Hi Safe:

What you propose is definitely one way of getting out of this WFT "pickle".  However, setting a sky high base price, though face saving, would be a hard sell to the Ecuadorian public plus it would not increase the government's much needed revenues. 

Putting my retired bean counter eye shades back on, there may be a solution after all.  If Ecuador truly just want more tax revenue out of ARU's gold reserves (due to the high price of gold), they can always use what is tried and tested in Canada - levy a scaled surtax based on taxable earnings above certain levels.  Such a surtax would still be based on taxable earnings, hence whatever addtional future costs would be reflected.  More importantly this is not done on commodity price alone (which is no gurantee of profitability) and it is in the spirit of "fair taxation" (if there is an oxymoron, this has to be it). 

Simply put, if ARU makes more money, Ecuador makes more money.  In fact you can even call this surtax - "improved WFT" for the simple matter of political optics. 

This reminds me of the time my company wanted to change the overall compensation package by lowering salaries but increase the bonuses instead.  My VP came into my office and told me of this scheme and in closing he said "You will make more money under the new plan".  At that point I just could not hold my laughter anymore.  I believe this remark has now become the second biggest lie in the corporate world, after "The cheque is in the mail".  

Anyway, Correa can always tell his citizens the same thing.  Except this would be true.  You have a much better chance of earning more from a surtax plan than setting a sky high base price (in which you will get nothing), or setting the current price as the base price (in which you collect nothing because no one would do business in Ecuador under those rules). 

For political optics, Correa can even claim that he has heard the pleas of the foreign nationals and in the spirit of the generosity of the Ecuadorian people he has come up with this compromise, which is beneficial to both sides.  He is the politician, he should be able to do a simple positive spin like this one.