QUITO, Ecuador—As Ecuador threatens to expand its oil network into Yasuní rainforests, the country is tugging at the heartstrings of both the world’s development specialists and environmentalist.
As an OPEC member, Ecuador pumps about 500,000 barrels of crude oil per day, which the government has turned into millions in revenue due to contracts with the United States and China.
However, as the oil reserves have been down about 44 percent in 2015, the Ecuadorian government has claimed that pushing pipelines into the rainforest is crucial to maintaining public spending on education, infrastructure and other facets of development.
“The Yasuní-ITT block…holds about 20 percent of Ecuador’s known reserves,” according to Amazon Watch. “Correa says Ecuador now stands to earn $18 billion ($11 billion more than initial estimates) by drilling…In a country where nearly one third of the population lives below the poverty line, the dilemma is clear.”
But have the oil revenues actually made a sizable difference in the poverty of Ecuadorians? Before the international community hands over the $3.6 billion President Rafael Correa believes will offset the costs incurred by not drilling in the Yasuní, there are some paper trails to be followed.
Despite a 1970 oil boom that many believe had the potential to transform the Ecuadorian economy, Ecuador remains one of the poorest countries in South America. With roughly four million Ecuadorians living in poverty, and 1.5 million living in extreme poverty, it appears that the revenues of the oil boom have done little to ameliorate conditions, despite the fact that the Ecuadorian economy has grown since the oil boom.
Instead Ecuador has become one of the foundational examples of “dutch disease” or the Natural Resource Curse, a phenomena where countries that find themselves rich in natural resources do not see increases in human development.
“Ecuador is rich in oil, but ranks as one of the most corrupt countries in Latin America,” writes the Global Policy Forum. “And accumulated resentments over the way Venezuela’s oil wealth has been distributed have contributed to the political divisions in that country.”
Ecuadorian oil management has been littered with scandals since the initial boom in the 1970s. When Texaco, an American energy company initially began drilling and dumping waste into petroleum pits throughout the countryside, the Ecuadorian government turned a blind eye to the suffering of indigenous Ecuadorians, many of whom had been poisoned by waste.
During this time, the government pocketed 90 percent of the revenue according to Paul Barrett, a business journalist and author of “Law of the Jungle.”
Despite a variety of lawsuits, mainly coming from American Lawyer Steven Donzinger, Barrett believes that “the people of Eastern Ecuador…are still no better off.” Despite the health challenges, the Ecuadorian courts “shrugged off” findings that indicated toxic levels of chemicals in the environment.
Ecuador, especially on the eve of the decrease in oil revenues, acts as a cautionary tale for human development and natural resources: increased revenues due to extractive industries like oil drilling do not necessarily translate into better living for the average citizen.
To address this disconnect, experts are calling for the public dissemination of natural resources data. Media, many believe, can act as a watchdog that can attack the corruption that arises from deals that happen behind closed doors.
Organizations such as Norway’s “Publish What You Pay” are calling for more information about oil policy, prices, and stores that is disseminated widely throughout Ecuador:
“States (governments) are obligated to provide information to civil society, and civil society has the obligation to demand it,” reflected a supporter of “Publish What You Pay” in Ecuador.
– Emma Betuel
Sources: Publish What You Pay, Economist, Sustainability Seeds, Amazon Watch, Global Policy, CFR, WSJ, Washington Post