On June 10, the 10th round of negotiations for a free trade agreement between the South American nations of Ecuador, Peru and Colombia, and the United States, ended in a stalemate, with neither side willing to budge, in yet another example of Washington's increasing isolation on the continent.
Colombian farmers boycotted the negotiations, thousands of
Ecuadorians protested in the streets of the country's largest city,
Guayaquil, until police used water cannons and tear gas to disperse
them, and on June 8, a bomb was set off outside the hotel in which the
negotiations were taking place.
Ecuador's social movements, confident after forcing the overthrow of
President Lucio Gutierrez on April 20, are demanding a referendum on the
agreement. Protesters chanted: "We don't want to become a North
Gutierrez was unpopular for his implementation of neoliberal
austerity measures, expansion of the US military presence in Ecuador and
for attempting to subvert the role of the Supreme Court.
replacement, former vice-president Alfredo Palacio, came to power
promising to hold a referendum on the trade agreement, increase social
spending and to "re-found" the country by setting up a constituent
assembly to rewrite the constitution.
However, while he initially spoke out against deepening military ties
with the US, Palacio has since affirmed that the US air base at Manta,
used as part of Plan Colombia, will stay, and there are fears he will
cave in to Washington over trade as well.
Washington has not relaxed, however. Palacio's new cabinet contains a
number of "leftists" opposed to US interests in the country. The
appointment of Rafael Correa as finance minister sent jitters down
investors' spines, as did Correa's statement that the highly unpopular
decision by Ecuador in 2000 to adopt the US dollar was the "greatest
On May 16, the new energy minister declared that Ecuador will review
all of its current oil contracts with foreign companies, and on June 15,
Ecuador's Congress voted 64-1 to approve a reform package that
redirects $745 million from an "oil stabilisation fund" into social
programs and economic growth package instead of debt repayment.
Thirty-five per cent of the money will be used for investment,
including reinvigorating Ecuador's ailing national oil company
Petroecuador. Fifteen per cent will be spent on education, 15% on
health, 20% will be kept in reserve, and the rest will be spent on
roads, research, and the environment, the funding comes into effect in
The bill is opposed by Wall Street, Ecuador's Central Bank,
Ecuadorian opposition parties and the International Monetary Fund, which
all claim that it will drive investors away and, if it causes a default
on debt repayment, may end the dollarisation process and destroy the
Oil is Ecuador's biggest export, providing 43% of Ecuador's national
revenue, and any changes to the industry have huge flow-on effects. A
reduction in global oil prices would hit Ecuador hard, and without a
reserve fund, Ecuador could default on its payments.
The Ecuadorian government claims that it faces an international
conspiracy, to prevent progressive reform and to destroy it. Gutierrez
recently left his exile in Brazil and travelled to Washington to meet
with representatives of the Organisation of American States (OAS) and
Ecuador debt bonds purchasers.
Gutierrez, who rejects the Palacio government as illegitimate, has
announced plans to return to Ecuador "within weeks", and called upon the
OAS to support him in "restoring democracy" to the country.
Rumours abound in Ecuador that Gutierrez' brother Gilmar of the
Patriotic Society Party (PSP), the right-wing Social Christian Party
(PSC) and others are deeply involved in oil deals, which might be
threatened by Palacio's policies, and are therefore engineering his
Meanwhile, a number of Palacio's ministers have come under scrutiny
for bad debts, and two, including energy minister Fausto Cordovez, have
been forced to resign, claiming they have been pressured by the oil
industry and financial sectors in Guayaquil.
While Palacio tries to maintain a balancing act between the social
movements and international finance, the chief of staff of Ecuador's
Public Administration, Luis Herreria, caused an uproar, accusing
Venezuelan President Hugo Chavez of trying to spread his "horrible and
diabolic" Bolivarian revolution to Ecuador.
Social movements supportive of the social policies of Chavez have
demanded Herreria's resignation, but some see the outburst as a ploy by
Palacio to assure the US and international interests that Ecuador is not
following the path Venezuela has taken.
Ecuadorians, over two-thirds of whom live in poverty, have shown
little patience with policies and politicking that do not improve their
conditions. Palacio, and Washington, would do well to remember the main
slogan used during the April uprising, "Que se vayan todos" ("They all
First published in Green Left Weekly, June 22, 2005.