Indians who traveled from Cotopaxi province to join the protests cook breakfast Friday in a park in central Quito VIDEO CNN's Harris Whitbeck traveled to some Ecuadorean Indian villages and examined their economic plight Windows Media 28K 80K

July 16, 1999
Web posted at: 9:07 p.m. EDT (0107 GMT)

In this story: 'Hunger and poverty are rising' Strike adds to economic woes RELATED STORIES, SITES

From staff and wire reports

QUITO, Ecuador -- Taxi drivers on Friday declared an end to a crippling transport strike that sparked violent clashes between strikers and police and plunged Ecuador into crisis.

The Association of Ecuadorean Taxi Drivers, which had led truckers and other transit workers on strike for the last 12 days to protest a 13 percent rise in fuel prices, said it and other unions would return to work nationwide.

President Jamil Mahuad gave in to the strikers' main demand on Wednesday, agreeing to roll back the gasoline price hike to its June 30 level. But the 50,000 transport workers across the Andean nation kept up their strike, joined by 4,000 Indians demanding better education and other services.

On Friday, the strikers reached an agreement with Mahuad that makes eight concessions to the transport workers, including unfreezing union bank accounts and a commitment to look into the problem of unions' debts, officials said.

It was unclear whether the Indians would continue their protests or accept the taxi drivers' decision to end the strikes.

'Hunger and poverty are rising'

"We're not seeking a violent confrontation but we want President Jamil to rectify this situation," Indian protest leader Olmedo Pilka said Friday as a police helicopter hovered overhead. "His government's not dying of hunger. He doesn't realize that not only are gas prices rising but the price of everything is rising so hunger and poverty are rising."

Police fired tear gas canisters at strikers in sporadic clashes during the nearly two-week strike. One truck driver was killed and more than 500 strikers were detained, police said.

Mahuad reimposed a 60-day national state of emergency on Wednesday that he first declared on July 5 before it was revoked by Congress on Tuesday. The state of emergency empowered police and soldiers to detain and order strikers off the street.

The fuel price hike was part of Mahuad's austerity plan designed to help bring Ecuador out of its worst economic crisis in 70 years. The country is suffering from a $1.5 billion budget deficit and its banking system is near collapse.

Strike adds to economic woes

The strike itself took an additional toll on major businesses, especially the flower export industry. Striking workers blocked major highways that connect flower farms to the country's airports.

Flower growers said the strike cost them at least 30 percent of their product, with $100,000-worth of flowers left to rot each day because they couldn't be transported from the farms to the airplanes.

Flower farms, which account for Ecuador's fourth-largest industry, have begun facing problems with creditors. But the banks are in no position to help them, reeling from a shortage of liquid assets.

The government intervened on behalf of some banks who announced they didn't have enough cash to meet all the demands of their account holders.

But the international financial community says Ecuador must implement austerity measures to help pay off its $16 billion debt.

"I think the country has to face these realities and the international community has to be supportive both in the economic side and also in the social side," said Enrique Iglesias, of the Interamerican Development Bank.

Two-thirds of Ecuadoreans live in poverty, a figure that will not likely improve under the country's current economic projections. Ecuador's economy is expected to shrink by 5 percent this year and its annual inflation to top 50 percent.

Correspondent Harris Whitbeck and Reuters contributed to this report.

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