Latin America Advisor

Energy Advisor

A Publication of The Dialogue

Can Ecuador Reap Oil Benefits While Protecting its Land?

Nemonte Nenquimo, the president of the Waorani Pastaza Organization (Conconawep) and a plaintiff in the lawsuit. . // File Photo: Amazon Frontlines. Nemonte Nenquimo, the president of the Waorani Pastaza Organization (Conconawep) and a plaintiff in the lawsuit. . // File Photo: Amazon Frontlines.

An Ecuadorean court on April 26 ruled in favor of the Waorani indigenous community, which sought to halt an oil auction process in Pastaza Province. The government had opened up parts of the Amazonian land for exploration, but the court said the indigenous tribe had not been adequately consulted, as the law mandates. The government has said that the Waorani community was indeed consulted on the plans and that it will appeal the ruling. What are the most significant implications of the court’s decision, and does it set an important precedent for future lawsuits? What does the ruling mean for the Ecuadorean government’s plans for auctions and exploration and development activities in the area? How can Ecuador find the right balance between reaping the benefits of its natural resources and guaranteeing the protection of indigenous lands?

Enrique Ortiz, program director of the Andes Amazon Fund: “The recent ruling by the Pastaza provincial court in favor of the Waorani is a significant but temporary victory for Amazonian indigenous peoples in Ecuador. It is also a setback for the nation’s attempt to increase its revenues. This ruling sets an important precedent for future cases and signals the need for the national government to pay more attention to the compliance of national and international laws regarding indigenous peoples’ rights. Although the government plans to appeal the ruling—insisting that the 2012 consultation process under the previous administration was in fact legitimate—the story is suspicious, as former President Rafael Correa, current President Lenín Moreno’s political rival, was not particularly friendly toward the indigenous Amazonian peoples in terms of his policies. If Moreno is to be more respectful of indigenous rights, as he has tried to appear, more transparency and dialogue are critical when it comes to extractive industries. The rights of indigenous peoples should not be ignored or underestimated. Oil exports are a large part of Ecuador’s GDP, and without them, the country’s economy would experience a strong shock. But proper consultation with indigenous populations is critical. It is the law and the right thing to do. President Moreno should act with caution, particularly now as he is considering international funding sources. The world is watching this case. Extractive activities are culturally and environmentally sensitive and require proper consultation, transparency and the use of latest technologies to avoid negative environmental impacts.”

Mario Flor, partner at Flor & Hurtado in Quito: “First, it is important to point out that the judgment hasn’t yet been made public, and only some press releases from interested parties are available. Furthermore, it is also relevant to point out that the ruling is not definitive and may be subject to an appeal before higher courts. Consequently, its findings can be overturned. I would say that it is too early to say that it sets a precedent for future lawsuits. Nonetheless, such a decision—if confirmed—may set an unfortunate precedent in Ecuador whereby, although a prior consultation was conducted in accordance with the relevant regulations in force, a community or an organization may challenge such a process alleging that it was not conducted in an appropriate fashion. It seems that the decision carves out additional requirements that are not clear for current and future investors. The ruling may open a ‘Pandora’s box,’ in which anyone may challenge any consultation process by arguing that the standards in the relevant regulations are not enough for protecting the right of prior consultation’s general principles. Such an approach may affect future, ongoing and established projects. Consequently, it is important for the state to provide more clarity and certainty for possible investors with regard to the standards and threshold that must be met in prior consultation processes. Discrepancies and conflicts arising from the development of natural resources projects will never cease to exist, but the key element to avoid and to overcome them is information. When indigenous communities realize that such projects will boost their development, as well as that of the country as a whole, and that their rights will be respected and their opinion taken into consideration, they will be more receptive to participate in and to benefit from such projects.”

Carlos Mazabanda, Ecuador field coordinator for Amazon Watch: “The recent court ruling recognizes that the informational workshops carried out by the Ecuadorean state in 2012 in relation to the 21 oil blocks of the ‘Ronda Suroriente’ systematically breached the indigenous right to free, prior and informed consultation and consent. Undoubtedly, this is a favorable precedent for all indigenous peoples who have been and continue to be affected by oil and mining projects. The ruling further implies that the blocks granted to Andes Petroleum (Blocks 79 and 83) and awarded to the state company PetroAmazonas (blocks 28, 74 and 75) were illegally executed because they similarly violated these rights. The Ecuadorean state must respect indigenous rights in accordance with the Constitution, international human rights treaties and rulings of the Inter-American Court of Human Rights, applying them prior to continuing with their plans around new auctions for oil and mining projects within indigenous territories. Currently, 27 percent of the Ecuadorean Amazon is covered by oil blocks that affect indigenous territories and even priority conservation areas, such as the Yasuní National Park. The ‘Ronda Suroriente’ oil blocks would cover an additional 30 percent of the Amazon, overlapping territories of seven indigenous nationalities that are—by no coincidence—the best-preserved tropical forests in the country. So, the decision to extend the extractive frontier into this area extends beyond a discussion of the possible economic benefits—we must factor in the importance in terms of biodiversity, climate change and as the home of ancestral indigenous cultures, with collective rights as guaranteed by the Ecuadorean Constitution.”

Mario Melo, legal advisor at Fundación Pachamama in Quito: “The case of the Waorani communities and the ‘Ronda Petrolera Suroriente’ is one of the most serious cases in which the Ecuadorean state has failed to fulfill its duty to consult communities affected by extractive and infrastructure activities carried out in their territory. In 2012, the Inter-American Court of Human Rights sentenced Ecuador for violating the right of previous consultation of the Kichwa people in Sarayaku in the face of an oil project. The court ordered the state to regulate the consultations in accordance with the standards established by the inter American jurisprudence and with the participation of the peoples who are going to be consulted. So far, this mandate of international justice remains unfulfilled. The lack of consultation does not only violate international law, but it also harms social peace in the areas where projects are carried out—socioenvironmental conflicts are multiplied, as are legal actions in which different actors seek justice. The cases of the Mirador, San Carlos Pananza and Río Blanco mining projects, the mining activity in the Sinangoe River, of the Piatua hydroelectric development and of the ‘Ronda Petrolera Suroriente’ are just a few examples of a loss of investments due to judicial decisions founded in the violation of communities’ rights of consultation. Even when national judges deny tutelage to the violated rights of communities, these cases—far from being solved—escalate to international spaces.”

 

Latin America Advisor logo.The Latin America Advisor features Q&A from leaders in politics, economics, and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.