IPS Blog

Daphne Wysham on Al Jazeera discussing the World Bank and climate change:

"It was 1992 when the World Bank was asked at the Rio Earth Summit to begin to marshall the funds to address the climate crisis, to help the developing world move away from fossil fuels, and they have done the exact opposite."

Daphne Wysham is a fellow at the Institute for Policy Studies and works with the Sustainable Energy and Economy Network. See the interview on Al Jazeera's website here.

I paid a visit this week to the Canadian Embassy with colleagues from the Institute for Policy Studies and other environmental and public policy organizations to deliver a letter to the Canadian Ambassador to the United States. We are demanding that his government tell Pacific Rim — the Vancouver-based mining company — to stop bullying the people of El Salvador.

Our letter was co-signed by Greenpeace, Sierra Club, Public Citizen, Friends of the Earth, Earthworks, the Center for International Environmental Law, and others. We wrote:

“Given the severe environment and human rights implications associated with Pacific Rim’s investment in El Salvador and the gold mine and cyanide leach-water processing plant it is proposing, we urge the Canadian government to alert Pacific Rim that its investor-state claim against the Salvadoran government for enforcing its own environmental laws and striving to protect its water and communities tarnishes the image of the Canadian mining industry.”

Salvadoran community leaders tell us that, since 2009 when they came to Washington DC to receive the Letelier-Moffitt human rights award from IPS, Pacific Rim has been trying to transform itself from victimizer to victim. This behavior is reprehensible. Some have lost their lives due to anti-mining activities, such as Marcelo Rivera, the brother of one of those who received the awards, who was assassinated for speaking out about the perils of gold mining.

This is the effect of free trade agreements.

Despite the prospect of major environmental damage, Pacific Rim says it has the “right,” under the investor–state regime allowed by investment rules in free trade agreements, to reap the profits that would have been brought by gold mining. In pursuit of these so-called lost profits, Pacific Rim is demanding up to hundreds of millions of dollars in compensation at the International Centre for Settlement of International Disputes (ICSID), an unaccountable World Bank tribunal that operates behind closed doors.

The Sierra Club “opposes trade and investment agreements that allow foreign corporations to attack environmental and public health protections in secret trade tribunals,” says  Ilana Solomon, trade policy expert at the Sierra Club. “This lawsuit by Pacific Rim, which threatens the health and safety of communities in El Salvador, is a case in point for why we oppose these secret tribunals." 

Using large roll-out maps of El Salvador watersheds that he brought along, IPS director John Cavanagh explained to the First Secretary of the Canadian Embassy that, though there is always danger from the mining and processing necessary to extract gold, Pacific Rim’s activity in El Salvador is particularly threatening given that El Salvador is the second most water-starved country in our hemisphere. A full 98 percent of El Salvador’s surface water is contaminated, some of it from mining activity halted decades ago. Yet Pacific Rim stands to exacerbate El Salvador’s water problems, threatening the river that supplies water to over half the population. 

There is a broad consensus in the department of Cabañas and throughout the country that opening a mine in the Lempa River watershed presents a dangerous risk that El Salvador cannot afford. Polling shows that the people of El Salvador oppose gold mining and the government supports this mandate.

Pacific Rim claims that those who oppose gold mining are “certain,” “rogue,” and “anti-developmental” organizations. But hundreds of environmental organizations in the United States, Canada and globally stand firm to defend the right of the people of El Salvador  — the first nation to halt gold mining — to defend their environment and to implement public policies to this end. Yesterday we asked the embassy official to notify his government that we expect an escalation in worldwide protests demanding that Pacific Rim drop its suit at the World Bank’s ICSID, and leave El Salvador.

In addition to environmental concerns, Pacific Rim’s project has caused divisions and severe human costs. As our letter states:

“We are deeply troubled by the human rights abuses associated with the Pacific Rim mine. Already, four environmental activists have been assassinated and many more have been threatened, including journalists who operate a local radio station.”

No company should have the right to threaten a country like this.

Civil society to World Bank president Dr. Jim Kim, "add your voice to the choir of support for an FTT"

Today, the Institute for Policy Studies sent the newly appointed World Bank president Dr. Jim Kim a letter signed by 58 organizations from around the world urging him to champion financial transaction taxes (FTT) – a tiny tax on stocks, bonds, currency and other derivatives trades - as an innovative way to raise much-needed money to address climate change, health and other development priorities in poorer countries. The groups – including WWF, Greenpeace, Oxfam, AFL-CIO, World AIDS Campaign, United Methodist Church, and the Main Street Alliance – come from a broad cross-section of civil society and show a growing consensus that it's time for developed countries to get serious about meeting their promises on climate and development finance.

The letter was sent in anticipation of the World Bank's annual meeting in Tokyo later this week, where high-level finance ministry officials from developed and developing countries will assemble to discuss poverty eradication, sustainable development and the world economic outlook.

In the letter, groups urged Dr. Kim to "[p]romote FTT as a source of innovative finance for developing countries’ efforts to address climate change. Such revenues are needed for the Green Climate Fund and … it would be helpful to promote FTT as a source of climate finance in the context of studies and reports mandated by international bodies such as the G20 and the UN."

In conjunction with the Bank meetings the Leading Group on Innovative Financing for Development will hold a symposium highlighting the role of FTT on meeting the funding gap for climate and development left by the global economic crisis. Two of the countries featured in the event – France and Germany – are part of an eleven-country 'coalition of the willing' that announced their commitment to implement an FTT today at the European Union Finance Ministers Meeting (ECOFIN). The letter to Kim emphasized that "[a]t this key moment in their decision-making, it is particularly important to urge European leaders to allocate part of FTT revenue to development and climate."

Now that countries have taken this leap forward, the World Bank's leader should make his own bold move and support an FTT.

Note: Besides the four biggest economies in the Eurozone – France, Germany, Italy and Spain – Austria, Belgium, Estonia, Greece, Portugal, Slovakia and Slovenia have pledged to implement a financial transaction tax at ECOFIN.  This "coalition of the willing" approach will still need to be given the green light by EU heads of state, but the political momentum is clearly strong. 

-----

Dr. Jim Yong Kim
President
The World Bank
1818 H Street, NW
Washington, DC 20433

October 9, 2012

Re: Financial transaction taxes as a source of innovative finance

Dear Dr. Kim:

We, the undersigned 58 organizations, congratulate you on your position as World Bank President. We are hopeful that with your impressive track record, you will bring fresh thinking to this important financial institution.

We are writing now to encourage you to use your prominent position of influence to become a vocal champion of innovative ways to ensure sufficient resources are available to tackle the most pressing problems faced by the world’s poorest and most vulnerable people.

Given the budget constraints facing many of the largest donor countries, it is widely accepted that new sources of financing are needed. Our organizations are part of a growing international campaign to promote one of the most promising forms of innovative finance – small taxes on trades of stock, derivatives, currencies, and other financial instruments.

We have long advocated that such financial transaction taxes (FTTs) are a practical way to generate revenue to fill domestic and international financing gaps, discourage the type of short- term financial speculation that has little social value but poses high risks to the economy, and serve as a predictable and sustainable source financing for health, climate, development, education, and job creation. In a recent paper, the UN Department of Economic and Social Affairs concluded that “financial and currency transaction taxes are technically feasible and economically sensible. They could readily provide the means of meeting global development financing needs.”

Over the past two years, we have been encouraged by significant shifts in the debate, with influential leaders such as Bill Gates, UNAIDS Executive Director Michel Sidibé, Bishop Desmond Tutu, Kofi Annan, and Pope Benedict XVI coming out in support. Now is a critical time to add your voice to the call.

A group of at least 11 European governments appears on track to forge an EU agreement to implement a FTT by the end of 2012. However, with the exception of France, they have made no clear commitment yet on how the resources would be allocated. Your support could help ensure that a substantial portion of the revenue goes to meet the needs of the world’s poorest people, rather than simply paying down deficits.

Recommendations:

1. Raise FTT in the context of your work to publicize the new World Development Report focusing on jobs. As governments look for sources of financing for job-creation strategies, FTT should be promoted as one potential source.

2. Promote the FTT as part of a plan to achieve internationally agreed global health, education and other development goals. For example, with the prospect of ending AIDS closer than ever, FTT revenues could help achieve Millennium Development Goal #6, aimed at reversing the spread of HIV/AIDS and ensuring universal access to treatment and help fully fund implementation of the 2011 Political Declaration on HIV/AIDS.

3. Promote FTT as a source of innovative finance for developing countries’ efforts to address climate change. Such revenues are needed for the Green Climate Fund and other funds of the UN Framework Convention on Climate Change, including the Adaptation Fund, Least Developed Countries Fund, and the Special Climate Change Fund. Further, it would be helpful to promote FTT as a source of climate finance in the context of studies and reports mandated by international bodies such as the G20 and the UN.

4. Bring these messages to the general public and world leaders. At this key moment in their decision-making, it is particularly important to urge European leaders to allocate part of FTT revenue to development and climate. We also recommend that you publish an open letter on this theme in major newspapers.

5. Meet with civil society and independent experts on this timely issue. We would be very pleased to organize a briefing that would include participation by leading experts in the field. Over the past several years, many of our organizations have been involved in similar briefings with the International Monetary Fund, the Gates Foundation, the European Commission, and national governments. We would appreciate the opportunity to share research and analysis of the feasibility and potential benefits of this means of generating additional finance.

We look forward to hearing from you. Sincerely,

AFL-CIO, USA
Alliance for a Just Society, USA
Australian Council of Trade Unions (ACTU)
Balance Promoción para el Desarrollo y Juventud, Mexico
Campaign for the Welfare State, Norway
Canadian HIV/AIDS Legal Network
Center for Economic and Social Rights, USA
Chicago Political Economy Group, USA
Coalition 15%, Cameroon
Comisiones Obreras (CCOO), Spain
Confederazione Generale Italiana del Lavoro (Ialian Geneneral Confederation on Labour)
CPATH (Center for Policy Analysis on Trade and Health), USA
Ecologistas en Acción, Spain
Education International
Europeans for Financial Reform
Friends of the Earth U.S. Gender Action, USA
Global Health Advocates France Global South Initiative, Nepal
Greenpeace
Halifax Initiative, Canada
Health GAP, USA
IG Bauen-Agrar-Umwelt (Trade Union for Building, Forestry, Agriculture and the Environment), Germany
INPUD (International Network of People who Use Drugs), United Kingdom
Institute for Policy Studies, Global Economy Project, USA
Interagency Coalition on AIDS and Development (ICAD), Canada
International Civil Society Support International HIV/AIDS Alliance
International NGO Forum on Indonesian Development (INFID)
International Trade Union Confederation
Kampagne: Steuer gegen Armut (Tax Against Poverty Campaign), Germany
KOO-Koordinierungsstelle der Österreichischen Bischofskonferenz f.internationale Entwicklung und Mission, Austria
Main Street Alliance, USA
Maryknoll Office for Global Concerns, USA
National Union of Public and General Employees, Canada
NSW Nurses and Midwives' Association, Australia
Oxfam International
Positive-Generation, Cameroon
Public Services International
Réseau Accès aux Médicaments Essentiels (RAME), Burkina Faso
Robin Hood Tax Campaign, United Kingdom
Salamander Trust
Stamp Out Poverty, United Kingdom
TAW AFRICA
TAW-BURKINA
TAW-CAMEROON
Trades Union Congress, Great Britain
Treatment Action Group, USA
UBUNTU - World Forum of Civil Society Networks
Unión Sindical Obrera (USO), Spain
United Methodist Church, General Board of Church and Society, USA
VOCAL-NY, USA
Wealth for the Common Good, USA
Women in Europe and Central Asia Regions plus (WECARe+), Germany
World AIDS Campaign International, South Africa and Kenya
World Democratic Governance project Association
World Federalist Movement Japan
WWF International

A Canadian mining company has cleared a major legal hurdle in their quest to exploit gold in El Salvador. In a celebratory press release, the firm, Pacific Rim, quoted lawyers from two Washington, DC law firms that are representing it in the case.

I guess having one legal powerhouse behind you just isn't enough when a major pot of gold is at stake. And so far, the investment appears to be paying off.

Pacific Rim is suing the government of El Salvador, demanding more than $77 million in compensation over the government's denial of a permit for a gold mining project. The government acted in response to strong public concerns that the project could contaminate a river that is the drinking water source for more than half the country.

The World Bank tribunal hearing the case, in a classic cowardly maneuver, put the word out late Friday that they planned to advance the case past the jurisdictional phase and start hearing arguments about the merits.

The Pacific Rim release quotes one "extremely pleased" lawyer from Weil, Gotshal & Manges and another from Crowell & Moring who called the ruling a "great development." The continuation of the case makes for more billable hours. According to the Wall Street Journal, lawyers at Weil, Gotshal & Manges make as much as $1,045 per hour. GDP per capita in El Salvador: $3,426.

What's remarkable is that Pacific Rim was able to hire these two law firms despite having no current income stream. They are essentially a corporate shell whose main asset is a lawsuit on which investors are willing to gamble. So they might lose a few million. But if the legal blackmail works and El Salvador allows the mining project to go ahead, the skyrocketing price of gold will produce a handsome return. Pacific Rim's release notes that "the Company has received encouraging feedback from potential sources of non-equity financing" to pay for the final phase of the lawsuit.

The response to the tribunal ruling in El Salvador is not so happy. A diverse coalition of faith, environmental, and community groups fought against Pacific Rim's mining plans because they don't want their children drinking the poisoned water that often gets left behind when foreign corporations come hunting for gold. Polls show the majority of the country is opposed to the project and two successive Presidents from different parties have been on their side.

So how did this domestic policy issue wind up before an international tribunal? Pacific Rim based its legal claim on alleged violations of two laws -- the U.S. trade agreement with Central America and a national Salvadoran investment law adopted in 1999. Both of these allow private foreign investors to bypass domestic courts and bring claims for compensation to international tribunals, such as the International Center for Settlement of Investment Disputes, housed at the World Bank.

The tribunal decided that the company did not have the right to sue under the trade agreement because they are a Canadian company and Canada is not a part of that treaty. But they will hear arguments about whether El Salvador breached its obligations under its domestic laws. It's not uncommon for cases like this to drag on for years, costing both sides millions of dollars in legal fees.

At a rally in front of Pacific Rim's Vancouver headquarters on June 2, Salvadoran activist Vidalina Morales asked for international solidarity in demanding that Pacific Rim drop the suit. She said the broad-based coalition that has come together around the issue, the National Roundtable on Metallic Mining, is now even more determined to obtain their ultimate goal, which is a ban on all mining in the country in the environmentally fragile country.

Unfortunately, the international regime for handling investment disputes doesn't pay much heed to the will of the people.

The World Bank presidency fight is getting really interesting.  There may be two developing country candidates in addition to Jeffrey Sachs and the U.S. candidate.  Jose Antonio Ocampo (from Colombia and also now at Columbia University) has a lot going for him. IPSer Sarah Anderson has worked with him on capital controls and trade agreements and he is terrific on that issue.  Looks like he'll become the Latin America candidate, with Brazil in the lead.  

The other possible candidate is Nigeria's Ngozi Okonjo-Iweala; she is more traditional and a lot less interesting.  The U.S. has until tomorrow to name their candidate.  Rob Weissman and others have done a great job at knocking down Larry Summers possible candidacy. Here is our latest on the Sachs' candidacy in the Nation. Thanks to several of you for participating in this debate.

Yesterday morning, I was leafletting outside the World Bank because a Canadian mining firm has brought a case against El Salvador in the Bank's International Center for the Settlement of Investment Disputes.  A number of us have been leafletting to tell the Bank not to interfere with El Salvador's decision to stop issuing gold mining permits. 

As I was leafletting World Bank employees, I used my growing "friendship" with some of the them to ask who they want to be their next World Bank president.  I spoke with 7-8 in more depth.  Every single one told me that they don't want an American.  (And, I realized as I spoke to them that I haven't met one American who works there.  This really is a colonial outfit: a largely developing world workforce and an American president.)  The don't like Zoellick and no one I spoke to wants Sachs.