The hot and humid impoverished region of Lago Agrio has unusual tourism traffic these days. Its renowned Toxic Tours have attracted many American journalists, politicians and celebrities, including Daryl Hannah, Bianca Jagger, Sting’s wife, Trudie Styler, and most recently, Robert Kennedy’s daughter, Kerry. The other L.A. has been spotlighted in both American newspapers and in Joe Berlinger’s documentary Crude.
Ecuador’s L.A. is indeed a real-life drama. Thousands of crude oil spills have taken place in the Amazonian region, and there’s no end in sight. Lago Agrio’s residents live surrounded by heavy oil and 60% of them make $2 a day or less, so they are unable to cover their basic needs or to relocate. The whopping poverty rate has remained unchanged and the government has provided little aid during the last decade, despite Ecuador having more than tripled its oil income since 1999. Oil riches, exclusively located in the Amazon, fuel 40% of the national budget and represent half of all exports.
Many environmental activists blame the American oil company Chevron for L.A.’s environmental devastation. But the giant has had no operations or assets in Ecuador since the 1990s. Between 2000 and 2008, state-owned oil company Petroecuador caused 1,415 oil spills—that’s one “accident” every other day. Petroecuador officials are so corrupt that they have purposely cut the oil pipeline to grant private companies remediation contracts, as acknowledged by Ecuador’s President Rafael Correa. Despite this, Petroecuador’s oil spills are not mentioned in the $27 billion environmental lawsuit, which blames Chevron-Texaco exclusively for Lago Agrio’s fate.
The largest environmental suit in history—equivalent to half of Ecuador’s GDP—began in the other L.A. in 1993. Led by a group of American lawyers, representing 48 plaintiffs, the Lago Agrio lawsuit attempts to apply the 1999 Environmental Management Act retroactively, issued one year after Texaco was granted a clean bill attesting that its remediation measures were successful. Ecuador’s Minister of Mines and Petroleum, and Petroecuador president, released Texaco from any further environmental liability in the future.
Incredibly, this legal outrage is backed by Correa, who joined Hollywood stars on a Toxic Tour. After his visit, he demanded Ecuador’s attorney general begin a criminal investigation against Texaco’s clean bill signatories.
Correa’s interference in the judiciary system had an echo. Attorney General Washington Pesantes fulfilled his request in August 2008. Yet that wasn’t the first time that Pesantes investigated the same case. In September 2007, as district prosecutor of Pichincha, he interviewed witnesses and concluded that Texaco’s actions were not criminal. More recently, Pesantes asked Judge Juan Nuñez—in charge of the Chevron lawsuit—to recuse himself from the case, after the oil giant released a series of videos implying that Nuñez would rule against the company. So Nuñez resigned. The recusal was seen as a victory for Chevron, which has argued that the Ecuadorian judicial system is too corrupt to render a fair verdict in the environmental lawsuit.
Corruption is indeed a common practice in Latin America. According to Latinobarómetro 2009, an annual survey of 19,000 interviewees, 69% of Latin Americans agree that their public officials are corrupt. In Ecuador, the distrust climbs to 75%—and for good reason. A few weeks prior to the release of the controversial videos, Correa’s brother, Fabricio, had to rescind $80 million worth of government oil contracts; Ecuadorian laws forbids relatives of the president from receiving these binding agreements.
Besides Chevron, Correa has also railed against other foreign firms, from oil and telecommunications companies, to private banks and multilateral lenders. The most recent example is French oil company Perenco, which refused to pay $327 million after the government unilaterally raised the 50% windfall profits tax to a ridiculous 99%. The firm won in international arbitration, but the government seized its production facilities, denouncing the World Bank’s International Settlement of Investment Disputes as a “colonialist.”
In September, Chevron requested the United Nations Commission on International Trade Law intervene in its struggle with the government of Ecuador. Whoever wins the arbitration, the $27 billion environmental lawsuit already has one big loser: the residents of Ecuador’s L.A. Their future looks dark and murky, like the hundreds of crude oil spills that sit on open wells surrounding their hamlets. Their fortunes can improve only when the Ecuadorian government, instead of joining Hollywood stars for photo ops or seeking “colonialist” scapegoats, begins to address and remediate Lago Agrio’s environmental disaster.