Ecuador struggles

While Venezuela's increasing influence has left Chavez upbeat, Ecuadorian President Alfredo Palacio has been battling his greatest challenge since taking office last April. He has contended with large protests, the smashing of oil equipment and attacks on small pipelines. These disruptions caused August's output to fall significantly, to about 33,000 bopd.

This situation's severity has forced Ecuador to seek an oil loan from Venezuela, so that it can meet its oil export commitments. Moreover, it will have to import oil for its domestic use and borrow about $400 million to avoid balance-of-payment problems exacerbated by oil production declines.

Oil officials believed that it might not be until November that Petroecuador could return to its normal output level of about 201,000 bopd. After Venezuela, Ecuador is South America's largest oil exporter to the US. Some countries' problems are often other nations' fortuitous advantages. In this case, Chavez is only too pleased to offer Ecuador oil loans and other aid. He is also happy to use Ecuador's reduced exports as a route toward increasing Venezuela's influence.

Mayra Rodriguez Valladares is president of New York-based MRV Associates Inc. (www.MRVAssociates.com). She is a regular contributor to this column.

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