Ecuador: Oil Up for Grabs
east, NACLA
Introduction For many years, Ecuador hit the front page (or back pages, more likely) only when a colorful general decided to stage a coup d'etat or when U.S. tuna boats were impounded by...
...The Military Junta (1963-1966) that replaced him swung to the right, with a strong-arm "solution" to both development and unrest...
...and the "rebellious" faction by Jos6 ChAvez, head of the Free Workers' Federation of Pichincha (FETRALPI...
...The immediate pretext was Arosemena's toast at a banquet *In 1952, Ecuador, Peru and Chile signed the Santiago Declaration, which established national sovereignty over a 200-mile limit in territorial waters.13 honoring Admiral McNeil, president of the Grace Line: "To the people of the United States, but not to its government which exploits the peoples of Latin America...
...For example, the Chamber of Industries stated: "under present circumstances, the only measure that can solve the crisis is a revision of oil policies which would permit the normal flow of this vital resource belonging to all Ecuadoreans...
...the Ecuadorean government still refuaes to recognize the changed border, and official maps of Ecuador still include the entire Amazon region.Manabi and Esmeraldas...
...According to the law, expropriation (with compensation) could only affect the following categories: deficiently exploited land, land exploited in a manner contrary to its potential, land whose exploitation violates the conservation of natural resources, land not directly exploited by its owner, land worked by precarious forms of labor...
...For many countries it provided the necessary stimulus to begin an industrialization process based on import-substitution...
...Fully cognizant of this situation, the Ecuadorean bourgeoisie has shown increased hostility toward any government decision that would cut off their pipeline to foreign capital...
...From this perspective alone, the course of historical development appears to be determined by a series of natural phenomena, "magical" discoveries and just plain luck...
...The Ecuadorean countryside is riddled with monuments to Valesco Ibarra: bridges, roads and schools constructed in the most unexpected places and bearing his name...
...The working class was strengthening its organizational forms and political consciousness, the peasantry was demanding an authentic agrarian reform and ever-growing sectors of the population were unemployed or engaged in marginal service activities...
...General GonzAlez Alvear, leader of the golpista elements in the military, was granted asylum in the Chilean Embassy and several eyewitnesses to the last hours of fighting report having seen an official embassy car wisk the General away to safety...
...No maximum limits were placed on the size of "productively cultivated lands," defined as those with 80 per cent of the available land area under cultivation...
...The country's ties to world capitalism constantly reproduce and reinforce its dependent status vis-a-vis the imperialist centers...
...In particular, the country's drive toward industrialization belies the common contention that dependency is synonymous with non-industrialization and that greater "autonomy" is concurrent with industrial growth...
...na na acq...
...In 1973, a report by the Workers' Federation of Pichincha asserted that "after three years of military government, the conditions of the working class and the exploited masses not only have not improved, but they have seriously deteriorated...
...Ecuador's integration into the world market in the nineteenth century, on the basis of tropical exports, and even its more recent status as an oil producer, are an integral part of the history of capitalist expansion on a world scale...
...For Ecuador, the 1960's added a new chapter to the history of sordid dealings between governments and foreign capital...
...It was with the sense of a job well done, then, that Donald Kessler, AIFLD's director in Ecuador, wrote to his regional director in 1973: "The Ecuadorean Petroleum and Chemical Workers' Federation (FECUAPETROL) has just concluded their First Ordinary Congress with AIFLD/Ecuador's assistance, and a new Executive Board was elected...
...The 1960's tested both the resistance of the oil companies and the political unity of the OPEC members...
...Three of the country's five leading exports (oil, cacao and coffee) dropped markedly, while only bananas and seafood products showed an increase in foreign sales...
...The euphoric banana boom was short-lived, as foreign companies pulled out in the late fifties as abruptly as they had arrived a decade before...
...Rather, the new direction is toward the capitalization of large landholdings, and toward rapid growth based on a new set of social relationships...
...Simultaneously, the Peruvian Navy easily laid seige to Guayaquil.* During the initial phase of the war, the U.S...
...All of them rank in Fortune's top ten cor- porations and their combined assets in 1973 totalled $69 billkm-or one-eighth of the assets of the top 500 corporations...
...Control over the government apparatus--endowed with unprecedented resources--became more critical than ever...
...The new political composition of the government includes the inflated presence of the industrial sector of the bourgeoisie...
...1975) 17...
...Yet current developments indicate that a turning point is in sight for highlands agriculture...
...The landowners insisted that the problem was not one of land tenure, but of government intervention...
...Most important among these was the fact that banana production, like cacao, remained primarily in the hands of Ecuadoreans...
...While Gulf had successfully used bribes to control oil policies in Bolivia, the Texaco-Gulf combine resorted to economic blackmail in the Ecuadorean case...
...Any pretense of nationalism was soon swept away when the Junta established a modus vivendi with the United States, forfeiting all claims to a 200mile limit to territorial waters...
...while on the other hand, it not only permits but encourages a torrential flow of foreign capital into the strategic centers of industry, banking, commerce and even agriculture, denationalizing the native capital it pretends to in- crmnent and defend...
...Fundamentally, it demanded a radical change in the pattern of dependent industrialization characterized by heavy imports of raw materials and capital goods...
...On August 22, 1975 (one week before the impending coup attempt), the government issued a decree that sent every sector of the bourgeoisie into active opposition...
...They tried to collect these production payments in 1973...
...By 1968, those figures climbed to 206,000 and 264,000, respectively...
...The Ecuadorean government protested vigorously, while even the docile Organization of American States denounced the measure as "discriminatory and coercive...
...Some sectors expressed the El Punto "Moe peroum, more poerty...
...The new law guaranteed the private ownership of land "which fulfills its social function...
...The Left opposition makes itself felt by means of student demonstrations.and strikes...
...The era of "political mautrity" was over...
...Any attempt at reform, however minimal, which affected any sector of the dominant classes was impossible to put into practice...
...The company most vulnerable to this process was Texaco-Gulf-the only company ready to go into full production and initiate exports by August 1972...
...concertqje was a system of debtors' prisons...
...Ibid., 9899...
...Factory production increased by nearly 10 percent annually throughout the 1960's, while small industries and handicrafts grew at half that rate...
...Thus, while other Latin American economies were suffering severe setbacks, Ecuador was zooming ahead on all fronts...
...The measures taken since 1972, have gone a long way toward doing just that...
...Beyond the isolated attempts at industrialization mentioned above, very little occurred in the 1930's and '40's to change the pattern of Ecuador's dependency on primary exports and to increase its industrial potential...
...On November 15, 1922, two thousand workers were killed in the streets of Guayaquil by the army and police...
...Both sides of this double-edged sword were applied to the Ecuadorean situation, analyzed by the United States as ripe for social revolution...
...cit., 22...
...In the name of a social base they never possessed, Ecuador's traditional parties called for free elections...
...C* C Ecuador, too, is industrializing, although at a later date and a slower pace than many countries...
...Thus, in October 1974, while Jarrin was still serving his term as president of OPEC...
...imperialism...
...Commenting on the tenor of the negotiations, a government official wrote: We hope (the oil companies) understand the serenity we have maintained up to now...
...Even CEOSL, born and bred of AIFLD, the CIA and the International Trade Secretariats, is moving toward a decisive break with its past practice of class conciliation...
...imperialism throughout Latin America...
...Indeed, sectors of the military and government bureaucracy were strongly determined to take the process further than had ever been tried before...
...government, U.S...
...1. AGRICULTURE: A TURNING POINT The history of agriculture in Ecuador is one of contrasting dynamism and backwardness: the steady expansion of export production on the Coast in juxtaposition to an archaic system of production in the highlands...
...They were carefully pieced together by Jaime Galarza In his book Festin del Petroleo...
...In fact, they were reaping windfall profits from the "crisis...
...The ITS was aided in its efforts by Matias Ulloa Coppiano, a CIA agent who had at one time served as head of CEOSL and was involved in a variety of labor operations for the CIA station in Ecuador...
...And secondly, aside from the weak coastal industries, the only industrial nucleus of any importance in Ecuador was textile production in the highlands...
...1 The full gravity of the situation, in both economic and political terms, became more apparent as the other half of the balance sheet, Ecuador's exports, entered a period of rapid decline...
...Trade Union Imperialism in the Dominican Repblic...
...or what amounts to $18.8 million in one year.38 oust the regime, did produce further concessions to foreign capital...
...4. Latin America, Vol...
...Bananas are still the country's second largest export-second only to oil--and new markets have recently been cornered in Eastern Europe, the Soviet Union and China...
...Fred Hirsch, An Aalsirs of Our AFL-CIO Role In Latea America: Under the Covers with he CIA (Son Joe: np...
...The post-September shake-ups and policy changes have done little to tame the demands of the bourgeoisie for a return to civilian rule...
...On the world market, the demand for tropical products was very low until the close of the nineteenth century...
...The question was asked most insistently, in the mass media and political declarations, by the bourgeoisie-by all those who had profited most from Ecuador's oil bonanza...
...The coup attempt had failed, some say because of bad planning or last-minute hesitations by key military figures...
...Its present development is, in many ways, a microcosm of fundamental changes occurring throughout Latin America...
...The following section briefly describes the events of the 1960's, with particular attention to the role of U.S...
...In 1964, two per cent of the population absorbed 19 per cent of total income, while 50 per cent of the people absorbed less than 23 per cent...
...On May 28...
...The shortage of food for domestic consumption became increasingly critical...
...3. El ComerciD, July 3, 1975...
...OPEC countries began to demand higher prices for oil, a greater share in profits and state participation in decision-making...
...This strong foreign reaction severely sharpened the divisions within the government...
...Under the predominant influence of the Ecuadorean Communist Party, the federation has maintained a position of "critical support" for the military regime, supporting its nationalist measures on oil and territorial waters, for example, while pushing for higher wages and better working conditions for the rural and urban work-force...
...The expensive history of their activities in the Oriente, their vicious competition for influence and control, made these sudden declarations highly implausible...
...The conclusions were not seen in full force until the 1970's...
...10 AlF LoD, Aaua Progream Report, (1962-1975...
...In exchae, the hsiparmevwra we obflged to wodr o the owners estate, at ar or nomnal wages, while women and chldrn worked In the ktces with no pay at alL NACLA-EastBOOM-EB U- BOOM-U T- BOOM- Mug 1 introduction The history of Ecuador from the nineteenth century to the present is readily susceptible to periodization: the cacao boom, the banana boom and, presently, the oil bonanza, with intervening periods of economic crisis and political havoc...
...rather than allowing it to flow abroad...
...There is no indication that the latifundia will be broken up and redistributed...
...While the huasipungo system and all forms of precarious labor were officially abolished, the net result was a tremendous proliferation of the minijindio, or small plots of land for subsistence farming...
...Nationalization is strictly taboo...
...Galo Pico Mantilla, the exMinister of Industries, took asylum in the Venezuelan Embassy...
...Under the regime of Rodriguez Lara, and primarily under the direction of Jarrin, Ecuador had made major strides toward capturing a greater part of the surplus from oil production and toward ensuring that portions of this surplus would create the conditions for industrial growth...
...3. Financial Times, February 28...
...The harshest sentences were reserved for those who had already fled the country: Joseph Shannon Wolfe-9 years, and Galo Pico Mantilla-5 years...
...The government has created the Escuadr6n Volante (Flying Squadron-better known as the "Death Squadron" to the coastal peasantry-to carry out official persecution...
...A gush of "black gold" initiated a new cycle of dependency and oil was proclaimed as the new economic savior...
...The debt between the oil companies left by the Chaco War had been paid back...
...In alliance with the U.S...
...But workers have not given in to these threats, nor to the tirades of misplaced blame leveled by the mass media...
...Lastly, we shall examine the abortive coup attempt which took place on September 1, 1975, and which highlights both the divisions within the military and the strong opposition of bourgeois sectors to even a much watered-down version of "nationalist and revolutionary" government...
...A primary difference between the oil boom and previous export booms lay in the fact that Ecuador's oil resources were the property of the State...
...Ecuador's history is an eloquent example of imperialist domination and dependency, under a variety of forms...
...2) the creation of a "climate of confidence" in the agricultural sector, meaning higher prices for agricultural produce and a revision of the agrarian reform...
...na 1975 est...
...Exporters wanted lower taxes and more credits...
...2, Labor), massive foreign investment and loans were one side of the U.S...
...The oil companies were flocking back en masse, beginning with Leonard Exploration Company (Standard) in 1957, and followed by a seemingly endless array of companies...
...Described by rightwing forces as suffering from acute xenophobia and communist influence, Jarrin pursued a consistent policy of tightening the reins on foreign capital in the oil sector...
...the oil men presented their ultimatum: If their "suggestions" were not accepted, the companies would cut back their operations in Ecuador...
...Three provinces contributed most heavily to his triumph: Guayas, Los Rks and El Oro-all coastal provinces and precisely those with the highest percentages of migrant population...
...Once in office, the pendular character of his political behavior, his oscillations between Left and Right, succeeded for a time in mediating the relations of dominance and subjugation between the dominant class as a whole and the masses, and in mediating the factional interests of the dominant classes...
...By straddling the fence, the regime had not only failed to mediate opposing interests within Ecuadorean society, but it had fallen into total isolation...
...In a country where 70 per cent of all housing lacks running water, electricity and sewage, luxurious apartment buildings competed for space on the cities' rising skyline...
...The popularity of Jarrin's policies among sectors of the Armed Forces had made him a potential political rival to President Rodriguez Lara...
...While the two sectors have been connected historically by trade and heavy migrations, their present characteristics remain highly divergent...
...The transition to the monopoly phase of capitalism meant that the export of capitals from the imperialist metropoles to relatively undeveloped regions, was replacing the traditional pattern of domination by means of commercial ties...
...For example: (1) The National Development Bank increased its loans to the agricultural sector from $32 million in 1973 to $120 million in 1974...
...Expropriation" became a lucrative business for the "expropriated," through large indemnifications from the government...
...AIFLD/INESE graduates have done their job efficiently, as can be seen in the fight over the petroleum workers' union, which deserves special attention, given the strategic role of oil in Ecuador's economy...
...The foreign companies also attacked the government's attempt to regulate the volume and rate of production, and to fix prices and quotas for internal consumption...
...Landowners on the Coast have reacted with equal vengeance to crush the seeds of unionization on the large plantations...
...While both these provisions have been invoked in legal proceedings since 1973, they imply costly and long bureaucratic struggles...
...If the lure of oil money and a divided bourgeoisie were not enough to make the military act, another factor entered the crowded arena of electoral politics as the catalyst for military intervention...
...the withdrawal of the Shell-Jersey consortium, Plaza went a step further when he declared: "It has been clearly shown that there is no oil there...
...IV, No.37 (September 13, 1974), 153...
...ibid...
...The present article will focus on two stages of the history of oil in Ecuador...
...According to a U.S...
...The Anglo consortium returned over 2.39 million hectares to the government, citing the surface tax obligations of Decree No...
...they receive in taxes more than what some member countries of OPEC receive in total.18 Nevertheless, the specific conjuncture in world oil prices...
...All that changed with Decree No...
...Small and medium producers, however, who lacked the capital to reorient production were excluded from the export quotas...
...The highlands peasantry and rural laborers on the Coast lack both the economic resources and bureaucratic "contacts" to make these measures a powerful tool for land reform...
...Ecuador was not to become a second Venezuela, which even after decades of oil boom, is plagued by the critical problems of unemployment, slum towns, social unrest and continued dependency on manufactured goods from abroad...
...The economy as a whole remained tied to the cycles of agricultural production for the world market...
...What's more, neither could the foreign oil companies...
...Local industrialists complained of "lenient" policies toward labor and an insecure climate for foreign investment...
...imperialism to the need for a radically different policy toward the hemisphere...
...The dominant classes, however, claimed that the reduction was far too little to re-establish a favorable climate for foreign investment...
...Since the events of September, it has appeared more and more that the nationalist vehicle for capitalist development is running out of gas...
...While he fond a new field for his talents as Secretary General of the Organization of American States, he was not forgotten in Ecuador...
...Surface rental charges, changed from 5 to 100 sucres under the 1971 law, were applied retroactively...
...The oil boom has brought few concrete benefits to the working class, still the victim of extreme exploitation by the bougeoisie and largely forgotten despite the government's plans for "social equality...
...2 2 OPEC countries were divided over the issue, When they unanimously agreed to a compromise decision raising oil prices by 10 percent, the Ecuadorean government assumed an ambiguous posture...
...More concretely, the question became which of the divergent tendencies present in the Armed Forces would gain hegemony and provide political leadership to the new regime...
...8. See "The Busines Outook-Ecuador...
...By the time the many facts fell into place and an official investigation was called for, Jaime Galarza was serving a prison sentence on trumped-up charges of terrorism and receiving daily threats on his life from the people Implicated In his writings...
...imperialism in Ecuador...
...The demands presented by the bourgeoisie as a whole, tantamount to a political program in the eyes of many, are indicative of their determination to keep the oil wealth flowing into their pockets, to combat the expanded role of the State in economic affairs and to strengthen their partnership with foreign capital...
...While large returns on exports provoked the articulation of elaborate plans for development in the fifties, no serious attempts at industrialization were made...
...Government declarations made it clear that "adjustments" may have to be implemented to take account of "special factors" affecting the country...
...The content of this "social function" remained imprecise, but the intent of the law was clear: the criterion was efficiency, not social justice, and the goal was modernization, not redistribution...
...1974, end Ages...
...AIFLD has not acted alone in Ecuador, nor elsewhere in Latin America...
...By far the most significant drop (52.2 percent) occurred in the oil sector...
...In 1970, Velasco lbarra had assumed dictatorial powers and, at the same time, announced a fixed date for the return to "normalcy...
...A Military Solution to Development The military overthrow of Arosemena's government was not a run-of-the-mill coup d'etat...
...3 Oil revenues in the first half of 1975 amounted to S215 million, down from $438 million in the first six months of 1974.4 This export reduction was accompanied by an intensive press campaign, locally and internationally, in which the foreign monopolies argued that the government's "irrational" policies had made Ecuadorean oil noncompetitive on the world market...
...The daily conditions of exploitation were harsher still in times of crisis, when the repressive machinery of the State was mobilized against an increasingly militant working class and peasantry...
...As described in an earlier article, foreign penetration in the economy has been primarily concentrated in export agriculture, with profound effects upon the social and political structure of the country...
...Among the largest is a state-cwned refinery which, when completed in 1976, will have a production capacity of 50,000 bpd...
...This apparent inconsistency between the words and deeds of the oil companies, their comings and goings, rapidly disappears if we examine the basis of their vast political and economic power within the world capitalist system...
...imperialism...
...8 As the U.S...
...the fate of Ecuador's oil policies under the present regime appeared settled...
...Cited in Velasco, "El Modelo Agroox portador," op...
...Beginning in 1972, the adjectives changed somewhat...
...whose very slight reanimation permitted the system to survive on the edge of collapse...
...The results of industrialization thus far have been the strengthened hegemony of foreign capital, increased dependency on loreign imports for industry, and the establishment of capital-intensive industries that suit the needs of foreign economies...
...But Galarza continued to work on a second book-Pirates in the Gulf 2 -which expanded the story of the offshore concessions...
...In a business requiring huge amounts of capital and a network of international connections, these six citizens were hardly typical of the investors and speculators that had populated the scene of oil dealings in the past...
...Ecuador: Decada 19,661879, mlmeo, 14-15...
...1965 est...
...Through its affiliates, such as the Workers' Federation of Pichincha, the CTE has been in the forefront of activity in the textile factories, a focus of increasing class struggle over the past year...
...Recent developments, however, reflect a move in the opposite direction, toward major concessions to the dominant classes and foreign capital...
...The 1960's was a period of slow and cautious entry, spurred by the import-substitution policies of several governments and the corresponding advantages granted to foreign capital...
...exports in Ecuador in this period, for example, have been strongest in the areas of machinery and electrical equipment, metals, transport equipment, chemicals, paper and construction materials...
...Manufactured goods from the industrialized centers were exchanged for cheap raw materials from less developed regions...
...The first three governments of the 1960's reflected all of these factors: the increased militancy of the working class in -4W L-__11 Galo Plaza The Politics of Prosperity The period of prosperity generated by the banana boom produced a new set of class alliances In Ecuador, a new model of bourgeois domination and a dynamic new political leader...
...In the absence of a developing industrial sector, the decomposition of pre-capitalist relations in the highlands produced a growing reserve army of labor, primarily concentrated in Guayaquil and engaged in a variety of marginal service activities...
...The fighting between forces loyal to the President and a small but determined group of golpistas lasted for 12 hours...
...2) the development of Industry by means of strong tariff protection and firm guarantees for food Investment...
...The oil companies wanted a major break in OPEC unity and a drastic reduction in the price of Ecuadorean crude as the preconditions for raising export production...
...Velasco's successors employed somewhat different tactics but were equally unsuccessful in their tasks of stabilization and economic development...
...More than 20 years of promised reforms in land distribution have culminated in a new drive toward capitalization, greater concentration of land ownership and the rapid proletarianization of peasant producers...
...Every hint at agrarian reform by the military regime was met with the old cries of "communist infiltration" and instantaneous drops in production...
...To the government's great disappointment, however, exports increased only minimally in the months that followed...
...1. Ibid., 190191...
...But divisions within the government deepened and internal debates were endless concerning the actual provisions of the long overdue law...
...6. U.S...
...Otto Arosemena was contrary to the norms of honesty, Integrity and Impartiality which the Chief of State, as the maximum representative of the people, Is obligated to uphold...
...have been exempted from import duties, which totalled $89.4 million in 1974...
...In the 1970's, however, foreign capital found a more fertile field in industry...
...to 211.300 in September...
...Department of Commerce, Foreign Economic Trd...
...AIFLDe One Out of Evwy Ten AIFLD has many names in many different places...
...The dominant classes soon consolidated their support for the interim presidency (1966-68) of Otto Arosemena, representative par excellence of the powerful banking and export interests of the coastal bourgeoisie...
...l 6 In 1942, under extreme pressure from the United States, Ecuador signed the Rio Protocol which legitimized the loss of one-third of its territory (200,000 square kilometers in the oil-rich Amazon basin) to Peru...
...While they fought these new measures every inch of the way, in lengthy contract negotiations, economic boycotts and propaganda campaigns, they basically had to adapt to new conditions...
...tuna boats were captured within Ecuador's 200-mile water limit* and $26,000 in fines were imposed...
...The September coup attempt, while it failed to *The income tax on company profits was reduced from 58.83 to 53.58 per cent-meaning a reduction of 43 cents per barrel in state revenues...
...In 1963, a 10-year development plan was adopted, with a major emphasis on industrialization and heavy reliance on foreign capital and loans...
...The factors leading up to this decision were numerous...
...3 1 The ranks of the landless peasantry were also increased, as a sizeable and cheap wage-labor force was made available to the Andean hacendados...
...Thus, for example, when reference prices are fixed at $11.65...
...Sectors of the Ecuadorean Armed Forces were also intent on changing the country's pattern of economic dependency and political surrender to the interests of U.S...
...AIFLD was aware that internal trouble was brewing and forcefully opposed ChAvez in internal union disputes...
...The so-called energy crisis of 1973 was a major test of OPEC unity and, in particular, of Ecuador's adherence to its policies...
...and the defense of oil prices...
...4 In addition to ADA, which Is the operator of the concession and holds a 17.9 percent Interest In the project, members of the group include: Equity Funding Corporation of America (23.8 percent), Swift and Company (23.3), OKC Corporation of Dallas (15.8), American Ultramar Co., Ltd...
...and European drug companies have virtually invaded the Ecuadorean scene, eager to capitalize on access to the Andean market, strong government incentives, an anticipated internal market of $40 million in annual sales, and favorable labor conditions...
...the United States hurriedly organized a continental meeting of foreign ministers in Rio de Janeiro, Brazil...
...4. Financial Times February 28, 1975...
...1 The Times might just as well have been reporting on a foreign invasion...
...Characteristic of this new legislation is Decree No...
...Given the internal weakness of both the agro-export bourgeoisie and the highland landowners, neither could put forth a political solution that would both advance their specific economic interests and pacify the increasingly militant masses...
...Some degree of reform was clearly an imperative for Latin America, as both a deterrent to revolution and a requirement for accelerated capitalist development...
...The present Minister of Natural Resources called upon the organization to "set profit margins commensurate with the need to assure foreign companies of attractive investment incentives...
...Shortly after, the government ordered that all foreign exchange earnings from oil exports be deposited with the Central Bank...
...Import barriers were progressively dismantled in the hope that excess demand, which could not be satisfied by national output, would be absorbed by foreign goods...
...According to Ecuador's equivalent of the Securities and Exchange Commission, foreign firms control over 58 per cent of the total number of firms operating in Ecuador...
...The oil companies' task was made easier by internal tensions within the military...
...Galo Plaza's thousand-acre hacienda near Quito made him a member of the highland gentry...
...For Velasco, the problems facing the country were not of an economic but of a moral nature...
...November 8, 1974, 175...
...What is more, official documents show that 62 percent of the economically active population receive salaries below those fixed by law.J -54 percent of the population receives only 9.5 percent of total income, while 7 percent receives fully one-half the total income generated in Ecuador.21 DIECT PRIVATE U.S...
...Yet the size of Ecuador's industrial proletariat is expanding and the level of class struggle is escalating...
...And when worker and peasant revolts persisted, Velasco resorted to repression and alienated the more radical elements within his own movement...
...Populism in Argentina was based on an alliance between these two classes against the traditional landed and commercial oligarchy, with close ties to foreign capital...
...Decree No...
...Historically, both of these elements can be understood only within the context of the capitalist system world-wide, the stages of its development and the different forms of imperialist domination...
...As described in section I, the cacao boom of the 1920's did little to change the economic conditions of the popular masses...
...A rebel communique, signed by General Gonzalez Alvear, head of the Joint Chiefs of Staff, stated that the government was being overthrown due to "mismanagement of the country's oil resources...
...Recently, however, beginning in the 1960's in many parts of the world (and somewhat later in Ecuador), direct foreign investment has moved into the industrial sector of these countries in a major way...
...While the export of capitals to the less developed countries has been constant since the early twentieth century, it initially tended to focus on the primary sector, through investment in raw material and mineral extraction, as well as the extension of markets...
...The owner of Lanafit textiles has also threatened to sell his plant if the strike there is not ended...
...The government had not done so sooner largely because of pressures within OPEC to maintain uniform prices...
...PART 1: TIlE OLD EMPIRE VS...
...AGRICULTURE: A TURNING POINT I. La Tierra (Quito), February, 1975...
...interventionism, pledged to nullify the Rio Protocol of 1942 and vowed never to break relations with Cuba, the United States screamed "communist in- filtration...
...738, their demands included the following: (1) the reduction of public spending to a minimum and reduction of the State's role in the private sphere of economic activities...
...The new import regulations had not only mobilized the bourgeoisie into open conflict with the government, but labor unions and mass organizations protested the measure as well, in the knowledge that higher costs would be passed on to the popular masses...
...Projects already in progress include an integrated steel industry, a state oil refinery and a major petrochemical complex...
...Arosemena (1961-1963) banked more heavily on Leftist support than had Velasco and set forth a more dynamic set of policies for structural reform...
...When it was finally over, Rodriguez Lara proudly affirmed, "Ecuador achieved in a few months what it took Venezuela decades to accomplish...
...While very little time has elapsed since the September events, government decrees, policy statements and cabinet appointments suggest a certain pattern of change...
...2 The convenient division of labor between Leonard in the jungles and Anglo-Ecuadorian on the coast would not last for long, however...
...Export-Orlented Growth The effects of the Liberal Revolution were most clearly reflected by the uninhibited rise in exports...
...Reportedly, this is the first time that any major oil country has entered this realm...
...The government established a 15 per cent tax on all Minister of Natural Resources: Gustavo Jarrfn Ampudia35 petroleum exports, the first time that any tax had been levied on oil...
...And the lands annexed by Peru were immediately handed over to IPC-Standard's subsidiary...
...In 1960, the moralistic rhetoric of the forties could no longer even hope to pacify the Ecuadorean masses...
...In short, Velasco's law left the domain of the oil companies untouched...
...An escape clause (article 44) was built into the decision and has been frequently invoked by the Ecuadorean government...
...It concerned the granting in 1966 of a huge concession for oil and gas exploration In the Gulf of Guayaquil...
...Cited in Velesco, "El Modelo Agroexportedor...
...The law was now redirected toward increasing production and raising productivity, toward forcing the landowners to modernize or be expropriated...
...2 The minimum monthly wage set by law is slightly less than one-third of that needed to satisfy the basic needs of a family of five...
...Three weeks after the coup attempt, at OPEC's meeting in Vienna...
...No longer was the agro.export bourgeoisie the major intermediary between foreign capital and the national economy, as it had been in the era of cacao and bananas...
...Now geared toward capitalist production, the Ecuadorean economy is fueled primarily by oil revenues and foreign investment...
...In addition, Gonzalez Alvear had a personal interview with General Pinochet-Chile's right-wing dictator-as recently as August 1975...
...The Ecuadorean government focused on petrochemicals and steel for its long-range industrialization process...
...Along with Bolivia, Ecuador has been granted special tariff privileges within the Andean Pact to compensate for its lower level of development, and foreign investors are taking supreme advantage of this special status...
...Though it appeared to be a paper transaction, the old owner hurriedly claimed that he no longer was obligated to bargain with workers, and the new one stated that he would re-hire only workers that were to his liking...
...The large multinationals and smaller corporations as well are relocating their productive operations to regions where labor costs are lower, investment terms more liberal and market potential is virtually untapped...
...Thus, when Velasco spoke out against U.S...
...Its major base of support comes from urban workers in the highlands and on the coast...
...Royal Dutch Shell had maintained its eastern concession intact, but its expansion southward had been halted and its access to the Amazon River, an extremely important outlet for exporting the Oriente oil, was entirely cut off...
...They would be entered into Central Bank ledgers at the official exchange rate and the Bank would subtract various items from the companies' deposits: The 15 per cent tax on export sales, local operational expenses, profit-sharing due employees, income tax on profits and other non-specified expenses...
...By opening up new zones for the production of primary goods, it determined an excess of supply and a fall in world prices...
...Six Ecuadorean citizens, representated by a North American "geologist" named Joseph Shannon Wolfe, solicited 200,000 hectares each in the offshore area...
...The Ecuadorean working class has a long history of struggle and the promise of a militant future as fragmentation gives way to unity, spontaneity cedes to organized combativeness and a higher level of political consciousness is forged through struggle...
...In the 1930's, coffee replaced cacao as the principal export and rice followed in the early forties...
...It was in the third period, from the late 1960's on, that the Dinosaurs came back in earnest, ready for business...
...16 per year for non-profit institutions ($30 for two years...
...Many factories supposedly contributing to national production were, in essence, assembly plants for foreign-made parts...
...Since 1974, the "anonymous" killings of peasant leaders have become a common occurrence...
...Regis Paper: containers Standard Brands: yeast and foods Texaco Corp.: lubricants, oil blending Union Carbides dry cell batteries 1973 est...
...The economic crisis of the 1930's would soon push these urban masses to the political forefront...
...According to the terms of the treaty, 200,000 square kilometers of Ecuadorean territory were annexed by Peru...
...Velasco's base was not a politically awakened urban proletariat but a wave of newcomers to the Ecuadorean *Velaco was elected to the Presidency in 1933, 1944, 1952, 1960 and 1968.7 urban centers.* The economic bust had provoked an enormous exodus from both the highlands and the rural areas of the coast to the port city of Guayaquil...
...In 1966, Arosemena granted a series of six concessions in the Gulf, one of the few remaining territories not yet devoured by the foreign monopolies...
...Petroleum exports had been declining since October, 1974...
...Only then did industrial growth in the metropoles generate a sufficient rise in per capita income to support non-essential consumption (chocolate, coffee, etc...
...8 In the 1920's...
...Industrial production grew by more than 10 per cent a year, and by 14 per cent between 1973 and 1974.5 The government's five-year Developement Plan projected foreign investment at $85 million dollars...
...Arosemena's reform-minded domestic programs attracted strong support from labor unions and sectors of the Left, while his foreign policy stressed the maintaining of relations with Cuba...
...to serve as Ecuador's Naval Attache...
...Colonization has, in fact, become the escape valve for the government's promises of land for the peasantry...
...1961 est...
...and (3) the period of actual exploitation of Ecuador's oil reserves, the late 1960's-1970's...
...Drilling concessions and contracts could not be renegotiated every time the reigns of power changed hands, and past practice had demonstrated the inability of civilian governments to provide the necessary climate of stability...
...who served as president from 1961 to 1963...
...Quito's major newspaper, El Comercio, recently editorialized: "If the principles of (worker) responsibility and discipline are indispensable under normal conditions, under present circumstances the non-existence or underestimation of such principles becomes an actual attack on the much-hailed aspirations of progress and economic development...
...The crisis of the early twenties was only a rehearsal for the deeper crisis to come: the Great Depression of the 1930's...
...Foreign imports began to soar and for certain industries, such as metalworking and paper, they represented over 90 per cent of the raw materials used in production...
...6 The pharmaceuticals industry in Ecuador presents the most dramatic case of foreign investment...
...Between 1925 and 1947, a total of 23 governments sought a solution to economic crisis and stagnation within the framework of export-oriented growth...
...In the second period, beginning in the late 1940's, the oil companies suddenly reversed themselves...
...The leading force of the strike was the small urban proletariat in Guayaquil, organized in the Workers Federation of Guayas Province since 1920 and which consisted mainly of workers engaged in transport and service activities: railroad and electrical workers, workers in the utilities sector, firemen, etc...
...They cited the impossibility of selling Ecuadorean crude on the world market, due to "unrealistically" high prices...
...From the export of tropical goods to the beginnings of industrialization and oil production, Ecuador's history corresponds to the changing needs of a world imperialist system...
...The Peruvian invasion of 1941 was essentially a military maneuver by Standard Oil to re-establish its foothold in the Amazon Basin...
...Schbering Plough pharmaceuticals sterling Drug.: pharmaceuticals St...
...when exports had been initiated...
...Vol IX, No...
...While management can legally fire any number of employees, and union leaders in particular, workers have no legal recourse to strikes or protest...
...In return, the Ecuadorean government was to receive a meager 6 percent in royalties...
...investment in public utilities, insurance, banking, transportation and communications, the escape clause allowed for the application of different rules, in light of "special circumstances...
...23 Moreano...
...As 1975 began, the unrelenting pressures from the oil companies were accompanied by the steady erosion of the nationalist policies instituted by Jarrin...
...The Battle of Quito At midnight, tanks began moving on the Presidential Palace in the heart of Quito...
...1) A limited internal market...
...In 1961, Minas y Petr6leos was run by two companies, each with a 50 per cent share in the concession: Norsul Oil and Mining Ltd., of Albany, Georgia, and Phoenix Canada Oil Co...
...A five-year Development Plan was adopted for 1973-77, calling for a $3.2 billion investment in the economy from public and private sources...
...9. Various articles and books have recently been written on AIFLD...
...6 This and other decrees have severely threatened the concept of collective bargaining...
...faction is led by Luis Villacr6s, former Secretary General of CEOSL...
...Moreover, the flow of oil revenues into the state coffers would mean an end to chronic penury and the ability not only to plan for, but to pay for an accelerated process of economic growth...
...Quito), No...
...The Agrarian Reform Law of 1964 barely skimmed the surface of land distribution in Ecuador...
...The Rio Protocol which ended the military conflict was signed on January 29, 1942...
...The infrastructure mounted by AIFLD in Ecuador, the methods it employs in conjunction with CEOSL, provide a clear insight into the labor strategy pursued by U.S...
...In the sharpest turn-about in government oil policy since 1972, he announced a 43-cent reduction in prices...
...Crist6bal Pajuna, President of the Rumipata-Pacopamba Cooperative (Tungurahua Province) was assasinated in May, 1974...
...Moreover, landowners have implemented the systematic and brutal persecution of "troublemakers" on their haciendas...
...The class or class fraction favored by the "pact" must then evaluate the situation: if Velasco, who was accepted as an instrument for manipulating the masses, fails in this role and becomes instead a "perturbing" cement, they throw him out of power and the dominant class as a whole seeks a more prudent solution...
...put it when asked what alternative the workers should adopt, "We believe that there is only one choice: that the workers, rising above the mystical, ingenuous consciousness created by capitalism, achieve political and class consciousness and convert this into their own power...
...Countries like Brazil, Mexico, Argentina, etc., are industrializing at an accelerated pace...
...e11ea Latin America, April 24...
...1973), 29...
...Naval Attache at the time...
...of Toronto...
...By dawn, the presidential palace was surrounded by tanks...
...Particularly the urban migrants from the highlands, newly liberated from the monolithic influence of the Church and their paternalistic bonds to the landowners, were easy prey to the quasi-religious rhetoric and grandiose promises of Velasco Ibarra...
...This political movement and its leader-Jos6 Maria Velasco Ibarra-were to dominate the course of electoral politics for the next four decades...
...Far from propelling a greater distribution of the country's resources, industrial growth has fostered the increased concentration of wealth...
...e * * The early or competitive stage of capitalism implied an international division of labor between industrial and agricultural countries, and a world system of domination based on commercial relationships...
...Petroleum could do all this, it was thought, without changing the basic structures of capitalist development and without creating major conflicts with the established interests of the dominant classes...
...A lengthy legal battle Is still going on between the consortium and the Ecuadorean government, over indemnification for the investments made in the Gulf of Guayaquil...
...INDUSTRY UP FOR GRABS The modernizing aspirations of Ecuador's military regime, as evidenced in agriculture, have taken on even higher hopes for the industrial sector...
...From October 1974 to January 1975 oil production and exports were drastically reduced...
...Beyond these stereotypes, there is an important analysis to be made and lessons to be drawn from the Ecuadorean experience...
...Nuva, No...
...3) the elimination of all taxes on export goods...
...The Junta's last act in office was an attempt to remedy an increasingly negative balance-of-trade by restricting credits and imports...
...Almost every journalistic account of the "Battle of Quito" cites the glaring absence of any popular support for either side...
...While it is unclear what was occurring inside the FNTP, in March 1965 AIFLD reported that "a notable development of recent weeks in Ecuador has been the apparent reduction of formerly insurmountable obstacles in planning and implementing regional seminars in areas and sectors for man years under the control of Marxist-dominated unions...
...The pre-September demands of the bourgeoisie with respect to foreign capital are in the process of being met...
...All of these governments, however, were marked by their inability to achieve a certain level of autonomy from the particular interests of traditional power groups...
...The pressures increase and the situation begins to deteriorate at all levels when, tired of words, several organized groups such as the labor unions, assume clear-cut positions and the hegemonic sectors, exasperated by what they consider the waverings and whims of the caudillo, present an ultimatum...
...4 British imperialism had clearly gotten the upper hand in the battle for control over oil resources in Ecuador...
...S Peru had advanced at a propitious moment...
...I 1 Petroleum was clearly the sector they had in mind...
...V, No...
...The cast included President Otto Arosemena and his closest political colleagues, a North American geologist turned speculator, seven foreign companies and a host of minor characters...
...A system of profit-sharing was instituted, whereby 15 per cent of the profits from production would go to company employees...
...To counteract a number of tendencies, such as increased labor costs and19 more stringent environmental measures, and to capture new markets, imperialism is rapidly breaking down the traditional division of labor between the pre-dominantly agricultural countries and the industrialized centers...
...Once the Reform Law was passed, and despite its timidity, the landowning class persisted in its active opposition for a number of reasons...
...9 Nueva, No...
...Land seizures and violent conflicts were proliferating in the countryside...
...The 92-day boycott by Texaco-Gulf, designed to pressure the government into reducing taxes and other constraints on company profits, signified a loss in state revenues of $109.4 million.z In April 1975 the government lowered its mandatory" production quota from 250,000 to 210,000 barrels per day (bpd), but production has averaged a meager 126,000 bpd since that date...
...5 Worker militancy in the face of these conditions has been met with a series of government restrictions on labor organizing...
...In fact, as early as 1938 it began preparing for retaliation and its eventual return to the Oriente...
...At approximately the same time that radical workers organized the predecessor to the CTE, Catholic groups backed by the Conservative Party formed another federation: CEDOC-The Ecuadorean Confederation of Catholic Workers...
...The vast operation, mounted by the Texaco-Gulf consortium, accelerated the onslaught of foreign oil companies in the Oriente and paralleled the assault by foreign capital on other sectors of the economy...
...9 Epilogue: The ADA case Is still not entirely settled...
...Between 1972 and 1974, real wages declined by nearly 25 percent...
...In summary, by the 1920's, the results of over two decades of economic boom on the Coast were the consolidation of a one-product export economy, a burgeoning import trade and expansion of the banking sector...
...It implied the political power to decide the destiny of oil revenues, the investment pattern of the State and, in general, the course of economic development for the decade...
...In essence, their18 demands reflected the passing of the old-style latifundist and the emergence of an aggressive agrarian bourgeoisie, intent on having its due share of revenues from the oil bonanza...
...While government policies clearly ran counter to the interests of bourgeois sectors, the regime was by no means ready to pursue a more radical course that would attract the support of the masses and break the economic domination of the bourgeoisie...
...Stagnation and Scarcity The direction of change in highlands agriculture must be examined within the context of the government's failure to carry out a genuine agrarian reform...
...Among them are "Argentina: AIFLD Losing Its Grip," Argnweia in tim Hoe of thme Furnaces (New York: NACLA, 1975...
...Paraguay's victory was Shell's as well, leaving Bolivia's economy virtually in ruins and 130.000 dead...
...Urban strikes and peasant revolts persisted, leading to the founding of the Ecuadorean Workers Federation (CTE) and the Ecuadorean Indian Federation (FEI) in 1944...
...An agrarian reform, particularly in the highlands, was essential to this strategy, in order to widen the internal market and, more importantly, to stimulate the development of the productive forces in agriculture...
...The Agrarian Reform Law promulgated by the Military Junta in 1964 did not produce the promised changes in land distribution, in living standards for the peasantry, nor the necessary expansion of agricultural production...
...12 (October, 1974), 36...
...in 1973-year of the so-called crisis-were 45 to 60 percent higher than profits in 1972...
...In addition, petroleum could finance an industrialization process that would ease the critical problem of unemployment...
...And by banding together they were also creating the conditions for greater solidarity and support among member countries...
...Finally, in July 1975, Jarrin's successor in the Ministry of Natural Resources announced Ecuador's first tax reduction since exports began in 1972.0 Reacting to the public outcry from labor unions, student groups and progressive sectors, the government declared that the measure was only temporary and open to revision at OPEC's next meeting, scheduled for September 24...
...17 After 107 day on strike...
...Domestically, a successful coup would have meant the indirect control over the state apparatus by the most reactionary elements of the bourgeoisie, and a return to direct civilian rule within the shortest time possible...
...In 1965, Norsul-Phoenix farmed out 1,650,000 hectares in the Oriente to two companies: Compaiia Petrolera Pastaza and Compafifa Petrolera Aguarico...
...CEOSL is an acronym for the Ecuadorean Confederation of Free Trade Unions...
...The inadequacy of food production for the internal market is still a serious problem in Ecuador...
...The circumstances surrounding these concessions were strange Indeed...
...Initial plans for economic development 2 K15 and greater social equality have progressively lost all content, and only the original rhetoric remains...
...The original function attributed to the export of capital, i.e., control of raw materials and the extension of markets for foreign manufactured goods, still persists, but no longer as its principal function...
...The oil monopolies located the government's achilles' heel in the balance of trade and acted accordingly...
...The facts, however, demonstrate a very different case...
...Finally, in the 1890's, the contradictions between export agriculture on the Coast and pre-capitalist forms of production in the highlands erupted into civil war...
...3. Includes a 1965 $4.4 million acquisition na-not available *-estimate from informed sources JV/PC-Joint Venture with Private National Capital U.S...
...Mixed enterprises were formed between the government and foreign firms to invest in a series of industrial projects...
...arsenal...
...Whether the technical breakdown was accidental or not, it came as a timely boost to the campaign of economic sabotage being waged by Texaco-Gulf against the government's nationalist policies on oil (see article 3...
...While United Fruit and its chain of subsidiaries maintained their monopoly over banana exports from Ecuador, the country was once again relegated to the status of residual supplier...
...4) Agricultural machinery, tertilizers, tools, insecticides, etc...
...government officially assumed a disinterested posture, characterizing the conflict to the south as a simple border dispute...
...The many names and hidden identities make it particularly difficult to disentangle this consciously created confusion and tend to obscure the process of foreign penetration...
...Furthermore, it announced that all companies would have to renegotiate their contracts with the government by June, 1973 at the latest...
...2. Amount invested may be either the initial amount or the current value depending on availability of data...
...in an effort to appease the foreign companies and stimulate a rise in exports...
...Thus, the struggle between British and American interests in Ecuador would focus on the region east of the Andes, with British capital making the first aggressive move...
...at the offices of the American Institute for Free Labor Development (AIFLD...
...Re-entry in the 1960's In 1960, a meeting in Baghdad gave birth to the Organization of Petroleum Exporting Countries...
...or else...
...1974, p. 132, and Latia Amorice Economic Report, November 15, 1974, 179...
...In other words, through control of the major oil reserves on a world scale, and through limiting the output of oil to demand, these companies have been able to keep prices as high as possible...
...The arms buildup in Peru was accelerated, the infiltration of Peruvian troops into Ecuadorean territory increased and, in 1941, the aggression was consumated...
...The high level of public26 A barrio in the city ofEsnadats-afcryfroram higk-rie apartments and hLmry imports (S...
...In August 1937, Piez negotiated a contract with the Anglo Saxon Petroleum Company...
...imperialism was worried about Ecuador becoming a "second Cuba" in the decade of the sixties...
...3 Food production could barely keep up with the rate of population growth in the 1960's and fell below that of urban population growth (3.5 per cent to 5).4 Between 1970 and 1973, the average yearly growth rate in agriculture (1.1 per cent) was well below the 3.4 per cent rise in total population...
...Populism in Ecuador, on the other hand, embodied neither of these forces...
...Within this category, industrial machinery increased from 30.1 to 39.5 per cent in the same interval.1 8 Thus, a certain transfer of capital investment to the industrial sector did take place...
...Furthermore, many items formerly included on List I were re-classified as non-essential...
...Land ownership remains concentrated in the hands of an agro-export bourgeoisie, which has felt its interests seriously threatened by the current oil boom...
...spending since the oil boom, the country's dependence on foreign imports'for industry and the free rein given to luxury consumption created a highly vulnerable situation...
...The Velasco law was heralded as a step forward in exerting greater control over the oil sector...
...Yet the industrialization process, under the hegemony of foreign capital, has not meant any relaxation of the ties of dependency...
...IL POPULISM AND VELASCO IBARRA The crisis years of the 1930's marked the emergence of the urban masses in Ecuador as a political force to be reckoned with, and the advent of a new political movement: Velasquismo...
...The second objective was directed at the Andean peasantry, still tied to the haciendas by a network of personal bonds and pre-capitalist productive relations...
...The events of the preceeding weeks left no doubt as to the participation of bourgeois sectors...
...Esteban del Campo, "Introduccion at VelasquIsmo," Mens)eroe (Quito), July, 1975...
...This decision by the oil companies was made, in part, on the basis of the geographical location of Ecuador's oil reserves, deep within the inaccessible jungle, and, in part, by the conditions of oil production world-wide...
...9 Moreano, "Capitalismo y Lucha," 174.175...
...He was promptly declared persona non grata by the Chambers of Agriculture and "a traitor influenced by foreign ideologies alien to the national revolutionary regime...
...The stale banner of regionalism has been raised to protest any new attempt at levying higher taxes on coastal exports...
...wits a subsidiary of the then Anglo Persian OilCo., which at the time was closely affliated with Burmah Oil and would later become British Petroleum...
...Exports rose by 55 per cent in 1974, boosted by the sudden rise in sugar and caaco prices on the world market...
...The new government seemed determined to reverse the terms negotiated by previous regimes, who had basically surrendered the country's oil resources to foreign capital (see article three...
...the Ecuadorean government is losing $51.600 per day...
...However, the governments of the oil-consuming nations, particularly the United States, appeared outraged...
...Second-class postage paid at New York...
...In May, 1975 the President announced that 346,000 hectares had been Distributed to 12,500 families...
...After five days, the talks had stalled and the oil companies walked out...
...CEOSL could not get its hands on the oil workers until 1971, however, and that also took a great deal of planning...
...The daily average jumped from 141.984 barrels in July...
...Unlike Per6n, his rhetoric was not that of a "modernizer" preaching structural reform...
...And to take advantage of the conjuncture, the OPEC nations as a unified bloc began to raise prices...
...In the 1960's, large landholdings were still under-cultivated, while small farms were dangerously over-worked...
...3. 11...
...This "autonomy" departed from the usual pattern in Latin America, particularly in mineral-rich countries such as Chile, where foreign investment controlled an enclave sector of the economy from the point of production to marketing abroad...
...Agee, Inside the Company, 123, 236, ff...
...Created as an antidote to communist influence in the labor movement, CEDOC has gone through many political changes since its inception...
...imperialism...
...Ecuador's national budget was dependent on the oil sector for 60 per cent of its revenues...
...Despite their modest means, the six Ecuadoreans were granted the concessions In 1968...
...In 1932, Velasco appeared on the political scene as an ambitious Congressman and was elected President the following year...
...According to the Institute for Economic Studies at the University of Guayaquil, 84 percent of all Ecuadoreans earn roughly five times less than that required to support a minimal standard of living...
...Yet he consistently sold out and repressed the working class and poor whenever they threatened the interests of the dominant classes...
...For the moment, only the effects of the Texaco-Gulf boycott concern us...
...General Assembly in April 1974, Ecuador's Minister of Natural Resources, Jarrin, countered the false thesis that OPEC's pricing had caused strangulation of the industrialized economies and had precipitated the world economic crisis: The reference or posted prices fixed by the member countries of OPEC are only an accounting measure which facilitates the establishment of tax obligations...
...industrialization under the hegemony of foreign capital...
...2 1 Thus, the one industrial sector capable of pushing for protectionist policies and incentives to domestic industry had its loyalties divided between textiles and agricultural production in the highlands...
...In late 1974, the oil companies in Ecuador, primarily Texaco-Gulf...
...Even within the realm of coastal agriculture, little diver- sification of crops took place...
...During this period, direct foreign investment was primarily centered in the extractive and agricultural sectors and served to cement the status of the dependent and dominated countries vis-a-vis the imperialist metropoles...
...or Acquisition (acq...
...It spoke of social justice and an end to the monopoly of wealth by a privileged few...
...1967 est...
...Hapumn were small plots otlad kead to the Inds bL r msistce farming...
...The conditions of the world capitalist system at the time, however, allowed for no such solution...
...President Rodriguez Lara is clearly on the defensive, both among his military colleagues of varying tendencies and visa-vis the dominant classes...
...The other side was counter-insurgency training for the army and police, vast amounts of military aid, and CIA subversion of leftist parties and even slightly leftist-minded governments...
...The most that either sector could hope for in Velasco, the "supreme arbiter," was a demagogue who could temporarily coopt the demands of the urban masses until economic upswing allowed them once again to compete for hegemony...
...Thus, the export, import and banking sectors of the bourgeoisie in Ecuador were able to accumulate large amounts of capital...
...19 By 1975, CEPE had become the principal exporter of oil: of the 3,597.711 barrels sold in the month of July, for example, CEPE exported 1,492,811 barrels, while TexacoGulf sold only 878.534.20 In January 1975 the U.S...
...This was not the first time that inter-imperialist rivalry in Latin America had pushed for such extreme action...
...4. "Foreign Control of Ecuadoreen Companies," Latin American Economic Report, March 15...
...International experts have made studies of Ecuador's natural resources and concluded that the national territory can easily maintain 50 million inhabitants...
...The Alliance for Progress, AIFLD (see article No...
...In 1972, several oil companies began to pull out, hesitantly at first, hoping that the mere threat of departure would provoke a change of heart within the military regime...
...Velasco must then descend from limbo and decide in favor of one contender or another...
...sentiment within the labor movement...
...Moreover, landowners were given until January, 1976 (nearly three years) to comply with this17 Peaemnt demonruation demanding agrarian reform...
...It was time to dust off the Ecuador file and re-enter the Oriente on the same advantageous terms that had characterized the relations between governments and foreign capital throughout the 1920's and 1930's...
...North American newspapers inevitably described the country as just another "banana republic," suffering the pangs of political immaturity and rebellious nationalism...
...The familiar face of populism resurfaced in the 1970's under a new leader: Asaad Bucaram, ex-mayor of Guayaquil, idol of the urban poor and presidential candidate of the Concentration of Popular Forces (CEP...
...The new decree was based on an earlier law, promulgated in 1971 under Velasco Ibarra...
...The largest of these organizations is the CTE (Ecuadorean Workers' Federation), created in 1944 and presently representing more than 800 organizations and 40,000 members...
...The Ecuadorean military definitely had a brighter vision in mind...
...For the reasons to be outlined below, changes in the structure of agrarian society are not in the direction of greater social equality for the landless peasantry and minifundist producers...
...with respect to both exports and further exploration...
...Nearly four years of vacillation offer little hope for a sharp turn toward decisive social change...
...The problem, however, was not in selling the crude...
...The contradictions inherent in the course of capitalist development were making themselves felt more sharply than ever...
...Now geared toward capitalist production, the Ecuadorean economy is fueled primarily by oil revenues and foreign investment...
...By four in the afternoon, police detachments had attacked the strikers, lobbing canister after canister of tear gas into the factory and then resorting to stronger tactics...
...Supreme Decree No...
...Since World War II, however, and more generally since the 1960's,a qualitative change has taken place in the pattern of imperialist domination world-wide.1 Increasingly, direct foreign investment has been channelled into the industrial sectors of the dependent countries...
...Thus, the socio-economic structure of Ecuador entering the sixties was not radically different from that of two decades before...
...They point to the lack of "investor guarantees" and more emphatically, blame the "exaggerated" demands of the workers for presenting employers with one of two alternatives...
...However, the Suez Crisis of 1956, Cuba's nationalization of oil interests in 1960 and the formation of OPEC were all strong indications that 3 C30 the epoch of uninhibited pillage of the world's oil resources was coming to an end...
...A genuine process of industrial development was never initiated...
...1975 est...
...In fact, the expansion of capitalist relations of production through industrialization, the capital-intensive nature of most industries and the uneven development between industry and agriculture has swollen the reserve army of labor making it a structural component of Ecuadorean society...
...However timid the provisions of the 1964 Law, and however biased its implementation, the landowning class saw the agrarian reform as an intrusion of the State into what they considered the sacrosanct terrain of private property...
...4) liberalizing the treatment of foreign capital.5 Heavy emphasis was put on the last of these demands by both the industrial and the oil sectors...
...By 1972, they reached 700 million...
...Rather, it responded to particular conjunctures of economic and political crisis, in which a precarious state of political equilibrium among different sectors of the dominant classes could only be maintained by an "independent" force that did not openly identify with any one of them...
...Foreign control in commerce and finance was even more drastic: in the early 1970's, nearly 60 per cent of all commercial enterprises and over one-half of all banking assets were in the hands of foreign capital.4 The 1970's ushered in a period of heightened economic activity, based on oil in the Oriente and higher oil prices than ever on the world market...
...Since then, virtually all of the world's largest oil companies-the Seven Dinosaurs*-have been involved in the country at one time or another...
...Agustin Cueva, an Ecuadorean sociologist, offers a vivid summary of Velasco's rule and the downfall of his five administrations: The first part of his administrations has always been rather colorless but a moment of great expectation...
...5.0) and General Exploration Company of California...
...dispose of their least productive lands, by distributing or selling them to the ex-huasipungueros...
...Most notably Mexico, Argentina, Brazil and Chile had industrialized significantly by the 1950's...
...As we will see, not all of the OPEC demands actually represented a threat to foreign interests, and some were actively supported by the oil companies...
...A brief characterization of these stages and forms will facilitate our study...
...While currently exporting over half of its production to Colombia and Central America, Dow hopes to corner markets in all Andean countries and the Caribbean as well...
...City streets were crowded with the latest model by MercedesBenz...
...2 2 OPEC countries were divided over the issue, When they unanimously agreed to a compromise decision raising oil prices by 10 percent, the Ecuadorean government assumed an ambiguous posture...
...Dependencia y Desarrollo, unpublished Ph.D...
...38 oust the regime, did produce further concessions to foreign capital...
...Its victory would be of short duration, however, as the American Dinosaur-Standard Oil-prepared for its comeback...
...In 1947 Leonard Clark, a colonel in the U.S...
...Ecuador's entry into OPEC greatly strengthened its bargaining position vis-a-vis Texaco-Gulf...
...faced with the vacillation of a government that passes anti-worker decrees and enacts a purely decorative agrarian reform, our position is one of independent struggle for the authentic and genuine interests of the working class...
...Furthermore, this lack of political or economic identification with any particular sector was reflected in Velasco's lack of a clear economic policy...
...However, the United States changed its stance in December 1941...
...A small industrial bourgeoisie, which had never displayed great dynamism in the past, was only too eager for foreign partners in the task of capitalist accumulation...
...On the contrary, the relationship of dependency is ever tighter, and is increasingly based on the industrialization process itself, under the hegemony of foreign capital...
...The controls on oil company operations did not stop with Decree No...
...1 1 I But the popular revolt expanded in the following months, spreading to the Andean haciendas...
...Events moved swiftly forward and in May, the FNTP affiliated with the corresponding ITS--the International Federation of Petroleum and Chemical Workers (IFPCW...
...In 1949, a special mission arrived from IBEC and presented its blueprint for Ecuadorean development, its report included the following recommedations: (1) Intensification and diversification of export production, through government Incentives and foreign loans for Infrastructural development...
...More workers have been trained by AIFLD in Ecuador than in any Latin American country except Brazil and Colombia...
...At first the caudlllo resists, trying to maintain himself "above and beyond particular class or party Interests...
...In April 1975, Texaco-Gulf, still maintaining its boycott on exports...
...The concession system was formally abolished, to be replaced by a system of "association contracts" between CEPE and the...
...Organized labor is presently represented by three federations: the CTE, CEDOC and CEOSL...
...The reaction of the bourgeoisie was violent...
...By 1974...
...In the 1930's, when conditions in Latin America were most propitious for 'autonomous industrialization, capital accumulation in Ecuador had assumed an unstable character...
...The paradoxical nature of dependent industrialization was painfully clear by the 1970's...
...The final toll was one dead and fifty wounded...
...The consolidation of an agro-export bourgeoisie on the Coast, engaged primarily in cacao production, generated the growth of a complementary banking sector...
...His presidency of 1948-52 is nostalgically remembered by the bourgeoisie as the heyday of economic boom, "democratic" rule and close ties to U.S...
...The IBEC blueprint and the class alliance that maintained the plan's advocate In power were based on the rapid accumulation of capital made possible by the banana boom...
...10 Agustin Cueve, El Proceso de Dominaclon Politic on Eceuador (Quito Editorial Volunted...
...Moreover, for the first time in a decade the political situation was relatively stable...
...It further promised a return to civilian rule within two years-one year to right the wrongs of the past four years and another to set the stage for elections...
...While Decision 24 supposedly prohibited new direct foreign...
...Fully cognizant of this situation, the Ecuadorean bourgeoisie has shown increased hostility toward any government decision that would cut off their pipeline to foreign capital...
...In mid-1971, the IFPCW called together a constituent assembly to form a new union for oil workers in Ecuador...
...2) The Ministry of Agriculture allotted $12.5 million in its 1975 budget to mechanization in agriculture...
...17 Moreano, "Capitalismo y Lucha," 190...
...Agrarian reform was still on the agenda and Arosemena refused to take strong repressive action against the Left...
...The tug-of-war in Ecuador between luke-warm reformism and out-and-out surrender to the dominant classes and foreign capital is still in progress...
...As with cacao, banana production in Ecuador had characteristics which distinguish it from foreign dominated agricultural production in other Latin American countries...
...They declared that the lands they had been vying for, starting wars over and spending millions on for over twenty years, were barren They claimed that no oil lay beneath the dense jungles of the Oriente...
...But with every attempt to put, these policies and programs into practice, the hybrid character of the new regime became more and more evident...
...I The statistics clearly support this statement...
...In the 1970's, when oil dollars brought the question of Ecuador's modernization to the fore, Galo Plaza and his plans for development would again be resurrected by the Ecuadorean bourgeoisie...
...As in the case of the cacao bust, no mechanisms were set up to absorb the greatly expanded rural labor-force that was thrown off the plantations when banana exports plummetted...
...2) the period of feigned disinterest in the region and temporary suspension of activities by the oil Dinosaurs, 1949-1960's...
...1b Since May Day 1974, when all three labor federations marched together through the streets of Quito in a militant demonstration of new-found worker unity, the CTE, CEDOC and the Chivez-faction of CEOSL have increased their joint activities and coordination in response to increased repression and anti-worker legislation...
...Signs of industrialization were appearing on the Coast-hulling mills, sugar refineries and related activities-adding to the atmosphere of economic boom...
...While its acronym remained the same, CEDOC's initials now stood for the Ecuadorean Confederation of Working Class Organizations...
...1961 est...
...Moreover, these plantations were reactivated on the basis of a new variety of banana, the Cavendish, highly resistant to disease and conducive to more dense cultivation and faster growth...
...imperialism...
...The fallaciousness of these arguments will be examined in the article to follow...
...Conditions are changing, slowly...
...Concluaionz Back to the Barracks...
...rather, the reliance on primary exports was perpetuated into the 1950's and beyond...
...His verbal attacks on the rich were matched only by his willingness to form alliances with different sectors of the bourgeoisie, and by his untempered hostility toward the Left...
...From October 1974 to September 1975, the consortium drastically cut back on exports and eliminated them entirely during certain periods...
...The complex pattern of their activities can be divided into three major periods: (1) the period of exploration and intense rivalry for oil concessions in the Oriente, 1920-49...
...OPEC immediately called a meeting of its own and announced a 70 percent increase in prices, from $3.01 per barrel to $5.12...
...Arosemena complied on April 2. Neither U.S...
...Feasibility studies were carried out for a series of infrastructural and industrial projects, in accordance with an OPEC decision of June 1973...
...According to official sources, fully 89 per cent of all imports in 1974 corresponded to capital goods and raw materials (essential items on List I of the import register...
...In the 1960's, however, with the knowledge that oil would soon play a major role in Ecuador's economy, U.S...
...First, the period of inter-imperialist rivalry...
...It did not turn out to be that easy...
...In 1967, basic imports of wheat, barley, rice, corn and sugar amounted to 370 million sucres...
...Since the events of September, it has appeared more and more that the nationalist vehicle for capitalist development is running out of gas...
...It is not even good for agriculture...
...NY3 tenant or subsistence farming on the huasipungoyp and wage-labor on the nearby haciendas...
...3.2).5 In 1969 the consortium carried out its first offshore test and discovered an estimated reserve of 4 trillion cubic feet of gas...
...Rumors of Chilean intervention or inspiration in Ecuador's abortive coup may still be unsubstantiated, but they are by no means far-fetched...
...The nationalism manifest in the government's policies toward oil, territorial waters and tuna-fishing, has only been extended to industry in the feeblest manner imagineable...
...IX, No...
...In June 1975, more than 2,000 workers were out on strike from nine factories in the Quito area, including four textile plants...
...Properties that 20 years ago were small, after dividing the family inheritance, have now become minimal...
...in close alliance with U.S...
...11 (march 15, 1974),84...
...El Mode)o Agroexportador Ecuatorlano...
...Initially, the growth in imports (a four-fold increase from 1972 to 1974) was stimulated by government policies as a measure to curb inflation...
...Velesco) is pressured by all sides to define himself...
...Presidential elections were to be held in August, 1972, but the race for power began long before...
...Time will tell whether the makings of a new scandal are just offshore.34 Dinosaurs: Texaco and Gulf, which were officially recognized as their parent companies in 1969.9 Presently those 1.65 million hectares are known as the Coca Concession, one of the two concessions providing Texaco-Gulf with 220,000 barrels of oil per day (bpd).* In 1968, Norsul-Phoenix farmed out the rest of their original concession to a group of seven companies under the umbrella name of World Ventures...
...Royalties rose from 11.5 per cent to 16 per cent of production...
...policy toward Latin America for the past few decades...
...In 1972, Ecuador had projected an image of unlimited possibilities for growth and imminent prosperity for all...
...One year later, the Shell-Jersey combine suspended its activities indefinitely...
...Many of their representatives entered the Presidential Palace in the early hours of fighting, when victory seemed assured, and have since been arrested or have .taken asylum in foreign em- bassies.28 Since September, additional evidence has been gathered to suggest foreign backing for the coup...
...Primarily as a result of this growth in "national" industry, the national trade deficit rose from $30 million in 1968 to $29 million two years later...
...Ecuador must concentrate on the coastal lands...
...As for Otto Arosemena, he was simply too big a fish to fry...
...The government was taking an increasingly active role in determining the new terms of dependency for the epoch of oil bonanza...
...Production in the Santa Elena Peninsula has declined over the years, with average production at a low 2.6 million barrels per year...
...Bucaram's style was as erratic as that of Velasco lbarra...
...For the first 40 years of foreign penetration in Ecuador, the Oriente became such a "reserve" region...
...The factory has operated since 1840, but not until 1973 did the workers ever win the right to bargain collectively...
...While the country is still predominantly rural, more and more of its population is flocking to the cities in search of the new jobs that are opening up in construction, services and industry...
...To add to this picture of ideal conditions for foreign investment, Ecuador had become a member of a regional integration scheme, the Andean Common Market, which offered the combined market of six countries as an outlet for industrial production...
...In a second letter, dated April 28...
...12, 37...
...1966 est...
...In 1970, the consortium struck oil in the Oriente...
...Here we can only attempt a brief characterization of this complex phenomenon...
...2. Ibid...
...When the Military Junta was replaced by a civilian government in 1966, the question of reform became a dead issue--to be revived in the 1970's under a very different set of internal and external circumstances...
...tuna boats were impounded by government authorities...
...The persons who Intervened In the different steps of the criminal act . . . are responsible for the end crime...
...signed its first contract with the government in 1931, and obtained a *Ang -Ecuadorian Oilfields...
...he was removed from his post at the Ministry and dismissed to the outer reaches of London...
...oil corporations, was obviously concerned...
...1963 aoq...
...Only those lands which had been abandoned for 10 years or more were subject to expropriation, while landholdings which were "efficiently utilized"--or whose owners presented concrete plans for cultivation to the National Planning Board-were exempted...
...It is not surprising that the story originates with Otto Arosemena,* the millionaire banker-President...
...Their earlier deal with Texaco-Gulf had been severely undercut...
...3) The absence of an industrial bourgeoisie...
...12 Texaco-Gulfs 5-year exploration period expired in 1969, leading to a series of new contract negotiations with the fifth Velasco government...
...One month before the deadline, the company was sold to a new owner...
...In addition to the repeal of Decree No...
...Capital goods imports grew from 24.2 per cent of total imports in 1928-30, to 31.1 per cent in 1938-40...
...The government opted for the latter and "not even the best divisions of the army were sent to contain the invasion...
...The old principle which had dominated the Law of 1964 was present once again: respect for "well developed land," for "efficiently cultivated holdings...
...On the contrary, this system proved advantageous to the foreign monopolies...
...The circumstances of oil production on a world-scale were such that the incorporation of any new reserves could only drive down the price of oil...
...It began in Ecuador as early as the 1920's, when rival imperialist interests vied for control over the rich oil lands east of the Andes...
...22 (August-September...
...Sectors of the Left were relieved by the outcome on September 1, not out of loyalty to the regime but because Rodriguez Lara represented a lesser evil than the extreme right-wing backers of the coup...
...1 2 Delegates to the meeting enjoyed an all-expenses paid vacation in Guayaquil, and approved the creation of a new union, the National Federation of Petroleum and Chemical Workers (FECUAPETROL...
...Alone and abandoned, the "apostle" of the multitudes must resign himself to depart...
...Most plantations were owned by Ecuadoreans and internal marketing was also controlled by national interests...
...It included delegates from the Conservative Party, the Social Christians, Liberals, Christian Democrats, Velasquistas, et al...
...Chile and the West coast of the United States...
...As Jorge Cuisana, Secretary General of the CEDOC...
...The balance would then be returned to the foreign companies...
...2._Texaco-Guif- The second and third largest U.S...
...Independent producers, for example, were forced to sell their produce at prices calculated on the basis of the lower production costs of the large plantations...
...rather the watchword is greater state participation...
...In mid-October, OPEC members opened negotiations with the oil companies for higher prices...
...Importers and industrialists, closely tied to foreign capital, were particularly vulnerable to any attempt at curbing imports...
...4. Eduardo Santos, Ecuador: Decade 196-1970, mimeo, 7. 5 Nueva, No...
...First, for those companies with considerable investments in the region and for whom production was already in sight, there was little doubt that they were in the country to stay...
...They are no longer waiting for the government to come through on its promises...
...the 503 kilometers of pipeline were completed and by late August the first tanker left port...
...One month later, in January 1942...
...that is, 211,730 craftsmen and barely 23,000 industrial workers...
...INDUSTRY UP FOR GRABS 1. La Tierra (organ of the Ecuadorean Revolutionary Socialist Party), February, 1975...
...5. 10...
...Foremost among them was the wave of nationalism spreading throughout the underdeveloped countries-and in particular, among the oil-producing countries of the Middle East and Venezuela...
...Sectors of the conservative land-owning class are gradually being transformed into a fraction of the bourgeoisie, intent on modernizing their holdings, increasing production and abandoning the archaic and inefficient forms of ex-16 ploitation that have characterized their relations with the peasantry...
...The premises of this sell-out brand of unionism include the preservation of the capitalist system through ideological control of the working class and cooptation...
...By the end of the fighting, the coastal bourgeoisie had emerged victorious...
...The government's Development Plan includes a detailed blueprint for industrialization and for channelling the oil revenues into productive investments...
...The monthly salaries of these workers averaged slightly more than $48, even though a recent study concluded that at least $154 was necessary to maintain a family of five...
...And when exports entered a period of decline they were unable to sell at any price...
...government saw for itself in preventing the repetition of the Cuban experience in other Latin Ameican countries...
...In July 1975, President Rodriguez Lara gave in to economic blackmail...
...Quotas were eliminated and the burden of market fluctuations was left to fall on those who could least afford it...
...Defending After the war of 1941, the shaded arwa came under Peruvian control and was leased to the Interuational Petokum Company (Standard Oil...
...To the bourgeoisie, even these feeble attempts at increased state control over distribution' represented an attack on the "free market system" and a dangerous precedent of state intervention in the private sphere...
...What's more, Velasco was rapidly losing the support of radical elements in his movement, while working class militancy and student strikes could only be contained by the army and police...
...imperialism nor local reaction was appeased, however...
...Recap: Ectador Entering the Flfties For Latin America, the Great Depression of the 1930's meant a drastic decline in foreign trade, foreign investment and the capacity to import foreign goods...
...Although export prices rose significantly during World War II, high levels of inflation hit the working class and masses...
...Landowners in the highlands claimed they were not receiving fair prices for their produce and began hoarding supplies for speculation and smuggling staples from Ecuador to Colombia and Peru, to be sold at higher prices...
...however, the "energy crisis" had abated to some extent, and the foreign oil companies were eager to take the wind out of OPEC's sails...
...To do this, however, would entail an on-going struggle with the oil companies to increase the country's share in the profits from oil production...
...United Fruit's plantations in Central America, fully recovered from disease, offered better prospects for profit in terms of lower transportation costs and more modernized techniques for processing and handling...
...The State would share directly in the profits of the enterprise, rather than being paid only in royalties...
...oil companies, who were eager to stamp out the rising tide of nationalism, the bourgeoisie initiated an intense campaign against "militarism," state intervention in the economy, "communist infiltration" in government and reckless public spending...
...Government plans call for an $196 million hydroelectric scheme, a system of roads including a modern highway between Quito and Guayaquil, port expansion and airport construction...
...Even those who found employment in the cities faced frozen wages and steep inflation...
...imperialism, largely in gratitude for its harsh persecution of the Left...
...9. U.S...
...Throughout the next ten years, the country's economic and political situation continued to deteriorate...
...Foreign investment in industry did not begin all at one blow, but came in spurts like the oil from the Oriente...
...1 0 Most likely, AIFLD found Ecuador so attractive precisely because of the low level of organization among workers and the country's incipient stage of industrialization...
...Moreover, the first-hand experience of people connected with the oil industry contradicted the contentions of the oil monopolies...
...Toward Unity and Strsngth Despite AIFLD's success in making powerful inroads into the labor movement, and despite persistent divisions among the major federations, conditions in the 1970's have provoked an upsurge in militancy unseen since the early part of the century...
...The never implemented plans for Industrialization were filed away to await Ecuador's next export boom...
...From there, it was only a short jump to the Ecuadorean side of the border and more of the oil-rich jungle...
...4 Lulis Alberto Carbo, Historia Monetaria y Cambierla del Ecieder (Quito: Im prenta del Banco Central, 1958), 447...
...But the nature of this process has not signified an improvement in social conditions, and least of all a decline in dependency...
...With income concentrated in the hands of so few, the internal market lacked the capacity to generate sufficient demand for manufactured goods...
...In 1950, for example, the handicrafts sector accounted for 90.2 per cent of total employment in manufacturing...
...Informede Is Comislon de Estudio de Ia SItuacion Social, Economica y Politics del Pais y sus Incidencias an La Vida de Is Cles Trabaladora," compiled by the Workers' Federation of PInchIncha (FTP) (Quito: 1975), typescript, 1. 2. Ibd...
...ll To this original concession, Texaco-Gulf added the Coca Concession farmed out by Minas y Petr6leos in 1965...
...The rural proletariat in formation would bear little resemblance to the work-force of the Andean haciendas, tied to precapitalist forms of production and the pervasive and reactionary influence of the Catholic Church...
...The tension of political uncertainty and rising economic stakes had been building up for two years...
...Thus, the middle and upper classes gave full vent to a nouveau-riche mentality...
...The economic and social conditions that held the country on the verge of political chaos throughout the 1930's and '40's were suddenly assauged by the aura of "green gold...
...As a socialist newspaper recently editorialized: On the one hand, (the government) carries out measures which reject the aggression of U.S...
...Despite its periodic crises, coastal agriculture has been the mainstay of the national economy for close to a century...
...In 1941, British and U.S...
...The three federations have jointly approved a 14-point program which includes demands for a raise in the minimum wage, the retraction of anti-labor decrees, an end to the de-nationalization of industry ind national control over the oil sector...
...The oil wealth was interpreted by many as an end to the chronic problems of trade deficits, budget-balancing and even class struggle...
...It implied the revision of all existing regulations, including income and export taxes, royalties, surface rents and shipping rights, foreign exchange regulations, workers' benefits and additional company obligations...
...The cost of living went up by 30 per cent in 1974, with food prices rising so drastically that the average working-class family in Quito had to spend up to 81 per cent of its income on food...
...1974, 407...
...Moreano, "Capitalismo y Lucha," 164-165...
...AIFLD Report, Vol...
...corporations and the reactionary leadership of the AFLCIO...
...The struggle for political hegemony, for the power to decide these vital issues, intensified...
...Today, its reserves are virtually exhausted.31 concession of 2.5 million hectares (25,000 square kilometers) in the Oriente...
...From Brbery to Blachkmal The sudden reversal in Ecuador's economic prospects was due not only to rising imports, but to a steady deterioration in the export trade as well...
...In addition, existing demand for such products as footwear, clothing, furniture and leather products could be satisfied by a strong handicrafts sector, in existence since colonial times...
...The 4-man Junta that came to power in 1%3 and ruled until 1966 represented a new approach to the "developmentalist" strategy outlined by U.S...
...This same tactic-fictitious sale of those companies beset by labor disputes-has been adopted by the bourgeoisie throughout Ecuador...
...Standard was determined to shift the border to its advantage...
...His firm belief that foreign capital constituted Ecuador's savior and his' close ties to United Fruit endeared him to the agroexport bourgeoisie...
...July, 1975...
...95 per cent of the workers employed by the companies had to be Ecuadorean, 80 per cent of the administrative personnel and 50 per cent of all technicians...
...By 1948, United Fruit had made Ecuador a priority zone for banana production and the large foreign monopolies moved in...
...The answer was not forthcoming, even after one year of military rule and, some would maintain, even to the present...
...Lest the Ecuadorean people become too suspicious, too aware of the potential wealth buried underground, a series of compliant governments echoed the claims of the oil companies, while collecting pay-offs from undaunted foreign interests in the region...
...The opening of the Panama Canal in 1914 made Ecuadorean products more attractive on the world market by lowering transportation costs...
...The largest banana producers in Ecuador, those with strong ties to foreign capital, were able to quickly convert their crops to Cavendish and retain a large share of world demand...
...Texaco-Gulf and Cayman Corporation were the only companies to fall within this category at the time...
...The newspapers are full of daily ads and declarations in homage to Ecuador's ex-president, Galo Plaza, recently returned from his post in Washington as Secretary General of the OAS...
...Up until the 1920's, foreign investment was mainly concentrated in the gold mines of Portovelo, mineral exploitation in the Santa Elena Peninsula and in limited infrastructural projects...
...This first article offers a brief description of this process dating from the first export boom in the late 1800's to the definitive failure of the export model in the 1960's and the first attempts at structural reform and industrialization...
...The only thing that the ruling sectors as a whole could agree on, throughout this period, was the need to encourage foreign investment in Ecuador and to crush the Left by means of severe repression...
...Moreover, they have consistently been counter-balanced by the massive penetration of foreign capital into all sectors of the economy, and primarily the industrial sector...
...The export crisis was to last throughout the inter-war period until the next fleeting period of boom in the 1950's...
...High on their list of reserve countries was Ecuador-where past experience with corrupt and compliant governments made the Oriente a potentially lucrative region for oil exploitation...
...They launched a heated attack on the OPEC countries, going so far as to suggest the possibility of an armed takeover of the Middle East oil fields...
...But the strength of working-class opposition and of working-class 100% 100% na 100% 100% 100% 60% na Jv/PC 40% 100% 67% 100% 100% na 100% 100% na 100% 100% 100% 55% 100% 100% 35% 100% 100% 100% C d M P d t Li22 organizations in general is still severely limited by the structure and size of the industrial proletariat in Ecuador...
...The Liberal government sought to accomplish the first by centralizing the state appartus and developing a national infrastructure in the highlands...
...Four months of intense negotiation ensued, until Texaco-Gulf finally signed in August 1973 and other companies followed soon after...
...Major policy revisions toward foreign investment have been undertaken by the new Minister of Industry, Trade and Integration, Danilo Carrera Drouet, formerly of First National City Bank in Guayaquil...
...January, 1975...
...Epitaph for an 0n Policy...
...The establishment of an industrial base in the less developed countries has not, however, produced a lesser degree of dependency...
...Copyrght 0 ISh by the North American Congress on Latin America, Inc...
...Even the fact that the landowners won their battle against change and the latifundia were left intact by the 1964 Reform, did not provide the necessary stimulus for increased output and productivity on the Andean haciendas...
...in which internal contradictions were mitigated by the sheer volume of surplus to be distributed...
...5. Financial TImes, February 28, 1975...
...But, throughout the past three years of bargaining with the oil companies, there has always been a clear limit to the government's nationalist line...
...The 1972 elections would be particularly important, since political power would imply a much larger booty than ever before in the nation's history...
...August 2, 1975...
...1955), 39...
...2 Gonzalo Abad, El Proceso de Luca per @4 PFder on e4 Ecuedor, unpublished MA Thesis in International Relations, Coegio de Mexico, 1970,19...
...oil companies went to war over the Amazon Basin separating Ecuador and Peru (see below...
...Labon Combag of Age Industrialization in the 1970's will certainly have profund effects upon the structure of Ecuadorean society...
...State ownership over the nation's oil resources had made the government apparatus the key negotiator of Ecuador's new terms of dependency...
...Second, the period of Ecuador's conversion into Latin America's second largest oil producer, its active participation in OPEC and the increasingly aggressive role of the state apparatus in the oil sector...
...3 1Apr1l, 1975...
...The present Minister of Natural Resources called upon the organization to "set profit margins commensurate with the need to assure foreign companies of attractive investment incentives...
...Four months later, LAzaro Condo was killed when rural police invaded the community of Toctezinin (Chimborazo Province...
...In 1920, exports peaked at $20,226,600.4 As in other Latin American countries, Ecuador's export boom was entirely dependent on world market conditions and increasingly reliant on one single buyer, In 1916, the United States purchased almost one-half of all exports (primarily cacao) and over 78.3 per cent in 1917.5 Moreover, the agro-export bourgeoisie was also dependent on foreign companies for marketing their products abroad...
...The process of capital accumulation in highlands and coastal agriculture has been greatly accelerated by recent government policies...
...In a letter dated April 3, and addressed to President Rodriguez Lara, the presidents of Texaco and Gulf-Latin America argued that the high production costs and taxes levied by the State made Ecuadorean crude uncompetitive on the world market...
...10(3) Large public investments have been made in irrigation systems, storage facilities and regional development schemes...
...L ENTRY INTO THE WORLD MARKETs CACAO Ecuador's incorporation into the nexus of international trade relations occurred relatively late, due to the nature of its primary export: cacao...
...Equally important, Velasquismo did not reflect a bourgeois nationalist challenge to the traditional power groups...
...see Table 2...
...An import sector concentrated in the port city of Guayaquil rapidly expanded its activities to meet the growing demand for luxury goods on the Coast and in the highlands...
...servatives or Liberals (in any case with some hegemonic sector, since Velasco has no revolutionary leanings), or seeks the support of the army and even attempts a coup d'etat...
...The corresponding Executive Decrees were signed by Otto Arosemena and his Minister of Industries Galo Pico Mantilla...
...Included In Galarza's expose were the first details of what would later become a major political scandal...
...Imperialism, uas in the case of the pirate boats...
...In practice, it had no effect on existing investments...
...Government declarations made it clear that "adjustments" may have to be implemented to take account of "special factors" affecting the country...
...Most recently the anti-communism that forms a major pillar of Christian Democracy has been eroded at the base level of the organization...
...While the immediate alternatives appear to be centrist militarism or a return to the corrupt civilian rule of the past, the Ecuadorean working class, the peasantry and the masses are gaining greater consciousness and political strength toward the more long-range and lasting goal of social revolution.29 OIL UN U MRAULEM Yff In 1967, the New York Times reported that "a vast helicopter operation, believed to be second only to that in Vietnam, is rushing oil-drilling rigs and supplies into the rugged northern region of Ecuador...
...A series of minor government officials got moderate sentences, while two of the six "frontmen" were sentenced 2 to 3 years for using false identity papers and the four others were absolved...
...22 Galo Plaza, Problems tof Democracy In Latin America, (Chapet HIII: University of North Carolina Press...
...However