino rattled Wall Street with his aggressive rhetoric, accusing creditors of cheating the country out of millions of dollars with overly expensive bonds.
His new post as Minister Coordinator of Politics puts Patino back into the spotlight. He is expected to work closely with a government-controlled assembly that earlier this month began a six-month debate on overhauling the constitution.
The assembly has closed down Congress and taken over its powers, clearing the way for Correa to boost state control over the Andean country's economy and implement radical reforms.
It is not clear yet how much policy-making power Patino will have in his new post, but his predecessor was considered an influential adviser to Correa.
Patino was accused by the opposition of manipulating the market while he was economy minister after a secret video showed him talking with foreign debt strategists about spooking the market to increase the price of debt insurance.
Patino has denied any wrong-doing and said he ordered the secret video to show how some Wall Street-insiders manipulate the market for their own benefit.
Patino, who is considered part of Correa's inner circle, quit his economy ministry job in July after the opposition accused him of manipulating the debt markets. He then took the low-profile position of Coastal Affairs Minister.
During his six months as economy chief, Patino rattled Wall Street with his aggressive rhetoric, accusing creditors of cheating the country out of millions of dollars with overly expensive bonds.
His new post as Minister Coordinator of Politics puts Patino back into the spotlight. He is expected to work closely with a government-controlled assembly that earlier this month began a six-month debate on overhauling the constitution.
The assembly has closed down Congress and taken over its powers, clearing the way for Correa to boost state control over the Andean country's economy and implement radical reforms.
It is not clear yet how much policy-making power Patino will have in his new post, but his predecessor was considered an influential adviser to Correa.
Patino was accused by the opposition of manipulating the market while he was economy minister after a secret video showed him talking with foreign debt strategists about spooking the market to increase the price of debt insurance.
Patino has denied any wrong-doing and said he ordered the secret video to show how some Wall Street-insiders manipulate the market for their own benefit.
Ecuadorian Assembly for New Elections
Quito, Dec 6 (Prensa Latina) The new Constitution written by the Ecuadorian Constituent Assembly will call a referendum in 2008 and will include anticipated legislative elections, informed Fernando Cordero, deputy chief of the institution.
If the 20th Constitution to be written by the assembly members is approved by the citizenry in the consultation, new elections will be called, Cordero explained..
But, if it is rejected the 100 deputies will declare a recess and return to their posts, he expressed.
He pointed out "if the approbatory referendum of the new Constitution does not win, there will be a transitory period to call for new legislative elections, since these congresspersons in recess today will again be deputies."
In addition to closing Congress the assembly members ratified in their post the president of the country, Rafael Correa, his vice president Lenin Moreno and other elected authorities.
With the dismissal of Parliament the Constituent assumes the task of legislation and control. For this reason a legislative commission will be created next week.
The new Constitution will be written during the coming six months in the Eloy Alfaro City complex in Montecristi.
If the 20th Constitution to be written by the assembly members is approved by the citizenry in the consultation, new elections will be called, Cordero explained..
But, if it is rejected the 100 deputies will declare a recess and return to their posts, he expressed.
He pointed out "if the approbatory referendum of the new Constitution does not win, there will be a transitory period to call for new legislative elections, since these congresspersons in recess today will again be deputies."
In addition to closing Congress the assembly members ratified in their post the president of the country, Rafael Correa, his vice president Lenin Moreno and other elected authorities.
With the dismissal of Parliament the Constituent assumes the task of legislation and control. For this reason a legislative commission will be created next week.
The new Constitution will be written during the coming six months in the Eloy Alfaro City complex in Montecristi.
Thursday, December 06, 2007
Ecuadorian government praises Venezuela
El Universal, 5 December, 2007
Recent overruling of the changes to the Constitution proposed by President Hugo Chávez in the ballot boxes show that the Venezuelan government is anything but totalitarian, said on Wednesday Ecuadorian Acting Minister of Governmental Affairs Fernando Bustamante.
The minister noted that Ecuadorian President Rafael Correa was not an imitator of his Venezuelan counterpart.
"We regret that a friend ruler suffered such a defeat. However, we are pleased to realize that the Venezuelan government proved to be anything but totalitarian; because it suffered a defeat, because its power proved to be less than widespread," he said, AP quoted.
The official told TV network Teleamazonas that it is clear that there is in Venezuela "a democracy; that all the accusations made in the sense that it had stopped being a democracy are unfounded."
Ecuador Assembly Tunes Bylaws
Montecristi, Ecuador (Prensa Latina) The Ecuadorian Constituent Assembly retakes Wednesday the analysis of the internal bylaws of that full powered institution, responsible for drawing up a new Constitution.
In its fourth session, assembly members renew debates with the aim of approving the articles of the document, which establishes the Constituent Assembly's rules of the game.
The Assembly ratified Tuesday night by 86 votes in favor of the new Constitution, to be drawn up in the coming six months, to be subdued to referendum, It also reiterated the supremacy of this body's decisive acts.
None of its decisions will be susceptible to control by any of the constituted powers, states one of the sanctioned articles.
Representatives from the minority's bloc, like Patriotic Society Party, Democratic Left and Democratic Network, complained of having little opportunity to be heard in the sessions.
However, the Assembly president and former minister Alberto Acosta said that everyone has the same opportunity of talking and making proposals.
Acosta stressed that the new Ecuadorian legislation will defend private property, provided it fulfills a social function, and the State will respect investors.
According to statutes, the Assembly has seven days to approve the bylaws, whose draft was presented Monday by 80 representatives of the Country Alliance Movement.
Wednesday, December 05, 2007
Oil Developers Permitted to Penetrate Pristine Upper Amazon
WASHINGTON, DC, December 4, 2007 (ENS) - One of the most intact and biodiverse rainforest regions on Earth, located in the Upper Amazon Basin on the Ecuadorian-Peruvian border, is now threatened by imminent oil development, warns a conservation organization based in Washington with close ties to its counterpart groups in South America.
In 2006, Petrobras came back with a roadless design utilizing helicopters to access the drilling platforms. This new roadless design was just given the green light from the Environment Ministry in the form of a new environmental license.
Known as the Napo Moist Forest ecosystem, this region is renowned for its record-breaking diversity of life and is so remote that it is home to several uncontacted indigenous groups living in voluntary isolation.
 |
A male crimson masked tanager, Ramphocelus nigrogularis, perches in the dense lowland flooded forest this species prefers. Not classed as imperiled, they inhabit parts of Colombia, Peru, Ecuador, and Brazil. (Photo © Mark Gurney courtesySave America's Forests) |
Yet the governments of Ecuador and Peru have just given the green light for three major new oil projects in the area.
"Three different oil companies are set to begin operations in what is arguably the most biodiverse spot on Earth," said Dr. Matt Finer, an ecologist with the DC-based nonprofit organization Save America's Forests. Finer has spent years in the remote Amazon back country, and his research is ongoing.
The Peruvian government just approved the environmental impact studies for Block 67 belonging to the U.S. company Barrett Resources and Block 39, which belongs to the Spanish corporation Repsol.
Barrett Resources (Peru) LLC, is an independent upstream energy company based in Delaware that advised the state regulatory agency Perupetro a year ago of its plans to develop commercial Block 67, its 250,000-acre contract area located in the Maranon Basin of northeastern Peru.
The Ecuadorian government recently granted an environmental license for the Brazilian state oil company Petrobras to drill for oil in Block 31 located in Yasuní National Park, a roadless area sheltering some of the world's rarest species.
Classed as Vulnerable to extinction, this primate, the monk sake monkey, Pithecia monachus, lives in the upper Amazon basin of Colombia, Ecuador, Peru, Bolivia and Brazil. (Photo by Reserva Communal Tamshiyacu-Tahuayo courtesy Rainforest Conservation Fund) |
All three blocks are located within the core of the Napo Moist Forest.
In addition, the Peruvian government has just signed eight more contracts with multinational oil companies.
Finer calls the drive by the Peruvian government to lease out oil blocks throughout its large portion of the Amazon "relentless."
Analysis by Save America's Forests shows there are now 50 active blocks under contract with multinational companies in the Peruvian Amazon, and at least 13 more are on the way.
"Around 73 percent of the Peruvian Amazon, an area the size of the states of California and Maine combined, is now or soon will be in the hands of oil companies," warns Finer. "That's up from just 13 percent in 2004."
In addition to concerns about the region's extraordinary biodiversity, these new projects pose a major threat to Peru's vulnerable uncontacted peoples.
Indigenous, environmental and human rights groups have been protesting for months that the projects in Blocks 67 and 39 overlap territories of several groups in voluntary isolation.
AIDESEP, the association that represents the indigenous groups of the Peruvian Amazon, has requested that the Inter-American Commission on Human Rights, with headquarters in Washington, DC, intervene in the matter.
Both Barrett and Repsol first plan on conducting massive seismic campaigns in this sensitive area, followed by the construction of production wells in the former and exploration wells in the latter.
 |
The coati, Nasua nasua, ranges from Colombia and Venezuela to northern Argentina. The species is threatened by roadbuilding, habitat encroachment and hunting. (Photo © Finding Species Inc. courtesySave America's Forests) |
Large quantities of heavy crude oil are known to exist under both blocks.
Further, of the eight new blocks with fresh contracts, half overlap territories of peoples in voluntary isolation.
"The lives of peoples in voluntary isolation are in grave danger with these signed contracts," warned AIDESEP President Alberto Pizango.
Of these four highly controversial blocks, three now belong to the Canadian company Pacific Stratus Energy, and the other belongs to the American company Occidental.
This wave of controversial oil projects in the Peruvian Amazon comes at a moment when that government has won a new free trade agreement with the United States. The U.S. Senate today approved the free trade agreement with Peru with strong bipartisan support.
The free trade agreement takes the environment into consideration said President George W. Bush. "Today's action by the Senate also marks the approval of the first free trade agreement that fulfills the May 10 bipartisan trade agreement with Congress by incorporating enforceable labor and environmental standards."
In Ecuador, environmental groups have been battling against the Petrobras project in Yasuni National Park for four years. In 2005, the Ecuadorian Environment Ministry prevented the company from building an access road into park
 |
Harpy eagles, Harpia harpyja, are in danger of becoming extinct due to habitat fragmentation, habitat destruction, and hunting. The proposed oil road into Yasuní National Park would fragment their habitat. (Photo © Ricardo Kuehn courtesy Save America's Forests) |
The only bright spot of the region, says Finer, is the innovative Ecuadorian initiative to leave the country's largest untapped oil reserves, known as Ishpingo-Tiputini-Tambococha, ITT, permanently underground in exchange for compensation from the international community.
The oil fields are located underneath Yasuní National Park.
The aim of the proposal is to provide a creative solution for the threat posed by the extraction of Amazonian crude oil, and contribute to preserving biodiversity, reducing carbon dioxide emissions that would contribute to global climate change, and respecting the rights of indigenous peoples.
Experts just completed a six-day workshop in Quito where they analyzed the government's ITT initiative, concluding the proposal is viable, of global significance given the ecosystem services provided by Yasuní National Park, and potentially precedent setting for other sensitive areas containing fossil fuel resources.
Ecuador's President Rafael Correa has given the international community one year, which expires in June 2008, to offer a compensation package of $350 million per year for 10 years if Ecuador does not exploit the oil resource. This equals half of the income the country would obtain by extracting ITT's crude oil.
In January, the Ecuadorian government delimited a 758,000 hectare zone off-limits to oil activities, known as the Zona Intangible" in the most remote part of the Ecuadorian Napo Moist Forest.
The Rio Napo region is situated at the western extreme of Amazonia where it hosts extraordinarily rich tropical moist forests. The ecoregion covers the northwestern portion of Peru, the Amazon region of Ecuador and the southwestern corner of Colombia's Amazon.
The international conservation organization WWF says this ecoregion has "some most species-rich forests in the world. For example, below 300 meter elevation there are 138 orchid species that have been identified in Ecuador alone.
"Much of this ecoregion is not well known by scientists," says WWF, "possibly holding species currently undiscovered with the possibility of increasing worldwide biodiversity."
View photos of the wealth of animals in the Upper Amazon at Save America's Forests Yasuni biodiversity site.
Copyright Environment News Service (ENS) 2007. All rights reserved.
Ecuador Assembly Defines Labors
Montecristi, Ecuador, Dec 4 (Prensa Latina) The bylaws of the Ecuadorian Constituent Assembly, being analyzed in this city Tuesday, define the work of members and establish rules and mechanisms to approve laws and resolutions.
The 75-article document, whose first point was approved Monday night, stresses that the Constituent Assembly, as a full powered institution, represents popular sovereignty of the Ecuadorian people.
The text ratifies that the official venue of the Assembly is the city of Montecristi, although it could session exceptionally in any other place, if the Directive Committee or most of delegates determine.
This first article had support of 90 assembly members from a total of 121 attending the plenary session of the Ciudad Eloy Alfaro complex of this city.
It states that the Assembly is made up of the directive commission, 10 constituent tables, auxiliary groups and other bodies determined by the plenary session.
Alberto Acosta, president of that full powered institution, stated that such working commissions will be comprised of eight assembly members from the Country Alliance Movement, the group with 80 seats, and the rest for minority parties.
It is expected that the approval of this rule take at least one week, due to the quantity of articles and the extension of speeches.
Ecuador Doubts New Constitution Will Bring Change
(Angus Reid Global Monitor) Dec 4, 2007 - Many people in Ecuador are skeptical on the effect a new national Constitution will have on their country, according to a poll by Cedatos/Gallup. 44 per cent of respondents think the country’s situation will remain the same after a new charter is written and implemented.
An additional 33 per cent of respondents think the country will be better off with a new Constitution, while 19 per cent expect Ecuador’s situation to worsen.
Rafael Correa, a former finance minister, ran for president as an independent leftist under the Alliance Country (AP) banner. In November 2006, Correa defeated Álvaro Noboa of the conservative Institutional Renewal Party of National Action (PRIAN) in a run-off with 56.69 per cent of the vote. He officially took over as Ecuador’s head of state in January and vowed to change the country’s Constitution. Correa’s party nominated no candidates to the National Congress.
In April, Ecuadorian citizens participated in a referendum to enact a Constituent Assembly. The president’s proposal was backed by 82 per cent of all voters. An election to choose the assembly’s 130 members took place on Sept. 30. Correa’s supporters—running under the Movement Country (MP) banner—secured 69 per cent of the vote and 80 seats, enough to enact changes without seeking compromises with political opponents.
On Nov. 28, Correa warned assembly members to take their duty seriously, saying, "It is now or never. If we don’t manage to change the country radically in a peaceful manner, next time people will want to change it with violence because they will be fed up."
On Nov. 29, Ecuador’s Constituent Assembly officially began its work, and suspended the National Congress. The ad-hoc legislative body has six months to finish a draft. The proposed Constitution must be ratified in a nationwide referendum. The Constituent Assembly is expected to discuss a wide variety of topics, including the possibility of consecutive presidential re-election, as well as new oil and mining regulations.
Polling Data
Do you think Ecuador will be better off, worse off, or stay the same with the new constitution?
| Better off | 33% |
| Worse off | 19% |
| Stay the same | 44% |
| No opinion | 4% |
Source: Cedatos/Gallup
Methodology: Face-to-face interviews with 1,286 Ecuadorian adults in 10 cities, conducted from Nov. 20 to Nov. 22, 2007. Margin of error is 5 per cent.
Tuesday, December 04, 2007
Ecuador's Correa Deepens Navy's Control of State Oil Company
By Stephan Kueffner
Dec. 3 (Bloomberg) -- Ecuador appointed Navy officers to lead the state-owned oil company's three biggest divisions, deepening the armed forces' control of PetroEcuador.
Patricio Goyes will run the production unit, Carlos Albuja will head refining, and Marco Salinas will oversee sales of oil and other fuels, the company said today in an e-mailed statement.
The personnel moves come after President Rafael Correa last week named a Navy admiral to run the company, which produces about half of the Andean country's roughly 500,000 barrels in daily output. He handed control to the military after a week of protests in the Amazon region shut some output.
Engineers have repaired most well heads and power generators damaged during the demonstrations, restoring output to near previous levels. Residents of the oil-rich region were demanding jobs, improvements to infrastructure and environmental cleanup.
``The intervention of troops and police allowed the mobilization of inspection and maintenance crews,'' PetroEcuador said today.
Goyes was previously an executive vice president at PetroEcuador. Albuja and Salinas studied business administration while pursuing their military careers, today's statement said.
Correa blamed the previous management, led by Carlos Pareja, for inefficiencies at the company and for allowing the protests to cut production in the area as much as 20 percent.
Output in the affected region reached 174,289 barrels today and will rise above 175,000 soon, the company added.
Ecuador: Keeping Up With Hugo
The lack of investment is making Ecuador one of the slowest growing countries in Latin America.
BY WALTER T. MOLANO
Latin Business Chronicle, 3 December, 2007
Not to be left behind by his Venezuelan ally, Ecuador’s President Rafael Correa is moving ahead with a new constitution.
In September, President Correa and his Alianza Pais (AP) party secured a majority in the new constitutional assembly. Having cobbled together a grassroots movement to combat the traditional political parties and entrenched interest groups, President Correa is plowing ahead with changes that promise to overhaul the nation’s institutions. The president is vowing to implement reasonable reforms, such as the separation of powers and an independent judicial system, but he is also pushing for measures that will give him more control over the economy.
SOCIALISM AND ENERGY CONTROL
Like President Chavez, President Correa is pushing the so-called Socialism XXI agenda by advocating direct control of the energy sector, better distribution of wealth and the ability to nationalize private property. As was the case in Venezuela, the new initiatives are scaring the private sector and producing a decline in fixed investment. Although the new measures will allow the Ecuadorian president to consolidate his powerbase, it could also lead to a deterioration of the country’s capital stock.
Unlike Venezuela, Ecuador is not booming. The Ecuadorian Central Bank recently revised its 2007 GDP growth forecast to 3.4 percent y/y from 4.1 percent y/y, and some local economists believe that final number could be closer to 2 percent y/y. Fixed investment fell 2.3 percent y/y during the second quarter, marking the second largest decline since the 1999 default. The nationalization of the oil sector is increasing government revenues, allowing the public sector to expand expenditures. Government revenues improved 28 percent y/y to $8.69 billion in 2007, or 20 percent of GDP, and outlays rose by 30 percent y/y to $8.88 billion. However, total oil production is declining as investment evaporates. The increases in government spending and social assistance programs boosted consumption, thus offsetting the decline in investment. This allowed Ecuador to post a modest expansion.
SLOW GROWTH
Nevertheless, the lack of investment will make Ecuador one of the slowest growing countries in Latin America. Fortunately, soaring oil prices left the central bank with $2.5 billion in international reserves, a massive windfall for a such a small country. The government hopes to use the resources to improve investment and social programs. However, the increase in consumption will push up the import bill, and it may leave Ecuador with a current account shortfall. Likewise, the increases in public expenditures will leave the government with a gap of 0.4 percent of GDP in 2007.
The improvement in external conditions allowed Fitch to revise Ecuador’s sovereign debt outlook to neutral from negative, but the overall rating remained the same. President Correa also softened his rhetoric, saying that Ecuador would continue to service its debt as long as it had the resources to do so, which is the case for every country on the planet. In sum, President Correa’s initiatives are strengthening his powerbase and ensuring that he will remain in office for the foreseeable future. As was the case with President Chavez’s Bolivarian revolution, President Correa’s initiatives are boosting consumption.
NOT VENEZUELA
However, the measures are disincentives for investment, resulting in a gradual depletion of the country’s capital stock. The erosion of the capital stock forces a country to rely more on imports and weakens the external accounts. Given the huge size of Venezuela’s oil sector, it can sustain a simultaneous erosion of the capital stock and an increase in imports for a moderate amount of time. However, Ecuador’s oil production is much smaller and in worse shape. Therefore, Ecuador could get into trouble relatively quick.
Although President Correa may be trying to keep up with Venezuela, it may not have the resources to implement a similar program.
Walter Molano is head of research at BCP Securities.
Ecuador Assembly Starts Sessions
Montecristi, Ecuador, Dec 3 (Prensa Latina) The National Constituent Assembly in Ecuador starts labors Monday as a full powered institution.
Alberto Acosta, president of the Constituent Assembly, stated Sunday that the country will determine the assembly members' working rules and did not discard the possibility of also adopting new resolutions.
The bylaws must be drawn up and approved in about seven days, because so far the behavior of 130 members from that body is controlled by a temporary set of guidelines instated during Thursday's first session.
The Country Alliance Movement, with 80 seats in the Constituent Assembly, has a working rules draft, to be presented by the minority.
After approving those guidelines, the Assembly, whose mission is to draw up a new constitution and reform the State's institutions, will create the 10 working commissions.
This concern in constituent tables with 13 members each, includes Development, Fundamental Rights, Territorial Order, Work and Production, and a Legislative Model.
In Thursday's first session, the full powered Assembly ratified President Rafael Correa in his post and suspended the National Congress for an indefinite period.
Petroecuador controls oil protest, output rises
QUITO, Dec 3 (Reuters) - Petroecuador has controlled a violent protest in an Amazon jungle province that had slashed the state oil firm's daily output by 20 percent earlier last week, a company spokesman said Monday.
Petroecuador's oil production was up near normal levels on Sunday at 172,404 barrels per day, recovering from the demonstrations by villagers of the province of Orellana who demanded more state funding for infrastructure projects.
"The military has provided security for our installations, and operations are returning to normal," said Petroecuador's spokesman Fausto Mejia.
Ecuadorean President Rafael Correa last week declared the province under state of emergency to quell the protest, banning public gatherings and setting curfews.
Correa also removed Petroecuador's chief Carlos Pareja and named Navy officer Fernando Zurita as the company's new head to battle the demonstration that had blocked roads to key oil fields.
Petroecuador top officials discarded attacks to the country's state oil pipeline SOTE after a local television reported bomb blasts near the key line.
Ecuador, South America's fifth largest oil producer, repeatedly suffers from demonstrations that curtail output in the poor Amazon region.Ecuador to push tax overhaul bill, rich to pay more
QUITO, Dec 1 (Reuters) - Ecuadorean President Rafael Correa on Saturday said he would introduce a proposal next week to overhaul the tax laws and force the rich to pay more duties.
"In the next few days we will send the assembly a tax reform bill ... a reform to make sure those who have more pay more, tax luxury goods and impose duties on financial speculation," Correa said during his weekly radio address.
The president will send his proposal to an assembly controlled by his political party that took over legislative powers this week and closed down Congress, increasing the influence of the leftist president, who wants to extend state control over the country's economy.
In the address, Correa did not specify what he meant by financial speculation. But officials have said the government is drafting a bill to tax foreign money transfers in an effort to halt financial speculation and generate incentives for private funds to be invested in the poor Andean nation.
Correa did not say if the bill would lower the key value-added tax to 10 percent from 12 percent, as he had promised during his presidential campaign last year.
The president's tax proposals worry Wall Street analysts, who say deep reforms could scare off foreign investment and hurt Ecuador's ability to repay foreign debt.
Correa also said he removed Mauricio Davalos from his Cabinet. Davalos was considered one of the most pragmatic members of Correa's team, but the former businessman lacked the authority to change economic policy.
Ecuador to allow open pit mining if benefits seen
QUITO, Dec 1 (Reuters) - Ecuadorean President Rafael Correa said on Saturday the government would allow open pit mining and bear its environmental impact if it generated enough revenues for the Andean nation.
"In principle we want to avoid it, but if there are more than $100 billion in revenues we will have to allow open pit mining," Correa said in his weekly radio address. "I'm talking about a real example, I'm talking about the mines of Ecuacorriente in Zamora Chinchipe."
The leftist president said the country's lush precious metal potential could help the government finance needed social projects for the poor.
Canada's Corriente Resources is waiting on the government to approve an environmental impact assessment amendment to start work at its Mirador mine in Zamora Chinchipe province, a company executive said.
Last year, Ecuador suspended the start of work at the Mirador copper-gold project due to clashes between communities in favor and against mining.
Correa has promised sweeping reforms to the country's nascent mining sector to establish new contracts and royalties for companies exploring for gold and copper.
Alberto Acosta, the head of the assembly rewriting the constitution and close ally to Correa, has repeatedly said a new charter will ban open pit mining to safeguard the country's environment.
The assembly, which last week closed down Congress and took over its powers, is expected to decide on a series of reforms to the mining law to increase state participation in the industry.
Some other firms exploring in Ecuador include Aurelian Resources and Iamgold Corporation.
Friday, November 30, 2007
Swedish Construction as Sexism in Ecuador
| Written by Hanna Dahlstrom | |
| From UpsideDownWorld, Wednesday, 21 November 2007 | |
| On the road between the two oil towns Lago Agrio and Coca the brothels are open 24 hours a day, seven days a week. The women along the road are waiting for the oil workers. Many of them come from the Ecuadorian coastal region or are refugees from the conflict-ridden Colombia. Oil workers and Child Prostitution Swedish construction company Skanska states the company “generates employment” when it actually deprives the local population the possibility to hunt, fish, and cultivate crops on its own terms. The one employment that oil exploitation actually has contributed to is prostitution, because in the oil region of Ecuador women are the most exposed and their lives the most commercialized and exploited. Skanska, with the operational responsibility of 5,000 oil wells in Latin America (1), is raping the earth as well as the women of the region.
According to a study by CONAMU (Consejo Nacional de las Mujeres – National Women’s Council), the UN Children’s Fund, and Sucumbios’ provincial church, the bars and discotheques of the oil town Lago Agrio are actually brothels frequented by the oil workers from Ecuador and other countries. The same report confirms that girls aged 12 to 16 work as prostitutes under slave-like conditions 17 hours a day.  Brothel along an oil road in Orellana, Ecuador Swedish Skanska and sexism The contact Agneta Enström and I have had with the Skanska in Ecuador confirms the context of sexism in which Skanska operates and where prostitution is an every day feature. At the company’s administrative base a few kilometers outside of Coca, the kitchen staff give ”massages,” according to one Skanska manager. One of Skanska’s employees, a geologist by profession, wants to let people know how Skanska operates. He describes observing another Skanska manager, Oswaldo Contreras, yelling obscenities at women, including an indigenous woman carrying her child, who he drove past while on his way out to the oil field to work. At Bermejo, the Skanska base close to the Colombian border, the companies’ employees’ complain about how difficult it is to sleep at night due to the noise from pornographic movies. Naturally, Skanska’s male personnel visit the bars of Coca every week and some managers even occasionally reside at the luxury hotel Auca in Coca.
Militarized oil fields and institutionalized prostitution Oil companies like Texaco and Shell arrived in the Amazon region of Ecuador in the 1950s, and with the help of the military they stole indigenous lands. The region is now constantly militarized and the military has repeatedly been deployed against the local population during demonstrations. Women are particularly affected by the militarization since the presence of oil workers and military leads to prostitution, rape, and thus higher rates of sexually transmitted diseases such as syphilis, HIV and hepatitis C. The role of the military in the oil state of Ecuador is clear – it is under direct order of the oil companies. The local population is forced to pass the oil companies’ military check points in their own villages, and outsiders must seek permission from the companies to visit the areas, and must state their relation to the company while travelling. In the Ecuadorian oil field called ”block 16” (in company language) where Skanska works for Spanish Repsol, the military is directly under the command of Repsol through a contract valued at more than 1 million USD. There, the military’s principal task, according to the aforementioned contract, is to prevent “intrusion by subversive elements into the areas of operation,” which is conveniently defined to apply to not only block 16 but to the country’s entire Amazonian region. In other words, the military personnel are mercenaries of Skanska and its clients and the military presence is constant. In addition, Skanska also employs its own security guards. Lawyer Bolivar Beltran from the Fundación Lianas in Ecuador has studied the contracts between the oil companies and the mlitary confirms these illegalities: Prostitution is further institutionalized in the Ecuadorian military since all military personnel receive a ticket to buy sex from one of the military’s own sex workers. The women mainly come from the coast to live on the military base while they work there. Each month, an obligatory five dollars is deducted for prostitution from each military’s $100 salary. The militarization of indigenous territory has also led to the military raping local women. “Around the military base kichwa girls become pregnant from the military” says Manuel Shiguango who himself is of the indigenous nationality kichwa and previously worked at the military base 49 Capitan Chiriboga in Montalvo. He now works with the indigenous federation CONAIE, as a youth leader of the indigenous peoples in the Amazonian province Napo, which is protesting against this oppression. Women protest against oil
The Waorani women refused to compromise with the companies. They protested against Brazilian Petrobras and Swedish Skanska’s illegal intrusion in their territory, and succeeded in stopping the thieves this time, as the Ecuadorian state withdrew their permit due to bribery scandals and insufficient environmental impact studies. Their territory and Ecuador’s largest national park is once again under threat as Skanska and Petrobras assert that it is possible to exploit for oil without damaging the sensitive rain forest and its inhabitants.(3) Naturally the oil companies are the first to talk about sustainability as the hunt for nonrenewable resources become increasingly bloody. Many are those who join the ranks of the oil companies’ preaching of high tech solutions to prevent an environmental disaster, and a very famous example is Sweden’s honorary consul Galo Abril, former minister of oil in Ecuador. His own position is at the height of ecological ignorance and arrogance and was manifested in an interview with Agneta Enström and I in which he said that there is no problem in building roads to reach oil in the rain forest as Skanska has done, if you just “let the treetops touch so that the monkeys can jump across.” The Waorani women’s current representative Manuela Omari Ima protested in an open letter to Ecuador’s president Rafael Correa: The Waorani’s preparedeness to defend its culture and territory has earned them the reputation of being bloodthirsty savages. In Waorani language wao means ”people” while cawode is used to describe outsiders, that is, the white man. Literally, the word cawode means ”inhuman cannibal,” or as an old Waorani warrior explained: ”those who cut up everything into pieces.”(5) Hanna Dahlström is an editor and reporter at www.yelah.net. Yelah is a Swedish independent media group, uncovering activism and politics worldwide. She has recently worked in Ecuador, researching Skanska and oil exploration on indigenous land. Contact: hannagoanna@hotmail.com Footnotes 1. See information about Skanska provided via trivia game on the website of a contracted advertising company. "Skanska - Trivia en Oil & Gas 2005": http://www.siainteractive.com/sitio2/050579.htm For further informaition on this topic, see the following series by Agneta Enstrom: (Part 1) (Part 2) (Part 3) (Part 4) (Part 5) |
Subscribe to:
Posts (Atom)
