Both abbreviations intersect due to the need to finance the war against narco-terrorism. According to the national government, in 2024, 1,020 million dollars are needed for this purpose. And the National Assembly of AN started the debate on the bill which, among other taxes, increases the value added tax, VAT, by three points without agreement.

The increase in VAT from 12% to 15% will represent a revenue of between 1,300 and 1,500 million dollars, depending on the state of the economy, which is being slowed by problems of insecurity, curfews and falling consumption.

How to finance the ‘war’ and the rest?

Meanwhile, the ITT oil field, which produces 58,000 barrels per day, would have to be shut down on August 20, a year after a public consultation. In 2022, this meant a net income of 1.2 billion dollars, and last year, due to the drop in the price of crude oil, 950 million. This means that the so-called Block 43, with the potential to double production, can pick up the bill alone.

Petroecuador scheduled its shutdown with bureaucratic meekness, which means that service providers are starting to dismantle equipment – drills, etc. – which will cause production to collapse with the consequent loss of millions in revenue.

Breaking the administration’s silence, the deputy minister of finance admitted in the announcement what is an open secret: there is no money to close ITT (1.5 billion) and that Ecuador needs the income generated by this activity.

Is dollarization in danger?

The subject should not be burdened with so much modesty. The popular consultation that the Constitutional Court, CC, called for “progress” coinciding with the political crisis arising from the death of the Crusader, was a ridiculous fraud. A wrong question that dates back a decade and did not make it clear about the true status of Block 43, whose reserves did not remain underground, but have been exploited since 2017 based on an exceptional license from the AN.

Article 407 of the Constitution is final: “Exceptionally, the mentioned resources (in protected and intangible areas) may be exploited… a previous declaration of national interest by the National Assembly, which, if deemed appropriate, may call for a public consultation (not NGO )”.

The fundamental problem is that the CC ignored the authorization of the AN and made a clean slate of jurisprudence and rights that the Ecuadorian state acquired through Petroecuador, without a firm rejection by the dejected executive who was in favor of leaving and the very fact that the AN was dissolved.

In the same column, we said that the new AN should demand responsibility from the Constitutional Court for ignoring its exclusive authority as a function of the state, but it turns out that, in accordance with the institutional framework of the Montecristi Constitution, it is not subject to any form of political control; something unheard of.

A paradox that must be added to the discussion, even more so if the majority agreement of the parties is that, in the midst of the war against narco-terrorism and fiscal bankruptcy, the closure of ITT is not possible. (OR)