Ecuador’s black gold: a billion dollar question

Oliver here in Quito:

In the Yasuni National Park, Ecuador boasts one of the world’s richest and most biodiverse places on the planet. As chance would have it, this pristine patch of the Amazon also has equally impressive volumes of oil underneath. An estimated 900 million barrels to be exact.

In a poor country like Ecuador, few sign up to the proposition that it might be best to leave such a minefield untouched. There is talk of 4,000 new jobs and foreign investment topping $5 billion.

As such, the Ecuadorian government is fishing around to see which oil companies might be interested. Its only stipulation for the eventual candidate is that it be state-run. Last week, Petroecuador (the Ecuadorian oil company) signed an initial agreement with Petrobras (Brazil), Enap (Chile), Petroecuador and even Pdvsa (Venezuela). At present, the accord is only a commitment to begin discussions.

Not all are convinced by the current bonanza. Among the fiercest critics of oil development in the Amazon is the Quito-based organisation Acción Ecológica. The project will “undoubtedly” cause widespread degradation in the area, serious negative impacts on the life of local peoples and the extinction of cultures, the group argues.

What is interesting about Acción Ecológica’s opposition to the project, however, is that it is based in neo-liberal logic. This group of environmentalists has asked itself how much the oil reserves are worth to the country.

Costing out the royalties and other fiscal revenue that the project (given the tongue-twisting name of Ishpingo-Tambococha-Tiputini or, more simply, ITT) is set to generate, Acción Ecológica has come up with a figure in the region of $5 billion.

Its proposal is a simple one. Raise the money and enable the Yasuni National Park to be left in peace. Acción Ecológica is currently putting together an international campaign to raise awareness about the project and to try and hit its target.

But however many money-boxes it fills, traditional fundraising methods won’t get close to $5 billion. But the folk at Acción Ecológica are nothing if not optimistic. One of their strategies will be to ask foreign governments to offer a contribution in the form of debt relief.

It’s a sensible strategy. If there’s one thing that can rival Ecuador’s natural wealth, it’s the amount it owes to foreign governments.

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