RP must learn from Ecuador

DIE HARD III
Herman Tiu Laurel
1/27/2012



Other than the letters to its name, the Philippines has other things that are more plentiful than Ecuador: Nine times more population; 10 percent more land area; a sea territory that is far more vast, etc. Yet, Ecuador is much better off in terms of per capita gross domestic product (GDP), with $8,327 compared to our $4,111; or its higher Human Development Index (HDI) of 0.72 compared to our 0.64, among other statistics.

In addition, one key difference will make the Filipino people see the light of day — that is, if they would cease to be mindlessly dependent on mainstream media. This sad comparison centers on a recent announcement on the Philippine government’s share of Malampaya oil profits totaling $1.1 billion, which translates to only 10 percent of the gas facility’s total earnings for 2011. Ecuador, in contrast, gets an astounding 87-percent share of gross revenues today from oil extracted by foreign companies. So what accounts for the Philippines’ sordid plight?

If only we had the same tough pro-people, pro-nation leadership as Ecuador under its progressive President Rafael Correa, the Philippines would also have a just share of its natural and national patrimony. If RP had someone like Correa today, the people would be enjoying not just a $1.1-billion share from Malampaya but around $8.8 billion (equivalent to P360 billion), or about the entire sum of the yearly allocation for interest payments on our foreign debt. If only we had this money in our hands, then Congress could have had the means to budget the principal repayment of our foreign debt in order to wipe this out in a few years’ time.

Ecuador did not always have this vastly pro-people arrangement with the transnational oil companies in its country. Before 2007, it only had a 13-percent share of revenues from its oil fields. All that changed with the victory of a nationalist leadership. And this exciting and welcome development for all Ecuadorians was chronicled in Jayat Ghosh’s “Could Ecuador be the most radical and exciting place on Earth?” in The Guardian.

As a backgrounder, the then 47-year-old Correa was elected in 2007 on an anti-trapo platform after a year of then Vice-President Alfredo Palacio’s transition government, which took over from Lucio Gutiérrez, who was ousted by a “citizens’ movement” protesting his administration’s failures to deliver on land reform, lower unemployment, social services and historical exploitation by the oligarchy.

By December 2008, Correa declared Ecuador’s national debt illegitimate for having been contracted by previous corrupt and despotic regimes. And as he pledged to fight creditors in international courts, he succeeded in reducing the debt before even paying any of it off.

Correa then brought his country into the fold of the Venezuela-led Bolivarian Alliance for the Americas in June 2009. All these policies were, of course, anathema to the US. Thus, a police-led coup that led to the Ecuadorian leader’s kidnapping was launched — with Correa thankfully restored after being rescued by the military. But this by no means deterred him from renegotiating contracts with foreign oil companies, thereby completely changing the rules by December 2010.

Foreign oil firms, which used to pay just over a percentage of their profits to the national government through taxes, were made service providers instead and paid a set fee for each barrel of oil extracted (at about $35 per barrel); the national government then kept everything above that, which allowed it to profit whenever oil prices increased.

Over and above his achievements in the oil sector, Correa also dramatically raised the corporate tax share in the total pie from 35 to 40 percent. These increases were then “put to good use in infrastructure investment and social spending,” raising Ecuador’s proportion of public investment to GDP to 10 percent — the highest in Latin America and the Caribbean — while doubling social spending since 2006, enabling progress toward free education and free health care for all.

Ghosh gushes, “All this may sound too good to be true, and certainly the process of transformation has only just begun. There are bound to be conflicts with those whose profits and power are threatened, as well as other hurdles along the way. But for those who believe that we are not condemned to the gloomy status quo, and that societies can do things differently, what is happening in Ecuador provides inspiration and even guidance. The rest of the world has much to learn from this ongoing radical experiment.”

Here in the Philippines, we have a scion of a cacique family in power who epitomizes a class of people whom Correa fought and overcame to launch the “radical and exciting” changes benefiting the Ecuadorian nation today.

Filipinos need the same type of leadership as the new Latin American leaders like Correa, Hugo Chavez (Venezuela), Fernando Lugo (Paraguay), Dilma Rousseff (Brazil), or Cristina Fernández (Argentina), who continue to push their countries forward with nationalist and pro-people policies.

While Ecuador wrested the just and rightful bounties of its oil wealth from foreign hands and gave them to its people, RP’s past and present governments have merely been in cahoots with Royal Dutch Shell and Chevron, allowing additional investments in Malampaya to dilute the country’s already measly 10-percent share — when the fact is all these “investments” were derived from Malampaya profits courtesy of Filipino power consumers, who have been paying for overpriced electricity through natural gas plants managed by a big oligarchic family.

Just the same, pressure from the likes of Energy Secretary Rene Almendras and his ilk continues for the privatization of the state-owned Philippine National Oil Co.-Exploration Corp. (PNOC-EC), which represents government’s share in Malampaya.

And so, as our country’s senators are caught up in impeachment rapture, the plunder of our nation continues unabated.

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