Ecuador’s tempest on the border

Ecuador isn´t accustomed to the bombings and kidnappings that have bedeviled neighboring Colombia for decades. The violence that has been rocking the border area near key oil installations in recent months is quickly changing that.

Ecuador´s military has stepped up security at oil refineries, crude and refined products pipelines, oil fields and fuel stations in and around the northern province of Esmeraldas. That´s where drug traffickers led by Guacho, an alias used by an Ecuadorean dissident of Colombia´s former guerrilla group Farc, have been fighting to protect territory they use to transport and export their illicit cargo.

This is the same territory where the tiny Opec country produces, transports and refines most of its oil.

The conflict took a dark turn after two journalists from El Comercio, Ecuador´s most important newspaper, and their driver were kidnapped on 26 March, and later killed. Now Guacho´s ruthless gang is obstructing the return of their bodies, even as news of another kidnapping sinks in.

The conflict is a test for Ecuador´s president Lenin Moreno. After taking office in May 2017, he unexpectedly broke ranks with his populist predecessor Rafael Correa, whom he served as vice president. He boldly jailed Correa´s corrupt strongman Jorge Glas and is now taking concrete measures to bring back foreign investment. In the oil sector, the largest source of Ecuador´s hard currency, the government is restoring the production-sharing model that was scrapped by the Correa administration in favor of fee-based contracts. It is also tackling a long list of unfinished or defective energy projects tainted by corruption, including a costly upgrade of the Esmeraldas refinery that will take up to three years to repair.

Less than 12 months into his four-year term, Moreno is promising to crack down on the lawless frontier that was largely tolerated under the previous government. In this objective his government is cooperating closely with Colombia, ground zero of the unrest and a country where oil pipeline attacks and their environmental consequences are depressingly routine.

It´s no surprise that Bogota´s sophisticated military, close security ties to Washington and an unauthorized 2007 military raid on a guerrilla hideout in Ecuador raise deep suspicions among Correa´s vocal partisans. But one need look no further than Venezuela, across Colombia´s restive eastern border, to see how deeply the region´s drug cartels are capable of penetrating into states that harbor them.

Colombia´s relentless strife shows that Guacho will fall, sooner or later, either at the hands of the military or a rival for his slice of the lucrative cocaine business. What will not go away anytime soon is Latin America´s violent illicit drugs enterprise, grossly nurtured by the bottomless appetite of North America and Europe where for many, the region’s drug battles are little more than a Netflix series. For Ecuador and its oil-producing neighbors, there is no changing the channel.

Caracas outruns the barrel counters

Back in the 1990s, Venezuela, like some other Opec countries, used to fudge its crude production numbers to avoid accusations of breaching its Opec quota. Until recently, Caracas was still blurring the data, not to sneak extra barrels into the market, but to keep the market from knowing how much its production was falling.

Over the past few months, Venezuela looks to have come clean on the data —  so clean that even secondary sources like Argus are racing to knotch down their estimates of Venezuelan output. It’s a far cry from the days when official data routinely exceeded secondary source estimates.

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Opec losing the Latin beat

Don’t be surprised to find an idle Spanish language interpreter or two along Vienna’s Helferstorferstrasse this week, as Latin America’s sole Opec members are preoccupied with their rocky home fronts. Venezuela and Ecuador appear content to let Opec´s heavyweights plus Russia hammer out the terms of the likely extension of a deal to restrict output. Their effective withdrawal means the region has less of a voice at the negotiating table, matching their loss of relevance in the market. Continue reading

The orphans of Odebrecht

The first night in jail was probably not too uncomfortable for Ecuador’s once-powerful vice president Jorge Glas. But this wasn´t where he was supposed to end up after president Lenin Moreno moved into Carondelet palace in May. Like Moreno himself, the impact of the region-wide Odebrecht corruption scandal that landed Glas behind bars was underestimated from the start.

An Ecuadorean court yesterday granted a request by the attorney general’s office to detain Glas for alleged bribery and conspiracy, accusations that have already tainted senior politicians from Brasilia to Bogotá after the contractor signed a 2016 international plea deal over its elaborate bribery scheme. The region´s new heroes are state prosecutors like Brazil´s Rodrigo Janot, Ecuador´s Diana Salazar and Venezuela´s Luisa Ortega.

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