A moral economy of oil: corruption narratives and oil elites in Ecuador

ABSTRACT

In oil-dependent nations, the governance of national oil reserves and the redistribution of oil rents are often widely-perceived as moral endeavours, necessary for achieving a minimum just distribution of resources. Struggles over oil policies and rents among powerful oil industry actors in private and public companies, public institutions, banks and unions are embedded in this moral economy. Thus, in moments of political-economic crisis, oil elites often attempt to persuade the public to perceive them as principled oil managers and their elite competitors as morally corrupt in order to legitimate new or renewed claims on oil. In Ecuador, I explore such a moral economy of oil. First, I detail the corruption narratives that oil elites have used in distinct historical conjunctures to shape moral perceptions of the actors who manage oil reserves and rents. Second, I detail a conjuncture in the early years of the Rafael Correa regime, when indigenous groups in the northern Amazon tried to leverage ancestral claims to oil-rich territories to form an indigenous-owned oil company called Alian Petrol. Traditional oil elites publicly denounced Alian Petrol as immoral. I build on classical theories of moral economy by signalling how elites exploited stereotypes of ethnic difference, contrasting the particularity of indigeneity with the universality of technocratic, mestizo authority, to cultivate moral expectations about continued elite control of oil resources and rents. This case allows us to consider how and when elites foster ethnic difference to actively shape moral economies of oil in postcolonial contexts.

Acknowledgements

I would like to thank Cristina Cielo for conversations about corruption that inspired much of this essay. Kristen Drybread and Donna Goldstein provided insightful and detailed comments on multiple iterations of this essay, for which I am very grateful. Benjamin Rubin and Jeremy Rayner also provided useful comments. I thank the residents of Playas del Cuyabeno, Puka Peña and Pañacocha for sharing their experiences, as well as other actors who shared their participation in Alian Petrol with me. Finally, I thank Nancy Carrión for working with me to recover the Alian Petrol story from the community archives of Playas del Cuyabeno. All errors and omissions are my own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributor

Angus Lyall is a PhD candidate in Geography at the University of North Carolina at Chapel Hill. As an economic and cultural geographer, he examines the institutions and cultural politics of work and production in Ecuador. His current research centres on oil-driven development and urbanisation in the northern Ecuadorian Amazon. He also has ongoing research projects on the politics of work in enclaves of cut-flower production and on transformations in rural political institutions related to tourism development in the Andes.

ORCID

Angus Lyall http://orcid.org/0000-0002-9199-5415

Notes

1 Between 2009 and 2014, the international benchmark oil price WTI (West Texas Intermediate) hovered between $70 and $120. Between 2014 and early 2016, the price collapsed, dropping to $27 per barrel and generating fiscal, financial and political impacts in oil-dependent states.

2 Brazilian President Dilma Rousseff was impeached in 2016 for acts of bribery and kickbacks in the national oil company, Petrobras; yet, there is no evidence that Rousseff knew of these transactions. The political Right mobilised discontent related to economic malaise to wrest control of the presidency from Rousseff on corruption charges. They have subsequently liberalised the oil sector, divesting from national oil companies and improving terms for private and foreign companies. Similarly, in 2017, Ecuadorian Vice-President Jorge Glas of the left-leaning ‘Citizens’ Revolution’ movement was sentenced to six years of prison for bribery in oil-related ministries and public companies under his authority. Although there is clear evidence that Glas’ uncle received bribes, Glas was sentenced on circumstantial evidence. The Ecuadorian government has since fostered alliances with the political Right.

3 I follow these authors in deducing popular expectations regarding oil-fuelled development from the discourses of successful political leaders and from political upheavals correlated with downturns in rent redistribution.

4 Occidental transferred shares to a Canadian company without the Ecuadorian state’s permission.

5 President Correa came to office amid anti-neoliberal, anti-establishment sentiments that stemmed from a 1999 banking crisis and, more broadly, from a series of discredited, corrupt neoliberal presidents. Prior to Correa, Ecuador witnessed seven presidents in ten years (Becker 2010).

6 In 1964, a consortium of Texaco and Gulf Oil began exploration in the Ecuadorian Amazon. In 1972, the Ecuadorian state created a national oil company, the Ecuadorian Petroleum State Corporation (CEPE in its Spanish acronym), to engage in exploration, extraction, transport, industrialisation and commercialisation. In 1977, CEPE replaced Gulf and became the majority partner in the CEPE-Texaco consortium, which dominated oil extraction in the Amazon until Texaco’s concession expired in 1992. In 1993, 30,000 inhabitants of the northern Amazon sued Texaco for contamination (Kimberling 2005; Valdivia 2007).

7 Unlike other South American nations that have witnessed the decisive revival of conservative governments in recent years, Moreno narrowly defeated the conservative candidate, Guillermo Lasso, in 2017; however, Moreno’s political-economic policies increasingly drifted towards conservative positions in 2018.

8 In the United Nations, the territorial turn can be traced through a series of statements on indigenous rights. The 1957 Indigenous and Tribal Populations Convention recognised indigenous social, religious and cultural rights. This convention was replaced in 1989 with the International Labour Organization (ILO) Convention 169, which laid out concrete land rights, including the right not to be forcibly displaced; to be consulted about invasive economic activities on indigenous lands; and to receive compensation for such activities. Ecuador ratified this treaty in 1998. The non-binding 2007 Declaration on the Rights of Indigenous Peoples describes rights to self-determination and territorial control that indigenous groups should possess.

9 Although indigenous groups are often associated with anti-oil politics in popular media and academic work (for example, Gudynas and Acosta 2011), the range of positions that indigenous groups, individuals and leaders have taken during 45-years of oil exportation in the Ecuadorian Amazon has included resistance, negotiation and active participation (Cepek 2018; Ramírez-Cendrero et al. 2017; Wilson and Bayón 2018).

10 It may seem curious that a businessman would coincide with a self-proclaimed revolutionary leftist, but Navarro and Correa shared similar neo-institutional visions. Neo-institutional economists differ from neoliberal economists by granting importance to the role of institutions for ensuring inclusive economic growth. De Soto (2000) argues that incorporating the poor into formal property both lessens inequality and encourages growth. Correa often cites neo-institutionalist Joseph Stiglitz, who similarly argues that institutions must foster equality to ensure growth.

11 These indigenous groups did not conceive of oil as their heritage (Adunbi 2015), but as state property. Yet, a number of factors shaped decisions to embrace the proposal for an indigenous oil company. These included aspirations to break with a history of exploitative economic relations in the region, such as the rubber, gold and skins trades in the nineteenth and twentieth centuries; aspirations for social and ethnic mobility; aspirations to prevent non-indigenous workers from entering their territories and pairing with indigenous women; and aspirations to generate jobs and build schools close to home, so that youth might avoid migration (Lyall 2017; Lyall and Valdivia 2018).

12 The new proposal defined a distribution of oil revenues favouring the state (56.3 per cent), but that designated 22.2 per cent to the trust fund and 21.5 per cent to non-indigenous partners and investors.

13 Rumours circulated locally that Alian Petrol may have been corrupt; however, illicit activities in relation to the state in this region are not always maligned. The mayor of the municipal government, for example, has been widely-accused of stealing funds, but residents often justify such actions by explaining that if the mayor demands funds from the central government to steal, then at least some funds will be used for public works to benefit the population. Anthropological studies have opened up the legal category of corruption to explore such contextual and political terrains on which actors justify legally unstable transactions (Gupta 2012; Jauregui 2016; Nuijten and Anders 2007; Torsello and Venard 2016), describing the cultural embedded-ness of transactions that may be illegal, but culturally appropriate (Olivier de Sardan 1999; Smith 2010) and problematising universal definitions of corruption (Rose-Ackerman and Palifka 2016; Anand et al. 2004). Here, I am less concerned about legal or cultural meanings of illicit transactions than I am about the public uses of corruption narratives for de-legitimating indigenous claims to oil.

14 Echeverría drew from Fanon’s (2004) analysis of domestic elites – ‘tradesmen, agents, dealers, and shipping agents’ (100) – who consolidated privileged social positions as professional intermediaries in colonial Algeria.

15 This dynamic can be observed in diverse contemporary contexts beyond Ecuador, from Brazil to Saudi Arabia.

16 To further illustrate the correlation between crisis and corruption narratives, independent journalist Fernando Villavicencio denounced many cases of oil corruption during the Correa administrations, but his studies drew few observations from mainstream media. He was persecuted by politicians for defamation and fled to Peru. Once the oil sector entered into crisis, Villavicencio returned to Ecuador and became a folk hero. He presented his research on television, over the radio and to members of the National Assembly. However, Villavicencio had once also denounced the company Sertecpet for winning contracts while President Moreno’s brother, Edwin, worked for the firm, and little attention has been paid to that case. If history is a guide, one might not be surprised if particular oil elites signal Sertecpet to renew or make new claims on oil during a future political-economic crisis.

Additional information

Funding

The research for this essay was supported by the Social Science Research Council and the Fulbright-Hays [grant number P022A160041] and National Science Foundation [grant number 1657742].