Nice post ebear, I'd love to knock some holes in your theory but like all theories that's all they are .. "theories".  Without a few facts they will remain theories and speculation.

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Thanks.  Like Donald Rumsfeld, I try to work with known knowns as much as possible;)

we know:

1. $US is the currency of Ecuador.
2. $US is trending lower against gold.
3. State expenditures are running ahead of income.
4. Oil production is declining (6% drop in 2007, according to Acosta)
5. Reserves exhausted in 30 years at current rates.
6. 3/4 of Ecuador's oil is exported.
7. Ecuador has major copper potential
8. Corriente is the poster child, invited to dog & pony show in China.
9. The Chinese have plans to build a port.
10. 70% WFT* on oil and mining now in place.

* that should be WTF!

Now imagine you're the Minister of Finance.  What do you do, assuming you have the nation's long term interests at heart?  Personally, I would try and fast-track copper production to cut down my dependance on oil exports and preserve as much as I can for the future.  I'd also be looking for a way to hedge my dollar risk.  The oil itself is a hedge, but it's non-renewable, whereas gold just sits there gaining value as the dollar declines.

I'm not saying that's their plan.  For all I know, they don't have a plan.  From the outside, it sure looks that way.   But if I can think of it, surely a former finance minister can?

Maybe I'm attributing too much intelligence to this gang?  Why should this particular group have the nation's interests at heart?  Sure they say that, but in Latin America as elsewhere, politics is the road to personal wealth, and these ARE politicians we're dealing with.  Something we must never forget.

Maybe Aurelian should fire a shot across their bow?  Stop drilling and start sniffing around Peru, Chile or maybe Argentina for another project?  We've got 68 million in the bank, according to the 2007 Q3 report.  Why waste it poking holes in Ecuador when we've already got FDN?  These guys are proven mine finders.  They shouldn't have any trouble setting up shop in a friendlier jurisdiction, and if my scenario plays out, they'd have to do that anyway.  Who in their right mind would explore in Ecuador now, if they're going to cap you at 70%?  Who would buy you out?

I've noticed a certain enthusiasm greeted CGP's venture with Newmont (I own CGP) and MDI's takeover of Paragon, but these are small stakes made before the WTF tax came in.  Just a toe in the pond - something you can walk away from if you have to - so I wouldn't attribute too much to it.  It's nice, but's it's not that significant.

Not trying to be Marc Faber here, just being realistic.  This tax thing drove me out of hiding.  Until it surfaced, I was perfectly happy just lurking the boards picking up snippits of news.  I'm bringing this up now because I don't see anyone else discussing it, and it seems like a serious possibility.

Anyway, not everything I post is doom and gloom, and to prove it, here's a valuable link that's sure to cheer you all up.  There's a new one every week, so I'll post them to the off-topic board as they appear - that is, if no one objects <g>.

http://www.diario-extra.com/especialesextra/lunes/default.asp

Oh, and Happy New Year everyone!  It HAS to be better than 2007!

ebear