Ecuador Oil Ruling: Whose Victory?
Bruno, Kenny
On March 4, 2003, the Ecuadoran newspaper Hoy reported that Ecuador's Ministry of Environment had agreed to allow two transnational companies to cancel their oil concession contracts under the...
...The ministry's statements affect the CGC concession area known as Block 23 and the Burlington concession, Block 24...
...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...
...A national environmental law says that failure to appropriately consult with affected communities before granting contracts with possible environmental effects will make the contracts "null and void...
...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...
...These consultation and participation regulations, though weak in many ways, represent one of the few mechanisms for slowing the destruction of the Amazon and for respecting the rights and desires of its people...
...Irresponsible loans taken on the basis of projected income from oil helped put the country on a debt treadmill...
...But it is unlikely that Blocks 23 and 24 will enjoy such a reprieve...
...The force majeure the ministry referred to is the determined opposition of indigenous Kichwa, Shuar and Achuar peoples who live in the concession areas to conKenny Bruno is the Campaigns Coordinator at EarthRights International, a nonprofit group that works in defense of human rights and the environment...
...In blocks 23 and 24, the Shuar, Achuar and Kichwa have stated unequivocally that they oppose new oil activities in their territory...
...The struggles over Blocks 23 and 24, which are adjacent to Ninth Round areas, were among the signals that the Ninth Round would be a difficult process for the government and any companies that might get involved...
...On March 4, 2003, the Ecuadoran newspaper Hoy reported that Ecuador's Ministry of Environment had agreed to allow two transnational companies to cancel their oil concession contracts under the provision of force majeure...
...Vol XXXVI, No 6 MAY/JUNE 2003 tinued activities by the companies, Burlington Resources of Texas and Compania General de Combustibles (CGC) of Argentina...
...On November 15, 2002, the ,ment, slowed Civil Commission Against Corruption determined that !nt-but may Burlington had not filled the o new efforts requirements of its concession contract in Block 24...
...This article is an adaptation of sev- eral reports by him originally published at <http://www.earthrights.org...
...5, 2003, letter to Hoy, Jose Serrano, a lawyer with the Quito-based Center for Economic and Social Rights, noted that CGC has violated the terms of a federal injunction relating to its operations in Block 23, and asks "Who are the real outlaws...
...It provides a reprieve for vast forested areas of extraordinary ecological and cultural beauty...
...The first stage in oil development for any Ecuadoran region involves the solicitation of bids from transnational companies to prospect and drill for oil in untouched areas...
...Each block of land up for bid is awarded to the company willing to invest the most and offering the highest percentage of profits to the national government...
...in these cases...
...This turn of events, in what has been an intense struggle between indigenous communities and transnational oil companies, leaves the communities and their supporters wondering if they have won a major victory or are in increasing danger of repression...
...The Quito-based Center for Economic and Social Rights called the recommendations a "clear victory for the indigenous movement, and for environmental and human rights organizations...
...Even after an Ecuadoran Constitutional Court issued an injuncC le t rF tion prohibiting the company from pursuing these contacts, Burlington, which inherited from Arco both the oil rights and the injunction, proposed "dialogue" with Shuar representatives, without the knowledge and against the wishes of the Shuar federations...
...The indigenous peoples of the central-southern Amazon still maintain a traditional economy, based not on cash but on sharing of communal resources...
...In a March ,ponents...
...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...
...Oil activities in the 1970s and 1980s, led by Texaco, destroyed some 1 million hectares of forest, polluted vast areas of the region, and left thousands of people with contaminated water and food...
...A "Ninth Round" of oil concession bidding was slated for May 2002 to grant 11 Amazonian blocks comprising some 2 million hectares to international oil companies...
...Although proponents claimed that oil production would bring wealth to Ecuador, poverty in the oil-producing areas-and in the country as a whole-has actually increased during Ecuador's oil era...
...A number of factors led to the reduced scope of the Ninth Round, among them the determined resistance of Shuar and Achuar communities...
...But there are reasons to be skeptical: According to Hoy, Ren6 Ortiz, president of the Association of Oil Companies in Ecuador, which includes both CGC and Burlington, has accused indigenous leaders of being "outlaws," and identified the lack of presence of the authorities as the cause of the problems in the two blocks...
...Combined unemployment and underemployment has gone from 15.4 percent in 1972 (before major oil exports) to 64.3 percent in 2002...
...One of the reasons for their opposition to oil development is the experience of the northern Amazon of Ecuador, which has been largely destroyed by oil development...
...In 1972, 47 percent of the population lived below the poverty line...
...The indigenous communities would warmly welcome such a retreat, even if accompanied by unfair blaming of those same communities...
...There is therefore a strong possibility that the ruling is a prelude to an effort to divide and conquer the opposition to oil exploitation...
...What is not clear is whether this major force will be respected or attacked...
...In essence, the Shuar, Achuar, Huaorani, Kichwa, Zapara and Shiwiar peoples would become the guarantors of debt accrued by the government to international financial institutions...
...Moreover, according to a against o letter of intent agreed to between the IMF and Ecuadoran government, the resources from the Ninth Round were to be used to guarantee payments to multilateral banks over the next few years...
...They have recognized that the will of indigenous communities is "beyond the control" of the government and the oil companies...
...The Ecuadoran Amazon is home to 10 indigenous forest-dwelling groups...
...Foreign debt, about $217 million before the oil era, now stands at about $16 billion...
...The term--literally "major force" but translated also as "cause beyond control"-usually describes unforeseen natural catastrophes such as earthquakes or major upheavals such as wars which can void the obligations of a legal contract...
...But last April 17, PetroEcuador, the country's state oil enterprise, announced its recommendation to reduce the bid area to only about 400,000 hectares...
...The CGC concession reportedly is owned partly by ChevronTexaco...
...The government hoped to turn around a recent decline in oil production and re-start Ecuador's stalled economy...
...These representatives were to receive compensation for agreeing to allow an environmental study in their area...
...In fact, the fight over Block 24, which is on Shuar territory next to Ninth Round areas, was considered a harbinger of the current struggles...
...Cultural destruction has also been vast, with colonizationfdisplacement and disease leading to the near disappearance of the Tetete, assimilation of the Huaorani, and severe effects on the way of life of the Cofan, Siona, Secoya and Kichwa...
...The constitution also says that "all state decisions that may affect the environment must take into account ahead of time the criteria of the community, which must be informed...
...The entry of transnational corporations and their agents represents a grave risk to traditional community customs...
...That was virtually the entire remaining wild rainforest of Ecuador...
...Starting in the year 2006, 80 percent of the oil income would go to financing debt, and just 20 percent to a stabilization fund to protect the country from volatile oil price swings...
...The Environment Minister has responded by calling for police presence in the area...
...On the surface, it would seem to be an inspiring win for the indigenous people whose ancestral territories in the Amazon rainforest were put up for concession to the oil companies in the form of large blocks of land...
...Taken at face value, the decision frees the companies of any obligation to carry out oil activities in 23REPORT ON THE ENVIRONMENT the areas, and means the will of the communities-which have officially decided not to accept oil development in their territories-will be respected...
...Some 500 indigenous people marched in the provincial capital of Macas in support ajeure ruling of the complaint...
...With the government's recent force majeure ruling, the situation in Blocks 23 and 24 can go in a number of directions...
...But this outcome would not suit the government, since it would mean the loss of revenues guaranteed by the concession contract...
...These statements have human rights advocates in Ecuador concerned that the force majeure ruling could be the beginning of an intimidation campaign by the companies and their allies in government aimed at forcing the indigenous communities to accept oil activities in their territories against their will and despite constitutional and legal provisions aimed at protecting their rights...
...The Ninth Round was part of a larger government program called "Open Ecuador 2000," which was intended NACILA REPORT ON THE AMERICAS 24REPORT ON THE ENVIRONMENT to attract foreign investment in the oil sector...
...In 2001 oil income provided about 40 percent of the national budget, but 42 percent of the budget went to pay foreign debt-with most of this expenditure going to pay interest The force rr on loans, not the principal...
...The southern Amazon has not yet been exploited, and remains today an area of relatively unspoiled tropical rainforest...
...The companies might leave their concessions...
...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...
...Last April, three indigenous federations filed a criminal complaint, contending that Burlington has failed to comply with the injunction...
...A major lawsuit against Texaco, brought by some 30 thousand indigenous and campesino plaintiffs, has helped warn Ecuadorans that oil development has brought pollution and misery to large portions of the Amazon...
...Federal Court in New York, but, after nine years of legal arguments over jurisdictional issues, was dismissed and will be heard in an Ecuadoran court...
...Belatedly, they have officially recognized the movement in defense of indigenous rights as a "major force...
...For now at least, the Ninth Round is much reduced and on a slow track, which gives the communities of large parts of the southern and central Amazon some breathing room to organize and determine what they want for their territories...
...Even the much reduced scope of the Ninth Round has not begun in earnest, but the pressures on the Ecuadoran government, from debt, from the International Monetary Fund and from the need to function in the global economy, continue to increase...
...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...
...That lawsuit, known as Aguinda v. Texaco, was brought in U.S...
...Ecuador's current agreement has, for the m with the IMF requires privatization of the oil industry, elimina- oil developm tion of subsidies, higher taxes and be a prelude the expansion of oil-producing areas...
...In 2002 that figure was closer to 70 percent, according to the Instituto Latinoamericano de Investigaciones Sociales...
...For all the ambiguities and dangers in the current situation, however, the Ecuadoran government has shown innovation in using the force majeure provision to describe indigenous opposition to violation of their rights...
...Though the Ecuadoran government technically owns the rights to subsoil resources, under the national constitution indigenous peoples have the right to "be consulted regarding plans and programs of exploration and exploitation of non-renewable resources found in their territories...
Vol. 36 • May 2003 • No. 6
