IPS Blog

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.

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 small country of El Salvador has dared to stand up against powerful international gold mining companies. And now they're dealing with the blowback.

One of the companies salivating over El Salvador's gold is suing the government for their failure to bow down and grant a permit for a proposed mining project. There is strong local resistance to the project because of concerns it could poison a river that is the source of water for more than half the national population.

The company, Pacific Rim, is demanding in excess of $77 million in compensation, alleging violations of "investor protections" under the U.S. trade agreement with Central America.

If Pacific Rim wins, the government will face a stark choice: fork over a huge chunk of taxpayer dollars to a foreign corporation or put its people's health at risk.

But those fighting the case in El Salvador have an increasing number of influential allies in Washington, where the case is being heard at an international arbitration tribunal housed in the World Bank. On December 15, labor, environmental, faith, and other groups turned out for a rally to demand that the case be dismissed. They delivered a letter to World Bank and tribunal officials signed by more than 240 international organizations, including 14 U.S. labor unions.

Particularly notable among them was the United Mineworkers. Although their members' livelihoods depend on the mining industry, they expressed solidarity for those in El Salvador who are resisting this mining project because of the possible repercussions for public health and democracy.

El Salvador is still struggling to transition to representative democracy after years of civil war and there are lingering concerns about political violence. Tim Beaty, Director of Global Strategies for the International Brotherhood of Teamsters, spoke about his union's long history of solidarity with unions in El Salvador and said they are still seeking justice in the case of a Teamster organizer, Gilberto Soto, who was killed while he was working to make connections between U.S. and Salvadoran port workers in 2004. In the course of the dispute over Pacific Rim's proposed mining project, four Salvadoran anti-mining activists have been murdered.

The Pacific Rim case is just one example of a growing number of "investor-state" lawsuits over natural resources. An Institute for Policy Studies report, Mining for Profits in International Tribunals, finds that 43 of the 137 pending cases before the World Bank tribunal are related to oil, mining, or gas. By contrast, one year ago there were only 32 such cases and 10 years ago there were only 3.

Not surprisingly, this increase has coincided with an increase in commodity prices. The price of gold, for example, has quadrupled, from $282 per ounce in January 2000 to $1,900 in September 2011. Corporations are using expensive lawsuits filed under trade rules as one more weapon to get their hands on these valuable resources.

A new video produced by the Democracy Center in Bolivia tells the broader story of how corporations are using these new powers to push back against all manner of government actions, including anti-smoking regulations in Uruguay, and the growing resistance in many developing countries. Even if Pacific Rim loses its case against El Salvador, the bigger struggle will continue to rewrite our trade rules so that governments don't have to face such outrageous cases in the first place. 

Today I will join leaders from the labor, environmental, faith, and human rights communities to protest in front of the World Bank.

Why?

We'll be there to stand up for the democratic rights of people everywhere in the face of ever-expanding corporate rule.

There's a set of people from the 1 percent who don't think we should be there. Twenty-one years ago, those people got together just two blocks north of the World Bank, in the K Street corporate lobbyist corridor, and crafted a set of corporate rights that they then inserted in the North American Free Trade Agreement (NAFTA).

These so-called "investor protections," now in dozens of U.S. trade and investment treaties, are some of the most extreme examples of excessive corporate powers you could find. They grant corporations the right to sue governments in international tribunals over actions that reduce the value of their investment. This can even include environmental, health, and other measures to protect the public developed through a democratic process.

These rules empowered an obscure tribunal in the World Bank to rule on these "investor-state" cases. Three people who no one elected can decide the fate of millions.

One of these tribunals will soon decide the fate of El Salvador. A gold mining company, Pacific Rim, is suing for compensation because that government has not approved a permit for a gold mining project. The majority of Salvadorans oppose this project because of legitimate concerns that it could poison a river that's the country's biggest source of drinking water. Pacific Rim is demanding in excess of $77 million.

The story gets even more outrageous. Pacific Rim is suing under the U.S. trade agreement with Central America and the Dominican Republic, called DR-CAFTA. But since Pacific Rim is based in Canada, and Canada isn't part of the DR-CAFTA pact, they created a subsidiary in Nevada in order to file this lawsuit.

If Pacific Rim gets away with this, it will give a green light to global corporations everywhere to pull this same trick. U.S. corporations could set up subsidiaries in other countries that are trade partners with the United States, in order to sue the U.S. government.

During today's protest, I'll be part of a group of us that will walk across the street and deliver an open letter to this tribunal (called the International Center for the Settlement of Investment Disputes) and to the president of the World Bank, who chairs the tribunal's administrative council.

The letter, signed by over 240 labor unions and other international organizations representing more than 180 million people, demands that El Salvador's domestic governance processes and national sovereignty be respected and that the Pacific Rim case be thrown out. This is the 99 percent standing up to the 1 percent. We're saying: You must stop trampling on democracy.

John Cavanagh is Director of the Washington-based Institute for Policy Studies. In August, he published in The Nation , with Robin Broad the article Like Water for Gold in El Salvador.

We are inside a greenhouse, gazing at row after row of hydroponic tomatoes and green peppers, learning why people in this community in northern El Salvador are receiving death threats. We have been sent by The Nation magazine to chronicle the struggle by people here to protect their river from the toxic chemicals of global mining firms intent on realizing massive profits from El Salvador’s rich veins of gold.

Before going to the greenhouse, we spend the morning at the home of Carlos Bonilla, a farmer in his sixties whose handsome face is creased with the wisdom, suffering, and joy of decades of struggles for justice. Over a delicious meal of local tortillas, vegetables, and chicken, Carlos and a group of eight young people tell us their stories.

These young people run a radio station, Radio Victoria, where they broadcast to a growing audience across this mountainous terrain. They tell us about giving air time to local leaders who, beginning seven years ago, found themselves facing a new threat: Mining firms, granted permits to explore for gold in the watershed of the great Lempa River (which supplies water to over half the country’s 6.2 million people), entered these communities with promises of jobs and prosperity.

Gold is now selling for more than $1500 an ounce. Local organizer Vidalina Morales tells us: “Initially, we thought mining was good and it was going to help us out of poverty…through jobs and development.”

But, then, a strange thing happened. A stream dried up near the exploration wells that a Canadian firm, Pacific Rim, was digging. Concerned, Vidalina and other activists traveled to nearby Honduras to meet with members of communities where large mining projects were already underway. They returned with grisly stories of cyanide poisoning the soil and water (cyanide is used to separate the gold from the surrounding rock), and people in mining areas suffering skin diseases and other ailments.

This wasn't what they wanted, especially near the Lempa River. Local people in northern El Salvador began to organize against the mining firms. First, they linked up with other groups across this province of Cabañas to coordinate opposition. Next, they found allies in other provinces and in the capital San Salvador, and they formed a National Roundtable on Mining. After discussion and debate, the Roundtable decided that the only way to save their vital water source was to organize for a national ban on gold and other metals mining. 

Then, they tell us, the death threats began. Some came as anonymous phone calls, some as untraceable text messages, some as people were stopped by men in cars. In June 2009, a dynamic local cultural leader, Marcelo Rivera, disappeared; his body was found in the bottom of a well, with signs of torture reminiscent of the bloody civil war that convulsed this region in the 1980s. 

Half a year later, two other people opposed to mining were gunned down. One was eight-months pregnant and held her two-year old in her arms when she was murdered. Then, two months ago, a college student volunteer with the Environmental Committee of Cabañas, Juan Francisco Duran, was found dead, two bullet holes to his head. He was last seen in Cabañas putting up anti-mining posters.

As we travel the remote roads of Cabañas with Vidalina and others here, we are struck by how their aspirations are not unlike those of people we have met in the Philippines, Trinidad, and even the United States. They want healthy food and safe drinking water for their kids. They want a vibrant local economy that provides good jobs and livelihoods. They do not want giant firms, unaccountable to them, determining their futures.

Yet in this poor country, where mining firms have spread around a great deal of money and promises, people are getting threatened and killed. 

Carlos, Vidalina, Marcelo, Juan Francisco… ordinary people taking extraordinary actions as they protect their water and their democracy. And, in this case, there are simple things that people elsewhere can do to support this struggle for water over gold. To share just one: The Committee in Support of the People of El Salvador (CISPES) is asking people to write the Attorney General of El Salvador to demand a thorough investigation into the killings to find not only the killers but also the “intellectual authors” - the masterminds - behind their actions.    

Our next blog will offer another chapter in this story, the fight to get the national Salvadoran government to support the proposed mining ban. And, a subsequent blog will move to the global level of this fight, as U.S. and Canadian mining firms use “free trade” agreements to bring legal cases against El Salvador in international courts. 

As we leave Carlos’s house that day and visit the greenhouse and communal farm lands, Vidalina entreats us not to write about their struggle as simply a defensive one: “We reject the image of us just as anti-mining. We are for water and a positive future. We want alternatives to feed us, to clothe us.”

This article was originally published in Yes! Magazine.