Politics of Poverty

A Victory for El Salvador’s Right to Decide

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A boy waves a banner while activists chant anti-mining slogans during the VIII Festival for sovereignty and the People's right to self-determination in San Isidro's central park. Pacific Rim's controversial El Dorado gold mine has been the focus of numerous social conflicts at local and national level. Three anti-mining local leaders were murdered in 2009. While a year before, former president Antonio Saca refused to authorize the company's mining permit. This action prompted Pacific Rim to invoked a provision of the Central American Free Trade Agreement (CAFTA) to place the matter in the hands of an international arbitration court. Oceana Gold, who took over Pacific Rim on October 2013 for US $10.2 million , now seeks US $300 million for damages agains the State of El Salvador. San Isidro, Cabañas, El Salvador. September 15, 2014. (Photo: James Rodriguez / Oxfam America)

After a long and expensive battle, finally a win for the people of El Salvador.

When you work at Oxfam and your job is to try to end global poverty and injustice, you tend to focus on the small victories you can get along the way. But last Friday we and our partners in El Salvador got a big one:  a World Bank tribunal decided in favor of the government of El Salvador in a dispute with OceanaGold, a Canadian-Australian mining company that was seeking $300 million in lost profits from the government for denying it a mine permit.  This decision, which took nearly seven years to achieve, affirmed the right of the government to take action to protect communities and the environment even in the face of intense pressure from a transnational corporation. Hopefully it can help strengthen efforts in El Salvador to protect land and water rights and turn the tide worldwide against these kinds of cases in the future.

I should say at the outset that this victory has come at a tremendous cost.  The company’s attempt to push its project forward in the northern Salvadoran region of Cabañas has created intense divisions in the community and has resulted in the death of four mining activists since 2009.  The cash-strapped government of El Salvador has been forced to waste $12 million and countless hours defending its justified actions in this case. This is money and time that could have been spent addressing the country’s endemic poverty, inequality and environmental degradation.

Still, the decision by the International Center for the Settlement of Investment Disputes (ICSID) is a vindication of the efforts by Salvadoran and international activists and the government of El Salvador to push back on an egregious abuse of what are known as “investor-state” dispute settlement provisions of international trade agreements and foreign investment laws.  These provisions, which are a key point of contention in the ongoing dispute over the Trans-Pacific Partnership, effectively give corporations the right to sue a government if they have the temerity to take actions to protect the environment or community rights vis-à-vis corporate interests. Such actions can be considered a “taking” of the property of a company investing in the country.

In the El Salvador case, the government did not issue a mining exploitation license to OceanaGold’s predecessor Pacific Rim. The government argued that the company had not taken the required actions to get the permit.   Pacific Rim refuted this and brought the lawsuit to ICSID.  The $300 million in damages they sought is equivalent to half of El Salvador’s education budget and 2 percent of GDP.

In response to Pacific Rim’s move, civil society in El Salvador and around the world mobilized to pressure the company to drop its case.  From our office in El Salvador, Oxfam worked closely with the Roundtable on Metallic Mining, the Salvadoran civil society coalition working on mining issues. Our lead organizer Sofia Vergara and our ally organizations including the Institute for Policy Studies and CISPES organized protests at the World Bank and launched online petitions.  We also connected representatives of El Salvador’s sizeable US diaspora community with the case and supported advocacy in Australia in collaboration with Oxfam Australia. My colleague Stephanie Burgos and I held numerous meetings with members of the US Congress to raise awareness about the case. We also talked extensively with the US State Department’s legal office about the case in an effort to convince them to support the Salvadoran government’s position (which they ultimately did).  And we supported the Center for International Environmental Law to submit amicus briefs in the case.

It’s hard to say precisely how much impact these efforts had on the outcome of this particular case.  But it’s clear to us that it’s exactly this kind of transnational organizing and influencing work that is needed to respond to this type of abuse of corporate power. The voices of real people affected by these actions need to be heard by those who ultimately make the decisions – by whatever channels are available.

El Salvador is now at a critical juncture following this decision.  There have been various attempts within the Salvadoran congress, actively promoted by civil society, to establish regulations to protect water resources and pass a moratorium on metallic mining in the country.  These have largely been on hold pending the outcome of this case.  Hopefully now an open public debate can take place on these measures and on the potential costs and benefits of mining in El Salvador.  Oxfam, along with our allies and partners in El Salvador, will contribute to those debates and continue to fight to protect the rights of communities and governments to decide what kind of development is best for them.

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