Extraneous Variable: National Regulations

In this section we will provide an overview of Ecuador and Peru's national regulations which might be relevant to the four dimensions of good governance. The present research has focused on the impact of the loan provider's identity on development projects' good governance levels through the analysis of project contracts. However, there exists the possibility that for some of the indicators the absence or low number of quotes might be caused not by the specific loan provider's lax standards, but by the existence of relevant national regulations which render unnecessary the presence of additional provisions in the contracts. Therefore, the present section will test the internal validity of the data analysis’ results by accounting for the potential influence of national regulations as an extraneous variable.

National Regulations on Voice

In Ecuador, the right to public participation is enshrined in the 2008 Constitution, which states that “in the drafting, implementation, evaluation and monitoring of public policies and public services, the participation of persons, communities, peoples and nations shall be guaranteed” (Ecuador’s Constitution of 2008, art.85). To this end the Council for Public Participation and Social Control was established, as part of the new government branch Transparency and Social Control. As stated by the 2008 Constitution, the council is to “promote and encourage the exercise of the rights involving public participation, (...) promote and setup [sic] social control mechanisms in matters of general welfare” (art.207) and “encourage public deliberation processes” (art.208). However, some critics have raised doubts over the council’s ability to act as an independent watchdog (Freedom House 2012, par.6).

The Constitution of Peru also guarantees the right to public participation, although in more vague terms: “Every person has the right: (...) to participate, individually or in association

with others, in the political, economic, social, and cultural life of the Nation” (Political Constitution of Peru, art.2). Additionally, it states that municipalities must “promote, support, and regulate citizen participation in local development” (art.197). Finally, Peru’s Prior Consultation Law (2010) requires that the government consult indigenous people and peasants before any decisions are taken regarding the implementation of infrastructure, energy and mining projects which might affect their livelihoods (Hordijk et al. 2015, p.139).

As we can see, although both Ecuador and Peru possess national regulations concerning public participation, these are quite general and vaguely worded. Although in Peru there do exist more specific laws outlining the mechanisms for implementing the right to public participation, namely the Prior Consultation Law, this can explain the absence of provisions in only one of the projects, since the Decentralized Rural Transport Project was approved in 2006, long before the law came into effect. As for Ecuador, there seem to be no specifications regarding the mechanisms for implementing the right to public participation. Therefore, while the absence of quotes in the documents of the IFI-financed development projects can be partially justified by the existence of relevant national regulations in Peru, this is not the case for the China-financed project. This would seem to support our main hypothesis, which is that projects financed by Chinese loans are designed with a lower concern for good governance.

As for the presence of checks and balances provided by an independent media and civil society, the protection provided by national regulations seems to be quite low in both countries, although less so in Peru. When it comes to freedom of the press, Freedom House consistently described both countries’ press status as “partly free” from 2005 up until 2012, after which Ecuador began to receive the “not free” status (Freedom House, n.d.). Ecuador’s status change can be attributed mainly to the 2013 Communications Law, which requires that the media publish only “verified, contrasted, precise and contextualized” information (cited in Human Rights Watch 2013, par.9), effectively “opening the door to censorship by allowing the government to decide what information meets these vague criteria” (Human Rights Watch 2015[b], par.9). As for Peru, although freedom of the press is enshrined in its 1993 constitution, in practice there are serious doubts over the ability of independent media to provide checks and balances over the government, as throughout the past decade local and international civil society have raised

concerns over widespread harassment and intimidation of reporters (Freedom House 2014a, par.1).

When it comes to civil society, the constitutions of both Ecuador and Peru guarantee a variety of rights, including freedom of association and expression, which should in theory enable it to provide checks and balances (International Center for Not-for-Profit Law 2016a, n.p.);(International Center for Not-for-Profit Law 2016b, n.p.). However, while in Peru the rights of NGOs are generally respected, under President Correa civil society organisations in Ecuador have had to face an increasingly repressive environment (de la Torre 2015, par.6);(Ortiz 2015, p.29). Therefore, we can conclude that, as far as freedom of the press is concerned, neither Ecuador nor Peru’s national regulations can justify the absence of relevant provisions in their respective projects’ contracts. As for civil society, the absence of relevant provisions can be justified in the case of Peru but not in the case of Ecuador, again supporting our main hypothesis.

National Regulations on Performance

When it comes to performance evaluation, all three projects contained multiple relevant provisions in their documents. Therefore, for this indicator there seems to be no risk that national regulations might have acted as an extraneous variable influencing our causal relationship; even if relevant national regulations did exist, it is evident that they did not render unnecessary the presence of additional provisions in the contracts.

National Regulations on Accountability

In Ecuador, transparency is guaranteed in principle by the 2008 Constitution and the 2004 Transparency and Access to Public Information Law. The Constitution of Ecuador upholds the right to access to public information through article 91, which enshrines the petition for access to public information as a jurisdictional guarantee “aimed at guaranteeing access to this information, when this information has been denied expressly or tacitly or when the information provided is incomplete or not trustworthy”. Additionally, it designs the Office of the Human Rights Ombudsman as responsible for supporting citizens’ access to public information (art.215). The 2004 Transparency and Access to Public Information Law defines in greater detail Ecuador’s

regulations on the subject, again defining access to public information as a fundamental right of Ecuador’s citizens (Ley Orgánica de Transparencia y Acceso a La Información Pública, art.5).

However, although Ecuador’s national regulations guarantee access to information in principle, according to Freedom House in practice there is “uneven compliance and confusion over the law on the part of government officials” (2014b, par.10). Indeed, this is evident in the very fact that the loan contract between Ecuador and China for the Coca Codo Sinclair project was not made available to the public (The Economist 2012, par.4). A similar situation is evident in the case of Peru. The right to access to public information is guaranteed by article 2 of the Constitution and by the Law of Transparency and Access to Public Information. However, according to Freedom House “transparency regarding official documents is inconsistent in practice, particularly at the regional and local levels” (2015[b], par.4).

Therefore, we can conclude that since Ecuador and Peru both possess basic national regulations concerning transparency which however are loosely implemented in practice, it is unlikely that the extent of their difference in levels of transparency was affected by the influence of different national regulations as an extraneous variable.

National Regulations on Fairness

This final subsection will compare Ecuador and Peru’s national regulations in terms of environmental and labour standards, relevant to the indicator of decency. When it comes to environmental standards, Ecuador possesses a more comprehensive regulatory framework than Peru. Indeed, the 2008 Ecuadorian Constitution is considered one of the most radical in the world in terms of the recognition of the rights of nature, introducing a biocentric (as opposed to anthropocentric) approach to environmental law (Lalander 2014, p.150). It contains an extensive section on biodiversity and natural resources (title VII, ch.2) which covers issues related to nature and the environment (arts.395-399), biodiversity (arts.400-403), natural assets and ecosystem (arts.404-407), natural resources (art.408), soil (arts.409-410), water (arts.411-412) and biosphere, urban ecology and alternative energies (arts.413-415). The constitution also enshrines the protection of the environment as one of the State’s primary duties (art.3).

As for the Constitution of Peru, its section on the environment is much shorter, consisting of only four articles. The constitution stipulates the government's obligation to "promote the conservation of biological diversity, and protected natural areas" (art.68) and "promote the sustainable development of the Amazonia" (art.69). It also grants it the right to determine national environmental policy (art.67) and to give concessions for the use of national resources to private individuals (art.66).

In terms of labour standards, on the other hand, Peru fares slightly better than Ecuador. Out of 189 International Labour Organization (ILO) conventions, it has ratified 75, while Ecuador only 61 (ILO n.d.[a], par.1; ILO n.d.[b], par.1). The various ILO conventions can be divided into three categories with different levels of priority. First of all, there are eight fundamental conventions, all of which have been ratified by both countries (ILO n.d.[a], par.1; ILO n.d.[b], par.1). These are the Freedom of Association and Protection of the Right to Organise Convention, the Right to Organise and Collective Bargaining Convention, the Forced Labour Convention, the Abolition of Forced Labour Convention, the Minimum Age Convention, the Worst Forms of Child Labour Convention, the Equal Remuneration Convention, and the Discrimination (Employment and Occupation) Convention (ILO n.d.[c], par.4). Then, there are four governance conventions, designated as priority instruments. These are the the Labour Inspection Convention, the Employment Policy Convention, the Labour Inspection (Agriculture) Convention, and the Tripartite Consultation (International Labour Standards) Convention (ILO n.d.[c], pars.5-6). Both Ecuador and Peru have yet to ratify the Labour Inspection (Agriculture) Convention, but have ratified the other three. Finally, there are 177 technical conventions, of which Ecuador has ratified 50 and Peru 64 (ILO n.d.[a], par.1; ILO n.d.[b], par.1).

Therefore, we can conclude that, while Ecuador has higher environmental standards than Peru, Peru has slightly higher labour standards than Ecuador. Nevertheless, all three projects contained a variety of relevant provisions in their contracts, as well as references to external social and environmental guidelines. And although Ecuador’s Coca Codo Sinclair project presented a higher number of provisions than the other two, it is most probably because the other two projects’ missing provisions are contained in the external guidelines referenced in the contracts, rather than because of differences in national regulations.