The Galapagoan Wall

A guest post by Francisco Zalles

During my visit to Universidad de las Hespérides, I had the privilege of hanging out for two weeks with Francisco Zalles, often called “the architect of the dollarization of Ecuador.” Francisco, a big fan of my Open Borders, recently started living part-time on the Galapagos Islands, which turn out to have one of the strangest anti-immigration policies ever enacted. Much to my delight, he offered to translate his recent essay on the topic into English. Enjoy!

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Last year, Ecuador completed the largest debt-for-nature exchange in history. These agreements help developing countries achieve substantial reductions in their external debt in exchange for commitments in the protection of natural resources. Ecuador’s exchange is historical as it is the largest debt-for-nature exchange ever, US$1.6 billion, equivalent to 5% of Ecuador’s foreign debt.

Bondholders approve the deal and the corresponding loss, due to the commitment to use the savings for conservation. While reduction of government debt is a good thing, the new money that Ecuador has pledged to the Galapagos because of the exchange could end up making matters worse for conservation — not better.

The Galapagos Islands have no native inhabitants. Even so, since 1998 a series of affirmative action policies were introduced to stop immigration to the islands, in effect enacting a “closed borders” policy. Even Ecuadorians from the continent are excluded from living, owning property, or working on the islands.  They enjoy a higher minimum wage than the one paid on the continent. Subsidized prices for electricity, gas and fuel add to the mix of perverse incentives.

Affirmative action policies are generally defended as a mechanism to correct systemic discrimination in the past.  Galapagos residents have enjoyed significant privileges and never discrimination, as there is no distinct Galapagosian ethnicity.  Yet somehow, Galapagos residents have convinced politicians that they are deserving of disproportionately favorable treatment.

Galapagos is a prime example of how damaging a closed border policy can be. Closed borders exclude qualified migrants from entering the labor pool while rewarding mediocrity. Tourist guides cannot be international experts in their fields, as these jobs are only allowed to be held by island residents who need not have studied extensive natural and scientific phenomena.  Nepotism and corruption abound for any position and especially government jobs. On an island that depends on tourism, the local government employs only slightly fewer workers than the hospitality industry. 

Permits to own and operate any type of sea-going vessel, as well as their crews, are only available to locals. The low quality of the boats and crews led to the tragic death of four tourists, and the incidence of accidents have led insurance companies to stop insuring vessels in the islands.  Closed borders also undermine infrastructure projects such as a badly needed port to satisfy the demand for products not produced on the islands, including foodstuffs.

The Governing Council estimates that users of electricity in Galapagos only pay a quarter of the cost of generation, which is mostly thermoelectric and tremendously polluting. Due to this subsidy, electricity demand has increased an annual average of 6.6% yearly in the last decade. Additionally, the fuel subsidy is one of the largest sources of corruption on the islands.

Currently the biggest beneficiaries of the subsidy are the Chinese fishing fleets and drug traffickers, which has led the Galapagos to be called the “gas station of the Pacific.”  These illegal activities bring with them social consequences of violence that undermine the tourist industry. Although subsidies are not immigration-related per se, the combination of closed borders plus subsidies is a toxic cocktail that is threatening the conservation of the islands. 

Many who have achieved “permanent resident” status have done so by marrying locals, bribing officials, or simply finding some spurious connection to the islands to claim that they had lived there in the past, just to gain the benefits from subsidies and the higher possibility of employment than in the mainland.  If no affirmative action policies were in place, jobs would go to more qualified individuals and the demographic pressure would likely subside, as the most precious privilege, island residency, would no longer be limited.  For this to be most effective, of course, subsidies would have to be reduced or eliminated. 

As part of the affirmative action policies to defend locals only, import-substitution policies have also been instituted.  Under the premise of "food sovereignty,” import of any foodstuffs that can be grown in sufficient quantities on the islands are prohibited.  The prohibition of imports of mozzarella cheese and coffee are prime examples.

As a result of the import ban on coffee put in place after lobbying by local farmers, many more hectares of the water-intensive crop have been planted.  The islands rely mostly on rainfall for water, making a water-intensive crop unsustainable in the long run. Since locals benefit from subsidies and higher minimum wages, they enjoy a relatively high living standard compared to the mainland and are not willing to work in agricultural jobs.  Enticed by employment opportunities, unskilled labor from the mainland immigrates to Galapagos to work the coffee crops and other jobs that locals will not perform.  More hectares, more people, and as a result, the population density of unskilled workers has ballooned, leading to the contamination and rapid depletion of scarce water resources. 

The additional resources from the Blue Bonds will be enjoyed mostly by permanent residents, increasing the amount of money available to entrench privileges.  The best way to assure the conservation of the natural paradise of the Galapagos is to make residents of the islands pay the real cost of living on volcanic rocks 600 miles from the mainland.  Closed borders keep people “trapped” in order not to lose the privileges they enjoy. Open borders is the best policy to unlock the islands’ immense potential for Ecuador and the world.