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Ecuador Political News

Plan to Ban Oil Drilling in Amazon Is Dropped

Six years ago, President Rafael Correa of Ecuador offered the world what he considered an enticing deal: donate $3.6 billion to a trust fund intended to protect nearly 4,000 square miles of the Amazon jungle and his country would refrain from oil drilling in the rain forest.

The plan won applause from environmentalists, and international luminaries like Bo Derek and Leonardo DiCaprio opened their wallets. The plan was backed by the United Nations, but governments generally balked at contributing, and only $13 million was collected.

“The world has failed us,” President Correa said as he withdrew the offer in a nationally televised news conference on Thursday night. “With deep sadness but also with absolute responsibility to our people and history, I have had to take one of the hardest decisions of my government.”

The pioneering effort was administered by the United Nations Development Program. It was originally set up after potential reserves of nearly 800 million barrels of oil were found in the Yasuni national park, which is inhabited by two isolated Indian tribes.

Its goal was not only to protect a pristine rain forest with a rich mix of wildlife and plant life but also to ease future climate change by preventing more than 400 million tons of carbon dioxide from being released into the atmosphere. The park was designated a world biosphere reserve by Unesco in the late 1980s.

Local and international environmentalists expressed disappointment with President Correa’s decision, and hundreds of protesters gathered outside the presidential palace in Quito, the nation’s capital.

“It could have been used as a model for other sensitive areas,” said Matt Finer, a scientist with the Center for International Environmental Law, referring to the fund. “But now that it has failed, there is really no alternative model that is attractive to governments unable or unwilling to forgo drilling solely on ecological grounds.”

Oil pollution in the Ecuadorean jungles has been highlighted by two decades of lawsuits against Chevron, whose predecessor, Texaco, worked as a partner with Petroecuador, the state oil company, in the 1970s before it was acquired by Chevron.

Chevron lost a case in an Ecuadorean court two years ago, but it has refused to pay more than $18 billion in damages. It argued that Texaco had done a cleanup and that most of the pollution that was left was caused by Petroecuador after Texaco left. Enforcement proceedings are at various stages in several countries since Chevron has no assets in Ecuador.

President Correa has publicly sided with Amazon residents who complain that their homelands were spoiled. But the Ecuadorean government still relies on oil for one-third of its tax revenue, and the government is running a large budget deficit. Ecuadorean oil production is about 500,000 barrels a day, making it the fifth-largest producer in South America. Although President Correa is a frequent critic of the United States and its foreign policy, most Ecuadorean oil exports go to the United States.

The three oil fields in the park represent roughly a fifth of the country’s 7.2 billion barrels of oil reserves and could generate more than $7 billion in revenue over a 10-year period, according to Ecuadorean oil experts.

China, which has become the largest source of financing for the Ecuadorean government as it seeks to secure more oil supplies from Latin America, is a likely beneficiary of any increased Ecuadorean production. In July, Ecuador obtained a $2 billion loan from the China Development Bank in exchange for nearly 40,000 barrels a day of oil from Ecuador to PetroChina over two years.

By Clifford Krauss-New York Times (Blog), August 16, 2013


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