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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
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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 

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