A Seat at the Table

September 25, 2007

In the fall of 1997, a tiny indigenous community deep in Ecuador's Amazonian interior was engaged in fierce negotiations with a team of environmentalists posing as oil executives. The "oil men" were eager to sign an agreement that would allow them access to indigenous lands and were willing to offer almost anything the community desired: a short-wave radio, motors for their canoes, solar panels, a health clinic. With hundreds of millions of dollars at stake, the negotiators could afford to be generous. But the indigenous leaders—all of them teenage boys—were skeptical: They complained about potential harms, and insisted on more time, more information and more access to lawyers. The elders in the back of the room could not understand the Spanish, but they were clearly agitated by the rising emotions and tension.

Suddenly, commotion erupted just outside the hut as three real oil workers arrived by chance. The environmentalists watched in dismay as the teenagers ran outside to greet the visitors, eager for information about possible jobs and gifts. On this day, concerns about oil development, so evident in the mock negotations, were little match for the real material promises of this wealthy industry. It would take more than technical training to overcome the vast economic, social and cultural factors working against these marginalized communities threatened—and tempted—by oil.

The petroleum industry, perhaps more than any other, has long been surrounded by conflict and protest. Local communities have played an increasingly important role in these protests and have forced significant changes on the industry. Once dispatched as meddlesome provocateurs, the affected communities are now often considered essential "partners" in oil projects. Ecuador is one of the smallest oil-producing countries, but its conflicts are a case in point. In particular, the Ecuadoran experience highlights new forms of activism provoked by oil, and shows how that activism has forced change upon the government and industry. Ecuador's experience also illustrates the tensions and struggles within the rapidly expanding field of corporate responsibility.

Ecuador shares problems common to all oil-producing countries in the South: high levels of government corruption, social inequality, poverty, external debt and political instability. It also suffers from a weak judiciary, growing ethnic and regional tensions, and an authoritarian government with an active military role. Early last year, indigenous groups and sympathetic members of the military overthrew the government—ushering in Ecuador's sixth president in the last five tumultuous years. An expanding narcomilitary conflict along the Colombia-Ecuador border, fueled by the U.S. counterinsurgency/"drug war" military package "Plan Colombia," has only aggravated social and political turmoil.

Ecuador's "oil boom" has brought billions of dollars into the country, accounting for roughly half of the national budget since the early 1980s. However, the lack of effective government control has allowed a tiny group of elites and foreign companies to capture the benefits, while leaving the most vulnerable populations to shoulder the burden. The oil boom has tended to exacerbate economic dependency, structural inequities and political instability that date to the country's colonial past. The statistics are telling: Before oil development, the country had a negligible foreign debt of $200 million, a poverty rate below 50%, unemployment and under-employment of 15%; meanwhile, the poorest 20% of the population controlled 6.7% of the country's resources. Today, after 30 years of oil production, with an estimated half of the country's reserves depleted, Ecuador per capita is the most highly indebted country in Latin America. The poverty rate is over 67%, under-employment and joblessness runs at 65%, and the poorest fifth of the population controls only about 2% of the country's wealth. The precise role of oil in these grim statistics is impossible to measure, but its influence has been overwhelming in skewing resources, corrupting politics and creating enormous dependency on a volatile industry.

Ecuador's oil boom began in 1967 when Texaco discovered oil in the eastern Amazon region (the "Oriente"). The Oriente covers 32 million acres of pristine rainforest considered one of the most biologically diverse areas on earth. It is also home to eight distinct indigenous groups with a total population of 100,000, as well as 250,000 recent immigrants. The oil industry has focused on the northern part of the Oriente, where it has had devastating impacts on local communities and their environment. Socioeconomic conditions within this region have been described by the World Bank as "calamitous," with poverty rates close to 90% and little or no basic infrastructure— sanitation, potable water, or paved roads.

Oil development in Ecuador—particularly relations between the industry, government and local communities—has gone through three overlapping stages: an initial period of widespread neglect by the state and abuses by the industry; a second one of conflict, organizing and protest; and a third era of dialogue. At the time of Texaco's discovery, the Amazon was a largely neglected frontier that supported indigenous peoples, church missionaries and a dwindling cacao industry. Few indigenous groups had legal title to their lands, and they were almost completely ignored by the state, which hardly considered them citizens. The Ecuadoran government had neither the resources nor experience to develop oil and instead allowed Texaco to exploit the region as it saw fit. The military quickly assumed a share of national oil revenues, and its presence in the Amazon, where tensions with Peru ran high, became intermingled with the task of providing security and support to the oil industry.

Texaco built a vast network of roads into the rainforest, and a pipeline running the length of the country, as well as refineries and hundreds of wells. The government encouraged colonization of the Amazon to relieve internal land pressures, offering legal title to any person who cleared and planted crops in the jungle.

Texaco's unrestrained development and the colonization rush were devastating for local communities, causing widespread deforestation, loss of land and wildlife, cultural disintegration, disease and a host of new social problems, including alcoholism and prostitution. Traditional indigenous groups like the Cofan, the Secoyas and the Huaorani, once numbering in the tens of thousands, were reduced to a few hundred each, and the Tetetes disappeared completely. To save costs, Texaco dumped its toxic wastes directly into the environment—an estimated four million gallons a day—causing massive contamination of land and rivers and an array of health problems among local communities, including increased rates of cancer. Texaco paid little heed to these communities, at best compensating them at the company's discretion for specific property losses.

The 1980s brought rising concerns about oil development, alongside community organizing and protests. Much of the interest in oil was sparked by the government's decision in 1985 to license millions of acres of new Amazon territories to private companies. The impacts of Texaco's operations were just beginning to reach a national audience, and newly organized indigenous groups joined with environmentalists to oppose further exploration and development, particularly in indigenous territories and national environmental preserves.

The Confederation of Indigenous Nationalities of the Ecuadoran Amazon (CONFENAIE), established in 1980, was a critical force in helping organize smaller indigenous groups to obtain land titles and build opposition to oil development. At the turn of the decade, CONFENAIE pressed the government to undertake a first-of-its-kind impact study of oil operations, and protested the World Bank's role in promoting oil development. CONFENAIE joined with the other major indigenous organization, Ecuarunari, representing the central region of the country, to form the Confederation of Indigenous Nationalities of Ecuador (CONAIE), a national indigenous organization that has since become a critical political and social force.

Environmental groups with a traditionally conservationist focus began to work more closely with communities in the Amazon to strengthen campaigns for sustainable development. This coming together at the local level was mirrored and supported by an international initiative between Northern NGOs and indigenous federations in the nine Amazon countries, who established the Amazon Alliance in the early 1990s. The natural target of these initial efforts was Texaco, the company responsible for the infrastructure and 90% of all oil produced in the 1970s and 1980s. A local NGO, Acción Ecológica, led protests aimed to raise awareness about environmental and social harms, to block further development and to ensure clean up and compensation. The actions included demonstrations, marches, take-overs of government offices, shareholder protests with U.S. NGOs, media campaigns and meetings with a range of government and industry officials. Texaco refused to be moved by the demonstrations and negative press, and assumed some responsibility for clean-up only under pressure from a later lawsuit.

In the early 1990s, meanwhile, the U.S. oil company Conoco was negotiating exploration rights to a block of rainforest that included one of the most valuable national parks and was home to the Huaorani, an indigenous group hardly touched by Western contact. The project provided a new focal point for protests, joining CONFENAIE and local environmentalists. These groups targeted not only the company, but also the U.S. NGO, Natural Resources Defense Council (NRDC), which was trying to broker an innovative scheme that would impose stricter environmental and social policies on oil drilling activities. At the international level, the Sierra Club Legal Defense Fund (now Earthjustice) filed a petition with the Organization of American States (OAS) on behalf of the indigenous communities, and Rainforest Action Network campaigned in the international media to raise awareness about the conflict. The pressure drove Conoco (and NRDC) out of the country, and provided one of the first concrete (though short-lived) victories for activists.

In 1993, U.S. lawyers filed a ground-breaking suit against Texaco in U.S. federal courts on behalf of some 30,000 Ecuadoran plaintiffs. Accompanying the lawsuit, a U.S. NGO, the Center for Economic and Social Rights (CESR), undertook water testing with a team from Harvard University, and compiled a report providing scientific proof of the contamination and evidence of widespread human rights violations. The lawsuit, scientific data and human rights report attracted national and international media coverage and sparked a wave of organizing in the Amazon, particularly among non-indigenous communities who had come to represent a majority of the Amazon population. The Amazon Defense Front, which grew up around the Texaco lawsuit, now comprises 26 communities with 10,000 people, and provides the most active regional voice against irresponsible development.

The protests had a tangible impact on the Ecuadoran government. The Congress initiated hearings and an investigation of Texaco, and threatened to impeach several government ministers because of their role in oil industry abuses. In 1994, under pressure from Congress and NGOs, the Minister of Energy and Mines organized an unprecedented trip of oil executives, indigenous leaders and environmental activists to witness the damage done to the Amazon. At the first site, a clearly surprised minister waded into the oil wastes and publicly lambasted the Texaco representative. The government followed with new environmental regulations and regular meetings with indigenous groups and NGOs. These steps had little practical impact, but they were evidence of the growing influence of civil society protests.

For their part, oil companies took pains to distinguish themselves from Texaco and began touting their commitment to the environment and communities. As a result, a new company ethic emerged that replaced Texaco's neglect with an equally questionable paternalism. In the absence of public resources and state intervention, private companies were implicitly or explicitly charged with providing for the local population. The short-sighted practice of offering gifts and small projects created a so called "worship of begging" described by one anthropologist: "[I]f an oil base is situated in the traditional hunting grounds of the population, it is treated like a new tree [with] large quantities of food that legitimately belong to the local population" and which "has to be harvested quickly and completely, like the fruit that goes bad after a few days."[1] Laments one indigenous leader: "The people are always thinking about how to take immediate advantage of the relation with the company, without thinking about environmental impacts or long-term development.... The idea imposed by the company is that everything comes down to money. Sucres [the local currency] begin to appear in the mind, and the whole world thinks about how to collect indemnification."[2]

The tremendous leverage exercised by the industry over impoverished communities often succeeded in quelling protests and frequently divided and even corrupted local leaders. In one of the more brazen examples of this dynamic, Texaco undermined indigenous protests against the company shortly after the lawsuit was launched, by offering certain communities $1 million in "compensation." Texaco also funded a phony environmental company run by indigenous leaders who used the money to finance their successful congressional bids, putting Texaco in probable violation of the U.S. Foreign Corrupt Practices Act and removing these leaders and their organizations from the protest movement.[3]

A third stage in Ecuador's oil development now prevails, characterized by dialogue and negotiations. Companies chastened by the protests and wary of provoking local communities (some of whom had taken to kidnappings and sabotage), have sought to build more lasting good will. At the same time, the economic and social pressure mounted by the industry, the government, and to a smaller extent the military, have undermined most attempts to resist oil, and communities have widely opted for dialogue with the companies. Over the course of a decade, negotiations and agreements between companies and indigenous groups have evolved from a limited focus on short-term benefits to addressing company operations, long-term development and the actual process of negotiations.

A growing awareness of and support for indigenous rights has provided an important backdrop to these agreements. An OAS human rights mission visited the Amazon in 1997 and issued a report strongly critical of the government and oil industry. A new Constitution in 1998 and the ratification of an international treaty protecting indigenous rights greatly strengthened community rights to consultation and participation in development as well as environmental, land and social rights.[4] While the state retains control over all subsurface minerals and the judiciary remains extremely weak, awareness of community rights has played a role in mobilizing protests and strengthening negotiations.

Many of the early agreements were mere formalities intended to provide cover for oil operations. Companies pushed these agreements through with material promises on the one hand and legal, political and even military pressure on the other. Communities had little understanding about the oil industry or likely impacts, no outside support and certainly no experience with Western-style agreements or negotiations. Additionally, it was most often the young males who represented the communities, as they spoke Spanish and had the most contact with the outside world. These young "leaders" were more likely to be swayed by the promise of Western-style development and goods than were community elders and women.

Early agreements between Occidental Petroleum and the tiny Secoya community provide a case in point. The Secoyas are an isolated group of approximately 300 members living according to their traditions and entirely dependent upon the rainforest. An independent consultant hired by Occidental to measure potential impacts on the Secoyas warned that development would be culturally and socially devastating, and recommended that it not be undertaken in their traditional lands.[5]

Notwithstanding that report, in 1996, Occidental representatives with military escort pressured community leaders to sign an agreement giving the company multi-year access to Secoya lands in return for solar panels, water pumps and medical kits. According to leaders of the Secoya Indigenous Organization of Ecuador (OISE) who signed the agreement, the community had no information about the company's plans or likely impacts, no outside advisors, no time to consider the issue and were threatened with expropriation of their lands by the military official accompanying the oil representatives.

After discussing the agreement with NGOs, OISE formally rejected it as unfair. Occidental then flew the leaders to a luxury hotel on the Ecuadoran coast, where they signed another agreement that merely modified some of the material benefits for the community. Occidental officials justified the agreements and process by noting that the community drew up the list of benefits, the company had provided general information about their plans, and the community had no need for outside advisors.

Similar negotiations were conducted between Maxus (successors to Conoco) and the Huaorani, and were actively promoted by Ecuador's president following the Conoco scandal. Maxus funded a Huaorani organization, then negotiated a number of projects and material benefits with the organization in exchange for access to their territories. At the official signing of the agreement, the President's daughter was caught on tape comparing Ecuadoran and U.S. approaches to pacifying indigenous communities with "trinkets and beads."

Some companies recognized that superficial agreements like these would provide little protection against future conflict and public criticism. In 1994, the Organization of Indigenous Peoples of Pastaza (OPIP), assisted by Oxfam America, negotiated an agreement with Arco Petroleum that included a number of novel provisions, including local participation in the environmental impact study as well as an environmental management plan for the region, and sharing benefits from oil production in order to finance projects under the management plan. The follow-up has been mixed: OPIP succeeded in establishing a technical team and taking part in the environmental impact study and environmental management plan, but Arco failed to provide funds for the expected projects and has created divisions in the community by funding a new organization and hiring irresponsible subcontractors.

After three superficial and short-lived agreements between Occidental and the Secoyas, the latter proposed a code of conduct to govern all future dialogue between the community and the company. With the assistance of CDES, the Quito-offshoot of CESR (with the same name in Spanish), the Secoyas negotiated a code that provides an array of rights, including information, consultation, collective negotiations, advisors, arbitration and resources to prepare the community for dialogue. The code is notable for having included a statement from the oil company promising to respect international human rights treaties and the constitutional rights of the community, and for its focus on the process and conditions of dialogue—including resources, mediators and transparency.

Another indigenous organization succeeded in enforcing the principle of "collective bargaining" through a lawsuit. In 1999, the Shuar Federation (FIPSE) brought an unprecedented injunction against Arco, challenging the oil industry's traditional divide-and-rule tactics. Arco had discovered that they could more easily enter Shuar territory by ignoring FIPSE and negotiating agreements with individual families and leaders. The local court decision (later ratified by the Supreme Court) held that this practice violated the communities' right to cultural integrity and prohibited the company from negotiating with anyone outside the elected and representative body.

While dialogue increasingly prevails in Ecuador, it is not the only option. A number of groups continue to seek a halt to oil development at least in parts of the Amazon. One of the more successful efforts involves the Achuar, who have established a thriving eco-tourism business and are pursuing different forms of sustainable development, while holding oil companies at bay. Two years ago, a larger-scale NGO-indigenous campaign supported by the Catholic Church pushed the government to designate 2.5 million acres of Amazon lands as "off limits" to industrial development. One area was inhabited by an "uncontacted" indigenous population, and the other was considered particularly fragile from an environmental perspective. While the territories cover less than 10% of the Oriente, they set an important precedent both nationally and regionally.

Along similar lines, CDES and CONAIE have promoted an ambitious "debt-for-Amazon" swap based on the fact that Ecuador and its public creditors have far more to gain from preserving the rest of the nation's rainforest as a global environmental asset than from continuing oil development. Ecuador's external debt drives the frenetic search for oil, and the interest on the debt alone consumes almost all oil revenues. In 2000, the government adopted the proposal as part of its negotiating position with public creditors through the Paris Club, and now there is hope for smaller-scale swaps with individual creditor countries. The Achuar have drawn up one such proposal, which would include carbon trading rights to offset lost oil earnings.

Despite these alternatives, the rush to development and dialogue continues, spurred by an international movement to overcome community and NGO hostility to multinational corporations. As Koffi Annan builds a "global compact" between the United Nations and corporations, environmental and human rights groups are lining up to work with yesterday's corporate villians, and the Clinton Administration has specifically targeted the oil industry as warranting "creative American diplomacy." As one State Department official put it, "There is no arena in which corporate conduct and human rights have come under a harsher spotlight than in the extractive industries of oil and mining, in part because of their massive impact on the communities and countries where they operate.... These are problems for U.S. foreign policy."[6]

The World Bank and Latin American Organization of Energy have stepped into this fray with an ambitious set of initiatives aimed at promoting community-oil industry negotiations throughout South America. These two institutions, in partnership with the Confederation of Amazonian Indigenous Peoples (representing indigenous organizations from the nine Amazon countries) and the Weatherhead Center for International Affairs at Harvard, have undertaken a series of trainings for indigenous leaders. And the Bank is currently funding efforts in countries like Ecuador and Bolivia to establish national regulations for community consultation and negotiations.

Two important issues are often lost in the single-minded focus on dialogue and conflict resolution. First, hurdles to "fair" negotiations are almost insurmountable, given the vast power and resource imbalances between the Goliath multinational corporations and the marginalized and impoverished Amazon communities. Good faith on the part of companies will never be enough. Fair negotiations and real guarantees relating to environmental, social and cultural impacts are next to impossible without the more active and progressive intervention of the state and civil society. New laws and technical training for indigenous leaders are a step in the right direction, but they must be supported by public oversight and continued activism by others.

Second, even assuming a perfect process, dialogue aimed at facilitating oil development inherently raises larger national and global questions. The most progressive treaties, laws and codes have never contemplated the communities' right to refuse oil in their territories, and negotiations always presume that development will take place. Beyond the immediate environmental, social and cultural impacts dealt with in some of the more promising agreements, oil development, in and of itself, is in many areas a questionable pursuit. Countries like Ecuador are ill-suited to take advantage of the short-term wealth generated by oil. Instead, the industry has fomented corruption, inequality and political instability, caused irrevocable damages to priceless rainforest and discouraged the pursuit of more sustainable development paths. By channeling concerns into a narrow set of issues, dialogue risks obscuring the costs of oil development at the national level, and—as in the case of global warming—at the international level as well.

Amazon communities and NGOs have thus made important gains in challenging industry practices in Ecuador, but they still face daunting odds. As oil expands deeper into the rainforest, the increasing attention to corporate responsibility and dialogue bring new opportunities and risk. If communities and NGOs can somehow take advantage of these opportunities without losing their vigilant and activist edge, there may still be hope for finding a sustainable compromise. Ecuador is on the frontlines of these changing dynamics, and its fate will foretell the destiny of conflicts throughout South America.

Chris Jochnick is Legal Director, Centro de Derechos Económicos y Sociales (Quito), co-founder of the Center for Economic and Social Rights, and former editor in chief of the Harvard Human Rights Journal. Paulina Garzón, executive director of Centro de Derechos Económicos y Sociales, has organized over 50 workshops in the Amazon and led various campaigns around oil and human rights.

1. For additional information about oil and indigenous protests in Eduador, see Natalie Wray, Pueblos Indígenas Amazónicos y Actividad Petrolera en el Ecuador (Quito: Oxfam/IBIS, 2000); Judy Kimmerling, Amazon Crude (New York: NRDC, 1991); Joseph Kane, Savages (New York: Knopf, 1995).
2. Laura Rival, "Huaorani y Petroleo" in Giovanni Tassi (ed.), Naufragos del Mar Verde: La resistencia de los Huaorani a una integración impuesta (Abya Yala/Confenaie, 1992) cited in Natalie Wray, p. 96.
3. Interview with Johnson Cerda, cited in Natalie Wray, p. 86.
4. The Act prohibits the payment of money to "any person while knowing that all or a portion of such money...will be offered...to any candidate for foreign political office, for purposes of...influencing any act or decision of such foreign official." (15 USCS ¤ 78dd-1(a)(3), 1998).
5. As the editor of one trade journal comments: "How the petroleum industry is perceived by the various publics and governments in the way it conducts its operations may well decide its future. There is already a battle for the hearts and minds of these stakeholders under way with groups whose agenda often is decidedly hostile to the industry. The front line of the battle is now in South America's rainforest, and even those companies without an investment in that region cannot afford to ignore the outcome." Bob Williams, Managing Editor-News, "Foreign Petroleum Companies Developing New Paradigm for Operating in Rain Forest Region" Oil and Gas Journal, Vol. 95, No. 16 (April 2, 1997).
6. Convention Concerning Indigenous and Tribal Peoples in Independent Countries (International Labor Organization Convention #169).
7. Andy Drumm, "Evaluación de Impactos Socioeconómicos y Culturales de la Siguente Fase de Exploración Sísmica en el Bloque 15" Unpublished study done for Walsh Environmental Scientists and Engineers, Inc., (1997).
8. The Centro de Derechos Económicos y Sociales (CEDS, the Quito offshoot of CESR) and The Institute for Interdisciplinary Science (ISIS) provided workshops and helped elaborate the protocol.
9. Bennet Freeman, Deputy Assistant Secretary for State Bureau of Democracy, Human Rights and Labor, U.S. Department. of State. Speech given at Conference on Corporate Citizenship, Royal Institute of International Affairs, London, England (November 8, 1999).

Tags: oil, Ecuador, Amazon, accountability, indigenous politics

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