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  • El Salvador's gold fight goes international

    After activists block their permit, Canadian company uses US trade agreement to sue Salvadoran gov't -   November 15, 2009
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    Five representatives of five organizations in El Salvador that form part of the National Coalition Against Mining, known as La Mesa, were in Washington, DC last month to accept the Letelier-Moffitt International Human Rights Award. The recognition comes at an interesting time as the group's successes in blocking mining exploitation in their small country, have brought about a unique legal situation. Namely, a Canadian mining company is suing the government of El Salvador for $100 million, through a US subsidiary under the Central American Free Trade Agreement (CAFTA). The Real News followed the group of activists around Washington, DC, and interviewed the CEO and president of the company behind the suit, Pacific Rim. Produced by Jesse Freeston.


    El Salvador's gold fight goes internationalJESSE FREESTON, PRODUCER, TRNN: On October 15, representatives of El Salvador's national coalition against mining, known as La Mesa, were in the Washington, DC, to receive the Letelier-Moffitt international human rights award.

    VIDALINA MORALES, ECON. AND SOCIAL DEVELOPMENT ASSN. (SUBTITLED TRANSLATION): La Mesa is made up of communities from the country's northern zone, especially from the departments of Caba�as and Chalatenango and ecological, human rights, religious, local development, and research organizations.

    FREESTON: As of today, no mining exploitation permits have been awarded in El Salvador, and La Mesa representative Vida Morales claimed this as a victory of the social movement.

    MORALES: Our principal victory is the decision of the government to deny permits to this poisonous industry, in spite of strong pressure from companies like Canada's Pacific Rim and Commerce Group from the US, companies that are now suing our country through International Center for Settlement of Investment Disputes (ICSID) for having denied them exploitation licenses.

    FREESTON: The court in question, known as the ICSID, is an arm of the World Bank that hears cases brought forward by corporations against governments. The case of Pacific Rim Mining Corporation is particularly interesting. The company alleges that the Salvadoran government's decision not to grant the mining permit is in violation of the Central American Free Trade Agreement, known as CAFTA. The catch is that Pacific Rim, along with over 60 percent of the world's mining corporations, is based in Canada, and Canada is not a party to CAFTA. So Pacific Rim is breaking new ground by filing the suit through a subsidiary based in Nevada. They are asking for $100 million in damages. The Real News spoke to Tom Shrake, CEO and president of Pacific Rim.


    TOM SHRAKE, PRESIDENT & CEO, PACIFIC RIM: You know, there's only so much that I'm allowed to say. Obviously, my hands are somewhat tied by the lawsuit itself. But the basic premise of the case is that El Salvador has mining laws, it has investment laws, it has environmental laws, and we followed all those laws, and we still don't have a permit. So that's basically the basis of the CAFTA arbitration case.

    FREESTON: The country still has the right to deny a permit, even if you follow those practices [inaudible]

    SHRAKE: Under their law, they have the right to deny the permit if there is a reason to deny the permit.

    FREESTON: Okay. So the argument's there hasn't been a reason to deny the permit.

    SHRAKE: Correct.


    FREESTON: Activists in El Salvador provide a number of reasons for denying the permit, including the demonstrated effects on water supply and contamination that other communities around the world have experienced from gold mining. El Salvador is reportedly tied with Haiti for the least access to potable water in the Western Hemisphere, and the little water that they do have is already contaminated. A recent report from the World Economic Forum states that only one-third of the country's water is healthy enough to drink. Opponents to the mine say this water crisis demonstrates why El Salvador cannot experiment with an industry that has contaminated and dried up water sources around the world. Pacific Rim claims that their mine will be an industry leader with no negative effects on the environment or public health, but Salvadoran activists say that they have never been shown in example of this benign form of gold mining in action.

    SHRAKE: There are very few operations in the world that go to the length that we've proposed in our proposed design to the government of El Salvador�the combination of double-lining the tailings pond, destroying cyanide, and putting a water-treatment plant downstream for any waters that are released from the tailings facility. There's only one mine in the world that I know of that has gone to those lengths, and that's Kupol in Russia.

    FREESTON: The Kupol mine, operated by another Canadian gold miner, Kinross, is located in the northeastern tip of Siberia. According to a recent Reuters article, the mine is only accessible in winter by way of, quote, "... an ice road laid across 400 km (250 miles) of Tundra to carry supplies to one of the world's most isolated gold mines." (August 12, 2009) By contrast, Pacific Rim's mine site is surrounded on all sides by rural communities and just a few miles down the highway from the town of San Isidro. Leading activists demand a more representative example. Opponents also challenge the company on its insistence that mining will help to address widespread poverty in El Salvador, and their skepticism is supported by studies from groups like Oxfam.

    ANDRES MCKINLEY, MINING PROGRAM DIRECTOR, OXFAM AMERICA: Since we're a development organization, we approach mining from the perspective of development. The question for us is: does mining contribute or not to a sustainable development? And we find that it does not. The experience that we've had demonstrates that far from generating economic booms, sustainable development at the local level for communities around mining projects with mining endeavors throughout the developing world tend to generate deeper levels of poverty.

    SHRAKE: The reality is that 80 percent of all the in situ value of the metal in the ground on average on a worldwide basis will stay in El Salvador. You know, the idea that we're, you know, out there basically playing the part of the Conquistadors and robbing the country of its gold is just patently ridiculous. Any natural resource industry in any country in the world, yeah, they're going in, they have a business, there's a cost to produce whatever it is they're producing, and they're going to make a profit. Otherwise they wouldn't be there. But the idea that it's just going to rape and pillage the countryside economically is just nonsense.

    FREESTON: Members of La Mesa say that this 80 percent figure is contradicted by the Pacific Rim's own forecasts.

    FRANCISCO PI�EDA, CABA�AS ENVIRONMENTAL COMMITTEE (SUBTITLED TRANSLATION): They want the gold because it's worth more than $1,000 per ounce right now. But they won't have to pay for the water they use while paying their employees poverty wages. According to the cost projection in their environmental impact study, the production cost per ounce will be only $163. Of course they're going to have their eyes wide open, looking at the huge profits.

    BERNARDO BELLOSO, COMMITTEE FOR RURAL DEVELOPMENT: We must develop alternative forms of development for Salvadoran communities. So we have to fight to repeal CAFTA. We must fight.

    FREESTON: For La Mesa, protecting the water supply is the most important feature of any future development, a belief shared by the World Economic Forum, who just last week painted a dire picture of the country's water crisis. Their analyst was quoted in the Salvadoran national daily, La Prensa Grafica, as saying that "Five years from now, neither foreign nor local investors can be certain that they will enjoy access to the necessary quality or quantity of water," adding that "There can be no economic growth without quality water." (Lawrence Pratt, Analyst, World Economic Forum) Interestingly, it is the same goal of attracting investment that is the justification for allowing corporations like Pacific Rim to sue governments like El Salvador under free trade agreements like CAFTA, allowing companies to invest in the understanding that should their projects be rejected, they can always try and recoup both their costs and in some cases their projected profits as well.

    PI�EDA: We said from the start that they didn't have to sign these free trade agreements. Unfortunately, in El Salvador our previous governments have sided with big capital. They didn't listen when told that free trade was going to bring us to this point where it even trumps our onstitution and our national sovereignty and even imposes itself over the will of the people, as polling shows that more than 62 percent of us said "no" to mining exploitation.

    FREESTON: The poll in question was carried out in late 2007 by the Jesuit University of Central America.

    JUAN CARLOS DURAN, ANALYST, INST. FOR PUBLIC OPINION RESEARCH: Eight out of ten respondents were not aware there were exploration projects in their own municipality. So the people were never consulted, never asked: "They've applied for a permit to explore in our community. As a community, are we going to support this or not?"

    FREESTON: But Shrake claims that mining is actually supported by the people of El Salvador and that the government has neglected their will.


    SHRAKE: The last poll that we did, which was in August 2008, shows that only about one out of four people in El Salvador are opposed to mining.

    FREESTON: This goes against some of the polling that's been done by the Jesuit University.

    SHRAKE: Right.

    FREESTON: Which shows pretty much diametrically opposed numbers.

    SHRAKE: Right.

    FREESTON: How should people look at that?

    SHRAKE: Well, I guess they have two sources of information. They have to decide which they trust.


    FREESTON: Recent months have put Pacific Rim at the center of a string of tragedies against anti-mining activists in Caba�as, including the torture and assassination of anti-mining leader Marcelo Rivera. The authorities in El Salvador have labeled the crime as a case of common gang violence and detained five gang members. Marcello's brother, Miguel, vehemently disagrees.

    MIGUEL RIVERA, ACTIVIST (SUBTITLED TRANSLATION): Marcello was the director of the cultural center in the town where the country's flagship mining project, El Dorado, can be found, run by Pacific Rim. He was also the director of the local organization that was advocating for the people and informing them about the true consequences of mining and the human rights violations that they represent. But Marcello also sat on the board of directors for the FMLN party in Caba�as. Unlike the rest of us here today, who are only part of the social movement, he was the linchpin for communication between the movement and the party. So we can see his significance for those deciding who best to make an example of in order to deter the movement. There is more than simple common delinquency behind this, as the attorney general would have us believe.

    SHRAKE: There's no reason why we'd participate in that kind of activity. Any murder in El Salvador is a tragedy. Any death, unnecessary death, is a tragedy, and there's far too much of it in El Salvador. There's far too much violence. You know, we don't condone violence in any shape, way, or form. We actually go out of our way to train our employees to turn the other cheek in the event of confrontation in the mining debate. We basically ask that they use Mahatma Gandhi as an example on how to conduct themselves.

    FREESTON: So far neither the Salvadoran attorney general nor the national police have heeded calls for a thorough investigation of Marcello's assassination and other acts of violence against anti-mining activists.

    MORALES: La Mesa dedicates this award to defenders of the environment and human rights that suffer threats, persecution, attacks, and murders as a result of their resistance to metallic mining, in particular Gustavo Marcelo Rivera.

    FREESTON: Until such time as an investigation clears the company's name, La Mesa has placed the blame on the company.

    MORALES: On top of breaching environmental standards and breaking laws, Pacific Rim's exploration caused ecological damage, economic losses, social conflicts, and corruption. That is to say that they damaged the country, so they should be charged. But no, the company is suing the country. The roles are reversed. The victimizer, Pacific Rim, is suing the victim, El Salvador. The Uruguayan writer Eduardo Galeano has, in this lawsuit, another example with which to better illustrate an upside-down world.

    FREESTON: The current government of El Salvador has committed to a temporary moratorium on mining licenses, but La Mesa continues to push for a new law to permanently prohibit metallic mining in the country. Meanwhile, the tribunal on the lawsuit is just getting started, and both sides appear confident.

    SHRAKE: We are relying on the law, both locally in El Salvador and in an international treaty, to resolve this dispute. And what I would ask is that people let the law do the job that it was designed to do. The rule of law is the best hope for El Salvador to establish a long-term economy, and we have faith in the rule of law here, and we have faith in the international treaties which protect us. And, unfortunately, we've had to resort to that. But we look forward to a day when we're building a responsible mining industry in El Salvador and both the company and all Salvadorans are benefiting from that industry.

    PI�EDA: We are certain that just like we beat them in our communities at Mount El Limon, where they stopped the company's machines from entering and they told them to never come back again, because this is where we the Salvadorans live, this is how we are going to kick them out of the country. And this is how we're going to fight at the ICSID tribunal, too.


    Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.


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