Kristin Washburn Prof. Thalhammer Research Paper 9.12.2005 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- Texaco. 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. References: 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. 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