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THE BACKGROUND

For thirty years in Ecuador, the Amazon and its peoples have suffered the devastating effects of the oil industry. Now a consortium of multinational oil companies are moving ahead with a controversial new oil pipeline known as the OCP (Oleoducto de Crudo Pesados), due for completion in June 2003. The pipeline will transport heavy crude oil from the country's Amazon rainforest for 314 miles across geographically unstable land to Esmeraldas on the Pacific Coast, putting fragile ecosystems and indigenous communities at risk.

To fill the OCP, Ecuador must double its current oil production by exploiting vast areas of the Amazon. The damaging effects will be felt amongst the country's last remaining old growth rainforest, where there are plans for hundreds of new oil wells and associated roads and processing plants. These territories are home to isolated pockets of indigenous peoples who are also feeling the impacts of an oil industry war.

WHO IS BEHIND THE OCP?

THE IMF: In response to Ecuador's mammoth external debt, currently standing at US $15 billion, the International Monetary Fund saw what it viewed as a solution by doubling Ecuador's oil production capacity - which, as part of an economic bailout package, would require a new pipeline. The IMF package also requires the opening of all sectors in the country's oil development industry to private corporations. The IMF insists that 80% of Ecuador's new oil earnings must be used to service the debt (with another 10% to go into a fund to hedge against the price of oil).

OCP CONSORTIUM MEMBERS: Including EnCana (Canada, 31.4%), Repsol-YPF (Spain, 25.6%), Pecom Energia (Argentina, 15%), Occidental Petroleum (USA, 12.2%), ENI-AGIP (Italy, 7.5%), Techint (Argentina, 4.1%), Perenco (France/UK, 4%). Techint, a company with an apalling environmental track record, is building the pipeline with a carelessness that even resulted in a temporary suspension of the project's environmental license by the Ecuador government.

FINANCIAL BACKING: The main financial backer is Westdeutsche Landesbank (WestLB), which is 43.3% owned by the German state of North Rhine Westphalia. It is distributing a US $900 million, 17-year loan to finance the OCP. Among the other supporting financial institutions are the Italian Banca Nazionale de Lavoro (BNL), Deutsche Bank, Citibank, and the project's financial advisor J. P. Morgan Chase.

GOVERNMENT: during 30 years of oil dependency, poverty has increased in Ecuador. Yet the OCP has been broadcast as a cure-all for the nation's economy. Security forces have met OCP opponents with severe repression, resulting in injuries, arrests, and deaths.

US MARKETS: Ecuador's oil exports are primarily destined for consumption in the United States, particularly California. US reliance on oil (the main fossil fuel responsible for climate change) is accelerating the destruction of the Amazon.

OCP VIOLATES WORLD BANK ENVIRONMENTAL & SOCIAL STANDARDS

West LB has publicly stated that compliance with World Bank environmental guidelines is an 'indispensible condition of any engagement' with the OCP. However, a report written by Robert Goodland, chief of the Environment Department of the World Bank for 25 years, was released in September 2002 by environment groups in Germany and the US. It found substantial non-compliance with World Bank environmental and social criteria, with key criticisms including threats to biodiversity, risks to indigenous peoples, and the forced resettlement of affected populations.

ENVIRONMENTAL IMPACTS:
Ecuador has been identified as one of the world's mega-diverse countries. With only 0.2% of the world's land area it is estimated to contain 10% of all known species. For this reason, projects such as the OCP stand to impact heavily on Ecuador's natural environment.

In May 2000 an Environmental Impact Assessment (EIA) was carried out by a company called Entrix Ecuador, whose president is OCP's environmental co-ordinator. It was therefore not a great surprise when the pipeline's EIA was deemed inadequate by a team of local and international scientists specialising in Ecuador's biodiversity. The EIA never fully assessed or disclosed the full long-term impacts on ecologically and culturally sensitive areas, and experts pointed to serious dangers of extinction for endemic and threatened species.

Rather than running the OCP alongside the existing SOTE pipeline (the route of least impact - an option preferred by a coalition of dozens of experts and groups), a northern route was chosen for the OCP. This was a little strange given a critical report about the north route from the Smithsonian Institution, and the extra cost of building new access roads. The north route crosses steep mountainous terrain with sharp ridges, including regions of high biodiversity and eco-tourism activity.

The existing SOTE pipeline was constructed by Texaco in the early 1970's, and crosses the country roughly east-to-west. Over the last thirty years it has experienced dozens of oil spills, having been ripped apart countless times by landslides, earthquakes, volcanic eruptions and insurgent bombings. This has caused millions of gallons of crude oil to pour into river systems and local communities, the latest rupture being in April 2003 when between 8-10,000 barrels of oil were spilt into the Sucus-San Juan River - later entering Papallacta Lagoon, the lake that provides Quito's water supply. The rupture has been blamed on the repeated passage of OCP machinery.

A total of 2.5 million acres of rainforest was lost due to company's operations. Today there are at least 350 toxic waste pits, and cancer rates are exploding.

Yet, another pipeline is being built. Despite the fact that the steep slopes of the Andes experience heavy rainfall, likely to result in landslides that could cause the OCP pipeline to rupture. Despite the fact that the pipeline route crosses numerous fault lines, placing it at risk from earthquakes and volcanic eruptions. And despite the fact that that political violence sometimes spills across the border from neighbouring Colombia, having already caused the existing SOTE pipeline to be sabotaged.

The new pipeline cuts through seven legally protected national parks and reserves, including the cloudforest of the Choco-Andean Corridor Project, a World Bank Global Environment Facility Biosphere Reserve. The Mindo Nambillo Cloud Forest Reserve contains several threatened and endangered Andean habitats, and has some of the world's richest biodiversity. It is home to 450 bird species - 46 of which are endangered - and has been designated the first 'Important Bird Area' of South America.

Australian volunteers from the Lismore-based Rainforest Information Centre (RIC) have been working in these areas since the late '80's and were funded by the Australian government aid agency AusAID to help protect them. In particular, RIC's efforts were instrumental in the reservation of the 56,000 Ha Panacocha Reserve with it's 9 species of monkeys, pink Amazon River dolphins, Jaguars and Ocelots. Now seismic lines snake through the reserve and Occidental Petroleum prepares to drill wells there.

Critics believe that the inevitable pipeline leaks and ruptures will cause ecological disaster by spilling oil into threatened forest ecosystems and rivers. Other long-term impacts include further deforestation and contamination of groundwater.

SOCIAL IMPACTS:
New oil reserves needed to fill the OCP are already being searched for in the ancestral homes of the Achuar, Shuar, Huaorani, Quichua, Shiwiar and Zapara indigenous communities in Ecuador's southern Amazon region. Many of these communities have vowed never to allow oil development on their land - for them, resistance to oil is literally a matter of life or death. They point to the environmental, economic and social ruin affecting indigenous peoples in the oil producing regions of northern Ecuador.

In rural areas, small farms have been affected by pipeline construction, with damage to crops, grazing lands and water supplies. Many landholders have reportedly been pressured, blackmailed or threatened into signing agreements with the consortium. Some of those who refused have been forced off their land by the Ecuadorian military, at OCP's request, and given nothing. The arrival of the project's five thousand construction workers has also had a heavy impact on some rural communities, with problems resulting such as violence, alcohol and prostitution. Coupled with this is a total lack of consultation with affected communities, in violation of Ecuador's constitution.

A dramatic increase in oil will also affect the communities who live alongside the country's principle oil refineries. The Afro-Ecuadorians of the coastal Esmeraldas region have some of the highest rates of cancer and malnutrition in the country - plus respiratory, skin and stomach illness due to ongoing air, water and land contamination.

It is believed that most of the heavy crude deposits to be tapped by consortium members lie underneath national parks, wildlife reserves and indigenous territories. Parts of Ecuador's Amazon region have already been designated as oil blocks, and others are proposed. Specific protected areas at risk include the Yasuni National Park, Limoncocha, Pañacocha and the Cuyabeno Wildlife Reserve.

WIDE-RANGING OPPOSITION

The pipeline, shelved for ten years due to opposition, has been riddled with problems since construction began in 2001. Communities across Ecuador have launched grassroots actions to halt the OCP, including a tree-sit blockade by residents of the Mindo Cloudforest in January 2002, the first of its kind in South American history.

Opposition to the pipeline is united across a wide spectrum, involving environmental and social justice groups worldwide. Opposition has taken a heavy toll on the OCP project, with delays due to environmental and social controversies putting OCP nearly US$2 million over budget. In October 2002 one of the two financial rating agencies, Moody's, downgraded OCP's investment rating to borderline junk status, citing growing environmental, political and economic risks.

As the OCP pipeline is 90% complete, it may not be possible to stop construction, though valiant efforts continue. However, we CAN help prevent new wells being drilled, and the further exploitation of national parks, reserves and indigenous lands.
All around the world people are rallying to support the Shuar, Achuar, Huaorani, Quichua, Shiwiar and Zapara indigenous communities, and the pristine forests of Ecuador's southern Amazon region.

WHAT YOU CAN DO

· Juan Pablo Barragan, a brilliant Ecuadorian film-maker/activist has just
completed a 35-minute campaign video about the issue. "Amazon Oil Pipeline: Pollution, Corruption and Poverty" has been produced in 6 languages in order to educate activists and enable them to confront the companies in their home countries. Please order a copy of this video to screen at the university or elsewhere followed by email/letter-writing sessions to the oil companies, banks and the IMF.

* Contact the Rainforest Information Centre (RIC), www.rainforestinfo.org.au johnseed1@ozemail.com.au 02 66213294 and they will send you updates and Urgent Action Alerts about the issue.

· In the '80's a lot of the best work in international rainforest conservation was done by Rainforest Action Groups (RAGs) around the world. Why not start a cyber RAG? Contact Rainforest Information Centre for details.

1. Please write to the US office of German Bank WestLB asking them to pull out of the OCP project and demand that OCP immediately repay the 900 million dollars they have loaned to OCP. One of the contractual conditions for this loan was that OCP adhere to World Bank standards for protection of nature and of indigenous communities. OCP has blatantly and continuously breached this contract (see www.rainforestinfo.org.au/ocp/goodland.htm)

West LB, Regional Head of Structured Finance Americas, Mr. Manfred Knoll, 1211 Avenue of the Americas, New York, NY 10036, USA
Ph: +1 212 852 6250
Fax: +1 212 852 6232
manfred_knoll@westlb.com, rod_fraser@westlb.com, presse@westlb.de, poststelle@stk.nrw.de2.

Please write EnCana, the Canadian oil company that leads the consortium with 34% - the biggest stake in OCP:
Gwyn Morgan, Chief Executive Officer, EnCana Corporation, PO Box 2850, Calgary, Alberta T2P 2S5, Canada
Phone: +1 403 645 2000
Fax: +1 403 645 3400
gwyn.morgan@encana.com, andy.patterson@encana.com, dick.wilson@encana.com

* Please write to the President of Ecuador, with a copy to Accion Ecologica, demanding:

- the cancellation of the contract between the Ecuadorian government and the OCP because of human rights violations ,environmental impacts and breach of contract (world bank guidelines not followed).

- That Ecuador declare a moratorium on new oil and gas concessions in the Amazon, in particular those on indigenous territories and protected areas.

Presidente Lucio Gutiérrez,
Despacho Presidencial,
Calle García Moreno y Chile,
Quito, Ecuador
Ph: +593 22 580833
Fax: +593 22 580748
karina.giler@presidencia.gov.ec

Accion Ecologica: natwe@uio.satnet.net

* Please contact the International Monetary Fund (IMF) and tell them you want them to cancel Ecuador's debt in exchange for Ecuador protecting the Amazon forests and indigenous people.

Michael J. Callaghan
Australia's Executive Director for the IMF
700 19th St, NW
Washington, DC 20431
USA
fax: 00111 (202) 623-4661
tel: 00111 (202-623-7000)
mcallaghan@imf.org, GFrancis@imf.org

International Monetary Fund, Attn. Horst Koehler, Managing Director,
700 19th Street, NW, Washington, DC 20431, USA
Ph: +1 202 623 7300
Fax: +1 202 623 6278
Emails: hkoehler@imf.org
publicaffairs@imf.org

Anoop Singh, Director of the Western Hemisphere Department, IMF
Ph: +1 202 623 6222
Fax: +1 202 623 7499
Email: asingh@imf.org