The country is debating whether the Yasuní oil should remain buried forever or whether it should be produced.

The analysis mainly focused on how much money will be taken from the state budget and how this gap of 300 to 400 million dollars per year can be financed. Having analyzed the topic a lot in the previous article throughout this column, I will focus on two aspects that, although crucial, have received very little comment.

The first is the enormous legal uncertainty in Ecuador. We are a country where many governments have unilaterally terminated contracts. We lost a large number of international court cases that caused us serious economic damage. We are waiting for a big blow, that of Chevron, a company that has shown a shameful coupling between the executive function and the judicial function, to create a judgment against it weighing billions of dollars. Soon the cost of the repair will arrive, which will surely make the Ecuadorians tremble.

The Yasuní issue is much more serious than Ecuador’s history of treaty violations and unilateral decisions. These are facts produced by governments with political intentions. But when the entire population declares the violation of several contracts that are in full realization, legally concluded, we are already talking about a national culture, about a whole city that believes that contracts are paper napkins or disposable paper towels. It is one thing that Idi Amin Dada Oumee was a savage tyrant in Uganda, a criminal and even a cannibal (by his own admission), and another thing that a public consultation in Uganda would approve the practice of cannibalism.

If the consultation on Yasuní favors the termination of the existing treaties, it would no longer be the government, the politicians, but the people themselves who would declare the invalidity of the legal treaties, their complete insecurity on the equator.

Another thing that is not well understood is that economic impact comes from two sides. One, of course, because the budget is losing funds, but the second that is barely mentioned is that in the balance of payments, Ecuador’s foreign sector is losing foreign exchange generation by 1,200 million for which there is no replacement in the short term.

Oil is exploited in Yasuní. Petroecuador is the operator, but has signed contracts with companies that have been drilling and carrying out investments and extraction. Oil is exported, and 1.2 billion dollars go to the accounts of the Monetary Reserve. Petroecuador then pays the companies for their services and other expenses, appropriating part of it for its operations and giving the rest to the state, which is about 300 to 400 million, depending on the price of crude oil.

The analysis is focused on those 400 million. For this, taxes can be increased, for example, and they are compensated (with the impact that the tax increase has on the economy). But on the other hand, the government CANNOT TAKE ACTION. If there is a lack of foreign exchange for the import of medicines, machinery or inputs, the state cannot solve it by raising taxes. There simply won’t be any dollars, and that means fewer opportunities to import, and that means fewer opportunities to grow and get out of poverty.

Dollarization is strengthened by ensuring that the country brings in as many dollars as possible. Dollarization has been weakened, making sure that as few dollars as possible enter the country.

The illusion of green bonds is becoming clearer to citizens every day. They suspect there will be new taxes or spending cuts, which will affect different sectors if the consultation is approved. But the public did not receive any information, nor a proposal from those who are in favor of non-production, as to how the millions of foreign currency entering the country today will be exchanged for oil from Yasuni.

Let’s remember these two things. To say yes to those who do not want production is to tell the world that the citizens of Ecuador believe in the possibility of non-compliance with any contract, that they firmly believe in legal uncertainty and not in the rule of law. To say yes to those who do not want to produce is to leave the country without resources, but more importantly, to leave the entire society with less availability of foreign exchange for everything that foreign exchange is necessary for.

I hope that environmental fanaticism will not come first, as bad as inaction in the face of real threats to the environment, but that common sense and reason will prevail. (OR)