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Blackmail plot fails by reason of sucker shortage

Yasuni: Ecuador abandons plan to stave off Amazon drilling

Ecuador’s President Rafael Correa has abandoned a unique and ambitious plan to persuade rich countries to pay his country not to drill for oil in a pristine Amazon rainforest preserve.

Environmentalists had hailed the initiative when Correa first proposed it in 2007, saying he was setting a precedent in the fight against global warming by reducing the high cost to poor countries of preserving the environment.

“The world has failed us,” Correa said in a nationally televised speech. He blamed “the great hypocrisy” of nations who emit most of the world’s greenhouse gases.

“It was not charity that we sought from the international community, but co-responsibility in the face of climate change.”

Correa had sought US$3.6bn in contributions to maintain a moratorium on drilling in the remote Yasuni national park, which was declared a biosphere reserve by the United Nations in 1989 and is home to two indigenous tribes living in voluntary isolation.

But on Thursday evening he said Ecuador had raised just $13m in actual donations and $116 million in pledges and he had an obligation to his people, particularly the poor, to move ahead with drilling.

Schemes outwardly quite like this, that ask people to put their money where their mouths are, might yet turn out to be a great way to find the balance between development and preservation that actually pleases most people as revealed by what they are willing to pay for. But given that Mr Correa has already shown, as Tim Worstall points out, that he considers payment of his country’s debts to be optional, I think the required foundation of trust might be lacking for this one. Sadly there were quite a few private individuals who contributed to this scheme even though the rich world’s governments prudently refrained – some of these individuals lament their wasted money in the comments to this second Guardian story. Someone else replies that it is a sin to leave a sucker in charge of his money, but there are worse things to be than a sucker. They are not the environmentalists who should arouse our scorn. Reserve that for the first commenter, who says to general approval, “If we want to save the planet, we are going to have to do this by force.”

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16 comments to Blackmail plot fails by reason of sucker shortage

  • Lee Moore

    Reserve that for the first commenter, who says to general approval, “If we want to save the planet, we are going to have to do this by force.”

    Somehow I doubt that commenter would like to see the principle extended to the collection of Ecuador’s debts.

    I rather approve of countries reneging on their debts. In theory, it should make it less likely that new suckers will lend to them, thereby applying some restraint on the grand spendathon that getting into power represents. Sadly, in practice, there always seems to be a supply of new suckers.

  • Zarba

    Sadly, in practice, there always seems to be a supply of new suckers.

    Consider that the Basel Accords give a risk weighting of zero for Sovereign debt, ECB Bonds, etc., in a “wink wink- we bailed out the banks, so now you have to bail out the govt.”, the sucker is us. Banks use our money to bail out themselves and buy up govt. debt. So much cleaner than taxes.

  • “Blackmail plot fails by reason of sucker shortage”… could this be “Samizdata article title of the year”? I LOL’ed

  • Laird

    Sadly, I have to agree with Zarba that the sucker is us.

    I find it amusing (ironic? unsurprising?) that the UN would declare this area a “biosphere reserve” without giving the country any money to cover the costs (including the opportunity costs) of maintaining it in pristine condition. Typical, I suppose. Because in essence that’s what Correa is asking for: reimbursement for his country’s opportunity costs. Not an unreasonable request, it seems to me. And I don’t think I would characterize it as “blackmail”, merely just compensation.

  • Tedd

    And I don’t think I would characterize it as “blackmail”, merely just compensation.

    Only if the UN declaration entailed some obligation on Equador’s part. Then Equador could justifiably make a claim for compensation against the cost of complying with UN-imposed obligations. But, so far as I can tell, having a piece of land declared a biosphere reserve by the UN doesn’t carry any legal force, it’s just a symbolic gesture.

  • Natalie Solent (Essex)

    Laird, you write, “I don’t think I would characterize it as “blackmail”, merely just compensation.”

    If it had worked and the full $3.6 billion had rolled in, how long do you think it would have been before Mr Correa discovered some other bit of national park that was going to be drilled unless further compensation flowed his way? How long before neighbouring leaders observed his success and discovered previously unsuspected reserves of oil under particularly photogenic parts of their countries?

    It would have been a bonanza for geologists and manufacturers of drilling rigs.

  • Natalie Solent (Essex)

    Though I must stress again that preserving the environment by buying it is a great idea, in principle. Unfortunately it will only work in jurisdictions with secure property rights. I can just visualise Greenpeace or some similar organisation buying up a patch of rainforest by public subscription and then being taken aback when El Presidente nationalises it once the oil is found. It would be interesting to see whether their socialist or environmentalist principles won out.

  • Michael Jennings

    Still less stupid than the Common Agricultural Policy.

  • veryretired

    I’m sorry, given some of the serious responses here, but I just think the whole charade is funny.

    Whoever this fledgling el duce’ is has been shown to be a fool, some rubes got suckered out of their money, a country has found a potentially valuable resource that will be there when its people come to their senses, or someone finally decides it’s needed regardless of ideology, in which case the ideology will be miraculously adjusted to approve of the development anyway.

    All around the world, and in the US in places as well, the oh-so-concerned-and-committed are shooting themselves in the foot economically, and betraying the “working class” they always solemnly swear they are fighting for, while preserving for some future development a resource that will just become that much more valuable and desirable as time goes on, until its utilization can no longer be put on hold.

    It is theater of the absurd on the grand scale, with the world as the stage, and all the world’s stooges as the players.

    All they need is a rodeo clown with a funny mask…

  • Laird

    There has been some objection here to my characterization of Correa’s request as seeking “just compensation”. Ted is certainly correct that the UN’s designation “doesn’t carry any legal force”, but then neither did Correa’s request. As I see it, the UN (ostensibly acting on behalf of the world) asked him to leave the land sacrosanct; he requested compensation from the world at large for doing so; the world declined and then so did he. Seems pretty reasonable to me. There was offer but no acceptance, so the contract failed. Elementary contract law.

    And if it had worked, Correa might very well have tried it again with another piece of land as Natalie suggested. But in such case it would simply have been another conditional offer, albeit this time extended from the other side: he would have offered to set aside some other allegedly environmentally sensitive land, and the world could either accept or reject his terms. No obligation on anyone’s part. That would be equally true if some other country attempted a similar arrangement. (And sooner or later the scheme would fail as the world grew tired of these deals.)

    The more interesting question is how long Correa (or any other national leader) would have honored the arrangement had he received the requested donations. Can such an arrangement be permanent? We have something similar in the US, where people contribute “scenic easements” and other real estate covenants to charitable trusts or governments, in exchange for tax benefits. Those easements are intended to run in perpetuity, but it would be interesting to see whether they will continue to be enforced in a few centuries when current needs have changed, or whether the courts will invent some sort of “public policy” against them. (Or if the government simply takes the grant via eminent domain, which is certainly not much of a stretch.)

    I suspect that Veryretired is correct that sooner or later that oil will become too valuable to lave in the ground, and Ecuador (whether under Correa or a successor) would repudiate the deal. Perhaps that lack of enforceability is why the world declined his offer. But in any case I think it was a fascinating attempt at asking the world’s environmentalists to put their money where their mouth is. Correa called their bluff and they folded. Great fun, and an object lesson for anyone paying attention.

  • Tedd

    I suspect that Veryretired is correct that sooner or later that oil will become too valuable to lave in the ground, and Ecuador (whether under Correa or a successor) would repudiate the deal.

    This is off topic, but Laird’s remark reminded me of what’s going on in my neck of woods these days. Many years ago (70s, I think), a huge piece of land around here was declared to be reserved for agricultural use only. Now, 40-ish years later, some landowners have applied to have a chunk of it taken out of the agricultural reserve, so they can develop it as residential property. What’s fascinating to me is that the political debate is all about increased traffic, retail customers, and other such factors. Nobody, other than me, seems to give a fig about the fact that the people who owned the land when it was reserved got screwed out of millions, and the people who own it now are set to make a huge windfall of rent because they’re better connected, politically, than the old owners. It seems like a lot of people have a “fairness” gene that gets offended by things that are perfectly fair but takes no notice of actual gross and obvious unfairness.

  • Paul Marks

    Private property is the only wave to save forests in the long term.

    But private property is exactly the thing that people like the President of Ecuador hate.

  • bloke in spain

    ““If we want to save the planet, we are going to have to do this by force.”
    Who is this we? Ecuador is a country where over a third of the population live below the poverty line. I can canvas the opinion of someone from a neighbouring country, with its own rain forest, who was also living below the poverty line ( but currently doing her nails ). She’d say you can strip mine the rain forest if it puts food on her family’s table. It’s that bit of her country nobody’s gotten round to hacking down & doing something sensible with. No doubt the concerted view of this other 98% of the people on the planet are “Rain forest? What’s a rainforest?” Unless they happen to be living next door to one. In which case it’s “More of those bloody trees!”
    So. Scheme initiated by clique of middle class university graduates collapses in disarray. Good luck with the force thing.

  • Richard Thomas

    Llaird, Tedd, I know of two actual such donations that have been modified after the fact in similar manners. One, a local park here in the US, the other, the grounds of my old school in Hampshire. Both have had small areas of land parceled off and sold for development.

    This should really be no surprise, of course. When one gives a gift, one gives a gift and it becomes the property of the recipient to dispose of however they see fit. The idea that the dead should retain dominion over the living is absurd when you think about it. This is doubly so when maintaining ownership of that gift may have costs attached.

  • Julie near Chicago

    Tedd, Paul: Correct.

    Tedd, same thing happened to us.