NOTE: This article is based in part on translation from a fact sheet by the Quito-based Centro de Derechos Economicos y Sociales (Center for Economic and Social Rights).
From the provincial capital of Macas in the southeastern part of the Ecuadorian Amazon, you see a densely forested mountain range in one direction, and a snow-capped volcano in the other. In sharp contrast to the boomtown of Lago Agrio to the north, here flower gardens outnumber rumbling trucks. Macas is peaceful, at a safe distance from the Colombian civil war. Leaving the town by road, you enter one of the most biologically diverse and beautiful ecosystems in the world.
But this region has a serious looming problem, one that threatens its environmental and cultural existence: Oil. More precisely, the problem is that there might be oil underneath this beautiful land. Until April 17, Ecuador’s “Ninth Round” of oil concession bidding, slated to begin in May, was set to grant 11 Amazonian blocks comprising some 2 million hectares to international oil companies. That was virtually the entire remaining wild rainforest of Ecuador. But on April 17, PetroEcuador, the country’s state oil enterprise, announced its recommendation to reduce the bid area to only about 400,000 hectares. While the recommendation is not yet official policy, the Quito-based Center for Economic and Social Rights says the recommendation is a “clear victory for the indigenous movement, and for environmental and human rights organizations.”
Human rights organizations are also enthusiastic about the reason for PetroEcuador’s recommendation. According to the Ecuadorian newspaper “El Universo,” Francisco Rendón, the Petroecuador representative, the primary argument for a reduction in the area up for bid is opposition from local residents and communities in potentially affected areas. The Ecuadorian Amazon is home to 10 indigenous, forest-dwelling groups. At least three of the groups, the Shuar, Achuar and Kichwa, have stated unequivocally that they oppose new oil activities in their territory, and they have been vocal in their opposition.
One of the reasons for the opposition to oil development in this area is the experience of the northern Amazon of Ecuador, which has been largely destroyed by oil development. Oil activities in the 1970’s and 1980’s, led by Texaco, destroyed some 1 million hectares of forest, contaminated vast areas of the region, and left thousands of people with contaminated water and food. Poverty in the oil-producing areas – and in the country as a whole – has actually increased in Ecuador’s oil era. The cultural destruction too has been vast, with colonization, displacement and disease leading to the near disappearance of the Tetete, assimilation of the Huaorani, and severe impacts on the way of life of the Cofan, Siona, Secoya and Kichwa. The southern Amazon has not been exploited, and remains today an area of unspoiled tropical rainforest. Life is not easy or perfect for the Shuar and Achuar Indians of the region, but at least they have their land, which they have lived on for millennia. The Ninth Round threatens their way of life.
The first stage in oil development for any Ecuadorian region involves the solicitation of bids from transnational companies to prospect and drill for oil in untouched areas. The size of the Ninth Round concessions were planned to be as much as 2.5 million hectares, divided in 13 giant blocks of land. Each block is awarded to the company with the most attractive bid, indicating a willingness to invest the most and offering the highest percentage of profits to the national government. As originally planned, most of the blocks were in the provinces of Napo, Pastaza and Morona Santiago in the central and southern Amazon. There are also two blocks for bid on the West Coast of Ecuador. (See map.)
The Ninth Round is part of a larger government program called “Open Ecuador 2000,” the purpose of which is to attract foreign investment in the oil sector. The government hopes to turn around the recent decline in oil production (down 11% in 1999) and re-start Ecuador’s economy. Admittedly, the economy has been in terrible shape over the last several years. But the oil industry has been a major cause, rather than the cure, of the country’s crises. Irresponsible loans taken on the basis of projected income from oil put the country on a debt treadmill. As a result, for example, in 2001 oil income provided about 40% of the national budget, but 42% of the budget goes to pay foreign debt. (And most of this outrageous expenditure goes to pay interest on loans, not the principal.) Foreign debt, about $217 million before the oil era, now stands at about $16 billion. Unemployment and underemployment has gone from 15.4% to 67.9%. In 1972, 47% of the population lived below the poverty line, today that figure is closer to 67%.
The impetus of the new round of oil development is to pay interest on debts incurred in a period of 30 years of oil production. Ecuador’s agreement with the International Monetary Fund requires privatization of the oil industry, elimination of subsidies, higher taxes and the expansion of oil-producing areas. Moreover, according to the latest letter of intent agreed to between the IMF and Ecuadorian government, the resources from the Ninth Round would be used to guarantee payments to multilateral banks over the next few years. In essence, the Shuar, Achuar, Huaorani, Kichwa, Zapara and Shiwiar peoples will become the guarantors of debt accrued by the government to international financial institutions.
Starting in the year 2006, 80% of the oil income would go to financing debt, and just 20% to a stabilization fund to protect the country from volatile oil price swings. If there’s any money left over, that is to say in the unlikely event oil prices remain consistently high, some small portion may go to education, health and social development. In other words, local people would get the crumbs – if any – remaining after servicing a debt that many Ecuadorian activists consider an immoral foreign debt.
The indigenous people of the central-southern Amazon still maintain a traditional economy, based not on cash but on sharing of communal resources. The entry of transnational corporations, their agents and their community relations style represent a grave risk to traditional community customs. The switch to a cash economy represents a profound threat to the cultural values that the government is obliged, by international conventions and Ecuador’s own constitution, to protect.
Globally, the last thing the world needs is new oil frontiers, since burning oil is one of the main sources of carbon emissions that are the principal greenhouse gas. Even burning most of the currently available oil reserves will be disastrous for the climate, so opening up still more oil wells defies carbon logic.
Even apart from affects on the planet’s climate, oil development is often disastrous, especially in tropical areas. Ecuador’s own experience in the north is one of the most notorious examples. The roads, colonists, brothels, contamination, oil spills, seismic lines crisscrossing the forest -- these are all part of oil development that could spell doom for the region and its indigenous people.
Here is a simple thought to concentrate the minds of oil executives planning to bid even in a Ninth Round: Any company involved in the Ninth Round is likely to be complicit in the violation of human rights, especially the rights of indigenous people of the area. These groups have made it clear that they are opposed to new oil development in their territories. Though the Ecuadorian government technically owns the rights to subsoil resources, the local people have the right to consultation and participation in the process. They have the right to preserve their way of life, the right to self-determination, and the right to choose their development path. But none of these rights have been respected.
The fight over Block 24, which is on Shuar territory adjacent to Ninth Round areas, may be a harbinger of upcoming struggles. Arco, which had the concession until selling to Houston-based Burlington in 2000, blatantly violated collective indigenous rights of the Shuar in 1998 and 1999. As part of their “community relations” strategy, Arco ignored the public statements of the Shuar federation opposing the entry of oil operations in their territory by signing agreements with carefully chosen local community representatives. These representatives were to receive compensation for agreeing to allow an environmental study in their area. Even after an Ecuadorian Constitutional Court issued an injunction prohibiting the company from pursuing these contacts, Burlington, which inherited both the oil rights and injunction from Arco, proposed “dialogue” with Shuar representatives, without the knowledge and against the wishes of the Shuar federations. On April 11th, three indigenous federations filed a criminal complaint, contending that Burlington has failed to comply with the injunction. Some 500 indigenous people marched in Macas in support of the complaint.
If Burlington’s techniques are any indicator, “dialogue, ” “sustainability” and “environmental assessments” will be the new guises under which indigenous solidarity – not to mention the rule of law - is undermined in order to allow oil to be mined.
In their effort to engineer consent to oil development, we can expect that companies bidding in the Ninth Round – even the reduced area PetroEcuador now recommends - will insist that they are better than Texaco, and that their operations will not contaminate the environment as happened with Texaco in the north. Indeed, it would not be difficult to improve on Texaco’s notorious practice of dumping process waters instead of re-injecting them into wells. But for any people, “development” must be preceded by self-determination. And “sustainability” must be defined by the people most affected, the ancestral inhabitants of the area. Claims that Ninth Round oil exploitation will be “sustainable” and “environmentally sound” must be evaluated by the people themselves.
The Ecuadorian government, oil companies and IMF all support the Ninth Round. But the indigenous people of the area – those most affected – most emphatically do not. Their activism has led at least some elements of the Ecuadorian government to recommend a substantially reduced Ninth Round. With enough pressure, we can bring that down to zero. So far no companies have bid in the Ninth Round, and no investments have been made. This is a chance to prevent a harm before it happens.
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© Copyright 1995-2011, EarthRights International
ERI staff, February 2010
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