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### Viewing cable 09QUITO657, CONFUSING SIGNALS ABOUT ECUADOR'S YASUNI ITT CONSERVATION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09QUITO657 | 2009-07-30 12:12 | 2011-04-20 18:06 | CONFIDENTIAL | Embassy Quito
Appears in these articles: http://www.eluniverso.com/2011/04/19/1/1355/cable-218811.html

`

    VZCZCXYZ0013
    RR RUEHWEB

    DE RUEHQT #0657/01 2111224
    ZNY CCCCC ZZH
    R 301224Z JUL 09 ZDK
    FM AMEMBASSY QUITO
    TO RUEHC/SECSTATE WASHDC 0694
    INFO RUEHBO/AMEMBASSY BOGOTA 8290
    RUEHCV/AMEMBASSY CARACAS 3659
    RUEHLP/AMEMBASSY LA PAZ AUG LIMA 3341
    RUEHBR/AMEMBASSY BRASILIA 4233
    RUEHRL/AMEMBASSY BERLIN 0126
    RUEHMD/AMEMBASSY MADRID 1848
    RUEHGL/AMCONSUL GUAYAQUIL 4523
    RUEATRS/DEPT OF TREASURY WASHDC
    RUEHC/USDA FAS WASHDC 0644
    RUCPDOC/DEPT OF COMMERCE WASHDC

` `

    C O N F I D E N T I A L QUITO 000657

    SIPDIS

    E.O. 12958: DECL: 07/28/2019
    TAGS: EPET PREL SENV ECON EC
    SUBJECT: CONFUSING SIGNALS ABOUT ECUADOR'S YASUNI ITT CONSERVATION
    PROJECT

    Ref.  A) Quito 204

    ¶1.  (C) SUMMARY.  On June 24, the ...

    id: 218811
    date: 7/30/2009 12:24
    refid: 09QUITO657
    origin: Embassy Quito
    classification: CONFIDENTIAL
    destination: 09QUITO204
    header:
    VZCZCXYZ0013
    RR RUEHWEB

    DE RUEHQT #0657/01 2111224
    ZNY CCCCC ZZH
    R 301224Z JUL 09 ZDK
    FM AMEMBASSY QUITO
    TO RUEHC/SECSTATE WASHDC 0694
    INFO RUEHBO/AMEMBASSY BOGOTA 8290
    RUEHCV/AMEMBASSY CARACAS 3659
    RUEHLP/AMEMBASSY LA PAZ AUG LIMA 3341
    RUEHBR/AMEMBASSY BRASILIA 4233
    RUEHRL/AMEMBASSY BERLIN 0126
    RUEHMD/AMEMBASSY MADRID 1848
    RUEHGL/AMCONSUL GUAYAQUIL 4523
    RUEATRS/DEPT OF TREASURY WASHDC
    RUEHC/USDA FAS WASHDC 0644
    RUCPDOC/DEPT OF COMMERCE WASHDC

    ----------------- header ends ----------------

    C O N F I D E N T I A L QUITO 000657

    SIPDIS

    E.O. 12958: DECL: 07/28/2019
    TAGS: EPET PREL SENV ECON EC
    SUBJECT: CONFUSING SIGNALS ABOUT ECUADOR'S YASUNI ITT CONSERVATION
    PROJECT

    Ref.  A) Quito 204

    ¶1.  (C) SUMMARY.  On June 24, the Ambassador met with former Foreign
    Minister Francisco Carrion, who is now a principal spokesman for the
    GOE's Yasuni ITT conservation project.  This initiative seeks to
    protect the Ecuadorian Yasuni National Park in exchange for
    international financial compensation.  Carrion told the Ambassador
    that the German Government had committed nearly $1 billion to the
    project over the next 13 years.  On July 7, EconOff met with Roque
    Sevilla, another spokesman for the project, who confirmed this
    information and provided additional updates on the status of the
    project.  On July 13, EconOff met with Germany's Ambassador to
    Ecuador, Christian Berger, who told EconOff that, in fact, no
    commitment had yet been made.  Ambassador Berger reaffirmed his
    desire to help preserve the Yasuni park, but expressed frustration
    about poor communication by the GOE and a lack of clarity about the
    project's details.  End Summary.

    AMBASSADOR DISCUSSES YASUNI WITH FORMER FOREIGN MINISTER
    --------------------------- ----------------------------

    ¶2.  (C) The Ambassador met with former Foreign Minister Francisco
    Carrion on June 24.  As part of a wide-ranging conversation, Carrion
    mentioned that he is closely involved in the Yasuni
    Ishpingo-Tambococha-Tiputini (ITT) initiative.  The initiative seeks
    to have the international community provide financial support to
    Ecuador in exchange for its promise not to allow oil production in
    the sensitive Yasuni national park, an area of exceptional
    biodiversity in Ecuador's eastern rainforest.  Carrion told the
    Ambassador that the German government had recently agreed to support  the initiative with donations of 30-50 million euros per year for 13 years, which could end up totaling nearly $1 billion.  Carrion said
    this was evidence that the initiative was gaining international
    credibility.  He said the initiative would get further backing from
    the Inter-American Development Bank (IDB), which he said was setting
    up an "international trust fund," to allow donations to support
    poverty reduction, environmental protection, or indigenous programs.
    Carrion told the Ambassador that there would be an outdoor concert in
    Madrid on September 19, 2009 to promote the Yasuni initiative.  He
    said this concert would be broadcast around the world and would be
    part of a global publicity campaign with billboards in major cities.
    Carrion said the GOE would also promote the initiative at the
    upcoming conference on climate-change in Copenhagen in December.

    SPOKESMAN FOR THE PROJECT BRIEFS ECONOFF ON NEW DEVELOPMENTS
    --------------------------- ---------------- ----------------

    ¶3.  (C) On July 7, EconOff followed up on the Ambassador's
    conversation with Carrion by meeting with Roque Sevilla, a former
    mayor of Quito, who is another of the principal spokespersons for the
    Yasuni initiative.  Sevilla gave a more extensive briefing on the
    status of the project, and said the basic structure was unchanged
    since he briefed diplomats from several western nations in March 2009
    (ref A).  Sevilla had recently returned from a trip to Europe to
    promote the initiative with the German and British governments, and
    he said the trip had been very successful.  He confirmed that the
    German government had agreed to contribute nearly $1 billion to the
    initiative, and said the mark of credibility this conferred on the
    concept had provided a major boost to the initiative.

    ¶4.  (SBU) Sevilla said that the plan still revolved around selling
    "Certificates of Guarantee--Yasuni" (CGYs) against the value of the
    carbon of the Yasuni ITT oil reserves.  The GOE previously stated
    that not exploiting the estimated 950 million barrels of oil in the
    reserve would prevent an estimated 410 million tons of carbon dioxide
    (CO2) from being released into the atmosphere.  Based upon current
    European Trading System market rates for CO2 of roughly $19 per ton,
    the value of the oil reserves' carbon would be approximately $7.8
    million.  Sevilla said the value of the CGYs would be tied to market
    prices of carbon, which prevented him from giving an exact figure for
    the total compensation Ecuador is seeking.

    ¶5.  (SBU) Sevilla said that Ecuador planned to seek donations from
    the signatories of the Kyoto Accord plus the United States.  He said
    the amounts solicited from each country would be determined by the
    size of its economy in comparison with the combined GDPs of all the
    countries.  For example, if a country's GDP was 11% of the group's
    total economic output, Ecuador would ask it to contribute 11% of the
    costs of the Yasuni initiative.

    ¶6.  (SBU) In his March 2009 presentation, Sevilla said Ecuador
    originally planned to have the CGYs classified as carbon bonds
    ("certified carbon credits") by the signatory countries of Annex 1 of
    the Kyoto Protocol.  Companies and investors would then have been
    able to purchase CGYs like other carbon credits through the European
    Trading System and would have registered these purchases with their
    governments.  Sevilla told EconOff that the German government had
    objected to this plan, however, saying it was too complicated.
    Sevilla said the GOE will therefore instead solicit contributions
    directly from European governments, which will be able to pass along
    the carbon credits to companies and individuals in the manner of
    their choosing.

    ¶7.  (SBU) Despite the shift in strategy for Europe, Sevilla said the
    GOE believes the carbon-credit approach is best for the U.S., since
    it removes the political liability of spending taxpayer dollars on
    the project.  He pointed to pending legislation in the U.S. Congress
    that would create a U.S. market for carbon credits, and suggested
    that CGYs could be traded there.  Sevilla said the GOE would soon
    brief many other countries on the proposal as well, and would provide
    the same kind of flexibility in order to make the plan workable in
    different settings.

    ¶8.  (SBU) The plan calls for funds raised for the initiative to be
    placed in an international trust.  Sevilla said the GOE was in
    negotiations with both the UN and the Inter-American Development Bank (IDB) to manage the trust.  Press reports have stated that the Andean Development Corporation is also being considered.  Sevilla said proceeds from the fund would then be invested through Ecuador's
    National Development Plan in projects for conservation,
    reforestation, renewable energy, and social development.  The last of
    these would include education and training programs in areas like
    ecotourism and agro-forestry.

    SEVILLA SEEKS TO ASSUAGE POTENTIAL CONCERNS
    -------------------------------------------

    ¶9.  (SBU) EconOff told Sevilla that the USG was still trying to
    understand the Yasuni proposal, and questioned him about potential
    difficulties.  EconOff asked if the initiative would not simply drive
    consumers to other sources of oil, resulting in little overall
    reduction in the emission of carbon.  Sevilla agreed that "leakage"
    of this sort could occur, but he argued that Ecuador's Yasuni
    initiative is simply the first step in a new approach to managing oil
    reserves.  Sevilla said that if parallel efforts could be launched in
    countries like Colombia, Bolivia, Papua New Guinea, and the
    Philippines--countries that have similar combinations of oil reserves
    and biodiversity--it would be much harder for consumers to find
    alternative oil supplies and would eliminate the leakage problem.
    Sevilla said the effect of this would be to "change the paradigm" of
    conservation, and he argued that the Yasuni initiative could play a
    "revolutionary" role by showing that it was a viable approach.
    Sevilla agreed that the cost of the project was high, but he argued
    that since the money raised would be used for conservation and
    reforestation efforts, the plan would actually have an "amplification
    effect."  Climate change would be reduced both by not burning the oil
    in the reserves and by the conservation projects that the money
    funded.

    ¶10. (SBU) Sevilla admitted that it is difficult for the GOE to offer
    long-term guarantees for a project like this, but he suggested that
    it would be very costly for the GOE to renege on its promises.  He
    noted that any exploitation of the oil by the GOE would be met with
    scathing criticism from the international community, and would result
    in the fund being dissolved and assets returned to the
    certificate-holders.  Sevilla pointed out that developing oil
    reserves takes a minimum of five years, during which Ecuador would
    receive neither the benefits of the fund nor income from the
    reserves.  He suggested that this financial blow would provide a
    strong disincentive to abandon the plan. Sevilla also argued that,
    with the rising global importance placed on biodiversity and a broad
    public-awareness campaign to support the project, Ecuador's
    reputation--like that of Costa Rica--would increasingly be dependent
    upon good environmental stewardship.  He said this reputation would
    be irreparably damaged by any move to abandon the initiative.

    ¶11.  (SBU) Sevilla said the Yasuni public awareness campaign would be launched on September 19, with outdoor concerts in Madrid and Quito called "Cibeles Ambiental."  Sevilla said the concerts will include
    several prominent musical groups and will be broadcast live on
    outdoor video screens in European capitals and major U.S cities.

    GERMAN AMBASSADOR CORRECTS MISPERCEPTIONS
    -----------------------------------------

    ¶12.  (C) EconOff's meeting with Ambassador Berger of Germany was
    markedly different in tone from the meetings with Carrion and
    Sevilla.  The Ambassador stressed his strong desire to preserve the
    Yasuni reserve, noting its remarkable biodiversity and laughing that
    "Germans are emotional about forests."  He flatly denied, however,
    that the German Government had made any financial commitment to the initiative beyond funding a $300,000 study of its feasibility.  He
    said he had first seen reports of the nearly $1 billion German
    donation in the German press in June, but had confirmed with
    Ministries in Berlin that no such commitment had been made or was
    pending.

    ¶13.  (C) Ambassador Berger expressed frustration with the way the GOE has managed the project.  He said the German Government had been pressing the GOE for months to provide greater detail about the
    proposal, and was disappointed that it was still not finalized.  He
    expressed skepticism about the viability of the GOE's carbon-credit
    idea, saying he thought it was too complicated and would prefer a
    plan that was simply "donations to protect the forest."  Ambassador
    Berger said he had concerns about long-term guarantees and the price
    tag for the project but did not think it was worth commenting on them
    without having been able to review a final proposal.  He noted,
    however, that the current level of German aid to Ecuador is $10
    million a year, which it manages through its GTZ development agency.
    The Ambassador expressed skepticism that any future commitment would be as large as the reported amount.  Ambassador Berger said that Germany is now waiting for the GOE to produce a final plan.  He said he had cautioned GOE officials, however, that they had "played the German card," and it was time for the GOE to line up additional
    support elsewhere.

    COMMENT
    -------
    ¶14.  (C) Carrion and Sevilla's enthusiasm for this project is
    infectious, and it is difficult not to wish them success in
    protecting this ecologically-important rainforest.  The conflicting
    information and lack of specificity makes it difficult to evaluate
    the project, however.  On July 9, just two days after EconOff's
    meeting with Sevilla, Bloomberg News reported that GOE Foreign
    Minister Fander Falconi had announced that the GOE would seek a
    reduced amount of $3 billion for the project, rather than the $7
    billion it initially sought.  Neither Carrion nor Sevilla gave any
    indication that this was being considered in their meetings with the
    Ambassador and EconOff.  The Yasuni initiative website still does not
    have a final version of the proposal, and Falconi's announcement
    suggests that major elements of the plan are still being worked out.
    EconOff also attempted to find out more information about the planned
    September 19th concerts in Madrid and Quito, but was unable to locate
    anything beyond a few scattered references on the Internet.  This
    apparent lack of preparation makes it unclear how major concerts
    supporting the project will be organized and broadcast globally in
    less than two months.

    ¶15.  (C) The Embassy believes that Ecuador will continue to promote
    this project aggressively in the lead-up to the December conference
    in Copenhagen.  We will provide additional updates as new information
    about the plan emerges.

    HODGES

    =======================CABLE ENDS============================

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