What does the future hold for
the Oriente Ecuador?
Gone forever
The nation of Ecuador, named for the equator that runs through it, is a land of diverse geography and peoples. Approximately the size of Nevada, the nation comprises 0.2 percent of the Earth’s landmass. Scientists estimate Ecuador is home to approximately 10 percent of all known species, giving it one of the highest diversities of flora and fauna in the world.
Much of the northern Oriente has been devastated by the effects of the oil industry and the settlements that ensued. However, in the central and southern Amazon basin, indigenous people still cling to traditional lifestyles, utilizing the rich resources of relatively undisturbed, pristine rainforest. In spite of the opposition of legally recognized indigenous communities – supported by national and international law – oil corporations are proceeding to develop these areas. As it has in the past, the cash-strapped government has sided with oil corporations, threatening to send in military and police forces to force indigenous submission.
Due to poor soil quality, highly evolved rainforests in areas such as the Oriente do not recover to their orignial state and frequently become unfertile through a process of desertification. Scientists estimate that the rainforests of Ecuador’s Oriente will be gone in 40 years if development and deforestation continue unabated. On the other hand oil reserves, by many estimates, will last only 20 years.
Indigenous communities have received virtually no economic benefit
from oil development. Instead, lands and waters have been exploited
for oil, resulting in contaminated water and food - and serious threats
to health. Poverty and social decay erode traditional lifestyles.
More oil, more debt?
During the period since oil production began in the late 1960s, economic conditions worsened in Ecuador as foreign debt rose from $200 million to $13 billion in 2003 – the highest per capita in Latin America. In response to this economic crisis, the government decided in the late 1990s to double oil production. Oil is the single greatest source of revenue of the nation’s economy. With the older SOTE pipeline production capped at 400,000 barrels per day, the government sought investors to increase oil production and began planning for the recent OCP pipeline, which ultimately cost $1.1 billion to construct.
Though oil coporations, investors and the government tout oil development
as the nation’s economic savoir, critics counter that oil development
is directly correlated to debt and poverty in Ecuador. The 1970s oil
boom, they suggest, led to grossly inflated public spending –
mainly for the military and also petroleum subsidies, and financed by
oil revenues and foreign creditors. Crashing oil prices during the early
1980s then left the nation with tremendous foreign debt. Subsequently,
during the 1980s and 1990s the government imposed austerity measures,
cutting public services like education and healthcare. The share of
the national budget allocated to health care had fallen to less than
three percent by 1999, and more than fifty percent went to servicing
foreign debt.
According to Chris Jochnick, in a story for New Internationalist magazine,
since the beginning of oil production, Ecuador has suffered “increasing
levels of poverty, inequality and unemployment” and “basic
social indicators (maternal and infant mortality, child nutrition, literacy)
have stagnated or gotten worse.”
With estimates of Ecuadorian oil reserves lasting 20 years, indigenous
communities, scientists and environmentalists denounce opening up the
remaining vestiges of rainforest for oil exploitation. They argue that
it will do little to solve Ecuador’s economic crisis. Jochnick
has written that oil revenues in this remaining period will amount to
less than 20 percent of the current national debt, making massive investments
into infrastructure economically unsound.
© 2003 Matt Levitch