Clean water as an impediment to corporate profits

An Australian mining company insists its “right” to a guaranteed profit is superior to the right of El Salvador to clean drinking water  — and an unappealable World Bank secret tribunal will decide if that is so.

Drinking water is the underdog here. It might be thought that Salvadorans ought to have the right to decide on a question as fundamental as their source of water, but that is not so. It will be up to a secret tribunal controlled by corporate lawyers. And as an added bit of irony, the hearing began on El Salvador’s Independence Day, September 15. Formal independence, and actual independence, alas, are not the same thing.

The case, officially known as Pac Rim Cayman LLC v. Republic of El Salvador, pits the Australian gold-mining company OceanaGold Corporation against the government of El Salvador. OceanaGold is asking for an award of $301 million because the Salvadoran government won’t give it a permit to open a gold mine that would poison a critical source of drinking water on which millions depend.

Cerro Cacahuatique, El Salvador (Photo by Amilcar moraga)

Cerro Cacahuatique, El Salvador (Photo by Amilcar moraga)

OceanaGold — or, more specifically, its Pacific Rim subsidiary, which it bought in November 2013 — has spent only a small fraction of the $301 million. That sum isn’t an attempt to recover an investment; it represents the amount of profits the corporation alleges it would have pocketed but for El Salvador’s refusal to give the company a permit. (El Salvador has had a moratorium on new mining permits since 2008.)

So here we have an increasingly common scenario under “investor-state dispute mechanisms” — environmental laws designed to safeguard human and animal health are challenged as barriers to corporate profit. Not simply to recover an investment that didn’t pan out, but supposed future profits that a company claims it would have earned. Should El Salvador prevail, it would still have lost because it will spend large sums of money to defend this case, money that could have been used for the welfare of its people.

An added insult in this case is that it is being heard not under one of the “free trade” agreements that elevate corporations to the level of (or above) a country, but under an El Salvador law passed by the former Right-wing government that has been since reversed. Pacific Rim originally sued El Salvador under the Central American Free Trade Agreement, but the case was dismissed because Canada, where Pacific Rim had been based before its acquisition by OceanaGold, is not a party to CAFTA. But the tribunal allowed the suit to be re-filed under an El Salvador law that granted corporations the same right to sue in secret tribunals ordinarily found only in “free trade” agreements.

Lawyers for corporations sit in judgment

The tribunal judging El Salvador is known as the International Centre for the Settlement of Investor Disputes (ICSID) — an arm of the World Bank. Neither the public nor the press are allowed to witness ICSID hearings and there is no appeal to its decisions. Under the “investor-state dispute mechanism,” governments legally bind themselves to settle “disputes” with “investors” in the secret tribunals. Cases are decided by a panel of three judges selected from a roster. The judges are appointed to the roster by the national governments that have signed on to ICSID.

Because ICSID, similar to other arbitration panels, does not have rules against conflicts of interest, most of the judges are corporate lawyers who specialize in representing corporations in these types of disputes. To provide just one example, one of New Zealand’s selected judges is David A.R. Williams, who is currently representing Philip Morris in its suit seeking to force Australia to overturn its tobacco regulations, which were ruled legal by Australia’s High Court.

The three judges in this week’s hearing are V.V. Veeder of Britain, Brigitte Stern of France and Guido Santiago Tawil of Argentina. Mr. Veeder and Mr. Tawil are veteran corporate lawyers; the former has carefully omitted any mention of who his clients are in his CV, while the latter’s bio page boasts he has assisted in the privatization of Argentina’s assets while representing corporations in several industries. To put that in some perspective, an austerity program was imposed in the early 1990s in conjunction with selling off state enterprises at below-market prices. This fire sale yielded $23 billion, but the proceeds went to pay foreign debt mostly accumulated by the military dictatorship — after completing these sales, Argentina’s foreign debt had actually grown.

The third member of the tribunal, Ms. Stern, is an academic regularly called on to arbitrate investor-state disputes. One of her previous rulings awarded Occidental Petroleum Corporation $2.3 billion against Ecuador because Ecuador had canceled an Occidental contract over a dispute in which the tribunal agreed that Ecuadoran law had been violated. The oil company was in the wrong but was given a windfall anyway!

Among the precedents these three ICSID judges will consider are separate rulings ordering Canada to reverse bans on PCBs and on the gasoline additive MMT, both dangerous to human health, because the bans hurt corporate investments.

Didn’t meet its obligations, but so what

The former Right-wing Arena government of El Salvador in 1999 passed a law enabling “investors” to sue the country in ICSID, thereby circumventing the local judiciary, as part of its effort to encourage foreign investment. A subsequent Right-wing government yielded to public pressure in 2008 by issuing the mining-permit moratorium, and the Farabundo Martí National Liberation Front (FMLN) administrations of Mauricio Funes (elected in 2009) and Salvador Sanchez Ceren (elected in 2014) have kept the moratorium in place.

In addition to the general moratorium, the Salvadoran government cites not only environmental and health concerns specific to the mine, but also says Pacific Rim has failed to meet its legal obligations nor has it secured more than a small fraction of the local permissions it must have to develop the land it seeks to mine. Some observers fear that a ruling in favor of OceanaGold could lead to violence in a country in which 70,000 were killed in a civil war a generation ago. Luke Danielson, a researcher with the Sustainable Development Studies Group, told the Inter Press Service news agency:

“This mining project was re-opening a lot of the wounds that existed during the civil war, and telling a country that they have to provoke a civil conflict in order to satisfy investors is very troublesome.”

Local communities are shut out of arbitration forums like ICSID, but it is community organizing that is responsible for the, so far, successful pushback against environmentally destructive mining. The National Roundtable Against Metallic Mining, or “La Mesa,” is an organization of civil society groups that has led the opposition to OceanaGold. Several corporations have prospected in El Salvador’s inland highlands areas since the Right-wing Arena government passed the law allowing investors to sue in ICSID.

A now closed mine in the area, on the San Sebastian River, operated by the U.S. company Commerce Group, left behind water too dangerous to touch, never mind drink. The El Salvador Ministry of the Environment and Natural Resources tested the river and found cyanide levels nine times above the maximum allowable limit and iron levels more than 1,000 times the maximum allowable limit. So polluted is the river that it runs yellow, orange or red at times.

Mining for gold is a process that uses large amounts of dangerous chemicals in the extraction. A National Geographic blogger, Vladimir Pacheco, writing about OceanaGold’s proposed mine, reports:

“The cyanide-leach processes at the company’s El Dorado mine will use approximately 900,000 liters of water a day. In comparison, it would take 30 years for an average Salvadoran family to use that amount of water. … Will water needed for the project aggravate the already perilous state of water access in the country? A study by the Ministry of Environment found that only two percent of the rivers contain water that can be made fit for human consumption, or used for irrigation or recreational activities and in another study the Global Water Partnership warns that water supply in El Salvador is hovering on the threshold of 1,700 cubic metres of water per person per year, the upper limit for the definition of water stress.”

Fighting back but at a cost

La Mesa has continued its struggle against mining and for the ability to decide its own pattern of development despite the violence that often seems to accompany mining. Three anti-mining activists were murdered in a six-month span in 2009. A report on Salvadoran activists published last year by Common Frontiers, a Canadian coalition, said:

“The fact that the government of El Salvador stopped issuing mining permits to companies was a real boost for their movement but at the same time it brought a significant shift in Pacific Rim’s tactics towards them. The company is accused of utilizing kidnapping, intimidation and even murder against community members opposed to the mining project.”

OceanaGold, which now owns Pacific Rim, did not address these charges in its glossy Fact Book 2014, but did have this to say:

“We have a staunch commitment to making sure our operations enrich, empower and improve the lives of our stakeholders, by creating a positive, long-lasting legacy that respects human rights and delivers enduring benefits and opportunities beyond the life cycle of our operations.” [page 28]

The Philippines Commission on Human Rights might beg to differ. In 2011, the commission recommended that the Filipino government revoke OceanaGold’s license to operate because of “alleged violation of the rights of the indigenous people of Barangay Didipio in Kasibu, Nueva Vizcaya,” including forced evictions. (The license was not revoked, and the mine is operating.)

La Mesa calls OceanaGold’s suit “a “direct attack against the sovereignty and legitimate right of the Salvadoran population to reject an industry that is a threat to our lives.”

This history is not likely to be under consideration by the ICSID tribunal. It is not known when it will hand down a decision, although it is likely to be at least several months. Two fundamental questions that can’t be avoided are: Does a community have the right to make decisions on its own development? Do multi-national corporations have the right to a guaranteed profit without regard to the cost imposed on communities?

That such questions must be asked — and that “no” to the first question and “yes” to the second are increasingly common answers — is emblematic of dictatorship, not democracy.

13 comments on “Clean water as an impediment to corporate profits

  1. Ed says:

    What would happen if a government just pulled out of the treaty? A color revolution?

  2. WrenchMonkey says:

    This is simply the normalised process of “growth” by which the cancer of industrialised “civilisation” spreads.

    What makes this exponentially obscene is the reality that gold is essentially worthless.

    Civilisation“, as we have been trained to perceive it, is not possible without “growth“. It is intrinsically expansionistic.

    As a result, all our ostensible modern civilisations have at least one thing in common: they invariably exceed the carrying capacity of their landbase. Once this happens, it obviously becomes imperative that additional resources be obtained elsewhere.

    Whenever and wherever they “discover” these resources, the “civilised” will acquire them using whatever means necessary, up to and including genocide. So, if an existing traditional community is unwilling to part with their resources, the civilised will happily destroy that indigenous culture without hesitation or compunction.

    The dominator culture we call civilisation is based upon the normalised dictum that certain humans have the right to exploit everyone and everything without limitation and to eliminate anyone or anything that stands in their way.

    In the psychopathic culture of this civilisation, it is “normal” for those at the top of the hierarchy to exploit, destroy and kill those beneath them. This culture of domination, occupation, extraction and consumption is killing the planet that makes it possible for us to survive.

    The ruling class of the 21st century is actually global in nature and more powerful than any “empire” has ever been. This, combined with the fact that they are, for the most part, essential psychopaths , makes it impossible to reason or even communicate with them. They are unreachable, untouchable and completely devoid of conscience, compassion or empathy and have “infected” much of the general population with their pathology.

    It should by now be perfectly clear, to anyone not neutralised by normalcy bias or simply lost to denial or willful ignorance, that those in power are intent upon pursuing their present course of destructive exploitation regardless of the consequences to Earth and the Life it harbours. The culture they foster is destroying Life faster by the day, yet they will never willingly submit to the changes necessary to stop the destruction, let alone reverse it.

    Absent such changes, more like restoration than change actually, Life on Earth is destined for decimation with many, if not most, species facing certain extinction.

    The longer it takes for these changes to happen, the more catastrophic and irreversible the destruction and consequent loss of Life will be and the greater the suffering for any Life remaining.

    A malignant cancer cannot be convinced to stop its spread through entreaty or appeal to reason. It can only be prevented from destroying its victim by its complete extirpation.

    Living on Earth with the culture of industrial civilisation is like being confined with a murderous psychopath and having no any means of escape. Unless the psychopath is neutralised or eliminated, there is no chance of survival.

    When every peaceful means for change is rendered impossible, there aren’t many choices left. Personally I can see only two: submit or fight and, at this point, any attempt to negotiate or work within the system is nothing more than submission.

    Just my opinion

    “Man has lost the capacity to foresee and to forestall. He will end by destroying the earth.”
    Albert Schweitzer

    • You’ve given us much to think about, as usual.

      “[S]ubmit or fight and, at this point, any attempt to negotiate or work within the system is nothing more than submission.”

      I would completely agree with that. This is the last century of capitalism: Either we will destroy the environment and exhaust the supply of natural resources, bringing destruction down on ourselves, or we create a new democratic economic system that is sustainable and provides for everybody. I do wish the choice were not so stark, but it is. As Rosa Luxembourg said a century ago: Socialism or barbarism.

      • WrenchMonkey says:

        This is the last century of capitalism…

        I’d feel a lot better if I knew this was the last week of capitalism.

        As far as a “new democratic economic system” is concerned, in my personal opinion, direct democracy is the only form of democracy worthy of the name. The easiest and best way to maintain direct democracy is to keep the population of your “society” very small.

        Now I suppose it would be technically possible to establish a direct democracy in america, or any of today’s “advanced“, industrialised nations using the same bit of technology that allows you and I to have this exchange.

        Alas, without a very significant reduction in human population, accompanied by an equally significant level of deindustrialisation, a very substantial decrease in consumption, a radical transformation of our values system and a fundamental change in the way we relate to our environment and the rest of species on the planet, the establishment of such a technological, electronic virtual democracy would do nothing whatsoever to ensure our long term survival.

        In fact, given the present level of ponerogenesis, the degree to which the global human population has been acculturated and indoctrinated to the dominator culture, any change in the economic system that gave the general population more “purchasing power” would only increase the rates of consumption and environmental destruction.

        Unless we can completely rid the human race of the fundamental flaw of psychopathology it will never be possible to maintain functional societies with populations much above a hundred of so individuals. It takes only a very small number of “bad apples” to spoil the entire barrel.

        Just my opinion

        Inherited and acquired psychological disorders and ignorance of their existence and nature are the primal causes of evil. The magic number of 6% seems to represent the number of humans who either carry the genes responsible for biological evil or who acquire such disorders in the course of their lifetime. This small percent is responsible for the vast majority of human misery and crime, and for infecting others with their flawed view of the world.”

        • It’s not “human nature.” It is systems that reward bad qualities like greed; the bad within humanity comes forward because those with the worst qualities are those who thrive in the current world. A system that rewards good behavior and distributes the necessities of life to everyone would bring forward different parts of the human personality. It’ll surely take us longer than the rest of this week to get there, alas …

          • WrenchMonkey says:

            I don’t think I made any reference to “human nature” but I certainly agree with your statement. Actually, I think that humans are, by nature, fundamentally socialistic, very cooperative and interdependent.

            I also agree that “systemsare responsible for the dire straits in which we now find ourselves. But, those systems are the result of “human nature” as it presents in a certain small percentage of the species.

            I have reached a conclusion regarding the cycle of empire that has constantly repeated itself throughout the relatively short span of human history. And please keep in mind that the word “conclusion” is completely interchangeable with “opinion”.

            It seems clear to me that, at least since the event known as the Neolithic Revolution, the driving force behind the machinery of human history has been a very simple and fundamental thing. It can be stated quite clearly in only a few sentences. To wit:

            1) There is and seemingly has been, for around ten to twelve thousand years or so, a small, psychopathic, subset of the species Homo sapiens who, being non-productive and unable or unwilling to provide for their own needs, have turned for their survival to deceit, contrivance, manipulation and all manner of mendacious behavior in order to exploit those who are productive contributors to the general welfare.

            2) These parasites have exploited their fellows in every possible way, taking unearned benefits from their labour but returning nothing to the group, clan, tribe or society.

            3) These individuals, who are invariably essential psychopaths, also consider themselves vastly superior to those who unwittingly support them.

            4) Consequently, for millennia, through the process of ponerogenesis, they and their descendants have pursued an utterly ruthless and inhuman agenda with the goal of subjugating and enslaving the rest of humanity, whom they consider to be inferior.

            Yes, in my humble opinion, it really is that simple.

            And now, in the technologically small world of the 21st century, the pathocrats stand on the verge of fulfilling the quest for their long sought, dystopian dreamworld.

            In the psychopath, a dream emerges like some Utopia of a ‘happy’ world and a social system which does not reject them or force them to submit to laws and customs whose meaning is incomprehensible to them. They dream of a world in which their simple and radical way of experiencing and perceiving reality would dominate; where they would, of course, be assured safety and prosperity. In this Utopian dream, they imagine that those ‘others’, different, but also more technically skillful than they are, should be put to work to achieve this goal for the psychopaths and others of their kin. ‘We’, they say, ‘after all, will create a new government, one of justice’. They are prepared to fight and to suffer for the sake of such a brave new world, and also, of course, to inflict suffering upon others. Such a vision justifies killing people, whose suffering does not move them to compassion because ‘they’ are not quite conspecific. They do not realize that they will consequently meet with opposition which can last for generations.”
            Andrew M. Lobaczewski, POLITICAL PONEROLOGY, A science on the nature of evil adjusted for political purposes, IV, PONEROLOGY, INHERITED DEVIATIONS, page 139

            From this seemingly interminable quest for total worldly dominance has arisen our destructive and unsustainable modern industrial civilisation; a fatal disease that is now rendering the only world we have to live upon uninhabitable.

            And so there is an ancient cycle of pathocracy that has accompanied the implacable march of civilisation, with its attendant male-dominated hierarchies, for at least ten thousand years:

            *Concentrated accumulation of wealth – in whatever the current form might be – along with the ensuant power it conveys, by a small (around 6%), pathological, subset of a population

            *Oppression and exploitation of the majority by this pathological “aristocracy” in its attempt to establish totalitarian dominance

            *Unrestrained growth that inevitably exceeds the carrying capacity of the occupied landbase, which leads to widespread, deepening poverty and suffering combined with failing infrastructure and dwindling resources

            *Imperial overreach in wars of conquest, colonization and occupation waged in the effort to acquire ever more essential resources

            *Failure of the societal system due to the unrelenting, irrational, draconian measures of psychopathic rulers possessed by a pathological lust for power

            *Popular anger reaches “critical mass” resulting in bloody rebellion or; the empire collapses under its own weight or; the empire is conquered by another, younger and/or more powerful

            *The “victors” take over but inevitably retain the patriarchal hierarchic structure of civilisation and said hierarchy is inevitably infiltrated and dominated by new or surviving essential psychopaths and another parasitic ruling class brings the next pathocracy to power

            This theme, or some variation thereof, is human history since the Neolithic Revolution. There is always the common denominator of a small group of pathological individuals who, driven beyond all reason by greed and addiction to power, without conscience or remorse, oppress, exploit and enslave their fellows in an irrational quest for absolute supremacy.

            As history has repeatedly proven, this is an endeavor that, by its very nature, can only fail.

            Just my opinion

            • Those systems are the creations of human beings, yes. So, as I see it, humans must devise a system that prevents those who are driven to dominate, in the manner that you describe, from being able to do so. Radical democracy and community control. Not so easy, I know, and we haven’t come close yet.

              • WrenchMonkey says:

                I agree. But I think we will have to go back before we can go forward.

                We once had “systems” that did exactly that.

                Before we became “civilised“, it was a simple matter to deal with psychopaths who threatened the survivability of the small groups of foragers that were, for many millennia, the human race.

                I refer you to the story of the kunlangeta;

                “A story reported by Dr. Jane M. Murphy, now director of Harvard’s Psychiatric Epidemiology Unit, serves as an example of the vigilant stance that one millennia-old indigenous culture – a group of Inuit in Northwest Alaska – takes regarding psychopathic types within their midst.
                So aware is this group regarding the existence of these individuals that their language includes a term for them – kunlangeta – which is used to refer to a person whose “mind knows what to do but does not do it,” resulting in such acts as lying, cheating, stealing and taking advantage of the tribe without making sufficient contribution.
                And how seriously do the group’s members take the need to respond to the threat such individuals pose to the group’s sustainability? When asked what the group would typically do with a kunlangeta, Murphy was told ‘Somebody would have pushed him off the ice when nobody else was looking’.”

                For a more direct citation:

                ”From recorded observations, we do know that sociopaths, by various names, have existed in all kinds of societies, worldwide and throughout history.
                As an illustration, psychiatric anthropologist Jane M. Murphy describes the Inuit concept of kunlangeta, which refers to a person whose “mind knows what to do but does not do it.”
                Murphy writes that in northwest Alaska, kunlangeta “might be applied to a man who, for example, repeatedly lies and cheats and steals things and does not go hunting, and, when the other men are out of the village, takes sexual advantage of many women”.
                The Inuits tacitly assume that kunlangeta is irremediable. And so, according to Murphy, the traditional Inuit approach to such a man was to insist that he go hunting, and then, in the absence of witnesses, push him off the edge of the ice.”

                “The Sociopath Next Door” by Martha Stout, Ph. D., pages 135 – 136.

                I have, as yet, been unable to obtain a copy of Dr. Murphy’s “Anthropology and Psychiatric Epidemiology” wherein, I think, the original research is to be found.

                We stopped evolving. We jumped onto the fast track to self destruction and are nearing the brink of extinction. That fate grows more likely with every day we fail to find our way back onto the evolutionary path.

                I see it right now, the best case scenario is that a few humans, surviving the collapse of industrial civilisation, will manage to rejoin the natural world, resume the course of human evolution and achieve real civilisation for the first time.

  3. xraymike79 says:

    I’d appreciate your comment on this essay concerning Professor Peter Hudis’ book “The Alternative to Capitalism”:

    • Excellent! Mike, you’ve written one of the best short explanations of why the world is in the state it is in that I have read. My (slight) disagreement with Professor Hudis’ thesis, if I am understanding it correctly (and do correct me if I am mistaken), is that he is placing all (nearly all?) emphasis on what I like to call the “market forces” of capitalism. If so, I nonetheless find that justified because his correct analysis on market forces, or “value production” as he terms it, is generally not given sufficient due by critics of capitalism.

      That is, there is generally an overemphasis on control of production by capitalists. I would caution against underplaying that, for ownership by a small class for its own private profit is a crucial part of the picture. That caveat out of the way, the main thesis of Professor Hudis as you have analyzed it is spot on. You write:

      “[T]he essence of the perpetually expanding nature of Capital, the expansion that consumes resources and poisons the planet, stems from this fundamental conclusion.

      Value is not material wealth, it is wealth computed in terms of money. As Hudis points out, once such a system of value production becomes the dominant form of social relations, the drive to constantly increase value becomes unstoppable.”


      “[I]t becomes evident that not even the Capitalists themselves have control of the system, as even they are not able to manage the forces that control production.”

      This is precisely why critics of capitalism should avoid ideas that claim some secret cabal is pulling strings or controlling everything. Capitalism is uncontrollable — even capitalists (although possessing far greater ability to maintain their positions than we working people) are riding the tiger, which is why the composition of top strata of the bourgeoisie does change over time.

  4. […] Dolack over at Systemic Disorder covers the story of how the government of El Salvador is fighting to prevent a foreign mining company from contaminating the… that millions of people depend […]

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