Economy Environment Latin America

Ecuador Faces Economic Dilemma After Vote to Ban Oil Drilling In the Amazon

How will the new president reconcile the ban on oil with the country’s economic dependence on extractivism?
The Amazon Rainforest. Photo from Flickr by Nguyen Ngoc Chinh on June 21, 2012.

By Francesc Badia I Dalmases / openDemocracy

Ecuador’s historic vote to leave the Amazon rainforest’s oil reserves underground contrasts sharply with the results of the presidential elections held on the same day, and leaves the troubled country facing an economic dilemma.

On 20 August, the country voted by a significant margin – 58% to 41% – in favour of leaving the oil reserves of the Amazon’s Yasuní National Park “unearthed”. The victory of ‘yes to Yasuní’ was a major triumph for environmental campaigners – and a major problem for the state. It means Ecuador’s state oil company Petroecuador will no longer be able to exploit oil reserves, costing the country an estimated $600m a year in revenue.

The two presidential candidates who will now compete in the run-off on 15 October have both favoured extractivism in the past, specifically metallic mining and the oil industry, key sectors of the Ecuadorian economy. There are few differences between the two candidates.

Left-wing populist Luisa González, who came first with more than 34% of the vote, is the hand-picked candidate of ex-president Rafael Correa, who was convicted of corruption in 2020 and is now self-exiled in Brussels. Right-wing businessman Daniel Noboa, the son of a banana tycoon, came second on 23%. Noboa’s success was a surprise – his support hadn’t topped 10% in pre-election polls, but he gained popularity after an eloquent performance in the final electoral debate.

History of the Yasuní referendum

The idea of voting to leave oil in the ground in Yasuní National Park – one of the most biodiverse areas in the world and home to at least two uncontacted Indigenous peoples, the Tagaeri and the Taromenane, who live in voluntary isolation in the Ecuadorian Amazon – was born in 2006. That was a year before Rafael Correa’s first electoral victory in 2007, and two years before the country became the first in the world to grant “rights of nature” as part of its new constitution.

The original proposal was to leave the Yasuní oil reserves untouched, in exchange for $3bn compensation paid by the world’s major economies, which would have to assume responsibility for a climate debt acquired over decades of greenhouse gas emissions from the burning of fossil fuels.

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This idea was criticised as an attempt to commodify nature, so Correa’s government insisted on promoting carbon credit markets in exchange for keeping the oil under Yasuní, thus making the protection of nature conditional on the income it could receive in return. In 2013, when this goal was not achieved, Correa licensed the state oil company Petroecuador to drill the three oil fields of Ishpingo, Tambococha, Tiputini (ITT, also known as Block 43), located at the eastern edge of the park.

The state began to receive $148m dollars a year from ITT’s exploitation, while the opposition movement, including youth groups, Indigenous peoples and environmental NGOs, grew in size and strength. Despite active government repression, they spent ten years in the struggle, collecting tens of thousands of signatures in favour of a public vote on the exploitation of Yasuní.

Finally, in May this year, Ecuador’s constitutional court recognised the right to a referendum. The court agreed that if the ‘yes’ vote – yes to keeping oil in the ground – wins, the state will keep the oil reserves of Block 43 underground indefinitely and will be responsible for “a progressive and orderly withdrawal of all activities related to oil extraction within a period of no more than one year”.

After the overwhelming 17-point margin of victory for ‘yes’ in the 20 August referendum, this is what the new president and government will have to deal with.

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Francesc Badia I Dalmases

Francesc Badia i Dalmases is a Mexican journalist, a film producer, and the founder and director of democraciaAbierta, the Latin American associate section of, London. A political analyst, author, and publisher, Francesc specializes in geopolitics and international affairs. Francesc is a regular contributor to international newspapers like El País or The Guardian, a Pulitzer Center grantee, and was awarded the prestigious Gabo Prize in 2021 for his work in the Amazon.

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