Freer trade deals blow to OPEC Ecuador is first to leave oil cartel

September 19, 1992|By New York Times News Service

GENEVA -- Ecuador's decision to leave OPEC reflects the spirit of the post-Cold War era in which monopolistic and socialist policies have unraveled to make room for freer trade and Western free enterprise.

Ecuador will be the first country in the 13-member oil cartel to leave since the group's founding 32 years ago. The decision, announced Thursday night, deals another blow to an organization that has seen its market power wane steadily for nearly a decade and is still reeling from depressed oil prices, rising energy taxes and a successful anti-pollution campaign to restrain the use of oil.

What's more, most members of the Organization of Petroleum Exporting Countries, led by Saudi Arabia, have been producing as much oil as they wish, rendering the cartel useless as a price-setting group.

Ecuador, OPEC's second-smallest producer after Gabon, said it wanted to produce more oil and put its industry into private hands. The significance of the defection could be much greater if it encouraged others in the cartel to bail out.

Over the last few years, politicians in Venezuela and Nigeria, two major OPEC producers, have repeatedly called upon their governments to leave the organization.

The Ecuadorean decision, made by President Sixto Duran Bellen, an advocate of free-market development who was elected in July, fits into a worldwide trend after the end of the Cold War as more countries liberalize their economies.

Mr. Duran Bellen in effect decided that the prestige bestowed upon his country by belonging to what was once a powerful cartel had turned into disadvantages that included restraints on the freedom of Ecuador to produce more oil.

He said Ecuador might double its output in a few years without the OPEC restraints. "Membership in OPEC has meant various costs without bringing major benefits to the country," the president said.

He said that nations like Norway, Britain and Mexico were selling their oil in significant quantities. "Their exclusion from OPEC has not caused them any harm," Mr. Duran Bellen said in a statement issued in Quito.

The move caught OPEC ministers by surprise as they were preparing to leave Geneva after an inconclusive two-day meeting that saw much discord between Iran and others.

"We were taken by surprise," Saudi Arabian Oil Minister Hisham Nazer said at a news conference.

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