The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Mining discontent in El Salvador

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The global mining industry is seeking to insert itself into post-conflict, economically-strapped El Salvador. While in El Salvador this week, President Obama should state publicly that the US respects the right of local communities to decide if mining should take place.

On Tuesday, President Obama travels to El Salvador. It’s the first time a US president has been to the country since George W. Bush went in 2002. The two countries have a long and tangled history. The US supported the Salvadoran government (and right wing death squads) against the leftist Farabundo Marti National Liberation Front (FMLN) during the country’s twelve-year civil war from 1980 to 1991. The country became a brutal Cold War battleground for the US, which perceived the insurgency as a communist menace backed by Cuba and later Nicaragua, following the Sandinista revolution of 1979. An estimated 75,000 people – mostly civilians – were killed in the war and thousands more disappeared; the vast majority of those responsible were found to be state agents or death squads allied with official forces, according to a UN Truth Commission. Hundreds of thousands more fled to the United States before a UN-brokered peace process ended the conflict and enabled the FMLN to disarm and become a political party.

Today, nearly 20 years after the war, the FMLN is in power following peaceful elections in 2009, and El Salvador is heavily dependent on the US for its economic survival. Remittances – money sent back by Salvadorans living in the US – total over $3 billion annually, more than 16% of the country’s GDP. An estimated 1.5 to 2 million Salvadorans – or one third of the country’s population – live in the US. Without the money they provide, El Salvador’s economy would collapse.

It is within this post-conflict, economically-strapped context that the global mining industry, including US-based companies (and some dubiously claiming to be US-based), is seeking to insert itself. On paper, this might seem like a good thing. After all, gold prices are at a record $1400 an ounce. Other minerals prices, like copper are also at high levels, mainly fed by demand from China. But so far, El Salvador’s limited experience with mining has been a nightmare. Community opposition to large scale mining has resulted in violence against mining opponents, human rights abuses, and death threats. Three anti-mining activists have been killed since 2009; others have received repeated death-threats.

On top of all this, two mining companies operating in El Salvador have sued the government under the US-Central America Free Trade Agreement (CAFTA), alleging that the government’s failure to approve their environmental permits is a violation of their rights as foreign investors in the country. Last week, an international tribunal at the World Bank threw out one of the cases – brought by Milwaukee based Commerce Group. The other case, filed by mining company Pacific Rim, continues. The Vancouver-based company claims to be American for purposes of suing the government under CAFTA. (Canada is not party to CAFTA and thus Canadian companies can’t avail themselves of the “investor protection” clause of the agreement.)

A resident of Cabaňas, El Salvador looks out over a valley where Pacific Rim hopes to begin mining for gold and silver.  Picture by Jeff Deutsch/Oxfam America, 2007.
A resident of Cabaňas, El Salvador looks out over a valley where Pacific Rim hopes to begin mining for gold and silver. Picture by Jeff Deutsch/Oxfam America, 2007.

The opposition to mining in the country, which includes El Salvador’s archbishop, appears to be growing. People within the current as well as the previous government have also expressed reservations about potential environmental and health impacts. And they are right to worry. El Salvador is Latin America’s most “water stressed” country in Central America, according to a UN study: Large scale industrial mining of the kind proposed in El Salvador uses massive amounts of water, which could have a major impact on the country’s agricultural production.

Historically, mining has not helped get countries out of poverty, as we found in research commissioned in 2002. And it is unlikely to provide much benefit to a country like El Salvador, given the environmental impacts it is likely to cause and the lack of integration with the country’s other economic sectors.

President Obama could help ease the tensions by taking two important steps. First, he should state publicly that the US respects the right of local communities to peacefully express their views on whether and under what conditions mining should take place. In that light, the US should condemn any threats, harassment or violence against anyone involved in the mining debate. Second, the president should instruct the State Department to intervene in support of the government of El Salvador in the Pacific Rim case. The US has a right, as well as the technical justification, to do this as a party to CAFTA. Doing so would demonstrate the US government’s commitment to El Salvador’s efforts to pursue peaceful and equitable development on its own terms, without undue pressure from foreign corporations.

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