By Pamela Martin
As China continues to heavily and strategically invest in oil fields around the world, the dilemma for developing economies has been juxtaposing the benefits and windfalls from these investments with the varying environmental and societal costs. This is even further complicated by global and local struggles to keep fossil fuels in the ground. In fact, these struggles have been eclipsed by daily policy choices such as opting to expand extraction into the Amazon Basin. Notably, in 2013, Latin American provided 11% of Chinese overseas oil production. Thus, global extractive pressures from emerging markets provide difficult decisions for states that are fossil-fuel dependent and for communities, like those in Ecuador, that have suffered the negative consequences of oil extracted from their lands.
Ecuador’s constitution define the country’s development under the rubric of sumak kawsay in Quichua, buen vivir in Spanish, well being, an indigenous term that signifies life in balance and in harmony with nature. This ancient indigenous concept recognizes the indelible human link to the Earth and the need to live within our natural environment as a balanced, or sustainable, process. This norm is uniquely Ecuadorian – indigenous in derivation – and is codified in the 2008 Ecuadorian Constitution. The Constitution’s Preamble states, “We decide to construct a new form of civil society, in diversity and harmony with nature to achieve el buen vivir, el sumak kawsay” (Asamblea Constituyente 2009, 15). This norm has echoed throughout the Andes in Venezuela, Bolivia, and Colombia, including through the Bolivian Constitution and the declarations of indigenous rights movements.[i]
As Alberto Acosta, President of the Constitutional Assembly of 2008, explains:
“Buen vivir requires a post-extractivist transition. It is fundamental that under no circumstance is extraction [of natural resources] the basis of buen vivir because extractivism supports violence against communities and nature. …. Development and underdevelopment are two sides of the same process. El buen vivir is an alternative to development, proposing dissolution of these concepts and the construction of a distinct proposal for civilization”.[ii]
And yet, the Minister of Non-Renewable Resources, Wilson Pastor, refers to development in the following manner:
Before petroleum operations, companies have to commit to social development. Of the $115 million initial investment to apply for oil block contracts, $5million must be dedicated to social development.[iii]
And herein lies the contradiction of buen vivir, what Acosta refers to as “buen vivir marketing,” the use of the word to support the very process it was meant to counter – extraction, particularly new extraction even deeper into the Amazon rainforest.
Yet the Ecuadorian state was not always a proponent of extraction. In 2007, upon the heals of a landslide election of the Citizens’ Revolution, President Rafael Correa announced to the world that he was supporting a plan developed by indigenous and environmental leaders throughout the 1990s to place a moratorium on oil extraction in a section of the Amazon. The Yasuní-ITT Initiative, named after the Ishpingo Tambococha Tiputini oil block on Peru’s border within the highly biodiverse Yasuní National Park, would not only keep Ecuador’s largest oil reserve of about 900 million barrels of oil underground. It would set a global precedent of creating a multilateral trust fund to support countries between the Tropics of Cancer and Capricorn that also wanted to opt for a post-fossil fuel development plan, based on buen vivir – harmony with nature. This plan also protects two (possibly more) indigenous groups living in voluntary isolation, the Taromenane and the Tagaeri. Thus, the Yasuní ITT proposal not only protected this rich rainforest plot of land, but it also protected the rights of those who wish to live in voluntary isolation and created a plan to move toward a post extractivist economy.
The $350 million per year for 10 years that Ecuador sought through the Yasuní-ITT Initiative would have been placed in a United Nations Development Programme (UNDP) Trust Fund with a board of directors that included Ecuadorians as well as members of the global community.[iv] The funds would have been directed to transitioning Ecuador’s energy matrix away from fossil fuels toward more renewable sources through the National Development Plan for Buen Vivir. As of August 2013, however, President Correa announced the closure of the trust fund. In response, Ecuadorians have protested in the streets, mobilized internationally, and called for a national referendum to keep the oil of the ITT block in the ground. Despite the closing of the trust fund, mass global and national support for keeping oil in the ground remain including a petition to the Interamerican Commission of Human Rights (IACHR) (which the Ecuadorian state did not recognize), requesting that the Ecuadorian state be held responsible for violating the civil and political rights of hundreds of thousands of Ecuadorian citizens who, guided by Yasunidos (the nongovernmental organization that organized to keep oil under the ground in the ITT block) organized a petition drive in which 757,623 Ecuadorian citizens signed in favor of a referendum on whether or not to exploit Yasuní-ITT.[v] Thus, for now, Chinese interests in ITT oil have trumped local and indigenous rights in Ecuador.
Still, President Correa announced not only expansion into the protected Yasuní National Park ITT block, but into 12 other oil blocks never before developed in the central and southern areas of Pastaza and Morona Santiago in the Amazon. Vice President Jorge Glas and Minister of Non Renewable Resources, Wilson Pastor, have traveled to China, France, Canada, and the U.S. to promote this latest round of oil block concessions.[vi] As of January 2014, other than state owned oil companies in China, Brazil, and Venezuela, no other private companies have made offers for the new oil extraction sites – and this in a time of decreasing reserves and predicted petroleum demand.
But the stakes are high in a country for which oil production represents 43% of the exports and is the principal source of state income since 1973. Independent reports conducted for Petroproducción Ecuador indicate that proven reserves in the ITT block are 944 million barrels of heavy crude, possibly up to another 1,530 billion barrels of reserves.[vii] The expansion into 13 oil blocks in areas never before open to extraction in the Southern and Central Amazonian provinces of Pastaza and Morona Santiago have estimated reserves of between 369 million and 1.6 billion barrels of heavy crude (Napo) oil.[viii]
And international financing since 2008 for Ecuador has been scarce. Claiming odious debt in 2008, President Correa suspended payments on global bonds for which Ecuador owed over $10 billion to bondholders since the 1990s.[ix] This sovereign debt default (not its first) and its dismissal of the International Monetary Fund (IMF) and World Bank (WB), left Ecuador isolated and paved the way for the $8.4 billion of loans (some estimates are upwards of $11 billion) from China that it now owes, which began with $1billion in July 2009.[x] This is in addition to the January 2014 announcement of a 30% stake in Ecuador’s Pacific Refinery Project, financed by the China National Petroleum Corporation at a cost of nearly $12 billion dollars.[xi] In November 2014, Finance Minister Fausto Herrera announced the Ecuadorian government was also seeking to renew a $1.5 billion credit line with China to help finance its 2015 budget of $35.5 billion.[xii] Despite the increase in Chinese investment and wealth of natural resources, Amazonian residents are among the poorest in the country, 30-50% living on less than $2.40 a day.[xiii]
While the scientists call to lower carbon emissions and lower our dependence on fossil fuels, studies indicate that petroleum will be our leading provider of energy through the year 2050 and extractive expansion in even more precarious and delicate areas of our planet continues, particularly in areas of Africa and Latin America. In light of the November 2014 Intergovernmental Panel on Climate Change Synthesis Report, pioneering initiatives like the Yasuní-ITT proposal provide pathways for keeping oil in the ground. Yet even tacit agreements between the US and China to lower fossil fuel emissions by 2030 still mean extractive industries loom large in Ecuador’s quest for the good life. Groups like Yasunidos and their politics of keeping it in the ground remind us that places like Yasuní are worth saving, and that living in harmony with nature is worth the struggle.
Pamela L. Martin is Professor in the Department of Politics and Geography at Coastal Carolina University. She is co-editor of the forthcoming volume “Ending the Fossil Fuel Era” (MIT Press, 2015).
[i] See the Universal Declaration of Rights of Nature, April 22, 2010, http://therightsofnature.org/universal-declaration/, accessed 6 December 2011; Constitution of Bolivia, 2009, http://pdba.georgetown.edu/Constitutions/Bolivia/bolivia09.html, accessed 6 December 2011.
[ii] Blanca S. Fernandez, Lilian Pardo, Katherine Salamanca, “El buen Vivir en Ecuador; Marketing Politico o Proyecto en Disputa? A Dialog with Alberto Acosta,” Iconos, Num 48, January 2014, 109.
[iii] “Ecuador Inicia Ronda de Licitaciones Petroleras en Pekin,” El Comercio March 25, 2013.
[iv]The Certificates of Guarantee Yasuní (CGYs) are issued to contributors, but not traded for carbon mitigation within the various carbon trading markets. This was not the original intention of the plan by its founders, but was considered as a funding option by subsequent government leaders of the initiative, such as former President of the Yasuní-ITT Initiative Administrative Committee (CAD in Spanish), Roque Sevilla, in 2009. As the CGYs could not be admitted into the European Union Emissions Trading Scheme (ETS) at that time, the idea was discarded. See Martin, Pamela L. (2011), Oil in the Soil: The Politics of Paying to Preserve the Amazon, Boulder, CO: Rowman and Littlefield, for more details.
[v] Princen, et al. Ending the Fossil Fuel Era, forthcoming MIT Press.; Summary of the Yasunidos Petition to the IACHR, October 2014, via e-mail communication.
[vi] “Ecuador Inicia Ronda de Licitaciones Petroleras en Pekin,” El Comercio, March 25, 2013.
[vii] Larrea, Carlos (2009)Yasuní-ITT Initiative: A Big Idea from a Small Country: 12.
[viii] El Telegrafo, “Ecuador Gana $4 mil millones por Petroleo,” October 10, 2010, http://ecuadorinmediato.com/index.php?module=Noticias&func=news_user_view&id=135389&umt=el_telegrafo_guayaquil_ecuador_gana_4_mil_millones_por_petroleo
[ix] Kueffner, Steffan, “Correa Defaults on Ecuador Bonds, Seeks Restructuring,” Bloomberg News Wire, December 12, 2008, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avVnU01XRJWE
[x] Mercedes Alvaro, “Ecuador and China Seek to Strengthen Ties,” Latin American News, Wall Street Journal, January 20, 2014.
[xi] “CNPC Expands in Ecuador,” January 23, 2014, China Daily.
[xii] Alvaro, Mercedes, “Ecuador Awaits $3.6 billion of Financing from China,” November 4, 2014, The Wall Street Journal.
[xiii] Instituto Nacional de Estadistica y Censos (INEC), “últimos Datos de Pobreza,”www.inec.gob.ec.