Pacific Rim against El Salvador in an international arbitration tribunal

Lauren Carasik has an article in Foreign Affairs on Undermined: The Case Against International Arbitration Tribunals.

A decision in favor of Pacific Rim -- allowing its corporate profits to trump El Salvador’s domestic safeguards -- would set a dangerous precedent about who has the power to dictate the terms of development for emerging economies. Corporations, concerned primarily with maximizing profit, should not be able to subvert the will of sovereign countries, especially those whose poverty requires them to seek outside investment. Compounding the problem, developing countries often submit to bilateral investment treaties and free trade agreements whose terms usually grant jurisdiction to international tribunals.

The dominant development orthodoxy of the past several decades has pressured countries to make concessions to attract foreign capital by implementing neoliberal reform packages, including austerity measures, privatization, and deregulation. In practice, this has often meant gutting labor, health, and environmental standards. Foreign tribunals, which further expand corporate prerogatives while limiting the ability of states to protect their citizens, are another step in the wrong direction.

I'm not that persuaded (read the comments to the Foreign Affairs article as well). I still hope that El Salvador wins or reaches a settlement with Pacific Rim that maintains the de facto ban over mining in the country. I just have a lot of questions over the safety of the operations and mining's potential to reignite social conflict that was the norm a few years ago. Mining doesn't have to go hand in hand with social conflict but in countries with weak rule of law and a history of government and elite exploitation of their people, it sure seems to. Social conflict around mining remains a permanent condition in Honduras and Guatemala whereas tensions seem to have subsided since the de facto ban.

While I have no love for Pacific Rim, the case was brought to an international arbitration tribunal because it was the Salvadoran government that agreed that in order to encourage foreign investment in a country that lacked the rule of law and where the courts were weak, corrupt, and politicized, investors needed greater guarantees than what their courts could provide. Go back to the McDonald's case.

The Salvadoran people and the FMLN generally seem to support the mining ban in general and in the decision not to extend an exploitation permit to Pacific Rim. However, the tribunal will (hopefully) decide the case on the legal merits. I'm hoping that the tribunal rules in favor of the Salvadoran government on the legal merits of the case ("The government countered that Pacific Rim had not complied with the requirements for a permit, including acquiring land titles for the area encompassing its proposed mines, obtaining the appropriate environmental authorizations, and submitting environmental impact assessments and a project feasibility study") rather than the more abstract argument that a ruling in favor of Pacific Rim goes against the will of the Salvadoran people.

A ruling along those lines would appear to do more to strengthen the rule of law in El Salvador than other alternatives at this point.

Salvadorans looks for mining ban

Edgardo Ayala provides an update on Rural Communities Push El Salvador Towards Ban on Mining for IPS.

In this Central American country of 6.2 million, there were 18 gold and silver mines in 2004, some of them operated by local and foreign companies under concessions.

Since 2008 no new concessions have been granted, but 74 requests are still pending.

The mining industry accounts for 0.8 percent of El Salvador’s GDP, according to the report “Metals, mining, and sustainable development in Central America” published by Oxfam in 2008.

But business sectors represented by the right-wing Nationalist Republican Alliance (ARENA), which governed the country from 1989 to 2009, argue that a suspension of mining activity would send out a negative signal to foreign investors.

El Salvador has had an effective ban on mining for the last six or seven years but environmentalists are hoping that a more permanent ban, however unlikely, might come out of the next congress. ARENA is right. A ban would send out a negative signal to foreign investors. However, a ban still might be a worthwhile policy.

Not so safe to wear those Maple Leaf patches now

montrealsimon.blogspot.com

When I was backpacking through Central America about fifteen years ago, I always ran into Canadians wearing Maple Leaf patches on their backpacks. The worst thing you could do was assume that they were from the United States. Not so much in Central America today.

Vice has an interview with Rachel Smalls, a Canadian woman with the Mining Injustice Solidarity Network, about what is going on in Guatemala.

Do you think there is a general ignorance amongst Canadians about what is actually happening at Canadian mining sites across the world?

Yes, it’s very telling that most Canadians don’t know that over 70 percent of the mines across the world are owned by Canadian companies, that should be a bragging point and something that Canadians are proud of, however I think it’s kept a secret for a reason because I think the more you look into these companies and you look into their projects, the more you realize it’s giving Canada a terrible reputation in many places around the world. There are many places where I would suggest people not put a Canadian flag on their backpack. Rural Guatemala is definitely one of them.

No need to just pick on the Canadians - I don't think that the nationality of the mining company is the main explanation for how they operate in a country.

You can also read Silvel Elias and Geisselle Sanchez's take on how consultations between the Guatemalan government and indigenous communities occur over various natural resource development projects in Americas Quarterly.

Violence and impunity around mining in El Salvador

I apologize. I really don't pay enough attention to the battle surrounding the mining industry in Central America. I can't say that I will comment on the affairs any more so than I do now, but I will draw attention to stories that I find interesting such as this one with Le Monde diplomatique on El Salvador, violence and impunity.

The bullets buried into the walls of the room within a foot of their intended victim, in El Salvador’s northern town of Ilobasco. After the attacker had fled unrecognized into the dusk, the phone rang: “Have there been any deaths in the house?” The female caller used an anonymous number and refused to give her name. This time Alejandro Guevara had been targeted: the anti-mining activist had been receiving threats by phone and text message in the weeks before the attack. On 8 October 2013, five days after the shooting, he told the press: “This is a plan that we have seen since 2009 ... the same method they used when they killed our colleagues. This is the same structure operating to persecute us; it reveals the forms of suppression used against the environmentalists working in opposition to mining projects in the municipality. This has been happening all along, but here it is uncovered.”

I'd be happy to host guest posts from other academics on the subject of mining like I have in the past with Michael Dougherty at Illinois State University or on other topics that I don't touch on all that much.

A changing of the miners in El Salvador

Doesn't seem like a good trade if Pacific Rim were actually a real company with the potential to make millions in El Salvador.

OceanaGold Corp has agreed to acquire all the shares in Canadian gold miner Pacific Rim Mining Corp that it doesn't already own in a deal valued at $C10.2 million ($A10.43 million).

...

For OceanaGold, the proposed acquisition would give it control of Pacific Rim's El Dorado Gold Project in El Salvador, a high grade gold-silver resource yet to be developed.

"This transaction will provide OceanaGold shareholders with potential exposure to a high grade gold-silver resource located in a very prospective region," OceanaGold managing director Mick Wilkes said in a statement.

OceanaGold currently owns just under 20 per cent of Pacific Rim. As part of the agreement, OceanaGold will advance Pacific Rim as much as $US1 million ($A1.06 million) for working capital at a 10 per cent interest rate.

The agreement has been unanimously approved by the directors of OceanaGold and Pacific Rim, excluding one common director who abstained from voting.

The proposal is fair to Pacific Rim shareholders from a financial point of view, according to advice provided to Pacific Rim from Evans & Evans Inc.

The board recommends shareholders vote in favour of the arrangement, the company said.

Pacific Rim is currently in dispute with the government of El Salvador over what it says is a passive refusal to issue a decision on Pacific Rim's application for environmental and mining permits for the El Dorado project.

The proposed acquisition is expected to close next month pending shareholder and regulatory approvals.