Capitalists Clash in Ecuador

Yahaira Castro

Special to the Tucson Citizen

August 21, 2003


Sarayacu, Ecuador

Villagers want to develop tourism; government banks on oil

Last October, when Isidro Gualinga heard about oil workers dynamiting land near his village looking for crude oil, he cut down a taraputo tree.

With a machete, Gualinga chopped the tall, skinny tree into six parts, which he shaped into lances.

With hundreds of his villagers from Sarayacu, Gualinga traveled a half-hour up river, then walked more than two hours through the hilly jungle to the dynamiting sites.

They waved machetes and shotguns and pointed lances at the workers, chasing them away.

Before burning their camps, they took the workers' equipment and 70 sticks of dynamite. One group took 10 workers hostage, eventually turning them over to police in a nearby town.

Following the confrontation, the company in February stopped seismic testing and called its workers out of the territory, saying the protesters had prevented them from completing tests.

A French business, the Compania General de Geofisica, was conducting the seismic testing on behalf of the Compania General de Combustibles, an Argentinian oil company that has concession to more than 80,000 acres in this part of the Amazon.

Next year, vast new tracts of the Amazon's landscape, almost all of it in places like Sarayacu, will be offered up for oil development by Ecuador's struggling government to feed a 298-mile pipeline for heavy crude oil that is under construction.

Economy struggling

The country hopes to rescue its economy and pay off its massive debt by developing more of its oil, which already represents about 40 percent of the national budget. Most of the oil will be exported to the United States.

In 2002, Ecuador exported 263,000 barrels per day, a fraction of the 3.6 million barrels per day Mexico exported. But to this country of 12 million people, where the poverty rate is about 70 percent, oil represents an economic opportunity.

In Sarayacu, indigenous leaders say they worry the government will forge ahead, using the military and police to help keep oil companies operating if necessary.

While they have little experience with entrepreneurial projects, people in Sarayacu say they want a chance to shape their own form of capitalism. They want to sell agricultural products like yucca and plantain to nearby towns and expand their ecotourism business.

Although the village of 1,200 had just 15 tourists last year, leaders say the business is expected to grow. Indigenous leaders say Ecuador should look to Costa Rica as a model. In 2001, that country's tourism industry was worth $1.3 billion and employed about 152,000 people.

But, while Sarayacu residents say ecotourism could ease Ecuador's economic problems, nine hours away in the capital city of Quito most bets are riding on oil.

One of those investments is the heavy crude pipeline known by its Spanish acronym OCP (Oleoducto de Crudos Pesados). It snakes a winding path in the north, about 200 miles from Sarayacu and will be operated by a consortium, including the United States' Occidental Petroleum Corporation and Canada's Alberta Energy.

Pipeline touted

The pipeline will bring a number of benefits to Ecuador, said Isabel Ortiz, the consortium's spokeswoman. In 20 years, its ownership will revert to the government. It will create more than 10,000 jobs, she said, though most will be temporary positions and in construction.

The pipeline could double the country's exports, intensifying the need for more oil. Activists say the state will look beneath the feet of people in Sarayacu to fill the pipeline.

Oil production in Ecuador dates to 1972, when Texaco began tapping crude oil out of the northern Amazon. That event spurred development and made this country the size of Colorado an international player in the market for petroleum, generating billions for the government.

Oil's downside

Yet little of that wealth has transferred to Ecuador's people. According to the United Nation's 2001 report on human development in Ecuador, unemployment and poverty have steadily increased since the country became an oil exporter. So has environmental pollution.

Oil production left behind pools of dumped crude oil in the rain forest, rivers contaminated from ruptured pipelines and sick people near areas of oil development, who activists say suffer from high rates of cancer, skin diseases and other maladies, including persistent headaches.

The state-run oil company that took over Texaco's oil operations has cleaned up dozens of sites, said Diego Cano of PetroEcuador. However, there are limits to what the cash-strapped company can do with an estimated cleanup bill of more than $1 billion, he said.

People in Sarayacu say they want to avoid that type of contamination in their village. Many of them have either worked with oil companies in the northern Amazon or taken trips to see the environmental damage.

"You go there and it's horrible what they've done," said Isidro Gualinga, Sarayacu's tourism director.

Crude dumped by homes

Gualinga has traveled to Coca, a northern community on the Napo River, many times. He saw pools of crude dumped by oil companies near people's homes. Many residents told Gualinga they wish they could sell their land and leave the area. But because the land is contaminated, no one will buy.

"They followed the oil companies and now what do they have?" he asked. "We'll have to explain to our children's children why we didn't fight against the companies."

New president disappoints

Ecuador's indigenous people thought the country's new president, Army Col. Lucio Gutierrez, would be an ally.

Three years ago, the main indigenous party formed an alliance with Gutierrez when he and others tried to bring down the government. The coup failed, but it provided the seeds for an association that survived when Gutierrez ran for president and won with the majority of the indigenous vote.

When Gutierrez took office in January, he inherited an economy weakened by a global recession and a foreign debt of more than $15 billion.

Indigenous groups expected him to keep to his populist platform by rejecting a deal with the International Monetary Fund imposing high repayment terms and abiding by a constitutional law that requires the government to negotiate with indigenous groups over oil development on their land.

Now, many say Gutierrez has betrayed them. Earlier this year, Gutierrez signed the controversial deal with the IMF. It ensured future loans, but also called for suspensions or decreased social spending in areas such as government pensions and wages.

Critics say that means the new pipeline won't even benefit Ecuadorians - 70 percent will simply go to paying off the country's foreign debt.

The country's finance minister said the government and indigenous people must reach some compromise on exploiting oil found in indigenous communities. "(We need) to return to those sectors services, infrastructure to show the benefits of these activities of oil production," said Mauricio Pozo.

In the past, the government has made clear to what extent it will go to keep the oil spigot working. Twelve years ago, when Sarayacu residents tried to occupy an ARCO helipad in a nearby community, the government sent in troops to protect the installation.

Under an open palm hut, Mario Santi, the president of Sarayacu's oil resistance campaign, stands in the town's center. "We're going to fight with the president of the republic," he said. "(Gutierrez) has to support us and we have to manage this resource."




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