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Ecuador's army tackles protesters

Ecuador's army has stepped up efforts to quell protests which have crippled production in the oil-rich Amazonian region of the country.

The army says it has regained control of a number of installations, and the state oil firm says it is slowly resuming production.

Earlier, the defence minister resigned. His replacement has authorised the army to use force to end the unrest.

Protesters want some of Ecuador's oil money to be invested in the region.

The authorities say they will not negotiate until the protests cease.

Ecuador's state oil company says it is resuming crude oil production which was suspended on Thursday, following five days of protests in the two provinces.

'Worse than war'

The government declared a state of emergency on Wednesday and ordered soldiers to restore order in Sucumbios and Orellana.

Army officials say troops have retaken a number of oil installations, airports and roads which have been occupied by hundreds of demonstrators.

They want more of the country's oil wealth to be spent on infrastructure and new jobs. Ecuador is the fifth biggest oil producer in South America.

The army has used tear gas to disperse some of the protesters amid clashes that have left dozens injured.

As troops took control of installations, state-owned Petroecuador said it was slowly resuming oil production following Thursday's stoppage.

The events have sent world oil prices higher and would require Ecuador to ask Venezuela for a loan of crude oil to keep up exports, the economy minister said.

The economic impact was "worse than any war," Energy Minister Ivan Rodriguez said.

Officials estimate oil production will not return to normal until November.

Key resource

Correspondents say the unrest is the worst faced by President Alfredo Palacio since he came to power in April.

They say he is under pressure at home to abandon the free-market policies of his ousted predecessor, Lucio Gutierrez.

Not all sections of Ecuadorian society have benefited equally from oil revenues.

The traditionally dominant Spanish-descended elite gained far more than the indigenous peoples, who make up a large proportion of those who live in poverty.

Correspondents say revenues from the country's existing Amazon oil reserves are critical in keeping the country's economy afloat.

Oil sales account for about a quarter of Ecuador's GDP. According to the president of the country's Petroleum Industry Association, oil revenues have been put towards paying for both state sector salaries and a significant amount of the national debt.

Editorial Notes: Related story at Financial Times and in other news media. Background at Letter From Ecuador: The High Cost of Oil in The Nation. -BA

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