National Interests, Multinational Actors, and Petroleum Development in the Ecuadorian Amazon

By Southgate, Douglas | Seton Hall Journal of Diplomacy and International Relations, Winter 2011 | Go to article overview

National Interests, Multinational Actors, and Petroleum Development in the Ecuadorian Amazon


Southgate, Douglas, Seton Hall Journal of Diplomacy and International Relations


For more than two decades, Ecuadorian environmentalists and their international allies have opposed fossil fuel extraction in the Amazonian lowlands of eastern Fxuador. Their greatest victory occurred in 1992 when a major oil company, Conoco, sold its interests in a production-block it had been developing. At the time, the effectiveness of controls on pollution and deforestation that Conoco had put in place were recognized by Robert F. Kennedy, Jr. - who on several occasions has visited the Oriente (the Ecuadorian name for the region east of the Andes). Regardless of Kennedy's misgivings about pressuring the company to leave,1 the opponents of the oil industry persevered. In 1993, a lawsuit was filed against Texaco, which along with Gulf Oil Corporation began searching for petroleum in the Oriente in 1965 and found sizable deposits two years later near Nueva Loja.2 Having purchased Texaco in 2001, Chevron is now the defendant in the lawsuit, which has been tried in Nueva Loja since 2003. 3

A broad narrative surrounding the campaign against oil drilling in eastern Ecuador holds that multinational firms - not any Ecuadorian institution - are solely responsible for the adverse consequences resulting from petroleum development. The theme of multinational culpability is unmistakable in a pair of legal filings made by a court-appointed expert in Nueva Loja. In those filings, both submitted in 2008, the expert barely mentions the Ecuadorian government and the state oil company, called Petroecuador, despite the nationalization of Texaco and Gulf's holdings more than three decades ago. The first report contains a solitary reference to the state company's interests in the concession originally developed by Texaco and Gulf and nothing is stated about the 62.5 percent stake Petroecuador held for fifteen years beginning in 1977.4 Neither do the filings acknowledge that it has been the concession's only owner since Texaco 's departure from the small, Andean country in 1992. The filings correctly observe that the US firm had operational responsibilities, but they do not mention either that those responsibilities ended in 1990 or that Texaco was closely supervised by its parastatal associate.

Multinational agency is also a pervasive theme in literature surrounding this issue. In the book Crude World, governments like Ecuador's are characterized as "too weak to control powerful industries" and full responsibility for environmental harm in the Oriente is assigned to foreign companies.5 Offering a similar assessment, economist Alberto Acosta, who has served in the cabinet of Ecuador's current president, Rafael Correa, criticizes former administrations for not serving their country's interests or for being incompetent. According to him, "The leadership of the state oil company or energy ministry was taken over by people who were openly at the service of multinational corporations or by people who knew nothing about the industry."6 A number of academic papers published in the United States support this view.

In this article, the broad narrative about petroleum development in the Ecuadorian Amazon is critiqued by analyzing the narrative's three constituent hypotheses. The first of these is that the country was entirely dominated by foreign firms. The second hypothesis is that the vast majority of Ecuadorians benefited little or not at all from petroleum development. The third is that environmental trade-offs in the Oriente were decided by multinational actors, not the Ecuadorian government.

Each of these three hypotheses is inconsistent with the historical record, which is surveyed in this article. Shortly after petroleum was discovered, and well before there was any commercial production, the national government started consolidating its authority in the Ecuadorian Amazon and over foreign companies operating there. No more than five years after oil started flowing, the industry was nationalized, which allowed the government to capture nearly all the returns created by multinational investment.

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