Save the Planet or End Poverty? How to Escape the Extractivist Dilemma.

Save the Planet or End Poverty? How to Escape the Extractivist Dilemma.

Save the Planet or End Poverty? How to Escape the Extractivist Dilemma.

A nearly forgotten proposal could help keep oil in the ground and reduce inequality.

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To slow the pace of climate change, scientists say we will have to leave as much as 80 percent of global fossil fuel reserves in the ground. But a left-wing candidate’s surprising loss in Ecuador’s recent election shows how the demand to end oil and mineral production in the Global South can put progressive forces in an excruciating dilemma: How can leftist governments in poor countries shut down oil wells and close mines but still bring in sufficient revenue to fight poverty?

Environmentalists in the United States have barely noticed the predicament. The latest proposals for a Green New Deal either ignore or scarcely mention the poor nations in Latin America, Africa, and Asia that depend on oil and mineral exports. It’s time to acknowledge this oversight and find a solution that accepts the reality of the climate crisis while also reducing inequality. Fortunately, a little-noticed proposal emerged a few years ago in Ecuador that could help the left avoid this lose-lose proposition.

Here’s what just happened: The left-wing candidate, Andrés Arauz, was leading in the polls before the second round of Ecuador’s presidential election on April 11. But he lost to right-wing banker Guillermo Lasso. The other leftist candidate, Yaku Pérez, who was eliminated after coming in third in the first round, had urged his supporters to cast blank ballots. Some 17 percent of voters did exactly that, which was more than Lasso’s 5 percent margin of victory.

For years, the left in Ecuador has been bitterly divided over what has come to be called Extractivism. Arauz was the designated successor to Rafael Correa, the president from 2007 to 2017, who argued that the country needed to exploit its oil and mineral holdings to develop its economy. A left opposition developed, especially among Indigenous Ecuadoreans from areas with oil drilling and mining. Pérez, who was the former leader of an Indigenous rights group and a vigorous opponent of drilling, represented this other view, and he narrowly missed finishing second in the election’s first round on February 7. (The intra-left debate over Extractivism is covered in useful detail in Thea Riofrancos’s recent book, Resource Radicals: From Petro-Nationalism to Post-Extractivism in Ecuador.)

In 2014, I interviewed then-President Correa in Quito’s colonial Carondelet Palace, and he defended his policy. He said Ecuador had a choice: either export oil and minerals or turn the country into an Asian-type manufacturing sweatshop. “We have poverty; we have misery,” he said. “We must defeat poverty. Our natural resources give us the opportunity to develop without the extremely painful process of exploiting our own workforce.”

While Correa was in office, global oil and mineral prices boomed. Even his critics concede that his administration used the increased earnings to carry out profound changes. The government, for instance, expanded Human Development Vouchers—cash payments to single mothers, other poorer Ecuadoreans, the disabled, and the elderly. (The mothers were required to keep their kids in school to get the vouchers.) Today, some 1.5 million Ecuadoreans, more than 10 percent of the country’s 13 million people, receive an average of $60 a month. From 2007 to 2017, the poverty rate dropped by 38 percent, extreme poverty by 47 percent, and inequality narrowed.

The government also expanded the state health system. Paul Gutierrez, a production engineer in Guayaquil, the country’s commercial capital, told me that his city used to have a single state hospital for its nearly 3 million inhabitants. “You could go to private clinics if you had enough money, but if you were poor, you had nowhere to go,” he said. The government finished Los Ceibos Hospital in 2017, and also began to pay for poorer Ecuadoreans to be treated at the private clinics.

All this costs money. And even after the world oil price skidded in 2014, petroleum was still Ecuador’s biggest export, accounting for one-third of public sector revenue.

In our interview, Correa was being a bit disingenuous when he said the country chose not to exploit Ecuadoreans in sweatshops. It would be nearly impossible for him to establish a competitive export garment industry. Ecuador’s minimum wage is $398 a month—more than four times the $95 a month that garment workers in Bangladesh earn. Gutierrez pointed out that the country can’t even compete on wages with neighboring Peru, where the minimum monthly wage is $294.

Meanwhile, the environmental risks have not disappeared. In April 2020, a pipeline break spilled nearly 672,000 gallons of oil. The spill harmed some 105 Indigenous rain forest communities, affecting their food and water supply and weakening their response to the Covid-19 pandemic. Kevin Koenig, Amazon Watch’s climate and energy director, told me the latest spill proves that “responsible oil extraction can’t be done in the Amazon.”

But one will hardly ever see any recognition of the Global South’s dilemma in the rich world’s environmental manifestos. The implication, although not stated explicitly, is that those who profit from oil are mainly the top executives and biggest shareholders at Exxon, Chevron, and BP, along with wealthy oil nations in the Gulf. But quite a few poor nations depend on oil and mineral exports. On a 2020 list of oil exporters, Nigeria is in sixth place, along with Angola (seventh), Venezuela (eighth), and Mexico (11th). Iraq is near the top, in third place.

That said, oil can threaten the environment anywhere. In Africa, spills in Nigeria’s delta region, where Shell is the major producer, have caused environmental disasters for decades. In 1995, Nigeria’s military dictatorship hanged writer and activist Ken Saro-Wiwa for protesting the contamination, and this February, the UK Supreme Court decided to permit 42,500 Nigerian farmers and fishermen to sue Shell in English courts over its alleged massive pollution. But, so far, few voices in Nigeria want to end its oil production entirely. In fact, in nearby Ghana the public is excited by recent offshore oil discoveries, and there’s hope that transparency legislation will ensure that the oil earnings benefit the entire nation instead of, as elsewhere, a corrupt elite.

Extractivism, and the accompanying dangers to the environment, are also a vital feature of certain Asian economies: Indonesia has both significant oil exports and the gigantic Grasberg gold and copper mine in Papua province, owned partly by the US Freeport-McMoRan corporation, which has been accused of damaging local rivers. In Myanmar, Total Oil built gas pipelines across the country in partnership with the military junta beginning in the 1990s, and now the company works with Chevron on the project.

For now, the left debate over Extractivism is most intense in Latin America. Social movements in Peru, Brazil, Honduras, and elsewhere have resisted mining and oil exploration. In 2017, El Salvador’s parliament even banned the mining of metal in the country. But in Mexico, leftist President Andrés Manuel López Obrador seems committed to strengthening his nation’s government-owned oil industry, even though he got his political start in the 1980s leading protests against oil pollution in his home state of Tabasco.

Environmental groups have campaigned vigorously to slow or cancel many of these oilfields and mines. But the activists in the United States and Europe have been slower to recognize the hard choice that countries like Ecuador face, and have yet to start the difficult and thorny task of proposing fair solutions.

Back in 2007 Correa came up with a response that could become a model. Oil had been discovered in the Yasuni National Park, a stretch of rain forest in the east of the country. Correa put forward the Yasuni-ITT Initiative, which proposed leaving 1 billion barrels of oil in the ground in return for compensation from wealthier counties. Correa asked for $3.6 billion, which was half what the oil would earn if it were exported.

His proposal barely registered. The US mainstream media ignored it almost entirely. (The Nation, to its credit, covered the initiative.) Critics said the proposal was not publicized skillfully, but the near total lack of interest would have doomed even the most persuasive promotional campaign.

Correa’s government approved oil drilling in Yasuni National Park in 2013. But maybe it is time to revive his intriguing idea. Koenig, of Amazon Watch, pointed out that the global climate crisis has gotten significantly worse since 2007 and that Correa’s proposal is still the only one like it he’s heard of.

The initiative would have locked some 20 percent of Ecuador’s known oil reserves permanently underground. The rich world compensation would have been protected in a trust administered by the United Nations Development Group. A hard-headed Norwegian economist named Bard Harstad, whose articles in professional journals can contain nearly as many equations as words, endorsed the idea. The Yasuni Initiative is about as green a climate proposal as you could wish for, and it deserves a second look.

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