Ecuador Auctions Off Amazon to Chinese Oil Firms

Indigenous groups claim they have not consented to oil projects, as politicians visit Beijing to publicise bidding process

Beijing, China – Ecuador plans to auction off more than three million hectares of pristine Amazonian rainforest to Chinese oil companies, angering indigenous groups and underlining the global environmental toll of China's insatiable thirst for energy.

On Monday morning a group of Ecuadorean politicians pitched bidding contracts to representatives of Chinese oil companies at a Hilton hotel in central Beijing, on the fourth leg of a roadshow to publicise the bidding process. Previous meetings in Ecuador's capital, Quito, and in Houston and Paris were each confronted with protests by indigenous groups.

Attending the roadshow were black-suited representatives from oil companies including China Petrochemical and China National Offshore Oil. "Ecuador is willing to establish a relationship of mutual benefit – a win-win relationship," said Ecuador's ambassador to China in opening remarks.

According to the California-based NGO Amazon Watch, seven indigenous groups who inhabit the land claim that they have not consented to oil projects, which would devastate the area's environment and threaten their traditional way of life.

"We demand that public and private oil companies across the world not participate in the bidding process that systematically violates the rights of seven indigenous nationalities by imposing oil projects in their ancestral territories," a group of Ecuadorean organised indigenous associations wrote in an open letter last autumn.

In an interview, Ecuador's secretary of hydrocarbons, Andrés Donoso Fabara, accused indigenous leaders of misrepresenting their communities to achieve political goals. "These guys with a political agenda, they are not thinking about development or about fighting against poverty," he said.

Fabara said the government had decided not to open certain blocks of land to bidding because it lacked support from local communities. "We are entitled by law, if we wanted, to go in by force and do some activities even if they are against them," he said. "But that's not our policy."

Amazon Watch said the deal would violate China's own new investment guidelines, issued jointly by the ministries of commerce and environmental protection last month. The third clause of the guidelines says Chinese enterprises should "promote harmonious development of local economy, environment and community" while operating abroad.

Fabara said he was not aware of the guidelines. "We're looking for global investors, not just investors from China," he said. "But of course Chinese companies are really aggressive. In a bidding process, they might present the winning bids."

Critics say national debt may be a large part of the Ecuadorean government's calculations. Ecuador owed China more than £4.6bn ($7bn) as of last summer, more than a tenth of its GDP. China began loaning billions of dollars to Ecuador in 2009 in exchange for oil shipments. More recently China helped fund two of its biggest hydroelectric infrastructure projects. Ecuador may soon build a $12.5bn oil refinery with Chinese financing.

"My understanding is that this is more of a debt issue – it's because the Ecuadoreans are so dependent on the Chinese to finance their development that they're willing to compromise in other areas such as social and environmental regulations," said Adam Zuckerman, environmental and human rights campaigner at Amazon Watch. "The message that they're trying to send to international investors is not in line with reality."

Last July the inter-American court on human rights ruled to prohibit oil developments in the Sarayaku, a tropical rainforest territory in southern Ecuador that is accessible only by plane and canoe, in order to preserve its rich cultural heritage and biodiversity. The court also mandated that governments obtain "free, prior and informed consent" from native groups before approving oil activities on their indigenous land.

A TV news report broadcast by the US Spanish-language network Telemundo showed members of Ecuadorean native groups – some wearing traditional facepaint and headdresses – waving protest banners and scuffling with security guards outside the Ecuadorean government's roadshow stop in Houston.

"What the government's been saying as they have been offering up our territory is not true; they have not consulted us, and we're here to tell the big investors that they don't have our permission to exploit our land," Narcisa Mashienta, a women's leader of Ecuador's Shuar people, said in the report.

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