Abstract
The Rafael Correa administration, usually characterized as “neo-extractivist,” did in fact propose an alternative development model that, under a particular understanding of the notion of buen vivir, aimed to overcome the country’s economic dependence on extractive activities through its gradual replacement by a knowledge-intensive economic sector. An examination of this model, some of the main policies implemented in order to configure it, and the main obstacles encountered in the process confirms the classic intuition of so-called dependency theory: that the ability of peripheral countries to overcome their reliance on commodities exports is constrained by economic and institutional mechanisms that limit their room for maneuver.
La administración de Rafael Correa, generalmente caracterizada como “neoextractivista”, propuso un modelo de desarrollo alternativo que, bajo un entendimiento particular de la noción del buen vivir, tenía como objetivo superar la dependencia económica del país de las actividades extractivas a través de una sustitución gradual por un sector económico intensivo en conocimiento. Un análisis de este modelo, algunas de las principales políticas implementadas para configurarlo, y los principales obstáculos encontrados en el proceso confirman la clásica intuición de la llamada teoría de la dependencia: que la capacidad de los países periféricos para superar su dependencia de las exportaciones de productos básicos está limitada por mecanismos económicos e institucionales que limitan el margen de maniobra.
A few years after the beginning of the twenty-first century, the world witnessed a series of electoral victories of Latin American leftist political organizations, a phenomenon labeled in English as the “pink tide.” Among the national political processes of this regional turn to the left, that of Ecuador received considerable attention for its use of the concept of buen vivir (sumak kawsay in Kichwa) as part of its political project. The notion was used to highlight its alleged inspiration by indigenous peoples’ struggles against colonialism and environmental degradation that are frequently dismissed by traditional leftist political discourses. After the initial enthusiasm generated by the pink tide, criticism emerged from activists and intellectuals regarding the continuing reliance of those countries, including Ecuador, on extractive activities and its environmental and socioeconomical consequences. A landmark article by Gudynas (2010) pointed to the problematic contradiction stemming from the fact that the progressive governments relied on commodity exports to carry out their progressive social policies. This was the core of his concept of “neo-extractivism,” which he used to characterize a governance model that uses the redistribution of extractive rents to justify the commodification of nature and the expropriation of communities on behalf of transnational capital.
Gudynas’s depiction was immediately accepted, promoted, and referenced by leftist and broadly progressive accounts of the period (for example, Ceceña, 2009, and Svampa, 2011). Despite being published at the beginning of the political cycle, the core of the initial characterization has not substantially changed (see Gudynas, 2013, and Webber, 2016). Among the main features attributed by Gudynas to neo-extractivism was that there were “no profound discussions of neo-extractivism outside of the ones over the income generated” (2010: 9); the use of this income in compensatory social policies served to defend the extractive activities (8). Rather than question the institutional rules of the global world market driven by neoliberalism, governments tended to “accept this new global commercial institutionalism and move according to its rules” (4). Their administration model therefore played “a subordinate and functional role in inserting itself into commercial and financial globalization” (13).
In this article I will focus on one case labeled by several writers (see Burchardt et al., 2016; Svampa, 2011; Webber, 2016), including Gudynas himself, as “neo-extractivism”: Ecuador during Rafael Correa’s administration (2007–2017). I will argue that (1) Correa’s government actively promoted a development model that under a very particular understanding of the concept of buen vivir aimed to overcome the country’s reliance on fossil-fuels exploitation; (2) the administration recovered substantial extractive rents from transnational capital that were invested not only in social programs but also in the education, science, and technology sector, seen as strategic for the alternative model proposed; (3) the latter, along with many of the related policies implemented, openly challenged the current institutional rules of the world economy, as well as key neoliberal prescriptions for peripheral countries and the economic interests of transnational capital; and (4) the strong reactions of transnational corporations and the binding nature of global institutional rules limited the possibilities of implementation of this alternative development model. I would like to bring to the discussion a classic intuition of the so-called dependency theory: that the ability of peripheral countries to overcome their reliance on commodities exports is constrained by a series of economic and institutional mechanisms that limits their room for maneuver. Therefore, these mechanisms need to be accounted for in studying the prevalence in peripheral countries of economic patterns such as the so-called extractivism.
The article is divided into four sections. In the first I describe the alternative development model proposed by the Correa administration, briefly addressing the underlying understanding of the notion of buen vivir. In the other three sections I characterize the policies implemented in the key areas—the oil sector, trade, and intellectual-property regulation—considered strategic by the administration for attaining this alternative development model. The article ends with some conclusions that stress the importance of including structural constraints related to unequal power distributions between core and peripheral countries in accounts of the persistence of extractivism in Latin American countries.
Buen Vivir as an Alternative Development Project
Since the early 1990s, economic thought in Ecuador has featured a series of analyses of the economic and environmental consequences of the country’s reliance on extractive activities. Before arriving in office, several of the main cadres of Rafael Correa’s government, including Correa himself, had published academic works on the issue, making the case for a new alternative development model (for example, Acosta and Falconí, 2005). Thus it is not surprising that the issue of reliance on extractive rents was extensively debated during the constituent assembly summoned a few months after Correa’s first electoral victory in 2007. During the constitutional debates, these progressive economic critiques dovetailed with the demands of the country’s indigenous movement. Its political party, Pachakutik, obtained a few seats (4 of 130) in an assembly otherwise dominated by Correa’s political organization, the Movimiento Patria Altiva y Soberana (Proud and Sovereign Land Movement) (79 of 139 seats). This convergence, in a context of increasing global environmental concern and sustained criticism of neoliberalism, facilitated the inclusion of the concept of buen vivir in the new constitution, which in its preamble states: “We, men and women, the sovereign people of Ecuador . . . hereby decide to build . . . a new form of public coexistence, in diversity and in harmony with nature, to achieve good living, sumak kawsay” (República del Ecuador, 2008: Preamble). The new constitution was approved in 2008 in a referendum in which 63.93 percent voted in favor.
The particular interpretation of buen vivir promoted by the Correa administration had already begun to take shape in 2007, when its first development plan used the notion for labeling its own alternative development proposal in a global context characterized by what was described as a deep crisis of global economic thought and the failure of both neoliberalism and traditional “developmentalism” (SENPLADES, 2007: 14): We understand development as the achievement of good living for all, in peace and in harmony with nature, and the indefinite extension of the human cultures. Good living implies that the freedoms, opportunities, capacities, and potentialities of individuals are expanded in order to achieve what societies, territories, collective identities, and individuals—simultaneously particular and universal—value as their desirable goal. Our concept of development compels us to recognize, understand, and value ourselves in order to make possible our self-fulfillment and the building of a collective future.
This paragraph reflects the multiple influences shaping the country’s new development model—not only the anti-neoliberal struggles led by the indigenous movement but also Amartya Sen’s “capabilities approach” and the notion of “sustainable development” widespread in international forums. Neither the inclusion of buen vivir in the constitution nor its further use in official documents during the following years meant the country’s “adoption” of a particular indigenous worldview—something not surprising in a country where, in the 2010 census, more than the 70 percent of the population identified themselves as mestizo and just 7 percent as indigenous. Instead, buen vivir was seen more as a signifier expressing a convergence of different visions of well-being. Despite recognizing its indigenous roots, the institutional use of the concept highlighted its shared features with other ideas of the common good from different cultures all over the world. As a planning document stated six years later, “The notion of Good Living has existed among native societies throughout the world, as well as within Western civilization. Its essence is universal, and it has been a constant human aspiration throughout history” (SENPLADES, 2013a).
As an “aspiration,” buen vivir was seen not as an existing social organization or set of social practices but as something that remained to be achieved. As stated in the constitution, Ecuador’s state priorities are “planning national development, eliminating poverty, and promoting sustainable development and the equitable redistribution of resources and wealth to enable access to buen vivir” (República del Ecuador, 2008: Article 3). In this way, buen vivir was linked with allegedly opposed notions such as progress, planning, and development. As one of the government planning documents stated some years later, “It is not about going back to an idealized past but about facing the problems of contemporary societies with historical responsibility. Good living does not postulate nondevelopment but contributes a different conception of the economy, social relations, and the preservation of life on the planet” (SENPLADES, 2013a: 23).
Despite its ambiguity and open meaning, the notion of buen vivir proposed by the Correa administration clearly included sustainability as one of its main goals. Linked to the early economic discussions promoted by its cadres, one of the key issues in all of the planning documents of the period was, in fact, the need to overcome the country’s reliance on the primary sector. This was, however, a difficult task: in 2008, the same year that the country recognized buen vivir and the rights of nature in its constitution, fuels—mostly oil extracted from the Amazon rainforest—represented 62 percent of the country’s total exports (World Bank, n.d.). This dependency on oil extraction was increased by the fact that since 2000 the country’s currency had been the U.S. dollar and that most of the population opposed any project of transition toward a national currency. In fact, during the electoral runoff, Correa had had to commit himself not to de-dollarize the economy, a possibility used against him by the private media (Espinosa, 2010: 762). As a result, the trade balance and exports were the key issues of concern, operating as a straitjacket for the government.
Any radical economic change that could, in theory, allow the immediate suppression of extractive activities in the country was also limited by political conditions: Alvaro Noboa, the banana magnate and the richest man in Ecuador, won the first round of the presidential elections of 2007 with 54 percent of the votes and an openly neoliberal program. Therefore, Ecuador’s 2008 political juncture featured a fragile post-neoliberal majority and not a postcapitalist consensus. During his tenure as the constituent assembly president, Alberto Acosta, who later became one of the most renowned critics of Correa’s neo-extractivist policies, had to admit that the prohibition of large-scale mining, much less extractive activities in general, was politically impossible (Asamblea Nacional Constituyente del Ecuador, 2008: 50). In this constraining economic and political context, Correa’s government proposed instead to drive extractive rents toward “social and productive investment” (SENPLADES, 2007: 272–274), aiming at a gradual reduction of the proportion of the primary sector in the country’s economy. Aligned with structuralist thought, the proposed development project sought an increase in the production of goods and services with higher value-added. The central role attributed to the state in this process implied a radical break from the neoliberal prescriptions followed by the country during the preceding decades (SENPLADES, 2007: 283).
Furthermore, the planning documents of the period proposed a twist in the concept of “comparative advantage” that was central to the neoliberal “development” recipe for peripheral countries. The neo-classical thesis was that countries with abundant natural resources should strategically position themselves within the world economy as commodity exporters instead of pursuing industrialization, in which they would not be able to compete. Instead, what the so-called National Plans for Good Living suggested was the use of those natural resources to reorient the national economy toward ecotourism and biotechnology (SENPLADES, 2009: 56). Ecuador was to become an “ecotourism biopolis” (SENPLADES, 2009: 7) and later a “socialist knowledge society” (SENPLADES, 2013b). Instead of destroying the rich biodiversity of the Amazon—where most of the country’s oil reserves lie—Ecuador would protect it while developing a bio-technological sector. In this alternative development project, a knowledge-related sector was prioritized for its smaller ecological footprint with respect to the manufacturing sector, which, however, was not dismissed.
The transition toward a “knowledge society” would depend on the creation of a science, technology, and innovation system and an intellectual-property regulation framework that would benefit both technological assimilation and the protection of the knowledge produced at the national level (SENPLADES, 2007: 268). The regulation of intellectual property would be designed on the principle of common and open knowledge (SENPLADES, 2013a: 17). These ideas were connected to the principle of sustainability: the path toward the “knowledge society” was described as a transition from the exploitation of finite resources to the production of infinite ones (SENPLADES, 2013b: 17). Thus, under the signifier “buen vivir,” Rafael Correa’s government proposed an alternative development model that had little to do with the indigenous cultures and practices that produced the notion. However, this alternative development model was a challenge to key neoliberal prescriptions for peripheral countries. The project aimed to overcome the country’s economic dependence on fossil-fuels extraction through a strengthening of high-value-added mainly knowledge-related activities.
The planning documents of the period (SENPLADES, 2007; 2009; 2013a) reveal that, from the point of view of the policy makers, there were three fundamental steps that had to be taken to achieve this goal: first, the recovery of oil rents—up to then hoarded by transnational corporations—and their redirection toward the development of a national system of science, technology, and innovation; second, the design and implementation of a new trade policy, oriented toward a “a strategic insertion in the global economy”; and third, the creation of a new intellectual-property regulatory framework oriented toward the strengthening of knowledge-related local capabilities. In the following sections, I will describe the main policies implemented for each of those objectives, highlighting some of the obstacles found during the process.
The Issue of Oil Rents
Disputes Between the State and Capital
For Ecuador to develop a knowledge-related sector that could someday replace extractive activities, the country had to recover at least some of its oil rents, which from the beginning of the 1970s on had been its main source of income. Oil rents had been increasingly hoarded by transnational capital. Throughout the neoliberal era, most of them were used for debt service (Fontaigne, 2008: 11), and during the foreign debt renegotiations of the 1990s creditors demanded the privatization of this sector, which was fully attained a decade later. The transnational companies that since then have controlled Ecuador’s oil sector enjoyed exceptional benefits after the sudden increase in oil prices in 2004, but in 2006 the provisional government of Alfredo Palacio taxed this extraordinary income at 50 percent. In 2007 the Correa administration increased this tax to 99 percent (La Vanguardia, 2007).
Continuing in the same direction, the 2008 Constitution nationalized the sector. Two years later, a new hydrocarbons law eliminated the existing concession contracts, replacing them with service-provision contracts in which the state paid a fixed price per barrel and the corporations assumed all the costs and risks of the operations (Herrera, Lopez, and Arias, 2012: 13). Seven companies rejected the new conditions and left the country (Última Hora, 2011). In just a year, the implementation of the new law represented an increase of 53 percent in the state’s oil rent (Herrera, Lopez, and Arias, 2012). Several corporations decided to take legal action against these measures on the basis of the bilateral investment treaties entered into by neoliberal governments of earlier decades. These treaties had been signed under the pressure of creditors and international organizations, sometimes without fulfilling the requirements established by Ecuadorian law (CAITISA, 2017). They were, in fact, an abdication of sovereignty that gave investors the power to choose the forum in which legal disputes over investments would be resolved. They included several clauses that limited the Ecuadorian state’s possibilities of recovering its economic and regulatory power (CAITISA, 2017: 18). Among other things, they protected investors from “indirect expropriations”—a broad concept that applied to any state measure that had “similar effects” to those of an actual expropriation, including regulatory measures that might generate an “expropriation of the investor’s profit” (CAITISA, 2017: 19).
Grounded in the bilateral investment treaties signed with the United States and France, Occidental, Burlington, and Perenco chose the World Bank’s International Center for Settlement of Investment Disputes (ICSID) as the venue for a lawsuit against Ecuador arguing that the taxation of extraordinary profits constituted indirect expropriation (CAITISA, 2017: 48–49). The ICSID ruled in 2012 in favor of Occidental, imposing upon the Ecuadorian state a sanction of US$1.77 billion (US$2.3 billion with interest), the largest award in the history of the tribunal at the time. One of the arbitrators, Brigitte Stern, voted against the decision of the majority, characterizing it as a “manifest excess of power” (Cheng and Bento, 2012). The case was later reviewed by a World Bank committee that in 2015 reduced the sanction to a little more than US$1 billion (Reuters, 2015); the Ecuadorian state negotiated an agreement with the company at US$980 million in 2016 (Reuters, 2016).
These were not the only claims filed by investors against the country. In 2014 the United Nations Conference on Trade and Development ranked Ecuador sixth on the list of countries with the most lawsuits by investors (UNCTAD, 2015: 3). The Attorney General’s Office declared in September 2018 that the country still had 36 lawsuits for around US$13.7 billion and 27 notifications of potential new ones (El Comercio, 2018), most of them related to extractive activities. All these notifications, claims, and penalties sought to dissuade Ecuador and probably other pink-tide governments from adopting further measures that could affect the interests of transnational capital. Recognizing the role of the bilateral investment treaties as instruments rigged to secure the interests of transnational corporations, between 2008 and 2017 Correa’s government annulled all of the agreements of this kind signed by past neoliberal administrations (El Universo, 2017). The measure was, however, relatively ineffective because the agreements included a “survival clause” that established an additional period of 10 to 20 years after being annulled by one of the parties during which all the conditions remained valid (CAITISA, 2017: 19).
Despite the sanctions imposed on the country for defying the transnational corporations’ power, Ecuador was able to recover a substantial part of its oil rents, which it used largely to invest in higher education, science, and technology, a sector that was to constitute the bedrock of the “socialist knowledge society” envisioned in the proposed alternative model. Between 2007 and 2015, this sector’s budget grew from US$421 million to US$2.1 billion, an accumulated investment of US$11.4 billion. The country’s expenditures in this sector as a proportion of the gross domestic product increased from 0.7 percent to 2.1 percent, the largest in Latin America and larger than the average for the Organization for Economic Co-operation and Development countries (Weisbrot, Johnston, and Merling, 2017: 7). The education sector, in fact, had the highest budgetary allocation during Correa’s two presidential terms, more than double that of any other sector (Forero, 2020).
Leaving the Oil in the Ground: The Itt-Yasuní Initiative
The recovery of oil rents was not the only significant policy deployed by Correa’s government regarding the oil sector. The administration promoted, in fact, a more radical proposal already discussed during the 2006 presidential election. The electoral platform of Luis Macas, the candidate of Pachakutik for the presidency, suggested “an oil moratorium in the areas declared as inviolable” (Pachakutik–Nuevo País, 2006), while that of Correa highlighted “the need to seriously consider an oil moratorium tied to the suspension of foreign debt service” (Movimiento PAIS, 2006: 49). The proposal of an oil moratorium became the “Yasuní-ITT initiative” and was explicitly supported by the 2008 indigenous mandate.
The Yasuni National Park was created in 1979 on 679,730 hectares (extended to 982,000 hectares in 1990). It was declared a “Pleistocene refuge” (Andrade, 2013: 14) for its unique diversity: at least 165 species of mammals, 121 reptiles, 593 birds, 2,274 trees and shrubs, and about 10,000 insects per hectare, the highest in the world (Le Quang, 2015: 3). In 1998 the Ecuadorian state created an “inviolable zone” within the park, prohibiting intensive extractive activities, in order to protect two uncontacted indigenous communities living there: the Tagaeris and the Taromenanis (Andrade, 2013). A series of studies performed between 1990 and 2000 confirmed the presence of 412 million barrels of recoverable heavy oil reserves, as well as potential reserves of 920 million barrels in what was called the Ishpingo, Tambococha, and Tiputini (ITT) block (also known as Block 43). This amounted to approximately 20 percent of the country’s oil reserves located in an area of 200 square kilometers within the park (Fontaigne, 2008: 12).
It was in this context that the idea of an oil frontier expansion moratorium began to be discussed by environmental experts, activists, and nongovernmental organizations. The Centro de Derechos Económicos y Sociales (Center of Economic and Social Rights—CODES) published a booklet in 2003 proposing a deal between the international community and Ecuador whereby the latter would commit to protecting the Amazon and stop oil exploitation in the region in exchange for the cancellation of its foreign debt. A year later this proposal was included in the platforms of two presidential candidates, Luis Macas and Rafael Correa, and subsequently incorporated by the latter into his government’s agenda. A proposal to leave the oil unexploited in exchange for compensation by the international community was officially presented to the UN General Assembly by President Correa himself in 2007. The initial period for collecting the compensation money was set at one year and then extended twice until the proposal became a permanent policy in 2009 (López, 2017: 229). The international community was to compensate Ecuador with approximately 50.0 percent of what the country would get from exploiting the oil, a value established at US$3.6 billion over a period of 10 years.
It is important to bear in mind what the ITT-Yasuni oil reserves represented for the Ecuadorian economy. The country, as we have seen, was heavily reliant on oil exports, and its oil reserves and oil production were in decline, having gone from 280,000 barrels per day in 1994 to 170,000 in 2007 (Larrea, cited in Le Quang, 2015). Therefore the initiative involved a radical contribution to the country’s energy transformation. The money gathered was to be used for the development of alternative renewable energy sources, reducing the domestic use of fossil fuels (an objective included in the national plans for buen vivir). The interest generated by the money, calculated at 7 percent, was to be used for reforestation and protection of an area covering approximately 20 percent of the country (Le Quang, 2015: 3).
Some radical principles inspired the ITT-Yasuní initiative. The first of these was “common but differentiated responsibility” for environmental problems, as included in the United Nations Framework Convention on Climate Change. This principle recognizes that, although climate change is a global problem to which generations of all nations have contributed, the responsibility of high-income nations is greater because of their share in carbon dioxide emissions and other factors of environmental degradation associated with their dynamics of capital accumulation. The principle demands that these nations take responsibility in the same proportion that they contributed to the problem (and profited from it). It is linked to the concepts of “climate justice” and “ecological debt,” which highlight the injustice underlying the unequal distribution of both the environmental impact and the economic benefits of the processes that have led to the current environmental crisis. Among other things, they imply that “Southern countries have the right to the same opportunities for economic development as Northern countries and must gain access to new clean technologies that do not increase pollution” (Le Quang, 2015: 10).
At the end of 2010, the administrative and leadership council of the ITT-Yasuni initiative and the UN negotiated the creation of a trust fund in which the money would be gathered (López, 2017: 129). In August 2013, two years after the creation of the trust fund and six years after the announcement of the initiative, Correa decided to liquidate the fund and start the process of oil extraction in the ITT-Yasuní. The trust fund had collected only US$10.5 million in its two years of existence, and Correa declared, “The world has failed us” (López, 2017: 229, 232). Immediately thereafter, nongovernmental and civil-society organizations initiated a political campaign oriented toward a popular consultation by which citizens would decide the issue. They had to present the request with a number of valid signatures corresponding to 5 percent of the electoral register. After checking the signatures, the National Electoral Council rejected 66 percent of them for reasons ranging from duplication to incorrect formatting. A recent press investigation has identified irregularities in the verification process (Sarmiento, 2021), and the organizations involved denounced sabotage and discrediting tactics on the part of the government. The popular consultation was never approved, and exploitation of Yasuní-ITT started in 2013.
Several scholars have tried to explain the initiative’s failure, claiming a lack of commitment from the administration, especially from Correa himself, who is said to have played a decisive role in the blocking of the popular consultation. Others have pointed to institutional problems such as insufficient incentives for the donors or their lack of confidence in the Ecuadorian state (López, 2017: 231). Conflicts between Correa and several key promoters of the initiative, both from civil society and from within the administration, have also been highlighted. Although these elements certainly need to be considered in any account of the initiative’s failure, it is fundamental also to take into account the lack of response from the international community. In fact, the small amount gathered by 2013 was a clear indicator of a lack of support. Furthermore, the money gathered by then barely covered the amount (more than US$9 million) that the Ecuadorian state had invested in the initiative’s promotion. To overlook this means to give up on the principles of “common but differentiated responsibility,” “climate justice,” and “ecological debt.”
The Yasuni-IIT initiative also showed some of the contradictions implicit in the behavior of the Correa administration and in the role the state played during this period. Arsel and Ávila (2011: 19), for example, highlight the contradiction of “the role of the state as both developer and preserver.” Le Quang (2015: 4) points to the contradictory nature of a project that attempts a transition to a postpetroleum Ecuador but at the same time requires the only available resources in the historical juncture not only to implement such a transition but also to finance the social policies implicit in the concept of good living.
Envisioning a Post-Neoliberal Trade Policy
Trade liberalization has been a key component of the neoliberal agenda, promoted in Latin America especially by the United States. Immediately following the ratification of the North American Free Trade Agreement in 1994, the United States started to work on the Free Trade Area for the Americas (FTAA), one of the priorities of President George Bush at the turn of the century. Resistance to the possible incorporation of Ecuador into the FTAA was one of the main issues promoted by anti-neoliberal movements and civil society organizations during the 1990s and the beginning of the following decade (Estevez, 2013: 91). The cancellation of the FTAA negotiations was part of Correa’s electoral platform and indeed one of the first measures adopted by his government (Telesur, 2006). The alternative was to work on the “strategic insertion into the global economy” that the national plan and other policy documents declared to be one of the conditions for achieving productive transformation (SENPLADES, 2009: 51, 74, 80; 2013a: 78, 89). To this end, the Correa administration suggested an alternative framework for establishing trade relations that would promote rather than hinder the development of the economic capacities of peripheral countries. The Ministries of Foreign Relations and Planning designed a document called “Trade Agreement for Development” to be used in negotiations with other countries.
The proposed agreement had three components: political dialogue, trade, and cooperation. Although most of its content was about general principles, there were also some binding commitments. Article 94, for example, recognized each country’s right to define “its own degrees of social, labor, and environmental protection.” In the same vein, Article 102 rejected trade strategies based on the reduction of protection standards in any of those areas. Article 95 highlighted the need to make labor regulations compatible with the main International Labor Organization (ILO) agreements. Article 96 established similar requirements for environmental international agreements such as the Kyoto Protocol. Finally, while recognizing the applicability of the “national treatment” clause of the World Trade Organization (WTO), which establishes that member states have to apply the same conditions to foreign companies as to national ones, the agreement subjects that applicability to the “enabling clause” of that organization, which subordinates “national treatment” to the rights of less developed countries to protect and strengthen their own productive sectors (Estevez, 2013: 131–135).
For almost a decade, the Correa administration refused to sign any trade agreement that would involve a different approach from the one proposed by this document. However, as Estevez (2013) argues, the general framework of the WTO restricted the possibilities of an alternative trade regulation framework, and therefore to implement it Ecuador would have had to leave the organization. Even more than international regulation, economic structural pressures sabotaged the country’s attempts at achieving an alternative trade policy in that it experienced a chronic trade deficit throughout Correa’s governments. The main causes of this deficit were an increase in import consumption related to the increase in real wages, a reduction of international oil prices from 2014 on, and the appreciation of the dollar (Calderón, Dini, and Stumpo, 2016: 15). While a chronic deficit would be a cause of worry for any economy, for a dollarized one such as Ecuador it was a serious macroeconomic limitation.
This macroeconomic restriction increased the pressure for negotiating a trade agreement with the European Union (EU) in order to avoid a decline of exports after the end of the Generalized Scheme of Preferences; in fact, already in 2011 the EU had announced the imminent end of Ecuador’s benefits under the latter because of its reclassification by the World Bank as an upper-middle-income country. Since this mechanism benefited 85 percent of the non-banana exports of Ecuador that entered the EU, this represented potential additional tariffs of about US$350 million per year, making those exports uncompetitive with respect to those of the other Andean countries that had already signed free-trade agreements with the EU. The EU advised Ecuador to start negotiating to be incorporated into its multilateral trade agreement with Colombia and Peru. After harsh negotiations, in 2017, during the last year of Rafael Correa’s second government, Ecuador signed it.
Till the signing of that agreement, the trade policy of Correa’s government could be labeled “protectionist.” This is not just because it had refused to sign free-trade agreements for a decade but also because of a series of nontariff mechanisms implemented to reduce manufacturing imports and the trade deficit, measures the private media called “forced import substitution” (El Comercio, n.d.). Combined with the growing aggregate demand that resulted from the real wage increases during the period, these protectionist policies offered an opportunity for the growth of the manufacturing sector. However, this opportunity seems to have been insufficiently attractive to the local private sector. The annual capital outflow was US$17 billion in 2008 and reached US$31.7 billion in 2014. The National Tax Service calculated that at least 12 percent of local private-sector revenue went to tax havens (El Telégrafo, 2016). The Panama Papers scandal revealed that, indeed, all the big economic groups of the country had holdings and companies in Panama and other tax havens. This process was facilitated by the conditions created by the bilateral investment treaties, since 77 percent of the country’s companies had at least one investor with a domicile abroad (El Telégrafo, 2016).
Summarizing, the trade policy designed by the Correa administration challenged the neoliberal guidelines, as exemplified by the government’s refusal to sign any free-trade agreement almost throughout the period. Macroeconomic concerns and the difficulty of finding any feasible alternative for trade promotion led the country to sign a trade agreement with the EU that was in many ways comparable to a free-trade agreement. The administration’s trade policy sought to open an opportunity for the local private sector to increasing manufacturing activities, but it was dismissed by the latter in favor of moving the sector’s profits out of the country, partially under the institutional rights guaranteed by the bilateral investment treaties. This can be labeled “passive sabotage” by the country’s capitalist class, which decided not to contribute to the alternative development model actively promoted by the administration.
A “Haven for Free and Open Knowledge”
As previously mentioned, a third fundamental requirement for moving toward a knowledge economy was the design of a new framework for the regulation of intellectual property. This topic was discussed during the constituent assembly of 2008 and was part of the Ecuadorian social movements’ agenda. The indigenous mandate of 2006, for example, required the government to block any attempt to appropriate or privatize traditional knowledge related to biodiversity (Macas et al., 2006). The platform of Luis Macas for his electoral campaign that year also criticized the intellectual-property regulation included in free-trade agreements for its role in widening the knowledge gaps between the Global North and the South (Pachakutik–Nuevo País, 2006).
These concerns came from a series of emblematic bio-piracy cases, the first of which was the patenting of ayahuasca, a sacred plant of the Amazon, by a U.S. citizen in 1986. Indigenous communities of nine Latin American countries fought against the registration, obtaining a victory two decades later when the patent was revoked (El País, 1999). Something similar happened with the poison of an Amazonian frog traditionally used by Ecuadorian indigenous communities for hunting. John W. Daly, a prominent scientist of the National Institutes of Health in the United States, discovered the active ingredient and patented it, using information provided by the indigenous communities (Grain, 1998). A third case involved the commercialization by the Coriell Institute of DNA samples taken from a Waorani community without its free and informed consent. The institute sold the genetic samples, and by 2014 the genetic data had been used for at least 13 scientific published research projects (Comisión de Bioética en Salud del Ecuador, 2014). For these reasons, knowledge and intellectual property became part of the constitutional debates and ended up in the country’s constitution, with Article 332 declaring: “Intellectual property shall be recognized in accordance to the conditions established by law. All forms of appropriation of collective knowledges are forbidden, in the areas of science, technologies, and ancestral knowledge. The appropriation of genetic resources that contain biological and agricultural diversity is also forbidden” (República del Ecuador, 2008: Article 322).
Software and pharmaceuticals are the two key sectors where transnational capital uses intellectual-property rights to extract rents from peripheral countries. Correa’s government took specific measures to counteract those practices. In 2008, inspired by a meeting with Richard Stallman, a prominent promoter of free software, Correa signed Decree 1014, which established the compulsory use of free and open-source software in public institutions (Delgado, 2015). Given the huge proportion of total investment represented by pharmaceuticals (especially those against cancer and HIV), the government issued another decree in 2009 establishing compulsory licenses for local production of key generic medications and chemical products used in agricultural production (Saenz, 2010). A series of diplomatic cables leaked by Wikileaks in 2011 revealed that the U.S. diplomatic mission in Ecuador, U.S. pharmaceutical companies, and three ministers of the government—including the minister of health—exchanged sensitive information and coordinated with the country governments of other potentially affected corporations in an effort to block those measures (Rossi and Umbasía, n.d.). The leaked memos show that the pharmaceutical companies were also concerned about the presidential decision to prioritize national over foreign pharmaceutical providers, something that from their point of view constituted “a significant blow to the U.S. pharmaceutical companies, whose sales to the public sector represent a significant proportion of the Ecuadorian market, sometimes up to 20 percent of the total” (Perez, 2013: 33). Although the government measures had the initial support of the national producers, the latter’s encouragement dwindled as they started to operate as maquilas for the transnational producers, a less risky operation than assuming the entire production but still lucrative (La Hora, 2010).
For Ecuador to develop a competitive system of innovation, science, and technology, the country had to ease intellectual-property regulation in order to facilitate technology transfer and counteract the monopoly power of transnational companies. To do so, Correa’s government started work on a new intellectual-property law inspired by a critical approach to the issue that characterized the global intellectual-property regime as “cognitive capitalism.” From that perspective, closed intellectual-property regimes were not just unfair but also inefficient, while open and free knowledge administration enhanced productivity and innovation (Blondeau et al., 2004). This approach was strengthened with the FLOK [Free/Libre Open Knowledge] Society project launched by various agencies of the Ecuadorian government in 2012. The project attempted to gather policy proposals for the country’s productive transformation through the enhancing of a broad knowledge-related sector ruled by free-and-open-knowledge administration regimes like those that operated in open-source software production. This started some months after Julian Assange, the founder of Wikileaks, found shelter in the Ecuadorian embassy in the UK in August 2012, whereupon Ecuador became visible to the international hacker community and to activists and academics interested in intellectual property and related matters. The event led to a series of initial communications between some of these actors and members of the Ecuadorian government, ending in a summit in May 2014 in Quito that gathered politicians, activists, hackers, and citizens to discuss and design proposals for the country’s productive transformation and for the new intellectual property law (El Diario, 2014).
Nevertheless, the final version of the new intellectual-property law approved by the Ecuadorian congress was far from the original proposal of making of Ecuador a “haven for free and open knowledge” (Gutierrez, 2013). One reason for this was the ideological contradictions within the institutions that implemented the knowledge-related policies. Fernandez, Martinez, and Purcell (2016) use Yachay, “the City of Knowledge,” as an example of this contradiction. Yachay is a high-tech university and industrial park identified as one of the main components of the country’s knowledge-society strategy with an initial budget of US$1 billion. The project focused on attracting several transnational corporations as investors, some engaged in bio-tech, such as Pfizer and AstraZeneca, or in proprietary software, such as IBM and Microsoft. These companies, however, operated with a business model that relied heavily on intellectual-property royalties, contradicting the main principles that inspired the new law.
A second reason was that the country had to take into consideration the limits imposed by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, which regulated this area on the basis of the principles of free-trade agreements (in this case, ironically, the protection of property rights) and which was compulsory for members of the organization, including Ecuador (Estevez, 2013: 89). A third reason was the lack of a social base capable of providing the necessary political support for a radical reform against the interests of transnational corporations and their national representatives. As mentioned before, national pharmaceuticals producers decided to align themselves with transnational companies and operate as their maquilas for the national market. Similar kinds of alliances occurred in the software sector. Not even the latter’s workers supported the law, despite the fact that it demanded a 10 percent royalty for the direct creators of software and granted them the right to use the material they developed in subsequent creations. This refusal to support a law that defended their own interests occurred because the software company owners were able to advance the discourse that this would put national companies at a disadvantage, generating the risk of massive loss of jobs, and thereby to persuade the programmers to oppose the measure (Ecuadorinmediato, 2016). Finally, the EU insisted on reviewing all the drafts of the intellectual property law project to check its compatibility with its own commercial interests as a condition for incorporating Ecuador within the multilateral trade agreement (El Universo, 2016), imposing a series of modifications to eliminate the radical proposals suggested in the first version of the law.
Conclusions
I have provided empirical evidence that contradicts Gudynas’s original account of the so-called neo-extractivist governments. In doing so I have made the case for a new, more empirically grounded and nuanced characterization of these political phenomena. Focusing on Rafael Correa’s government in Ecuador, I have shown that, under a particular interpretation of the concept of buen vivir, his administration did propose an alternative development model, one aimed at overcoming the country’s reliance on extractive rents through the generation of a knowledge-intensive sector.
The Correa administration actually implemented key policies articulated to that alternative development model, questioning many neoliberal prescriptions for peripheral countries, in an attempt to reconfigure Ecuador’s role in the international division of labor. By doing so, his administration affected the economic interests of transnational corporations operating in the country. I have also addressed the series of constraints confronted by the administration during the process, related to either the economic and political conditions of the country or a series of institutional mechanisms configured during the neoliberal era that hindered the application of the proposed alternative development model. In pointing to these constraints I do not pretend to offer them as the only explanation of the pink-tide governments’ shortcomings but instead call attention to the fact that—paraphrasing Marx—governments make policies but not under circumstances of their choosing. As dependency theory has taught us, “developing countries are not just ‘behind’ the economically advanced countries but remain subordinated to them by various mechanisms” that limit the room for maneuver of even the most progressive administrations; therefore, “the realization of egalitarian [and sustainable] development is likely to be achieved only if there is coordinated action on the part of a wide range of countries, and most probably only if there is a serious reaction against the logic and power of global capitalism in the imperial centers themselves” (Saul and Leys, 2006: 111–114).
Studying thoroughly the failed attempts of neo-extractivist governments to overcome extractive activities, we come to learn not just about the mistakes they made but also about the potential obstacles that any progressive government of a peripheral country will have to face in attempting to carry out any alternative development project. This awareness will be particularly useful in our current global juncture, characterized by a serious environmental crisis that demands a global radical agenda that, to be really progressive, has to be guided by the principles of “climate justice” and “common but differentiated responsibility.”
Footnotes
Jorge Enrique Forero is an associate researcher in the Environment and Sustainability Area at the Universidad Andina Simón Bolívar.
