Yasuní Depends on You: Globalization, the Amazon, and Oil
Pamela L. Martin, Coastal Carolina University ()
Introduction
This simulation is intended to illustrate the dynamics of conflict within the multi-layered global governance structure of the world today in which national governments and international governmental and non-governmental organizations, private corporations, and local citizens negotiate for the creation of new international environmental and energy resource policy. However, Ecuador’s situation provides an optic to the difficulties of managing the global environmental commons of the rainforest and the oil-rich profits that come from it – essentially we are confronting the natural resource curse and its paradox. I invite you to explore the roles within this simulation to better understand your own role as both a global and local citizen.

Rich in bio-diversity and oil, yet debt and poverty-stricken, Ecuador presents a good example of the paradoxes that accompany globalization. Billions of dollars exchange hands around the oil trade, yet the benefits of the oil industry continue to elude the people of Ecuador. While South America’s 5th largest oil producer and sixth largest exporter to the US for oil, profits from Ecuador’s oil industry have not improved the social and economic upheaval of the country since the beginnings of seismic testing and drilling in the Amazon in the early 1960s. In addition, oil extraction processes in the Amazon have been controversial as this plot of rainforest has been designated as one of the world’s most biodiverse by a group of 59 world-renowned scientists, sponsored by two NGOs – Finding Species and Save America’s Forests (Scientists Concerned for Yasuní). Thus, the search for profits to support its economy and the protection of its diverse peoples and land has come into conflict. It will be your job to seek a sustainable resolution to the Yasuní National Park dilemma, which impacts not only Ecuador, but other biodiverse countries in the developing world that could replicate this plan.
A recent World Bank Poverty Assessment of Ecuador shows that social outcomes and access to basic services in Ecuador have improved slowly but continuously since 1990, while monetary poverty has increased. The illiteracy rate fell from 11.7 to 10.8 percent, and the number of years of education of the average adult increased from 6.7 to 7.6 between 1990 and 1999. Similarly, the infant mortality rate and the population mortality rate dropped from 30 to 18 per thousand births, and from 5.0 to 4.5 per thousand respectively, during the same period. In contrast, as this report shows, poverty rates have increased from 40 to 45 percent between 1990 and 2001.[1]
But the Yasuní-ITT international campaign is different, as Esperanza Martínez of Acción Ecológica argues, because the world community now knows of the destruction of the rainforest and the devastating impacts that oil extraction and industry can bring to not just plant and animal life, but to the daily lives of indigenous peoples. The percentage of people living in poverty in the Amazon is higher than the Ecuadorian national average: 82.42% in Sucumbíos and 80.2% in Orellana, compared to the national average of 55%. Literacy rates are far lower in this part of the country and clean drinking water is provided to only 13% and 14% (in Sucumbíos and Orellana respectively) of the population of this area as compared to the national average of 48% (Martínez, 2007).
Poverty Percentages by City and Region: 1995-2006
City or Region / 1995 / 1998 / 1999 / 2006
Poverty
Quito / 27.3 / 19.9 / 29.1 / 20.9
Guayaquil / 34.6 / 40.2 / 47.9 / 36.0
Coast / 51.6 / 58.4 / 62.8 / 52.4
Highland / 52.4 / 53.0 / 59.3 / 43.6
Amazon / 71.5 / 63.2 / 66.8
Rural / 76.5 / 77.9 / 81.6 / 72.7
Urban / 36.3 / 40.6 / 47.0 / 35.6
National Total / 52.6 / 56.3 / 61.1 / 49.1
Table 1 Source: Larrea, Carlos, Ana Isabel Larrea, and Ana Lucía Bravo (2008). Petróleo, sustentabilidad y desarrollo en la Amazonía ecuatoriana: Dilemas para una transición hacia una sociedad post-petrolera, unpublished manuscript. See also Instituto Nacional de Estadísticas y Censos (INEC), Encuesta de Condiciones de Vida, 1995, 1998, 1999, 2006 (
In 2000, Ecuador dollarized its economy, which created incentives for foreign investment into the country – given the more stable currency. This transition, while spurring 3-4% growth in the country over the past 3 years, has also been met with trepidation and fear of a decreasingly valued dollar, making imports more expensive in some cases. Moreover, dollarization and an increase in oil prices has created incentives for the government to develop its oil reserves, found primarily in its precious Amazonian rainforest, ranked as one of the richest, most bio-diverse places on the planet. Thus, this scenario reflects a developing country’s struggle to develop its economy, while also preserving its natural resource gems.
In the simulation, you will take on the role of one of the parties involved in the political economy of Ecuador or the international community, and participate in negotiations about the future shape of the petroleum industry and rainforest in particular and the region in general. This campaign, unlike others in the oil sector, has great global implications as it seeks to provide new options for avoided carbon emissions from leaving oil in place in order to protect biodiversity and indigenous cultures, not a currently accepted methodology by the United Nations Framework Convention on Climate Change (UNFCCC). Each party has specific interests, local, national, and global-based, that may be at odds with the interests of others. In addition to differences, the actors have long-standing social histories of mistrust and suspicion about the motivations of the others. There is also division about who should lead the fundraising of the campaign between the national and international levels. Agreements will require not only negotiation of the specific terms, but also the repair of relationships and coordination among the multiple levels of governance from local, national, and global actors.
Background
In response to a call for a moratorium on petroleum extraction in this area by international and national nongovernmental environmental organizations (NGOs), including Amazon Watch, Save America’s Forests, Finding Species, Pachamama Alliance, Acción Ecológica, Oilwatch, and Amazonía por la Vida, President Correa in March 2007 gave international NGOs an 8 to 10 month time period to provide $350 million dollars annually (half of the expected $700 million dollars of profit from petroleum extraction) to the Ecuadorian government to preserve this rainforest eco-system. Based on substantial interest from European Union member states, such as Italy and Germany and other international organizations, that time period was extended through January 2009 in order to continue to seek funding for the campaign. “If we don’t get the money, we’ll exploit ITT,” said Correa in a press conference (Correa, 2007). Thus, the international nongovernmental community, in addition to state organizations and multinational corporations, became embroiled in the rich rainforest dilemma.
By February 2009, President Correa, having established a high level Leadership and Administrative Council (CAD) within his administration to develop the Yasuní-ITT proposal, lifted the time limits on the proposal and made the initiative one of the country’s hallmark foreign policies. The president, his Foreign Minister Fander Falconí, and the CAD members travelled throughout Europe and the United States to garner support and funding for the innovative proposal. By fall 2009, they had agreed to form the largest environmental trust fund in UN history with the United Nations Development Fund (UNDP) to guarantee the investments in the initiative and assure that oil would remain underground. In December 2009, the proposal was presented at the UNFCCC Copenhagen Climate Change talks, but no official action was taken to adopt it as part of a post-Kyoto agreement.
After the Copenhagen talks, supporters of the initiative criticized the government for not signing the UNDP Trust Fund agreement. In the interim, President Correa outlined a new time limit for collection of funds to keep oil underground. If they were not collected in 10 months, Correa threatened to extract the oil. Then, in January 2010, just as the CAD members were finalizing the UNDP Trust Fund guidelines to officially sign, President Correa announced that they were “embarrassing” and threatened the sovereignty of the country. On the verge of such a historic moment, CAD leaders President Roque Sevilla and former Minister of the Environment Yolanda Kakabadse and Foreign Minister Fander Falconí resigned from their positions in protest of President Correa’s response to the UNDP agreement and his inaction on the initiative. This simulation will reconvene government and international officials to try to resolve the global controversy.
Ecuador is no stranger to oil development. In the Amazon, exploration by Royal Dutch Shell under its affiliate Anglo Saxon Petroleum Company Limited began in 1937, but was soon abandoned. True exploration and extraction of oil from the Northern Amazon did not begin until 1971 with Texaco Oil Company of the United States in the Lago Area region. In this same year, the first Hydrocarbon Law was passed, creating the legal-institutional structures to support natural resource extraction. By 1974, the Corporación Estatal Petrolera Ecuatoriana (CEPE) was formed and was part of a consortium with Texaco-Gulf.[2]
Map: Ecuador’s Oil Blocks

Source: Finer M, Jenkins CN, Pimm SL, Keane B, Ross C (2008) Oil and Gas Projects in the Western Amazon: Threats to Wilderness, Biodiversity, and Indigenous Peoples. PLoS ONE 3(8): e2932. doi:10.1371/journal.pone.0002932
Currently, 65 percent of Ecuador’s Amazon is zoned for oil activities. Since the 1970s oil boom, multiple partnerships have formed between the state oil company, now called Petroecuador, and transnational oil companies. The country boasts two oil pipelines that traverse its Amazonian rainforest over the Andes Mountains to the coast. These activities have not gone without conflict as will be discussed in the following chapters. Most notably, the lasting environmental impact of Texaco (now Chevron-Texaco) on the Northern Amazon is still to be determined by a court of law in Lago Agrio, Ecuador. Suffering from oil spills and seepage into ground-water systems that rival the Alaskan Exxon Valdez disaster, local and indigenous peoples demanding a clean-up opened a 1993 multi-billion dollar lawsuit against Texaco-Chevron in New York. The case was moved to Ecuador in 2003 and awaits judgment in 2010.

Oil seepage into the Northern Ecuadorian Amazon, near Lago Agrio(photo taken by author)
The Campaign
Some scholars of international relations argue that global governance is a myth and that nongovernmental actors are nothing more than international lobbying groups seeking foundation funding and international organization contracts, but the international campaign to save El Parque Nacional Yasuní in Ecuador provides fertile ground to contest these cynical claims. According to Max Christian formerly of the Sustainable Development and Conservation Biology program at the University of Maryland and former member of a US working group on the ITT Block, President Correa --through Ambassador Luís Gallegos and Organization of American States (OAS) Representative Gustavo Palacio in Washington, D.C. --asked international experts to study the options for revenue-substitution for the ITT project to finance the moratorium on Yasuní; thus seeking governance options outside the sovereign state. In addition, the Wallace Global Fund as part of the Clinton Global Initiative funded a World Resources Institute (WRI) study of the viability of revenue substitution models, such as carbon trading and debt cancellation. As Christian pointed out, these models have implications on a global scale and they may provide new options for avoided carbon emissions from leaving oil in place in order to protect biodiversity and indigenous cultures, not a currently accepted methodology by the United Nations Framework Convention on Climate Change (UNFCCC). Researchers on this project are looking to interject the idea of leaving oil unexploited in order to protect biodiversity and indigenous cultures into the post-Kyoto framework discussions.
President Correa has placed the Yasuní situation squarely on the shoulders of the international community by stating, “Ecuador doesn’t ask for charity, but does ask that the international community share in the sacrifice and compensates us with at least half of what our country would receive, in recognition of the environmental benefits that would be generated by keeping this oil underground” (Correa 2007). He and the Amazonía por la Vida supporters of the proposal note that Ecuador has subscribed to international treaties on climate change (Kyoto Protocol), the conservation of biodiversity (Yasuní as a UNESCO World Biosphere Reserve), and the protection of designated protected areas and peoples (May 2006 Inter-American Commission on Human Rights granting precautionary measures in favor of the Tagaeri-Taromenane peoples of the ITT and Block 31 areas). According to the former Minister of Energy and Mines, Alberto Acosta, Block 31 (contracted by Brazilian company Petrobras) oil activities were stalled for nearly two years in favor of precautionary measures for the protection of the uncontacted indigenous peoples (los intangibles) in this region. After that, Petrobras returned Block 31 to the Ecuadorian state.
In support of the Yasuní-ITT Proposal, President Rafael Correa spoke before the UN General Assembly on 24 September 2007 to explain his support of Ecuador’s plan and ask the global community for a global solution that is “equal and fair” for all countries. He noted that while the issue of climate change “has no borders,” it does have unequal distribution and impacts, such as the “6 tons of carbon generated by the United States and the 1.3 tons average generated by the rest of the world.” The plan to leave 920 million barrels of petroleum underground in the ITT block of Yasuní would prevent the generation of over 111 million tons of carbon, while also preserving the bio-diversity of the peoples and environment of the region. President Correa called the world community to support this proposal by providing $5 per barrel left underground, rather than the market value of $10-$15 per barrel. Over a ten year period, this would mean nearly $4.6 billion to be invested in this rainforest area. The plan, according to Correa, calls the global citizenry to change their mindset of the market for the 21st Century to one that values not only market price, but the “generation of value” for all of humanity (Correa 2007 Thus, even the Ecuadorian state is basing its argument in favor of global regimes and accepted international norms and principles that have been established – another step in the direction of global governance.
While this step toward global governance is noteworthy and the roles of NGOs like Amazonia por la Vida, Save Americas Forests, and Amazon Watch are significant, the Ecuadorian state is also rearing its powerful head as a country that is willing to develop its oil reserves. The previous granting of rights to Petrobras of Block 31, just next to the ITT block in Yasuní National Park, is a disconcerting sign to international supporters of Yasuní. In addition, Ecuador’s re-admittance to OPEC and President Correa’s national decree of increasing profit-sharing with foreign oil companies to 99% of the profits demonstrate a governmental desire to concentrate on oil profits from this biodiverse region. Possible investment from China and Russia in Amazonian oil has also recently been reported. Furthermore, neighboring country, Peru has granted drilling rights to US Oil Company Barrett Resources in Block 67 and Spanish oil corporation Repsol in Block 39(Environmental News Service, 2007). These two Peruvian oil blocks borderYasuní National Park and contain populations of uncontacted indigenous peoples (see map below).

(Courtesy of Max Christian, the Sustainable Development and Conservation Biology program at the University of Maryland and member of a US working group on the ITT Block.)
Yet, the global campaign to save the ITT region of Yasuní is a “bright spot” among the Amazonian oil development projects throughout Ecuador and Peru, according to scientist Dr. Matt Finer of Save Americas Forests (Environmental News Service, 2007).
The Plan
The Yasuní-ITT proposal calls for co-responsibility with the rest of the world (common, but differentiated) in avoiding emissions that the nearly 900 million barrels of oil in the ITT block could produce. The world would pay for avoided carbon emissions in order to protect one of the most biodiverse plots of Earth. The $350 million per year that Ecuador seeks each year for 13 years would be placed in a United Nations Development Program (UNDP) Trust Fund with a board of directors that includes Ecuadorians as well as members of the global community. If successful, it would be one of the largest global environmental trust funds of its kind. The funds would be directed to protecting Yasuní National Park, improving the lives of those who live within its boundaries, and to making Ecuador the country with the largest amount of land protected as national parks – 38% of its total land mass. The ultimate goal is to transition Ecuador from an economy and society dependent upon fossil fuels for its development to a post-petroleum society that focuses on sustainable development and living in harmony with nature – the politics of the good life.
The good life is not just a utopian dream. It is a concept with deep and ancient roots within indigenous communities that weaves their lives within and around their environments. For indigenous peoples, nature and man are not separate; rather they co-exist in harmony. Through this perspective, equitable and sustainable living within the environment is the priority over development driven by profits and neo-liberal markets. Ecuadorians believe so much in this way of living that they included it in their new constitution passed in Montecristi in 2008. The term sumak kawsay in Quichua is the backbone of the policies that outline the rest of their new constitution. In addition, Ecuadorians granted rights to nature – a first of its kind. Overall, the politics of the good life are the driving elements in keeping oil underground in their Amazon and in pursuing alternative energy policies in this resource-rich developing country.