New Internationalist

Oil or life? Ecuador’s stark choice

Issue 441

Esme McAvoy goes to the Amazon to find out what is happening to the audacious Yasuní proposal – to keep oil in the ground for the good of the planet.

Mauro Burzio / Gobierno Municipal de Francisco de Orellana
Mauro Burzio / Gobierno Municipal de Francisco de Orellana

A 360-degree spin on my heels confirms that I’m surrounded. By trees. A dense forest stretches as far as the eye can see. Trees of every possible shade of green, with leaves the size of parasols and the occasional towering ceiba – a giant variety that pokes head and shoulders above the rest of the rainforest canopy. I’m 36 metres up a bird-watching tower, overlooking a fraction of the mighty Yasuní National Park in the heart of the Ecuadorian Amazon, and I feel tiny.

It is here that Ecuador is confronting a dilemma of epic proportions. Beneath a pristine patch of this Park – which scientists now agree is the most biodiverse swathe of rainforest on earth – lies over $7 billion-worth of oil. The estimated 846 million barrels lie in three oilfields – Ishpingo, Tambococha and Tiputini, or ITT for short – and equate to a fifth of Ecuador’s total oil reserves. But rather than exploiting the oil, Ecuador’s president, Rafael Correa, has put forward an unprecedented alternative: leave the crude underground indefinitely and instead seek compensation from the rest of the world to the tune of $3.6 billion – roughly half its market value.

Locking up the oil would avoid the emission of 407 million tonnes of CO2 – roughly equal to France’s annual emissions. The money raised would be invested in renewable energy projects, helping Ecuador reduce its dependency on oil, while the expected returns would be put in a second pot to fund environmental conservation and community projects nationwide.

First announced in 2007, the Yasuní ITT proposal was considered one of the few bright spots in the deadlocked UN climate negotiations. It offered a new model of shared responsibility and shifted the debate away from ‘carbon offsetting’ and mitigation towards something far more sensible: avoiding emissions in the first place.

Yet since then, the initiative has burned through three committees, suffered ministerial resignations, false starts and backtracks. President Correa’s threats to drill have damaged the proposal’s credibility and, despite some progress, words of support have largely failed to turn into cash.

Ecuador isn’t prepared to wait around forever. If there isn’t at least $100 million in the pot by the end of December this year, President Correa has the right to call off the initiative, clearing the way for ‘Plan B’: drilling the oil.

What’s all the fuss about?

The environmental case for leaving the ITT oil fields untapped is beyond question. A single hectare of rainforest within Yasuní has been found to contain over 650 different species of tree – more than the whole of the US and Canada combined – and the Park boasts over 600 types of birds. Research stations have documented world records for ‘species richness’ of amphibians, reptiles and bats. In light of this incredible ‘megadiversity’, the Yasuní National Park and its surrounding area was declared a World Biosphere Reserve by UNESCO in 1989. A spill here would be disastrous.

The entire National Park region is also the ancestral land of the indigenous Waorani people – once hunter-gatherer warriors who are now largely settled in 38 communities. However, there remain at least two uncontacted tribes, the Tagaeri and Taromenane. Relatives of the Waorani who broke away to escape contact with the outside world, they remain in voluntary isolation. Leaving the ITT oil untapped is critical for their survival: and so, in 1999, the southern half of the Yasuní National Park, some 700,000 hectares, was designated an ‘Intangible Zone’, off-limits to all extractive industry.

Yet Yasuní is under competing pressures. According to Matt Finer, of the environmental NGO Save America’s Forests, the Yasuní region today is ‘a complicated array of overlapping protected areas, indigenous reserves and extractive concessions’. Oil interests can often win out, regardless of National Park protection or UNESCO titles.

The view from the rainforest

‘The roads, health centre, the schools were all built by oil companies. The Yasuní initiative is gaining traction here but it’s hard. The men think about how to make a quick buck – oil work brings money’

To try to find out how the local people feel about the interest the world has suddenly shown in their home, I catch an overnight bus to the oil town of Coca. It’s located in the province of Orellana, the gateway to the northern Ecuadorian Amazon where most of the country’s oil is produced.

Swelteringly hot, with the constant blaring of horns from buses and huge 4x4s, Coca is literally an urban jungle. Sitting on the banks of the Napo river that eventually joins the mighty Amazon, the town has grown rapidly since Texaco struck oil in the late 1960s. Yet, despite the bustle and apparent growth, there’s no real wealth. ‘Orellana province produces 63 per cent of Ecuador’s total oil yet its people are the poorest,’ says Enrique Morales, director of environment for the local provincial government. ‘In the areas where the richest companies in the world are drilling, you’ll find local people just outside the confines begging.’

When oil companies first entered the Amazon, the state took a hands-off approach, leaving the communities no option but to depend on the very industry that was causing their problems. The roads built into the Amazon brought uncontrolled immigration and deforestation.

The roads, health centre, the schools in Coca were all built by oil companies,’ says Gerardo Gomez, who works for the local government’s tourism department. ‘The Yasuní initiative is gaining traction here but it’s hard. The men think about how to make a quick buck – oil work brings money.’

Yet according to Morales, few in Orellana actually work for oil companies. ‘At least, very few have a decent job. The jobs such as digging trenches, cleaning up oil spills or clearing the roads are reserved for local people.’

Abandoned by the state

Some of the most dramatic impacts of oil exploitation have been seen amongst the indigenous Waorani people. Evangelical missionaries made the first contact with the fierce nomadic warriors in the 1950s, bringing sugar and even air-dropping cases of Coca-Cola to win them over. Oil companies followed in their wake, taking advantage of the Waoranis’ social structure of relatively isolated, small clans. They negotiated with individual leaders to drill in return for cash, roads, free food and alcohol that, combined, destroyed their hunter-gatherer culture within a generation.

Communities across the Amazon were abandoned by the State. According to Morales, just four per cent of the water used by local people is safe to drink. ‘Some water is completely toxic due to oil contamination. We receive calls from local people almost every day reporting leaking oil pipes, oil spills, evidence of oil contamination close to their homes.’

‘It was hard to give up hunting but we have seen more animals in our territory’

Miguel Jaramillo, 26, now lives in Coca working as an oil-tanker driver for contractor Halliburton. ‘Halliburton is contracted by all the oil companies here to do work such as lining new wells with concrete, closing them off or clearing contaminated waste,’ he says. ‘Oil production involves expensive equipment, controlled chemicals and produces lots of toxic waste.’ Last year he helped clear waste from the oil wells operated by Spanish oil company Repsol working within the National Park, removing over 3,000 cubic metres of contaminated drilling mud.

We’re the ones living in the contamination from oil,’ he says, gesturing to the town of Coca. ‘It’s always the poor people that end up living in polluted places.’ Yet oil work offers a small minority the chance of decent pay and training. ‘There are so few opportunities here,’ he says. ‘A driver can earn about $1,000 a month, which is a good wage here.’

Outside Coca and further into the Amazon, the communities are mainly either indigenous Kichwa, who are traditionally hunter-gatherers, or subsistence farmers. Both groups migrated to the area with the opening of the oil roads and both are dependent on a flourishing rainforest with clean rivers, animals to hunt and land to grow crops. In the Kichwa language, the concept of ‘living well’ with clean water, good food from the land and a healthy environment, is summed up by the term Sumak Kawsay. Ecuador’s National Development Plan has incorporated Sumak Kawsay as a central goal for all its citizens.

Esme McAvoy
Building an alternative to oil: Meliton Yumbo, pictured with his daughter Serley, is the leader of the Kichwa community that owns the Napo Wildlife Centre, inside Yasuní National Park. Esme McAvoy

Yet, according to Esperanza Martinez of the NGO Acción Ecológica, communities can be blackmailed into accepting oil drilling. ‘Communities can be told, “if you want a better road, a new health centre, you have to have oil”. President Correa said just recently in one of his public addresses, “if you don’t want us to drill for oil, don’t ask me for health, education, schools”. But the truth is that if you have oil development on your land, you’re not going to have good health or food growing in abundance. There is no Sumak Kawsay. There is a direct relationship between the number of oil wells in an area and poverty levels.’

Increasing numbers of indigenous families now live in Coca, rather than the rainforest. Like many indigenous women, Adriana Shigunago, 49, founder of the local Kichwa women’s association, moved here reluctantly because her husband had secured work with an oil company. ‘It was a difficult transition. In the forest you can eat very well with what the rainforest provides and what you can grow. We didn’t think about money. But in the city, without land, you have to buy everything.’ When asked about the Yasuní initiative, Shigunago looks vague. ‘Yes, I’ve heard about that, keeping the oil underground, but I don’t know…’ Speaking to a number of residents in Coca, this is a common reaction. Many have heard about the initiative from somewhere but it has little bearing on the more immediate concerns of feeding and clothing their families.

Tourism as an alternative

We have to find alternatives to short-term extraction,’ says the ITT proposal’s technical director, Carlos Larrea. Current oil reserves will allow for no more than 30 years of production, even assuming new discoveries. ‘We are at a peak of production right now but production will start declining,’ says Larrea. ‘Even if we exploit the oil in the ITT, we postpone that decline by just one year. It’s stupid.’

For those living in the Amazon region, the most promising economic alternative is tourism. The Napo Wildlife Centre, a high-end tourist lodge located inside the Yasuní National Park, is often held up as a model of how tourism can work hand in hand with conservation. Established with funds from an NGO in 1998, it is now completely owned by the local Kichwa community. The community’s young leader, Meliton Yumbo, 29, is resolutely anti-oil. ‘Repsol has 16 oil wells inside our territory but we don’t want oil drilling here,’ he says.

We have changed our lifestyles and no longer hunt, in order to protect the biodiversity of the rainforest.’ Traditionally the Kichwa eat a diet of birds, small rodents and monkeys from the forest. The community decision to stop hunting means they now buy their food from a supermarket in Coca.

It’s a drastic decision, but for community member Julia Cerda, 45, it’s positive. ‘It was hard to give up hunting but we have seen more animals in our territory. The baby deer come really close and I can show them to my children. We can also show tourists a forest full of animals. With oil, the government just sells it to richer countries and we’re left with nothing, no birds or animals or trees.’

The income earned from tourism has enabled the community to start building new classrooms and a new health centre, and the influence of foreign tourists is evident: the community’s teenagers have swapped their traditional clothes for jeans and trainers, and have mobile phones – despite the lack of phone signal.

Further along the Napo river, simpler community-owned enterprises are emerging. Several Kichwa communities have joined forces to offer guided tours and traditional lodging. ‘Some communities are moving into ‘agri-tourism’, planting Amazonian fruits and coffee that visitors can help harvest, and offering traditional food products made in the communities,’ explains Carlos Puca, head of the Kichwa tourism solidarity network (REST). ‘Another has a garden of traditional medicinal herbs used in Kichwa culture, and offers guided tours.’

A grassroots proposal

Although many locals still know little about the ITT initiative, the idea to leave the oil underground wasn’t dreamt up by the President, but emerged from the grassroots resistance to decades of reckless oil drilling in the north of the Amazon. Ecuador has been exporting oil since 1972 and it accounts for 60 per cent of export earnings. Turning down the potential oil revenues from ITT is no easy decision in a country where almost half the population lives below the poverty line.

However, in 1993, over 30,000 Ecuadorians filed a lawsuit against the oil giant Texaco, now owned by Chevron, claiming that outdated techniques led to the dumping of 18 billion gallons of toxic waste directly into streams, rivers and the jungle floor, poisoning their land and water. The case – the biggest environmental lawsuit in the world – raged for over 17 years until in February this year Chevron/Texaco was found guilty – although it has appealed, and successfully put the judgement on hold, for now. ‘The case against Texaco built up a strong, organized resistance to oil,’ says Alberto Acosta, one of the architects of the Yasuní proposal. ‘Shortly after it was filed, those involved began to call for an end to drilling across the whole of the Amazon.’

In 2000, a group of academics and environmentalists, including Acosta and Acción Ecológica’s founder Esperanza Martinez, began working on plans for a moratorium on oil extraction in the Amazon and how to build a ‘post-oil’ Ecuador.

With the election of left-leaning President Correa in 2007, many of them became part of the government and it was Acosta who presented the ITT proposal. ‘I was the newly appointed Minister of Energy and Mining and yet I was telling the President not to exploit our oil reserves!’ says Acosta. ‘In a country like ours that lives off oil, during a time when oil prices were high, plenty of people thought I had lost my head.’

Pitted against Acosta was Carlos Pareja Yannuzzelli, the director of state oil company Petroecuador, who was hell-bent on drilling. The President reached a compromise. ‘Correa decided that while the first option would be not to drill in return for compensation, the second option to drill couldn’t be ruled out and both must continue being worked on,’ says Martinez. So, while the ITT initiative was presented to the world and praise was heaped on the President, Plan B was quietly put in motion too.

The signing that never was

Initially, the President kept setting one deadline after another for the proposal to secure a minimum level of funding,’ recalls Martinez. A committee was put together in mid-2008, headed up by Foreign Affairs Minister Roque Sevilla, with a deadline to collect $350 million by September 2008. This was later pushed back to December and then finally lifted permanently in February 2009. ‘Our first task was to commission a raft of technical, legal and scientific studies,’ explains Yolanda Kakabadse, a former member of the ITT committee. ‘Research into biodiversity, carbon emissions data, oil exploration statistics, the legal framework in Ecuador and abroad – everything needed to turn an exciting idea into a solid proposal we could present to the world.’

Miguel Romero / Presidencia de la República del Ecuador
President Correa passionately promoted the Yasuní initiative at the Cancún climate summit last December; but doubts remain about his commitment. Miguel Romero / Presidencia de la República del Ecuador

By November 2009, things were looking positive. Germany was set to contribute a generous $70 million a year and, after an international tour, there was interest from several other European countries.

Most promising of all, the UNDP had agreed to become independent administrators of the trust fund and the agreement was to be signed during the Copenhagen climate summit in December that year. But at the eleventh hour, the President ordered his team not to sign. Shortly afterwards, he publicly criticized the committee, accusing them of being too weak in their negotiations and claiming the conditions of the proposal were ‘shameful’ and an affront to Ecuador’s sovereignty. The rant, made on his weekly TV and radio address to the nation, prompted the resignations of Sevilla, the head of the committee, foreign affairs minister Fander Falconí, and Kakabadse.

Yet, somehow, the proposal survived and a new team was pulled together with some of the remaining members still on board. On 3 August last year, the signing of a new UNDP agreement finally took place. Correa’s backtrack damaged the credibility of the proposal but arguably brought some noteworthy changes: Ecuador now has a greater role in deciding how the money will be spent.

Chile was the first to contribute, though its $100,000 was more a token gesture of neighbourly solidarity. Spain has since added $1.4 million and the regional Walloon government of Belgium $415,000. Italy has offered a ‘debt swap’, to the tune of $35 million. Germany, one of the earliest to voice support, now looks likely to pull out after a change in government. According to Larrea, however, contributions from private business and social institutions had swelled the fund to $38 million by February 2011.

Now, the initiative has reached a critical stage. The committee has until December 2011 to secure at least $100 million and Ivonne Baki, Ecuador’s former Ambassador to the US, has been tasked with the job of the initiative’s chief negotiator.

The doubts won’t fade

Despite Baki’s enthusiasm for the ITT proposal, serious concerns about how it is being handled and where it is heading persist. The biggest threat has always been the ever-present spectre of Plan B, and when I was in Coca, plenty of government officials expressed concern that plans to drill were moving faster than the initiative.

The proposal has always only aspired to protect 20 per cent of the Park. But in early 2010, the government floated the idea of making the ITT block even smaller, leaving Tiputini out of the proposal entirely so that it could drill there more easily. Esperanza Martinez received information in January this year that suggested this plan could still be on the cards. Clandestine negotiations between the government and Chinese oil company Petroriental have led to changes to the shape of their nearby oil concession, block 14, adding to it a corridor of land perilously – or strategically – close to Tiputini. ‘The idea is to exploit Tiputini,’ concludes Martinez. ‘This change is absolutely illegal as the new corridor is within the National Park.’ At the same time, Enrique Morales told me that ‘Petroamazonas began work in January this year in block 31’, right next to ITT. Drilling here could seriously degrade the ITT block, and could create a domino effect, with new infrastructure later used for exploiting it.

Also in January, less than two months after Correa enthusiastically presented the Yasuní initiative at the Cancún climate summit, the issue of drilling in ITT inexplicably appeared on a list of possible questions being considered for a national referendum. ‘There are too many contradictory signals,’ says Martinez. ‘People are thinking, “Hold on, why are we contributing millions if they are now going to let the people decide whether to drill?”’

Another concern is that when the money wasn’t forthcoming, the committee began to look at possible funding from burgeoning carbon markets. Keeping the oil locked up will prevent over 400 million tonnes of CO2 emissions; but the concept of ‘avoided emissions’ is not recognized under the Kyoto Protocol, meaning Yasuní’s certificates cannot be traded as carbon credits. However, the agreement signed with the UNDP doesn’t rule out the possibility in the future, should the rules change. As if in anticipation, the wording of the trust fund agreement defines the oil not in millions of barrels but in tonnes of avoided emissions.

Acción Ecológica is worried. ‘The original initiative was a critique of carbon markets,’ says Martinez. ‘It was saying that Kyoto wasn’t working, that Kyoto was created precisely not to affect the oil markets, so that industrialized countries could continue polluting.’ Unlike Kyoto’s Clean Development Mechanism – carbon ‘mitigation’ projects paid for by big polluters so they can carry on polluting – the Yasuní plan to leave oil underground directly threatens the world’s oil supply. If the model is rolled out to other countries and sizeable reserves are locked up worldwide, it would push us faster along the road to oil shortages and price hikes – but also to genuinely reducing CO2 emissions.

Finally, it is not clear how supportive of the proposal President Correa truly is. It’s true that some of the biggest leaps in environmental legislation have taken place under Correa’s presidency. Ecuador’s new Constitution, signed in 2008, is the only constitution in the world that recognizes the rights of nature. Animals and ecosystems have the right to flourish and survive and Ecuadorians are able to sue for any actions taken that damage the environment.

However, according to Martinez, the ‘deep green’ Constitution that emerged was largely a result of key figures such as Alberto Acosta within the government, rather than Correa himself. Notably, many have since quit the government, Acosta included. ‘Since the Constitution was created in 2008, the government has been distancing itself from it, pulling out a rule here, an article there, weakening the initial principles behind it,’ says Martinez. ‘It’s clear that the President doesn’t like the Constitution he’s agreed to, and issues of environmentalism even less, but he’s trapped because it has given him praise and worldwide attention.’

Furthermore, Correa has one moment supported indigenous rights to land and clean water, and the next cracked down heavily on any peaceful indigenous protests against threats to those very same rights. Three indigenous leaders were detained in February this year charged with terrorism and sabotage for taking part in a 2009 protest against a water reform bill and large-scale mining in the southern Amazon.

Ripples of influence

Almost four years on, the ITT proposal has survived and its influence has rippled out beyond the borders of Ecuador. ‘The concept of non-exploitation is now being discussed both in developed and developing countries,’ says Martinez. ‘The initiative has created its own momentum and will continue to exist and develop, regardless of its success or failure under Correa here in Ecuador.’

It is telling that even those who resigned from the proposal still support it. ‘I think as a country we must push the initiative,’ said former foreign affairs minister Falconí shortly after his resignation. ‘We are defining new ethics of conservation… I am willing to sacrifice my own hide for this because I believe we are talking about building a different society.’

As darkness falls in the Napo Wildlife Centre two young teens from the community take me out in a canoe to go cayman watching. The reptiles’ heads are lifted just out of the still, ink-black waters, their eyes lit up by our torchlight and the moon. Ecuador’s offer is still on the table but it won’t be there forever. Only a serious injection of cash can keep exploitation at bay. And perhaps that’s our job. The fund is now open for individuals symbolically to ‘buy’ a barrel of Yasuní oil, guaranteeing that it will stay underground. The proposal came from civil society – it may ultimately be down to us as global citizens to ‘crowd fund’ the initiative and protect this priceless patch of the Amazon forever.

The ITT initiative: what’s the deal?

Where will the money go?

The funds raised will be invested in renewable energy projects and environmental and social development projects nationwide, to be selected by a steering committee of representatives from the government, civil society and the contributing countries. The focus will be on: forest conservation and reforestation; social development and sustainable livelihoods; energy efficiency; and research into clean energy and conservation.

The small print

The Ministry of Finance will issue Yasuní Guarantee Certificates to contributors stating that the ITT oil will remain untapped indefinitely. The money will be held in a trust fund administered by the UN Development Programme (UNDP). If any future government should decide to drill, all investments will be returned to the contributors. The fund aims to attract a minimum of $3.6 billion over the next 13 years – the estimated time it would take to drill the oil – and requires a minimum of $100 million by December 2011. If this is not reached, the government can opt to break the agreement and return all the money.

Official government website: yasuni-itt.gob.ec/

UNDP fund website: mdtf.undp.org/yasuni

Esme McAvoy is a freelance journalist.

This first appeared in our award-winning magazine - to read more, subscribe from just £7

Comments on Oil or life? Ecuador’s stark choice

Leave your comment