Ecuadorian Oil

Earlier this month, Chile became the first country to pay into a trust fund set up in order to protect Ecuador's Yasuni park and its indigenous peoples from the destructive hand of the oil business. At a ceremony in Quito, the Chilean Minister of Foreign Affairs, Alfredo Moreno Charme, handed over a certificate of deposit worth 75,000 euros ($100,000).

He acknowledged that it was a small sum of money, a drop in the ocean of the 75 million euros Ecuador is hoping to receive before the end of 2011, but stressed that it was symbolic of his country's "commitment" to the Yasuni Ishpingo-Tambococha-Tiputini (ITT) initiative.

The gesture prompted observers to suggest that Spain and Germany -- a proponent of the scheme from the outset - would be quick to follow Chile's lead. But in the case of Germany, at least, that is not the way things are panning out. Last week, Development Minister Dirk Niebel suddenly announced that far from champing at the bit to throw money into the pot, under the current conditions Berlin was not willing to pay anything at all.

The wrong sign

The statement, which reverses a 2008 grand coalition resolution to invest generously in the initiative, has met with widespread criticism from opposition parties and environmental groups. They say the about-turn is not only an embarrassment for Berlin but sends the wrong message to the rest of the world.

"It is a bad signal if one of the richest nations won't support the initiative," Thomas Brose, Director of Climate Alliance told Deutsche Welle "not only for countries thinking about becoming donors but for others like Peru, Bolivia and Guatemala that are considering implementing similar projects of their own."

While Brose would welcome more ventures like the Yasuni trust, which could potentially keep 407 million tones of carbon dioxide from making it into the earth's atmosphere, Germany's Federal Ministry for Economic Co-operation and Development (BMZ) is more skeptical about the ethos of the fund and the culture it could breed.

"One of our main questions is whether this would be setting a precedent for other governments," BMZ spokesman Sebastian Lesch told Deutsche Welle. "Our objective is to pursue active policies for active countries, not pay them to do nothing."

Positive plans

The fund administrator, the United Nations Development Program (UNDP) maintains that is not what would happen. It says the fund, which is looking to collect 2.7 billion euros by 2024 - 50 percent of what it would have made from oil extraction at the Yasuni site - would provide for investment in renewables, help change the country's power matrix and offer support for greater industrial and domestic energy efficiency.

Yet Niebel is unconvinced. Another major sticking point for the development minister is that of guarantee. He says the terms of agreement between Ecuador and the UNDP, are not sufficient to prevent future governments from going ahead and drilling for crude in the 200,000 hectare ITT section of the Yasuni park.

As it stands, the government of Ecuador has pledged to issue Yasuni Guarantee Certificates (CGYs) to contributors, promising their money back should any subsequent government decide to exploit the oil reserves.

Working to a deadline

But that is too vague for Berlin. Lesch says both that issue and the one of setting a precedent would need to be addressed satisfactorily before the ministry would consider rethinking its decision to withhold a contribution to the historic fund.

So the ball is in the Ecuadorian court, which Brose says is a dangerous place for it to be.

"The president of Ecuador is playing a double role," he told Deutsche Welle. "On the one hand he is using the initiative to say 'look how green we are and how hard we are working to protect the environment', but on the other, he grants licenses for the drilling of oil in other regions."

The government has set a deadline of the end of 2011 for the collection of the first installment of funds. If the 75 million euros have not been raised by that date, the project will be deemed a failure and the path will be cleared for oil extraction.

Brose believes the very fragility of the project means Berlin cannot afford to blow hot and cold.

"If the government doesn't get the money it will say it tried its best, but didn't even manage to get the support of wealthy nations like Germany."

An Ecuadorian delegation is due to travel to Berlin this week for a trip planned before Niebel's announcement. Although the BMZ says there are no hard plans to talk about the fund, a representative of the Quito administration told Deutsche Welle that the team would take the opportunity to talk Germany through its doubts regarding the initiative.

Author: Tamsin Walker
Editor: Rob Mudge