Theft or Recoup of Profits From Resources?

Operating worldwide from a position of strength, the largest oil companies historically worked with governments that bled the people to enrich themselves, and hammered out agreements that were advantageous to the oil companies rather than to the countries they operated in. The past is coming back to haunt the big oil companies in many areas. j

A tide of populism has been rising in South America, bringing into power leaders who are turning around centuries of banana republics that fought public interest, and bringing into power those who are directing profits toward the working people.

In Correa's Ecuador, a big pinch is being taken out of profits, and it is aimed directly into the pocketbooks of the populace.

When Ecuador's left-wing President Rafael Correa drastically increased the state's share of oil revenues in October, and oil minister Galo Chiriboga also announced that contracts with foreign oil companies had to change, industry analysts said the country had gone too far.

After all, foreign firms currently account for about half of Ecuador's total crude production of more than 500,000 barrels a day (bpd).

And while Petroecuador, the state oil corporation, accounts for the rest, it continues to be plagued by mismanagement and debt, analysts say.

The proposed increase in the government's share of windfall oil profits - those obtained whenever world oil prices exceed those established in existing contracts - was also huge.

The tax went up from 50% of windfall oil profits to 99%.

That would net the government $830m a year more in revenues, assuming world oil prices stay at current levels.
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Mr Correa's repudiation of the current oil contracts is not just about foreign oil companies, but also the previous Ecuadorean governments, run by conservative political elites, that agreed to them.

"The contracts have not benefited Ecuador. The problem is also the previous governments. This is widely recognised, " Mr Pachano says.

Mr Correa is an ally of Venezuela's President Hugo Chavez - and, like him, is not shy about using colourful rhetoric on occasions.

He maintains justice is on his side. Most of the existing oil contracts were agreed when international oil prices averaged $24 a barrel, before they started rising in 2003.

But, said Mr Correa at a press conference during a state visit to China in November, Ecuador was still receiving just $3 to $4 in taxes from oil sales, even though the price of crude has risen to about $90 a barrel.

Confiscation of properties from foreign investor groups has long been a problem for those investors in Central and South American countries, and other poor areas, when governments turn over. While those extremes are pretty much a thing of the past, the past is being remedied by voters in the "third world".

Voters in the U.S. have for the most part been convinced that this is theft, but the theft that preceded it is not so much frowned upon because historically it benefitted us. As large corporations, especially big oil, become less inclined to benefit the U.S., where most of them originated, the voters here are becoming less critical of policies that take back from the corporations the boon they have received from our government.

A balance of powers is in the reckoning, and not just in Ecuador. In the recent Energy bill that the occupied White House is intent of vetoing, the oil company benefit - from permitting them nonpayment of taxes on their use of our natural resources - was proposed to be revoked. Our own banana republic in D.C. was not about to let the people profit from the use of their own resources. The criminal element may have killed the energy bill for this year, but it will be back.

An election should make big differences in the present pickpocket policies. Other means may be necessary as well. As 'Yo-There' points out at ptarmigannest.net" Believe it or not, the US government signed the American Servicemembers’ Protection Act (ASPA) introduced by Jesse Helms in 2002 that OK-ed the invasion of my country should an American soldier be held prisoner here for the international court and several countries were arm-pushed into a bilateral non-extradition to the international court." The criminals have much to fear from the international court, and, as Diane pointed out, already face charges in Canada.

Impeachment would move the badly needed changes up considerably, and cut our losses. Confiscation of ill-gotten gains would help as well. Things are due for a change in the favor of the U.S. public.