Amazon Oil Offensive by Chris Jochnick, Multinational Monitor - Developments concerning Texaco's and Maxus Oil's presence in the Ecuadorian Amazon
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     [Ed. Note: This article is reproduced with permission from
     the "Multinational Monitor", Vol XVI, No. 1-2 January/
     February 1995]

                A M A Z O N   O I L   O F F E N S I V E

                           By Chris Jochnick

      Chris Jochnick is the legal director of the New Cork City-
             based Center for Economic and Social Rights.  

          THIS PAST NOVEMBER, the Organization of American States 
     sent an official delegation to Ecuador's Amazon ("the 
     Oriente") to investigate alleged human rights violations. 
     The investigation was significant for its concern with the 
     actions of two U.S. oil companies, Texaco and Maxus. While 
     environmentalist and indigenous groups have long decried the  
     unregulated development of oil in the Oriente, it is only 
     recently that these activities have come under scrutiny as 
     human rights violations.  

          The Oriente consists of over 13 million hectares (32 
     million acres) of tropical rainforest lying at the 
     headwaters of the Amazon liver network. The region contains 
     one of the most diverse collections of plant and animal life 
     in the world, including many endangered species. The Oriente 
     is also home to 95,000 indigenous people belonging to eight 
     different ethnic groups and 250,000 recent immigrants, who 
     have followed the oil roads east in search of land and work.  

          The development of oil in Ecuador has followed a 
     pattern that, familiar to most developing countries. Since 
     the first barrels were extracted in 1972, the industry has 
     been dominated by multinational corporations -- led by 
     Texaco until its 1992 departure -- with negligible 
     government oversight and scant attention paid to non-
     economic concerns. Oil development has taken a predictable 
     toll on the environment and welfare of the Oriente's 
     inhabitants. Less predictable was the strength of the 

          The struggle over oil came to a head in 1994. In 
     January, the government announced a plan to double the 
     amount of rainforest subject to oil exploration; a coalition 
     of environmental and indigenous groups immediately 
     challenged the government's plan. Local protesters took over 
     the offices of the Ministry of Energy and Mines in Quito, 
     condemning any new oil development until the oil companies 
     remedied past damages and the government imposed stricter 
     controls on the industry.  

          The protest was joined by international groups led by 
     Rainforest Action Network  (RAN) and Oxfam America. In 
     March, the New York City-based Center for Economic and 
     Social Rights (CESR) released a report documenting dangerous 
     levels of toxic contamination and related health problems in 
     Ecuador's Amazon and charging the government with human 
     rights violations. That same month, New York federal judge 
     Vincent Broderick sided with Ecuadoran plaintiffs bringing 
     suit against Texaco, granting them access to Texaco's files 
     to establish the parent company's responsibility for damages 
     caused by the company's Ecuadoran operations. This past 
     summer, Ecuador Minister of Energy Francisco Acosta rejected 
     a Texaco-commissioned environmental audit of the damages 
     caused by the company, arguing that it was too narrow. The 
     minister threatened to bring his own suit against Texaco if 
     the company refused to negotiate in good faith. When it was 
     later discovered that the minister had arrived at a secret 
     agreement with Texaco, environmentalists convinced an 
     already restless Congress to impeach him.  


          The OAS investigation and the use of human rights 
     rhetoric against Texaco and other private companies have 
     challenged traditional human rights dogma. In this case, it 
     is more than civil liberties being threatened and the 
     government is only one of many essential actors. "When we 
     indigenous peoples talk about the environment, we are not 
     just talking about the trees, rivers and butterflies. We are 
     also talking about human beings," explains Rafael Pandam, 
     vice president of the Confederation of Indigenous 
     Nationalities of Ecuador (CONAIE). "Likewise, when we talk 
     of human rights, we are not just talking about the right to 
     free speech. We are talking of the political, economic, 
     social and cultural rights of all peoples."  

          Pandam's broad vision of human rights is well supported 
     by international and Ecuadoran law. In 1972, the United 
     Nations General Assembly unanimously endorsed the principle 
     that "man has the fundamental right to freedom, equality and 
     adequate conditions of life, in an environment of a quality 
     that permits a life of dignity and well-being." This non-
     binding agreement is rooted in the Universal Declaration of 
     Human Rights and the International Covenant on Economic, 
     Social and Cultural Rights which, in addition to granting 
     the right to "life, liberty and the security of the person," 
     oblige governments to take necessary steps for "the 
     improvement of all aspects of environmental and industrial 
     hygiene." The Organization of American States recently 
     drafted a more specific "right to a healthy environment" in 
     the 1988 San Salvador Protocol. Ecuador and other nations 
     have ratified the protocol, which will enter into force once 
     several more nations ratify it. Similarly, Ecuador's 
     constitution provides for the right "to live in an 
     environment free from contamination." 

          Economic and social rights, like the right to a healthy 
     environment, implicate corporate activities more directly 
     than do traditional civil and political rights. When civil 
     liberties are threatened, in China for example, foreign 
     corporations are criticized for their presence but are 
     rarely accused of active participation in human rights 
     abuses. By contrast, in Ecuador, "Texaco is viewed as the 
     chief human rights violator," explains Paulina Garzon of the 
     Quito-based Accion Ecologica. "Texaco has invaded the 
     forests, killed the rivers and animals, created a health 
     disaster and destroyed indigenous groups like the former 


          Texaco's involvement in these human rights abuses has 
     been documented in a series of recent reports. Amazon Crude, 
     written by Judith Kimerling and published by the National 
     Resources Defense Council in 1991, estimated that Ecuadoran 
     oil operations discharged 4.3 million gallons of toxic 
     wastes into the Oriente's environment every day. Until 1990, 
     Texaco controlled 90 percent of these oil operations. A 
     later CESR report confirmed that these wastes created a 
     potential health catastrophe. The report documented toxic 
     contaminants in drinking water at levels reaching 1,000 
     times the safety standards recommended by the U.S. 
     Environmental Protection Agency. Local health workers report 
     increased gastrointestinal problems, skin rashes, birth 
     defects and cancers, ailments that they believe to be 
     related to this contamination. 

          This assault on the environment is intertwined with a 
     parallel social and cultural assault on indigenous groups. 
     As described in a published statement of the Federation of 
     Indigenous Communities of the Ecuadoran Amazon (CONFENAIE), 
     "more than two decades ago, Texaco entered indigenous 
     territories and exploited petroleum, destroyed the forests, 
     contaminated the rivers, soil and environment, made the fish 
     and animals disappear, and then came the colonists and our 
     territory was occupied by foreigners." Contact with 
     outsiders and the vital loss of land has broken down 
     traditional bonds, brought malnutrition and new diseases and  
     pushed indigenous communities into the bottom rung of a 
     hostile market economy. Alcoholism and prostitution, endemic 
     to the Oriente's oil towns, are among the most visible signs 
     of the social and cultural deterioration. The World Bank has 
     described the region's socio-economic state as "calamitous." 

          A 1987 study by the Ecuadoran government warned that 
     oil development led by Texaco had placed the local 
     indigenous groups "at the edge of extinction as a distinct 
     people." Indeed, at least one group, the Tetetes, has 
     completely disappeared in the wake of Texaco's activities, 
     and the Cofan population has been reduced from 15,000 to 
     about 300 people. "Since the 1950s, almost every aspect of 
     the Cofan culture has experienced change. This includes 
     their house types, tools and weapons, traditional medical 
     practices, the behavior of community members, and their 
     traditional food taboos," notes a World Bank Report. "As a 
     result of outside contacts and pressures, the Cofan have 
     suffered a process of social disorganization, rapid 
     acculturation and near cultural extinction." 

          Texaco counters these allegations by touting the 
     essential importance of oil to Ecuador's development. Oil 
     revenues now account for approximately half of the 
     government's revenues. Michael Trevino, vice-president of 
     Texaco Petroleum (Texpet), notes that Texaco's operations 
     brought $24 billion to the Ecuadoran government over the 
     course of 18 years.  

          Texaco denies that its operations seriously damaged the 
     Ecuadoran Amazon. "Texaco did not ravage the Amazon region," 
     says Trevino. "We think we made a very significant 
     contribution . . . we have international standards to which 
     we hold ourselves accountable." Trevino points to an 
     environmental audit commissioned by Texaco and the Ecuadoran 
     state oil company that found "moderate to high" levels of 
     contamination in 60 percent of the former Texaco sites in 
     the Oriente, but recommended a limited program of 
     remediation costing less than $30 million. According to 
     Fransisco Acosta, former minister of energy and mines, 
     Texaco has offered to pay 33 percent of any cleanup costs, 
     based on ownership share of the consortium. (Through 1990, 
     Texaco was the consortium's sole operator, but held only a 
     one-third ownership stake). "Texaco is not interested in 
     dollar amounts; the issue is commencing with the clean up," 
     Trevino says.  

          Responding to claims that the oil roads are the source 
     of many of the region's problems, a Texpet statement says: 
     "To allege that Texaco is responsible for the local 
     population's subsequent use of the roads for colonization 
     and agricultural development is both dishonest and 
     unrealistic. As a private company, Texaco would have no 
     authority or right to restrict citizens of Ecuador from 
     using these roads, or to interfere in Ecuador's national 
     programs and planning for colonization of the region."  

          In fact, Ecuador's government has encouraged settlement 
     along Amazon oil roads to relieve pressure on land elsewhere 
     in the country. The "Wastelands Law" granted legal title to 
     any person that cleared the rainforest and put it to 
     "productive use." The resulting deforestation has been 
     exacerbated by the poor quality of Amazon soils and 
     inappropriate farming techniques, which encourage the 
     continual clearing of new land. Oil roads and the lack of 
     government regulation also have opened the door to land 
     speculators, agro-industrialists, ranchers and loggers, who 
     place even greater pressure on the land.  


          Texaco's denial of responsibility notwithstanding, an 
     international boycott organized by Accion Ecologica and RAN 
     in the United States and Europe, along with political 
     lobbying, appears to have had some effect on Texaco's 
     willingness to negotiate an agreement. These groups estimate 
     proper cleanup costs and fair compensation will run to 
     several billions of dollars, dwarfing the figures that 
     Texaco has been considering. Texaco has also reportedly felt 
     pressure from the U.S. Congress and the Clinton 
     administration to find a fair solution to the problem.  

          Texaco is facing a major challenge on the judicial 
     front as well: a $1.5 billion lawsuit brought in a New York 
     federal court on behalf of 30,000 Ecuadoran plaintiffs. The 
     case was filed in November 1993 by a team of lawyers headed 
     by Cristobal Bonifaz and Joseph Kohn of Kohn, Naft and Graf 
     of Philadelphia. Bonifaz says, "Texaco can't be brought 
     before international human rights tribunals and there is no 
     chance of finding justice in Ecuador, so we filed a suit in 
     its own backyard. We don't care how it's achieved, but 
     Texaco must somehow be forced to make good on the damage it 
     caused to the people and environment of the Oriente."  

          Perhaps the most crucial question raised by the suit is 
     whether foreign plaintiffs alleging health and environmental 
     damages in their country should be allowed to sue a U.S.-
     based company in the United States. When Indian plaintiffs 
     tried to sue Union Carbide for the Bhopal disaster, they 
     were sent back to India under a doctrine, known as forum non 
     conveniens, which gives U.S. judges wide discretion to 
     decide that a case would be more suitably heard in the 
     courts of another country. Under this doctrine, an earlier 
     suit filed by Attorney Judith Kimerling in Texas was quickly 
     dismissed by a federal judge, who viewed Ecuador as a more 
     appropriate forum.  

          The plaintiffs in the New York case argue that New York 
     is the appropriate site for the case because Texaco made the 
     critical decisions that resulted in the damages to the 
     plaintiffs at its headquarters in White Plains, New York. 
     The plaintiffs also maintain that the Ecuadoran courts are 
     incapable of fairly hearing the case against Texaco because 
     of widespread corruption, racism and incompetence. More 
     importantly, they argue, the Ecuadoran courts have no 
     meaningful authority over Texaco since Texaco operated in 
     Ecuador through its Texpet subsidiary, which has assets of 
     less than $10 million.  

          Unbound by the Texas court's decision, Judge Vincent 
     Broderick has granted plaintiffs the opportunity to depose 
     Texaco's employees and to review Texaco documents before he 
     decides whether to accept the case. In a 25-page March 1994 
     memo denying Texaco's petition to have the case dismissed, 
     he suggested that the case will proceed if plaintiffs can 
     show that decisions made in Texaco headquarters directly led 
     to environmental and health problems in Ecuador. His memo 
     also takes seriously the plaintiff's use of an eighteenth 
     century statute allowing foreign plaintiffs to sue U.S. 
     based defendants for violations of international law. Were 
     he to grant jurisdiction under the so-called "Alien Tort 
     Statute," it would mark a major advance in the field of 
     environmental law and would have far-reaching implications 
     for U.S. corporations operating abroad.  

          This past summer, Judge Broderick granted Texaco a 
     temporary hold on discovery while the company seeks a 
     settlement with the government. On December 22, 1994,  
     Texaco submitted to the court a "Memorandum of 
     Understanding" the company reached with the Ecuadoran 
     government. Texaco's Trevino says the agreement  
     "establishes a mechanism for the implementation of 
     environmental remedial work." He adds that Texaco also 
     proposes to establish schools, fish farms and health 
     clinics. But the agreement does not bind Texaco to any 
     specific amount of compensation and the corporation has only 
     agreed to put up a $5 million bond to settle individual 
     claims in Ecuador. Without consent of the plaintiffs, it is 
     unclear whether the judge would consider the agreement 
     sufficient grounds for dismissal of the suit.  

          Less than a week after Texaco's filing, the plaintiffs' 
     attorneys filed a new suit in front of the same judge on 
     behalf of 25,000 Peruvians who complain of similar damages 
     related to Texaco's former Ecuador operations. "The problem 
     has now spread to Peru and has snowballed into an 
     international catastrophe," says Bonifaz. All of the rivers 
     in which the Center for Economic and Social Rights found 
     oil-related contamination eventually flow through Peruvian 
     territory. Trevino calls the case "frivolous," claiming that 
     the plaintiffs live more than 250 kilometers (150 miles) 
     away from Texaco's former sites and that Texaco stopped 
     operating the sites almost five years ago. Judge Broderick 
     has agreed to consolidate the two cases, which should at 
     least make it more difficult to dismiss the suit on the 
     grounds that Ecuadoran courts are the more suitable forum.  


          The OAS investigation undertaken by the Inter-American 
     Human Rights Commission was primarily concerned with a 
     different U.S. oil company, Maxus Energy. In 1990, the 
     Sierra Club Legal Defense Fund (SCLDF) filed suit to block 
     the plans of Maxus's former consortium partner, Conoco, to 
     build a road and begin oil development in the Yasuni 
     National Park. Conoco abandoned the project soon after in 
     the face of heated protest from indigenous and environmental 
     groups, but Maxus went ahead with the road and began oil 
     production in the summer of 1994.  

          Yasuni National Park, one of the most biodiverse 
     territories in the world, is designated by the United 
     Nations as a World Biosphere Reserve. Ecuadoran lawyers 
     initially succeeded in blocking the Conoco-Maxus operation 
     under a constitutional provision providing for the right to 
     a contamination-free environment and under laws prohibiting 
     exploitation of protected areas. However, one month after 
     ordering a stop to the Conoco-Maxus plans, the 
     constitutional court reversed itself in the face of what one 
     judge later described as intense pressure from the 
     government and oil industry.  

          The SCLDF suit addressed the threat that oil 
     development poses to the indigenous groups in the area, 
     particularly 1,200 Huaorani. The complaint, filed before 
     Maxus had begun to develop the Yasuni, describes the 
     diseases, water contamination, breakdown of traditional 
     cultures and loss of land that has followed oil development 
     in other parts of the country. Oil development will have 
     especially severe effects on the Huaorani, contend lawyers 
     working on the case, because their population is small, 
     dispersed and isolated from the outside world.  

          The complaint is supported by the testimony of Dr. 
     William T. Vickers, an anthropologist with 26 years of 
     experience in Latin America. The road into the Yasuni "will 
     be the bridge for a spontaneous invasion of the land.... 
     Deforestation will begin immediately," says Vickers. "Many 
     of the Huaorani will contract new diseases and many will 
     die. Many will be disheartened and depressed by these 
     losses. Among the survivors, some will become alcoholics and 
     others will sustain themselves by begging from the whites. 
     It is totally possible that the Huaorani culture and 
     language will disappear within two or three generations." 
     Kimerling says, "Huaorani lands that have been used by the 
     Petroecuador-Texaco consortium for oil production activities 
     are so degraded by pollution, colonization and deforestation 
     that Huaorani can no longer live there."  


          But Maxus is not as easy a target as Texaco, having 
     learned from its predecessor and taken steps to avoid 
     political damage. On the environmental front, Maxus has 
     managed to assuage some critics through its program of 
     reforestation and its use of modern drilling practices, 
     including the reinjection of production wastes (as opposed 
     to Texaco's practice of leaving them in unlined pits and 
     spreading oil residue on the roads). The company claims to 
     be spending $60 million on environmental protection, a 
     significant figure, particularly by Ecuadoran standards. 
     However, given the ecological richness and fragility of the 
     territory, many environmentalists object to any sort of 
     development and are particularly concerned by Maxus's policy 
     of denying outsiders access to its facilities to 
     independently verify the company's claims.  

          Even the best environmental policies provide little 
     defense against the primary threat to the region, the 
     colonization and deforestation that has inevitably followed 
     the oil roads. Maxus has carved a 94-mile road into the 
     Yasuni, opening up vast stretches of rainforest formerly 
     accessible only by helicopter and boat. As one Huaorani 
     comments, "Maxus and the government have promised to keep 
     the colonists out, but what happens when Maxus leaves and 
     there is no more oil? Who will stop them then?" The SCLDF 
     complaint notes that over the course of eight years of oil 
     development in the Northern Oriente, the influx of colonists 
     more than tripled the local population from 74,000 to 
     260,000. The government's 1982 census revealed that the 
     Oriente was growing at twice the rate of the rest of the 
     country. Plans by Maxus and the government to prevent 
     colonization by establishing army-run roadblocks are 
     unsustainable and unrealistic, critics say.  

          In contrast to Texaco's practice of simply ignoring 
     indigenous inhabitants, Maxus has actively sought their 
     support, signing an unprecedented "Friendship Agreement" 
     with the Huaorani in 1993. Maxus's directive to its 
     employees reads, "Maxus is a guest in the home of the 
     Huaorani, the rainforest. For this reason we must respect 
     their culture, customs and territory." If they make contact 
     with the indigenous people, employees are told to announce 
     "Waponi, amigos Huaorani, boto Maxus," or, "Greetings 
     Huaorani friends, I am Maxus."  

          Maxus has contracted with the government to provide 
     health and educational services, and has already begun 
     supplying medical and dental care, educational materials, 
     school rooms and health clinics. It has also nurtured 
     support by employing indigenous men, providing funds for a 
     political organization and plying community leaders with 
     personal gifts.  

          This policy has temporarily won Maxus the support of 
     the Huaorani Nation of the Ecuadoran Amazon (ONHAE). ONHAE 
     has formally distanced itself from the demands of the 
     Confederation of Indigenous Organizations of Ecuador 
     (CONAIE) for a 15 year moratorium on oil development. Last 
     April, during a conference of indigenous organizations held 
     in the Amazon, Maxus flew a group of Huaorani leaders to 
     Quito, where they spent their days meeting with government 
     officials and the press and denouncing Maxus's critics.  

          Maxus's overwhelming presence in the social and 
     cultural affairs of the community has alarmed outsiders. 
     Given the government's proven inability or unwillingness to 
     regulate oil companies and the lack of transparency in 
     Maxus's internal operations, critics worry about ceding it 
     such fundamental government functions as health and 
     education. "It's no longer clear who's supposed to do what," 
     states SCLDF attorney Neil Popovic. "The Ecuadoran 
     government has abdicated its responsibilities to private 
     companies and has made no effort to regulate them." 
     Government agencies remain seriously understaffed and 
     underfunded, leaving monitoring essentially in the hands of 
     the corporations themselves.  

          The Huaorani have no effective recourse if Maxus fails 
     to comply with its many promises. The "Friendship Agreement" 
     between the Huaorani and Maxus is written in Spanish, a 
     language that few Huaorani either speak or read, and makes 
     no firm commitments. "Maxus is under no obligation," 
     explains spokesperson Tom Sullivan. "We're damned if we do, 
     damned if we don't. If we weren't providing anything we'd 
     have a whole other group of people condemning us."  

          However, critics remain skeptical, viewing Maxus's 
     gestures as hollow and emphasizing the larger political 
     questions of accountability. They ask whether corporations 
     such as Maxus or Texaco (whose annual revenues of $42 
     billion dwarf Ecuador's $12 billion GNP) should not be 
     treated differently than private citizens, should not be 
     held more accountable to the public in the way that public 
     bodies are. "Ecuador's indigenous and environmental 
     organizations have pushed human rights groups to reexamine 
     their exclusive focus on government actors," says Roger 
     Normand, policy director of CESR. "When multinationals 
     assume the role of government, they must be held more 
     directly responsible for the welfare and human rights of 
     their constituents, the people they effectively govern." 


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