Wednesday, May 17, 2006

Trouble down South America way

From FT: a pair of stories regarding Ecuador's decision to revoke Occidental Petroleum's operating contracts and assign another company to take control of its operations. Article 1 and companion article 2 can be read in full at the links provided.

It seems that this President Palacio was given a very strong signal that he must go forward with the actions against Occidental. From the second article, "Palacio bows to populism in confiscating oil assets

Several factors appear to have influenced the Ecuadorean authorities to take a hard line. First, Occidental has become a cause célèbre for radical trade unions and indigenous organisations that have attached almost as much weight to their campaign against the company as to their opposition to the country's pursuit of a trade agreement with the US.

Second, Occidental's presence has become a controversial issue in the run-up to October's presidential elections, and Ecuadorean politicians are more than willing to pursue their opponents through the courts.

Colleagues of Mr Palacio say he and other ministers feared they would have been prosecuted had they not acted against Occidental. "The probability that this would happen has become greater in recent weeks because the legal issue has become a threat to different people," said one Ecu­adorean diplomat yesterday.

Earlier this week, mining company Cambior had to shut down its Rosebel gold mine in Suriname due to a strike. The country has also been hit by recent flooding.