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ECUADOR: Selling the Amazon for a Handful of Beads

by Kelly HearnAlterNet
January 17th, 2006

Scanning bookshelves in his tiny law office in Quito, Ecuador, Bolivar Beltran's disdain for Big Oil is as legible as the contracts that map their nefarious ways.

"These were all negotiated in secret," says the soft-spoken attorney and Ecuadorian congressional aide, explaining how he used a lawsuit last year to obtain pages of once-classified contracts between the Ecuadorian military and 16 multinational oil companies.

In November, when I visited him, Beltran handed me a grainy photocopy of a contract dated 2001. Then another bearing an official government seal. Soon a small table is covered, his finger running down keywords that spill off the page. Occidental Oil. Ecuadorian Ministry of Defense. Counterintelligence. Kerr-McGee. Armed Patrols. Military detachments. Burlington Resources.

The contracts come to light as an oil boom bears down on the Ecuadorian Amazon. Ecuador's 100,000 square kilometers of the world's richest rainforests unfortunately sit atop 4.4 billion proven barrels of oil, the 26th largest reserve in the world. Since the 1960s, state and private companies have taken oil from Ecuador's eastern province, known as the Oriente, and sent much of it to the United States, leaving behind environmental and public health disasters. And on top of all else, serious poverty: Despite their country's vast natural resources, 70 percent of Ecuadorians live below the poverty line.

Impoverished, in debt and dependent on petro-dollars for revenues, the Ecuadorian government has put some 80 percent of its oil-flush lands up for international grabs, according to Amazon Watch, a California-based watchdog group. Oil companies are given subsoil rights by the government, but by law must negotiate with the pre-industrial societies that hold title to jungle lands -- tribes like the Huarani, the Achuar and the Shauar tribes, some of which have only come into contact with the modern world in recent decades.

Too often, the tribes' introduction to modernity comes from oil company negotiators. By finessing them into signing away oil access in morally deplorable contracts, these deals channel the legendary purchase of Manhattan island for $24 worth of trinkets. But they are learning fast. Increasingly savvy to the oilman's ways, tribes here are putting on war paint, grabbing spears and shotguns, and saying no, sometimes violently, to the world's most powerful interests.

Against that backdrop of rising tension, these previously unpublished contracts, including classified agreements between the Ecuadorian military and 16 oil companies, are changing the debate. The bulk of the documents, obtained by Beltran and verified by this reporter in November, offer what experts say is an extremely rare and detailed look at how cut-throat capitalism and an oil-guided militarization of the Ecuadorian Amazon are digging deep rifts through the country.

Sealing the deal with a fingerprint


"This one is one of the worst," Beltran says, handing me an eight-page contract.

In 2001, Agip Oil Ecuador BV, a subsidiary of the multibillion dollar Italian petrochemical company Eni, convinced an association of Huarani Indians to sign over oil access to tribal lands and give up their future right to sue for environmental damage. In return Agip gave, among other things, modest allotments of medicine and food, a $3,500 school house, plates and cups, an Ecuadorian flag, two soccer balls and a referee's whistle.

Indicative of the vast gulf in cultures, two of the tribal representatives signed the document with fingerprints.

Other contracts, some marked classified, are signed by multinational oil companies and the Ecuadorian military. Activists and attorneys interviewed for this story say the documents prove the Ecuadorian army has become a private security force for oil companies, one obligated to patrol vast swaths of jungle lands while engaging, and spying on, Ecuadorian citizens opposed to oil operations.

The contracts I reviewed typically required companies to provide money and nonlethal logistical support such as food and fuel in exchange for military protection of staff and facilities in remote jungle areas.

But some go even further.

In July 2001, a "master agreement" was signed between the Ecuadorian Ministry of Defense and 16 oil companies, including Petroecuador, the state oil company, and U.S.-based companies Kerr-McGee, Burlington Resources and Occidental Oil. Covering a duration of five years, the document is stamped "Reservado" -- classified. Its purpose: "To establish, between the parties, the terms of collaboration and coordination of actions to guarantee the security of the oil installations and of the personnel that work in them." It obligates the military to undertake "the control of arms, explosives and undocumented persons" in areas of oil operations and to give periodic updates to oil executives in monthly meetings. For their part, oil companies are obligated, among other things, to provide food, fuel and medical attention while maintaining permanent communication links with military units in the sector.

Activists say this seemingly innocuous language is harmful in scope: Hundreds of thousands of remote jungle acres are covered by the accord, making especially the mandate to control undocumented persons ridiculously expansive, since indigenous citizens often either do not have IDs or don't carry them.

Another contract between the ministry of defense and California-based Occidental Oil, dated April 2000 and also marked classified, required soldiers to "carry out armed patrol and checks of undocumented individuals in the area of Block 15; provide security guards for ground travel of personnel, materials, and equipment within the area of operations and its area of influence; [and] plan, execute and supervise counterintelligence operations to prevent acts of sabotage and vandalism that interfere with the normal development of hydrocarbon activities."

"This basically gives the company the ability to spy on citizens," Beltran told me, a sentiment echoed by Steve Donziger, a U.S. attorney involved in an Ecuadorian environmental lawsuit against Chevron Corp.

Beltran and men like Ricardo Ulcuango, a popular Ecuadorian politician who put his name on Beltran's disclosure suit, say the contracts are especially troublesome given claims that a Quichua Indian settlement of Sarayacu, in Ecuador's Napo province, as well as Shuar, Achuar and Shiwiar Indian communities in southeastern Ecuador have been victims of state threats. For them, the army's involvement in land disputes is part of "a policy of intimidation" by oil companies working through what has essentially become their own private army.

Oxy's invisible hand

A few days after my visit to Beltran's office, I met Ulcuango in a dilapidated high-rise office building not far from the Ecuadorian Congress. He was preparing for a strategy meeting with other Amazonian lawmakers. Getting off the elevator, the entire floor had the feel of a company gone belly up: dim lights, little furniture, bare walls. But shy, smiling secretaries in brightly colored tribal dresses hustled among political aides with bronze skin and wide cheekbones. More lawmakers showed up: a group of short, elderly indigenous lawmakers in red shawls and, like Ulcuango, trilby hats.

Soon the three of us were sitting in a side office, empty but for an old desk and two chairs, with the high-rise's view of Quito's morning chaos. I told Ulcuango I had seen the contracts, and I needed to verify that he had officially filed the disclosure suit and that the contracts were, as far as he knew, valid. He confirmed both and added, "This is all unconstitutional because the military is supposed to serve the people, not just oil companies."

But that is far from clear. While the contracts are technically legal, Beltran, whose oil investigations take place under the auspices of a small nonprofit group called Las Lianas, says the fact they were negotiated in secret violates Ecuadorian law requiring oil companies to publicize such agreements.

Another uncertainty is the military's role in intervening in disputes between oil companies and local tribes. Even the contracts seem contradictory. What appears to be a November 2001 annex agreement to the master contract, for example, forbade military commanders from getting involved in problems between local populations and oil firms. But the 2000 Occidental agreement says they should collaborate in helping solve problems between companies and locals.

Do oil companies wield much leverage in guiding military policy? In a 2001 letter to a ranking Ecuadorian military official, an Occidental executive offered to build a military base near one of its remote operation areas, which Beltran says is located near a Quichua Indian community. The base was eventually built and supplied with Ecuadorian troops, all on what he claims is expropriated indigenous lands. In a Las Lianas newsletter, Beltran and Jim Oldham, an American activist working with the group write:

"It's unusual, to say the least, that a foreign-owned business, dedicated to oil exploration and production, should choose to advise the Ecuadorian Armed Forces as to where best to base their soldiers, and it is a sad reflection on the power relations in Ecuador that the advice not only did not offend, but was followed. The danger is that, now that the oil companies have established their authority over the military, and now that indigenous lands have become a target for military intervention, it is a short step to the military terror that has been seen in Burma, Nigeria and Colombia."
I also met with attorneys suing Chevron Corp. for damages left by Texaco Petroleum Co., which launched the Amazonian oil boom in 1967 but left the country in the early '90s. (Chevron and Texaco merged in 2001). On November 28, while visiting the legal team's headquarters -- a white nondescript building with a security guard located in a hilly section of Quito -- I was shown another military contract. Released that same day by the Defense Ministry (presumably a result of public pressure by the plaintiff's attorneys in the case), the agreement was signed by Chevron and a military detachment near a jungle oil town called Lago Agrio, where the trial is taking place. That deal obligates Chevron to build a villa on a remote jungle military base belonging to a Special Forces detachment known as Rayo-24. The building remains army property but is used, currently, as temporary housing for Chevron attorneys defending the company in a billion-dollar environmental lawsuit here.

Big Oil's Response

Larry Meriage, Occidental's spokesman, dismissed Beltran's allegations as propaganda of the well-intentioned, saying that tribes in the Oriente have long known about the security arrangements.

Regarding claims that tribes had been forced to open the lands to oil, he wrote in a November email: "It is important to clarify that [they] do not allege nor, to Occidental's knowledge, are there any allegations that indigenous communities within Block 15 have ever been threatened or subjected to violence directly by Occidental or by armed forces acting on behalf of Occidental."

Meriage said the contracts in question were legal and far from nefarious, adding that in 2004 Occidental received an amended agreement it requested in keeping with its human rights policy. That version had no references to armed patrols or counterintelligence, for example, and forbade the military from deploying troops that had been "credibly implicated" in human rights violations, Meriage said.

He stressed the dangers of operating in the Oriente, a zone widely reputed to be frequented by drug runners, FARC guerillas from Colombia and kidnappers who in the past have taken oil employees hostage. Also, though the 2000 agreement is clearly marked classified, Meriage told me that "pursuant to Ecuadorian law, these documents are most likely freely accessible to the public from the Ministry of Defense." He also said the base referenced in the letter was not on indigenous territory, as Beltran claims.

Chevron's Jeff Moore said plaintiffs in the Chevron case have long known about the villa and only recently called it into question as their case deteriorates. Like Meriage and extractive industry experts I interviewed, Moore pointed out the dangers of operating in Ecuador's jungles. The Ecuadorian military did not grant an interview for this story.

People and politicians fighting back


The potential significance of the contracts rises proportionally with social tensions here. In August, state forces in Quito cracked down on populist protests that had shut down the country's oil production. And such clashes will continue as long as indigenous groups clamor for halts to or bigger stakes in oil operations.

There are stories of military personnel serving as repressive minions of oil interests. A woman who works for a Quito-based group called Accion Ecologica told me she had interviewed several poor residents of eastern Ecuador who had been subjected to intimidation and violence by state forces after they complained about the oil companies. Beltran says he, too, has interviewed people with similar claims and has worked with an NGO to videotape testimony, a project that wasn't completed due to lack of funds.

Santiago de La Cruz, a Chachi indigenous leader and president of the Confederation of Indigenous Nationalities of Ecuador, said companies try to intimidate community leaders. "The companies have the backing of the government, even though the government is supposed to defend the towns and guarantee the conservation of natural resources," he said. "That is why groups are resisting oil companies. It is a process that is requires risks and sacrifices of the people."

In addition to populist uprisings, political waves have recently spread. In early December, an Ecuadorian congressional committee on indigenous affairs called the country's defense minister, Oswaldo Jarrin, to testify about contracts with foreign oil firms. Though Jarrin did not attend, he later suspended all military contracts with foreign oil companies on December 8. Local media reports said he plans to create a special military unit to protect oil facilities in the Oriente.

Others have a different take on the military here. For many Ecuadorians, the military is seen as a stabilizing social force, one that has even taken indigenous sides in disputes with companies. Alex Alper, an American (and former AlterNet intern) who for two years worked for an anti-mining newspaper in Ecuador, said she was surprised to read the contracts. "Historically, the military in Ecuador has been seen as a big safeguarder of the will and well-being of the people, ousting several unpopular regimes and seeing to nonviolent government transitions. So it's inconsistent to [describe the military] as primarily at the behest of the petroleum companies."

Randy Borman, a middle-aged son of American missionaries who was raised with Ecuador's Cofan Indians, agreed. Over the years, as oil operations further encroached on tribal lands, Borman, now a Cofan elder, put on face paint and organized armed raids on remote oil facilities, even once kidnapping a group of oil employees for a day. He told me that during the Cofan's confrontations, the military proved to be fair.

"They have basically been good," he said, "even though they are often manipulated by political forces." In his dealings with oil companies during land disputes, Borman said oil companies would bring the military as backup for their position, but the troops would often end up supporting the Cofan. Borman did say that some military officials "who are on the take" are responsible for intimidation. (In a seeming reference to this problem, the Master Agreement's amendment prohibits contracts, verbal or otherwise, between military commanders and oil companies. It also prohibits commanders from taking donations and "economic support.")

Ulcuango symbolizes a recent shift in Ecuador's indigenous opposition: Whereas groups once boycotted the political system, they are now starting to work within it. But politics in Ecuador is a messy and unpredictable business. Corrupt, unstable and prone to turnover, it has had eight presidents in ten years, the last one, Lucio Gutierrez, being forced to flee street protesters. He's now in an Ecuadorian prison, where he reportedly claims to still be the rightful president, not President Alfredo Palacio, his former second in command.

More than politics or law, force gets heard, says Borman. He believes aggressive tactics helped the Cofan build a tough reputation and ultimately regain a respectable chunk of its territorial lands. "We've got a reputation now," he says, telling me how his tribe recently confronted a Chinese oil company whose newly acquired operations encroached on Cofan territory. "They backed off and put out a press release saying the area is highly biodiverse," he said. "But basically they surrendered without a fight."

Other groups have gotten oil companies to back down, or at least stand still. In one case, the Ecuadorian government has given Houston-based Burlington Resources subsoil rights to vast tracts of undisturbed rainforest that crosses into lands belonging to the Shauar and Achuar Indians (the latter group only came into contact with the outside world in the late 1960s). That project has since stalled because the tribes vow to fight.

Borman sees oil's march as inevitable and works to shape rather than stop it. He said the right technology can take oil without leaving an environmental mess, and that tribes can work to make sure they get a fair stake in profits, not just payoffs.

A common claim I heard is that oil companies use sophisticated ways of dividing and conquering tribal opposition. According to Atossa Soltani, director of Amazon Watch, in some cases the oil companies employ anthropologists who speak local languages to offer development in exchange for oil rights.

Likewise, Chachi tribal leader De La Cruz says oil company representatives offer health centers, schools and "other things that will offer a better life." And if there is dissent in the community, he said the companies "buy the conscience" of certain leaders who convince their base to follow suit. In 1999, an Ecuadorian court ruled that an oil company could only negotiate with legally recognized federations of indigenous communities, but activists say it changed little. As environmental writer John Vidal puts it, "yesterday's mirrors and beads have become today's roads, health and education centers."

Cracks in the oil well


Can tribal people of the Ecuadorian Amazon stop the pipeline push? How much will the Ecuadorian government, bent by debt to the globalizing North, tolerate opposition to Big Oil? And if clashes come, how will rank and file soldiers respond?

By one estimate, global oil consumption is forecast to grow from 82 million barrels per day now to 111 million barrels per day over the next 20 years. In this light, the billions of barrels of oil lying in wait below Ecuador are understandably tempting for the oil companies.

Scott Pegg, a political scientist at Purdue University in Indianapolis who studies natural resource conflicts, says having documents like these contracts and letters is "extremely rare" and points out that oil companies have a "catalytic effect," if not a direct one, on human rights in developing nations.

"Simply by virtue of them being there and generating extremely valuable revenues for the government, they tend to bring an increased military and security presence into oil-producing areas," he says. "The increased presence of soldiers then potentially adversely affects the local population through increased bribes, corruption, shakedowns, drunkenness, bad behavior, rape, etc. My point is that this can happen even if the companies are not actively participating in the security dynamics themselves."

Pegg says oil companies accused of rights violations typically justify their actions in a few basic ways: First, they say they are simply conducting business and remain "neutral," or "apolitical" or "uninvolved" in political matters. Second, they point to their own legitimate security needs. Third, he says, they sometimes claim that they are required to follow the domestic laws in place.

"Obviously, he added, "the documents you have blow serious holes in a number of these justifications."



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