~ ~'1>Jl1sualmeeting took place at lhco. Inte:r,u'Wtionaloil and Gas headquarters

in plaJio, Texas, on 4 Marcb 1994. Sit-ting side by side around a conferencetable, Indian leaders, oilmen, and envi-ronmental advocates talked well into thenight. They discussed native land claims,health care, and the lack of adequateschools throughout the Oriente,Ecuador's Amazon region. At midnightthey reached a decision: They would pur-sue a dialogue to resolve tbe issues sur-rounding Pu:co's proposed development ofthe Villano oJ field. Located deep withinLheOriente, in a region of Pastazaprovince Imown as Block 10, tl~eVillanofield had become a baltleoround in theoften difficult and contentious relation-ship between Arco and Ecuador's indige-nous Indian communities.

This agreement represented a majorturning point. A few years eariier, theOrganization of Indigenous Peoples ofPastaza (OPIP), one of Ecuador's mostpowerful Indian federations, haddemanded a IS-year moratorium all.

all petroleum exploration in Pastazaprovince. Yet ,that night in Plano, OPIPrepresentatives promised to work withAxeo. This alticle outlines the process bywhid~ that agreement was reached andwhere it has led since 1994, assessingwhat larger lessons Axeo's unique experi-ence holds for hydrocarbon companiesworl"ing to buJd relationships witbindigenous peoples elsewhere. To buildsuch relationships in Ecuador, the com-

PETROLEUM andINDIGENOUSPEOPLESin ECUADOR'SAMAZON

by Sixto Mendez, Jennifer Parnell,and Robert Wasserstrom

pany discovered, requires some appre-ciation of history.

Setting the Stage: Ecuador'sAmazon, 1964-88

In 1964, the Ecuadorian governmentpassed the Agrarian Reform and Colo-nization Law. Recognizing the im-mense disparities between the nation'supper-class landowners and its nearlylandless peasants, the law allowed im-poverished farmers to receive under-utilized or surplus fields annexed fromprivate estates. Throughout the An-dean highlands, where most of theseestates (or haciendas) were located,peasant communities slowly began topetition for land, eventually forminglocal and regional organizations topress for their rights under the law. I

Many hacienda owners, however,filed lengthy and expensive lawsuitsthat effectively blocked confiscationof their properties, As a result, littleland actually changed hands, and whatacreage did tended to be the least pro-ductive. Meanwhile, highland popula-tions continued to grow.

Many senior Ecuadorian officialsargued that the solution lay in encour-

aging landless highland peasants tosettle empty areas of the Oriente. Mostof the eastern rainforest had beenlegally declared public land (open forhomesteading and colonization) sinceat least the 1930s. The AgrarianReform and Colonization Law reaf-finned this declaration. It also creat-ed a new' government agency-theEcuadorian Institute for AgrarianReform and Colonization-which wasauthorized to grant 50 hectares (125acres) of forestland to any farmer whoput 65 percent or his tract to produc-tive use.

The prospect of settlers drew heatedreactions from the lowland Indians liv-ing in the Oriente. Most of these peo-ple inhabited small, dispersed commu-nities, often made up of no more thanone or two extended families, locatedwithin territories that had been occu-pied for centuries. Over hundreds ofyears, they had developed a way of lifebased on hunting and gathering andshifting cultivation. In 1964, the ap-pearance of the first wave of settlersnear the town of Macas threatened todisrupt this existence, in which mini-mizing ecological disruption guaran-teed long-term survival."

Native villagers in Pastaza at a meeting to discuss the environmental impact that foreigncompanies will hove on the surrounding lands.

14 ENVIRONMENT

That same year, SI1UarIndians livingin the rainforest adjacent to Macasfanned the Shuar Federation to defendtheir territory and obtain legal title totheir lands.' Subsequently, the pace ofcolonization did slow for severalyears, but the land race S0011 beganagain in earnest. In 1973, the govern-ment issued a stronger agrarian reformlaw followed by a new homesteadingact in 1978, which included additionalinducements for settlers. Texaco Inc.,on the heels of its 1967 discovery of amajor petroleum reservoir in Napoprovince, built a new road into theregion, which effectively paved theway for immigration.

As fresh waves of settlers streameddown the road into Napo province inthe 1970s, lowland Indian communi-ties organized to resist the invaders.They formed the Federation of Indige-nons Organizations (FOlN) in Napo in1975 and GPIP in Pastaza province in1979. In 1980, ForN, oPIP, and theShuar Federation banded together tocreate the Confederation of Indige-nous Nationalities of the EcuadorianAmazon (CONFENIAE). This organi-zation eventually united disparatenative federations in all five ofEcuador's Oriente provinces. In 1986,CONFENlAE and several organiza-tions of highland Indians founded theConfederation of Indigenous Nation-alities of Ecuador (CONAIE) to repre-sent indigenous peoples throughoutthe country."

In 1988. OPIP organized a basegroup or local chapter in Villano, acluster of seven or eight communitieslocated in Pastaza province." Thatsame year Arco and its partner Agipacquired oil exploration rights (fromthe Ecuadorian government) to an areaknown as Block 10 (see Figure 1 011

page 15). This area included Villano.The Block 10 project put Arco firmlyon a collision course with OPIP andother indigenous groups. In relativelyshort order, the company stoodaccused of willfully violating indige-nous rights and causing widespreadenvironmental damage."

June1998

Enter Arco

Arco planned a four-stage explo-ration of Block 10. It would first coo-duct a seismic study, followed by afour- [0 six-month review of the dataattained. It would then drill at leastthree exploratory wells in the mostpromising locations and, if it discov-ered an important reservoir, developand operate the field for roughly 20years. Arco knew that it would haveto resolve many problems-somesmall and some not so small-alongthe way. For example, most of Block10 lay in virgin rainforest or maturesecondary growth located at least 100miles from the Trans-EcuadorianPipeline System. If Arco discoveredoil, a feeder line would have to bebuilt through sensitive and pristineforestland to connect the field to thepipeline. In 1988, however, companyrepresentatives believed this andother obstacles lay at least severalyears ahead.

Arco's successful operations inother ecologically sensitive areas suchas the North Sea convinced companymanagers that they could overcomethe environmental challenges of work-ing in the rainforest. Even so, the strictdeadlines in Arco's contract withEcuador's national oil company,Petroecuador, were a major concern.These deadlines required Arco to com-plete 1,200 kilometers of seismicinvestigation within 24 months and toconclude its entire exploration pro-gram in just four years.

Arco hired an experienced seismiccontractor, Compagnie Generale deGeophysique (eGG), to conduct thefieldwork in Block 10. CGG began tocut seismic lines in November 1988.Following standard industry practiceat the time, CGG took no specialmeasures to contact indigenous com-munities before it started work. In-stead, as one former eismic crewchief recalls, "As we got to each vil-lage, we would walk in and ask themwhat they wanted. Whatever theyasked for, we would do: hire a few

Volume 40 Number 5

Figure 1. Map of Ecuador including Block 10

Pipeline / ,-e -_._,-./'--..... / 1~'~ ~:A":p}fui",)/ V

Ambato. /• 1 •• Pastaza SOUTH AMERICAPuyo

Block 10

ECUADOR

SOURCE: Arco Oriente, Inc.

local people, fix the airstrip, maybeeven build a school or clinic, or givethem school supplies or medicines.As long as it was reasonable, we justgave it to them."?

Arco supported this approach,which seemed to work well until April1989, when CGG workers arrivednear Sarayacu, a Quichua Indian com-munity located just outside of Block10 but included within the seismicprogram. The same crew chief re-members initial contacts as friendly,but when he returned to Sarayacu thefollowing week, he encountered sev-eral angry OPIP officials. Demandingcompensation for trees that had beencut and accusing CGG of driving fishfrom the rivers and wild game fromthe forest, they requested a meetingwith general managers from CGG,Arco, and Petroecuador.

The Ecuadorian government quick-ly sent two senior officials (accompa-nied by mid-level representativesfrom CGG and Petroecuador) tonegotiate "transit rights" through thevillage. Involuntarily held for 12

days, the delegation left Sarayacuonly after signing the SarayacuAccords. Among other things, theaccords called on the government toend colonization and homesteading inthe rainforest, resolve disputed landclaims, place a IS-year moratoriumon petroleum exploration, grantindigenous terri tories semi -auto-nomous political status, and impose alevy on oil production whose pro-ceeds would go to indigenous com-munities. The accords also estab-lished a so-called Bilateral Com-mission, composed of representativesfrom indigenous organizations andthe Ecuadorian government, to report.on the status of native communities.

In retrospect, it seems clear thatOPIP and the other federations de-signed the accords to provoke a dis-cussion of broader issues with theEcuadorian government rather than toredress specific grievances related toArcos operations in Block 10.8 Theaccords essentially amounted to whatone indigenous leader describes as away of "telling the government that

ENVIRONMENT 15

they needed to begin a dialogue withIndian organizations and other groupson the country's oil policy and natu-ral resources,"?

For Arco, however, the SarayacuAccords precipitated a significant

change in plans. The company got per-mission from the Ecuadorian govern-ment to declare force majeure on itsseismic studies around Sarayacu. Itthen amended its contract with Petro-ecuador to exclude the disputed area

and got back to work, completing therest of the sei mie study.

In January 1991, Arco begandrilling its first exploratory well atMoretecocha, a village located a fewkilometers from Sarayacu. The com-

A BRIEF CHRONOLOGY OF EVENTS, 1964-98

1964: The Agrarian Reform and Colo-nization Law is signed.1967: Texaco make" a major petroleumdiscovery in apo province.1972: Texaco begins oil production atthe Shu.§hufindi field in Suoumbfos andNapo provinces.1973: Agrarian Reform Law revised,allowing government to deprive benefi-ciaries ofland rights if they do not meetproduction requirements; Indian com-munities and etrlers begin cuttingmature forest in the Oriente to plant pas-ture grasses.1978: Amazon Region Settlement Actpasses, declaring most of the Orientepublic land.December 1979: Organization of Indige-nous Peoples of Pastaza (OPIP) forms.1980: Federation of Indigenous Organi-zations (FOIN), Federacion Shuar, andOPIP form the Confederation of Indige-nous Nationalities of the EcuadorianAmazon (CONFEl ITAE).1986: CO FENIAE and other groupsform the Confederation of IndigenousNationalities of Ecuador (CONAIE).November 1987: Arco bids for explo-ration and production rights in Block 10..1988: OPW organizes base group in ViI,":.lano, future site of Arco's major petrole-um discovery; government awards ArcoBlock 10 exploration rights.November 1988-May 1989: Arco'sseismic studies begin.July 1989: First phase of seismic stud-ies completed.August 1990: Ecuador's Pre idemRodrigo Borja refuses to repeal the Col-onization Law or to grant Pastaza'sindigenous territories emi-autonomy,October 1990: Arco begins buildingexplorafion well at Moretecocha.November 1990: Arco signs communi-ty as istance agreement with Morete-cocba.January 1991: Exploratory drillingbegins at Moretecocha.Mid-1991: Moretecocha block con-struction of airstrip. stalling Arco's work

to demand additional benefits.August 1991: Arco signs second com-munity assistance agreement withMoretecocha; agrees to allow Universityof California, Berkeley (DCB) re-searchers to evaluate its environmentalperformance in Block 10.August 1991-September 1991: Villanoseismic work completed.November 1991-January 1992: Vil-lano exploratory drilling completed.January 1992: UCB researchers vi itEcuador.March 1992: UCB researchers releasefindings.April 1992: OPIP organizes March toQuito; demands recognition of semi-autonomous territories in Pastaza and asingle land title to all indigenous com-munities. Arco announces Villano dis-covery.June 1993: DJClP (later the Associationfor Indigenous Development, AmazonRegion (ASODlRA)) form .July 1993: Arco sign Villano assi lanceagreement with D1CIP/ASODIRA.September 1993: OPIP reque-sts meet-ing with Arco; ASODJRA protestsmeeting; OPIP/Arco discussions breakdown.December 1993: OPlP convenes theVillano As embly.January 1994: OPIP, cm,~-r-.lIAE.and CONAIE occupy Ministry of Ener-gy and Mines ill Quito to protest seventhbidding round on exploration rights andexclusion of native organizations frommajor policy decisions.February 1994: Minister of Energy andMines meets with CONFENIAE,CONAIE, OPIP. and other indigenousfederations in Puyo to discuss oil policy,4 March 1994: OPlP and Arco repre-sentatives meet in Plano, Texas.April 1994: OPIP, ASODlRA, and Fed-eration of Indigenous Peoples of Pas-taza, Amazon Region (FIPPRA) formthe Indigenous Front to negotiate withArco and Petroecuador,May 1994: Arco/Agip, Petroecuador,

the Ministry of Energy and Mines,OPIP. FIPPRA, ASODIRA, CONFENT-,-\E. CO AlE, and Oxfam Americameet at CONFENIAE's Union Baseheadquarters;June 1994: CONAIE organizes Nation-al Mobilization for Life to prote t newAgricultural Development Law tbattransfers communal land titles to jndi-vidual property owners; demand mora-torium on seventh bidding round.21-22 September 1994: Technicalcommittee's first meeting.November 1994: ASODIRA informsArco that it wjJI no Ionger accept OPIPinvolvement in the Block 10 environ-mental assessment.December 1994: Arc()stlbmits Villanodevelopment plan to Ministry of Energyand Mines.January 1995: OPlP and FlPPRAdemand that Arco suspend all discus-ions with ASODlRA.

April 1995: Ministry of Energy andMines approves Villano developmentplan.May 1995: Areo declares force majeureon Villano development until Petro-«ecuador agrees to bu,ild required feederlink to Trans-Ecuadorian Pipeline System.December 1995: Arco contracts withFugro/Petrokem to conduct retrospec-tive environmental impact assessment.May 1996: Eight members of theindigenous political party, Pachakutik-Nuevo Pafs, elected to Ecuador's C1>n-gress.March. 1997: Arco resolves pipelinedispute with Petroecuador; issues decla-ration of commerciality signaling startof development phase.June 1997: Arco rejects FugrolPetrokem's draft report; hires ENTRD(to conduct second environmental assess-ment.April 1998: Ministry of Energy andMines approves Arco's environmentalimpact assessment and managementplan; Arco begins construction of VIl-lano field and pipelines.

16 ENVIRONMENT June 1998

pany plugged and abandonedthat well after finding insuffi-cient oil. In 1992 and 1994, Arcodrilled two additional wells atVillano, 25 kilometers to thenorth of Sarayacu. There, it dis-covered recoverable reserves of200 million barrels of medium-grade oil.

Sarayacu's Aftermath

Volume 40 Number 5

despite the researchers' strong ties toOPIP and RAN. (Several months ear-lier, RAN, with OPIP's blessing, hadlaunched an international campaign tosupport the Quichua people of Pastazaprovince that attacked Arcos opera-tions in particular.)

The Berkeley team visited Ecuadorin January 1992 and released itsreport two months later. The reportcriticized Arco for failing to conductbaseline environmental studies beforebeginning its seismic investigationsand for not issuing environmentalguidelines to its contractors until wellafter exploration work had begun. 11 Italso outlined the negative impacts of aseries of technical problems re-searchers claimed had arisen duringthe exploratory drilling and the recla-mation of the abandoned well sites.'?In particular, they noted that indige-nous inhabitants reported a decreasein wild game near these sites; theyalso observed that Arco's revegetationefforts at Moretecocha were largelyunsuccessful. While faulting the com-pany for its initial "lack of ecologicalunderstanding, weak environmentalanalysis and documentation, and inad-equate procedures for consult[ing]with indigenous communities," the

Berkeley research team acknowl-edged that many of these issues hadbeen resolved.P It concluded that Ar-co's conduct in Moretecocha and Vil-lano "appears to represent a new envi-ronmental standard for oil explorationin Ecuador."!"

The Plot Thickens

Although it ended on this positivenote, the Berkeley report was widelycited as evidence of Arco's poor con-dUCt.15 Yet in the spring of 1992, thereport was actually the least of Arco'sproblems. In April, OPIP organized ahighly publicized march to Ecuador'scapital city Quito, calling internationalattention to its demands for a "plurina-tional indigenous state." OPIP wantedthe government to issue it a single titleto the land occupied by Pastaza'sindigenous communities (more than1.1 million hectares or 2.75 millionacres). This demand sparked angrydemonstrations organized by settlersand rival indigenous political groups,including the Federation of Indige-nous Peoples of Pastaza, AmazonRegion (FIPPRA).

In part, the antagonism betweenOPIP and FIPPRA can be traced to

ENVIRONMENT 17

During the seismic studies,Arco supported CGG's "paywhatever they ask as long as it'sreasonable" approach. But whenthe company decided to drill anexploration well at Moretecocha,it negotiated a formal communityassistance agreement with the Arm's contract with the national uti lily, Petroecuador, set a strict deadline for the company tovillage. Signed in 1990 and even- finish its exploration program in just four years.tually extended through 1996,this agreement required Arco to providevillagers with training in carpentry andsewing, medical services, and one air-plane flight per week to the provincialcapital in Puyo as well as direct finan-cial support.

Behind Arcos willingness to negoti-ate with Moretecocha lay its aware-ness of a basic economic fact: Seismicstudies might cost several hundredthousand dollars; drilling an explo-ration well typically costs several mil-lion. For Arco. this greater level ofinvestment justified its support of larg-er, longer-term community benefitprograms. The company pursued asimilar strategy in Villano, where itsigned a community assistance agree-ment in July 1993.10

During this period, Arco continuedworking to resolve the issues OPIPraised at Sarayacu. In August 1991, atOPIP's request, company representa-tives met with Rainforest Action Net-work (RAN) members and researchersfrom the University of California Col-lege of Environmental Design atBerkeley. OPIP wanted the Berkeleyteam to conduct an independent envi-ronmental impact assessment ofArco's activities in Block 10. Arcoagreed to participate in the assessment

religious differences. Starting in thelate 1960s, U.S. Protestant missionar-ies successfully converted large num-bers of Quiehua Indians and otherindigenous peoples in the region. Con-versions typically involved extendedfamilies and, in some cases, entirecommunities. Where villages splitbetween Protestants and Catholics,one group often moved a short dis-tance away to establish a separatecommunity and, in many cases, sepa-rate political organizations. Most ofOPIP's members were Catholic; how-ever, FIPPRA's membership was pre-dominantly Protestant.

FfPPRA members in Moretecochawere already embroiled in a territorialdispute with Sarayacu residents whenArco arrived on the scene. After theEcuadorian government issued prelim-inary land titles to the two villages in1990, a group of Sarayacu men occu-pied hillsides near the proposed site of

mid-1993, all but one group out of 120Catholic and Protestant families aban-doned OPIP to form their own inde-pendent organization, the Associationfor Indigenous Development, AmazonRegion (ASODTRA, originallyDfClt'). United in the hope of negoti-ating a substantial community assis-tance agreement with Arco, ASODI-RA members openly admit they leftOPIP rather than agree to its demandthat they share benefits with othercommunities in the region. 17

The community assistance agree-ment Arco signed with ASODIRA inJuly 1993 infuriated OPIP. The feder-ation accused Area of deliberatelypromoting ASODIRA's creation aspart of a "divide and conquer" strate-gy. Several years earlier, Ecuadoriangovernment officials had activelyencouraged alternative groups likeASODIRA in an attempt to weakenOPfP and other strong federations. I~

impact of their actions. Nonetheless,what they did merely confirmedOPIP's worst fears. To make mattersworse, when OPIP approached Arcoin September 1993 to suggest openingnew discussions, ASODIRA refusedto participate.

Shifting Priorities

ASODlRA and OPIP's battle overcommunity development funds in Vil-lano mirrored many other indigenousorganizations' struggles throughoutEcuador during this time period.

By this point, the indigenous organi-zations had won many of the battlesthey originally set out to fight, suc-cessfully focusing national and in-ternational attention on land reform,racial discrimination in basic govern-ment services, and other politicalissues ."0 Under President RodrigoBorja (I988-92), the Ecuadorian gov-

ernmcnt gave many indige-nous communities title to theirlands and rook important stepstoward eliminating inequali-ties in education, health care,and infrastructure." By ]992,most observers concur, streetdemonstrations and marcheshad forced most of the prob-lems that needed to be ad-dressed by government actiononto the national agenda.i?

Deeper, more intractable is-sues lay beneath such prob-lems, however. Building aroad or schoolhouse is onething; eliminating poverty orincreasing family income isanother. As the governmentbegan to eliminate outrightdiscrimination, indigenousorganizations faced new and

unfamiliar challenges. As a team ofEcuadorian and international special-ists wrote in 1992, "now that many ofthe problems of land rights and cultur-al marginalization have been amelio-rated, both sympathetic outsideobservers and local members wonderif these organizations are becoming

Pinchaza village ill Ecuador's Oriente is home 10 Shuar Indians.

Arco's exploratory well that had beenassigned to Moretecocha. They ac-cused Areo of pulling strings withgovernment officials to get the landassigned to the more sympathetic FIP-PRA members. 16

Similar events occurred in the com-munities surrounding Villano. But in

18 ENVIRONMENT

By negotiating with ASODTRA, Areodid appear to be doing the same thing.However, W. Ken Keag, Arco's thenresident manager in Ecuador, reportsthat ASODIRA's formation caught thecompany equally off-guard.'? Tn theend, Arcos managers in Ecuadorbasically underestimated the political

June 1998

remote from the pressing demands ofdaily life."23

Many federations foresaw the needto begin focusing on community devel-opment during the late 1980s and there-fore sought financial and technical sup-port from foreign nongovernmentalorganizations (NGOs) or other donors.Slipshod management practices, inex-perience, and a constant shortage ofresources, however, often conspired touudermine nascent agricultural cooper-atives, community stores, and otherventures.P' As economic setbacksmounted, federation leaders foundthemselves accused of favoritism, dis-honesty, or outright theft.

Such problems threatened OPIPand FlPPRA's relationship. With sup-port from RA, OPIP created theAmazanga Institute, a forum whereresearchers and activists could workout a regional development scheme.OPIP earmarked a large part ofArnazanga's budget to finance theinstallation of a state-of-the-art com-puterized geographic informationsystem (GIS) at its Puyo headquar-ters. When President Borja rejectedOPIP's demand for a single land titleto all of Pastaza's indigenous com-munities in May 1992, the rationalefor investing in the G1S system disap-peared, Afterward, Villano and othercommunities complained that themoney had been misappropriated or,at the very least, that they had bene-fited little from OPIP's use of interna-tional donations.

This history partly explains thepolitical impact of Arco's communityassistance agreement with ASODlRA.In their defense, company representa-tives felt obligated to negotiate withlocal landowners for access to com-munal territory within Block 10. Over-whelmingly, those landowners be-longed to ASODIRA, not OPIP.

Petroccuador's reluctance to dealwith OP1P after the events in Sarayacualso played a part in the decision. Arcoofficials felt they could not afford totake such reluctance lightly. Under theterms of their risk service agreement

Volume 40 Number 5

In Shushufindi, pipelines from the Lago Agrio oil refinery interrupt the landscape.

with Pctroecuador, Arco and its part-ner Agip did not own the oil in Block10 even after the company invested allof the capital required to find and pro-duceit. As hired operators, they wouldbe reimbursed for their expenses if oilwere to be found and paid in oil formanaging the Villano field. ButPetroecuador had to approve everydollar in Arco's budget, includingfunds spent on local development andcommunity relations. Hence, Arco hadto walk a fine line, conciliating Petro-ccuador and meeting indigenous lead-ers' expectations.

Under the circumstances, conflictwas inevitable. Arco taff membersslate that by late 1993, OP1P's then

president refused to meet with them.25

Former OPIP officials, however, recalltwo meetings where Arco raised"insulting" questions about their au-thority to represent indigenous com-munities in the region." Rather thanbow to "unacceptable conditions thattrample the dignity of the future ofindigenous people in Pastaza," as oneofficial wrote, OPIP convened a publicassembly of base-level leaders fromeach of its 133 member communitiesto debate Arco's presence in Block

For additional perspectives on thisarticle, turn to Commentary onpage 42.

, .

ENVIRONMENT t9

10.27 The assembly took place in Vil-lano in December 1993.

Thi gathering accomplished twoobjectives. First, it demonstrated thatOPIP remained a strong organiza-tion with a broad-based membershipthroughout the province. Second, itsent a message to ASODIRA thatOPIP intended to speak for all Indi-ans in Pastaza, including those in Vil-lano where at least one importantfamily retained its OPIP membership.After three days of heated debate anddiscussion, the assembly issued astatement calling on Arco to "lessenand avoid the social, cultural, andenvironmental impact of its projecton native cornrnunities.t'P

This declaration signaled a subtlebut significant shift in OPIP's stance.Four years earlier in Sarayacu, OPIPhad. demanded a IS-year moratoriumon petroleum activities. The organiza-

sentatives and OPIP's new president,Hector Villamil. OPIP leaders contin-ued to claim that Arco had createdASODIRA to undermine them anddemanded that Arco agree to negotiatesolely with OPIP in the future.

In March 1994, RAN and OxfarnAmerica helped Villamil and anotherOPIP leader, Leonardo Viteri, travelto the United States to plead theircase to advocacy groups and joumaJ-ists.29 At the end of this trip, OxfamAmerica and another nongovernmen-tal organization, the Seventh Genera-tion Fund, suggested that Arcorepresentatives and the two leaderstry meeting again at the company'sTCX:l!> headquarters.

By this time, a new team at Arco hadturned its attention to Block 10. Withthe exploration phase complete, anoperations group had come onto thescene to begin preparing a develop-

engulf the Block 10 project. Soileauand his team knew they needed toestablish working relationships with abroader range of stakeholders, includ-ing OPIP and nongovernmental or-ganizations like Oxfam America andRA . Villamil and Viteri, as one sym-pathetic observer relates, realized thatto stay relevant to its base communi-ties, OPIP had to provide them withlasting economic benefits.'? The Planomeeting offered both parties theopportunity to start fresh.

The Search for CommonGround

At the Plano meeting, Areo repre-sentatives and OPIP leaders outlinedtwo major objectives: minimizing theenvironmental and social impacts ofoil production in Villano and creatinga plan to ensure the long-term wel-

fare of Pastaza's indige-nous communities. "We allagreed that we had no desireto see another Napo pro-vince," Soileau recentlyrecalled. "But to avoid that,we had to layout a plan forfuture resource develop-ment here."3l

The Arco team also want-ed to resolve an outstandingproblem raised two yearsearlier in the Berkeley re-searchers' report: the lack ofbaseline environmental stud-ies on Block 10. The teamknew the time for such stud-ies had passed, but wanted toconduct a retrospective en-vironmental impact assess-ment. This assessment, inaddition to being a gesture of

good faith, could provide a baseline forfuture development and productionactivities around Villano.

The Plano meeting attendeesagreed. Acknowledging the need toinvolve other stakeholders in futurediscussions they decided to form asubcommittee with representatives

(continued on page 36)

Arco engineers designed Villano's well and production facilities to he operated remotely, unlike thealternative shown here.

tion issued similar ultimatums in 1992during the march to Quito. Now,instead of opposing Arco outright,OPIP' leaders were asking the com-pany to only "moderate" the impact ofits activities.

Despite this apparent change in ani-rude, little was achieved at the January1994 meetings between Arco repre-

20 ENVIRONMENT

ment plan for the Villano field. Themanager leading that group, LouisSoileau IV, under rood the need tobuild a serious, long-term relationshipbetween Arco and the indigenouscommunities that could last for thenext 20 years. Such a relationship wasthe key to avoiding the kind of grind-ing, daily conflict otherwise likely to

June 1998

Common Ground(continued from page 20)

from Petroecuador, ASODIRA, andFIPPRA to flesh out the assessment'sterms. A second subcommittee wouldexamine near- and mid-term commu-nity assistance opportunities withinBlock 10. A larger group, includingperhaps the local government andother companies operating in Pastaza,would be invited to help exploreoptions for long-term developmentplanning and resource use.

Before they adjourned at midnight,the Plano group wrote a sim-ple, five-point memorandum.In it, OPIP agreed to prepare aproposal for an initial devel-opment fund to finance theterritorial plan.32 It also prom-ised to seek a consensusamong the three organizationsrepresenting indigenous com-munities in Pastaza. Arcoagreed to seek Petroecuador'ssupport for further discus-sions and to encourageASODIRA to talk with OPIP.The company also promisedto consider establishing a fundto finance the long-term re-gional development plan.Lastly, participants agreed toschedule a meeting in Ec-uador between an concernedgroups for the followingmonth, and stipulated thatOxfam America would beallowed to attend as an inde-pendent observer.

After several delays, this secondmeeting took place in May at CONFE-NIAE's Union Base headquarters. Themeeting attracted representatives fromCONAIE, CO FEl\TJAE. Oxfam,OPIP, ASODIRA. and FlPPRA, aswell as Arco, Agip, Petroecuador, andEcuador's minister of energy andmines, Francisco Acosta. With Acos-ta's blessing, attendees drafted anagreement formally establishing atechnical environmental committee.

36 ENVIRONMENT

The committee, composed of threePetroecuador representatives, threeArcol Agip officials, and two memberseach from OPIP, FlPPRA, andASODIRA, had three immediateresponsibilities: define the scope ofArco's retrospective environmentalimpact assessment; set the level ofindigenous organizations' participa-tion in this study; and review the qual-ifications of prospective environmen-tal contractors. As operator, Arcowould select the winning bidder. Thecommittee would then draft terms forthe scope of the study and Arco's envi-ronmental management plan for the

widely from that of Arco, Agip, andPetroecuador. Arco arrived at themeeting hoping to approve a generalplan for the environmental impactassessment in Block 10 and agree onselection procedures for potential con-tractors. The indigenous groups' pro-posed agenda articulated very differ-ent priorities, namely the need tocommit financing for the developmentplan. Indigenous leaders wanted near-ly S150,000 to conduct their own envi-ronmental/community study and train-ing program.

Company representatives ultimatelysuggested that senior managers at

Indigenous technical committee members become involved in operations (L( Villano as trained"environmental monitors"

Villano field, incorporating basicsocioeconomic and cultural informa-tion that could be later used in design-ing a long-term community develop-ment program.

A Wrench in the Works

After a series of delays, the techni-cal committee held its first meeting on21-22 September 1994. At this gather-ing, OPIP, FIPPRA, and ASODIRApresented an agenda that diverged

Arco and Petroecuador should take upthese funding proposals separately.After much negotiation, the partiesagreed that the technical committeewould only address environmentalissues and that a higher-level groupwould deal with financial support andcommunity development issues. Thishigher-level group came to be knownas the Political Front.

Before concluding the meeting, thecommittee members signed a generalwork program for the environmental

June 1998

to minimize ecological disrup-tion, company engineers de-signed the well and productionfacilities to be operated re-motely from a town near Puyo,applying a variation of an off-shore production model devel-oped for one of Arco's NorthSea operations.

The escalating conflictthreatened to derail the techni-cal commission's work. Arcoresident manager W. Ken Keagsent a letter to all three groupsreasserting that the companyhad the right to proceed withits development plans (oncethe relevant permits wereissued) whether or not theenvironmental assessment wasever completed. He wrote "theindigenous organizations haveonce again imposed variousconditions that must be ful-

filled before the next meeting can takeplace. We want to emphasize that thework of the Technical Commission isnot a process of negotiation, but ratheran effort of mutual cooperation,'?"

Keag's letter apparently broke thelogjam. ASODIRA withdrew itsthreat, and OPIP ~U1dFlPPRA backeddown. The technical committee,including all representatives from thethree federations, met again in lateJanuary 1995 to start drafting the envi-ronmental assessment's final outline.Committee meetings continued overthe next few months and membersselected three potential contractors toconduct the study.

In April 1995, the Ministry of Ener-gy and Mines approved Arco's devel-opment plan for Villano. Insteadof mobilizing to begin construction,however, the company again declaredforce majeure, this time becausePetroecuador could not promise tobuild a required feeder line from theVillano oil field to the Trans-Ecuador-ian Pipeline. Pending resolution ofthis issue, the project remained inlimbo for almost two years untilMarch 1997, when Arco finally issued

Most of Block 10 is covered by virgin rainforest or mature secondary growth. Areo eventuallydecided to build a roadless pipeline at Villano to minimize ecological disruption.

assessment and finalized selectionprocedures for potential contractors.In addition, they agreed to review along list of consulting firms whosecredentials met initial screening cri-teria. With the ground rules for mak-ing technical decisions in place,members agreed to meet again on 12December 1994 to designate theshort list of consultants.

A few weeks later, Arco officialsreceived a letter from ASODIRA'spresident Hector Mayancha that total-ly surprised them. The letter an-nounced ASODIRA's categoricalrejection of OPIP's continued partici-pation in planning the environmentalassessment. Noting that OPIP andFIPPRA had each asked to delay the12 December meeting until January,Mayancha suggested going aheadwithout both other groups. In re-sponse, OPIP and FIPPRA removedASODIRA as co-sponsor of the pro-posed integrated community develop-ment plan and resubmitted it to Arco.They also demanded that the companyrecognize them as the sole legitimaterepresentatives of Pastaza's indige-nous communities.

Volume 40 Number 5

Several factors precipitated thisconflict. After returning from Plano,OPIP did try to unite the three organi-zations as Arco had asked. It invitedFIPPRA and ASODIRA to form anew alliance called the IndigenousFront. FIPPRA and ASODIRA agreedand the Front did prepare a prelimi-nary document describing its plans foran integrated environmental manage-ment and community developmentplan. But internal differences inter-vened to upset this alliance. ASODI-RA wanted Arco to build a road con-necting Villano to the main highway35 kilometers (20 miles) away. OPIPopposed this proposal in light ofindigenous experience in Napo pro-vince where potential squatters usedthe road built by Texaco to invadenative territory. According to Mayan-cha, ASODfRA members interpretedthese objections as yet another exam-ple of OPIP's indifference to theirneeds. "If it were up to OPIP," he said,"we would be walking around naked.They don't want anything tochange/'P AlTO'S ultimate decision tobuild a roadless pipeline at Villanoonly intensified this feeling. Anxious

ENVIRONMENT 37

a declaration of commerciality signal-ing the start of work.

During this 20-month hiatus, com-mittee members focused on refiningthe environmental. assessment study,reviewing contractor qualifications,and setting standards for fieldwork.In December 1995, Areo selectedFugro International and Petrokem (anEcuadorian firm) to jointly conductthe study. Thereafter, Arco andFugro/Petrokem trained indigenousrepresentatives to the technical com-mittee as field technicians so that theycould assist in data collection, analy-sis, and research design.

Fugro/Petrokem completed thcfieldwork and submitted its draftrepOlt to the committee in December1996. After a lengthy review, nearlyeveryone on the technical committeeagreed that the work did not includekey biological and social data. Inparticular, indigenous representativeswere concerned that botanical invento-ries were incomplete and that impor-tant local species were missing. Virtu-ally all other members agreed. Thecommittee sent a list of correctionsand other issues the final report need-ed to address to Fugro/Petrokem inJune 1997.

By this time, however, Arco hadissued its declaration of commercialityand had begun to design the environ-mental impact study and long-termenvironmental management plan forconstruction and operations at Villano.Rather than wait for a revised Fugrostudy, the technical committee mem-bers decided that missing data shouldbe collected as part of this new inves-tigation. With committee endorse-ment, Arco contracted with Houston-based Entrix to complete the impactstudy and train indigenous committeemembers as "environmental monitors"in the field. It also hired 30 additionalIndians-lO from each organization-as part of its workforce. The environ-mental impact study began in Septem-ber 1997 and was completed in March1998. Arco's environmental permitwas approved one month later.

38 ENVIRONMENT

deliberations, LOllis Soileau of Arcobelieves the results have justified theeffort: "It was a slow, painful process,but I always felt that anything wecould do to get people to sit down andtalk to each other was better than nottalking to each other."36

OPIP's Leonardo Viteri expressessimilar sentiments. Viteri thinks thecommittee helped OPIP accomplishone of its explicit objectives. "When wewent to Plano, we had several objec-tives in mind, one of which was tomake sure that our organizations, espe-cially our technical people, would bebroadly involved in planning, imple-menting, and monitoring the environ-mental management program in Block10.'>37 He also believes working on thecommittee has fostered transparencyand trust: "J think we have taken bigsteps [and while] we haven't complete-

Area needed to find the most environmentally sound way to connect the oilfield in Block10 to the Trans-Ecuadorian Pipeline System. some 100 miles away.

June 1998

Assessing the TechnicalCommittee

Not surprisingly, technical commit-tee members offer widely differentassessments of the group's success,Area believes the committee has ful-filled its main purpose, serving as aneffective communications channelbetween the company and indigenousorganizations. Area's operations man-agers knew that once the Villanodevelopment began, it would have amajor impact on indigenous commu-nities. The technical committeeoffered a way for them to involve"indigenous people in the process[which was desirable] because theyhave a lot of lunique 1 knowledgeabout their environment.t''" Althoughexternal politics and internal rivalrieshave complicated the committee'<

!; re hed our goal yet. we're gettingthe «:> He'LOr Mayancha, ASODI-R..A:s pre idem. concurs.

Petree uador and the energy min-istry representatives, however, ques-tion the utility of involving nonspe-cialists with little formal training inechnical environmental management

decisions. One former senior official,who has served on the committeesince its inception, stated that "com-panies like Arco can't operate inEcuador unless they meet strict envi-ronmental requirements that arc setby law. We really don 'I need anotherlevel of review' by groups or organiza-tions that have no technical qualifica-tions."39 Petroecuador specialistsshare these opinion. "We're stillwaiting to ee if these dialogues real-ly bear frui :. on of them comment-ed recei ly.:

.-\[CO a .nowl dgcs the validity ofthese reservations. Ind ~.d. one for-mer staff member recent! y recalledthat at the outset "there were peoplewho felt the dialogue wa - wastedeffort .... Our ontra t said that thegovernment was su 0' to dealwith the Indians: \' were there onlyto develop the oil."'! Yet .Arco nowsees the technical .ommi tee as amodel for resolving FO . Ii ! contro-versies and ensuring con iunity par-ticipation in project planni _

Future Challenges

Even so, indigenous repr sent rivesto the committee still believe theycontinue to operate at a disa vantageconcerning access to techni al infor-mation. First, Petroecuador deter-mines which technical documents thecommittee can discuss and review.and indigenous committee memberscomplain that it has taken a relativelyrestrictive and bureaucratic approachto disclosure. Second, they feel thatthey do not always have the trainingor background they need to adequate-ly address complex technical qucs-tions. Third, they chafe at the limitsimposed on their ability to shape the

Volume 40 Number 5

Block 10 environmental managementprogram. Arco reserves the right tochoose the environmental contractorsafter consulting with the committee,and the company does not involve thecommittee in its budget decisions.Lastly, indigenous committee mem-bers wonder why discussions of thesize and shape of the Pastaza regionaldevelopment plan have yet to makethe agenda.

For its own part, Arco remainstroub- led by the indigenous organiza-tionsIack of unity. After three years,they still do not speak with a singlevoice. Old divisions appear to lie justbelow the surface and could easilyerupt once a major issue like theregional development plan finds itsway to the table. The indigenous rep-resentatives acknowledge such fearsare well-founded. ASODIRA presi-dent Hector Mayancha, for example,feels that working within the technicalcommittee has helped overcome"about half of the earlier distrust";OPJP's Leonardo Viteri puts the levelcloser to "60 or 70 percent/"? Still,both OPIP and ASODlRA are contin-uing to prepare separate regionaldevelopment plans.

Competing models for the develop-ment plan also spark some concern.ASODIRA and FIPPRA favor a modelthat would focus exclusively on Block10 communities and evolve from adiagnostic study into a 20-year pro-gram, sponsored by Arco, to improvehealth, education, and householdincomes. The second model, favoredby OPIP, takes a much broaderapproach. This model incorporates atype of trust fund that could be used byall of Pastaza's indigenous communi-ties. OPIP claims the fund could beunderwritten initially by assessing alevy on oil production (on the order of$2 per barrel). This levy could beexpanded later to include income fromlogging companies and other SOurces.With a constant stream of income,indigenous communities would havethe resources to implement, manage,and direct their own integrated sus-tainable development plans.

Both models raise a number of troub-ling issues, perhaps the most pressingof which is figuring out a systemwhereby remote communities ratherthan a bureaucracy of professionalleaders i.n the provincial capital canplaya meaningful planning and deci-

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ENVIRONMENT 39

sionmaking role. Leaving aside thefact that national legislation would berequired to impose a levy on oil pro-duction, OPIP faces an uphill battleon this count. The organization'smembership embraces more than 100widely scattered communities locatedin half a dozen major watersheds. Inthe past, OPIP has been most success-ful in mobilizing broad support forpolitical initiatives, such as the 1992March to Quito, or more recently, theWomen's March to Save the Rainfor-est in October 1997. Even sympathet-ic observers admit OPIP has hadmuch less success designing and man-aging community development initia-tives/" Unless OPIP can build internalconsensus for its economic proposals,it will likely face growing conflict andopposition within its own ranks, as its12 regional associations (or fragmentsof those associations) fight overpotential benefits. Recognizing thisdanger, Arco has offered to hire spe-cialists in participatory communitydevelopment planning.

In the final analysis, despite threeyears of cooperative effort, suspicionstoward Arco persist. During the almosttwo year period of force majeure (May1995-March 1997), Arco reduced itsinvolvement and trimmed its expensesin Ecuador to the bare minimum.Although Arco representatives contin-ued to meet with the technical com-mittee, they consistently postponedany discussion of long-term develop-

OIL·UPDATEi.

IrtFeb~ll1'Si..l?if8;·Petro~2uado~.........allocated afifftherblpck9.t land:'<known as Bloci<24,tpAr<:0. Qn27?'. April) 998; Aito ;~igqed.an agree-

.; ment with Jh~ Ecuadorillugovem-....·..wcnt for the i:igllls~Otxplo{y the'. aI"ea:andidrill foroil,J,5aTlyr~ports>?~$timat¢ resyrves'off20million': •.b~rrelsw~thill)he. hlock. Petro-

eC!-,~dorprojects that Arco.will?invest.$6~iiQn to .p.eyelop~d'<lrill in tf\(,~area>begirininginearly;1999. ••.... . .

40 ENVIRONMENT

ment options or plans. In retrospect,according to Herbert Vickers (Arco'scurrent resident manager in Ecuador),this decision was a mistake: "Arcocompromised the effectiveness of [its]initial agreement because we waitedfor three years to talk about the mostimportant issues. This has created anatmosphere of mistrust. [As a result],every new piece of work we undertakerequires new negotiation.?"

Arco has tried to address these prob-lems. In March 1997, it invited spe-cialists from the regional office of theUnited Nations Food and AgricultureOrganization's Forest, Trees, and Peo-ple Program to conduct a workshopfor technical committee members onparticipatory methods for managingsocioenvironmental conflicts. Indige-nous committee members found thisworkshop particularly useful because"our organizations suffer from a lackof people who are trained in contlictmanagement, negotiation, and resolu-tiOO."45Arco currently plans to spon-sor additional workshops and otherinitiatives involving communitiesthroughout Pastaza in an effort to fos-ter a culture of dialogue.

Lessons Learned

Technical committee members allpoint out that face-to-face discussionslaid the foundations for resolvingmajor issues, Despite false starts andmissed opportunities, the committeehas provided an arena where OPIP,ASODIRA, FIPPRA, Arco, andPetroecuador have learned to findcommon ground. Many committeemembers have come to appreciate thatone group's gain is not necessarilysomeone else's loss. This representsan essential step in reforming the cul-ture of confrontation built on the polit-ical calculus "if you win, I lose" thathas traditionally prevailed in Ecuadorand elsewhere in Latin America.

Arco has realized that it and aUother hydrocarbon companies need tobe smarter about local politics. "Whenforeign companies come to Ecuador,"

one deputy energy rmruster recentlyobserved, "they have absolutely nounderstanding of [our] politics. In fact,they don't want to understand. Theydon t think it's their job."46 In Arco'sexperience, Ecuadorian governmentofficials frequently encouraged thisview, finding a variety of reasons toexclude indigenous organizationsfrom discussions about Block 10. Nev-ertheless, the ongoing dialogue facili-tated by the technical committee hashelped Arco develop its own perspec-tive on the indigenous communities,environmental groups, and otherstakeholders in Pastaza province. Thisperspective has enabled the companyto take the initiative in trying toresolve conflicts.

Throughout Latin America, indige-nous organizations, environmentalgroups, and nongovernmental organi-zations have objected to oil projects onenvironmental grounds to focus publicattention on social and economic ques-tions. This strategy has generally paidoff, but at the price of confusing realtechnical problems with thornierissues of sustainable development,stakeholder equity, and grassroots par-ticipation. The technical committeehas helped Arco and its partners avoidthis pattern. The technical trainingindigenous organizations and theirmembers have gained has enabledthem to better distinguish between realecological threats and more routineenvironmental challenges, therebystrengthening their ability to act andnegotiate as equal partners.

In the long run, forums like theBlock ]0 technical committee, whichfacilitate discussions between compa-nies and indigenous communitiesabout social, political, and environ-mental issues, play an enormouslypositive role in demonstrating a com-pany's good faith-the most basic arti-cle of sound and morally responsiblebusiness practice.

Sixto Mendez, Jennifer Parnell, and Robert Wasser.srrom are, respectively, manager of environment,health, and safety for Arco Oriente in Quito, Ecuador;senior environmental engineer for Area in Plano!

June 1998

Texas: and senior partner in The Terra Group, an inter-national consulting firm in Houston, Texas.

~OTES

I. For a brief discussion of the 1964 law and its impacton highland Indians. see M, H. Selverston, "The Poli-tics of Culture: Indigenous Peoples and the State ,1\

Ecuador," in D. L Van COli, ed., Indigenous Peoplesand Democracy in Latin America (New York: Thelnrer-American Dialogue, 1994), 131-52.

2. For a case study of Indian" responses, see T. Mac-donald, "Indigenous Response to an Expanding Fron-tier; Jungle Quichua Economic Conversion to CattleRanching," in N. Whitten Jr .• ed., Cultural Transforma-Ifous and Ethnicity in Modern Ecuador (Urbana, Ill.:University of Illinois Pres>, 1981). 356-83. A moreextensive discussion is included in T Macdonald, D~cazadores a ganaderos (From hunters to cattlemen)[Quito, Ecuador: Ediciones Abya Ya13. 1997).3. For 3 description of lhese events. see E. Salazar. ,.l.Il

Indian Federation in Lowland Ec-uador. IV:GL-\ Docu-ment 28 (Copenhagen. 1977): and. more recently. ESalazar. "La federacion shear y I~ fronrera de IE colo-nizacion" (The Shuar Federarioa :h,d th1? seulernerufrontier) in N. \"\1titten Jr. ed .. A....,.....:J:u~li e(~utJw·riCi!la:La otro cara del pro-zrfsotEcu::-ds.JIi,'::;' Arnaz n; Tneother face of pr()§:.te~~J(Quito. Ecuador: EdlcionesAbya Yala. i9S9).

..1. For a brief history of indigenous organizations inEcuador. see '1"1. Becker. "Nationalism and Pluri-Nationalism in a Multi-Ethnic State: Indigenous Orga-nizarions in Ecuador" (paper presented at the Mid-America Conference. on History at the University of,,",-'!Sa;,. Lawrence, l7-19 September 1992). See also

O:\.:uE. CONAIE: A Brief History (document pub-lisaed On Native Web at <hup:llwww.nativeweb.org/rovavala/cultu res/ecuador/conaie/connie t .htmt».3'b.' ..\ 'illano" refers to a cluster of seven or eight com,:::.:rniries. including around 300 families, located near..:; aid airstrip of the same name. OPlP was founded in1 '.-mage called Santa Cecilia.

". Rainforest Action Network first published these alle-;mions in 1990. For a summary, see S. Sawyer,"Imiige.nou~ Initiatives ill Petroleum Politics in theEcuadorian Amazon," Culturol Survival Quarterly 20,no. 1(1996): 26-30.", Gustava Gamboa. former CGG seismic operations~!tid supervisor, Quito, Ecuador, interview with theauthors. July 1997.S. For an indigenous perspective on Sarayucu, see H.Villamil, "El manejo del conflicto COli Jus petroleras: EIcase de la ARCO·OPIP" (Conflict management withoil companies: The case of Areo-OPIP) in A. Varea,ed.. .vlarca negra en l~'lamazonia (Black tide in theAmazon) (Quito, Ecuador: Ediciones Abya Yala,1995).339-66. A summary of the Sarayacu agreementsis included ill P. Ortiz, "Cultures y trararniento de con-tucros socloambicruales' (Management of sociocnvi-ronmental conflict) (unpublished manuscript, Quito,Ecuador, 1997). In June 1990, CaNAlE and CONFE·:\1.-'\£ published a follow-up document, "Propuestapara poner en marcha el acuerdo de Sarayacu" (Pro-posal to implement the Sarayacu Accords) which maybe found in 1. Juncosa, romp .. Documentos indios(Indian Documents) (Quito, Ecuador: Ediciones Ally.Yala, [991), 171-87.9. Leonardo Viteri, former OPIP president. Puyo,Ecuador, interview will; the authors, July 1997.10. The other element in this calculation is risk. Arcocfficials note that they are generally willing to makegreater investments in community programs duringexploration activities when they believe there's a high?robability of finding commercial hydrocarbon:eposits,

.'olume 40 Number 5

II. Ecuador's government first required environmentalimpact evaluations in 1994.

12. After an internal analysis of the report's technicalobjections, Arco decided that most were either exag-gerated or untrue. For example, most of the Berkeleygroup's recommendations focused on environmentalassessment procedures and recordkeeping and Arcohad voluntarily implemented an assessment process bythe time theMoretecocha well was drilled (that is, threeyears before such assessments were. required byEcuadorian law). Moreover, Arco managers flatly dis-agreed with the group's judgment th:lt Arco's environ-mental studies "failed to target the most significantissues [or investigation," as the report charged. Cornpa-ny officials also perceived the Berkeley team's criti-cism of their environmental assessment procedures asunjustified. Arco had hired qualified independent con-tractors to conduct. environmental studies for each of itsexploratory wells and had implemented extensivereforestation programs at Villano and Moretecocha,where commercial deposits of oil had not been found.

13. S. McCreary et al., "Independent Review of Envi-ronmental Documentation for Petroleum Explorationin Block 10. Oriente. Ecuador" (paper prepared for theL'niversitv of California at Berkeley. College of Envi-ronmenta! Design. 17 June i992). 1_

15. For an example, se:e \lH~"11iL note 8 above.

I . Gamboa. notel:!oov'e.

if. Patricio Manva, former ASODIR.A president. Sh-eil,Ecuador. interview with the authors. \hY 1995: andHector Mavancha. ASODIRA president. Puvo.Ecuador, interview with the authors. 'July 1997. 'l8_ See T Macdonald, Ecuador's Lowland QuichuaIndians: All Amazonian Response 10 Poiuical and Envi-roumental Change (New York: Allyn and Bacon. inpress).

l 9. W. Ken Keag, Arco resident T!1UJl3ger, London,England. interview with the authors, July 1997.20. For an extremely lucid account of this process. seeA. Bebbington er a1., "The Evolution or IndigenousFederations in Ecuador," Grassroots Development 16.no. 2 (1992): 11-20.21. FoJ' a sympathetic discussion of Borja', policies bya fanner education minister. see R. Vallejo. Cnmicamestiza del "/leliO Pachakutik (Mestizo account of thenew Pachakutik) Latin American Study Center Work-ing Paper no. 2 (College Park, Md.: University ofMaryland. 1'196).22. Hebbington et al., note 2() above: and Vallejo. note21 above.

23. Bebbington et al .. note 20 above.24. Bebbington and his colleagues describe severalexamples of this trend. Other cases are analyzed b)' R.C_ Smirn, C. C. 'Iapuy, and N_ \Vray, Amazonia:economia indigena )' mercado. Los desafios del desar-rolla (Amazonia: indigenous economy and market. Thechallenges of development) (Quito. Ecuador: Coordi-nadora de las Organizacioncs lndfgenas de la CuencaAmazonica and Oxtam America. 1996). For a discus-sion of Fo.IN's experience with community-basedforestry projects in Nape province, see Macdonald,note 18 above,

25. Marcelo Saa and Gustavo Gamboa, communityrelations manager and coordinator respectively. forArco Oriente, Quito, Ecuador, interview with theauthors. July 19')7.26. Leonardo Viteri, note 9 above.27. Villamil. note 8 above.

28. Villamil. note 8 above. For an alternative perspec-tive, see Sawyer, note 6 above.29. Eventually, the OPIP leaders visited seven majorU.S. cities, including Washington, New York, SanFrancisco, and Los Angeles.

30. Pablo Ortiz. United Nations Food and AgricultureOrganization consultant, Quito, Ecuador, interview

with the authors, July 1997.

31. Louis Soileau IV, manager of operations, Arco. Dal-las, Texas, interview with the authors, June 1997.

32. Area Oriente, "Meeting of Arco and the Organiza-tion of Indigenous Peoples of Pasraza, Plano, Texas.March 4, 1994." (unpublished memorandum, Quito.Ecuador).

33. Hector Mayancha, note 17 above.

34. W. K. Keag, '~\ los rniembros de las orgnnizacionesindlgenas ante la Comision Tecnica Ambierual para clBloque 10 operado por el Consorcio Arco/Agip," (Tothe members of indigenous organizations representedOn the Technical Environmental Comminee for Block10 operated by the Arco/Agip Consortium) AOI-O 12-95(Quito, Ecuador. 13 January 1995}.35. Louis Soileau IV, note 31 above.

36. Ibid.37. Leonardo Viteri. note 9 above.38. Ibid.

.'>9. Giovanni Rossania, former subsecretary for envi-ronmental protection, Ministry of Energy and Mines.Quito, Ecuador. interview with the authors. August1997.40_ Oswaldo Tapia, Pctroecuudor's contracts unit.Quito. Ecuador, interview with the authors, July 1997.

.+1. Louis Soileau IV, note 31 above.~2. Leonardo Vireri, note 9 above.-1-'. Pablo Ortiz and Victor Lopez, Quito, Ecuador,imervie« willi the authors, July 1997.

J4. Herbert Vickers. resident manager, AfCO~ Quito,Ecuador. interview with the authors, July 1997.-i5. Leonardo Viteri. note 9 above.

-Ul. Jorge Albas. deputy energy minister, Quito,Ecuador. interview with lhe authors. Augusr 1997_

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ENVIRONMENT 41

commentary II

Seeking Common Ground in Ecuador

•Historically,

the impact ofresourceextractive

industries onlocal economies

andenvironmentshas not beenpositive in

the Andeancountries.

•

42 ENVIRONMENT

OF TI:IE M!\NY THOUGHTS that "Seeking CommonGround: Petroleum and Indigenous Peoples inEcuador's Amazon" (page 12 of this issue) pro-vokes, three in particular deserve mention: therelationship between extractive industries and localdevelopment; the conditions under which businessmight be more socially and environmentallyresponsible; and the specific is ue of trust funds.Reflecting on these issues will give us a clearersense of tile responsibilities that companies suchas Areo have toward organizations like OPIP andregions such as Pastaza. While the article impliesthat Arco dealt with local indigenous organizationsbecause it was good business to do so (thus actingin conformity with economist Milton Friedman'sclaim that business's only social responsibility isto make a profit), I believe that business has amoral and ethical responsibility to behave in thisway-i-and indeed, to go even further.

Historically, the impact of resource extractiveindustries on local economies and environmentshas not been positive in the Andean countries.The profits have gone to company owners, share-holders, and central governments, while the jobsthat have been created cannot compensate for thelonger lasting environmental impacts of muchresource extraction. If profit is in some sense areturn to the risk borne by investors, this alloca-tion of benefits is inequitable, for local popula-tions bear much of the risk associated withresource extraction. The difference is that thecapital they risk is their social and natural capitalas opposed to the financial capital risked by thecompanies involved in resource extraction.

Recognizing this inequity is particularlyimporr.anr in the current context because Andeancountries are entering a period of rapid growth inmineral, oil, and gas extraction as a result ofmore favorable investment climates ,U1dgovern-ment policies encouraging foreign investment inthese sectors. Before this next found of resourceextraction gets fully under way, it is critical tocreate mechanisms that will prevent suchinequities from occurring again.

Because Andean governments have not dealtwell with this inequity in the past and companiesarc fully aware of this, it is not enough for com-

parries merely to meet the requirement. set bythese governments. This leads to my secondtheme, the conditions under which businesseswill exercise more social and environmentalresponsibility toward the regions in which thcyoperate. The Areo-OPIP case is illustrative here,for the article implies that had there not been awell-organized indigenous population in Pastaza,Areo would not have gone beyond negotiatingwith the Ecuadorian government. Thus, one les-son of this experience seems to be that Arcobehaved more responsibly because indigenouscivil society demanded it. Indeed, Iwould arguethat the single most important factor in determin-ing the environmental and social quality of futuredevelopment in the Andean countries will be thestrength of indigenous peoples' organizations inthe humid lowlands and the overall strength ofcivil society organizations in the highlands. Itwill be this strength (coupled with consumer con-sciousness in the North) that, above all else, willtwist business's ann regarding its social and envi-ronmental responsibilities.

111is observation is important because the articletends to question OPIP's legitimacy and represen-tativeness. I would agree with the authors that it isappropriate to challenge such federations toenhance their relevance and responsiveness to theirconstituencies. However, this should not be a rea-son to question the legitimacy of these organiza-tions. Rather, it should encourage us to find waysof making them stronger and more legitimate.

Finally, it is important to note that the proof ofArco's social and environmental responsibilitywill be in the economic pudding. The commit-ments that Arco has so far made to making [heplanning process more participatory and transpar-ent are laudable and worth communicating toother businesses as a challenge to behave like-wise. However, it remains to be seen how thiswill translate into material actions. In this regard,it seems imperative to me that a trust. fund for thedevelopment of Pastaza be created-and that thisbe financed out of Arco's profits rather than taxbreaks. To question, as the article does. the ideaof a fund on the grounds that OPIP may not be atruly representative organization is to mix argu-

June 1998

governance to sidestepregional and temporal equity

r,e~'friicmty on the part of business.TruSt T"1ili h:!,;c ::luth potential for promoting

"Js:ainabi-e: ili:n'£,.1pmem in Latin America. As;:E~tl\ved funding mechanisms, they are potential-

.sustainable in perpetuiry and thus offer an~:merestillg way to support civil society initiatives.L'lC address inrergenerational responsibilities, If.-\1',;,) were !O commit to such a fund, that would"','at!,v be something worth communicating to a;\~i-d2'raudience.

Anthony BebblagtonDepartment of Geography

and Environment and Behavior ProgramUniversity of Colorado

Boulder

A :'\T'\!B£R OF C:ONCER:'IS troubled me uponreading "Seeking Common Ground: Petroleumznd Indigenous Peoples in Ecuador's Amazon.Between June !993 and November 1994. I con-;:Tttcled research in Pastaza for my Ph.D. in::.niliropology from Stanford University. :\!y dis-sertation focused on the poihics of resource usein the rainf-Orc~L >1)"-me!h«V.io_og~fo.~-ill;:- fried .col-ia:c.onui.ng closely wi'!,'1 Oi". . Ccasequenrly. IliwJ and anaiyzed snanyof the events of whichSi,,· . .\leooez. Jennifer Pameli. and Robert11,"a-,,,.enrrom ~4i.I;.: \1;- researchindicates that{b~ir i."'eruiiticm. is _highly problematic.

.:~..TI!!tI:bc;-Qfdi:5:(»rrrons pepper chis article.Th<:y·c lor evenrs. undermine indigenous poliri-,--8c",pa.city. erase rhe company's obstructiveness,3:'_1champion corporate compassion. Wittingly or11::> • these misrepresentations render a misleadingzcccunr of the history of indigenous-corporate·:t}P.il.i.ClSinthe Ecuadorian Amazon. They serveas subtle mechanisms for effacing the politics ofpower. LeI me focus on four concerns.

First. the article implies that Arco sited itsexploratory wells on indigenous land adjudicated::'5 1 consequence of OPIP's march [Q Quito inE'92. This is incorrect. Moretecocha and Pan-.:.2.Huque(a hamlet of Villano) acquired legal titlero.their communal lands in 1990 and 1991::npectively.2 Thus the assertion that the 1992?c:ij dicarion "includled] Villano" is not only-."11:1I1g but it lends the impression that Arco (ineemrast to the acknowledged CompagnieC~"nerale de Geophysique improprieties) conduct-.=J its activities innocently. Importantly, Morete-;.,,~ha and Pandanuque only gained legal titletecause of the crucial intervention by Arco per-.;,.:;n:1el-this, in a moment when state-indigenousrelarions were volatile and after more than aceeade-long period in which the government hadrepeatedly denied OPIP's demand that indigenous:ailGS be legalized. Thus, Area systematicallysought to establish the political and social terrain;:~.;;essary for smoothing the flow of its opera-;';::ns. This entailed bold interventions (among••i1ich facilitating land titles was only one) thats-::-.;.X'medwhat became an ASODIRA leadership.

-,,,,,Toe 40 Number 5

Second, despite repeated disavowals, Area'sfield workers played a crucial role in the forma-tion and maintenance of ASODIRA (formerlyDlCIP). ASODIRA only existed because Arcodid, the latter supporting the former through anarray of costs-all incidental by corporate stan-dards. Initially, ASODIRA was a near-puppetorganization. Arco's connection with ASODIRAallowed the company to demonstrate its closerelations with indigenous peoples; similarly,ASODIRA's politics relinquished Arco from hav-ing to engage with OPIP. ASODIRA (founded in1993) represented-at a generous estimate-lOOpeople, only a few of whom had completed pri-mary school. OPIP (founded in 1979) represented20,000 people, including some of Ecuador's mosteloquent indigenous leaders. Given these organi-zations' differential leverage, it was to the com-pany's advantage to bolster ASODIRA as a"true" organization and undermine OPIP's legiti-macy, While OPIP is far from perfect, its politicalstance is hard to fault: that the high social andenvironmental stakes of oil operations cannot beexchanged for trinkets-be they pencils or build-ings. metal roofing or high school scholarships.

Third. Arce only engaged in dialogue withindigenous communities beyond Moretecochaand Villano because OPIP compelled it to. Overtime Arco representatives came to realize thatOPIP could disrupt the flow of oil operationsgiven the Indian federation's political sophistica-tion and transnational organizing power. Between1993 and 199-t OPIP's position toward petrole-um activity in indigenous territory shifted, as thearticle correctly notes, This shift-from staunchopposition to cautious negoriation--did notemerge, however. as the article implies, because •the federation needed to justify its reason forbeing. Rather. this shift reflected OPIP's attemptto forge new strategies for grappling with the dra-matically changing political-economic reality inwhichindigenous peoples lived. Now, as ever,OPIP plays an important role in Pastaza: indige-UQUS marginalization is all but "ameliorated:'

Fourth, few would oppose an initiative encour-aging industry to focus on the environment. Yetthe technical committee does much more thanthat. It impedes the ability to focus attentionsimultaneously elsewhere. A protest banner oftenused in OPIP mobilizations reads: "The Defenseof Nature and Social Justice are Inseparable."Ironically, the technical committee threatens tosever this crucial precept. It runs the risk ofbecoming what anthropologist James Fergusoncalls an "anti-politics machine't=-rhat is, a mech-anism that de-politicizes the context in whichmultinational petroleum extraction occurs.' Inevery meeting between 1993 and 1994, companyrepresentatives stridently refused to talk seriouslyof social and economic issues--even at thePlano, Texas, meeting that the article celebrates.As the authors claim, the technical committeeenables "stakeholders to separate true environ-mental issues from other concerns." The ability to

•The high social

andenvironmentalstakes of oiloperationscannot be

exchanged fortrinkets-be they

pencils orbuildings,

metal roofingor high schoolscholarships.

•

ENVIRONMENT 43

•The currentapproach to

resourceextraction is notfully utilizing the

most valuableresource of all:the indigenous

peoplesthemselves.

•

44 ENVIRONMENT

disassociate the environmental effects of resourceextraction from its political-economic context,runs the danger of dismissing the profoundinequalities among "stakeholders." For mostThird World communities. inequity is the extrac-tive industry's middle name. The myth that"everyone must win" only makes sense if onediscounts as inconsequential the fact that "win-nings" are profoundly unevenly distributed.

Suzana SawyerDepartment ofAnrhl'Op%g)'

University of California. Davis

1. S. S<.lwycl~ll1an:hi'lIg to Notion Across EthnirTerrain: TheCuhural Politics olNmiolt. Territory. and Resource Use ill theEcuadorian LIpper ,,}11/0:011 (Ph.D. dissertation, Department ofAnthropology Stanford l;nivcrsity, 1997).

'1 This information can he found at' lnsuuno Ecuaioriuno deReforma Agraria y Colcnizacidn (Ecuadorian Institute ofAgrarian Reform and Colonization) land titling archives. Puyo,Pastaza, Ecuador,J. J. Ferguson, The Ami-Politics :.\1l1clline: 'Development;Depoliticization, and Bureaucratic Power ill Lesotho {Min-neapolis. Minn: University of Minnesota Press 19(4).

iJURIN(j THE LAST TWO DECADES. Ecuador hasbeen the setting for some very significant devel-opments. both structural and in relation to thedesign of strategies for development. For exam-ple, its indigenous peoples, who have traditional-ly been relegated to the sidelines, are actively anddecisively attempting to meet the responsibilitiesplaced on them by their presence in key areas.

This activism is neither accidental nor theresult of generous conce sions from other ele-ments of Ecuadorian society. such a- the govern-ment and the country's economic and politicalsectors: It is the product of a process that is tear-ing down the traditional social, cultural. and reli-gious structures in Ecuador. Indigenous peoplesare forcing their way in by virtue of the strengthgiven them by tbeir organization, their culturalvalues, and their long experience living with (andsurviving) conditions that are highly adverse inevery sense.

Several factors have been determinative in thisregard: intercultural and bilingual education:indigenous peoples' recognition (or, in somecases, declaration) of traditional ethnic territories;their respect for cultural values; their active par-ticipation in passing laws that confirm indigenousrights; the strengthening of cultural identities andethnic organizations; and, above all, indigenouspeoples' commitment to environmental integrity.The environment, in fact, bas been the area wherethe greatest conflicts have occurred. Indigenouspeoples, particularly those in tbe Amazon, havefelt themselves under attack by the governmentand its efforts to exploit Ecuador's naturalresources-with all the implications of suchexploitation. Coercion by the government hasnaturally prompted strong reactions from indige-nous peoples, reactions tbat are often character-ized as acts of violence Of' blind opposition to uti-

lizing natural resources at all. One must remem-ber, however. that indigenous attitudes are rootedin two very important things: the defense of their"Pacha Mama" (Mother Earth, on which all ere-arion depends) and their right under a 1989 inter-national Labor Organization convention onindigenous rights to be consulted about and toparticipate in the exploitation of their re ources.

Analysis of the variou laws governing theexploitation and use of natural resources leads tothe conclusion that apart from a few defects, thelaws themselves are adequate-thc problem isthat they are not respected. indigenous peoplesfeel very strongly that the government shouldensure compliance with these laws, particularlythose dealing with remediation, mitigation, andthe rational management of their resources.

Conflicts with indigenous peoples have beenmost pronounced in the case of petroleum, Facedwith irresponsible exploitation of this resource,which is degrading the areas in which they live,indigenous peoples have naturally reacted.Threats, evictions, and the use of force have beenthe common denominator in all oil exploitationefforts; indigenous organizations have respondedby demanding a dialogue over their participationin the process, mitigation measures, and environ-mental management in general- all or which thelaw requires. To be sure, some very significantdevelopments are under way, and some oil com-panies have begun negotiating with indigenouspeoples. The re-sults of these negotiations will bepositive if they are conducted openly and honest-ly, bearing in mind that it i not simply a questionof sharing profits with indigenous peoples but ofactually giving them a voice in decisions aboutdevelopment. That is, they must be allowed tomanage their environment according 10 their ownview of the world, their abilities, and their needs.

Finally, we must remember that. the currentapproach to resource extraction is not fully utiliz-ing the most valuable resource of all: the indige-nous peoples themselves. To exploit naturalresources without adverse effects on these peo-ples, we must draw on their experience, age-oldknowledge of the environment, and professionaland technical abilities. After all, they have beenthe guardians of these resources for centuries andhave much (0 contribute to defining a way of lifethat is fair and just.

Carlos A. Moreno MaldonadoCOkIUNfDEC

Quito. Ecuador

ANTHONY BEBBINGTON RAISES three issuesthat deserve a detailed response. The first is thestatement that Arco "would not have gonebeyond negotiating with the Ecuadorian govern-ment" if Indians in Pastaza had not alreadydeveloped strong political organizations. Thesecond is that our article casts doubt on OPIP'slegitimacy and representativeness. Finally. henotes we question the idea of creating a trust

June 1998

fund for Pastaza because OPIP may not be "atruly representative organization."

Our main purpose in writing this article wasto document a paradigm shift within Area fromthe North American model of compensatingindividual landowners (or landowning commu-nities) for a "right of way" (ROW) on theirproperties to the construction of a participatoryprocess that addresses broader social, economicand environmental concerns. Admittedly, thisshift is still incomplete. But it is significant thatArea managers in widely dispersed locations-such as China and Indonesia-are moving in thesame direction.

When Arco began its exploration activity inPasraza in 1988, compensation to indigenouscommunities was almost unknown in Ecuador.Nonetheless, the company took the initiative tonegotiate support agreements with Morerecochaand Villano, where our exploratory wells weredrilled. These agreements reflected our strongconviction that local people-s-villagers who bearthe most direct impact or our activities-c-shculdalso receive the most direct benefits. \Ve mayhave been guilty of misunderstanding the role ofindigenous organizations in Pasraza but no! oftrying ro sidestep our respcnsibili ies towardnative communities. as Bebbington suggests.

In addressing the second issue. we acknowl-edge that Arco managers tended to underestimateOPIP's importance as a stakeholder in Block 10prior to the Plano meeting in ~'larch 199-1..At thatmeeting, however, Arco recognized that indige-nous groups outside of Villano also hold animportant stake in oil development thereand thattwo organizarions=-Ol'Il> and FIPPRA-are theirlegitimate representatives. Since then. as Leonar-do Viteri points out. Arco has worked closelywith all three organizations to design and conductenvironmental studies and lay the groundwork fora long-term economic development program.

The idea of a trust fund grew out of LouisSoileau's suggestion at the Plano meeting thatAl'CO, OPIP, and other stakeholders should devel-op a 20-year "resource management plan" forPastaza, Arco supports this initiative, whether ittakes the form of a fund or some other structure.But just as the company has been forced to ques-tion earlier assumptions about ROW compensa-tion and other issues, it is also concerned aboutthe challenge OPIP faces in building internal con-sensus around any particular proposal-which iswhy it has offered to pay for technical assistance(for example, from the United Nations Food andAgriculture Organization (FAO)) and presumablywhy OPIP has accepted it.

COMING SOON IN

EJ1Y'lIIOI1I11EmImplications of the Kyoto negotiations

Volume 40 Number 5

One final observation: We agree that strongcivil institutions play an essential role inEcuador and elsewhere. In 1994, Arco made thedecision to assist in strengthening such institu-tions in Pastaza within the narrow limits allowedto private companies operating in a foreign COUll-

try. Perhaps Ecuador's recent ratification ofInternational Labor Organization (lLO) Agree-ment 169 (mentioned by Carlos Moreno Mal-donado in his commentary) will legitimize par-ticipatory initiatives that already exist and giverise to new ones. Yet whatever the impact of ILO169, Arco plans to support the process that ourcompany and other stakeholders in Pastaza haveset in motion- ..-not because anyone forced us to,bur because it's the right thing to do.

Like Bebbington, Suzana Sawyer accuses LIS ofcasting aspersions on OPIP. In contrast. we havetried to document the more subtle process ofmutual teaming that we believe wok place inPastaza between 191-\::\and 1997. After all. whenArco began its exploration program. there was nomanual for conducting negotiations between oilcompanies and indigenous organizations. Bothsides made mistakes that polemicized discussionand rook lime [0 OYCITome.

We would like to briefly slate two other points,namely that the location of AlTO'S exploratorywells was chosen based on seismic data, not poli-tics. The fact that we made a major discovery atVillano dearly vindicates our choice. Second, itmay certainly be true that "ASODIRA only existedbecause Arco did," but that doesn't mean that wecreated ASODIRA as a "near-puppet" organiza-tion. Throughout the Oriente, native communitieshave abandoned regional indigenous federationswhen local leaders become convinced that theyCJn cur a better deal for themselves from oil com-panies. tour operators, government agencies, andeven private donors. Our first mistake lay in failingto recognize this process: our second one involvedour inability to understand it---even though wewere the catalysts for ASODIRA's formation,

As for Sawyer's final comment-that the "win-nings" from resource extraction are unevenly dis-tributed in developing countries-we wouldstress that Arco's willingness to support somesort of long-term social fund in Pasraza reflectsan effort to mitigate that problem. Most of therevenue from Villano belongs to the Ecuadoriangovernment (in which Indians have gained astronger voice) and presumably can be used forrhe benefit of Ecuadorians.

Sixto MendezArea Oriente, inc.

Quiro. Ecuador

Jennifer ParnellArc!) lntcruational Oil and Gas Company

PIaI/O. Texas

Robert WasserstromThe Terra Group

Houston, Texas

•Arco plans tosupport the

process that ourcompany and

otherstakeholders inPastaza have setin motion-not

because anyoneforced us to, butbecause it's the

right thing to do.

•

ENVIRONMENT 45