Fueled by high unemployment and lack of basic services that exist at the same time that Occidental and other foreign oil giants take huge profits out of the country, the demonstrations initially called for higher royalty payments from foreign oil monopolies that would go directly to the local governments. As the actions unfolded, protesters called for nationalization of foreign-owned oil companies, a demand that has also been raised in neighboring Bolivia.

Ecuador is South America’s fifth largest oil producer, at 200,000 barrels per day, more than half of which is exported to the United States.

Workers and indigenous peasants occupied oilfields, blocked highways, and took over two airports in Orellana and Sucumbíos, located in the Amazon region near Colombia and Peru. The state-owned oil company Petroecuador suspended crude oil exports.

In face of the explosive situation and the disruption of oil production, Ecuadoran president Alfredo Palacio declared a state of emergency August 17. Some 3,000 soldiers and police were then sent to take over the oilfields. Faced with the growing crisis, Ecuadoran defense minister Solon Espinosa resigned. The new minister, Oswaldo Jarrín, warned that the army would use “all its capacity” to crush the unrest. Among the organizers of the protests who were arrested were Guillermo Muñoz, governor of Sucumbíos province, and Máximo Abad, mayor of Lago Agrio, the provincial capital. Abad is a leader of the Movement for Popular Democracy, an electoral formation led by the Marxist-Leninist Communist Party of Ecuador (PCMLE), a Maoist group.

Seven foreign oil monopolies have facilities in Ecuador. They include Occidental Petroleum, Encana of Canada, Repsol-YSL of Spain, Petrobras of Brazil, and Pecom Energia of Argentina. From 2002 to 2004, Occidental Petroleum tripled its oil production in Ecuador. These oil monopolies pay the national government 25 percent in royalties.

Oil is Ecuador’s main source of income, accounting for 44 percent of its total exports and one-fifth of its gross domestic product. Despite its oil wealth, Ecuador is burdened with $16 billion in debts owed to U.S. and other imperialist banks.

Ecuador, which relies heavily on hydroelectric power, imports electricity from Colombia during the dry season. Barely more than half the rural population has access to electricity.

In the wake of the disruption of oil supplies by the protests, Ecuadoran energy minister Iván Rodríguez said his government would ask Venezuela to loan oil to Petroecuador so it could honor export contracts with Occidental, Encana, and other oil monopolies.
 
 
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