Why Ecuador Abandoned Plans to Leave Fossil Fuels in the Ground and Save the Amazon

Adam Chimienti

On Aug. 15, Ecuadorian President Rafael Correa announced his government’s abandonment of the Yasuni-ITT Initiative, the innovative attempt to reverse the economic arrangement of oil extraction in the Amazon by keeping the oil in the soil in exchange for international assistance. His words that evening were disheartening to many. They encroached on the hopes of environmentalists and indigenous rights activists in Ecuador and progressives around the world.

Correa had announced on Ecuadorian state television that he was liquidating the fund for the program and that it was the world’s fault. “The world has failed us,” the fiery president declared, implying that the global community of wealthy nations, organizations and individuals rejected the unique opportunity to cooperate with the Ecuadorian government and its people to save one of the most biodiverse regions on the planet. The idea, highly touted by environmental activists and international supporters of the Correa government, as well as the government itself, was radical in the sense that it would try to provide a model for not extracting oil, while sparing the inhabitants and countless species of the forest from the invariably destructive nature of drilling. Conservation groups have pointed out that the idea for the plan came from civil society, not the government, as one might assume from press coverage.

Growth, Environment and Democracy

If the world is to blame, then surely Correa, as the leader of Ecuador and a prominent voice for an alternative twenty-first century development model, must take his fair share of the responsibility. Correa has earned respect around the world for his economic management, defense of sovereignty and promotion of innovative approaches to the environment, or Pachamama. The latter factor was most notably manifested in what is called the Green Constitution. Yet, Correa dismissed the key Article 71 wherein the ambitious drafters declared

All persons, communities, peoples and nations can call upon public authorities to enforce the rights of nature. To enforce and interpret these rights, the principles set forth in the Constitution shall be observed, as appropriate…The State shall give incentives to natural persons and legal entities and to communities to protect nature and to promote respect for all the elements comprising an ecosystem.

The problem Correa faces after announcing the end of the initiative can best be understood in the classic jobs/growth vs. environment dilemma. While many respected the idea that the government was willing to choose the environment as long as tangible forms of cooperation were coming from wealthier nations abroad, to back away from this initiative deals a blow that an overwhelming majority of Ecuadorians (over 90 percent from the major cities according to a recent poll) are unable to accept. Additionally, Correa’s many critics abroad, especially in the international media, are delighted to point out the hypocrisy of the decision.

To address these concerns, opponents of drilling are now preparing to organize a referendum. Such a move requires five percent of the population to sign a petition and deliver it for review to the National Electoral Council, and then an absolute majority of valid votes is required for the referendum to succeed.

Environmental Stewardship?

While people around the world can only lament the lack of leadership on environmental issues, despite the abundance of dire forecasts and scientific consensus, encouraging models are rarely visible or effective. The Ecuadorian government has succeeded in providing stable economic and political conditions, something unfortunately rare in the South American country. Yet, if we are to believe the rhetoric that boldly emanates from the capital Quito, that Correa’s policies are part of a citizen’s revolution, then the facts on the environmental front must be reviewed. The groups opposed to the drilling of oil in and near Yasuni National Park are on the front lines defending the world’s diminishing biological reserves. In a country plagued by centuries of inequality, a revolution based on the citizenry’s needs must be radical and innovative. The Correa government often insists it is both, but pragmatism in the traditional sense of markets and growth seem to be the defining feature. How could a citizen’s revolution exclude the de jure citizens inhabiting the biological reserves, i.e. the indigenous tribes, some of which have little or no contact with the outside world?

Furthermore, the 2008 constitution, in granting rights to nature, is trailblazing but also essential. UN data reports that threatened species in Ecuador in the year 2011 were no less than 2,260. In neighboring Peru and Colombia, both countries with roughly four times the territory of Ecuador, the number of threatened species is roughly a quarter of that amount (even the vastly larger U.S. and Brazil do not come close to Ecuador in threats to endemic species). For a sense of how Ecuador is leading the world in this harrowing category, check out this infographic by the Mother Nature Network. This phenomenon can likely be explained as a reflection of both the dense biodiversity within the Andean-Amazon corridor near the equator and vast ecocide that has occurred over the years.

Playing Catch Up in Late Capitalism

President Correa is certainly aware of the inequity present within the global climate change debate. On Sept. 24, 2007, when he first announced the initiative at the UN High Level Meeting on Climate Change, he pointed out that over 90 percent of damages from climate-change related disaster occurred in developing countries, and clearly the poorest are the most vulnerable within such countries. Now, however, his leadership appears aimed to assist the majority of impoverished people in Ecuador (while giving the middle and upper classes a significant boost) at the expense of the environment and the many native peoples who are categorized as impoverished and are clearly marginalized. This new policy seems to be a betrayal of his former sympathies. It has been widely reported that in his younger years, Correa lived amongst indigenous people, learning Quechua, and even despairing over the extent of the poverty they had to endure.

Since the announcement, the president has fired back at critics by arguing that this drilling, Plan B of the Yasuni proposal, will only take place in one thousandth (.001) of the park’s territory. He also claims that the public, especially the youth, are being manipulated in an effort to take down the government. Critics point out that there has already been drilling in the park under Correa and that the auctions of oil blocks nearby are also problematic. Moreover, the issue of mining for copper and gold in the south of the country, near the Peruvian border in the Cordillera del Condor, will also have a major impact on indigenous people, water supplies and precious rainforest. Overall, the green position is increasingly stained, the revolution less radical.

Due to the international headlines announcing the initiative’s failure, now would be an appropriate time to look over the facts related to oil extraction in Ecuador. It is nothing short of dismaying. Over the years, firms including Texaco, Occidental Petroleum (with deep ties to the family of former VP Al Gore), Brazil’s Petrobras, Venezuela’s PDVSA and others backed by the Chinese CNPC and Sinopec, as well as the Ecuadorian state firms PetroEcuador and PetroAmazonas, have all played a role in the extraction sector in the country. Many of these companies have been implicated in irresponsible methods that have led to considerable pollution. The most famous example is Texaco’s near three-decade span of exploration and extraction in the northeastern corner of the country near the towns of Lago Agrio and Coca. This involved the construction of an inexcusably faulty pipeline in coordination with the government, dumping of produced water into waterways and creating a major disaster zone with unlined pits that continue to frequently spill over when it rains. A fierce legal battle rages on over this issue and the area’s inhabitants are still suffering.

The history of oil extraction in the Andean nation is also notorious among the whole of the Ecuadorian population. Aside from the pollution, there is also the inverse relationship, especially in the 1970s and ’80s, with oil production and exports to national debt. The more oil the country exported in previous decades, the more indebted it became to foreign entities. Since a key aspect of Correa’s approach has been a break with the Western-backed international financial institutions like the IMF and World Bank, the leadership has been able to acquire a brand new source of lending from China.

Correa has also prided himself on the ability to negotiate or renegotiate contracts that are much more favorable for Ecuador. This success must be noted and credit is due the government in this regard. Correa’s explanation that he is doing this for poverty-stricken Ecuadorians does ring true to a certain extent. After a 2008 default on $3.2 billion in bonds that left the country with a poor credit rating, the government had to rely heavily on China to maintain public works projects. These have been on the rise and having a notable effect on poverty reduction and infrastructure. This has boosted support for Correa, evidenced by his landslide reelection in February of this year, winning around 35 percent more votes than his closest rival. 

However, such progress is not clearly established and the country’s loans coming from China (representing more than half of borrowing by Ecuador between 2005-2011 and certainly on the rise) arrive with a significant premium in the form of high interest rates. Experts also believe the country is running the risk of an over reliance on oil exports, thereby contributing to an eagerness to continue exploitation of proven reserves. This enthusiasm is clearly on display in the decision over Yasuni, where the president claims profits from reserves may actually be worth as much as $18 billion, nearly three times the amount when the initiative first got underway.

The attitude expressed over the initiative is also proving politically unpopular. Mr. Correa is not able to run for office again under the current rules and has repeatedly expressed that he has no interest in ruling Ecuador beyond the end of his term in 2017 (though he recently signed a proposal to reform the constitution in August that would, among other things, include indefinite reelection). Yet there may certainly be backlash against his party and effective resistance on the ground. The leader of the largest indigenous collective, the Confederation of Indigneous Nationalities of Ecuador, or CONAIE, Humberto Cholango, has declared that it is up to all Ecuadorians to defend the park and its tribes as this issue is of “transcendental importance, not only for Ecuadorians, but for all of humanity.” Correa, however, disagrees and says he is confident that the Ecuadorian people will trust him and that his government, defenders of their self-proclaimed revolution, will win again.

Missing an Opportunity to Lead and Inspire

After all is said and done, the loss of integrity in Yasuni National Park would be a tragic blow to the ecosystem, the indigenous tribes and environmentalists around the world. Celebrities such as actor Leonardo DiCaprio have expressed their support for the initiative along with people around the world in search of alternative models. It is therefore very unfortunate that, as his critics see it, Correa did not fully engage in the promotion of the Yasuni-ITT initiative.

Interestingly, while the governments of other developing countries, such as Indonesia and Turkey and neighboring Colombia and Chile, pledged their support, the U.S., China, UK and Japan all officially stood on the sidelines. (Individual contributions have come from at least 11 countries though, including the U.S., UK and Japan.) The Italian, Spanish and a regional government in Belgium led the way in commitments and deposits, but the German government never backed the fund and disagreed with the premise. However, earlier this year Germany and Ecuador did reach an agreement amounting to 34.5 million euros in support of forest protection and the UN’s Reducing Emissions from Deforestation and Forest Degradation. Responding to German criticism over the Yasuni decision, that deal has now been unilaterally canceled by the Correa government.

Considering the negotiating prowess of Rafael Correa and the burgeoning relationship with the People’s Republic of China, which promotes harmonious, respectful and mutually beneficial cooperation, it begs another question: Why weren’t Chinese leaders brought aboard?

Similarly, we see a failure in terms of multinational corporations. Major firms like Coca-Cola (which committed to a $100,000 contribution, but didn’t deposit the funds), Google and Facebook are highly visible in the Ecuadorian market and should have been under more pressure to back the initiative and earn some positive press. One can easily see how a company like Amazon might have felt compelled to save an important corner of the forest that is its namesake.

The unfortunate reality is that Correa’s brash style is likely a factor.

Billy Pizer, a former deputy assistant secretary for environment and energy under President Obama, made the case that the initiative was about holding the forest hostage, as did other Western observers. This seems more than a bit disingenuous though. Consider that Ecuador’s history has been rife with corrupt leadership that has been under the sway of not only Washington but also Wall Street for decades. This has led Ecuador to the state in which it currently finds itself, with few good options to successfully lift up its poor. The Ecuadorian president, in condemning critics opposed to the open-pit copper mine that a Chinese firm is currently readying, declared that the country cannot be beggars sitting on a sack of gold. The jobs/growth vs. environment argument, when it applies to developing countries, is always complicated by history—history that is all too often ignored by the wealthier colonizers of previous eras.

Such debate has bogged down progress on the climate change accords and is incredibly depressing in its nature. We are likely to see more disheartening scenes throughout the developed world as leaders are increasingly concerned with succeeding in today’s harshly competitive global economy. This comes alongside a drive to improve the lives of millions of impoverished human beings. Unfortunately, it leaves out future generations who may never get to experience nature in its most diverse form or a state that could be considered unspoiled. A citizen’s revolution should necessarily account not only for the poor majority of a society, but for those in the margins living on top of the reserves of oil and minerals. It should also account for our descendants. For this to happen, we need good ideas. The Yasuni-ITT Initiative is one such good idea. Its fate now rests on the democratic will of a nation of some 15 million human beings, 29 percent of whom are living in dire poverty. Its fate should have rested on a government that seeks to inspire the world through a genuinely alternative model of development. It should have rested on the desire of people, organizations and nations around the world aiming to right some of the wrongs of the global system. In any case, there is enough blame to go around.

Visit EcoWatch’s BIODIVERSITY page for more related news on this topic.

——–