Crude Conflict

Document Sample
Crude Conflict Powered By Docstoc
					                                                                                  Kristin Washburn
                                                                                  Prof. Thalhammer
                                                                                     Research Paper
                                        The Crude Conflict

       Oil is major source of income for Ecuador and has been the engine of the nation‟s

economy since the Amazon oil boom of 1970s. Before the oil boom, Ecuador was one of the

world poorest countries in Latin America. Since then, oil production has been the primary cause

of Ecuador‟s economic growth. In part, this has been the product of suggestions from the

international lending community to implement neoliberal policies and reform oil sectors.

Aggressive neoliberal policies that have been instituted at the request of the International

Monetary Fund and the World Bank to stimulated economic growth. However, this growth has

come at unjustifiable cost to the environment and the health of local communities in Amazon.

       The large groups of indigenous peoples who live in the Oriente feel that their collective

rights to live as an autonomous community has been severely undermined in Ecuador‟s quest for

economic development. This paper investigates the ugly consequences of these neo-liberal

policies in order to demonstrate that economic growth should not come at the expense of the

socio-cultural moorings within indigenous communities. The issue of oil exploitation and its

implication on the health and environment of indigenous peoples has severely hindered

Ecuador‟s ability to achieve sustainable development. Even though, the Ecuadorian Government

implemented these policies to better the lives and opportunities of its citizens, it has come at a

grave cost to the most vulnerable and unique portion of its society—the indigenous peoples and

the delicate natural world of the Amazon.

       The development of oil in Ecuador has followed a pattern that is similar to most

developing countries. The economic and political landscape of South America has changed
drastically in the last three decades, as the developmentalism or cepalismo that prevailed in

economic policy from the late 1940s was replaced by a new economic model—neoliberal

policies in the 1970s (Lewis, 34). By the 1980s, the neoliberal orthodoxy had been established

as the dominant economic ideology throughout the world. Ecuador‟s debt/loan crisis and failure

of the stabilization programs in the 1980s prepared the way for neoliberal policies in the 1990s

according to Dr. Colin M. Lewis, Senior Lecturer in Latin American Economic History at the

London School of Economics and Political Science (Lewis, 34). The discovery of rich oil

deposits in the Amazon in the 1970s resulted in an economic boom for the elite, ecological

disaster for the Amazon, and increased impoverishment for its inhabitants.

       The Amazon oil boom and oil revenues launched Ecuador into the industrial world.

Ecuador‟s capital city, Quito, changed from an isolated quaint colonial city into a vibrant

administrative and economic center with an important banking industry. Over the years,

Ecuador became heavily dependent on its oil reserves. Dr. Marc Becker, assistant professor at

Truman State University, states that many Ecuadorians believe the Amazon is critical to their

national salvation, because of the potential economic wealth from exploitation of petroleum and

other minerals (Becker, 70). Crude oil represented approximately 50 percent of the state’s

budget. Today, petroleum exports amounted to some US$ 2,069,900 million in 2002, equivalent

to 41% of the total value of export (Europaworld, 1537). When oil revenues did not cover the

costs, the military government of the 1970s used future oil production as leverage for obtaining

international credit (Sawyer, 11). These actions and access to credit on future petroleum

revenues sustained Ecuador through the 1970s and led to unprecedented growth rates.

       However, in the 1980s, the fall of the world price of crude oil and hikes in international

lending rates drove Ecuador into an economic crisis. At this time, Ecuador could barely service
their crushing debt. Between 1974 and 1982, the foreign debt had risen from 18 percent to 60

percent of the GDP (Sawyer, 11). As a remedy to the economic situation, in the 1980s Ecuador

began introducing a neoliberal program that sought to increase oil exploration and open the

economy to foreign investment and trade (Sawyer, 11). Ecuador has implemented structural

adjustment programs at the request of the IMF and the World Bank. However, Ecuadorian

Presidents between 1980 and 1992 resisted selling state-owned energy enterprises in an effort to

fend off foreign investors and subdue internal protests.

       It was not until 1992 that neoliberalism transformed Ecuador‟s political-economy. Like

most indebted third world countries, multilateral lending institutions like the World Bank and the

IMF granted Ecuador loans on specific conditions of implementation (Sawyer, 13). Adhering to

these policies required Ecuador to stimulate transnational investment through privatization,

liberalization, deregulation, and decentralization. This meant opening the economy by reducing

tariffs, simplifying tariff regimes, removing nontariff barriers to trade, and removing exchange

controls (Lewis, 35). These neoliberal policies sought to ensure and allow that prices were

determined by markets in order to deregulate the economy. Privatization removed one of the

principle expenditure pressure points, since the operating deficits of state-owned corporations

accounted for substantial portions of overall fiscal deficits (Lewis, 36). Through neoliberal

policies, Ecuador hoped to generate enough state revenue to reduce their debt burdens, where

former state-owned corporations had been purchased by foreign consortiums like Chevron-


          As the debt crisis worsened and oil prices declined the state sought to increase

production in order to finance unpayable foreign debt. The international lending community

believed increased production in the oil sector would promote the interests of the Ecuadorian
society as a whole through trickle-down economics. In 1993, the „Modernization Law‟ was

implemented and provided for the privatization of some 160 state-owned companies

(Europaworld, 1532). Over the last three decades, these foreign oil consortiums have

transformed the Amazon rain forests, contaminating thousands of miles with open waste pits, oil

wells, pumping stations, and an oil refinery. These companies have prospered under unregulated

oil development, which has forever disrupted indigenous communities in the area with disease

and contamination.

       The major supply of oil comes from the Amazon or the “Oriente” region of Ecuador, and

this contains one of the most diverse collections of plant and animal life in the world. In 1967 a

Texaco-Gulf consortium discovered a rich field of oil beneath these rain forests, which lead to

the Amazon oil boom of the 1970s and made Ecuador the second leading oil producer in South

America. Consequently, the region was permanently reshaped by the vast network of roads,

pipelines, and oil facilities that now inundate these tropical forests.

       Currently, the oil infrastructure in the Oriente region spans nearly one million hectares,

with over 300 producing wells and 29 production camps (San Sebastian & Hurtig, 205). The

country has 4.6 billion barrels of proven oil reserves, with crude production of around 390,000

barrels a day. The Ecuadorian state-owned oil company, Petroecuador accounts for about 55% of

Ecuador‟s total output, with 16 private companies accounting for the remaining 45% (San

Sebastian & Hurtig, 1022). Since 1970s foreign oil companies and Petroecuador have extracted

more than two billion barrels of crude oil from the Ecuadorian Amazon. However, during this

time Chevron-Texaco alone released some 4.3 million gallons per day of toxic wastewater

directly into the environment (Koenig, 10). Over the 21 years that the company operated in
Ecuador, they discharged roughly 20 billion gallons of toxic waste into the Oriente, which is

largely populated by indigenous peoples and peasants.

       The goal of increasing production in the oil sector was to reduce social and economic

suffering of the country. However, the actual economic progress seems moot. From 1970 to 2002

the unemployment rate rose from 6.0% to 7.7%, and the percentage of people living in poverty

climbed from 47% to 61.3% (San Sebastian, 208). The ratio of wealth distribution based on the

poorest 5% of the population and by the richest 5% changed from 1:109 in 1988 to 1:206 in 1999

(San Sebastian, 208). Clearly, structural adjustments and privatization of the oil sector has no

lead to equally distributive development for Ecuador because the Amazonian region continues to

have the worst infrastructure and the lowest socioeconomic and health indicators in the country.

Despite the economic gains brought to Ecuador as a whole by the oil industry, many people who

live alongside the process have experience problems as a result of the production, and few of the

benefits. In the poorest villages, there are no piped drinking water or sewer services. For these

people, water for bathing, drinking, cooking, and washing clothes comes from the local rivers.

However, these rivers are also the dumping grounds for untreated waste from oil productions.

For many of these communities, foreign and state-owned oil consortiums have been operating in

this manner for more than 30 years.

       The extent of the oil industries‟ polluting processes depends mainly on the environmental

practices and technology used by oil companies. The wastes from oil production were frequently

deposited into open, unlined pits, called separation ponds, from which they were directly

discharged into the environment or they leached out as the pits degraded or overflowed from

rainwater (San Sebastian, 207). A study in 1987 by the Ecuadorian Government found elevated

levels of oil and grease in all of the 36 samples taken from rivers and streams near production
sites (San Sebastian & Hurtig, 207). Also, this study discovered a shortage of dissolved oxygen

in the majority of water samples; this has serious implications for the health of aquatic

ecosystems (San Sebastian & Hurtig, 207). The indigenous communities in these areas are

entirely dependent on the environment to provide food, water, and shelter. However, the

environmental contamination and cost cutting measures have threatened the livelihood of these

communities and animals throughout the region.

Every day over 4.3 million gallons of liquid waste are generated every day and discharged

without treatment into pits (San Sebastian, 207). Roughly 53 million cubic feet of “waste” gas,

which contains heavy metals, oxides of nitrogen, sulfur, and carbon, hydrocarbons, and soot

(carbon particulate) is burned daily without temperature or emissions controls as a result of the

separation process (San Sebastian, 207). Every year an estimated five million gallons of

untreated toxic wastes into the environment during routine maintenance activities at over 300

producing wells (San Sebastian, 207). According to a survey conducted by the Ecuadorian

Government, an estimated 20,000 gallons of oil was spilt from the flowlines that connect the

wells to the stations every two weeks (Jochnick, 13). Overall, during the period of 1972 through

1993, more than 30 billion gallons of toxic wastes and crude oil were discharged into the land

and waterways of the Oriente (Jochnick, et al, 84). Compare this to the 10.8 million gallons

spilled in the Exxon Valdez tanker disaster in 1989 in Alaska, one of the largest sea oil spills that

have ever occurred.

       Only until the 1990s were studies conducted to investigate the association between oil

pollutants, exposures, and cancer in residents near oil fields. These petroleum hydrocarbons are

an extremely volatile organic compound that after applied to skin causes tumors and has

carcinogenic effects on the body. Consequently epidemiological studies have reported different
types of cancer and their association with occupational and residential exposure to oil pollutants

(San Sebastian, et al, 521). These cancers include many varieties such as stomach, skin

melanoma, soft tissue, rectum, kidney, cervix, lymph nodes, larynx, liver, melanoma, leukemia,

and other haematopoietic cancers. These studies conclude that childhood leukemia and other

childhood cancers also have been geographically associated with the oil industry (San Sebastian

& Hurtig, 1025). In addition the risk for spontaneous abortions was 2.5 times as high in women

living in proximity of oil fields (San Sebastian, 208). Oil exploration and production in these

Amazonian areas have devastated indigenous communities through the destruction of their

environment, their health, their way of life.

       Once able to care and heal themselves, now Amazonian indigenous peoples must adopt

Western medical practices, and reject their traditional medicine in order to treat their modern

diseases. The local hospitals lack the histopathological services and access to radio- or

chemotherapy treatment—the services need to treat these cancers (San Sebastian & Hurtig,

1024). Suspected cancer cases are referred from these provinces to Quito. Yet, most residents

cannot afford to take a day off, pay for the bus fare nor the appointment, and navigate in the

strange urban centers. For these socioeconomic and geographical factors, it is most likely that

many cases of cancer were never referred to facilities in Quito.

       In 1994, the Ecuadorian environmental and human rights organization Centro de

Derechos Economicos y Sociales released a report documenting dangerous levels of toxic

contamination (San Sebastian & Hurtig, 1022). Concentrations of polynuclear aromatic

hydrocarbons (PAH) were found in drinking, bathing, and fishing waters, and were 10 to 10,000

times greater than what is recommended by the U.S. Environmental Protection Agency (San

Sebastian & Hurtig, 1023). In 1991, the National Resources Defense Council estimated that
Ecuadorian oil operations discharged 4.3 million gallons of toxic wastes into the Oriente‟s

environment every day (Jochnick, 13). A report published by the Center for Economic and

Social Rights confirmed that these waste levels reaching 1,000 time the safety standards

recommended by the U.S. Environmental Protection Agency (Jochnick, 13). Yet, the

Ecuadorian Government insisted that these were acceptable levels.

       Transnational corporations pledged to developing countries that they would ensure that

their activities had „minimal impacts on human health and the environment‟ and „foster openness

and dialogue‟ with the public (Kimerling, 66). Assistant Professor of Law and Policy at The

City University of New York, Queens College and School of Law, Judith Kimerling says that

representatives of industry promoted the idea that corporations could play a key role in

implementing sustainable development and that governments were counting on private

corporations to pay for and carry out environmental development programs (Kimerling, 65).

However, the Ecuadorian Government has refused to recognize the rights of indigenous peoples

to self-determination and ancestral territories. Instead, they emphasize State sovereignty over

resources, and affirm their ability to exploit their own resources. From the perspective of the

indigenous peoples, the imposition of development activities in hands of the State, without

consent, violates their fundamental rights, and represents the colonization of their territory with

outsiders (Kimerling, 66).

Occidental is one of the many oil consortiums operating in Ecuador. The company concentrated

their drilling in Block 15, and during that time, they did not even greet the community according

to a local community member (Kimerling, 69). Yet, one of their corporate principles is to inform

members of the public who may be affected by and interested in the health, safety, and

environmental issues of oil production and regularly share information with the surrounding
community; however, their actions completely contradict their corporate guidelines (Kimerling,

69). Under Ecuadorian law, oil companies are required to prepare environmental impact studies

that address the social effects called Estudios de Impactos Ambientales before each stage of

development (Kimerling, 70). These studies act as a database for environmental and socio-

cultural conditions that exist before the operation begins. Although Occidental stated the one of

its top priorities is to be a direct benefit for the local community in order to improve the quality

of life of the population, it is appears obvious that the lives of indigenous peoples in the

surrounding areas have not gotten better since the oil boom.

Instead, throughout Block 15, residents feel olvidados, forgotten by their government when it

comes to basic social services and infrastructure like education, health care, transportation, and

communication. Their traditional way that provided secure and self-reliant sources of food,

water, shelter, and medicine is no longer possible due to the incredible environmental

degradation, which has corrupted their access and wealth of renewable natural resources. The

destruction, degradation, and contamination of natural resources can and has created poverty

among the people who use them.

       Foreign oil consortiums have entered indigenous territories and exploited petroleum,

destroyed the forests, contaminated the every component of environment, made the fish and

animals disappear, and brought colonists and foreigner to occupy their territory (Jochnick, 13).

The indigenous peoples in the Oriente feel that their political, economic, social, and cultural

rights have been violated because their environment, which for them is both sacred and alive, has

been destroyed. In addition, their autonomy to live in an environment free from contamination

has been thwarted. The oil booms have made indigenous peoples invisible and overlooked in the

spirit of economic “development.”
        The inhabitants of the Ecuadorian Amazon have asked for a better quality of life and for

technical assistance, as well as electricity, water, health services and other basic services be

provided. Residents of the Oriente have demanded that oil consortiums clean up their

environmental pollution and compensate them for oil-related damages. Although oil companies

have contributed large monetary sums to environmental clean-up, it has not been enough. The

measures adopted by these oil companies and the Ecuadorian Government have been described

as “patches,” such as covering some waste pits, building some schools, and constructing roads

(San Sebastian, 208). Over the last decade, international oil consortiums have acknowledged

that the Ecuadorian Government has not implemented meaningful regulations for environmental

protection and community relations in the Amazon.

        The emissions and contaminants discharged into the air and water by oil refining must be

controlled and regulated for the benefit of future generations. The existence of benzene and

other aromatic hydrocarbons are proven to have horrible health consequence for local residents

(Harari, 189). Innumerable reasons exist that show an urgent need for the Ecuadorian

Government to respond to these environmental challenges by adopting tougher legislation and

laws to protect the health and environment of Amazon. However, environmental health services

are incipient, the political and concrete response of the governmental control bodies are quite

limited, and the economic and immediate needs of the Ecuadorian Government have lead, almost

fatally to the increase of the problem at a rate that is difficult to address in an appropriate

manner. There is almost no control, protection is insufficient and prevention is almost

nonexistent. Ecuador has not adopted the legislation or regulations to protect rights of

indigenous peoples and Amazon.
       Since the implementation of neoliberal policies it has been debated whether or not they

have provoked deterioration in the welfare of South America. The World Health Organization

and the International Labour Organization are establishing their presence in Ecuador as a way to

stimulate prevention, protection, and to improve the interest in environment and health problems

(Harari, 187). The environmental problems originate from a large number of factors that are

complicatedly connected to the economic and political health of the Ecuador. Oil producers

have generated their products by contaminating the environment and altering the health of the

people living in the surrounding areas. Due to the deregulation and privatization of the

economy, companies freely transport their merchandize and supplies into and out of the country

with little supervision; this makes it nearly impossible to control the introduction of hazardous

substances into developing countries (Harari, 188). The producers emphasize their need to

compete in the world market even if the costs to the environment and health of the community

are irreparable.

       Twenty years of oil production with technology that was quite below the standards

applicable in the developing countries, oil exploitation in the Oriente has caused damage to the

ecosystems, rivers, fauna and flora, where cancer is now common when it once had been

nonexistent. The exploration and production of oil in Ecuador has threatened and harmed

renewable resources in a number of locations, diminishing peoples‟ ability to continue a

sustainable and self-reliant way of life, and reducing their resource base for sustainable

development. Some Ecuadorians see oil development as an opportunity, and perhaps their only

opportunity, for improved health care, education, transportation, jobs and income. However, the

profits from oil production has achieved economic growth, but for local residents and indigenous

peoples the perceive benefits of neoliberalism have not trickled down far enough. Ecuadorians
hoped that neoliberal policies would create an environment of political and economic stability

and has gnawed away at the country‟s social bodies and served to foment resistance. The

government has a responsible to its citizens to provide the highest quality of life possible. In

order to honor the rights of its citizens, it must value their needs and voice more than those of the

IMF and World Bank. Clearly, the health and wealth of the indigenous peoples and the natural

world of the Amazon have been overlooked in attempt to regain fiscal solvency. Ecuador needs

to look for more socio-culturally responsible solutions to economic concerns.


Becker, M. (2002). Ecuador. In P. Heenan & M. Lamontagne (Ed.), The South America
       Handbook (pp. 68-79). Chicago, IL: Fitzroy Dearborn Publishers.

Harari, R., Freire Morales, R., & Harari, H. (2004). Major Concerns in Developing
        Countries: Applications of the Precautionary Principles in Ecuador. International Journal
of Occupational Medicine and Environmental Health, 17(1), 187-191.

Hurtig. A-K., & San Sebastian, M. (2002). Geographical differences in cancer incidence in the
Amazon basin of Ecuador in relation to residence near oil fields. International Journal of
Epidemiology, 31(5), 1021-1027

Lewis, C. M. (2002). From Developmentalism to Neoliberalism, 1945-2001. In P.
      Heenan & M. Lamontagne (Ed.), The South America Handbook (pp. 29-42).
      Chicago, IL: Fitzroy Dearborn Publishers.

Jochnick, C., Normand, R., & Zaidi, S. (1994). Rights violations in the Ecuadorian
       Amazon: the human consequences of oil development. Health Human Rights,               1(1),

Jochnick, C. (1995). Amazon Oil Offensive. Multinational monitor, 16, 12-15.

Kimerling, J. (2001). „The Human Face of Petroleum‟: Sustainable Development in
       Amazonia? RECIEL, 10(1), 65-81.

Koenig, K. (2004). Chevron-Texaco on Trial. World Watch, 17(1), 10-19.

San Sebastian, M., Armstrong, B., Cordoba, A., & Stephen, C. (2001). Exposures and cancer
incidence near oil fields in the Amazon basin of Ecuador. Occupational and Environmental
Medicine, 58(8), 517-522.
San Sebastian, M. (2004). Oil exploitation in the Amazon basin of Ecuador: a public    health
emergency. Revista Panamericana de Salud Publica, 15(3), 205-211.

Sawyer, S. (2004). Crude Chronicles: Indigenous Politics, Multinational Oil, and Neoliberalism
in Ecuador. London: Duke University Press.