SETTLEMENT OF ECOPETROL STRIKE HINGES ON

C O N F I D E N T I A L SECTION 01 OF 03 BOGOTA 004950

SIPDIS

GENEVA FOR DELAURENTIS AND CHAMBERLIN
LABOR FOR ILAB

E.O. 12958: DECL: 05/13/2014
TAGS: PGOV ELAB EPET PHUM CO
SUBJECT: SETTLEMENT OF ECOPETROL STRIKE HINGES ON
REINSTATEMENT OF DISMISSED UNION MEMBERS


Classified By: Ambassador William B. Wood for reasons 1.4 (b)
and (d).

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Summary
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1. (SBU) Twenty-two days into the Syndicated Workers Union's
("Union Sindical Obrero," or USO) strike against Ecopetrol --
Colombia's state-owned oil company -- the lone issue
remaining on the negotiation table is whether Ecopetrol will
re-hire nearly 180 workers dismissed for their participation
in a strike previously declared illegal by the Ministry of
Social Protection (MSP). The MSP decision was based on a
1995 Constitutional Court ruling that all hydrocarbon sector
employees perform "essential public services" and are
prohibited from striking. USO declared its "political
strike" to protest the GOC's restructuring of Ecopetrol,
claiming that the plan would result in the company's
liquidation and hand control of Colombian oil fields to
foreign firms. Both USO and Ecopetrol agree that most of
their strictly labor-related disputes were resolved well
before USO declared the strike. USO's failure to articulate
or to achieve its objectives has severely weakened the
union's public standing and its ability to keep workers from
crossing the picket line. END SUMMARY.

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Background
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2. (U) The Syndicated Workers Union's ("Union Sindical
Obrero," or USO) declared a "political strike" on April 22 to
protest the GOC's restructuring of Ecopetrol, Colombia's
state-owned oil company. USO representatives told us that
the restructuring will result in the privatization of
Ecopetrol and a loss of Colombian control over Colombian
natural resources. On the same day, the Ministry of Social
Protection (MSP) declared the strike illegal on the basis of
a 1995 Constitutional Court ruling prohibiting hydrocarbon
sector workers from striking on the grounds that they perform
"essential public services." USO workers represent
approximately one-half of Ecopetrol's 6,600 member work
force. We recently met separately with USO's national human
rights director Daniel Rico Serpa, former USO human rights
director Jose Fernando Ramirez Lozano, Ecopetrol President
Isaac Yanovich and Minister of Mines and Energy Luis Ernesto
Mejia to discuss ongoing negotiations and to assess the
possibility of reaching a settlement.


3. (SBU) Ecopetrol and USO entered into negotiations on a new
labor contract under their collective bargaining agreement in
November 2002. Under Colombian labor law, parties have 20
days to reach an agreement before submitting to mediation
and, after an additional 20 days, binding arbitration.
Colombian law requires each party to name an arbitrator. If
the two named arbitrators are unable mutually to agree on a
third arbitrator, the third arbitrator is selected by the
MSP. In March 2003, the GOC imposed binding arbitration on
both parties. In September 2003, after waiting six months
for USO to name an arbitrator (USO refused to do so),the MSP
named an arbitrator on USO's behalf. Mejia told us the
arbitrator named was a lawyer sympathetic to the union's
position with a long history of defending unions in labor
disputes.

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Labor Issues Resolved, "Political Strike" Declared
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4. (SBU) USO representatives and Yanovich both told us that
the parties were able to resolve key labor-related points of
disagreement in the context of binding arbitration between
September and December 2003. In January 2004, USO walked
away from the negotiating table to protest the GOC's division
of Ecopetrol into two entities, the original company and the
National Hydrocarbons Agency (NHA),a regulatory agency for
the hydrocarbon sector. USO leaders maintained that the
restructuring would result in Ecopetrol's privatization and
eventual liquidation and would effectively hand control of
Colombia's oil fields to foreign firms.

5. (SBU) According to Mejia, the restructing permits
Ecopetrol to compete more transparently with foreign oil
firms by ceding Ecopetrol's traditional authority to
negotiate contracts with foreign oil firms on newly
discovered oil fields to the NHA. Ecopetrol retains its
financial autonomy, a government-appointed board of
directors, and authority over all oil fields under Ecopetrol
control as of December 31, 2003. The plan also permits
Ecopetrol to sell stock without ceding GOC control of the
company. In reaction to the GOC decree, which went into
effect on January 1, 2004, USO publicly raised the
possibility of a strike. According to USO's Daniel Rico
Serpa, the "political strike" was an attempt to raise
consciousness among Colombians and to protect Colombian
natural resources from being exploited by foreign oil firms.
When asked what concessions they hoped to achieve by
striking, neither USO representative could provide an answer.

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GOC Declares Strike Illegal
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6. (U) According to Mejia and Yanovich, the MSP repeatedly
informed USO that the strike would be declared illegal on the
basis of the 1995 Constitutional Court ruling. The
arbitrators referred the matter to the Supreme Court, which
ruled that the union was not permitted to strike and should
return to the negotiating table. On April 22, USO announced
their intent to strike. On the same day, Minister of Social
Protection Diego Palacios declared the strike illegal. USO
maintains the GOC does not have the authority to declare the
strike illegal, citing a 1999 Supreme Court ruling that the
GOC may not intervene in labor disputes involving state-owned
enterprises. Ecopetrol and the GOC hold that the ruling
explicitly exempts enterprises whose workers provide
essential public services. USO and other Colombian trade
unions also cite earlier ILO rulings declaring that petroleum
sector workers do not provide essential public services and
therefore may strike.

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Both Ecopetrol and USO Confident, Wary
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7. (SBU) Ecopetrol and USO perceptions of union support and
the prospects for USO's success differ tremendously. USO
workers represent one-half of Ecopetrol's 6,600 member work
force. USO maintains that 80 percent of union members are
participating in the strike and that Ecopetrol's production
has diminished precipitously as white-collar workers and
untrained contractors have been tapped to fill in for
striking workers. Yanovich told us that only 25 percent of
Ecopetrol's work force is participating in the strike and
that the company has been able to maintain its production
levels using contractors hired from other firms under the
company's contingency plan. Yanovich also maintains that
Ecopetrol is slowly reincorporating workers who have crossed
the picket line.


8. (SBU) USO contends that Ecopetrol is pressuring striking
workers with the threat of being fired; that Ecopetrol
installations in Barrancabermeja have been militarized; and
that uniformed soldiers frequently deliver dismissal letters
to workers' families. Ecopetrol states that a military
presence is necessary to prevent vandalism and property
damage and justifies the dismissal of nearly 180 workers,
including USO President Gabriel Alvis and Vice President
Hernando Hernandez, on the grounds that they had been
informed that the strike was illegal. On earlier occasions,
the ILO has criticized Colombian labor laws, which give the
GOC permission to dismiss workers for participation in an
illegal strike. USO leaders claim that striking workers have
been threatened by paramilitaries and other armed actors, but
have stopped short of alleging that paramilitaries are
collaborating with Ecopetrol or the GOC.

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Only One Issue to Resolve: Reinstatement
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9. (SBU) Yanovich believes the company has convinced USO that
the restructuring of Ecopetrol will not result in a loss of
financial autonomy or production rights. After five
negotiation sessions over the past six days, both sides agree
that the only issue to be resolved is whether Ecopetrol will
re-hire dismissed USO workers. Ecopetrol maintains that the
workers were aware of the consequences of their actions when
they decided to strike and refuses to offer them employment
as direct hires. However, Ecopetrol has indicated a
willingness to help dismissed workers find new employment,
possibly with some of Ecopetrol's external contractors.

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Comment
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10. (C) For the first time in USO's history, a strike against
Ecopetrol has not resulted in significant declines in
production or concessions in favor of organized labor. The
reasons behind USO's political strike were never clearly
articulated to the public and even most USO leaders are
unclear about the union's demands or objectives. USO's
obstructionist approach to all phases of negotiations with
Ecopetrol has damaged the union's public credibility and
considerably weakened the union, traditionally a giant of
Colombian labor.
WOOD