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RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHPE/AMEMBASSY LIMA
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C O N F I D E N T I A L QUITO 000937
SIPDIS
LIMA FOR REO
E.O. 12958: DECL: 2019/11/06
TAGS: EPET PREL SENV ECON EC GM UK SP
SUBJECT: Ecuador: Yasuni-ITT Initiative Still Searching for its First
Major Donor
REF: QUITO 657; QUITO 2...
id: 233681
date: 11/6/2009 19:39
refid: 09QUITO937
origin: Embassy Quito
classification: CONFIDENTIAL
destination: 09QUITO204|09QUITO657
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INFO RUCNDT/USMISSION USUN NEW YORK 0015
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO
----------------- header ends ----------------
C O N F I D E N T I A L QUITO 000937
SIPDIS
LIMA FOR REO
E.O. 12958: DECL: 2019/11/06
TAGS: EPET PREL SENV ECON EC GM UK SP
SUBJECT: Ecuador: Yasuni-ITT Initiative Still Searching for its First
Major Donor
REF: QUITO 657; QUITO 204
CLASSIFIED BY: Heather Hodges, Ambassador, State; REASON: 1.4(B), (D)
------------
Summary
------------
1. (C) Despite Ecuadorean President Correa's frequent claims to be
raising funding among European nations for Ecuador's Yasuni-ITT
rainforest/oil conservation initiative (Ref A), the reality is that
the Europeans are so far skeptical. During an October 27
conference at Chatham House in London, President Correa once again
announced that Germany had agreed to provide US$50 million a year
over 13 years for the initiative, and the GoE has also highlighted
Spanish government support in recent public announcements. The
German and Spanish Embassies in Quito clarified to Econoff October
28 that the GoE has grossly overstated their governments' support
for the initiative. Although both Germany and Spain have expressed
interest in the proposal, and financed small feasibility studies,
the Embassy representatives commented that Ecuador had not provided
sufficient details and had not been able to credibly explain what
would happen if a future Ecuadorean government began to drill in
Yasuni-ITT. The U.K. has flatly refused to fund the initiative.
An Ecuadorean delegation will pitch the project to OES November 12.
End Summary.
-----------------------------------------
An interesting plan in principle
----------------------------------------
2. (C) Following on the heels of Ecuadorean President Correa's
speech at London's Chatham House on October 27, in which he
repeated that Germany had pledged US$50 million to the Yasuni
project over 13 years, Econoff spoke with Raymond Dequin, the
Political/Economic Counselor at the German Embassy in Quito.
According to Dequin, the German government has not promised any
support for the Yasuni-ITT initiative (Ref A) beyond US$300,000 for
feasibility studies. Ecuadorean Foreign Minister Falconi visited
Berlin in June 2009, where he met and discussed this project with
Erich Stather, a State Secretary in Germany's Ministry of Economic
Cooperation. Dequin indicated that Stather might have appeared
overly positive on Yasuni. However, after Ecuador's Ambassador to
Berlin began to shop the US$50 million/year story to the press and
to supporters, Dequin said Stather wrote a letter to Minister
Falconi clarifying that he had never agreed to any financial
support, that the project proposal still needed work, did not mesh
with current emissions trading schemes, and lacked sufficient and
credible guarantees. The German Embassy in Quito also recently
released a statement to journalists clarifying that Germany had not
yet given any concrete funding assurances. Dequin was clear that
while support for the idea behind the initiative exists in the
German Bundestag and government, the plan is simply underdeveloped.
3. (C) Dequin believes the main flaw is that the plan does not
offer sufficiently strong guarantees to prevent future Ecuadorean
governments from abandoning the plan and pumping oil from the
Yasuni field. The proposal currently states that funds supporting
the project, gathered via donations or through the sale of "Yasuni
Guarantee Certificates", would go into an internationally monitored
trust fund that would invest in renewable energy projects in
Ecuador. The interest from these investments would be used to
support increased national energy efficiency, reforestation,
protection of national parks, and "social development." Should a
future government decide to pump oil, the trust fund would
supposedly return the contributions to donors. According to
Dequin, Roque Sevilla, the former Quito Mayor who is the President
of the Yasuni-ITT Commission and who briefed western diplomats on
the project in March 2009 (Ref b), told him that the investments of
the trust fund -- wind, hydro, and thermal alternative energy
projects, for example -- would be the ultimate guarantee to donors.
No one with whom Econoff spoke believed it credible that a future
Ecuadorean government that decided to renege on the Yasuni
guarantee would turn over energy plants financed with Yasuni money
to disgruntled foreign donors. This lack of a credible guarantee
was echoed by the Spanish and the British.
----------------------------
More details needed
----------------------------
4. (C) Javier de la Cal, responsible for Yasuni-ITT for the Quito
branch of Spain's international development agency, AECID, echoed
the questions raised by Germany's Dequin. He also stated that
Spain had yet to pledge any amount of money for support beyond
approximately US$200,000 for feasibility studies. The lack of
details on project guarantees, how the money would actually be
spent, and the Yasuni initiative's non-compliance with the Kyoto
Accords all prevented Spain from announcing any concrete long-term
support. However, de la Cal also stated that the idea behind
Yasuni enjoyed support within the Spanish Government -- it just
was not realistic as currently put together.
--------------------------
Brits not interested
--------------------------
5. (C) Econoff asked Christopher Poole, First Secretary at the U.K.
Embassy, if President Correa had received any indication of support
from the U.K. government during his trip. Poole said that
Ecuadorean officials were told that the U.K. would not support the
Yasuni-ITT initiative, as it was not in line with the U.K.'s energy
security policy, although other environmental cooperation was
certainly a possibility. Poole expressed little belief that the
Ecuadorean government would find sufficient support for the
Yasuni-ITT initiative as it currently exists, and speculated that
it was likely that the Correa government would soon tire of
soliciting donors and would begin to make preparations to exploit
the oil in Yasuni.
-------------
Comment
-------------
6. (C) Ecuador is known as a "serial defaulter" on international
obligations, and the Yasuni- ITT initiative appears to suffer from
the lack of trust that foreign governments have in the Correa
administration and future Ecuadorean governments' ability or
willingness to comply with their commitments. Should the GoE
somehow come up with convincing guarantees, and align the plan with
Kyoto or its successors, it might find some international support,
as its cash for carbon sequestration ideal is fully consistent with
negotiations and current projects under the UN's Reducing Emissions
from Deforestation and Forest Degradation in Developing Countries
(REDD) program. The GoE's best course may be to aggressively seek
to have oil reserves included in the REDD-based carbon trading
mechanisms to be negotiated in Copenhagen. The GoE has announced
that it will continue to lobby for support for the project in
capitals abroad; Roque Sevilla and Yolanda Kakabadse (the former
Ecuadorian environmental minister who will take over as president
of WWF International in January 2010) have a meeting with OES in
the Department on November 12, at the working level, to pitch the
project. (The Department of Energy refused a meeting; a number of
meetings are scheduled with House and Senate committees.)
Ecuador's former Foreign Minister Francisco Carrion, who returned
to government in February 2009 to support the Yasuni-ITT
initiative, was recently appointed as Ecuador's Ambassador to the
UN, responsible for continued evangelization and finding concrete
ways to implement the proposal. However, lacking the improvements
cited above, and a deeply detailed blueprint, possible donor
governments will continue to make soothing noises while keeping
their money close. End Comment.
HODGES
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