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Ecuador: Oil exploitation to reduce poverty?
Luis Ángel Saavedra*
9/26/2013
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Correa calls for oil drilling in protected area after international cooperation falls short.

President Rafael Correa announced Aug. 15 that he now support drilling for oil beneath Yasuní National Park because the international community failed to fund US$3.6 billion Ecuador requested in exchange for not tapping into the Ishpingo, Tambococha, Tiputini (ITT) block, located in this protected area.

International cooperation only brought in US$13 million — 0.37 percent of what the government demanded to compensate for abandoning the project.

Correa said the drilling was necessary to reduce the country’s poverty levels. He dismissed the objections of environmental communities, which had hoped the national government would preserve the Yasuní National Park, considered one of the most diverse areas on earth.

At the same time, the government has also increased what it expects to receive from the exploitation of the ITT. While the reserves were originally valued at $7.2 billion during the Yasuní negotiations, that figure has jumped to $18.2 billion, reinforcing the government’s argument that drilling will reduce poverty by eliminating the housing deficit and providing basic services, schools, hospitals and other public works to the people.

The National Assembly must vote on the presidential order to drill the ITT, and several of its committees are reiterating the party line. The commissions of Economic Development, Justice, Collective Rights and Autonomous Governments already have issued positive reports. For example, the resolution of the board of Economic Development, Production and Microenterprise states “the proceeds will be part of a process of change in the transformation of the production matrix, which involves large investment in the social sector.”

The composition of the National Assembly, in which the ruling party has 108 of 126 possible votes, ensures the president’s request will be met, even though there is no explanation for the $18.2 billion the ITT would now supposedly generate, such as if this figure is the net income to the national treasury after subtracting operating expenses, calculated at 30 percent for being a “heavy” crude oil deposit, which requires more extensive technological processes to remove.
 
Nor has it been explained whether this income, which would begin in the fifth year of operation, will be obtained now through advanced sales, as has been done with Chinese companies exploiting other Ecuadorian oilfields.

Value of the reservoir
The former Superintendent of Banks, economist Alfredo Vergara, estimated net annual income from drilling the ITT will be about $600 million to $700 million, which would still not be enough fund the government´s offer to provide basic services to the people of Ecuador. Vergara says that the rush to exploit the ITT is due to the need to sustain the government´s current spending—which otherwise would impede poverty reduction in the coming years.

Spending and the current budget are extremely high due to the considerable social investment made by the government, which has also increased the number of public servants, including teachers and health workers.

In a message broadcast on national television, Correa tried to convince mainly young people — to whom he constantly referred — that the government had made every effort to ensure that the original proposal was successful, but that the drilling was now needed. The constant reference to young people was because this is the sector that has the greatest attachment to ecology, and the one that took up the defense of Yasuní as one of the main reasons for paying attention to national politics. They are also a significant percentage of the electorate.

The same night as the announcement, young Ecuadorans protested Correa´s decision in the plaza where the presidential palace is located, demanding the ITT never be drilled.

However, the biggest protest occurred the night of Aug. 27, when they again tried to rally in the plaza but were repressed by the National Police. Thereafter the demonstrations in defense of the Yasuní have decreased and the government is receiving the support necessary to carry out drilling.

Referendum
Environmentalists and the indigenous movement have proposed a referendum to ask: “Do you agree the Ecuadorian government should keep the ITT oil below-ground indefinitely?” The groups submitted the proposal to the Constitutional Court and are preparing to collect the 600,000 signatures needed to carry out this project.
 
Another group of young people raised the issue with the Court to declare Ecuador free all extractive activities, weakening the position of indigenous and environmentalist groups. Finally, more than 30 mayors in the Amazon, who are up for reelection in February, arrived in Quito and proposed a third matter with the Constitutional Court, supporting ITT drilling and allocating the income to fight poverty.

Municipal elections to be held in 2014 have strengthened local authorities’ support for the president, even those who criticized him earlier, as they are all seeking the support of the ruling party for their re-election. Several of the mayors who now support oil drilling in Yasuní were elected by the Plurinational Pachacutik Movement, the political arm of the indigenous movement and staunch opponent to the government today.

A referendum raises doubts in the human rights sector, not only because there is the risk of losing the vote, but also at stake is the survival of communities who live in the Yasuní National Park. 

 “If we know that the exploitation of the Yasuní will cause the disappearance of isolated peoples, we can not risk their survival in a referendum. What we should do is defend the Yasuní at all costs,” said to Latinamerica Press Harold Burbano, lawyer for the human rights law group Regional Foundation for Counseling in Human Rights.

With the three issues before the Constitutional Court, and considering that organization’s fidelity to government policy, the court is very likely to proffer a response that strengthens the government’s position. That would dismantle the indigenous and environmentalist proposal, which hasn´t garnered the collective support required to curb the president´s decision to drill the ITT— a project that will surely affect the delicate Yasuní ecosystem, even if the government argues that it will affect one per thousand of the park’s 982,000 Hectares (2.4 million acres).
—Latinamerica Press.


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Youth movement advocates for a referendum to end the extractives industry in Ecuador. (Photo: Boris Merchán)
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