Authoritarian Reformism and Petroleum in Ecuador

Without attempting to cover all the more or less abortive attempts at "radical praetorianism" our panorama would be incomplete without studying Ecuador, the only petroleum-exporting state in which, between 1972 and 1976, an experiment in military reformism appeared that seemed to be a somewhat pale reflection of the Peruvian "process."

The coup d'état of February 1972 that appeared very institutional in character coincided with the petroleum boom. The commanders in chief of the three branches deposed the aging and picturesque President Velasco Ibarra, who was serving his fifth term, having taken over full power in 1970 in opposition to the pressures of the businessmen of Guayaquil. When the petroleum bonanza opened a period of prosperity, the military did not want just anyone to profit from the windfall. Specifically, they wished to prevent the likely victory in the June 1972 elections of the mayor of Guayaquil, who was a demagogue close to the export sector.

The new government under the presidency of General Rodríguez Lara proclaimed itself "revolutionary, nationalist, so-

cial-humanist, and in favor of autonomous development."^[54] It subscribed to a number of objectives: a better distribution of income, the fight against unemployment, an agrarian reform, and a fiscal reform. It published an Integral Plan for transformation and development for 1973–77 that called for an acceleration of development and the strengthening of the public sector. The nationalist character of the new government was not in doubt: it was demonstrated by the intransigent defense of the maritime sovereignty of the country over a 200-mile zone against the California tuna fishers—as well as by its international policy, especially with reference to Cuba. The military were most active and decisive in the domain of petroleum. In 1972 General Rodríguez Lara created the Corporatión Estatal Petrolera Ecuadoriana (CEPE) to control the development of the recently discovered petroleum. The CEPE owned 25 percent of the shares of a consortium that also included Gulf and Texaco. It bought all of Gulf's shares and a part of those of Texaco.^[55] The state thus controlled about 80 percent of the shares in the petroleum industry. Then the government decided to revise all the contracts and concessions belonging to foreign companies—which was not likely to take place without problems, especially when Ecuador, having become the fourth largest petroleum exporter in the continent, entered OPEC against the wishes of the United States, resulting in the suspension of U.S. military aid. A new refinery was created at Esmeraldas, as well as a network of pipelines that made up for the inadequacy of the highway network. Petrochemical projects were created. Thanks to the intervention of the state, Ecuador under the military intended to make the best possible use of its petroleum.

In 1974 hydrocarbons comprised 60 percent of the total exports and for the first time in Ecuadorian history the most important natural resource was essentially controlled by the state. The economic growth that resulted from the stimulus of petroleum reached impressive rates (13 percent in 1974) and the transfer of the profits to the private sector permitted strong industrial growth. A restructuring of the agrarian sector was also made possible by the new revenues and the military's desire for change. The transformation and development plan called for "an acceleration in the elimination of poverty by

breaking with the traditional agrarian structure, the increase in the domestic supply of food products, and the stimulation of the expansion of agro-pastoral exports."^[56] The implementation of the agrarian reform law of October 1973 produced significant results. Wage labor became generalized while the unpaid or forced labor that was traditional in the Andes disappeared. Sharecropping was practically abolished. The number of large landholdings and their size declined, and medium and small property holdings increased. That cautious reform failed, however, to accelerate the establishment of cooperatives, while the lack of change in the availability of land and in social domination limited the expansion of the market.

In fact, the accomplishments of the regime were very far from its change-oriented rhetoric. Also, while the petroleum wealth made it possible to improve somewhat the inadequate highway system and thus to unify a national territory that had been fragmented because of the Andean mountain chain, it did not transform the country.

Ecuador adopted a stockholder mentality. Beginning in 1972 imports of luxury products increased at an annual rate of 60 percent.^[57] The bureaucracy grew. Speculation enriched a "new class," of which the military were a significant part. But proven reserves were limited and it seemed possible that Ecuadorian petroleum would be exhausted by 1990. The internal consumption of petroleum products that was subsidized by the government because of pressure from the road transport lobby (high-test gasoline at 20 cents a gallon in 1979!) increased at a wild rate. Furthermore, Ecuador was in danger of becoming the first OPEC country to become a net importer of petroleum. Boycotted by the oil cartel, hampered by technical problems, production and exports dropped beginning in 1975. General Rodríguez Lara tried to limit imports in order to improve the financial situation: the importers in Guayaquil who protested against the revaluation of the sucre (the Ecuadorian currency) initiated major maneuvers against the "progressive" military, accusing them of communism. While the unions initiated very bitter strikes in order to secure wage increases, the business interests and the parties of the right attempted to involve a part of the army in a coup d'état at the time of the "uprising" of 1

September 1975. On 11 January 1976, General Rodríguez was removed by the three commanders in chief, who announced their intention to return power to the civilians. The "nationalist revolution" was over.