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DE RUEHQT #0579/01 0682221
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O 092221Z MAR 06
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3828
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 5429
RUEHCV/AMEMBASSY CARACAS PRIORITY 1626
RUEHLP/AMEMBASSY LA PAZ MAR 9713
RUEHPE/AMEMBASSY LIMA PRIORITY 0410
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 0074
RHMFISS/CDR USSOUTHCOM MIAMI FL

UNCLAS QUITO 000579 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM EPET ELAB EC
SUBJECT: STATE OF EMERGENCY DECLARED FOR OIL WORKER STRIKE 
 
¶1.  Summary:  President Palacio declared a state of emergency 
on March 7 in the three provinces of Napo, Orellana, and 
Sucumbios after 4,000 oil workers went on strike and took 
over installations at five PetroEcuador oil fields.  On March 
8, the military retook control of the oil wells and the 
government announced its intention to negotiate with the oil 
workers.  The methods used by striking workers fits a pattern 
becoming common here, with disruption at the local level 
used, often successfully, to obtain resources from the 
national government.  An unrelated national one-day strike 
and march in Quito by workers, teachers, and students took 
place on March 8, disrupting traffic but little else.  End 
Summary. 
 
Oil Workers Strike, State of Emergency Declared 
--------------------------------------------- -- 
 
¶2.  Early on March 7, 4,000 employees of subcontractors 
Petroproduccion, a subsidiary of PetroEcuador, went on strike 
demanding back pay and to become regular employees of 
PetroEcuador.  The workers took over the installations at 
five key PetroEcuador oil fields:  Auca, Sacha, Shushufundi, 
Libertado, and Lago Agrio.  On the evening of March 7, 
President Palacio declared a state of emergency in the 
eastern provinces of Napo, Orellana, and Sucumbios.  This 
measure includes the suspension of constitutional rights and 
militarization of the area. 
 
¶3.  On March 7, oil production fell to 132,000 barrels 
(compared to a usual 197,000) due to the strike, however, oil 
exports were not suspended as there were reserves in other 
locations.  Credit Suisse has stated that they do not believe 
the strike will have serious economic consequences. 
 
Government Seeking to Negotiate 
------------------------------- 
 
¶4.  On the morning of March 8, the GOE military retook the 
oil installations in the five fields to begin the 
normalization of operations and the president of the Regional 
Federation of Subcontracted Petroleum Workers, Remigio 
Sornoza, was arrested along with several other protesters. 
The Ministry of Economy publicly announced a planned transfer 
of $35 million to cover back pay for the workers and Minister 
of Government Alfredo Castillo announced the government's 
willingness to negotiate with the oil workers on March 8, 
saying their demands had merit. 
 
¶5.  Provincial leaders in Orellana and Sucumbios announced 
they would join the oil workers strike from March 10, setting 
the stage for a prolonged negotiation.  Vice Minister of 
Government Felipe Vega told EmbOffs on March 9 that the GOE 
was committed to pressing ahead with charges against those 
that broke the law.  Meanwhile, four more Sierra provinces 
are threatening to strike from March 13 if the GOE does not 
meet their demands. 
 
Workers Lead National One Day Strike 
------------------------------------ 
 
¶6.  A relatively small number of workers, reportedly in the 
thousands, led by umbrella United Workers Front, and joined 
by far-left teacher and student groups (who largely stole the 
spotlight from workers with their more violent tactics), held 
a one-day "national" protest on March 8 to protest the 
minimum wage, subcontracting, the free trade agreement, and 
to demand the ouster of Occidental Petroleum.  The protesters 
blocked some roads and marched to the presidential palace and 
the Congress building where they were met with tear gas.  The 
worker protest largely fizzled, with low turnout and its 
impact limited to public schools in the capital, which were 
closed. 
 
Comment 
------- 
 
¶7.  PetroEcuador's financial woes are unlikely to get any 
better in the near term and its current employees have 
already protested against the new president of the 
state-owned company (the third since Palacio took office 11 
months ago).  With the provinces now joining in, the trend 
toward local strikes to get economic concessions is likely to 
continue, at high economic cost.  However, if Vega's 
statement is true that violent protesters will be prosecuted, 
this could change their disruptive methods.  Meanwhile, the 
national worker strike was not widely observed, and in Quito 
protest marches quickly dispersed after rain began.  Still, 
such protests should keep President Palacio distracted in his 
last 10 months in office, helping to make any real progress 
on the political or economic front unlikely. 
 
JEWELL