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...
...of the Oriente would finally reach the surface...
...It basically served to shear the system of its most wasteful elements...
...13 Texaco-Gulf still controlled the Coca Concession, however, making its total holdings amount to 1.15 million hectares in the Oriente...
...Ideally, all that remained was for the Ministry of Natural Resources to fill in the appropriate figures for each company, and for company representatives to sign the dotted line...
...This inability or unwillingness to separate the cause from its effect has guided U.S...
...The stale banner of regionalism has been raised to protest any new attempt at levying higher taxes on coastal exports...
...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...
...Exporters wanted lower taxes and more credits...
...At the same time, Piez decreed the General Mining Law of 1937, which was conveniently drafted by attorneys affiliated with the British companies...
...Subscriptions: $10 per year for individuals ($18 tor two years...
...Ecuador is now just another oil country, squandering its riches in internal squabbling and misplaced nationalism...
...the Ecuadorean government still refuaes to recognize the changed border, and official maps of Ecuador still include the entire Amazon region.Manabi and Esmeraldas...
...The reaction to government policy by foreign oil companies can be generally divided into two main categories...
...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...
...Esteban del Campo, "Introduccion at VelasquIsmo," Mens)eroe (Quito), July, 1975...
...Indeed, sectors of the military and government bureaucracy were strongly determined to take the process further than had ever been tried before...
...and the "rebellious" faction by Jos6 ChAvez, head of the Free Workers' Federation of Pichincha (FETRALPI...
...In contrast to a sizeable wage-labor force on the Coast, pre-capitalist relations of production in the highlands have maintained the peasantry in an uncertain status of neither propertied nor propertyless...
...Its link to economic prosperity was not with Ecuador's internal economy, but with the industrialized centers abroad...
...When the law was passed in early 1974, the editor of an Ecuadorean journal geared toward U.S...
...Traditionally, the highlands peasantry has been tied to precarious or mixed forms of labor, including variants of NACLA'S LATIN AMERICA & EMPIRE REPORT Vol...
...According to the 1969 agreement, Texaco-Gulf would also build a pipeline to transport the oil across the Andes to a port on the Coast...
...Landowners have reacted by organizing private "goon squads" that the government has taken a more repressive role against land seizures...
...The government that came to power in 1972, headed by General Rodriguez Lara, called itself "nationalist and revolutionary...
...PART 1: TIlE OLD EMPIRE VS...
...response during the 1960's...
...Some sectors expressed the El Punto "Moe peroum, more poerty...
...1975) 17...
...Quito), No...
...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...
...AIFLD has not acted alone in Ecuador, nor elsewhere in Latin America...
...And by banding together they were also creating the conditions for greater solidarity and support among member countries...
...at the offices of the American Institute for Free Labor Development (AIFLD...
...Embassy stated to alert 1969 RaZ Material Raw Materials Activities Natioly pro ed pr, ta 2t 98o Printing a&Ad pab1iagh 0 100 ahbber 10 90 Chmicala 28 72 Basic metals 0 100 metal Prod=t.' 5 95 Nm-aloctical biney 66 34 achinery and electrical appliances 12 88 capt m.h.Line anrd tranportation mcinary Source F. Naiquaahca, o2...
...When five thousands peasants assembled in Quito, in 1961, to hear Arosemena announce plans for agrarian reform, the banner of anti-communism was immediately raised by the dominant classes and U.S...
...430 ushered in fundamental changes in the prevailing relationships between foreign companies and the government...
...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...
...Yet one thing is eminently clear: The image of imperialism as a set of advanced industrialized nations in stark contrast to a set of "underdeveloped," agricultural countries is rapidly becoming out-dated...
...Yet industrialization has only heightened the country's dependency on foreign capital and imports...
...1973), 30...
...It could now rely on international support for its policies, and the combined expertise and past experience of 12 major oil producers in dealing with foreign companies...
...3) the elimination of all taxes on export goods...
...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...
...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...
...NACLA's Lati Amor and mpil R report...
...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...
...It did not turn out to be that easy...
...Capital goods imports grew from 24.2 per cent of total imports in 1928-30, to 31.1 per cent in 1938-40...
...Yet the bloody repression of the bourgeoisie has been met with greater unity among the peasantry, with stronger and more politicized forms of mass organization and, most importantly, with a higher level of integration between the struggles of the working class in the cities and of rural laborers in the highlands and on the Coast...
...This political movement and its leader-Jos6 Maria Velasco Ibarra-were to dominate the course of electoral politics for the next four decades...
...The final toll was one dead and fifty wounded...
...It was no wonder, then, that U.S...
...One year later, the Shell-Jersey combine suspended its activities indefinitely...
...By 1969, foreign interests controlled 35 per cent of all industrial enterprises in Ecuador, not to mention the 35 per cent control which foreign firms still maintained over the primary goods sector (agriculture, fishing and mineral production...
...In the second period, beginning in the late 1940's, the oil companies suddenly reversed themselves...
...contacts...
...The price-drop was not of the magnitude that Texaco-Gulf had in mind and the consortium was now insisting that the government retract its decision to purchase 51 per cent ownership in the consortium's Ecuadorean operations...
...In 1947 Leonard Clark, a colonel in the U.S...
...Ecuador's national budget was dependent on the oil sector for 60 per cent of its revenues...
...Instead, the middle-of-theroad philosophy that had become the government's trademark was preserved...
...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...
...Article 2 proceeds to a discussion of Ecuador's present role in world capitalism as an oil producer and fertile ground for industrial investments...
...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 decree was designed as a stimulus to national industry...
...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...
...Despite their modest means, the six Ecuadoreans were granted the concessions In 1968...
...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...
...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...
...1965 est...
...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...
...By far the most significant drop (52.2 percent) occurred in the oil sector...
...Throughout the first period, rival oil interests were competing for concessions, resorting to a vast array of measures to out-bid and out-bribe each other in order to gain the favor of successive governments...
...Since 1974, the "anonymous" killings of peasant leaders have become a common occurrence...
...With profits concentrated in the hands of a few, and wages of the rural work-force kept at subsistence levels, the internal market could hardly support the local production of manufactured goods...
...Ecuador was particularly affected by competition from cacao producers in Brazil and the European colonies of Africa...
...Many factories supposedly contributing to national production were, in essence, assembly plants for foreign-made parts...
...The events of the preceeding weeks left no doubt as to the participation of bourgeois sectors...
...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...
...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...
...In fact, one of the major causes behind the Chaco War between Paraguay and Bolivia (1932-1935) was the struggle between Royal Dutch Shell and Standard Oil-the same protagonists to appear on the Ecuadorean scene--to control the suspected oil reserves in Bolivia's desert-like area called the Chaco Boreal...
...Only 22 percent of the economically active population is organized in some type of labor union, including a high percentage of craft unions and peasant cooperatives...
...A brief characterization of these stages and forms will facilitate our study...
...All that changed with Decree No...
...5.0) and General Exploration Company of California...
...imperialism...
...Furthermore, they charged that internally controlled prices made it "uneconomical" for the consortium to continue producing for the Ecuadorean market...
...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...
...3 Alejandro Moreano, "Capltismo y Lucha de Claws en Ia Primera Mited de Sig t XX," Ecuador: Pasedo y Presents (Quito: Editorial Unlversitaria, 1975), 140...
...Ironically, these same companies made no effort whatsoever to exploit the areas under their control...
...Both sides of this double-edged sword were applied to the Ecuadorean situation, analyzed by the United States as ripe for social revolution...
...Export-Orlented Growth The effects of the Liberal Revolution were most clearly reflected by the uninhibited rise in exports...
...For the first 40 years of foreign penetration in Ecuador, the Oriente became such a "reserve" region...
...As in the 1940's, Velasco Ibarra was brought back to assume his traditional role as mediator...
...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 the name of a social base they never possessed, Ecuador's traditional parties called for free elections...
...The latter will be considered in the following article, which traces the history of foreign penetration in the oil sector and changing government policies...
...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...
...9 The landowners continued to pressure for higher prices on agricultural produce and demanded government subsidies on imported seeds, fertilizers livestock and machinery, larger credits for agriculture and public investment in rural infrastructure...
...l5 The case of the "Chillo Jij6n" textile plant near Quito is illustrative of the bourgeoisie's reaction to the high level of strike activity spreading throughout the country...
...Velesco, Dependnces, 141- 142...
...Decree No...
...20 (June, 1975), 101...
...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...
...The government was taking an increasingly active role in determining the new terms of dependency for the epoch of oil bonanza...
...2) the development of Industry by means of strong tariff protection and firm guarantees for food Investment...
...Frequent crises in the export sector inhibited the formation of a constant source of financing for industrialization...
...PART II: NATIONALIST, IF NOT REVOLUTIONARY The "nationalist" label that Ecuador's military regime bestowed upon itself is most appropriately applied to its oil policies...
...Color television became the new toy of the rich, while expensive boutiques, discotheques and restaurants catered to their foreign tastes...
...Calculating an average of 210.000 bpd...
...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...
...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...
...An enormous publicity campaign was launched to make "Chiquita Banana" (or Cavendish) known to the world, as demand for the Ecuadorean variety (Gross Michel) drastically declined...
...Only three days before the coup attempt, its civilian supporters came out into the open, announcing the formation of a Civic Junta for "institutional restoration...
...A wage system was established on the cacao plantations on the Coast to attract a rural population still heavily concentrated in the Andean highlands...
...The effects of crisis were conveniently passed on to the working masses through a series of successive devaluations and the consequent rise in the cost of basic consumer goods...
...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...
...Ecuador was left to await the day when either economic or political factors would mandate the entry of its oil into the pool of crude controlled by the Dinosaurs...
...A second group of companies (which may well conceal the identities of other Dinosaurs), were still in the exploratory stage and had a very different reaction...
...OPEC countries began to demand higher prices for oil, a greater share in profits and state participation in decision-making...
...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...
...1963 acq...
...The Ecuadorean government focused on petrochemicals and steel for its long-range industrialization process...
...The potential of oil deposits on the Santa Elena Peninsula was far inferior to the oil companies' hopes for the vast Oriente...
...13 Letter, Kessler to Friedman...
...rather the watchword is greater state participation...
...The surplus generated by large agricultural holdings in the highlands was not reinvested to raise productivity, but was filtered into urban land speculation, construction and luxurious consumption...
...IV, No.37 (September 13, 1974), 153...
...At the same time...
...Other strikes followed in rapid succession, surprising only those who had believed the imperialist lies of the 1940's...
...Created as an antidote to communist influence in the labor movement, CEDOC has gone through many political changes since its inception...
...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...
...There is no indication that the latifundia will be broken up and redistributed...
...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...
...3 1Apr1l, 1975...
...Department of Commerce, Bureau of International Commrce, Marc Barold, Multinational Corporation Project, NACIA, 19751 Business Latin Amaricar Latin America Econcmic Reports -In mid-1973, it was estimated that only 48 percent of the economically active population (approximately one million people) had full-time employment, while 47 percent (980,000) were under-employed and 5 percent (100,000) unemployed...
...1 1 I But the popular revolt expanded in the following months, spreading to the Andean haciendas...
...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...
...cit., 104...
...Cited in Velasco, "El Modelo Agroox portador," op...
...The pressure on the Ecuadorean government to temper its nationalist stance was mounting, and internal conditions in Ecuador made the moment propitious for an oil company offensive...
...If one element could be identified that made the early 1960's different from the beginning stages of Ecuador's previous crises, it was indeed the Cuban Revolution and the new role the U.S...
...Never a member of any political party, Velasco came to power through the support-at one time or another--of almost every major political party, from Communists to Conservatives...
...The PoItal Tightrope By 1975, the government was forced to take steps against the deteriorating balance of trade and fiscal crisis--despite27 the political risks involved...
...A decline in exports could easily create havoc in the finances of the State...
...From October 1974 to January 1975 oil production and exports were drastically reduced...
...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...
...The natural gas extracted from the concession will be Industrialized jointly within Ecuador...
...Thus, when Velasco spoke out against U.S...
...State Department that Arosemena had to go...
...In a second letter, dated April 28...
...The militancy of the working class and peasantry not only has produced significant shifts to the left within CEDOC, but also has provoked important changes at the leadership level...
...Previously, the foreign oil companies fought it out among themselves, with successive governments playing a subservient role...
...More specifically, he directed public investment not toward the expansion of productive activities but toward demogogic infrastructure projects...
...His dual purpose was clear...
...Populism in Ecuador, on the other hand, embodied neither of these forces...
...Between 1929 and 1934, Guayaquil grew at an annual rate of 5.33 per cent, compared to 1.4 per cent in the prior twenty year period (1909-1929).14 The very low level of industrialization in Ecuador prevented these migrants from entering into productive activities...
...Notes BOOM OR BUST 1 Fernando Velasco...
...Although export prices rose significantly during World War II, high levels of inflation hit the working class and masses...
...The inevitable question arose: Where had the oil money gone...
...company from its eastern outpost, the government cited the company's lack of results after six years of exploration and an outstanding debt to the government of 126,000 sucres...
...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...
...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...
...While very minor in comparison to other Latin American countries, Ecuador's early introduction to foreign capital in industry would take on much greater proportions in the 1970's...
...Even the nationalist pretensions of the present regime--vocalized in the defense of national sovereignty over natural resources-have recently been undercut...
...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...
...1 5 The scenario described above was repeated five times during the forty year period between 1932 and 1972...
...4. Latin America, Vol...
...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...
...imperialism...
...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 owner of Lanafit textiles has also threatened to sell his plant if the strike there is not ended...
...I The statistics clearly support this statement...
...Christian militias" attacked the headquarters of the CTE (Ecuadorean Workers Federation) and the Cuban Embassy...
...and (3) the period of actual exploitation of Ecuador's oil reserves, the late 1960's-1970's...
...its friends back home: "Ecuador will need feasibility studies, engineering and design services, construction work, equipment and financing...
...Origins of the Cdls The presence of "black gold" in the Ecuadorean jungles had proven to be a mixed blessing for the economy as a whole...
...In the 1960's, large landholdings were still under-cultivated, while small farms were dangerously over-worked...
...Since virtually all the land in the Oriente had been leased away and since the law was not applied retroactively it would affect only those companies entering the country after the year 2010...
...24 Moreover, in addition to the large Ecuadorean landholders (many of whom converted from cacao production to bananas), a new group of small and mediumsized property owners opened up virgin lands for cultivation.* Thus land tenure on the coast assumed a less polarized character than that of the highlands: In 1954, medium-sized properties (5 to 49.9 hectares) accounted for 43 per cent of total landholdings and 21.5 percent of the total land area under cultivation...
...1942 est...
...or maintain internal order but permit the army of the Peruvian oligarchy to invade with impunity...
...To do so it actively encouraged and financed the expansionist tendencies within the Peruvian government...
...22, ep...
...The new law guaranteed the private ownership of land "which fulfills its social function...
...Assured that "communism" had been crushed, the traditional power groups begun to yearn for the reins of power...
...The pre-September demands of the bourgeoisie with respect to foreign capital are in the process of being met...
...2 As the coastal bourgeoisie expanded its economic potential, the political hegemony of the landowning class in the highlands, unchallenged since independence, grew more tenuous...
...Within Ecuador, the CIA mounted a vast campaign to pinpoint the country as the next target of "communist aggression" in Latin America...
...In 1950, for example, the handicrafts sector accounted for 90.2 per cent of total employment in manufacturing...
...With income concentrated in the hands of so few, the internal market lacked the capacity to generate sufficient demand for manufactured goods...
...The Rio Protocol which ended the military conflict was signed on January 29, 1942...
...Conditions are changing, slowly...
...In 1941, British and U.S...
...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...
...Although oil prices shot up to unprecedented levels, the oil companies themselves were hardly suffering...
...The major automobile firms are among the most eager bidders, competing for an edge on the Ecuadorean market and its liberal investment terms...
...A genuine process of industrial development was never initiated...
...3. Financial Times, February 28...
...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 answer was not forthcoming, even after one year of military rule and, some would maintain, even to the present...
...This was not the first time that inter-imperialist rivalry in Latin America had pushed for such extreme action...
...1) A limited internal market...
...Epitaph for an 0n Policy...
...For this reason, the economic power base of the Andean land- owners remained largely intact and a political modus vivendi was gradually established with the coastal bourgeoisie...
...Nuva, No...
...That first contract expired in July 1975...
...In May, 1975 the President announced that 346,000 hectares had been Distributed to 12,500 families...
...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...
...industrialization under the hegemony of foreign capital...
...The inability of successive governments to cope with worker and peasant militance, except by severe repression, was exemplified by the reaction to the Peruvian invasion of 1941 (see article 3...
...5 Worker militancy in the face of these conditions has been met with a series of government restrictions on labor organizing...
...As with cacao, banana production in Ecuador had characteristics which distinguish it from foreign dominated agricultural production in other Latin American countries...
...Galo Plaza's fascination with U.S...
...No.32 (August 15, 1975), 128...
...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 story of Minas y Petr6lekos in Ecuador illustrates how the frequent transfers of concessions pass from one company to another, until finally they end up in the hands of a Dinosaur...
...The persons who Intervened In the different steps of the criminal act . . . are responsible for the end crime...
...Estimates circulated that by 1973, Texaco-Gulf would be producing a million barrels of oil per day, of which 150,000 would belong to the State...
...This reference to so-called "special factors" is little more than a reference to Ecuador's dependence on foreign capital...
...7 Only the six original "frontmen" were waiting out the decision In a jail cell, alongside their Investigator, Jaime Galarza...
...CEOSL is particularly active in organizing unions in the many factories being set up by foreign capital...
...Hapumn were small plots otlad kead to the Inds bL r msistce farming...
...A system of profit-sharing was instituted, whereby 15 per cent of the profits from production would go to company employees...
...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 euphoric banana boom was short-lived, as foreign companies pulled out in the late fifties as abruptly as they had arrived a decade before...
...In the highlands, precapitalist relations of production were slowly entering a process of decomposition, but the huasipungo remained a predominant form of land tenure...
...Flexible conditions for oil investment in Ecuador were a thing of the past...
...November 8, 1974, 175...
...The State would share directly in the profits of the enterprise, rather than being paid only in royalties...
...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...
...The creation of the Organization of Petroleum-Exporting Countries (OPEC) in 1960 greatly increased the leverage of host countries vis-a-vis the foreign companies...
...The concession system was formally abolished, to be replaced by a system of "association contracts" between CEPE and the...
...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...
...Sapport from OPEC In June 1973, Ecuador became an associate member of OPEC and received full membership status soon after...
...Moreano, "Capitalismo y Lucha," 164-165...
...1966 est...
...In the 1930's, when conditions in Latin America were most propitious for 'autonomous industrialization, capital accumulation in Ecuador had assumed an unstable character...
...International experts have made studies of Ecuador's natural resources and concluded that the national territory can easily maintain 50 million inhabitants...
...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...
...While management can legally fire any number of employees, and union leaders in particular, workers have no legal recourse to strikes or protest...
...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...
...One month later, in January 1942...
...Alone and abandoned, the "apostle" of the multitudes must resign himself to depart...
...7. The above figures are from "Drug Industry In Ecuador Gears Up to Meet New Rulesa," Slulless Latt America, December IS...
...Petroleum exports had been declining since October, 1974...
...Thus, Velasco's campaign in 1960 both preached the strong nationalism and anti-U.S...
...They were carefully pieced together by Jaime Galarza In his book Festin del Petroleo...
...Significantly, the ceded territory did not include the populated areas under Peruvian military occupation, but the oil-rich lands of the Amazon Basin...
...January, 1975...
...the fate of Ecuador's oil policies under the present regime appeared settled...
...2) the industrialization process and labor...
...The Ecuadorean army was busy controlling internal unrest and Peruvian troops met little resistance as they advanced through the southern portion of the country...
...This allowed foreign capital to both fix prices and impose a discriminatory quota system on banana exports...
...The facts, however, demonstrate a very different case...
...After carrying out extensive studies of the region, Standard Oil (alias Leonard Exploration Co...
...sentiment within the labor movement...
...Surface rental charges, changed from 5 to 100 sucres under the 1971 law, were applied retroactively...
...Foreign Trade Law of 1975 excluded all member countries of OPEC from preferential tariffs in trade with the United States...
...imperialism, in the context of political crisis, economic stagnation and escalating class struggle...
...In August 1937, Piez negotiated a contract with the Anglo Saxon Petroleum Company...
...This lack of dynamism in the industrial sector can be explained by two major political factors: Firstly, through direct control over the state apparatus, the agro-export bourgeoisie directed economic policy not toward protectionism to stimulate domestic industry, but toward a free trade philosophy to benefit the export sector...
...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...
...First, the changing nature of Ecuador's role within the world imperialist system and the changing forms of its dependency...
...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 contract was due to last forty years, with an optional ten-year extension...
...The Alliance for Progress, AIFLD (see article No...
...Reportedly, this is the first time that any major oil country has entered this realm...
...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...
...sentiment that was gaining force among popular sectors throughout Latin America, and put forward a tentative plan for economic reform and development...
...La Tierra,July, 1975 and Uilded SidiCel, August, 1975...
...What, in fact, the "nationalist and revolutionary" government of Rodriguez Laura represented was a tenuous equilibrium among widely divergent tendencies in the military and an inability to withstand the pressures of the bourgeoisie and foreign interests...
...INDUSTRY UP FOR GRABS 1. La Tierra (organ of the Ecuadorean Revolutionary Socialist Party), February, 1975...
...The oil companies' task was made easier by internal tensions within the military...
...HiL ECUADORI TOP BANANA TB "YMay"* Ecuador's banana exports had been on the rise since 1946, in response to increased demand from the United States and Europe...
...Factory production increased by nearly 10 percent annually throughout the 1960's, while small industries and handicrafts grew at half that rate...
...By 1972, however, the ADA case had become known as Ecuador's "Watergate...
...8 Despite this declaration of common guilt, the final sentencing demonstrated the government's ultimate Inability to withstand the pressures from the bourgeoisie...
...Most plantations were owned by Ecuadoreans and internal marketing was also controlled by national interests...
...The popularity of Jarrin's policies among sectors of the Armed Forces had made him a potential political rival to President Rodriguez Lara...
...As Jorge Cuisana, Secretary General of the CEDOC...
...In practice, it had no effect on existing investments...
...Ecuadorean exports totalling $4,923,000 in 1883 nearly doubled to S9,761,600 by 1890.1 The cocoa-bean was Ecuador's admission ticket to the world market and the seed of capitalist production relations in the countryside...
...Food riots were already occurring in the cities and by March, 1974 the government gave in to economic sabotage...
...The yanquis decided to stop Royal Dutch Shell, thanks to whom Standard had been thrown out of Bolivia...
...Cuba had alerted U.S...
...8. See "The Busines Outook-Ecuador...
...The six "frontmen" conveniently dropped out of the picture, selling their rights to the concessions for the lowly sum of 20,000 sucres each (US $800).3 The ADA consortium was now in control of 2.6 million acres--.e., the entire Gulf of Guayaquil...
...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...
...The effects of this "gift" of industrialization on the dependent countries have yet to be analyzed in sufficient depth...
...The net result was a more mobile labor force in the highlands and the channeling of surplus labor to the coastal plantations producing for export...
...Thesis In Sociology, University of Louvain, 197t...
...Now geared toward capitalist production, the Ecuadorean economy is fueled primarily by oil revenues and foreign investment...
...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...
...Ecuador aligned itself with the more radical elements within OPEC, pushing for higher oil prices and state participation in production...
...Events moved swiftly forward and in May, the FNTP affiliated with the corresponding ITS--the International Federation of Petroleum and Chemical Workers (IFPCW...
...Rodrfguez Lara, with shelks and Shah at OPEC meeting in Algeria.37 Thus, the multi-national corporations obtain huge profits which...
...While the two sectors have been connected historically by trade and heavy migrations, their present characteristics remain highly divergent...
...Thus, for example, when reference prices are fixed at $11.65...
...In 1972, Ecuador had projected an image of unlimited possibilities for growth and imminent prosperity for all...
...Nearly four years of vacillation offer little hope for a sharp turn toward decisive social change...
...El Proces de Dominacion Politico sn Ecuoder...
...14 Another incursion into un- chartered waters was the requirement that at least 50 per cent of all petroleum exports be carried on Ecuadorean flag ships, and provided for the creation of a state-owned tanker fleet...
...In 1954, for example, there were 92,387 landholdings in the highlands of less than one hectare, and 159,000 of less than five hectares...
...In Ecuador, it is known as INESE, the Ecuadorean Institute for Trade Union Education, co-sponsored by AIFLD and CEOSL Since 1962, INESE has trained over 23,000 workers in Ecuador-more than 10 percent of the entire organized labor force In fact, AIFLD's interest in Ecuador, in comparison to other countries, seems to outstrip both the size and strength of its labor movement...
...And secondly, the internal ramifications of this process, as capitalist relations of production increasingly expand within the national economy and pre-capitalist relations are progressively eroded...
...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...
...1968 est...
...It included delegates from the Conservative Party, the Social Christians, Liberals, Christian Democrats, Velasquistas, et al...
...430 as the reason...
...According to a U.S...
...More workers have been trained by AIFLD in Ecuador than in any Latin American country except Brazil and Colombia...
...By 1968, approximately 40 per cent of Ecuador's total population was dependent on minifundist production...
...Most recently, they have formed a United Workers' Front (FUT) and addressed the possibility of forming a United Workers' Confederation (CUT...
...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...
...Amoco, Anglo and OKC all suspended their operations in late 1972...
...But divisions within the government deepened and internal debates were endless concerning the actual provisions of the long overdue law...
...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...
...When the masses ignored their pleas for support, knowing what lay behind the false dichotomy between military and civilian rule, the bourgeoisie began their ideological offensive inside the Armed Forces...
...However, the governments of the oil-consuming nations, particularly the United States, appeared outraged...
...In alliance with the U.S...
...Arosemena (1961-1963) banked more heavily on Leftist support than had Velasco and set forth a more dynamic set of policies for structural reform...
...For the first time, the oil-producing countries were demanding a say in the quantity of oil produced and the level of prices...
...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...
...I 1 Petroleum was clearly the sector they had in mind...
...CEOSL is presently divided into two factions, one which continued under the hegemony of its advisors in Washington, and another which wants greater autonomy from the dictates of AIFLD, et...
...Countries like Brazil, Mexico, Argentina, etc., are industrializing at an accelerated pace...
...Every hint at agrarian reform by the military regime was met with the old cries of "communist infiltration" and instantaneous drops in production...
...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...
...they receive in taxes more than what some member countries of OPEC receive in total.18 Nevertheless, the specific conjuncture in world oil prices...
...6 Nueva, No...
...1975...
...Its victory would be of short duration, however, as the American Dinosaur-Standard Oil-prepared for its comeback...
...Crial Round One In March, 1920 the New York commodities market cited a record price for cacao at $26.76 per quintal.* By December prices fell abruptly to 12 dollars and by 1921 to *quintal is a unit of weight equal to 100 kilograms.6 $5.75.7 Why this sudden bust...
...In fact they had only set up their Ecuadorean affiliates In 1967, one year after the Gulf concessions had been solicited...
...2. La Tierra...
...The government's first move in this direction came in June, 1972-two months before the first exports were due to leave port...
...Labon Combag of Age Industrialization in the 1970's will certainly have profund effects upon the structure of Ecuadorean society...
...with respect to both exports and further exploration...
...According to one economist, "the cacao crisis in Ecuador was a direct result of the mechanisms of the world capitalist system...
...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...
...He seeks only "the unity of all Ecuadoreans" and tries to maintain, verbally, a political line that is sufficiently ambiguous so as neither to alarm the oligarchies nor disillusion the masses...
...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...
...Plaza was born In New York in 1908, attended the University of California at Berkeley and went on to study at the University of Maryland and the Georgetown School of Foreign Service...
...While both these provisions have been invoked in legal proceedings since 1973, they imply costly and long bureaucratic struggles...
...Three weeks after the coup attempt, at OPEC's meeting in Vienna...
...Department of Commerce, Foreign Economic Trd...
...of successful manipulation of government policies and the careful perpetuation of Ecuador's status as a reserve country...
...And when exports entered a period of decline they were unable to sell at any price...
...imperialism to control Ecuador's foreign policy and intervene directly in the Ecuadorean class struggle through the subversive activities of the CIA...
...The politics of prosperity, (see box) however, lasted only as long as the economic boom...
...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...
...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...
...1963 aoq...
...the popular masses had never been included in the process of "nationalist and revolutionary" government that led to the open conflict...
...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...
...5 Ecuador's present population is estimated at 6 and a half million...
...He openly distained technocratic, long-range planning and opted instead for a chaotic and purely spontaneous style of economic development...
...offIciah was "If we must have dictatorships, let's have more of the Ecuadorean kind...
...8 Financial Tlmes (London), February 28, 1975...
...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...
...He demonstrated his faith in "the preponderant advantages of offering hospitality to foreign private Investment," by turning over the planning for Ecuador's development to Rockefeller's International Basic Economy Corporation (IBEC...
...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...
...In some zone, it should be noted, foreign control over production was much more complete...
...Ibid...
...2 7,1n 1962, manufacturing employed only 14.1 per cent of the labor force and included a high percentage of small craftsmen.28 The 1960's were still marked by the social extremes of concentrated wealth and abject poverty...
...Moreover, landowners were given until January, 1976 (nearly three years) to comply with this17 Peaemnt demonruation demanding agrarian reform...
...In the cities, the reserve army of labor continued to expand its ranks, living off subsistence incomes from the service sector...
...Its present development is, in many ways, a microcosm of fundamental changes occurring throughout Latin America...
...Its original members included five of the seven largest oil producers in the world: Venezuela, Saudi Arabia, Kuwait, lran and Iraq...
...have been exempted from import duties, which totalled $89.4 million in 1974...
...These pressures have steadily increased over the past few years, and the ideological balance within the government has shifted accordingly...
...The limits of a nationalist ideology divorced from structural change internally are only too apparent from this case study...
...its effect on exports was seen almost immediately...
...Thus, the socio-economic structure of Ecuador entering the sixties was not radically different from that of two decades before...
...In a sense, Ecuador was an open field for the labor imperialists, quite unlike the situations in Chile, Argentina or Bolivia...
...Between 1972 and 1974, real wages declined by nearly 25 percent...
...57 (January...
...Behind these two companies lurked a consortium formed by two of the seven33 ffO h I i ADA C s ore ntrgue: The ase The facts of the case began to emerge slowly at first...
...who served as president from 1961 to 1963...
...The new political composition of the government includes the inflated presence of the industrial sector of the bourgeoisie...
...The smooth line of constitutional succession was broken...
...Any measures taken to remedy the rise in imports would affect the interests of the dominant classes and threaten the tenuous stability of the regime...
...When it ended, at mid-day on September 1, 22 were dead, over one hundred wounded and Rodriguez Lara remained in the seat of power...
...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...
...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...
...2 Industrial production, traditionally based on local raw materials and centered around food processing, textiles and the making of handicrafts, began to shift course...
...Letter, Kessler to Friadman, August 30, 1975 THE SEPTEMBER COUP 1. El Comnrco, July 21, 1975...
...2) the period of feigned disinterest in the region and temporary suspension of activities by the oil Dinosaurs, 1949-1960's...
...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...
...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...
...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...
...The story would be called the ADA case, after the Texas-based consortium that would discover vast reserves of natural gas in the Gulf of Guayaquil...
...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...
...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...
...The sudden oil boom of the 1970's was, in fact, only the culmination of a long history in the "battle of petroleum...
...Economic penetration was accompanied by power relations of dominance and subjugation: "Gunboat diplomacy" was at its height...
...As the economic policies of the Junta began to crystallize, however, the support of the dominant classes began to splinter...
...Most importantly, all sectors of the bourgeoisie demanded the formulation of a more "realistic" oil policy to stimulate a rise in exports...
...In fact, they were reaping windfall profits from the "crisis...
...na na acq...
...firms are clamoring for government contracts in the development of extensive infrastructre projects...
...In mid-1971, the IFPCW called together a constituent assembly to form a new union for oil workers in Ecuador...
...Artificial scarcity began to aggravate the already critical level of shortages...
...By 1972, when he ignominiously departed for exile in Argentina, he had been elected to the Presidency five times.* Velasco's extraordinary ability as an orator, his quasi-religious charisma and his verbal war on the oligarchy earned him the fanatical support of the urban poor...
...A study conducted in the early 1970's found that nearly 90 per cent of all companies having a capital investment of more than S8,000 were controlled by only 1,000 investors.10 While employment no longer follows the ups-and-downs of economic cycles as it did in the agro-export phase, industrialization has only skimmed the surface of the critical employment shortage...
...It was clear that the United States government wanted an immediate solution to the so-called border conflict and exerted heavy pressure on the Ecuadoreans to cede to Peruvian demands...
...But no one is satisfied...
...The fruits of their efforts are apparent in the 1970's: CEOSL now has a membership of approximately 32,500 and controls many labor unions in strategic sectors of the economy: communications, transportation, maritime activities, petroleum and municipal and service industries...
...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...
...3. El ComerciD, July 3, 1975...
...First, the period of inter-imperialist rivalry...
...Millions were spent to finance candidates, to buy off parliaments and to set up and knock down dictatorships...
...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...
...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...
...6 The pharmaceuticals industry in Ecuador presents the most dramatic case of foreign investment...
...Government declarations made it clear that "adjustments" may have to be implemented to take account of "special factors" affecting the country...
...By 1946, it was clear that Velasco would be no more successful in maintaining the unity of the dominant classes or pacifying the popular masses than he was in 1933...
...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...
...1974, 44...
...In other words, half of the post-1942 Oriente was leased out until the year 2016...
...tuna boats were impounded by government authorities...
...ll To this original concession, Texaco-Gulf added the Coca Concession farmed out by Minas y Petr6leos in 1965...
...By 1966, support for the Junta was virtually absent among the landowners and rapidly waning among all sectors of the bourgeoisie...
...loside fse Company...
...2 Population pressure on insufficient and badly eroded lands continues to push people off the land, while exodus to the cities has failed to provide a viable alternative for subsistence...
...Thus, the middle and upper classes gave full vent to a nouveau-riche mentality...
...Imperialism, uas in the case of the pirate boats...
...8 As the U.S...
...Productivity in agriculture was barely keeping pace with population growth and food scarcity was becoming a major problem...
...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...
...In 1960, the moralistic rhetoric of the forties could no longer even hope to pacify the Ecuadorean masses...
...Initially, the growth in imports (a four-fold increase from 1972 to 1974) was stimulated by government policies as a measure to curb inflation...
...FinancIal Tims, February 28, 1975 LABOR: COMING OF AGE "1...
...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...
...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...
...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...
...City Invest...
...Re-entry in the 1960's In 1960, a meeting in Baghdad gave birth to the Organization of Petroleum Exporting Countries...
...Most notably Mexico, Argentina, Brazil and Chile had industrialized significantly by the 1950's...
...Embassy Bulletin from Quito, "The unprecedented growth of Ecuador's import capacity combined with a liberal import regime and essentially stimulative economic policies presents the United States with a diamond-studded opportunity to expand markets in Ecuador...
...In the following month, AIFLD held its first seminar for petroleum workers...
...Excess supply on the world market determined a constant downward pressure on wages, in order to maintain the competitive advantage of Ecuadorean products...
...For example, the Minister of Agriculture, Guillermo Maldonado Lince, stated publicly that in exceptional cases, properly cultivated lands could be expropriated with compensation for reasons of social necessity, population pressure or building needs...
...2 The convenient division of labor between Leonard in the jungles and Anglo-Ecuadorian on the coast would not last for long, however...
...cli., 17 18...
...of Toronto...
...imperialism throughout Latin America...
...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...
...Profit remittances abroad increased from $1.1 million in 1947 to 25.7 million in 1959.23 By 1954, 80 per cent of all banana exports were controlled by five major companies: Compafiia Bananera del Ecuador (a subsidiary of United Fruit) and Standard Fruit and Steamship Co...
...The factors leading up to this decision were numerous...
...This chain of export bonanzas in Ecuador brought prosperity to only a very few, while the intervening periods of crisis were long and devastating for the great majority...
...On the contrary, this system proved advantageous to the foreign monopolies...
...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...
...I must comment that there was a tremendous amount of cooperation on the part of the FECAUPETROL officers in realizing this program with AIFLD/E...
...Rather, the new direction is toward the capitalization of large landholdings, and toward rapid growth based on a new set of social relationships...
...By 1948, United Fruit had made Ecuador a priority zone for banana production and the large foreign monopolies moved in...
...Labor unions, peasant federations and leftist organizations issued strong declarations calling on the government to take decisive action in favor of the popular masses and against right-wing subversion...
...While large returns on exports provoked the articulation of elaborate plans for development in the fifties, no serious attempts at industrialization were made...
...The first barrels of "black gold" were due to leave the depths of the Oriente, and export revenues would be flowing by 1973...
...The loopholes and ambiguous language that were cited to forestall expropriation in 1964 were repeated in 1973...
...Included In Galarza's expose were the first details of what would later become a major political scandal...
...As for the sub-proletariat, with whom the caudillo has long since lost contact, it abandons him with great ease once the messianic echo of his vdasquiuta discourse in the electoral phase is no longer heard...
...6 Furthermore, the very low technical and capital requirements of cacao production enabled the Ecuadorean bourgeoisie to maintain control over agricultural production for export...
...Land ownership remains concentrated in the hands of an agro-export bourgeoisie, which has felt its interests seriously threatened by the current oil boom...
...NY 10025 or Box 226, Berkeley, CA 94701...
...However, the United States changed its stance in December 1941...
...Agee, Inside the Company, 123, 236, ff...
...Profits were either reinvested to increase the number of acres dedicated to cacao, or they were used to finance an exceptionally high level of luxury imports...
...foreign oil companies...
...food processing Continental Grain/Seaboard Allied Millings flour mill Crown Cork & Seal: cups, timplating Del MYntes frozen tuna Dow Chemicals veterinary medicines and pharmaceuticals 3 Fort Dodge Labas veterinary medicines and drugs Gans Inks ink and printing General Tire: tires and valves Glidden Paints: paints (subsidiary of s01) W.R...
...Five days later, the Minister of Industries quietly authorized the transfer of all six concessions to a group of seven companies calling itself the ADA consortium, with no prior history of operations In Ecuador...
...The rapid decline in imports of animal and vegetable fats and oils, textile products, wood and leather products, etc...
...And secondly, aside from the weak coastal industries, the only industrial nucleus of any importance in Ecuador was textile production in the highlands...
...2) The government has decided to reverse two earlier decrees (January 1975) which prohibited any new foreign investment in the banking sector and finance companies...
...Ecuador's participation in the formulation of OPEC policies went far beyond its relative weight as an oil producer...
...538,874 properties of less than 3 hectares each had to support large peasant families, while 1,348 properties controlled over one thousand hectares each.l "In certain highlands regions," a journalist writes, "minifundium means a scramble for a single furrow (1 meter wide and 30 or 40 meters long...
...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...
...Even those who found employment in the cities faced frozen wages and steep inflation...
...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...
...The generals that rallied to the side of the President did so on a conditional basis, predicating their support upon a "moderation" of government policies...
...Royalties rose from 11.5 per cent to 16 per cent of production...
...While petroleum exports added enormously to the export side of the trade balance, the influx of petrodollars also created a growing tendency toward excessive imports...
...free use of water, wood and other materials in the area...
...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...
...In the 1930's, coffee replaced cacao as the principal export and rice followed in the early forties...
...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...
...In their endeavor to create an image of failure and, at the same time, to control the future of the Oriente lands, the oil monopolies could rely on the complicity of a trusted business associate: Galo Plaza, elected to the presidency in 1948...
...And secondly, to temporarily shelve the Ecuadorean deposits for use at some future date...
...In June of 1944, Velasco returned from exile to cheering crowds, and by July he had been elected president with the support of an ad-hoc coalition of Conservatives, Liberals, independents, Socialists and Communists...
...Supreme Decree No...
...One day later, against the backdrop of the Arab-Israeli War, the Arab oil producers agreed first to limit over-all production and, then, to drastically reduce exports to supporters of the Israeli government...
...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...
...The export crisis was to last throughout the inter-war period until the next fleeting period of boom in the 1950's...
...The government issued another decree, partially reforming No...
...8 He also wanted to discredit the Oriente's agricultural possibilities in order to deter the colonization of agricultural lands east of the Andes...
...In fact, as early as 1938 it began preparing for retaliation and its eventual return to the Oriente...
...CEOSL is an acronym for the Ecuadorean Confederation of Free Trade Unions...
...The circumstances surrounding these concessions were strange Indeed...
...The arms buildup in Peru was accelerated, the infiltration of Peruvian troops into Ecuadorean territory increased and, in 1941, the aggression was consumated...
...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...
...The Military Junta (1963-1966) that replaced him swung to the right, with a strong-arm "solution" to both development and unrest...
...Three weeks later, the International Monetary Fund showed its approval by announcing a $10 million stand-by loan to Ecuador for a fiscal stabilization program...
...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...
...Ecuador's oil policies were called into question as a new Military tigure entered the Ministry...
...The Chambers of Industry and Agriculture followed suit a day later, expressing their "solidarity" with the import sector and supporting a common set of demands...
...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...
...The consolidation of an agro-export bourgeoisie on the Coast, engaged primarily in cacao production, generated the growth of a complementary banking sector...
...labor strategy for Ecuador has concentrated a major portion of its activities on union-robbing battles with the CTE and CEDOC...
...Control over the government apparatus--endowed with unprecedented resources--became more critical than ever...
...By 1963, unanimity existed within the bourgeoisie and the U.S...
...Perhaps most importantly, Decree No...
...In 1963, another conflict flared with the United States: two U.S...
...The corresponding Executive Decrees were signed by Otto Arosemena and his Minister of Industries Galo Pico Mantilla...
...They allied themselves with sectors of the dominant classes, who were mounting their own campaign against the government's economic policies and demanding a return to civilian rule...
...Together they pulled out of Ecuador, declaring that nearly 30 years of exploration had been for naught, that the Oriente simply did not contain any oil...
...August 2, 1975...
...The debt between the oil companies left by the Chaco War had been paid back...
...The North American cast of characters was already safely bound for home...
...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...
...On March 28, 1962 the commander of the military garrison in Cuenca sent an ultimatum to the President: break relations with Cuba within 72 hours...
...In 1973, 'agricultural production rose by only 0.4 per cent, while food prices in the cities soared...
...The Chamber of Industries demanded the revision of Ecuador's position toward the Andean Pact and, in particular, toward Decision 24 which regulates the policies of all member countries with respect to foreign investment...
...While its acronym remained the same, CEDOC's initials now stood for the Ecuadorean Confederation of Working Class Organizations...
...see Table 2...
...The President's response to these pressures, in a speech given in July 1974, was emphatic: "The time of Republican misrepresentation will not return...
...As will be seen in the following articles, Ecuador's political and economic crisis had gone far deeper than questions of economic boom or bust...
...The current drive toward industrialization, the role of the military, and rising nationalism are all important aspects of a more general process which can be studied succinctly in the Ecuadorean example...
...In 1921, a deputy in the Ecuadorean parliament exposed Leonard as none other than Standard Oil of New Jersey...
...The banana boom, In turn, was dependent on United Fruit's continued interest in the region...
...The never implemented plans for Industrialization were filed away to await Ecuador's next export boom...
...As Marz wrote in 1867, "A new international division of labor, a division suited to the requirements of the chief centers of industry springs up, and converts one part of the globe into a chiefly agricultural field of production for supplying the other part which remains a chiefly industrial field...
...North American newspapers inevitably described the country as just another "banana republic," suffering the pangs of political immaturity and rebellious nationalism...
...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...
...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...
...1965 acq...
...Copyrght 0 ISh by the North American Congress on Latin America, Inc...
...na 1975 est...
...Plaza is seen as a candidate of "national unity...
...Two major themes are prominent throughout Ecuador's history...
...The government has created the Escuadr6n Volante (Flying Squadron-better known as the "Death Squadron" to the coastal peasantry-to carry out official persecution...
...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...
...The major architect of Ecuador's oil policies was Navy Captain Gustavo Jarrin Ampudia, Ecuador's Minister of Natural Resources from 1972 to 1974...
...OPEC immediately called a meeting of its own and announced a 70 percent increase in prices, from $3.01 per barrel to $5.12...
...In 1972, Ecuadorean agriculture still had the lowest level of mechanization of all the Andean countries...
...4 Lulis Alberto Carbo, Historia Monetaria y Cambierla del Ecieder (Quito: Im prenta del Banco Central, 1958), 447...
...On November 15, 1922, two thousand workers were killed in the streets of Guayaquil by the army and police...
...The government's desperate need for foreign credits added but another weapon to the U.S...
...While non-Arab members of OPEC did not enter the total embargo that was later declared, they did refuse to undercut its effects by raising production...
...The so-called energy crisis of 1973 was a major test of OPEC unity and, in particular, of Ecuador's adherence to its policies...
...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 official rhetoric remains strong-citing the need to promote national industry, to foster the development of national entrepreneurs, and to satisfy the needs of a national economy in an era of accelerated growth...
...And a cheap and abundant labor force, shadowed by the existence of a vast reserve army of labor, was well suited to the needs of capital investment in low-skill industries...
...AGRICULTURE: A TURNING POINT I. La Tierra (Quito), February, 1975...
...6 Moreano, "Capitallsmo y Lucha," 140 141...
...The alternatives were seen as a choice between the pro-imperialist, repressive model of the Brazilian "miracle" or the reformist-nationalist path traced by its Peruvian neighbors to the South...
...12 Texaco-Gulfs 5-year exploration period expired in 1969, leading to a series of new contract negotiations with the fifth Velasco government...
...At the same time, the development policies of the government toward so-called national industry provided for partial or total exemption of these goods from import duties...
...Their methods became ever more vicious as the struggle intensified...
...3) The Ministry of Industry, Trade and Integration has announced its intention to revise earlier decrees prohibiting new foreign investment in construction companies and in entities engaged in foreign or internal trade...
...Having invested large sums of capital in the Ecuadorean jungles, they were taking an active interest in political developments in Quito...
...The hybrid nature of this group, landowners-industrialists, made them inalterably opposed to any attempts at providing the essential conditions for industrial growth: the expansion of the internal market and increased productivity in agriculture through agrarian reform...
...Here, we highlight the two most prominent examples of wheelings and dealings in the oil sector, which helped to create the conditions for nationalism in the 1970's...
...Only two provisions allowed for expropriation on grounds other than inefficienty: demographic pressures on the land and monopolization of land ownership through family ties...
...Between August 1972 and December 1973, tax reference prices rose from $2.50 per barrel to $10.00, and further increases were still in sight...
...Ltd.-a fictitious company which veiled the entry of the British Dinosaur, Royal Dutch Shell.3 The concession covered 10 million hectares-four times the size of Standard's previous concession and comprising nearly one-half of the entire Oriente at the time...
...1. Minas y Petr6leos: The problem of distinguishing between frontmen, speculators and Dinosaurs in the 1960's began with the fourth administration of Velasco lbarra...
...22 Galo Plaza, Problems tof Democracy In Latin America, (Chapet HIII: University of North Carolina Press...
...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...
...The balance would then be returned to the foreign companies...
...Conclusion The distributive side of agrarian reform in Ecuador has been decidedly abandoned, displaced by a strategy of cooperation between the government and landowners to raise production and revenues...
...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...
...It spoke of social justice and an end to the monopoly of wealth by a privileged few...
...Of this figure, fully half belong to independent (non-affiliated) unions, while the other half is split among three national labor federations...
...Instead, both were forced into an uneasy alliance behind the "lesser evil" of Velasco Ibarra...
...Four months later, LAzaro Condo was killed when rural police invaded the community of Toctezinin (Chimborazo Province...
...concertqje was a system of debtors' prisons...
...In 1937, the dictatorship of Federico PKez, with close ties to British oil interests, cancelled the concession granted to Leonard Exploration Co., (Standard...
...The two outstanding features of the oil monopolies are: (1) their collective control over the world's low-cost crude oil reserves...
...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...
...Foreign investment in industry did not begin all at one blow, but came in spurts like the oil from the Oriente...
...Through control of the State, the coastal bourgeoisie established a legal framework to undercut the landowners' previously unchallenged system of domination...
...The struggle for political hegemony, for the power to decide these vital issues, intensified...
...Even Ancom's controversial Decision 24, which sets certain limits on the entry of foreign capital into key sectors of the economy, did not disappoint potential investors...
...Bucaram's style was as erratic as that of Velasco lbarra...
...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...
...16 per year for non-profit institutions ($30 for two years...
...The crisis of the early twenties was only a rehearsal for the deeper crisis to come: the Great Depression of the 1930's...
...Ecuador was no exception to penetration by foreign capital, but to a much lesser degree than in most Latin American countries...
...2) Lack of stablefinancing...
...For Ecuador, the 1960's added a new chapter to the history of sordid dealings between governments and foreign capital...
...3) The absence of an industrial bourgeoisie...
...Antagonizing both U.S...
...The oil-producing countries were beginning to consume their own petroleum wealth...
...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...
...or else...
...8 The third Ecuadorean labor federation, CEOSL, is the stepchild of U.S...
...the 503 kilometers of pipeline were completed and by late August the first tanker left port...
...3) the politics of oil...
...Thus, by the early 19 7 0's, a new "petroleum war" was raging, with a different scenario than the one that had been played out for over five decades...
...Simultaneously, the Peruvian Navy easily laid seige to Guayaquil.* During the initial phase of the war, the U.S...
...both U.S...
...The new technocratic term used to describe the Junta's growth strategy was "associated development," i.e...
...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...
...Minas y Petrdleos also refused to pay the retroactive surface rents, and their concession was cancelled for "non-fulfillment of contract...
...The new Minister of Finance in Ecuador, Jaime Morillo, is also the general manager of LIFE Laboratories (controlled by Dow Chemical) and Director of the Chamber of Industries in Quito...
...The road to economic stabilization was mined with the factional interests of the bourgeoisie and those of U.S...
...By 1974...
...7 Carbo, op...
...Moreover, landowners have implemented the systematic and brutal persecution of "troublemakers" on their haciendas...
...AIFLD could proceed to train leaders, recruit agents and penetrate unions with relative impunity throughout the 1960's...
...738 imposed 60 per cent duties on items for "minority consumption" (list II1) and 5-25 per cent duties on imports for industry and mass consumption (List I...
...Meanwhile, the government granted a new concession in April 1975 to the Northwest Pipeline Corporations, in conjunction with CEPE...
...Ecuador produced 238,000 bpd in 1973, as compared to the next smalled producer in OPEC-Nigeria with 2.238 million bpd...
...The military government could hardly afford a further drop in production and still expect to maintain a precarious level of social stability...
...Agrarian reform was still on the agenda and Arosemena refused to take strong repressive action against the Left...
...10 (June, 1974), 20...
...The contradictions inherent in the course of capitalist development were making themselves felt more sharply than ever...
...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...
...Naval Attache at the time...
...The first beneficiaries of the liberal terms of the law were, appropriately enough, the British...
...1969 acq...
...AIFLD was aware that internal trouble was brewing and forcefully opposed ChAvez in internal union disputes...
...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...
...In addition to the repeal of Decree No...
...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...
...The new Ecuadorean border ran exactly along the boundaries of the concession granted to Royal Dutch Shell in 1937...
...Government declarations made it clear that "adjustments" may have to be implemented to take account of "special factors" affecting the country...
...In 1929, for example, three thousand peasants were massacred on the haciendas at Columbe and Colta.12 Thus confronted by its first major crisis since the beginning of capitalist development in Ecuador, the same bourgeoisie that spoke of "liberating" the highlands peasantry in 1895, had revealed in full force the new conditions that the proletariat would face under capitalism...
...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...
...Ecuador was "oil country," the paradise of foreign industrialists, bankers, exporters and Texas oilmen...
...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...
...Fiscal crisis was the opportunity they had been waiting for to rid themselves of a troublesome and, at times, even antagonistic regime...
...The Ecuadorean countryside is riddled with monuments to Valesco Ibarra: bridges, roads and schools constructed in the most unexpected places and bearing his name...
...By 1925, economic crisis had called into question the political hegemony of the agro-export bourgeoisie and an intense power struggle ensued among the dominant classes...
...oil corporations, was obviously concerned...
...Almost every journalistic account of the "Battle of Quito" cites the glaring absence of any popular support for either side...
...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...
...1944, a popular insurrection took place throughout the country and was brutally crushed...
...The Anglo consortium returned over 2.39 million hectares to the government, citing the surface tax obligations of Decree No...
...State ownership over the nation's oil resources had made the government apparatus the key negotiator of Ecuador's new terms of dependency...
...On May 28...
...Now geared toward capitalist production, the Ecuadorean economy is fueled primarily by oil revenues and foreign investment...
...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...
...A special National Development Fund was created in December 1973 to channel these unforeseen revenues into specific development projects...
...arsenal...
...The coup attempt had failed, some say because of bad planning or last-minute hesitations by key military figures...
...Conjecture focused on the two most prominent (and contrasting) examples of military dictatorship in the Americas...
...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...
...Each time the national economy approaches collapse, another booming export item comes to its rescue...
...e11ea Latin America, April 24...
...that is, continued respect for private property and allegiance to the capitalist system of production...
...government, and the traditional resistance to reform on the part of the Ecuadorean dominant classes...
...A deficit equivalent to 25 per cent of the national budget was projected for 1975...
...stipulation...
...While Decision 24 supposedly prohibited new direct foreign...
...Ecuador's history is an eloquent example of imperialist domination and dependency, under a variety of forms...
...From then on, multinational corporations and governments of consuming nations fix the real market price of oil, elevating it considerably to increase their profits...
...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...
...And despite the oil, Ecuador's trade balance was showing a growing deficit, foreign reserves were dangerously low and the government was faced, once again, with the plague of fiscal crisis...
...Ecuador was about to abandon its stereotypic role as a "banana republic" and enter the ranks of the oil producers at a particularly favorable world conjuncture...
...Velasco's successors employed somewhat different tactics but were equally unsuccessful in their tasks of stabilization and economic development...
...Peasant cooperatives are being formed throughout the country to demand the division of the large haciendas...
...III, No...
...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...
...Unemployment is still a critical problem and will continue to be so in light of the capital-intensive nature of most new industries...
...Even the minimal land area chat has been distributed since 1973 corresponds in large part to a strategy of colonization...
...Recent developments, however, reflect a move in the opposite direction, toward major concessions to the dominant classes and foreign capital...
...In the 1960's, however, with the knowledge that oil would soon play a major role in Ecuador's economy, U.S...
...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...
...Despite the glaring visibility of luxury consumption in Ecuador, a far greater strain on the balance of trade came from the industrial sector...
...In the 1920's, interest in Ecuador's oil potential was divided between two geographic regions: the Santa Elena Peninsula, on the Pacific Coast near Guayaquil, and the Amazon Basin area east of the Andes...
...Production in the Santa Elena Peninsula has declined over the years, with average production at a low 2.6 million barrels per year...
...A Military Solution to Development The military overthrow of Arosemena's government was not a run-of-the-mill coup d'etat...
...11.0), Phillips Petroleum Co...
...Urban strikes and peasant revolts persisted, leading to the founding of the Ecuadorean Workers Federation (CTE) and the Ecuadorean Indian Federation (FEI) in 1944...
...In the cities and countryside, mass mobilizations were organized by peasants and workers to demand rapid and effective measures against the subversion of agrarian reform by the landowning class...
...The U.S...
...Between 1961 and 1968, the level of direct foreign investment rose from $29.7 million to $8.9 million (based, in large part, on new investments in the oil sector...
...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...
...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...
...In the 1960's, it came under the influence of the international Christian Democratic movement and was affiliated with the Latin American Confederation of Christian Trade Unions (CLASC...
...demogogues will not reign by virtue of their privileges, nor will the permanently privileged regain their economic domination...
...738, but the time to come up with another solution was rapidly running out...
...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...
...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...
...THE NEW In the early history of oil in Ecuador, two of the Seven Dinosaurs were particularly active in devouring the available land area for oil exploration: Standard Oil of New Jersey (owned by Rockefeller interests) and Royal Dutch Shell (owned by British and Dutch capital...
...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...
...Through its Peruvian subsidiary, the International Petroleum Company (IPC), Standard already controlled the oil reserves on the Peruvian coast and had extended its domain to the Amazon region in Peru...
...6 Months passed, however, before any decision was forthcoming...
...The Junta's last act in office was an attempt to remedy an increasingly negative balance-of-trade by restricting credits and imports...
...Initially, the Junta had the support of all sectors of the bourgeoisie and U.S...
...Future plans call for an ammonia and urea plant and a natural gas plant in the Oriente...
...Importers and industrialists, closely tied to foreign capital, were particularly vulnerable to any attempt at curbing imports...
...When Peruvian troops invaded Ecuadorean territory, the government was faced with a dangerous dilemma: "Arm the masses to defend the national frontiers, but with the grave risk to the bourgeoisie that those arms will also unleash an internal insurrection...
...Nearly 36 per cent of total national income was derived from agriculture, while bananas, coffee, cacao and sugar accounted for over 90 per cent of all exports in 1966.26 The industrialization process begun in the 1940's had stagnated and industrial production contributed to only 15 per cent of the national product in 1960-75per cent of which corresponded to the handicrafts sector...
...He had most recently incurred the wrath of the foreign monopolies by demanding that CEPE's share in the subsidiary stock of Texaco-Gulf be increased from 25 percent to 51 percent...
...City streets were crowded with the latest model by MercedesBenz...
...The paradoxical nature of dependent industrialization was painfully clear by the 1970's...
...Any attempt at reform, however minimal, which affected any sector of the dominant classes was impossible to put into practice...
...reinitiated the campaign they had waged during the contract negotiations of 1972-73 to weaken the nationalist tendencies of the military regime...
...The Battle of Quito At midnight, tanks began moving on the Presidential Palace in the heart of Quito...
...acceptable to virtually all sectors of the bourgeoisie and eminently acceptable to foreign capital...
...cit., 29...
...6. Walter Spurrier, Wekly Analysis, Vol...
...2, Labor), massive foreign investment and loans were one side of the U.S...
...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...
...It seeks to replace class struggle with class conciliation and promotes a harmonious "partnership" between labor and management that can only mean the perpetuation of capitalist exploitation...
...The dependent character of industrialization implied a heavy quota of foreign imports-raw materials, intermediate and capital goods...
...It is only one representative of the socalled free trade unionism prosyletized by the United States throughout Latin America and other parts of the world...
...They Included a Guayaqull shopkeeper, a chauffeur, a housewife, a soldier and, it was later discovered, two persons with fake identities...
...Vol IX, No...
...In addition, the growth of a wageearning labor-force on the Coast and the migrant population in the cities produced a significant rise in demand for food products grown on the Andean haciendas...
...The oil *What is referred to in Ecuador as the Seven Dinosaurs is less graphically known elsewhere as the Seven Sisters...
...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...
...The oil companies were also obliged to hand over all geological materials gathered during the exploration period...
...But Ecuador was only a marginal supplier to the world market until the large plantations in Central America, owned by United Fruit, were ravaged by sigatoka and Panama disease in the late forties...
...The problem, however, was not in selling the crude...
...imperialism to the need for a radically different policy toward the hemisphere...
...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...
...While the government was beset by serious internal divisions from the very outset, the major point of agreement among its divergent tendencies was the need to change Ecuador's traditional relationships with the oil companies...
...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...
...1967 est...
...They are no longer waiting for the government to come through on its promises...
...In April 1975, Texaco-Gulf, still maintaining its boycott on exports...
...Colonization has, in fact, become the escape valve for the government's promises of land for the peasantry...
...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...
...7. "Solo e 22 porcsento Representativided SIndical," Nerva, No...
...The infamous Decree No...
...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...
...From the 1930's on, the restless presence of the urban masses and a strengthening of Leftist forces began to turn this political stalemate into political crisis...
...The reaction was an immediate and unanimous condemnation...
...Strikes have swept the country in recent months, particularly in the important textile sector.24 On December 19, 1974, the workers at Lanafit, a textile factory owned by one of Ecuador's major industrial families, went out on strike and took over the factory...
...CEOSL could not get its hands on the oil workers until 1971, however, and that also took a great deal of planning...
...2._Texaco-Guif- The second and third largest U.S...
...The 1960's tested both the resistance of the oil companies and the political unity of the OPEC members...
...Some degree of reform was clearly an imperative for Latin America, as both a deterrent to revolution and a requirement for accelerated capitalist development...
...imperialism in Ecuador...
...Ecoaomale (Central University...
...Gelo Pflaz Prwidcwt from 1948 to 195212 Latin America, the omnipresent role of the U.S...
...Velasco had failed in the tasks of mediation and cooptation and was ousted in 1947...
...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...
...In the same period, luxury articles, immediate consumption goods (liquor, cigarettes) and durable goods (cars, electrical appliances)-List II imports-accounted for only 11 per cent...
...In fact, the bourgeoisie already seems to have chosen their candidate, either for an interim presidency or national elections...
...Land seizures and violent conflicts were proliferating in the countryside...
...Economic conditions were so bad, particularly inflation, that weekly publication of the Central Bank's statistical bulletin was stopped...
...The Military Junta of 1963 was the embodiment of the Alliance ideology in all its many facets: hard-line on repression, incentives to industry and foreign investment and reforms in the administrative, tax and agrarian structures of the country...
...A British company, Anglo-Ecuadorian Oilfields, Ltd., had been pumping oil from the coastal region since 1917, in small but consistent quantities.* Exploration in the Amazon Basin was initiated in 1920 by a Delaware-based corporation calling itself the Leonard Exploration Company...
...INVESTMENT IN CUIADORERN INDUSTRY (Excluding Petroleu Exploration and Drilling) Date Entered Amont Invested Percentage - - L 1 I4 -I 14- 2 1 Abbott Laboratories: pharmaceuticals American Bospital Supplyt hospital supplies City Investing Co...
...and (2) the determination of the dominant classes in Ecuador to obscure the nature of the crisis and to block all attempts at structural reform...
...The new border between the two countries** was drawn in a very particular fashion...
...They cited the impossibility of selling Ecuadorean crude on the world market, due to "unrealistically" high prices...
...2) The Ministry of Agriculture allotted $12.5 million in its 1975 budget to mechanization in agriculture...
...According to company sources, the consortium had invested $180 million in bringing their fields into production and another $120 million in the pipeline...
...that is, 211,730 craftsmen and barely 23,000 industrial workers...
...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...
...and (3) modernIzation of food production for the Internal market, through the Introduction of new technology for agriculture and cattle-raising In the highlands...
...While the February coup had been expected for months, the ideological and political direction that would characterize the new regime was the subject of broad speculation and political maneuvering...
...They had consolidated themselves as the dominant economic force and their political representatives, the Liberal Party, assumed control of the state apparatus for the next thirty years...
...The following section briefly describes the events of the 1960's, with particular attention to the role of U.S...
...The government opted for the latter and "not even the best divisions of the army were sent to contain the invasion...
...Thus, in October 1974, while Jarrin was still serving his term as president of OPEC...
...The policies of a modernizing military regime will be examined in terms of their effects on the internal social structure and Ecuador's ties of dependency to the imperialist centers...
...Economically, the situation continued to deteriorate, especially when Taiwan initiated banana production and captured the Japanese market, formerly receptive to Ecuadorean exports...
...Once the Reform Law was passed, and despite its timidity, the landowning class persisted in its active opposition for a number of reasons...
...government, U.S...
...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...
...Furthermore, the Ecuadorean government granted a concession of 520,000 hectares to Standard Oil (via IPC) in the coastal provinces of *It is interesting to note that the Pernian fleet was under the command of the U.S...
...The accelerated proletarianization of the peasantry, the implantation of capitalist methods and productive relations implies a new form of exploitation in the countryside and the urgent need for new forms of struggle...
...In 1970, Velasco lbarra had assumed dictatorial powers and, at the same time, announced a fixed date for the return to "normalcy...
...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...
...Eleven months after his election, Velasco was overthrown by the Armed Forces...
...The new military regime, pressured by the publicity around Galarza's revelations, revoked the ADA concession In November, without Indemnification...
...The factory has operated since 1840, but not until 1973 did the workers ever win the right to bargain collectively...
...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...
...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...
...The Ecuadorean bourgeoisie, particularly the import and industrial sectors tied to foreign capital, did not agree...
...Finally, he openly pacts with the Con*Ln 1952, 1960 and 1968, Velasco won the presidential elections with an overwhelming majority of votes...
...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...
...Most important among these was the fact that banana production, like cacao, remained primarily in the hands of Ecuadoreans...
...Church, Property and the CIA From the onset of Velasco's fourth administration to the end of the sixties, the spectre of communism was used in Ecuador to camouflage the objectives of two primary forces: (1) the efforts of U.S...
...The stage was seemingly set for one of the most lucrative operations In Ecuador's long history of foreign plunder...
...The headquarters of this vast operation are in Washington...
...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...
...1965 est...
...More recent characterizations combine these cliches...
...In this way Standard Oil of New Jersey had won the battle for control over the Ecuadorean Oriente by literally lifting half of it over to Peru where IPC had already established its control over the Amazon Region...
...The shortage of food for domestic consumption became increasingly critical...
...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...
...Land tenure in the highlands remained intact, as the Andean peasantry continued its exodus to the coastal lowlands and cities...
...But workers have not given in to these threats, nor to the tirades of misplaced blame leveled by the mass media...
...This situation is further exacerbated by internal divisions in the labor movement...
...Once again, the cycle of reform and reaction began...
...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...
...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...
...The fantastically liberal terms included: a five-year exploration period (with a threeyear optional extension...
...36 (September 12, 19751), 284...
...The oil wealth was interpreted by many as an end to the chronic problems of trade deficits, budget-balancing and even class struggle...
...Among them are "Argentina: AIFLD Losing Its Grip," Argnweia in tim Hoe of thme Furnaces (New York: NACLA, 1975...
...imperialism, largely in gratitude for its harsh persecution of the Left...
...Moreover, the country had now made an international commitment to the cause of "economic decolonization," as Jarrin called it...
...These two features have enabled the oil companies to adjust the output of petroleum to the requirements of the world market...
...On the world market, the demand for tropical products was very low until the close of the nineteenth century...
...government added its weight to the already tipped scales...
...Here we can only attempt a brief characterization of this complex phenomenon...
...and the defense of oil prices...
...In May, 1961, the Cuban Ambassador to Ecuador was expelled as a concession to right-wing pressure, but the government stopped short of breaking diplomatic relations...
...The measures taken since 1972, have gone a long way toward doing just that...
...na na est...
...Ecuador's entry into OPEC greatly strengthened its bargaining position vis-a-vis Texaco-Gulf...
...THE 1960'1: REFORM AND REACrION The 1950's, the period of the banana boom, was the first decade in Ecuadorean history unpunctuated by dictatorship or coup d'etat...
...oil companies went to war over the Amazon Basin separating Ecuador and Peru (see below...
...Expropriation" became a lucrative business for the "expropriated," through large indemnifications from the government...
...By February of 1961, seven countries in Latin America had already broken relations with Cuba, and Ecuador was under strong pressure to be the next...
...12, 37...
...As described in section I, the cacao boom of the 1920's did little to change the economic conditions of the popular masses...
...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...
...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...
...But the nature of this process has not signified an improvement in social conditions, and least of all a decline in dependency...
...4. "Foreign Control of Ecuadoreen Companies," Latin American Economic Report, March 15...
...Standard was determined to shift the border to its advantage...
...Local industrialists complained of "lenient" policies toward labor and an insecure climate for foreign investment...
...The perpetuation of a weak and decentralized State under their control, their "holy" alliance with the Church and strong ideological control over the peasantry were no longer consistent with the needs of a society increasingly dominated by the capitalist mode of production...
...The daily average jumped from 141.984 barrels in July...
...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...
...Even within the realm of coastal agriculture, little diver- sification of crops took place...
...In Ecuador this process clearly did not occur...
...The government's Development Plan includes a detailed blueprint for industrialization and for channelling the oil revenues into productive investments...
...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...
...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...
...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...
...On May Day, 1975, massive demonstrations by peasants, workers and students included in their Platform of Struggle the demand for an authentic and immediate agrarian reform: THE LAND TO THOSE WHO WORK IT...
...In Brazil, under Vargas, and in Per6n's Argentina, for example, an industrialization process based on import substitution was under way by the 1930's and the development of both an industrial proletariat and an industrial bourgeoisie was far more advanced...
...ibid...
...Ecuador had become the second largest oil producer in Latin America...
...Despite these complaints, the production of traditional exports-bananas, cacao and coffee-remains a major source of revenue...
...The alliance of forces between U.S...
...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...
...The reaction of the bourgeoisie was violent...
...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...
...The official declaration by the Rodriguez Lara government stated: "The attitude of Dr...
...By mid-1961, the anti-communist campaign and fiscal crisis were taking their toll on Velasco's stability in office...
...The pro-U.S...
...It is not surprising that the story originates with Otto Arosemena,* the millionaire banker-President...
...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...
...Who or what the ADA consortium represents is not entirely clear...
...The Liberal government sought to accomplish the first by centralizing the state appartus and developing a national infrastructure in the highlands...
...in an effort to appease the foreign companies and stimulate a rise in exports...
...Available funds were systematically channelled into commercial activities and the expansion of luxury imports...
...12 Ibid., 113 13 For further study of Velasquismo, mthe following sources are available in Spanish: Cueva...
...cit., 22...
...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...
...El Coamercie (Quito), October 2, 1975...
...However, the political situation in Ecuador changed considerably by the 1970's, precisely when the oil companies were ready to initiate exports...
...Otto Arosemena (1966-68) is not to be confused with his cousin, Carlos Julio Arosemena...
...Thus, while other Latin American economies were suffering severe setbacks, Ecuador was zooming ahead on all fronts...
...4) Agricultural machinery, tertilizers, tools, insecticides, etc...
...Mixed enterprises were formed between the government and foreign firms to invest in a series of industrial projects...
...imperialism...
...In the sharpest turn-about in government oil policy since 1972, he announced a 43-cent reduction in prices...
...imperialism...
...to 211.300 in September...
...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...
...The conclusions were not seen in full force until the 1970's...
...1961 est...
...Food and Agriculture Organization (FAO), the fertile area of the Guayas River Basin alone is capable of providing enough food for 20 million people...
...Defending his measures, Finance Minister Jaime Moncayo stated that the "productive sectors" would not be affected...
...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...
...According to the terms of the treaty, 200,000 square kilometers of Ecuadorean territory were annexed by Peru...
...Thess, Department of Economics, Catholic University of Quito, 1972, 118...
...Ecuador not only raised its oil prices in accordance with OPEC's decision, but staunchly defended these measures against imperialist attack...
...na 1975 est...
...And when worker and peasant revolts persisted, Velasco resorted to repression and alienated the more radical elements within his own movement...
...Traditional social science might reach a very simple conclusion from these figures: that the Ecuadorean population, especially the poor sectors, is growing too fast for its own good-that food shortages are the clear-cut result of over-population...
...Throughout the first half of the twentieth century, the imperialist centers perpetuated the division of the world into predominantly industrial and agricultural regions...
...This meant that companies owed relatively large sums of money to the government for land they had previously controlled for nominal fees...
...6 (October, 1971...
...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...
...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...
...In the first half of 1975, total exports declined by more than 40 per cent with respect to the same period in 1974...
...4 -In 1974, inflation surpassed 30 percent, while wages edged up by only 8 percent...
...Their earlier deal with Texaco-Gulf had been severely undercut...
...Printed in Unided Ilnadical (Quito), August, 1975...
...The characteristics and consequences of dependent development in Ecuador can only be treated here schematically in a general overview of Ecuadorean history...
...The expensive history of their activities in the Oriente, their vicious competition for influence and control, made these sudden declarations highly implausible...
...1974, 407...
...government officially assumed a disinterested posture, characterizing the conflict to the south as a simple border dispute...
...The entire country exploded into violent conflict in the Revolution of 1895...
...Landowners were still bitter over the struggle against agrarian reform...
...The most blatant forms of coercion, such as the Indian head-tax and concertqje* were eliminated, while Church influence was eroded by the establishment of secular education and the expropriation of Church properties...
...Pressures from the base have provoked internal leadership struggles and, most recently, an open split in the organization...
...In 1970, the consortium struck oil in the Oriente...
...Since the new military regime came to power, coastal interests have continuously accused the government of discriminating against Guayaquil, of using the oil money to enrich the members of a powerful state bureaucracy and of favoring the highlands in terms of investment and credits...
...2. Luls Carrera, "Velasco Ibarra: A Hesitant Pace for a Historic Moment," Prena Latina Features ES 635, 70, 6 3. Nueva (Qulto), No...
...And the coastal lowlands had to be opened up to the penetration of foreign capital-and in particular, to Plaza's close associates at United Fruit...
...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...
...1973), 29...
...There was, however, an important difference between the nature of foreign penetration in Ecuador and that which occurred in other parts of Latin America...
...By November, 1922 the situation of the masses was untenable and the call went out for a general strike...
...Only then did industrial growth in the metropoles generate a sufficient rise in per capita income to support non-essential consumption (chocolate, coffee, etc...
...In terms of the national economy as a whole, however, the unsophisticated character of cacao production provided little stimulus to other sectors and export agriculture basically remained an isolated pocket of dynamic growth...
...or what amounts to $18.8 million in one year.38 oust the regime, did produce further concessions to foreign capital...
...The fallaciousness of these arguments will be examined in the article to follow...
...6 Reform and Reaction The military government that took power in 1972 recognized the concentrated pattern of land ownership as the source of stagnation and social conflict in the highlands...
...20 Industrial growth has been particularly dynamic in plastics, electrical goods, metal-working, textiles, light engineering, pharmaceuticals, timber and paper...
...8 In the 1920's...
...Under the aegis of the oil boom, a modernizing government was investing large sums of capital in infrastructure-roads, hydro-electric dams, electrification--precisely what foreign capital needs to make its stay easier and profits greater...
...The National Federation of Petroleum Workers (FNTP) was founded in 1936 and became affiliated with the CTE in 1944...
...and restricted the workers' right to job security and freedom from political persecution...
...In the early 1900's, the gradual transition to monopoly capitalism, or imperialism signified a shift from the simple export of commodities to the export of capital to non-industrialized regions...
...It declared that the old law be applied retroactively which sent tremors through the oil industry...
...He wrote: ". . AIFLD/Ecuador considers FETRALPI President, Jos6 ChAvez, to be a leftistsympathizer and also an opportunist attempting to earn a high position in the next CEOSL Congress...
...capitalism did not fall from the sky above his highlands ranch...
...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...
...By dawn, the presidential palace was surrounded by tanks...
...In his capacity as politician and aristocratic entrepreneur, he became not only United Fruit's man In Ecuador but also a close friend and business associate of Nelson Rockefeller...
...Dhe revenues from oil could finance a variety of social programschools, hospitals, roads, etc.-to cool the smolderings of social unrest...
...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...
...Close to four years of military rule in Ecuador have produced a zig-zag image of political wavering, intramilitary struggle and waning support among popular sectors and the bourgeoisie as well...
...More importantly, industrialization has done little to alleviate the social and economic ills that plagued the Ecuadorean people during the agroextractive phase...
...Velascp, DOepemdencia, 132...
...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...
...Yet current developments indicate that a turning point is in sight for highlands agriculture...
...On this occasion, however, Velasco was forced into an even more precarious juggling act than before...
...While many sectors of the labor movement gave critical support to the new regime when it first came to power, they have since drawn a strong line of demarcation between official rhetoric and government practice...
...In the 1970's, however, foreign capital found a more fertile field in industry...
...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...
...The Peruvian invasion of 1941 was essentially a military maneuver by Standard Oil to re-establish its foothold in the Amazon Basin...
...The changing forms of dependency can be clearly seen in the Ecuadorean case...
...In exchange for ceding these lands to Texaco-Gulf, Norsul-Phoenix got a 2 per cent over-ride on production from the Coca Consession...
...In fact, while the companies maintained that they could not place their oil on the world market at the government's fixed price of $11.00 per barrel, CEPE was selling it at $11.58 and higher to Peru...
...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...
...policy toward Latin America for the past few decades...
...2 Gonzalo Abad, El Proceso de Luca per @4 PFder on e4 Ecuedor, unpublished MA Thesis in International Relations, Coegio de Mexico, 1970,19...
...5. 10...
...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...
...The Catholic Church in Ecuador was a major ally, using religious fanaticism to mobilize violent street demonstrations demanding a break with Cuba...
...Between 1925 and 1947, a total of 23 governments sought a solution to economic crisis and stagnation within the framework of export-oriented growth...
...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...
...Furthermore, the oil money was to be spent on a rational and well-planned development program, with heavy emphasis on industrialization and modernization of agriculture...
...Rather, the attitude of the masses was one of apathy or simple curiosity...
...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...
...In return, the Ecuadorean government was to receive a meager 6 percent in royalties...
...The opening of the Panama Canal in 1914 made Ecuadorean products more attractive on the world market by lowering transportation costs...
...The "nationalist and revolutionary" regime in Ecuador has declared 1975 the Year of Production...
...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...
...signed its first contract with the government in 1931, and obtained a *Ang -Ecuadorian Oilfields...
...Oil production was limited to the small reserves on the coast, while Ecuadorean presidents and foreign oil companies still denied the existence of larger reserves in the Oriente...
...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...
...For many years the potential wealth of the Ecuadorean jungle lay untapped...
...the virgin jungles of the Oriente had to be preserved in their present state for the future needs of the oil companies...
...worry that "we may be killing the goose that laid the golden egg," while the dominant classes openly pushed for a more conciliatory line toward foreign capital...
...Thus when Galo Plaza's benefactor, the United Fruit Company, pulled its interests out of Ecuador In the early 1960's, the whole pack of cards tumbled down...
...4. Financial Times February 28, 1975...
...Guayaquil's population was swelled by the influx of Indian migrants, no longer able to subsist on the huasipungo, and workers from the ailing cacao plantations...
...To appease the landowners, the prices of basic foods, including milk, meat, corn and rice, were allowed to rise, as scarcity suddenly began to disappear...
...Behind this so-called "political maturity" was an alliance among the various factions of the dominant classes, under the hegemony of the agro-export bourgeoisie...
...Galo Plaza obediently echoed the companies' claims: "El Oriente es un mito"-The Oriente is a myth...
...In other words, although the present govern- meant rejects certain traditional forms of imperialist domination, it accepts other more modernizing or developmentalist forms of the same domination.1 Same Bandit, New Mask The substitution of one form of dependency for another is not the result of conscious decision-making in Quito...
...Jaime Galarza maintains that the whole operation is a front for Standard Oil of New Jersey, with Interests In the ADA Oil Company of Houston...
...The terms of the contract allowed for a 20-year study period, 6 years for exploration, 40 for exploitation and total exemption from import duties and taxes on future exports...
...Department of Commerce, Foreign Ecnomc Trems (Washington, D.C.: Government Printing Office, 1974), 10...
...As he became prominent In Ecuadorean society as mayor of Quito (1938) and Minister of Defense (1938-1940), he maintained his U.S...
...The agrarian reform became a convenient method for large landowners tc **According to the Washington Post (April, 1966), a phrase trequently used by U.S...
...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...
...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...
...1 The Times might just as well have been reporting on a foreign invasion...
...This reference to so-called "special factors" is little more than a reference to Ecuador's dependence on foreign capital...
...imperialism nor local reaction was appeased, however...
...Foremost among these is the persistence of pre-capitalist relations of production in the Andean countryside, and its consequent effect upon the social structure of the country as a whole...
...A large concession (4.35 million hectares) was granted to a company calling itself Minas y Petr6leos, previously unknown in the annals of oil history...
...rather, the reliance on primary exports was perpetuated into the 1950's and beyond...
...The economic crisis of the 1930's would soon push these urban masses to the political forefront...
...For example: (1) the Ministry has announced that the Ecuadorean position on Decision 24 of the Andean Code will be revised...
...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...
...And the lands annexed by Peru were immediately handed over to IPC-Standard's subsidiary...
...Rather, it is characteristic of fundamental changes taking place within the imperialist system of domination on a world scale...
...While it can train agents and channel CIA funding into pro-imperialist unions, AIFLD cannot openly organize these unions nor enter into internal union battles...
...Large tracts of land were left entirely uncultivated, while thousands were landless...
...Yet the size of Ecuador's industrial proletariat is expanding and the level of class struggle is escalating...
...3 0 The promised funds did nothing to improve the economic situation, however, and by July a currency devaluation had sent the import sector into open opposition to the Velasc6 regime...
...In other words, the base that was reflected in Velasco's landslide victories (80 per cent of the vote in 1933) was what is characterized by most authors as the "sub-proletarian" or "semi-proletarian" masses, divorced from the center of the productive apparatus, lacking a high degree of political consciousness and highly susceptible to manipulation from above...
...The military regime did try to reduce the inflow of foreign luxury goods, yet the situation required more drastic measures...
...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...
...Chile and the West coast of the United States...
...During this period, the CIA played a well-documented and major role, in which Ecuador tigured as part ot a much broader strategy to isolate Cuba from the hemisphere and prepare public opinion for the Bay of Pigs...
...Although an accord was reached...
...to serve as Ecuador's Naval Attache...
...Interspersed with these steps to power In Ecuador were periodic stays In Washington, as Attache (1930-1931) and as Ambassador (1938-1940...
...In one sense, they were right...
...indicate that investment was generally directed toward these branches, in addition to cement and sugar production...
...The reformist intentions of the sectors within the "nationalistic and revolutionary regime" had been overruled by political pressures and economic sabotage...
...Address all correspondence to Box 57, Cathedral Station, New York...
...England and the United States were suddenly allies, and the need for a steady supply of raw materials in war-time compelled them to put an end to the hostilies between Ecuador and Peru...
...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...
...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...
...By 1972, they reached 700 million...
...The "new military breed" so loudly praised by the United States* closed down universities and labor unions, suspended the right to strike, prohibited all political parties and imprisoned, tortured and exiled hundreds of leftists...
...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...
...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...
...For example: (1) The National Development Bank increased its loans to the agricultural sector from $32 million in 1973 to $120 million in 1974...
...Milk production, for example, rose by 10-15 per cent in a matter of weeks...
...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...
...Velesco) is pressured by all sides to define himself...
...For example, the QuitoGuayaquil railroad was built in 1897 to connect the coastal lowlands to the capital city...
...17 After 107 day on strike...
...1975 est...
...Cited in Velesco, "El Modelo Agroexportedor...
...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...
...The tension of political uncertainty and rising economic stakes had been building up for two years...
...10 Agustin Cueve, El Proceso de Dominaclon Politic on Eceuador (Quito Editorial Volunted...
...Rather, they were generally absorbed by the sprawling service sector as domestic workers, street vendors, shoe-shiners, etc...
...38 oust the regime, did produce further concessions to foreign capital...
...Fred Hirsch, An Aalsirs of Our AFL-CIO Role In Latea America: Under the Covers with he CIA (Son Joe: np...
...The next stage of the battle was the renegotiation of contracts, deadlined for June 1973...
...The Ecuadorean military definitely had a brighter vision in mind...
...1966 est...
...It was not until the late 1960's and early 1970's that the international oil companies developed an interest in actually exploiting the oil they had discovered in Ecuador decades before...
...This pattern of land ownership, however, did little to strengthen the position of Ecuadorean landholders vis-a-vis foreign capital...
...Hurricanes and plagues in Central America, for example, were largely responsible for Ecuador's sudden conversion into the largest banana producer in the world...
...430 provided for the creation of a state oil corporation, CEPE (Corporaci6n Ecuatoriana Petrolera) with far-reaching responsibilities in the areas of internal marketing, transport, refining, exploration and eventually production...
...The enigmatic figure of Velasco Ibarra and the conditions which carved out his role in Ecuadorean history clearly require much greater study and detailed consideration...
...2. Ibid...
...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 United States hurriedly organized a continental meeting of foreign ministers in Rio de Janeiro, Brazil...
...Army with considerable experience in the Ecuadorean jungles, wrote in the New York Post that Ecuador's Oriente had oil reserves comparable to those of the Middle East.6 In addition, unemployed oil workers, Ecuadorean technicians, legislators and journalists all repeatedly insisted that the companies had found large reserves of oil, and that about 100 wells had been sealed for later use...
...l 3 In mid-1975, an ITS report states: "The former federation of petroleum workers which was under communist leadership has been destroyed...
...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...
...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...
...The inflow of oil revenues had produced a greater demand for consumer goods, without a parallel rise in national output...
...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...
...Company tactics included various forms of economic blackmail and political pressures designed to deepen the already existing divisions within the military regime...
...Dependencia y Desarrollo, unpublished Ph.D...
...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...
...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...
...dispose of their least productive lands, by distributing or selling them to the ex-huasipungueros...
...The battle was not simply over oil prices or Ecuador's share in profits...
...3. 11...
...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...
...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...
...in close alliance with U.S...
...According to the U.N...
...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...
...As for Otto Arosemena, he was simply too big a fish to fry...
...That date is still commemorated by the Ecuadorean Left as a day of national degradation and surrender to the dictates of U.S...
...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...
...Domestic programs such as agrarian and tax reforms have been paralyzed by contradictions within the Armed Forces and by pressures from bourgeois sectors...
...Reading the verdict on television, the judge declared: "The existence of one constant criminal mentality In the process Is undeniable...
...For the moment, only the effects of the Texaco-Gulf boycott concern us...
...The Ecuadorean government protested vigorously, while even the docile Organization of American States denounced the measure as "discriminatory and coercive...
...Ecuador's Military Junta (1963-66) granted the Texado-Gulf consortium a concession of 1.431,450 hectares and set royalties at 6-7 per cent-eight times less than the lowest royalties being collected by the Arab oil-producing country...
...In mid-October, OPEC members opened negotiations with the oil companies for higher prices...
...It was there in 1967, that oil was "discovered" in the Oriente...
...Pressures for a return to civilian rule had been felt since 1974 with the formation of a Democratic Restoration Front including every major party from Center to Right...
...20 Ibid., 208...
...6 This and other decrees have severely threatened the concept of collective bargaining...
...26 U.S Department of Commerce, Oversees Dsinoso Reports (July, 1968), 2. 27 Eduardo Santos...
...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...
...Shortly after, the government ordered that all foreign exchange earnings from oil exports be deposited with the Central Bank...
...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...
...1 9Despite the fact that World War II produced a significant rise in the volume and prices of exports, industrial development in the 1940's continued the slow pace of the thirties...
...Sharp and Dohme, Park Davis and Bayer are among the foreign firms currently spending a total of $12 million in new production facilities and taking advantage of new government restrictions on foreign drug imports...
...in which internal contradictions were mitigated by the sheer volume of surplus to be distributed...
...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...
...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...
...Article 3 examines both the history and present status of oil politics in Ecuador, from the standpoint of imperialist penetration and Ecuadorean nationalism...
...Pearl Harbor was attacked by the Japanese and the United States found itself embroiled in a war of its own...
...Schbering Plough pharmaceuticals sterling Drug.: pharmaceuticals St...
...Throughout the next ten years, the country's economic and political situation continued to deteriorate...
...9 On its Board of Directors sit powerful representatives of the U.S...
...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...
...Equally important, Velasquismo did not reflect a bourgeois nationalist challenge to the traditional power groups...
...24 Of the five foreign companies mentioned above, only Standard and Corporacion Ecuatoriana y Europea did not own their own plantations In Ecuador...
...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...
...imperialism clearly understood that it was essential to control--or at least divide-the new industrial proletariat that would grow with the expansion of foreign investment...
...Paraguay's victory was Shell's as well, leaving Bolivia's economy virtually in ruins and 130.000 dead...
...The bases were not created for the accelerated expansion of the productive apparatus, by means of a rap id transformation of commercial capital into industrial capital...
...investors remarked: "the regime through decree 64 has shown its willingness to give more guarantees to private enterprise...
...As in other Latin Am'rican countries, this has required the combined efforts of AIFLD (in training and funding), the International Trade Secretariats (in providing the organizational context for jurisdictional battles and internal union struggles) and the CIA (in placing agents, funding and over-all coordination...
...But despite the pretense, the reality is glaring...
...Thus, for the oil companies, it was no slight cause for concern when the OPEC nations outlined a program for increased control over taxes, prices, the regulation of production, and for building mutual solidarity and support...
...The oil monopolies located the government's achilles' heel in the balance of trade and acted accordingly...
...But with every attempt to put, these policies and programs into practice, the hybrid character of the new regime became more and more evident...
...1965 acq...
...23 Moreano...
...At the same time, however, a dramatic shift occurred in the sources of raw materials used in industry...
...Galo Plaza's gratitude to United Fruit is demonstrated by the following lines from a book he coauthored In 1958: "By every economic measure that we have been able to apply, the contribution of the United Fruit Company to the economies of the six countries Is enormously advantageous when regarded from the viewpoint of their national interest...
...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...
...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...
...rather than allowing it to flow abroad...
...Thus, the area controlled by foreign companies was reduced by 4,096,000 hectares...
...The OPEC nations had voted to insist upon the installation of petrochemical plants, steel mills, aluminum plants and other high energy consumption industries currently reserved for the developed countries...
...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...
...Since colonial times, however, the textile industry had been "no more than an appendage of the latifundist sectors of the highlands...
...8 Interminable lines formed at the new state-run grocery stores (ENPROVIT-Empresa Nacional de Productos Vitales), created to dampen inflation and curb speculation...
...Velasco put forth the Alliance for Progress strategy, emphasizing the need to raise exports, promote industrial growth and carry out effective agrarian reform...
...Manufactured goods from the industrialized centers were exchanged for cheap raw materials from less developed regions...
...Six Ecuadorean citizens, representated by a North American "geologist" named Joseph Shannon Wolfe, solicited 200,000 hectares each in the offshore area...
...The bourgeoisie, strengthened by the govern- ment's own ambiguity, continued to plot a political comeback...
...Feasibility studies were carried out for a series of infrastructural and industrial projects, in accordance with an OPEC decision of June 1973...
...It mattered little which band of soldiers would triumph...
...It was clear that the military regime did not intend to cede power willingly...
...If the political representatives of the bourgeoisie could not assume power directly, a puppet military regime was the next best thing...
...1975 est...
...10 (In operating the concession, World Ventures kept the name of Minas y Petr6leus...
...The establishment of an industrial base in the less developed countries has not, however, produced a lesser degree of dependency...
...na og g ma y a n s ro uc ne o. .3 na .97 1.2 .5 2.7 7.9 na na 1.6 .25 8.0 .3 3.0 .8 1.5 1.6 na 2.0 .7 .4 .5 2.0 .2, 1.5 1.0 2.0 .67 NOES s 1. Establishment (eat...
...Furthermore, commercial banks have been directed to devote 25 per cent of their total advances to landowners...
...By 1968, those figures climbed to 206,000 and 264,000, respectively...
...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...
...Constitutional democracy was the rule of the day and the bourgeoisie under Galo Plaza joined with foreign capital to devise Ingenious methods for spending Ecuador's banana dollars to modernize the country's economy...
...Now the Ecuadorean bourgeoisie was ready to assume its historic task: that of consolidating the material base and creating the political and ideological bases for capitalist development.3 Its objectives in this initial period were twofold: (1) to integrate the national economy and thereby remove all obstacles to free trade...
...July, 1975...
...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...
...8, November 1975 Published monthly, except May-June and July-August when it Is published bi-monthly, at 160 Claremont Ave, New York, NY 10027...
...And when "green gold" from Ecuador lost its allure on the world market, the smell of oil was already in the air...
...The conditions of the world capitalist system at the time, however, allowed for no such solution...
...By the first half of 1975, the trade balance was running a deficit of $159.5 million...
...As industry's share in the GNP rose from 15.5 to 17 per cent, the proportion of factory manufacturing in the industrial sector grew from 52 to 63 per cent by 1971.3 The composition of Ecuadorean industry began to shift away from the production of traditional consumer goods and toward consumer durables, intermediary goods and capital goods (see Table 1...
...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...
...Today, its reserves are virtually exhausted.31 concession of 2.5 million hectares (25,000 square kilometers) in the Oriente...
...Whereas many types of industries were formerly the privileged preserve of the imperialist centers, foreign companies are increasingly transporting the locus of their production to less developed countries...
...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...
...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...
...The controls on oil company operations did not stop with Decree No...
...7 These incongruities reflect two historic compromises...
...By June 1972...
...1 3 The Crisis of Bourgeois Hegemony The situation of economic crisis which began in the mid1920's brought the country to a political stalemate in which no one sector of the dominant classes could impose its hegemony over the others...
...The first step in the companies' offensive was to achieve the ouster of Jarrin-instigator of Ecuador's militant nationalism...
...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...
...The agricultural sector has been officially designated a priority area for the investment of oil money, through a variety of channels...
...When it was finally over, Rodriguez Lara proudly affirmed, "Ecuador achieved in a few months what it took Venezuela decades to accomplish...
...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 Special Tribunals in Quito, set up to deal with the corruption of past regimes, were granted jurisdiction "for judging functionarles, employees, and other persons who have taken part in the procedure of concession, contracting, authorization of transfer, transfer and ratification of such concessions...
...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...
...Exports rose by 55 per cent in 1974, boosted by the sudden rise in sugar and caaco prices on the world market...
...It is not even good for agriculture...
...1975...
...1 7 Among these achievements, the President included a reduction in the duration of concessions from 40 to 20 years, income taxes on company profits, refining and industrialization rights and, most significantly, the decision that within four years, 25 per cent of Texaco-Gulfs Ecuadorean subsidiary stock would be sold to the government...
...Lautar Oleda, Mecanismos y Articuaclones del Caudlllsmo Voelsqolsta, unpublished Ph.D...
...faced with the rule of the landowners, who cynically proclaim that they are arming themselves to crush the peasant movement...
...When he spoke of agrarian reform, the political representatives of the landowning class--the Conservative Party-officially declared that the proposed agrarian reform was clear proof of communist infiltration...
...Second-class postage paid at New York...
...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...
...Finally, in September 1973, the Quito Tribunal handed down its decision on the ADA case...
...But Galarza continued to work on a second book-Pirates in the Gulf 2 -which expanded the story of the offshore concessions...
...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...
...1391 went on to state that the areas of the Gulf granted under the concession would revert to government control, and ordered a complete investigation of the case...
...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...
...5. La Tierra, January, 1975...
...Firstly, sectors of the military, the government bureaucracy and peasant and workers organizations were still intent on using the law to its maximum and on pressuring the government to strengthen its reformist stance...
...V, No...
...government saw for itself in preventing the repetition of the Cuban experience in other Latin Ameican countries...
...For many countries it provided the necessary stimulus to begin an industrialization process based on import-substitution...
...Dow Chemical, Merck...
...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...
...The harshest sentences were reserved for those who had already fled the country: Joseph Shannon Wolfe-9 years, and Galo Pico Mantilla-5 years...
...AIFLDe One Out of Evwy Ten AIFLD has many names in many different places...
...According to the new terms, the consortium was obliged to return 900,000 hectares to the State and was entitled to keep 500,000 of its own choice...
...Petroleum had a predominant role to play in the development plans of the new government...
...Trade Union Imperialism in the Dominican Repblic...
...Nationalization is strictly taboo...
...However, the government kept up its drive for greater participation and tighter controls...
...The present article will focus on two stages of the history of oil in Ecuador...
...In July 1975, President Rodriguez Lara gave in to economic blackmail...
...10 AlF LoD, Aaua Progream Report, (1962-1975...
...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...
...Organized labor is presently represented by three federations: the CTE, CEDOC and CEOSL...
...They charged that a climate of "uncertainty" had been created in the countryside, that the lack of guarantees and incentives had discouraged' further investment...
...Moreover, for the first time in a decade the political situation was relatively stable...
...In fact, by 1971, Texaco-Gulfcould report that an outstanding average of 74 out of 78 wells drilled were productive...
...64, which restricts the rights of workers while providing strong guarantees to investors...
...After 20 months of deliberation and complex political negotiations, the Agrarian Reform Law was released to the public in October, 1973...
...By April 1973, after prolonged internal discussions, the government approved a set of "model" contracts, to serve as the basis for negotiating with the oil companies...
...Internal migrations to the Coast were on the rise during this period and from 1851 to 1896, the population of Guayaquil increased by 145 per cent...
...Instead, they merely wanted to extend their exploration contracts as long as possible and, if need be, set up front companies to perpetuate their control over the Oriente...
...The country's ties to world capitalism constantly reproduce and reinforce its dependent status vis-a-vis the imperialist centers...
...In addition, Gonzalez Alvear had a personal interview with General Pinochet-Chile's right-wing dictator-as recently as August 1975...
...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...
...oil companies entered the Oriente in 1964...
...Crist6bal Pajuna, President of the Rumipata-Pacopamba Cooperative (Tungurahua Province) was assasinated in May, 1974...
...From there, it was only a short jump to the Ecuadorean side of the border and more of the oil-rich jungle...
...Business Latin America called this a "decision of momentous proportion...
...Government royalties dropped from the 6 percent figure in 1931 to 5 percent...
...In addition, petroleum could finance an industrialization process that would ease the critical problem of unemployment...
...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...
...Ecuador must concentrate on the coastal lands...
...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...
...Department of Commerce, op...
...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...
...and (2) to ensure a smooth flow of cheap labor to the coastal plantations...
...The working class was suffering the effects of steep inflation and frozen wages, and was fighting back with strikes and stoppages throughout the country...
...10(3) Large public investments have been made in irrigation systems, storage facilities and regional development schemes...
...The need to encourage foreign investment in industry has made the military regime deaf to the demands of labor...
...Even today, when the voracious greed of the oil companies threatens the duration of national oil reserves, large deposits of natural gas, uranium and other minerals have already been discovered...
...To make matters worse the list of "front" companies included a number of firms or individuals engaged in speculation, ready to sell their concessions to the highest bidder at the precise moment...
...Gato Plaza escaped unscathed from the ensuing crisis of the banana bust...
...Needless to say, the 1972 elections were never held...
...the Ecuadorean government is losing $51.600 per day...
...1 5 Other companies were anxiously awaiting the outcome of these negotiations, in order to evaluate the seriousness and stamina of the new regime...
...The incapacity of civilian governments to carry out basic structural reform and promote industrialization was to be remedied by a strong-handed military regime acting in "the national interest...
...the oil men presented their ultimatum: If their "suggestions" were not accepted, the companies would cut back their operations in Ecuador...
...Four months of intense negotiation ensued, until Texaco-Gulf finally signed in August 1973 and other companies followed soon after...
...or Acquisition (acq...
...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...
...In late 1974, the oil companies in Ecuador, primarily Texaco-Gulf...
...Seven companies have controlled the oil industry on a world-scale since the early 20th century...
...The era of "political mautrity" was over...
...Furthermore, this lack of political or economic identification with any particular sector was reflected in Velasco's lack of a clear economic policy...
...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...
...Instead of lessening the country's dependency on primary exports through importsubstitution, the bourgeoisie had committed the country to a more sophisticated level of foreign domination...
...made its demands explicitly clear to the government...
...Here, we shall attempt to recapitulate the factors contributing to this relative "backwardness" vis-a-vis the rest of Latin America, in order to proceed in the next section to analyze its consequences...
...As a socialist newspaper recently editorialized: On the one hand, (the government) carries out measures which reject the aggression of U.S...
...Unlike Per6n, his rhetoric was not that of a "modernizer" preaching structural reform...
...Moreover, the Ecuadorean governments of the late 1960's had remained clearly outside the currents of social reform and nationalism making themselves felt in many parts of Latin America...
...The military regime no longer had the political stamina to resist these economic pressures, and finally ceded to the insistent demands for a return to civilian rule...
...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...
...And Otto Arosemena was busy mobilizing his newspapers, banks and influential friends to denounce the trial's "deep and wicked political inspiration...
...The strength and violence of their struggle has come to symbolize a new militancy and unity in the labor movement...
...Many of the factories being set up in Ecuador are expressly designed to service all six of the Andean Common Market (Ancom) countries...
...Landowners on the Coast have reacted with equal vengeance to crush the seeds of unionization on the large plantations...
...Most recently the anti-communism that forms a major pillar of Christian Democracy has been eroded at the base level of the organization...
...5. El Comercle, August 28 and 29, 1975 6. Ibid., August 29, 1975...
...By the end of the fighting, the coastal bourgeoisie had emerged victorious...
...The working class, the peasantry and the urban masses grew increasingly hostile toward a regime that had promised them everything and had done very little...
...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...
...loans and technical assistance to Ecuador, for example, have been particularly "generous" in the area of population control, as the preferred solution to unemployment, hunger and social tensions...
...Pachano...
...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...
...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...
...Defending After the war of 1941, the shaded arwa came under Peruvian control and was leased to the Interuational Petokum Company (Standard Oil...
...The rural work-force in the highlands and on the Coast have not been fooled by official rhetoric...
...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...
...Then, suddenly, in 1948 the British and American giants, Shell and Standard, decided to end their rivalry and obtained a joint concession in the Oriente...
...The Left opposition makes itself felt by means of student demonstrations.and strikes...
...And in fact, industrialization in Ecuador has made great strides over the past five years...
...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...
...Foreign companies were able to impose their own conditions and capture a major portion of the surplus generated on small and medium-sized properties while throwing the burden of market fluctuations on locAl producers...
...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...
...After five days, the talks had stalled and the oil companies walked out...
...17 Moreano, "Capitalismo y Lucha," 190...
...while priests were caught in the act of setting off explosives in their own churches...
...To combat the growing unity of the oil-producing countries, the companies immediately began to diversify their sources of crude...
...6 For the bourgeoisie, the solution to Ecuador's economic problems was simple: let the foreign oil companies have their way, heighten the penetration of foreign capital in industry and above all, abandon the centrist policies that had paralyzed the government since its inception...
...1. Ibid., 190191...
...The prices of Ecuador's basic exports, cacao, coffee and rice, dropped by 51 per cent between 1927 and 1931.9 By 1932, exports which totalled $15 million only 4 years before, were down to a meager 5 million.1 0 In a pattern to be repeated many times, the agro-export bourgeoisie did not bear the major brunt of this drastic decline in exports...
...And his belief in modernization as exemplified by his experlents In new agricultural and livestock techniques made him the darting of both Ecuador's nascent Industrialists and foreign capital...
...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...
...While the country's largest plantations were owned by foreign capital, these plantations accounted for only 20 per cent of total banana exports during this period...
...1961 est...
...There was no doubt, however, that Bucaram would be the victor of any freely held elections...
...In sum, the structure of banana production in the fifties was controlled by a class of large plantation owners (both foreign and national), with their own marketing outlets abroad, in addition to an important sector of small and medium-sized producers, entirely dependent on the foreign monopolies for their life-line to the world market...
...While the government's original plans for structural reform had been progressively neutralized, the dominant classes were eager to resume direct control of the state apparatus...
...It promised a "radical change in the agrarian structure" and again aroused the hopes of the peasantry for a genuine land reform...
...Rather, the level of class struggle in the countryside is escalating, as the isolation of individual peasant producers gives way to collective struggle and new organizational forms...
...7 Information on industrial development prior to 1950 is very scarce, but comparative data on the composition of imports can provide some insights into its intensity and direction...
...In fact, Ecuador's Minister of Natural Resources, Gustavo Jarrin Ampudia, was elected president of the organization--a tribute to his hard-line policies toward oil companies, both nationally and internationally...
...25 per year for profit-making and government organizations ($48 for two years...
...The 1972 elections would be particularly important, since political power would imply a much larger booty than ever before in the nation's history...
...Not only have large amounts of revenue been channelled into industry and imports, but the axis of political power has shifted significantly to the government apparatus in Quito...
...One month before the deadline, the company was sold to a new owner...
...investment in public utilities, insurance, banking, transportation and communications, the escape clause allowed for the application of different rules, in light of "special circumstances...
...7. LatilnAmerica, Vol...
...President Rodriguez Lara is clearly on the defensive, both among his military colleagues of varying tendencies and visa-vis the dominant classes...
...With the southern part of the country under foreign military occupation, with Peruvian troops ready to proceed with their advance, and with a volatile political situation provoking internal disorders, the Ecuadorean government had little choice but to succumb to external pressure...
...These tasks are assumed by the International Trade Secretariats (ITS), AIFLD's right arm in its strategy to divide the working class.23 In a country with more university students than industrial workers, U.S...
...Furthermore, it announced that all companies would have to renegotiate their contracts with the government by June, 1973 at the latest...
...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...
...11 (march 15, 1974),84...
...1975 est...
...And borrowing to pay for this program caused a sharp rise in TABLE 1: INUSTPIAL PIRODCTIONCt 1960-1971 Branches of in- dustrial activity Total industrial production Traditional con- sumer goods Intermediary goods Durable consumer goods & capital goods 1960 1969 1970 1971 100.0 100.0 100.0 100.0 76.2 63.7 63.4 64.3 22.1 30.5 30.5 29.0 1.7 5.8 6.1 6.7 Source: National Planning Board, La decada de los sesenta, algunos aspectos d la econcmia ecuatoriana (Quito,1972) medium and long-term foreign debts during the "Decade of Development," the 1960's...
...The government had not done so sooner largely because of pressures within OPEC to maintain uniform prices...
...Among the largest is a state-cwned refinery which, when completed in 1976, will have a production capacity of 50,000 bpd...
...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...
...Three weeks after the coup attempt, at OPEC's meeting in Vienna...
...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...
...9 Summing Up Approximately 15 years of industrialization have given Ecuador an industrial base which was all but non-existent as late as 1960...
...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...
...instead, it was in the companies' refusal to export until taxes were lowered and their profit margin widened...
...7 The Law of Agrarian Reform had been on the books for only six months when Maldonado Lince was dismissed from the Ministry...
...In 1965, Norsul-Phoenix farmed out 1,650,000 hectares in the Oriente to two companies: Compaiia Petrolera Pastaza and Compafifa Petrolera Aguarico...
...While all its goals have not been accomplished, the creation of OPEC in and of itself presented a tacit ultimatum to the oil companies: grant the "host" countries a larger share in profits or face the consequences of greater nationalism and unity among the oil producers...
...Statistics from the 1962 Census, for example, confirm the still predominantly rural character of the country: 65.5 per cent of the economically active population living in rural areas and 56.5 per cent engaged in agriculture or fishing...
...Its major base of support comes from urban workers in the highlands and on the coast...
...Ibid., 9899...
...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...
...Throughout the twentieth century, the Seven Dinosaurs have followed a consistent strategy of exploiting oil deposits in some parts of the world while relegating others to a reserve status-to be exploited only when world market conditions make it profitable...
...Instead, the intervening decade has been characterized by steadily deteriorating conditions...
...9 Moreano, "Capitalismo y Lucha," 174.175...
...The effects of nearly one century of imperialist domination have produced serious impediments to rapid modernization and the creation of an industrial base...
...Dow Chemical, in particular, through its Ecuadorean subsidiary, LIFE Laboratories (Laboratorios Industriales Farmaceuticos Ecuatorianos), has very ambitious plans for the diversification and expansion of its pharmaceutical trade...
...In 1900, exports totalled $7.5 million, rose to 12 million in 1908 and to 15 million in 1916...
...9 Nueva, No...
...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...
...A gush of "black gold" initiated a new cycle of dependency and oil was proclaimed as the new economic savior...
...he was removed from his post at the Ministry and dismissed to the outer reaches of London...
...Rumors of Chilean intervention or inspiration in Ecuador's abortive coup may still be unsubstantiated, but they are by no means far-fetched...
...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...
...IX, No...
...The structural problems inherent in Ecuador's dependency on the imperialist metropoles had become so acute that even the latest export bonanza--oil--has, in fact, created more problems than it has resolved.14 SIGNAL LEFT, TURN RIGHT The Ecuadorean Armed Forces took power on February 15, 1972 in a bloodless coup d'etat that surprised virtually no one...
...Foreign investors were arriving en masse, while international agencies who hesitated or refused to loan money in the past were banging on the Finance Minister's door...
...7. Latin America, Vol...
...In 1972, a military regime calling itself "nationalist and revolutionary" took power and social reform again took its place in official rhetoric...
...36- 8 Velasco...
...In 1941 the roles of winner and loser were reversed...
...The government was equally unsuccessful in increasing exports...
...For more details ont me actIvitlesofVUnited Fruit in Latin America, see NACLA's Latin America and Empire RoeWrt, Vol...
...1965 est...
...Ranked according to s=, they Include: Standard Oil of New Jersey (Exxon) Royal Dutch Shell, Mobil Oil, Tenaco, Gulf, Standard 011 of California and British Petroleum...
...Since the events of September, it has appeared more and more that the nationalist vehicle for capitalist development is running out of gas...
...The tension mounts...
...From October 1974 to September 1975, the consortium drastically cut back on exports and eliminated them entirely during certain periods...
...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...
...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...
...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...
...In addition, by maintaining a monopoly over oil technology, refining and marketing, they have been able to inhibit any independent producers (whether private or state-owned) from entering the scene as competitors and from depressing the price of oil by increasing supply...
...The Chambers of Commerce in both Quito and Guayaquil were the first to issue major declarations in the press, denouncing the decree and demanding its immediate repeal...
...To the government's great disappointment, however, exports increased only minimally in the months that followed...
...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...
...Rather, the export bourgeoisie sought a source of cheap, abundant labor and not the redistribution of wealth to expand the internal market...
...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...
...Through the Associated Producers Program, 2 5 under which most of the banana acreage in Ecuador was developed, United Fruit Company maintained a monopoly over marketing outlets, while Yuapy is the Ecoadorean primonclation and common spelling of United Fruit...
...sale or bankruptcy...
...Galo Plaza's thousand-acre hacienda near Quito made him a member of the highland gentry...
...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...
...The major protagonists in this developmentalistt" charade were Ecuador's large landowners, exporters, importers, bankers and Industrialists united by favorable conditions behind a politician who to some degree represented all of their interests...
...Even its failure, however, has provoked significant changes in both the composition and direction of the Rodriguez Lara government...
...Concluaionz Back to the Barracks...
...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...
...The Agrarian Reform Law of 1964 barely skimmed the surface of land distribution in Ecuador...
...construction workers in Quito continue their struggle Nue).25 I. THE SEPTEMBER COUP--DID IT REALLY FAIL...
...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...
...The industrialists maintained that Decision 24 had created a bottleneck in industrial development and emphasized the need for new incentives to encourage foreign investment...
...Yet the opposition of the landowning class which had exerted itself in 1964 was felt with even greater force a decade later...
...Arosemena complied on April 2. Neither U.S...
...S Peru had advanced at a propitious moment...
...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...
...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...
...Quotas were eliminated and the burden of market fluctuations was left to fall on those who could least afford it...
...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...
...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...
...4. Eduardo Santos, Ecuador: Decade 196-1970, mimeo, 7. 5 Nueva, No...
...Yet the industrialization process, under the hegemony of foreign capital, has not meant any relaxation of the ties of dependency...
...In June 1975, more than 2,000 workers were out on strike from nine factories in the Quito area, including four textile plants...
...Ecuador: Decada 19,661879, mlmeo, 14-15...
...The process of capital accumulation in highlands and coastal agriculture has been greatly accelerated by recent government policies...
...Furthermore, many items formerly included on List I were re-classified as non-essential...
...The Velasco law was heralded as a step forward in exerting greater control over the oil sector...
...no taxes and a meager 400,000 sucres (or 40 centavos/hectare) for surface rental...
...In fact, while capital goods imports rose relative to other imports, they declined in absolute terms from 62.5 million sucres in 1928-29 to 21.7 million in 1943.20 In general, then, the so-called favorable conjuncture for import-substitution was only partially present in the Ecuadorean case...
...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...
...August 30, 1975 14...
...In 1972, out of an economically active population of approximately two million, only 259,000 workers were engaged in industry or manufacture--that is, only 12.45 percent of the labor force, as compared to 26.15 percent in services and 50.96 percent in agriculture...
...The new decree was based on an earlier law, promulgated in 1971 under Velasco Ibarra...
...In short, Velasco's law left the domain of the oil companies untouched...
...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...
...In addition, U.S...
...40 years for exploitation (with an optional 10-year renewal...
...In addition, the governments of consumer countries employ a tax system which allows them to collect revenues of S8.00 per barrel-that is...
...Moreover, the pattern of-dependency on a succession of single exports was not the result of historical accident...
...Bourgeois parties, coalitions and "independent" candidates vied for popular support, while they also competed for influence within the Armed Forces--just in case...
...This Tribunal is therefore obligated to make the record of his behavior clear, so that he may be sanctioned by the national conscience...
...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...
...Foreign firms have participated with state-owned enterprises in the development of a number of vital industries...
...His firm belief that foreign capital constituted Ecuador's savior and his' close ties to United Fruit endeared him to the agroexport bourgeoisie...
...firms), Compafiia Frutera Sudamericana (Chilean), Corporacibn Ecuatoriana y Europea and Compafiia Frutera Astral (German...
...In 1932, Velasco appeared on the political scene as an ambitious Congressman and was elected President the following year...
...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...
...2 9 The archaic land structure of the highlands continued to expel migrants to the cities, where only unemployment and swelling slum towns awaited...
...many hoped and predicted that the subversive actions of the bourgeoisie would provoke a move to the left, toward the radicalization of government policies and the consolidation of the reformist current still present in the Armed Forces and the government bureaucracy...
...An escape clause (article 44) was built into the decision and has been frequently invoked by the Ecuadorean government...
...Properties that 20 years ago were small, after dividing the family inheritance, have now become minimal...
...The dominant classes, however, claimed that the reduction was far too little to re-establish a favorable climate for foreign investment...
...To all appearances, the so-called Peruvian line had triumphed within the Armed Forces, supported by sectors of the petit-bourgeoisie in the government bureaucracy and the embryos of an industrial bourgeoisie...
...AIFLD Report, Vol...
...The inadequacy of food production for the internal market is still a serious problem in Ecuador...
...This same tactic-fictitious sale of those companies beset by labor disputes-has been adopted by the bourgeoisie throughout Ecuador...
...Article 1 of this NACLA Report deals with the agro-export phase of Ecuador's integration into the world capitalist system, the divergent social structures of the Coast and highlands, and their effect on class alliances...
...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...
...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...
...Texaco-Gulf and Cayman Corporation were the only companies to fall within this category at the time...
...While he fond a new field for his talents as Secretary General of the Organization of American States, he was not forgotten in Ecuador...
...Regis Paper: containers Standard Brands: yeast and foods Texaco Corp.: lubricants, oil blending Union Carbides dry cell batteries 1973 est...
...And to take advantage of the conjuncture, the OPEC nations as a unified bloc began to raise prices...
...The post-September shake-ups and policy changes have done little to tame the demands of the bourgeoisie for a return to civilian rule...
...1240 or $13.90, it means that the producing country-owner of the natural resource-obtains ap, proximately $7.80 or $9.00 per barrel of petroleum...
...When successive "Give me a balcory and I will goww.8 governments were equally unsuccessful in providing a solution, the Velasco experiment was tried again...
...NY3 tenant or subsistence farming on the huasipungoyp and wage-labor on the nearby haciendas...
...They tried to collect these production payments in 1973...
...imperialism...
...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 country's GNP was rising more rapidly than anywhere else in Latin America and, for the first time in many years, total exports far exceeded imports...
...22 (August-September...
...imperialism was worried about Ecuador becoming a "second Cuba" in the decade of the sixties...
...Rather, the relationship between dominant and dependent countries has been reorganized along new lines, and new forms of exploitation have been thrust upon the working masses...
...The Lanafit workers had gone out on strike in solidarity with five workers who had been unjustly fired, and were demanding their re-hiring...
...The landowners insisted that the problem was not one of land tenure, but of government intervention...
...C* C Ecuador, too, is industrializing, although at a later date and a slower pace than many countries...
...It concerned the granting in 1966 of a huge concession for oil and gas exploration In the Gulf of Guayaquil...
...12, 38...
...The Oil Companies' "Believe it or Not" British and American companies had been exploring for oil in Ecuador for several decades...
...Thus, divisions within the dominant classes were accentuated...
...In the northern proyinoe of Esmeraldas, foe example, the presence of the Swedish firm...
...At first the caudlllo resists, trying to maintain himself "above and beyond particular class or party Interests...
...Camht, Catwhlc, Imperlabt In addition to its numerical weakness, Ecuadorean labor has also been weakened by its own fragmentation...
...The archaic productive system of the highlands could hardly fulfill these requirements...
...In 1963, a 10-year development plan was adopted, with a major emphasis on industrialization and heavy reliance on foreign capital and loans...
...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...
...when exports had been initiated...
...Velasco must then descend from limbo and decide in favor of one contender or another...
...9. Various articles and books have recently been written on AIFLD...
...Fruit Trading Corporation, inhibited the growth of an indigenous entrepreneurial sector.10 providing credit facilities and technical assistance for independent producers...
...1955), 39...
...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...
...Characteristic of this new legislation is Decree No...
...By straddling the fence, the regime had not only failed to mediate opposing interests within Ecuadorean society, but it had fallen into total isolation...
...Right-wing terrorism (often attributed to the Left), false reports of guerrilla activities and secret arms shipments from Cuba and inflamatory propaganda all contributed to the climate of hysteria...
...The United States reacted violently to the first and the Ecuadorean landowning class to the second...
...But the Rodriguez Lara regime levied an 86 per cent tax on all production payments and other revenues derived by third parties from the transfer of oil and mining contracts to operating companies...
...pharmaceuticals Phelps Dodge: cables, wire, pharmaceuticals Ralston Purina: canned tuna Rhem International: steel drtme (subs...
...Ibid., 52...
...and (2) vertical integration of the industry, including production, refining and marketing facilities around the world...
...Thus, the export, import and banking sectors of the bourgeoisie in Ecuador were able to accumulate large amounts of capital...
...faction is led by Luis Villacr6s, former Secretary General of CEOSL...
...Despite the absence of a large industrial proletariat, the port city was paralyzed by the strike...
...Far from propelling a greater distribution of the country's resources, industrial growth has fostered the increased concentration of wealth...
...A brief sketch of the period from 1933 to 1947 serves to demonstrate this process: -In 1933 Velasco ran as an independent candidate endorsed by the Conservative Party and supported by Liberals...
...First, to abandon the imperialist back-biting that had characterized the first few decades of oil exploration and to establish joint control over Ecuador's resources...
...In removing the U.S...
...Moreover, the industrial boom has meant an unprecedented rise in imports, including not only raw materials but intermediary and capital goods as well...
...The law was now redirected toward increasing production and raising productivity, toward forcing the landowners to modernize or be expropriated...
...Projects already in progress include an integrated steel industry, a state oil refinery and a major petrochemical complex...
...While the price-drop was less than what the companies had demanded...
...By November, 1961, Velasco was on his way to Panama, ousted by the Ecuadorean Armed Forces, and Carlos Julio Arosemena was recognized as his constitutional successor...
...Ill, No...
...It was in the third period, from the late 1960's on, that the Dinosaurs came back in earnest, ready for business...
...Neither the bourgeoisie nor the military would accept such an unstable political arrangement in the epoch of oil bonanza...
...Initial plans for economic development 2 K15 and greater social equality have progressively lost all content, and only the original rhetoric remains...
...Small and medium producers, however, who lacked the capital to reorient production were excluded from the export quotas...
...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...
...imperialism...
...We hope they understand that the epoch of oil piracy has passed, that Ecuador will be no one's colony, that the country is no longer a hacienda, that ourpatural resources are not prey to audacity and corruption . .. This will never repeat itself again.1636 The most controversial points of the negotiations included tax reference prices, internal market provisions, state participation via CEPE, and the volume and rates of production...
...5. Financial TImes, February 28, 1975...
...This last policy recommendation, It should be noted, In no way implied a change In the system of land distribution...
...corporations and the reactionary leadership of the AFLCIO...
...By opening up new zones for the production of primary goods, it determined an excess of supply and a fall in world prices...
...interests became increasingly intent on pressuring the oil workers to break with the left-wing CTE...
...The old principle which had dominated the Law of 1964 was present once again: respect for "well developed land," for "efficiently cultivated holdings...
...In the contract, Ecuador's traditionally liberal terms prevailed, including an exploration and exploitation period adding utip to 55 years...
...the fate of Ecuador's oil policies under the present regime appeared settled...
...In 1967, basic imports of wheat, barley, rice, corn and sugar amounted to 370 million sucres...
...imperialism and the most reactionary elements in Ecuadorean politics forged an anti-communist campaign that bordered on hysteria...
...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...
...3 (March, 1965...
...6. 3. "Legiliaclon Avenzada, Triste Realidad," Nueva, No...
...The economy as a whole remained tied to the cycles of agricultural production for the world market...
...Galo Pico Mantilla, the exMinister of Industries, took asylum in the Venezuelan Embassy...
...After the coup attempt...
...It did, however, bring into clear relief the vulnerability of the present regime...
...Cueva, El Proceso de Dominaion, 85...
...9 Epilogue: The ADA case Is still not entirely settled...
...Translated into terms of dependency, virtually all of these industries are controlled by foreign capital (see Chart...
...The entire cabinet resigned in its aftermath and major shake-ups have occurred in the Armed Forces...
...This strong foreign reaction severely sharpened the divisions within the government...
...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...
...Yet he consistently sold out and repressed the working class and poor whenever they threatened the interests of the dominant classes...
...Rigging the Borders Standard Oil of New Jersey did not take the loss of its eastern territories lying down...
...8. "Manifesto del Comits Eecutlvo Nacional de Ia CEDOC a La Clase Trabaledora Ecusatorlana...
...1 He relates the real-life story of an "oll banquet," served up to foreign companies by the corrupt politicians that have controlled state power since Independence...
...They have taken over factory after factory when management raises the spectre of liquidation...
...In March, 1975 they were totally paralyzed by a sudden breakdown in the oil pipeline to the Coast...
...Whether for better or for worse is a question badly posed...
...The characteristics of coastal agriculture still present a stark contrast to the system of food production in the highlands, where primitive techniques, low productivity and the extremes of latifundio-minifundio prevail...
...Over-production was further compounded by a short recessionary period (1920-22) in the industrialized nations, which caused a sharp decline in the demand for tropical goods...
...Capitalismo y Lucha," 215...
...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...
...7 A further channel for foreign investment has been the Ecuadorean government...
...In doing so, however, he forces not only the organized popular sectors, but also the dominant dass excluded from this "pact" to move to the opposition...
...12 (October, 1974), 36...
...Despite its periodic crises, coastal agriculture has been the mainstay of the national economy for close to a century...
...Only very few properties-such as the cattle-raising and dairy haciendas-could be categorized as modern enterprises...
...7 The limited size of the industrial proletariat and the fact that jobs are exceedingly scarce in relation to the available work-force makes union-organizing a particularly difficult task...
...Signs of industrialization were appearing on the Coast-hulling mills, sugar refineries and related activities-adding to the atmosphere of economic boom...
...The high level of public26 A barrio in the city ofEsnadats-afcryfroram higk-rie apartments and hLmry imports (S...
...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...
...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...
...Beginning in 1972, the adjectives changed somewhat...
...6. U.S...
...For Velasco, the problems facing the country were not of an economic but of a moral nature...
...S5 Velasco, "El Modelo Agroexportador," 35...
...Beyond these stereotypes, there is an important analysis to be made and lessons to be drawn from the Ecuadorean experience...
...9. U.S...
...His policies won out...
...whose very slight reanimation permitted the system to survive on the edge of collapse...
...Royalties were raised from 6-7 per cent to 11.5 per cent (still five points lower than royalties in Venezuela...
...cit., 2. 29 Santos, Ecuador, 2 30 Philip Agee, Inside the Compaoy: CIA Diary (London: Penguin Books, 1975), 180 31 instituto de Investigciones EconomIces, Vision del Ecuador (Central University, Quito), 1974, 15...
...beginning in 1973, was also a windfall for the Ecuadorean treasury...
...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...
...Fundamentally, it demanded a radical change in the pattern of dependent industrialization characterized by heavy imports of raw materials and capital goods...
...in 1973-year of the so-called crisis-were 45 to 60 percent higher than profits in 1972...
...interventionism, pledged to nullify the Rio Protocol of 1942 and vowed never to break relations with Cuba, the United States screamed "communist in- filtration...
...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...
...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...
...At a speech before the U.N...
...When the point was reached when Velasco could no longer fulfill those functions, when he could no longer serve as an antidote to popular unrest, Velasquismo quickly gave way to another solution-and usually a military one...
...Opposition from the landowners also focused on the government's attempts to impose price controls on basic foods and to expand the role of the State in food distribution...
...As 1975 began, the unrelenting pressures from the oil companies were accompanied by the steady erosion of the nationalist policies instituted by Jarrin...
...The result was a general strike, called by commercial interests in Guayaquil and supported by the Chambers of Commerce, Agriculture and Industry...
...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...
...Grace/Intarnational Paper: containers Gulf Oils plastics for houseware Gulf Oilt refining (2 locations) International Multifoods: animal feed mill Maestro Import Industries: furniture for export Merck, Sharp a Dohm pharmaceuticals Horton International: "alt extraction and packing Park, Davis & Co...
...The changing nature of Ecuador's military government, from 1972 to the present, and the pattern of economic development that has been set in motion can best be understood by examining three key areas: (1) the agricultural sector and agrarian reform...
...Today," writes the national executive board of CEDOC, "faced with the assault of the capitalists, who insatiably seek to heighten their exploitation of the working class...
...Peasant revolts continued throughout the 1920's, repeatedly followed by savage repression...
...imperialism and sectors of the dominant classes in Ecuador, however, did not ameliorate the abysmal situation of the Ecuadorean masses...
...86 per cent of that land, however, represented newly colonized areas brought under cultivation without access to credit or technical assistance...
...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...
...2 1 The rumors immediately began to circulate that the government was considering a reduction in tax requirements...
...imperialism...
...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...
...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...
...Banana exports totalled nearly $2 million in 1948, rising dramatically to 20 million in 1952.22 They accounted for three-fifths of all exports in 1955 and Ecuador had become the largest banana producer in the world...
...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...
...4 British imperialism had clearly gotten the upper hand in the battle for control over oil resources in Ecuador...
...If the government of Ecuador could not be prevailed upon by peaceful means, if British oil interests were unwilling to share their eastern dominion--the Rockefeller interests were not averse to taking more drastic measures...
...Any industrialization process requires a massive and cheap supply of basic foods to feed the working class and keep wages low...
...By 1975, the situation had changed drastically...
...According to estimates of the National Planning Board, 72.4 percent of the export price of bananas remained in the hands of exporters and intermediaries...
...Moreover, the first-hand experience of people connected with the oil industry contradicted the contentions of the oil monopolies...
...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...
...As precarious forms of labor were abolished, the minifundio proliferated throughout the Andean countryside...
...1974, p. 132, and Latia Amorice Economic Report, November 15, 1974, 179...
...For at the same time that TexacoGulf was claiming a lack of buyers, CEPE was selling its 25 percent share in production with no problems at all...
...For example, in a memorandum sent to AIFLD's regional director from Donald Kessler, AIFLD) director in Quito, Kessler expressed his anger at the positions adopted by FETRALPI, under the leadership of ChAvez, in support of radical teacher and student strikes in Quito...
...2. Amount invested may be either the initial amount or the current value depending on availability of data...
...The responsibility of the producing countries stops there...
...While Gulf had successfully used bribes to control oil policies in Bolivia, the Texaco-Gulf combine resorted to economic blackmail in the Ecuadorean case...
...1974, end Ages...
...The bourgeoisie has blamed both the "excessive" demands of the working class and what it terms a "lenient" policy toward labor on the part of government, for the proliferation of labor disputes...
...Created in the early 1960's, a period of political instability, radicalization and nascent industrialization, CEOSL has been groomed as the stronghold of anti-communism and pro-U.S...
...The fighting between forces loyal to the President and a small but determined group of golpistas lasted for 12 hours...
...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...
...What's more, neither could the foreign oil companies...
...He declared himself dictator and initiated a reign of terror, primarily directed at workers, students and the Leftist parties...
...But from 1972 on, the major protagonists became the foreign oil companies on one side and a nationalist military regime on the other...
...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...
...The entry of the military as the outflow of oil began was no mere coincidence...
...tuna boats were captured within Ecuador's 200-mile water limit* and $26,000 in fines were imposed...
...El Mode)o Agroexportador Ecuatorlano...
...The immediate reaction of progressive and popular forces was bitter disappointment and anger at "so much time, for so very little...
...AIFLD, whose financial supporters include the largest U.S...
...Banana production in Ecuador opened the door to massive penetration by foreign capital in both marketing and production...
...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...
...While very little time has elapsed since the September events, government decrees, policy statements and cabinet appointments suggest a certain pattern of change...
...While Velasquismo can be termed a populist solution to political and economic crisis, it is important to differentiate Velasco's unique brand of populism from similar movements taking hold in Latin America during the same period...
...Presidential elections were to be held in August, 1972, but the race for power began long before...
...For the first time, the OPEC governments had determined the price of crude unilaterally...
...Since the events of September, it has appeared more and more that the nationalist vehicle for capitalist development is running out of gas...
...Immediately, Texaco-Gulf initiated the economic boycott described in an earlier article...
...Among the provisions of petroleum legislation in 1972, the most salient points include the following: -No contractor would retain more than 40 per cent of its concession and no more than a total of 160,000 hectares after the initial 5 years of exploration...
...Peasants could pay off their debts by working without pay on the landowners' estates.Despite the coastal bourgeoisie's fierce struggle for political hegemony over the Andean landowners, it had little interest in altering the concentrated pattern of land ownership in the highlands...
...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...
Vol. 9 • November 1975 • No. 8
