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56 | WALTER SPURRIER BAQUERIZO OIL AND THE TRANSFORMATION OF THE ECUADORIAN STATE | 57 coupled with the willingness of politicians to offer such benefits. The principal ways of addressing these immediate expectations have been through subsidies for fuel and other energy sources, increased public-sector employment, and wage increases unac- companied by improvements in productivity, resulting in the loss of competitiveness for productive activities outside the oil sector. As a result, there has not been a sustained increase in investment in relation to the size of the economy, or even a stabilization of the relationship between investment and the size of the economy. The peak periods of investment relative to the size of the economy were in the early 1970s (tied to the construction of the first oil pipeline), in 1987 (to reconstruct the oil pipeline destroyed by the earthquake that year), and 2001–02 (the construction of a second oil pipeline for heavy crude). ENERGY INVESTMENT With the discovery of oil, investment in the energy sector became a priority. Accordingly, the first oil revenues that came in were used to build a new refinery in Esmeraldas province alongside the terminal of the trans-Andean oil pipeline, and planning got underway for a large hydroelectric plant in the Amazon region. Although these projects were realized, problems persist. The refinery has not been properly maintained, new facilities have not been built, and today Ecuador is a net importer of fuel.2 As for hydroelectricity, Paute—the large plant built with the first oil revenues—was constructed without sufficient attention to the other projects that would have halted sedimentation. As a result, Ecuador today imports hydroelectric- ity from neighboring countries. In large measure this is because neither the refinery nor the hydroelectric plant is profitable, due to the aforementioned subsidies. DEVELOPMENT STRATEGIES Between 1972 and 1982, the first period of Ecuador’s development of its energy sector, the country adhered to the import substitution strategy then prevalent in Latin America. The result was a highly-protected industry, of little national value added. All oil revenues were squandered, along with available private financing. This model collapsed with the 1982 debt crisis. From 1982 to 2007, policies proposed under the so-called “Washington Consensus” were only partially implemented. Short-term political interests pre- vailed at every moment: the 1992 elections resulted in large majorities for right- wing parties, yet they did not seek a readjustment of the policy program. It was a period of economic stagnation. In 2007, the government of Rafael Correa formally abandoned the policies dictated by the Washington Consensus, proposing instead a new kind of social- ism emphasizing the empowerment of the poorest social groups. In contrast to “historical” socialism of the Soviet kind, which transferred ownership of the hitherto private means of production to the state, the socialism of President Correa proposes to gradually increase ownership of the means of production by unions, cooperatives, and communes. This declaration of independence vis-à-vis the international community coincides with the return of oil to its price at the time of the 1982 crisis, when the strategy of economic opening was adopted. OIL AND CONFLICT Oil was found just east of the Andes where the Amazon jungle begins. At the time, the area was sparsely populated; the inhabitants were mostly indigenous commu- nities with different levels of contact with the dominant culture. For that reason, there was no conflict between the local population and the central government over access to the resources generated by oil exploitation. The discovery of oil witnessed the beginning of a disorganized process of settle- ment not very different from the settlement of the West in the United States. Institutions as well as the law arrived late relative to the growth of the population. While the population density in the area is low, settlers increasingly resorted to vio- lence to obtain what they wanted both from the government and the companies. This has taken the form of occupying facilities (particularly in the oil regulation center in Lago Agrio as well as pumping stations); staging incursions in oil fields, often taking equipment; and sabotaging the pipeline. At times the settlers are sus- pected of committing acts of sabotage to collect compensation from Petroecuador. Ever more, funds are pre-allocated to the Amazonian provinces. Yet it would appear that optimal use is not made of the funds; on occasion, there are suspi- cions of embezzlement. In addition, the funds tend to remain in the provincial capitals, and the communities near the oil fields do not consider themselves to be beneficiaries. There is considerable opposition to oil activities by environmental NGOs. At this time, efforts are focused on halting the expansion of the oil frontier eastward. These NGOs work with the communities, trying to persuade them to oppose the oil companies. For their part, the oil companies also work with the communities, to get them to support economic programs. The government assumes a position that is essentially passive. The result is conflict among the communities.PDF Image | Energy and Development in South America
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