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Ecuador: Quo Vadis

Michael Werbowski, Prague, Czech Republic, February 26, 2007

Ecuador's new president, Rafael Correa (right), his wife Anne Malherbe, and his youngest son Miguel, leave the National Congress in Quito on Jan. 15 after the swearing-in ceremony. (Photo: Mauricio Duenas / AFP-Getty Images)

Last month's inauguration of Ecuador's new president Rafael Correa holds great promise for the equatorial country of bananas and "black gold." Yet Ecuadorians have had their hopes dashed in the past. It remains to be seen whether this time it is really a fresh start for a brighter future or just a repeat performance scripted from previous failures.

A positive sign: the new administration seeks to lighten the country's credit burden by announcing a cutback in its repayment to the International Monetary Fund-World Bank duo. The new president may follow in the footsteps of his ideological mentor Hugo Chávez and redirect the reduced debt payments to more funding for health, education, and vital infrastructural projects like roads and sewage systems. Or he might choose to raise royalty taxes on oil exports to pay for these projects. We shall see soon where he takes the county. Internationally, so far we have not heard the shrill and provocative rhetoric directed at George (Jorge in Spanish) W. Bush coming out of Quito as one hears from Caracas. Hence it is reasonable to assume the new president will not squander the nation's oil wealth on arms and weapons purchases as Chavez has done so far as part of his very personal dueling and hollering match with the evil "devil" in the White House.

Big Players Making a Very Big Mess in a Small Country

One area where President Correa may depart from the failed and corruption-ridden policies of his predecessors is in the extraction industries of oil, gas, and mining.

Like resource rich Venezuela, Ecuador has that precious liquid that is so coveted by its "oilaholic" trading partners to the North. Three juggernauts of the "extraction industry," Encana, Occidental Petroleum, and Chevron-Texaco, hold a virtual oligopoly over the country's oil output. This "unholy trinity" controls the domestic oil industry and thus is the key to Ecuador's struggle to escape poverty and move toward prosperity.

All three companies, however, have less than glittering histories in the country. The Calgary-based company Encana (a name derived from the words Energy, Canada, and Alberta) is the country's largest foreign investor and main backer of the O.C.P. pipeline. It is an engineering exploit for some but an environmental nightmare for others. The O.C.P. project was designed to pump heavy crude out of the Amazon area and transport it to Ecuador's Pacific coast. The pipeline has been plagued for years by protests, delays, and allegations by locals residing near the drilling site of toxic fluids spilling into rivers killing fish and fauna.

A similar messy business is the now infamous Occidental Petroleum case. In May 2006, "blocks" or operational portions of the company's operations were "illegally" seized (i.e., expropriated) by the government at the time due to incessant charges related to environmentally destructive activities.

The California-based company, which as an ironic twist has financial ties to global warming, anti-greenhouse gases crusader Al Gore, has challenged the Ecuadorian government's decision in front of the World Bank's (a corporate Vatican council of sorts) bi-lateral trade litigation tribunal, a legal body that has a track record of ruling overwhelmingly in favor of multinational companies at the expense of "defendants" in the developing world. (For more on this case and others refer to the Web site www.bilaterals.org.) The third case involves the Chevron-Texaco conglomerate, which is being sued by local mestizo residents in the Amazon for failing to clean over the years 18 billion gallons of toxic wastewater. There have been documented reports of increasing incidences of cancer among the Indians in the affected area. (See www.oilwatch.org.) The Justice Department has interceded at the behest of Ecuadorian officials to investigate this matter and possibly may initiate criminal proceedings against the company. How these cases play out will depend on what kind of policies the new president adopts with respect to these oil giants.

Ecuador's Ongoing Mining Mess

The other extraction industry case in the news is the Canadian mining corporation Ascendant and its open pit Junin project (see "Ecuador: Escalation in the Junin Copper Conflict" at www.upsidedownworld.org), which is opposed by locals due to environmental concerns as well. The company's less than stellar performance as a "good corporate citizen" has drawn fire from local nongovernmental organizations for trashing the landscape and stirred the ire of locals who maintain that the company's E.I.A., or environmental assessment impact study, is a sham and was done in an improper and shabby manner. President Correa's new "environmentally friendly team" has looked into the matter; the newly appointed mining ministry has ordered a halt to all mining activities at the site. Again, by which scenario this burning issue is settled remains dependent on how the new president deals with corporations and companies plundering his country for profit.

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