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Oil-producing countries - Oct 13

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Basra in southern Iraq has been transformed - thanks to oil

Martin Chulov, Guardian
... Against many expectations, Basra is steadily being transformed into a Mini-Me of the Kurdish city in northern Iraq, Sulaymaniya. There is one common denominator between them – oil and the flush of wealth it has brought.

The first round of oil auctions in Iraq last year cast Basra as potentially the largest beneficiary of the move to lure foreign investors to untap Iraq's vast amounts of underground black gold. But it was a projection that those who had lived through nothing but worst-case scenarios found difficult to believe.

"Visitors come here and say they don't recognise Basra anymore," said Firas Mohammed, who opened a cosmetics centre late last year. "I left for two years from 2006 and I returned to open my business. It is already going very well and will be much better very soon. This was the city of nightmares. Now shops are open until midnight and families are playing in new fun parks."

Throughout the centre of the city, several hundred shops have opened in recent months, selling anything from Turkish shawls, Gulf fragrances and Lebanese sweets. Fun park rides compete for space along riverside parklands that were deserted for most of the past five years. Even the riverboat restaurants are plying a trade of sorts, serving fried food on rusting decks that had been empty since 2004.

The deep south had been persecuted throughout Saddam Hussein's totalitarian regime, during which he viewed the predominantly Shia Muslim population as proxies of his mortal foe, Iran.

Oil pipes, roads, and other services had not been updated since the 1960s. Many Basra suburbs did not have sewage lines. Most had next to no electricity, or hope that things could ever get better.

This hardly dissuaded the global oil giants who flooded into town once the first round of contracts were awarded last August. In their wake came hundreds of smaller outfits on the hunt for service contracts, as well as prospectors and carpet baggers.
(11 October 2010)



Iraq has the oil stores, but does it have the know-how?

Robin Mills, The Nation
In one dramatic press conference, Hussain al Shahristani, the Iraqi oil minister, last week unveiled almost as much new oil as the entire world uses in a year.

By announcing that Iraq's proved reserves had jumped from 115 billion barrels to 143 billion, he effectively added two Algerias or four Norways to the oil world. But what is the real significance of this announcement? Everything and nothing.

Nothing, because oil in the ground is essentially useless. Neither markets nor OPEC will take account of these new reserves until Iraq backs up its impressive numbers with action. The contracts awarded to international oil companies such as Shell, BP, Malaysia's Petronas and the China National Petroleum Corporation (CNPC) add up to output of 12.5 million barrels per day within seven years, which would make Iraq the world's largest producer.

But seven years after the invasion, Iraq's output is still stagnant, and most analysts think Iraq will do well to get halfway towards its target. The well-documented security problems, although somewhat eased since the worst days of 2006 and 2007, have flared up again recently. The fields in the south, especially along the Iranian border, are littered with landmines and unexploded ordnance left over from previous wars.

Corruption, competing local and tribal authorities, and the continuing political vacuum are further obstacles.
(12 October 2010)



Behind the coup in Ecuador

Duroyan Fertl, Greeb Left Weekly
The attempted coup d’etat in Ecuador on September 30 against the left-wing government of Rafael Correa was defeated by loyal troops and the mass mobilisation of Correa’s supporters. The event underscores the turbulent history of the small Andean nation.

It also exposes some of the weaknesses of Ecuador’s revolutionary movement, which is part of a broader Latin American movement against US domination and for regional unity and social justice.

The coup attempt was led by a small core of police and soldiers, whose rebellion was triggered by a public service law that cut some of their benefits. This has led some commentators to assert that recent events were simply a wage dispute, rather than a coup attempt.

Correa’s 2006 election victory — supported by the country’s powerful social and indigenous movements — came after almost two decades of political turmoil. Government after government dragged the country deeper into debt and greater poverty.

Between 1998 and 2005, three elected presidents were overthrown by mass uprisings, led in large part by the main representative of the country’s 40% indigenous population, the indigenous federation CONAIE.

Correa — a former finance minister — won the 2006 poll on a platform of radical social change.

He promised to lead a “citizens’ revolution”, using Ecuador’s oil wealth to eradicate poverty, deepen grassroots democracy and build a “socialism of the 21st Century”. These promises echoed similar process under way in Venezuela and Bolivia.

About 40% of Ecuador’s population of 14.5 million lives at or below the poverty line.

Upon taking office, Correa moved to raise social security payments and the minimum wage. He also increased funding for health and education.

... Ecuador’s new constitution contains laws guaranteeing access to clean water, giving groundbreaking legal rights to the environment and granting recognition to Ecuador’s indigenous peoples.

One of Correa’s greatest environmental achievements is the deal to protect the environmentally significant Yasuni-ITT National Park from oil mining in exchange for US$3.6 billion — half the oil’s value.

Ecuador has promised to leave the oil — nearly 20% of the country’s reserves — underground, protecting vulnerable rainforest. The deal prevents about 430 million tons of carbon dioxide emissions, provided wealthier nations and individuals compensate Ecuador for the financial loss.

The money to keep the oil in the ground will be administered by a United Nations trust fund. It will pay for further conservation projects in Ecuador, as well as funding health and education in rural and indigenous communities.

Correa’s actions have angered the Ecuadorian oligarchy and its US backers.

Correa has clashed repeatedly with foreign oil companies in the Amazon, threatening to nationalise those that refuse to comply with legal reforms. This includes the recent nationalisation of oil reserves, which has allowed Ecuador to increase its share of profits from its extraction.
(10 October 2010)



Ecuador’s Economy Under Rafael Correa: Twenty-First Century Socialism or the New-Extractivism? – An Inteview with Alberto Acosta

Jeffery R. Webber, Upside Down World
I spoke with Alberto Acosta, ex-Minister of Energy and Mines, and ex-President of the Constituent Assembly, in his Quito office on July 8, 2010.

Jeffery R. Webber: In a few words, can you describe your political formation and political trajectory?

Alberto Acosta: I’m an economist. I’ve worked as an international consultant and as a university professor. I’ve been an advisor to social movements, to the indigenous movement. I’ve been involved in various struggles in the last few years which are trying to build a country based in equality, liberty, and justice. In the early part of the Rafael Correa government, I was the Minister of Energy and Mines and the President of the Constituent Assembly.

JW: As a former Minister of Energy and Mines, can you talk about the strengths and weaknesses of the economic model being advanced by the Correa government in the current conjuncture?

AA: We can’t talk about the economic development model of only this government. Stretching way back, Ecuador has had a model of accumulation based on the extraction of natural resources. Ecuador has been a country based in the production of bananas, flowers, shrimp, and oil, and there are people who now believe that it can be a country based in mining production.

In reality, we’ve been living off the rent of nature. In the last few decades, since the 1970s, Ecuador has had as its principal source of revenue the exploitation of oil – the extraction of crude oil and the export of oil into the international market. This is a fundamental characteristic of the Ecuadorean economy. And this has not changed substantively under the government of Correa.

It’s true that he’s sought greater participation of the state in generating the oil rent. There’s been a certain increase of state control over oil activities. There’s been an attempt to increase the efficiency and to strengthen the state oil company. And the state’s greater take of the oil rent has allowed for improvements in education, health, and social welfare.

But at the root of things, the fact that Ecuador has an economy dependent on natural resources has not been altered, and we remain highly dependent on our insertion into the world market.

... The Constitution also commits the country to “living well,” or sumak kawsay, in Quichua, which is an entirely distinct way of understanding development. It’s another form of development. It’s an alternative to development, an alternative not within development, but an entirely different concept to development. Along these lines, the Constitution guarantees the rights of nature. Nature is a subject with rights in the Constitution. Ecuador’s Constitution is the only one in the world with this characteristic.

The Constitution also notes that water is a fundamental human right, not just access to water, but water itself. Water is a strategic patrimony. Water is part of biodiversity. It is central to nature.

... JW: Shifting themes, we’ve seen a shift to the left in Latin America – full of contradictions, but nonetheless a shift – over the last decade. What has Ecuador’s role been inside this regional turn to the Left?

AA: There has been a series of very interesting processes in Latin America – in Venezuela, Bolivia, and Ecuador. However, none of these new processes have managed to overcome the economic structures of extractivism. Bolivia continues to be dependent, even more dependent than before, on natural gas. Bolivia is making concerted efforts to extend oil, gas, and mineral extraction. In Ecuador the orientation is toward ongoing exploitation of oil. Although, one has to highlight the proposals of Ecuador to leave the oil under the ground in the National Park of Yasuni, which is positive. But, in general, it’s clear that there is no coherent position against the extractive model. There is a lot of talk of transformation and revolution, but it continues to be more of the same.

As I suggested, I don’t think there’s anything to what they’re calling socialism of the twenty-first century. What we’re witnessing instead is a neo-extractivism of the twenty-first century.

JW: In the long term, what does Ecuador need to change in its development model?

AA: What we need to do in the medium- to long-term is overcome this model of accumulation. We need another way to organize the economy, which is not so dependent on the exploitation of natural resources. We need to move from an extractive economic model, to one based in the knowledge, and forces, and needs of human beings, individual and collective. We also need another way of inserting ourselves into the world market that is more intelligent than simply providing raw materials. We need to start producing other kinds of products for the international market. But more than anything, fundamentally, we need to strengthen the internal market and to strengthen regional integration in Latin America. Ecuador needs to break with the extreme concentration of assets and income, and change the pattern.
(12 July 2010)

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