Ecuador: Oil, Rainforests & the challenge of climate change


In previous issues, we examined aspects of the challenge of climate change. We have argued that carbon trading is merely an enclosure of the atmospheric commons, while carbon offsets are a form of neo-colonialism whereby the “developed north” continues to pollute while the “global south” are paid not to (please see: and Another, more radical, proposal is one based on prevention, that is, the non-extraction of fossil fuels. The argument is that once extracted, the use of fossil fuels is inevitable, and that any mechanisms to mitigate the increase in CO2 emissions will be unworkable.

In this light, it is useful to consider the example of Ecuador. Ecuador boasts some of the highest levels of biodiversity in the world. It also boasts large deposits of oil. Unfortunately, the two coincide - the oil being mainly under the rain forests in the east of the country. Having been controlled by right-wing governments for much of the time since oil was first discovered in the 1960s, the petrochemical industry has enjoyed doing what it does best - making massive profits while destroying the environment and polluting the local water supply.

After these decades of neo-liberal pillage, Ecuador elected a leftist, Rafael Correa, in late 2006. A constitution that guaranteed the “rights of nature” soon followed. This is the context in which Correa announced that Ecuador had decided not to extract the crude oil discovered in the ITT field located in the Yasuni National Park.
The Yasuni National Park is one of the most biodiverse sites on Earth, covering 982,000 hectares. The ITT field is about 20% of the total park area with 846 million barrels of recoverable oil reserves which are estimated to be worth $7.25 billion (at present value). Non-extraction would also avoid an estimated 407 million tonnes of CO2 emissions.

Under the Yasuni-ITT initiative, Ecuador proposed that the international community contributes $3.6 billion over 13 years. However, very quickly, negotiations for the project almost collapsed. International support was slow to appear, and Ecuador went though three different foreign ministers and three negotiating teams. So far, there have been limited contributions. Chile was the first to contribute with $100,000. Spain has since added $1.4 million and the regional Walloon government of Belgium $415,000. Italy has offered a ‘debt swap’, to the tune of $35 million. Germany, one of the earliest to voice support, pulled out after Angela Merkel assumed power. Contributions from private business and social institutions have brought the fund up to $38 million by February 2011.

Ecuador says it hopes to obtain $100 million in contributions by the end of 2011. If the $100 million is not forthcoming, the Correa government will, it is expected, decide to proceed with oil drilling in the rain forest.
As can be easily seen, $38 million after 2 years is a long way off the target of $100 million by the end of 2011. Moreover, $100 million is a long way off $3.5 billion over 13 years. So unless there is some kind of revolution in the thinking of the international community, these targets will not be met and the oil will be extracted and the rain forest destroyed. But could it have been any different?

The global recession that began in 2008 was, in part, caused by high oil prices, which created uncertainty as to economic forecasts. Now, again, with the intervention in Libya, it can be argued that part of the rationale was to prevent a protracted civil war which would limit access to Libya’s oil and continue to drive up prices. So why would the capitalist powers be willing to pay Ecuador to leave the oil in the ground, inevitably pushing up oil prices to a greater or lesser degree?

Furthermore, what kind of precedent would this set? If Ecuador’s offer was met with hard cash, it would be a green light to countries such as Venezuela, Morocco, Uganda and even Ireland to propose similar projects. In general, the challenge for capitalism, is to transition to a post-fossil fuel world, as cheaply as possible, while maintaining profits and economic growth - quite a feat of juggling. So how could Ecuador’s project of non-extraction fit in with this transition?

There are other other complications, too. How do you put a price on the “non-extraction of oil”? It may be valued at $3.6 billion now, but what if oil jumps ten-fold in price? Is there not a financial pressure then to extract the oil and pay back the original donors?

Despite these complications, this is not to argue that the Ecuadorean proposal is not a nice idea. It is, in principle - and one of the few proposals on the table that might avert runaway climate change. But we live under capitalism. In a system based on competition and the profit motive, the idea of an solitary, small state such as Ecuador, being able to propose and benefit from such a project is, unfortunately, absurd. Climate change is a global problem, one caused by the capitalist powers and suffered disproportionately by the global south. A global solution is required. But a global solution is effectively impossible under capitalism. If it is to be solved, it will be done so from the bottom up.


This article is from Workers Solidarity No 121 published May 2011