CONCLUSION

FROM 2000 TO 2010 Latin America experienced an unprecedented increase in the number of conflicts related to natural resources in general and oil and gas in particular. This tendency has been especially pronounced in Peru, and to a lesser extent in Ecuador and Colombia. Many of the disputes were related to oil and natural gas reserves located in the Amazon basin and its surrounding areas, home to large numbers of Indigenous Peoples. These historically marginalized groups have for years maintained numerous grievances that have largely gone unnoticed by the rest of the population. A rapidly developing and increasingly assertive movement of Indigenous Peoples across Latin America is demanding improved living conditions, more political representation, and recognition of their specific cultural identity. They are questioning the benefits of the proliferation of oil and gas developments in the areas they inhabit and are increasingly demanding a fair share of the profits. Their struggle for acceptance has been further legitimized by growing international appreciation of their cultural uniqueness and recognition of their rights.

In this context, local conflicts around extractive industries in the Amazon carry a political significance that goes far beyond ensuring an equitable distribution of economic benefits. The growing number of local conflicts related to oil and gas development opens up a broad range of unresolved questions that have cultural, political, and economic dimensions: How will Indigenous populations be integrated in Latin American societies in the future? What will be the terms of the social contract currently being reshaped between Indigenous communities and the rest of society? Are governments and Latin American societies ready to recognize the cultural and economic distinctiveness of the various Indigenous communities living in large extensions of their territory, even if this recognition might mean a redefinition or change of approach to natural resource development?

Our study recognizes that the volatile political dimension of oil-related conflicts makes it difficult to find definitive answers to questions and to solve disputes. However, our research identified several areas for improving the performance of state institutions and for adopting more efficient management practices in the oil and gas industries that could go a long way in mitigating conflicts in a relatively short time frame, including the participation of a well-respected entity to facilitate dialogue; the implementation of participatory mechanisms for designing local development projects; the optimization of the process of oil revenue distribution; and the completion of social and environmental mappings of the areas to be developed prior to the granting of licenses. These steps could occur while long-term political decisions related to the inclusion of Indigenous communities are being considered and discussed.

Our research identifies various causes of oil- and gas-related conflicts, which we have divided in two groups. The first group consists of structural flaws embedded in the institutional and legal framework of the three countries under review. The second group includes stressors from the group dynamics of the stakeholders involved that contribute to escalating the conflicts. This second group of conflict stressors is easier to address, as long as the stakeholders involved are ready to agree on modifying certain patterns of behavior and actions that exacerbate the disputes.

By contrast, resolving the structural flaws that contribute to conflicts is complex and time consuming. It would entail the reform of institutional and legal systems that have been accepted and applied, even if ineffectively, by a wide variety of stakeholders for decades. Furthermore, modifying these structural flaws would in some cases call for a political commitment to reform that societies may not be ready to make. Among these stubborn institutional flaws, the decentralization process adopted by the three countries studied in this research incorporates some of the most pressing governance failures that need to be addressed, in particular poor local management of new oil revenues, corruption and clientelistic behavior within local governments, the weak presence of the central government in oil and gas development areas, and miscommunication or poor coordination between different government agencies in charge of local social and economic development processes. Fiscal decentralization has often transferred the governance flaws of the central administration to the regional or local areas where the oil or gas projects are being developed. These effects of the decentralization process need to be rapidly addressed to prevent them from spreading further through the different subnational government levels.

The legal framework that governs the oil and gas industries is also highly problematic. Often poorly implemented, laws can overlap or become overabundant. They are also frequently modified to accommodate short-term needs. Legal mechanisms for solving hydrocarbons disputes can be convoluted and slow, and not always effective. Most important, the countries studied for this research lack effective local and territorial planning for defining areas that may be apt for oil or gas development and those that should be protected due to their social or environmental characteristics. All of this contributes to the intensification of local conflicts and to a generalized tendency to bring disputes to international courts rather than domestic tribunals, with the hope of achieving faster resolution abroad.

There is still an opportunity for obtaining a relatively rapid beneficial impact by addressing the more transient, second group of conflict stressors. Our research found examples of changes in attitudes, or in the modus operandi of stakeholders, that contributed to mitigating the intensity of oil conflicts. In Ecuador, for example, the adoption of a unified front by the Indigenous movement resulted in a positive resolution of conflictive situations with regard to oil developments. Likewise, sound corporate practices and sustained supervision by multilateral institutions of Peru’s Camisea natural gas project ensured relatively high social and environmental safeguards from the start and resulted in the long-term establishment of effective conflict management practices. Another relatively straightforward step that could contribute to reducing or containing the number of conflicts in the short term is the involvement of recognized institutions, or even personalities, that enjoy a solid popular backing to act as mediators. The best example of a positive institutional intervention in the region is that of Peru’s Office of the Ombudsman, whose actions have been praised for success in resolving disputes and in some cases averting conflicts altogether by creating a space for dialogue. In the same vein, various rulings by Colombia’s Constitutional Court that ensured adequate attention to the claims of Indigenous communities had important beneficial impacts in settling or even preventing oil conflicts.

This is not to say that addressing the second group of conflict stressors is a simple process, devoid of difficulties. But it is a good first step that could have tangible results in a relatively short period, particularly if instituted as a preventive measure prior to a conflict. Early action could help to challenge the perception of abandonment among the affected population, while contributing alternative solutions to differences of opinion. Once a conflict has developed, it is difficult to defuse. Instead, with the adoption of early conflict alert signals, disputes might be avoided or mitigated through the mechanisms set in motion prior to the conflict. Overall, however, we found that there is still a lack of a general commitment to devote enough effort, financial resources, and political will to address this second group of conflict triggers in a way that could have rapid, short-term results. This reluctance is even greater with regard to adopting a conflict-prevention agenda prior to an actual dispute.

Conflict-prevention policies adopted when the oil or gas projects are being designed are key for avoiding large-scale disputes during the exploration or production phases of the project. A solid conflict-prevention policy should build on a detailed understanding of the social and cultural framework that characterizes the project’s area of influence. Conflicts related to oil and gas are usually influenced by the historical, social, and cultural context of the population most affected by the project. Memories of past contamination or noncompliance by previous stakeholders, a history of local opposition to oil projects, or the knowledge of past grievances expressed by a nearby community may foreshadow strong opposition to oil or gas activities in a specific territory. Natural resource conflicts are largely influenced by perceptions, which are to a large extent defined through the lens of these factors. Often, conflicts break out when a community perceives future risks in being exposed to an oil or gas project, long before an actual threat from the project materializes. A thorough understanding early on of the sociocultural and historical framework that surrounds an oil or gas project is essential to build early dispute-prevention mechanisms.

Not all stakeholders carry the same weight when it comes to influencing the development of oil or gas conflicts. The role of the central government is unique and can serve to mitigate conflicts, but it can also have the insidious effect of triggering more disputes if the issues that started the differences are not properly and promptly addressed. Oil-related conflicts may be exacerbated by action or inaction on the part of the central government. Conflicts may come as a consequence of decisions on the part of the authorities contrary to the wishes of the communities. But it is very common for disputes to escalate when there is not enough central government involvement, precisely due to frustration among the affected population, which feels abandoned by the state. Conflict-prevention mechanisms in place before the start-up of oil or gas activities in a particular area can help to address this feeling of neglect.

The involvement of central government authorities during negotiations between local communities and oil companies is essential for various reasons, among them to ensure that rules and regulations are respected, to grant legitimacy to the process, to act as arbiters when differences arise, or simply to send a message of recognition to largely forgotten communities. Our review of cases shows that the absence of the central authorities in these situations is often an important contributor to conflicts.

The behavior of the other stakeholders can also act as a conflict stressor within the second group of oil-related triggers. The type of companies involved and the social responsibility policies they adopt may tilt the balance toward the resolution or the aggravation of differences. The Western majors that were historically the main players in the oil and gas industries worldwide have been gradually giving way to state-owned counterparts or to smaller players that sometimes have questionable environmental and social practices. This research has plenty of examples of the effect on the development of oil conflicts from diverse social and environmental corporate attitudes. Likewise, the degree of activism of communities affected by hydrocarbons projects and the style of action adopted by the civil society involved in the area both play a fundamental role in the development of oil conflicts.

Our study has identified a number of reforms and actions that we believe could address the second group of more transient conflict triggers and could contribute to solutions for oil- and gas-related conflicts in these countries in a relatively short period. Among these is the adoption of well-designed territorial planning to identify areas that may be open to extractive activities and regions that should remain shielded from such activity. This mapping of extractive areas within the borders of a particular country could be used as the basis for long-term decisions by all the stakeholders, particularly with regard to the granting of oil or gas concessions.

Another important action for mitigating oil conflicts would be to ensure the improvement of existing revenue distribution mechanisms so that oil profits make their way back to the producing regions. Parallel to that, local development projects to be funded with the new oil income should be designed early on in a transparent way, with the participation of local communities. This action would strengthen the local government’s accountability in the design and implementation of local development policies. In this context, the authorities should also monitor that social actions taken by companies remain within the framework of the development plans previously designed locally with the participation of the affected communities. This would guarantee that responsibility for the plans and for monitoring their implementation are evenly shared among the different actors.

An analysis of available institutional mediation in the three countries researched for this book show that Peru and Colombia have relatively effective mechanisms for addressing oil- and gas-related conflicts. The Peruvian Office of the Ombudsman and the Constitutional Court of Colombia can both serve as inspiration for the incorporation of agile and effective elements to institutional mediation mechanisms, which could in turn help to reduce the number and intensity of oil-related conflicts. Both institutions are generally well regarded by local communities affected by oil projects, and this is an essential condition for their successful intervention. Ensuring the existence of clear consultation policies and well-designed laws and regulations, and their proper implementation by all stakeholders, would greatly contribute to mitigating oil-related conflicts. Our analysis shows that existing consultation mechanisms are not as effective as they should be in the countries we studied, and that is a constant source of conflict. Perhaps the foundations of the consultation process as stated by the ILO Convention 169 should be revisited to make the process more effective.

Our research also shows that smaller junior oil companies do not always adequately apply appropriate social and environmental safeguards when operating in the three countries under review. Monitoring of their operations should be reinforced, perhaps through the development of a peer review mechanism among companies, that could serve to detect flaws in the system of safeguards. Finally, coordinated efforts should be geared toward strengthening the capacity of the Indigenous Peoples movement so that they may effectively contribute to company monitoring and improve their proficiency during complex negotiations and legal proceedings with companies.

These recommendations are obviously not easy to implement. Our case studies show that they must be adapted to each specific country and local context for them to be successful in the long term. Most important, a comprehensive commitment to these recommendations from the various actors involved would be necessary to guarantee their success. The violence shown during some recent conflicts, particularly the Bagua events in Peru in 2009, evidences the potential destabilizing force of these disputes unless they are properly and swiftly addressed. This is particularly true given Latin American countries’ imperfect and still relatively fragile institutions and their recent history of bloody rebel movements.