People Over Profit: Why These Two Small Countries Stood Up to Big Mining

LATIN AMERICA AND THE CARIBBEAN, 17 Mar 2014

Robin Broad, John Cavanagh – YES! Magazine

If the governments of Costa Rica and El Salvador can resist the mining industry, maybe we all can.

Would a government of a poorer country ever choose to say “no” to short-term economic profits because of concern for long-term environmental impacts?

Surprise: that is precisely the case with at least two national governments that have said no to certain kinds of mining.

One is the tiny nation of El Salvador, where the government stopped issuing gold mining permits half a decade ago. The Salvadoran government did so despite sky-high gold prices and the argument that exporting gold was one of the country’s few chances to boost aggregate economic growth (in the short-term, at least).

They did so largely because the majority of Salvadorans get water from one large river system, and gold mining invariably pollutes nearby rivers and watersheds. Hence, this decision to say no to gold mining has widespread support in El Salvador, even in the local communities that might have gotten some mining jobs.

Thus far, El Salvador has been viewed as an outlier—an exception to the rule—on mining policy in an era where many governments have embraced global mining corporations and gone down a path of extractive-based economic growth.

Witness Honduras, Guatemala, South Africa, the Democratic Republic of the Congo, Papua New Guinea, and Indonesia, where governments have opened their doors even further to plunder by mining. Other governments, like that of the Philippines, have revised their mining policies. But, unlike El Salvador, they are not intended to deal with the devastating environmental and social costs of mining, but rather to try to ensure that more of the gold mining profits stay in-country.

Yet, it turns out that El Salvador is not alone in its policies. The government of Costa Rica has said no to open-pit mining. (While open-pit mining is only one method of mining, it is among the most environmentally destructive.)

This revised national mining policy began in 2002 with a Presidential moratorium on new open-pit mining. (While the moratorium was cancelled during the administration of President Oscar Arias, it was reinstated by his successor, Laura Chinchilla, who is of the same political party as Arias.)

Costa Rica’s Congress subsequently voted for a no-new-open-pit-mining law—unanimously. That no was upheld by Costa Rica’s Supreme Court.

Popular opposition to any open-pit mining in Costa Rica surged in the wake of an environmental “accident” that led to the closure of the Canadian-owned Bellavista open-pit mine. The efforts of another Canadian mining company, Infinito Gold, to start an open-pit mine at Crucitas also provoked outrage. Indeed, both the executive branch and the Supreme Court have said no to Infinito for its proposed mine.

As in El Salvador, this “no new mining” policy reflected the majority wishes of constituents both in affected communities and on a broader national level. In El Salvador, more than 60 percent of the population has indicated opposition to mining; a 2010 poll showed more than 85 percent of Costa Ricans were against Infinito’s proposed mine.

These two governments should restore our faith that governments can indeed do good. Governments can say no to a false notion of development that would do little besides line the pockets of elite corporate interests, while leaving devastated ecosystems in its wake. We should applaud these two small countries that could say no—and bravely, did.

But global mining companies are trying to ensure that no government is allowed to say no.

These corporations are making their cases based on a controversial Central America “free trade” agreement with the United States, and on El Salvador’s former investment law (written with the help of the World Bank), which opened the door for mining firms to sue governments for policies that impeded future profits.

Canadian-Australian gold mining corporation Pacific Rim/OceanaGold claims its so-called “investor rights” are being trampled by the ban, and that El Salvador must give it a license to mine (or compensate it for what it claims is $301 million in expenditures and in profits foregone).

But the Salvadoran government is serious that no means no—and it has already spent $5 million (an amount likely to more than double or triple) to defend itself against this suit at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID).

So too the Costa Rican government, which is finding itself having to defend its right to say no. In February 2014, Infinito announced that, rather than accept the Supreme Court rejection of its appeal, it was also initiating an investor-state case against the Costa Rican government at the World Bank’s ICSID. Infinito is suing Costa Rica for the $94 million it claims to have invested so far.

But, to the government of Costa Rica, no means no and it, like El Salvador, has proclaimed its intent to follow through on its mining-ban policy, even at ICSID where Infinito’s “investor rights” suit is projected to cost each side $2 million a year.

So, ladies and gentlemen, now is the time to support the right of governments to say no to rapacious mining. Let us celebrate the fact that the governments of El Salvador and Costa Rica are forging new paths that begin by saying no to old destructive paths. And let us hope that these citizens and these governments are not outliers, but will prove to be trailblazers of positive paths to the future. Repeat with us: no means no.

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Robin Broad is a Professor of International Development at American University in Washington, D.C. and has worked as an international economist in the U.S. Treasury Department and the U.S. Congress.

John Cavanagh is director of theInstitute for Policy Studies, and is co-chair (with David Korten) of the New Economy Working Group.

They are co-authors of three books and numerous articles on the global economy, and have been traveling the country and the world for their project Local Dreams: Finding Rootedness in the Age of Vulnerability.

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