If you’re in the oil business and trying to hide your payments to host governments, last week was a rough one.

Most notably, on Wednesday the European Parliament overwhelmingly approved new European Union legislation that requires oil, gas and mining companies to disclose their country and project level payments in every country of operation. The final tally was 657 for and 17 against. This broad backing of payment disclosure from across the political spectrum was a stinging defeat for Shell, BP and other companies who lobbied European member states and European Members of Parliament. They failed to weaken the final provisions in the Transparency and Accounting Directives that will bind companies in Europe to the same standards as those who report to the US Securities and Exchange Commission as a result of the “Cardin-Lugar” or Section 1504 provision in the 2010 Dodd-Frank Act.

The European Parliament vote approves the political agreement reached in April after long negotiations between the Parliament, European Commission and member states of the European Council. Importantly, the new European requirements contain no reporting exemptions—a clear sign that member states and parliamentarians were unconvinced that alleged host government prohibitions exist. (Oil companies have alleged that such prohibitions exist, but have not been able to provide a single example to the public or the court.)

Also on Wednesday the Canadian Prime Minister Stephen Harper, a conservative politician, said Canada would move to adopt mandatory disclosures for oil and mining companies raising capital in that country. The announcement, coming days before this week’s G8 meeting where the UK hosts have made extractive industry transparency a priority, was warmly welcomed by Oxfam Canada and other groups. The Harper government announcement was quickly followed by the publication Friday of a framework for mandatory reporting developed through a roundtable process by the Mining Association of Canada, the Prospectors and Developers Association of Canada as well as Publish What You Pay Canada and Revenue Watch Institute. The framework recommends no exemptions for future Canadian requirements in line with Dodd-Frank and EU rules.

To make matters worse for those companies who want to hide the truth, even Switzerland, a country not known for financial openness, are backing mandatory disclosures. After a motion was passed by the Swiss Parliament last week calling on the government to require disclosures by extractive companies and commodities traders, the Swiss governments said it would approve this approach. (Switzerland is home to, among others, the giant commodity trader and miner Glencore Xstrata as well as oil trading firm Vitol.)

These events in the European Parliament, Canada and Switzerland represent huge breakthroughs in the battle for transparency. Oil companies who are pursuing litigation to try to overturn the Dodd-Frank provision and weaken the SEC rule are now being overtaken in their secrecy fight by real world events.

During oral arguments on June 6^th in the American Petroleum Institute vs. Securities and Exchange Commission case, the District Court judge seemed to express skepticism regarding industry claims that they have a First Amendment right to keep payments secret. Judge John Bates said there are “oodles and oodles” of situations where the government has compelled disclosure requirements in all sorts of regulatory contexts that have not merited heightened protection under the First Amendment. Oxfam and SEC lawyers pushed back strongly on industry arguments.

Rather than dropping the lawsuit (take action to call for this here), which former UN Secretary General Kofi Annan has called a “strategic folly”, companies such as Exxon, Shell, BP and Chevron have said in letters to the Publish What You Pay coalition that they continue to back the US litigation. Too bad for Shell and BP that they’ll now have to disclose in the EU as well.

All-in-all it was a very bad week for oil industry secrecy-mongers, but a great week for citizens in resource-rich nations who have a right to know how much their governments are being paid for resources extracted from their lands.

Emily Greenspan is an extractive industries policy and advocacy advisor with Oxfam America.

Last week the International Council of Metals and Mining (ICMM) released a new mining and indigenous peoples position statement requiring its 22 member companies to integrate Free Prior and Informed Consent (FPIC) into their practices around engagement with indigenous communities. ICMM is an industry association aiming to promote sustainable development in the mining sector. While certain provisions weaken ICMM’s statement, overall ICMM’s commitment to FPIC reflects a gradually turning tide which began to pick up momentum in 2011, when the World Bank’s International Finance Corporation (IFC) announced a similar FPIC requirement. Increasingly, companies are recognizing FPIC as a fundamental aspect of human rights due diligence that can help to create shared value for companies and communities and mitigate the risk of social conflict down the road.

San Andres gold mine in Honduras. Photo: Edgar Orellana / Oxfam America

ICMM’s commitment to FPIC is an important step, demonstrating that the mining industry is beginning to recognize that the terms of the debate have shifted. No longer should companies be discussing whether they need to consult communities, but rather whether and how they can ensure community consent. Indigenous peoples’ organizations (along with Oxfam and others) have worked many years to encourage the industry to embrace FPIC, and ICMM’s commitment will be useful to promote accountability among ICMM members and to encourage more companies to follow ICMM’s lead.

With its new position statement ICMM requires member companies to begin incorporating FPIC into their practices in over 800 project sites around the world, with commitments coming into full effect by May 2015. ICMM describes FPIC as both a process and an outcome and states:

The outcome is that Indigenous Peoples can give or withhold their consent to a project, through a process that strives to be consistent with their traditional decision-making processes while respecting internationally recognized human rights and is based on good faith negotiation.

Importantly, the statement recognizes that negotiations should be carried out in good faith and that in certain circumstances indigenous peoples may choose to withhold their consent to a project. The statement applies FPIC both to new projects and changes to existing projects likely to have significant impacts on indigenous peoples.

However, some of the FPIC language later in the policy could create confusion for companies. For example, the statement references a 2008 guidance document from the UN’s Department of Economic and Social Affairs which states that “neither Indigenous Peoples nor any other population group have the right to veto development projects that affect them,” so FPIC should be considered a “principle to be respected to the greatest degree possible in development planning and implementation.” ICMM does not elaborate on the difference between “withholding consent” and “veto.” Nor do they reference more recent guidance from the UN on FPIC which states, “Consent is a freely given decision that may be a ‘Yes’ or a ‘No,’ including the option to reconsider if the proposed activities change or if new information relevant to the proposed activities emerges.”

ICMM generates further ambiguity by stating: “In balancing the rights and interests of Indigenous Peoples with the wider population, government might determine that a project should proceed and specify the conditions that should apply. In such circumstances, ICMM members will determine whether they ought to remain involved with a project.” Effective FPIC implementation requires that companies be willing to respect the decision of indigenous communities regarding whether a project should be developed regardless of a government’s interest in pushing ahead.

Finally, ICMM limits the FPIC requirement to projects that impact indigenous peoples. However, community consent is also emerging more broadly as a principle of best practice for sustainable development in any community. Oxfam recognizes that FPIC is a right in international law specifically for indigenous peoples, but also believes that all communities affected by oil and mining projects must be able to participate in effective decision making and negotiation in processes that affect them.  When they say “no” to a project, companies and governments need to respect this.

As with all of the new policies I’ve written about in previous blogs (IFC, Peru’s Indigenous Peoples Consultation Law, and individual oil and mining company policies), the true test will be in implementation. ICMM’s members must prioritize good faith engagement and respect indigenous peoples’ decisions with regard to oil and mining project development. If policy commitments fail to move beyond mere lip service, rights violations will continue and the risks of violence and social conflict will only increase.

The chair of the Africa Progress Panel, former UN Secretary General Kofi Annan, has pushed back on an oil industry attack against the landmark US Dodd-Frank Act oil and mining payment disclosure provision. In an op-ed in today’s New York Times, Annan said the lawsuit launched by the American Petroleum Institute against the US Securities and Exchange Commission was a “strategic folly” and those companies supporting the suit, such as Chevron, Exxon, BP and Shell were “swimming against the tide of reform”.

Former UN Secretary General Kofi Annan, Chair of the Africa Progress Panel. UN Photo/Evan Schneider

The Africa Progress Panel’s 2013 report “Equity in Extractives” was released today in Cape Town and focuses on steps to take to ensure that Africa’s oil, gas and mining boom actually benefits the majority of African’s rather than a select few. The panel includes the former head of the IMF, Michel Camdessus; former US Treasury Secretary Robert Rubin; former Nigerian President Olusegun Obasanjo; former first lady of Mozambique Graca Machel; and Peter Eigen, founder of Transparency International and former chair of the Extractive Industries Transparency Initiative, among others.

These heavy hitters stand behind a report that says there “is no credible evidence to indicate that the Dodd-Frank requirements will impose significant additional costs, let alone threaten the competitive position of some of the world’s largest companies.” The report says that the “Cardin-Lugar” or Section 1504 provision of Dodd-Frank and forthcoming European Union disclosure requirements provisions represents an important opportunity for African civil society groups to work with multinational companies to “achieve higher standards of disclosure” but notes that some companies appear “to be squandering that opportunity” with the US lawsuit.

In advance of June’s G8 summit, the report says “all countries must adopt and enforce” project-by-project disclosure standards such as in the US and EU—“as major players in Africa’s extractives sector, Australia, Canada and China should be the next countries to actively support this emerging global consensus.”

Oxfam’s new Executive Director, Winnie Byanyima, is from Uganda, a country undergoing its own oil boom, and is in Cape Town for the World Economic Forum Africa. She said “African governments must use oil, gas and mining to raise revenue, but this boom must not steamroll the rights of communities living on top of Africa’s mineral wealth. It is important that local communities are informed and consulted about extractive industry projects that affect them.”

With the political boost from today’s African Progress Report we are one step closing to realizing the so far unrealized potential of Africa’s resource endowment.

Emily Greenspan is an extractive industries policy and advocacy advisor with Oxfam America.

Recent statements from the Peruvian government do not bode well for implementation of Peru’s new Indigenous Peoples Consultation Law (Consultation Law). The landmark law, passed in 2011 and now being implemented, requires the Peruvian government to consult indigenous peoples affected directly by development policies and projects such as oil drilling, mining, roads and forestry. Consultations must aim to achieve agreement or consent. If implemented effectively, the law could help reduce the number of violent conflicts that frequently emerge in the country’s oil and mining industries.

However, last week Peru’s Vice Minister of Culture Ivan Lanegra—responsible for overseeing implementation of Peru’s Consultation Law—resigned in protest following Executive branch declarations that highland (or campesina) communities do not qualify as indigenous peoples. At the same time, the Peruvian government announced that it will proceed with 14 mining projects located in the Peruvian highlands without prior consultation with neighboring communities.

The Peruvian government should recognize publicly that many highland communities meet national and international criteria for identifying indigenous peoples, and should immediately begin prior consultation processes in accordance with the law. At the same time, the less progressive companies currently fighting the law in Peru should recognize that if they do not comply with law they will be at a competitive disadvantage in the end.

Worrisome signals from the government

Photo: Jessica Erickson / Oxfam America

In a speech on April 28, President Humala stated that, “Basically there are no native communities…in the sierra [highlands], the majority are agrarian communities resulting from agrarian reform. For the most part native communities are found in the jungle, those called ‘no contactados’ [uncontacted communities living in voluntary isolation]”. This worrisome statement fails to recognize that communities living in voluntary isolation represent only a small percentage of indigenous communities inhabiting forested areas in Peru, and directly contradicts the Consultation Law which states that highland or Andean communities may be considered indigenous peoples as long as they meet certain objective criteria specified in the law. Peru also has a law protecting indigenous knowledge of biological resources which states that highland communities may be considered indigenous peoples.

Peru’s Cabinet (Consejo de Ministros) claims that by moving ahead with 14 mining projects without prior consultation with communities they are attempting to “unfetter” these projects from bureaucratic requirements. However, the government’s approach is shortsighted. If it chooses to proceed with projects impacting indigenous peoples without consultation it would violate not only its own laws, but also international human rights law.

Human rights and business case for community consent

United Nations Special Rapporteur on the rights of indigenous peoples James Anaya stated in a public speech in Lima on April 25:

In my work as special rapporteur on the rights of indigenous peoples for the United Nations, the majority of the problems that reach my attention reflect a lack of adequate consultation with indigenous peoples, in particular on decisions related to development or natural resource extraction projects on their territories…Various treaties, in addition to [International Labor Organization] Convention 169, support the consultation standard…Consultation and its link to the principle of free, prior and informed consent are central elements for a new model of relationships and development.

In fact, if Peru proceeds with mining projects without consulting indigenous communities, the government will risk being taken to the Inter-American Court of Human Rights, which has interpreted Free Prior and Informed Consent (FPIC) to apply to development projects with significant impacts and has, in several instances, ruled that states failed to meet their FPIC obligations.

In addition, while the government may hope to woo mining companies by bypassing consultation processes, ultimately this approach will be to the detriment of mining companies’ bottom lines as well given the high economic cost of social conflict in the extractive industries. A 2011 study by researchers from Harvard Kennedy School and the University of Queensland found that a world-class mining project (capital expenditure between US$3-5 billion) stands to lose approximately US$20 million per week in lost productivity as a result of delayed production from social conflict. In Peru, mining giant Newmont reported that it lost approximately $2 million per day in the first few days alone after local protests paralyzed its Conga mining project.

In recent years, several oil and mining companies have adopted public policies in favor of securing community approval prior to moving projects forward. We recently released a report showing that 13 of 28 oil and mining companies reviewed have made public commitments to FPIC (five with explicit commitments and an additional eight with indirect or qualified commitments). Companies are beginning to get the message – those that fail to consult communities early and adequately risk facing delays and huge costs down the road.

Implications for the Latin America region

Currently, several other countries in Latin America are considering developing consultation laws similar to Peru’s Consultation Law. Peru has emerged as a leader in the region on community consultation issues, but stands to lose that position if the law is not implemented adequately. A rollback of the law could have serious repercussions for many indigenous communities affected by oil and mining projects throughout Latin America.

It sounds like a late-night TV infomercial, but it’s true. In the midst of a fiscal crisis, the US government receives no royalty payments for gold extracted from federal lands. Yesterday, the US Government Accountability Office (GAO) released a report on mineral extraction and revenues from land administered by the Department of the Interior. The report, requested by Senator Tom Udall and Rep. Raul Grijalva, found that not only does the government not collect any royalty for “hardrock minerals” such as gold, silver, copper, and uranium, it does not even know how much of such minerals are being produced! “We found that federal agencies generally do not collect data from hardrock mine operators on the amount and value of hardrock minerals extracted from federal lands because there is no federal royalty that would necessitate doing so,” the report said.

This bizarre state of affairs is a result of the General Mining Act of 1872 which, amazingly, still governs hardrock mining and allows operators to mine without paying any royalty. No benefits and significant impacts on the environment and Native and other communities—sounds like a great deal. In contrast, oil and gas royalties from federal lands provided $10.1 billion to the Treasury each year in 2010 and 2011.

The government has been “leaving a huge pot of money on the table”, says Rep. Grijalva. “There’s no reason to keep these extraction and royalty laws out of date… Keeping the public and Congress in the dark any longer about what’s going on with federal property doesn’t serve any public purpose, and it should end.” said Grijalva, a member of the House Committee on Natural Resources.

Even when royalties are collected for oil and gas, the rates are quite low. Many offshore oil lease royalty rates are as low as 12.5 percent. But it gets worse. The “effective royalty” rate found by the GAO study—the amount the government actually collected—was in some cases significantly lower than the rate specified in the lease. (Though it was not a focus of the report, it is worth noting that for the years studied in this report, FY10 and FY11, surprisingly little revenue from these offshore leases, unlike oil and gas activities on public lands, comes back to the coastal communities and states bearing the brunt of the risk from these activities, particularly across the Gulf of Mexico. Much has been written in recent weeks about incoming Senators Ron Wyden, Lisa Murkowski, and Mary Landrieu’s interests in addressing this disparity in revenue sharing in the 113^th Congress.)

It should not take Members of Congress asking the GAO for information for citizens to know how much is being generated by our nation’s oil, gas and minerals. One part of the fix is implementation of the Section 1504 (the so-called “Cadin-Lugar” provision) of Dodd-Frank. The Securities and Exchange Commission has issued final rules for Section 1504 that require all oil, gas and mining companies reporting to the SEC to disclose royalties and other payments on a project-by-project basis—both in the US and abroad.  The Interior Department has expressed support for this provision. Oxfam and the Publish What You Pay US coalition has been working for the past two years on getting this provision implemented and Oxfam is now part of a legal battle pitting the US oil industry against the SEC.

US implementation of the international voluntary Extractive Industries Transparency Initiative by the Department of the Interior may also help. But as the GAO notes it is unclear whether production of hardrock minerals will be required—as in some other countries—and full reporting and implementation may be four years down the road.

Ultimately, it is up to Congress to reform the outdated 1872 mining law. Rep. Grijalva has cosponsored a bill, the Fair Payment for Fair Payment for Energy and Mineral Production on Public Lands Act, which would set a 12.5 percent royalty rate on hardrock minerals and says “he looks forward to supporting and strengthening an updated version in the upcoming Congress.”

Indigenous people hold their own consultation in Guatemala. Photo by Oxfam.

This blog was written by Emily Greenspan, Oxfam America extractive industries policy and advocacy advisor. 

Watch a panel discussion on Oxfam’s Community Consent Index Report featuring the authors here.

This year, Oxfam has written about protests and conflicts near oil and mining projects operated by companies both large (like US-based Newmont and Switzerland-based Xstrata) and small (like the Ghanaian company Solar Mining). New examples are cropping up frequently. Just this month, indigenous communities stopped production of nine Maple Gas oil wells in the northern Peruvian Amazon over alleged pollution. The leader of the affected Canaan de Cachiyacu communities stated that they were not consulted prior to oil development. Also this month in Peru, the Canadian oil company Talisman Energy—which has drawn criticism from some environmental NGOs for failing to secure indigenous peoples’ consent—withdrew from its concession in the northern Amazon.

Given this context, it may not be surprising that some oil and mining companies are beginning—at least on paper—to recognize that they benefit from strong human rights and community engagement policies. My colleague Marianne Voss and I recently completed research that surveyed the human rights policies of 28 oil, gas, and mining companies with a particular focus on the issue of community consent—looking closely at whether company policies required local community approval prior to implementing projects. This research followed and expanded on a similar report that Oxfam America produced in 2009.

The research, titled the Community Consent Index, found that five companies with a total market cap of $180.58 billion (Inmet, Newmont, Rio Tinto, Talisman, and Xstrata) have made explicit public commitments to attaining Free Prior Informed Consent (FPIC), a number which has doubled since the 2009 report. Another eight companies (including Anglo American, BP, Repsol, and others) have made somewhat qualified or indirect commitments to FPIC. Overall, two-thirds of the companies reviewed have incorporated in their policies concepts related to community consent, community support, or social license. Increasingly companies are recognizing and embracing the business case for community consent.

The research also looked more broadly at oil and mining company adoption of public human rights commitments and policies, and findings suggest that it is now standard practice for companies to commit to protecting human rights. All but two of the 28 companies reviewed have made explicit commitments to human rights, and all but five have made explicit commitments to indigenous peoples’ rights. Just over half of the companies surveyed have reported developing a human rights policy, with eleven companies making their human rights policy publicly available and six of those companies also publishing implementation guidelines.

As we celebrate the fifth anniversary of the United Nations Declaration on the Rights of Indigenous Peoples this month, it is encouraging to see increasing company commitments to FPIC – a right for indigenous peoples that is enshrined in the declaration. However, there’s much more work to be done, not only in terms of strengthening company policies, but also towards the goal of improving implementation of consultations with communities. (Our report doesn’t attempt to measure implementation against policy). We hope that communities impacted by mining or oil projects will use the report to monitor implementation and report cases where policies have not been followed.

Consultations should aim to achieve community consent and empower communities to make decisions about the use of their lands and natural resources. In a separate piece of research, Oxfam has looked at three consultation experiences in Peru and Bolivia that resulted in agreements between indigenous peoples and company or government representatives, and has identified some interesting lessons learned. Of course, effective implementation of consultations remains a critical challenge.

Though the trends we are seeing on paper are positive, there remains much to be done both on the policy and on the implementation front. Let’s hope that with the next iteration of Oxfam’s Community Consent Index in two years we see many more oil and mining company commitments to community consent, as well as more public human rights policies and implementing guidelines.

It took far longer than I—or any of us at Oxfam—expected, but the US Securities and Exchange Commission (SEC) has finally issued binding regulations to implement the oil, gas, and mining disclosure provisions contained in the 2010 landmark Dodd-Frank Wall Street Reform Act. Starting in 2014, an estimated 1,100 companies will have to start disclosing the payments they make to governments on a country-by-country and project-by-project basis. This includes American companies such as ExxonMobil and Chevron, foreign companies, such as BP and Shell, and some companies from emerging markets such as China, India, Brazil, and Russia.

On August 22, the SEC approved regulations to enforce Section 1504 (“Cardin-Lugar”) passed over two years ago. (Since the SEC was more than a year past the Congressionally mandated deadline, Oxfam America used public pressure tactics—including stunts in front of the SEC and Chevron—as well as litigation to try to compel the SEC to act.)

Oxfam activists outside Chevron's headquarters in Houston. Photo by Scott Dalton.

While many were worried that the SEC would give in to the demands of the oil industry to issue watered-down regulations, and Oxfam America is still completing a legal review of the regulations, the agency appears largely to have stuck to the statutory language and Congressional intent. For example, the SEC did not grant any exemptions to the disclosure requirements for covered companies. Some oil companies had said that they should be allowed to withhold disclosures in certain countries that legally prohibit disclosing government payments, but Oxfam America and its allies in the Publish What You Pay US coalition made it clear to the SEC that such prohibitions have not been shown to exist.

The requirements as enacted have been hailed in the developed and developing world. Such ideologically diverse publications as the Financial Times and The Nation have both praised the SEC move. The FT said in an editorial (“Sunshine Rules”) that the new SEC regulation “puts legal force behind a demand long pushed by civil society organisations: that extractive companies disclose the payments they make to host governments… the transparency rule will make a real difference.”

Hannah Owusu-Koranteng, one of the founders of WACAM, a mining activist group and Oxfam partner. Jeff Deutsch/Oxfam America.

On the ground, activists are eagerly awaiting the disclosures. In Ghana, Hannah Owusu-Koranteng, an Oxfam partner from WACAM, a mining activist group, said the project-level disclosures required will “provide communities and local officials in Ghana with detailed information on the revenue flowing to government from gold extracted from their lands.” (Just before the SEC vote, I was in Ghana’s Western Region – a part of the country rich in gold and oil – looking at our district assembly budget monitoring work. SEC project-level disclosures will certainly help district officials and citizens “follow the money”.)

In Cambodia, a country rich in natural resources but where more than 50 percent of the population lives on less than two dollars a day, very little public information about oil and mining revenue is available. SEC disclosures by Chevron and others will put information into the hands of activists who have been failed by international voluntary measures such as the Extractive Industries Transparency Initiative (EITI). The SEC move has made a big splash, with coverage in the Phnom Penh Post and Khmer-language media. Oxfam partner Cambodians for Resource Revenue Transparency hailed the regulation as a landmark for the transparency movement.

Reading through the SEC’s 231-page explanation of the rules (and I’ve never been more excited to read a government regulation!), I was inspired by the involvement and impact of civil society groups from around the world who shared their views—and evidence—directly with the SEC drafters in Washington through a transparent regulatory process. Input from groups in Ghana, Peru, Ecuador, Equatorial Guinea, Angola, Nigeria, Burma and elsewhere shared a common theme—this information will be vitally important in our fight for transparency.

Enactment of the regulations is now having a global ripple effect. In Europe, the European Parliament has scheduled an important committee vote on a proposal to possibly match—or go beyond—the US requirements and European Members of Parliament are pointing to the final SEC rule to push for strong requirements there. (Companies that are “cross-listed”—on stock markets in the US and Europe—already have to comply with the strong SEC rules, so Oxfam believes they should drop their efforts to slow or weaken progress in Europe.) Also, last week Publish What You Pay Canada and Revenue Watch Institute announced an agreement with the two largest mining industry associations in Canada to develop mandatory reporting requirements for Canadian stock exchanges.

Real social progress takes time (and monkeys). It’s been a 10 year fight to get this far. Next week the Publish What You Pay coalition celebrates its 10^th anniversary with a well-timed global conference in Amsterdam bringing together more than 250 activists from 50+ resource-rich countries. The next 10 years must be focused on finishing the job and putting this information to work to ensure that oil and mining billions are invested in people, not lining pockets!

Recent press reports suggest that Haiti is about to reap a major bonanza in minerals such as gold, copper, and silver—more than $20 billion-worth according to government estimates. This is obviously a huge sum of money in the poorest country in the Western Hemisphere. The country receives hundreds of millions of dollars in aid each year, so mining could theoretically allow the country to end its dependence on this aid.   Because of the country’s long-running political instability, the country is largely “under-explored” (in mining industry lingo) and so this resource wealth remains largely untapped, despite some previous mining activity in the country.  Mining companies, such as US-based Newmont, are already streaming in to start exploiting it.

With this much wealth in the ground, it’s tough to fault the Haitian government for wanting to “dig it up”, in the recent words of Haiti’s prime minister Laurent Lamonthe.  Nevertheless, leaving the stuff in the ground at least for the foreseeable future might actually be the best option for Haiti if the country wants to ensure that these minerals actually benefit the country instead of making its governance, human rights, and environmental problems even worse.  The fundamental issue is that the revenues that come from natural resources have a lousy global track record of contributing to economic development in poor countries—especially those that face Haiti’s level of governance challenges.

Natural resources can produce a lot of money very quickly for governments during boom times (like now) that is easily manipulated by corrupt government officials and squandered in off the book transactions, poorly-conceived vanity projects or outright corruption.  There are abundant examples of this—particularly in the oil states of Africa, to which Haiti might most readily be compared.  However, even in relatively-well governed middle-income countries, mineral revenues have generally not trickled down to communities in mining-impacted areas. Peru is the most prominent current example of this, where despite impressive mining-driven economic grown over the past 10 years, widespread community protests have put the continued viability of the mining sector in jeopardy.

Photo: Ami Vitale/Oxfam America

If Haiti is to avoid, or at least mitigate, these problems in developing its mining sector, a number of important steps need to be taken right now.  I’ll describe these in turn below.

First, the capacity of the government to manage mining revenues needs to be strengthened drastically. This means ensuring that government officials in charge of negotiating mining contracts know (1) the real value of the country’s resources and (2) what a fair government take should be.  Many African countries have negotiated embarrassingly bad agreements with oil and mining companies that have left governments with only a fraction of the revenues they should have been getting.  Mining company lawyers are extremely skilled at getting the best possible deals for their clients, which often include clauses that allow them to pay almost nothing in taxes. International donors should help Haitian officials ensure that they are getting a fair deal and not getting taken to the cleaners by mining company sharpies.  On the flip side, Haiti would be an excellent place for mining companies to put into practice their current rhetoric about wanting to be good “development partners.”  Companies operating in Haiti, e.g. Newmont, should commit themselves to doing deals that are in the best interests of the country—even if that means forgoing profit that these companies could otherwise obtain.

A critical corollary of increased government capacity is transparency.  The Haitian government and mining companies should agree to publicly disclose all contracts for mining projects, as is now required by projects funded by the World Bank’s International Finance Corporation. There is no reason that these contracts can’t be made public.  “Business confidentiality” is a bogus claim that has been widely debunked.  Mining companies should commit from Day 1 to fully disclose all revenues, taxes and other payments to the Haitian government. Newmont already does this in other countries; they should continue in Haiti. The smaller junior companies that are operating in the country should do this as well.  Without exception. The Haitian government should insist on full revenue disclosure as a pre-condition of any contract they negotiate with a mining company.

Setting up a multi-stakeholder oversight committee to monitor Haiti’s use of mining revenues would also be a good idea. The World Bank tried this with Chad’s  oil revenues and it was largely a failure. However, it might work better in Haiti, which gets more international attention and has a somewhat stronger civil society than does Chad. Such a committee should include civil society representatives with training and capacity to understand mining revenue issues.  The committee should be given full access to all information on mining revenues coming into the country and government expenditures made using those revenues.

Having a plan for how Haiti’s mining revenues will actually be spent is also critical. This seems to be the missing piece in a lot of mining-based development schemes. (I explore this issue more deeply in this book.) It’s just sort of assumed that all that money will be used constructively somehow. A national-level development plan that includes explicit commitments to developing industries, supporting rural agriculture and funding social protection programs should be developed with full participation of Haitian civil society.  Despite its troubled history, Haiti does have certain advantages, not least of which is its proximity to the US, which could be an even greater market for Haitian exports than it is now. Channeling mining revenues into industries that could help diversify the country’s export based and link it to the US market could be a productive use of that money.  The hows and whys of this, however, would need to be explained clearly. Donors, particularly the US, would have an important role to play.

There’s no magic formula for ensuring that the exploitation of Haiti’s mineral wealth doesn’t end up making the country even worse off than it is today.  The steps listed above are a starting point and would need to be combined with efforts to address the inevitable negative social and environmental impacts mining will have at the local level.  What is clear is that the time to address these issues is right now, before development of the sector gets any further down the track and Haiti squanders what could be a unique opportunity to break out of a too-long history of poverty and suffering.

Emily Greenspan is an extractive industries policy and advocacy advisor with Oxfam America.

In previous blogs, I’ve talked about Oxfam’s “Right to Know, Right to Decide” campaign and our global advocacy to promote the principle of Free, Prior and Informed Consent (FPIC), which holds that local communities must be adequately informed about oil, gas, and mining projects in a timely manner and given the opportunity to approve (or reject) these projects. International law and jurisprudence recognize FPIC as a right for indigenous peoples. However, in practice some companies also recognize the value of obtaining a “social license” from local communities or committing to a higher FPIC standard, whether or not their projects impact indigenous peoples. Governments and companies that fail to implement FPIC adequately run the risk of finding their projects mired in social conflict.

In Ghana, tensions have emerged between community members and mining companies around issues such as the environmental impacts of mining and land acquisition disputes. For example, in the small city of Prestea in the western region, tensions between community members and Bogoso Gold Mines (a subsidiary of Golden Star Resources) arose as a result of cyanide spills and alleged damage to homes from mining explosives and eventually led to project suspension.

Last month I had the opportunity to talk with members of the Saaman community, located in the eastern region of Ghana, about their opposition to a mining project operated by the Ghanaian company Solar Mining. Many Saaman community members, including the local Assemblyman, have protested against the project over concerns regarding its impact on water quality. According to local community members, the Ghanaian police and military forces have responded to local opposition using violence and aggression. During our visit, community members reported incidents of police and military forces employing intimidation tactics such as shooting guns, striking them with guns, and pulling them from their beds at night to threaten and harass them. The situation has become quite tense, with no clear resolution in sight.

Oxfam parter organization WACAM has been supporting members of he Concerned Citizens Association of Prestea, such as Dominic Nyame pictured above, in their efforts to negotiate with a mining company around issues related to air and water pollution, and the proposed expansion of mining operations. Credit: Jeff Deutsch/ Oxfam America

Several community members also reported frustration with not having been consulted on the mining project prior to the decision to develop the mine. Many community members that we spoke with recognized the authority of their traditional leader (or chief) to make decisions that affect the entire community, and also acknowledged their chief’s approval of the mining project. However, they noted that traditional leaders have an obligation to consult with their constituencies, and in this case it appears that this decision-making process was short-circuited. Several community members that we spoke with reported inadequate consultation around the mining project, and some contrasted this with the example of a highly participatory community engagement process around planning for a recent school building project. This community input will feed into a research report on FPIC and consultation processes in Ghana that Oxfam partners will publish later this year.

FPIC processes offer governments and companies a valuable tool to facilitate participatory decision-making. When implemented early enough and effectively, these processes safeguard against the emergence of social conflict by ensuring that projects that diverge with community land use priorities do not proceed. At the same time, for projects that communities chose to approve, FPIC processes represent an opportunity for project developers by offering a framework for regular and ongoing dialogue and negotiation among the parties.

Peru’s long-simmering mining-related social conflicts blew up again last week in the southern province of Espinar, where police shot and killed two local community members who were protesting for greater benefits from giant Swiss mining company Xstrata. As I’ve written previously, Peru has been beset by such conflicts for more than 10 years, as high global prices drive more and more mining in the country—considered to have one of the world’s most favorable geological endowments. Late last year, the Minas Conga project in the northern province of Cajamarca was also hit by protests as community members blocked highways to prevent construction of the project by US-based Newmont. The $5 billion project is Peru’s largest foreign investment.

Villager from Espinar, Peru views Tintaya mine’s tailings dam. Diego Nebel/Oxfam America.

The protests in Espinar and Cajamarca, occurring at opposite ends of the country, have been cited by some analysts in the country as sort of twin poles of a broad anti-mining conspiracy. This is a fairly ridiculous accusation given, among other things, that the protests in Espinar weren’t “anti-mining” but actually mainly about demanding greater benefits from mining. (How could they be opposed to mining if they want more money to come from it?) There’s also no evidence that people in Cajamarca have any particular ideological opposition to mining. They just don’t happen to want four lakes destroyed that they use to support their agricultural livelihoods. Even Marco Arana, a Catholic priest from Cajamarca who is seen by some as the Svengali of the “anti-mining” movement, has said clearly he’s not opposed to mining in general, but is opposed to mining activities that destroy watersheds and contaminate groundwater.

President Ollanta Humala was elected a year ago with a fair amount of hope that he could provide a solution to these conflicts, but much remains the same. The killing and violence continue, as in Espinar. The Ministry of Energy and Mines retains ultimate authority for approving mining companies’ environmental impact assessments (EIAs)—a direct conflict of interest that undermines confidence in the independence of governmental oversight of the mining industry. And the mining industry continues to push forward at an alarming pace. In research that will be published later this year by Oxfam America, we will show graphically how large swathes of the country have been conceded to mining and oil interests. This is of particular concern in agriculturally productive areas, where mining concessions now cover more than 30% of these lands.

Humala has spoken of a need for a “new vision” for mining in the country. To this point, however, that vision hasn’t included a lot of details. There are a few basic starting points that we would propose for his consideration. One is zoning, or “ordenamiento territorial” in Spanish—basically identifying those areas in the country that are socially and environmentally viable for mining and those that aren’t. Our partner Cooperaccion has done extensive work on this issue.

Another key point is security sector reform, particularly relating to security forces that protect mine sites. This is a sector that is rife with abuse, as we saw in Espinar. In Peru, mining companies employ private security contractors and local police to protect their operations. In fact, police often use mine camps as bases for operations, including storing large caches of weapons. Companies are therefore ultimately accountable for actions that these forces take. A few years ago, in the process of resolving a complaint we filed against Newmont Mining for human rights abuses at its giant Yanacocha Mine in Cajamarca, we learned that police forces can in effect instantaneously “deputize” private security contractors in the midst of a police operation. This situation is ripe for abuse; one in which accountability becomes ambiguous. These ambiguities need to be resolved and mining companies and police need to reaffirm their commitments to human rights standards including the Voluntary Principles on Security and Human Rights, a global standard for human rights in the extractive industries.

Additionally, the Humala government needs to end criminalization of mining protests. Peruvians, like all people, have a basic human right to peacefully express their views. In no situation should peaceful protest be met with violence or human rights abuse as happened in 2005 in the northern department of Piura in which 28 community members were detained and tortured (yes, tortured) by private security forces and police for opposing the Chinese-owned Rio Blanco project. (Just this week false charges brought against these protestors were dropped, thanks to the dogged efforts of Oxfam America partner Fedepaz.) In Espinar, the national government has declared a state of emergency, suspended civil liberties and detained mayor Oscar Mollohuanca, allegedly for inciting the protests.

Finally, strengthening Peru’s environmental management capacity is critical to increasing confidence among local communities in the government’s ability to protect their lives and livelihoods. It’s simply not the case that mining-related environmental problems are a “thing of the past,” as some in Peru argue. All mines, including those run by big modern companies, pollute the environment in some way. Closely monitoring these impacts and holding companies accountable is critical. Moving final authority for approving mining EIAs out of the Ministry of Energy and Mines and into a strengthened Ministry of the Environment would be an important step in this direction.

Ultimately, if Peru is to find a way out of this cycle of conflict (which at present shows no signs of abating), the government should take steps like those above and also articulate a vision for how mining – and the revenues it generates—can link more harmoniously and beneficially to traditional agricultural livelihoods that predominate in the highland areas where most mining takes place in the country. Finding a way to channel the substantial revenues coming from mining to sustainably support these livelihoods and protect the water and land on which they depend seems to me to be critical to finding a way out of the current cycle of conflict. Short of that, the protests—and violence—will surely continue.