by Todd Gordon
Strengthening “institutional capacity” is a euphemism for neoliberal reform. At the heart of CIDA’s spending was the establishment of Colombia’s mining code, which allowed international capital to enter indigenous territories and peasant communities containing mineral deposits unfettered. The code facilitated the unilateral expropriation of land, weakened environmental regulations considerably (including permitting exploration without environmental authorization), and limited labour rights. Significantly, the code also reduced the royalty rate foreign mining corporations must pay the Colombian government, from 15 to 4 percent. The code further established that small-scale artisanal miners had to sign a contract with the government within three years, or would risk losing access to their deposits. Many of these miners, however, were prevented from pursuing this route once they had been driven from their lands by paramilitary threats. The code, finally, fit nicely with U.S.-backed Plan Colombia, which Hristov notes, “guarantees private sector control over natural resources, even if this means the forcible removal of the existing population from certain areas of the countryside.”734
In other words, the Canadian state and Canadian mining corporations did not simply benefit from the neoliberal mining code of 2001 through happy coincidence. They played a central role in its development, beginning in 1996, as the project to develop a new mining code was initiated. According to Colombian trade union lawyer and activist Francisco Ramírez Cuellar:
Actions by Canada’s government cooperation agencies like CIDA (Canadian International Development Agency) and CERI (Canadian Energy Research Institute, an NGO representing Canadian-based mining and energy companies), have created situations of conflict of interest with its private mining companies. CIDA-CERI has provided aid in the creation of mining, petroleum and environmental legislation in Colombia, and the multinational companies that provide financial support to CIDA-CERI have been in a position to benefit from the new laws.735
Indeed, Ramírez Cuellar reports that the code was written by a Colombian lawyer “connected to the Canadian company Corona Goldfields.”736
The possibility for improved social indicators for Colombians as a result of the Canadian-backed mining regime approaches zero. If large-scale, multinational mining leads systematically to displacement and violence, as it does in Colombia, how can there be any reasonable expectation of improved standards of living? The reality of tax and royalty revenues also undermines Canada’s claims to be supporting Colombia’s economic development: despite the high levels of investment in its mining sector, the industry generates relatively low earnings from tax and royalty rates. As one environmental consultant argues:
Foreign companies are the only companies able to do large-scale mining here. These mining companies keep 96 percent of profits and theoretically Colombia gets four percent. However, it’s not even four percent…Colombians finance these foreigners so that they get rich not with 96 percent but 99 percent of profits from our natural resources.737
One study of mining’s contribution to Colombia’s national income, by economist Guillermo Rudas, finds that in 2009 royalties paid were 1.93 billion pesos while exemptions were 1.75 billion; and between 2005 and 2010, for every US$100 companies paid to the government in taxes, they received US$200 in exemptions and other forms of financial support from the state.738
Together with Peru and Bolivia, Colombia has also been included in CIDA’s mining-oriented Andean Regional Initiative, the focus of which includes “sustainable development projects” and improving “dialogue between communities and the private sector.”739 C$6.5 million was earmarked for Colombia. Between 2008–2010 another approximately C$67,000 in projects to support the mining industry were provided through the CIDA-funded and embassy-run Canada Fund for Local Initiatives, while Foreign Affairs spent C$49,000 to “strengthen…social practices in the extractive sector.” The idea of creating better relations between the mining sector and the people being displaced by it and targeted for repression—which in Colombia is really what these various funding initiatives amount to—is so far removed from the plane of reality that, however much the government may reference the fund, it cannot possibly believe the line it is selling with regard to corporate social responsibility. Human rights and improved living standards are clearly not the drivers behind Canada’s aid program in Colombia.
CONCLUSION
This chapter has shown the myriad ways in which Canada has sought to secure its geopolitical and economic interests in Colombia, as well as the strategic role Colombia plays as an axis for the projection of Canadian imperial power throughout the rest of the Andean region. Canadian investment, it was demonstrated, enters into Colombia today against a long historical backdrop of violence and conflict, accentuated particularly in the special violence of the extractive sectors, in which Canadian capital has been so active. We have mapped out the broad array of Canadian investments in Colombia, as well as the grassroots resistance they have consistently engendered.
It was demonstrated precisely how, and to what great extent, the Canadian state has employed the nodal entry points of development aid and bilateral free trade in order to protect those investments. Using these mechanisms, Canadian diplomats and Canadian capital have lent support to the Colombian state’s militarization, and have benefited from the impunity with which paramilitary groups are able to terrorize social movements in Colombian society. Canadian foreign direct investment has flourished in environs that subject many Colombians to heightened insecurity, repression, and fear. The violent mining sector, as elsewhere in Latin America, has been a particular area of strength for Canadian capital in Colombia, followed by oil and gas investments, all supported by a Canadian banking infrastructure. The configuration of Canadian geopolitical power in Colombia contributes to and benefits from an environment of relentless violence and dispossession. Canadian companies are intimately tied to the networks of violence in the countryside, as well as the less visible networks of elite Colombian urban power. Extractive capitalism in Colombia enriches Canadian capitalists while intensifying the displacement and dispossession of peasant, indigenous, Afro-Colombian, and artisanal mining communities, while exploiting workers in the mining pits and oil and gas fields. The wealth repatriated to Canadian companies is routinely covered in blood and dirt. Similar patterns emerge in the case of Peru; to which we now turn.
CHAPTER 6
AGONIES OF MINERAL DEPENDENCY IN PERU
For centuries, Peru has been the standard bearer for a classical natural resource dependency—a country integrated into the broader rhythms of the global economy on the basis of the wealth of its raw materials. The principal demand for the extraction of these resources has long emanated far from the borders of Peru, and the control of these resources has likewise rarely been in the hands of Peruvians. The country has experienced the deprivations, economic swings, constant external interference, and violence that are de rigueur for countries incorporated along these lines into the world market. The neoliberal period has only served to extend, and in some ways intensify, long established historical patterns. Canadian capital has leapt into the new openings for access to Peru’s mineral wealth brought about by the latest round of market liberalization. As in Central America, Canadian companies, supported of course by the Canadian state, are investing in a country haunted by the long shadows cast by colonial and Cold War violence, products in part of the curse of its natural resource wealth. This history of violence has been perversely advantageous to contemporary Canadian investors, however much they are willing to ignore it. Canadian capital now has a significant presence in Peru. With almost C$8 billion invested in the country by 2013, Canada is one of the largest foreign investors in the Andean nation. Mining, in particular, is at the centre of Canada’s investment profile, and conflict with local communities and Canadian political intervention are dominant features of the Peruvian landscape.
In the first section of this chapter we discuss the breathtaking dimensions
of the neoliberal mining boom, and the role of Canadian investors therein. The second section situates the current round of natural resource dependency within the longer historical arc of resource extraction in Peru and the legacy of racist colonial violence endured by its poor majority, particularly indigenous communities. From there we discuss patterns of ecological predation and conflict surrounding the current extraction regime, led by Canada. Lastly, we discuss the ways in which the Canadian state has intervened to defend the rights of Canadian investors, reinforcing the long Peruvian trajectory of resource dependency, poverty, and dispossession.
MINING BOOM
For hundreds of years the territory now known as Peru has been one of Latin America’s traditional mining areas. Throughout much of the colonial period under Spanish rule, and ever since its foundation as an independent republic in the early nineteenth century, the country has been articulated into the world economy as a provider of raw materials.740 And yet, mining in Peru assumed an unprecedented scale and intensity in the 1990s and 2000s. In a world context of rising metal prices, Peru’s domestic political and economic structures were transformed through a neoliberal package of structural adjustment introduced by authoritarian President Alberto Fujimori (1990–2000). The new economic policies were devised to boost investment opportunities and juridical security for foreign capital operating in the country. And since the early 1990s, large-scale mining and hydrocarbon extraction has expanded into new geographical areas within Peru, and intensified in older areas of traditional exploitation. This dynamic has gradually generated a new wave of socio-environmental conflict, with rural indigenous communities in the Andean highlands squaring off with multinational mining corporations, while similar lowland movements in the Amazon confront the oil equivalent of the mining giants.741
The new recipe of authoritarian neoliberalism under Fujimori, within an auspicious international context, generated an extraordinary pace of accumulation in Peru, putting the country at the top of growth charts in Latin America and the Caribbean for much of the last two decades. Between 2006 and 2013, Peru’s gross domestic product (GDP) grew at an average rate of 6.6 percent, with a low of 1.0 in 2009, in the immediate fallout from the global economic crisis, and a high of 9.1 in 2008.742 From 1990 to 2005, the mining sector was an important driver of development on a national scale, with global GDP in the country growing by 80 percent over this period, next to 221 percent in mining alone.743 Likewise, between 2002 and 2007, the stock of foreign direct investment (FDI) in the mining sector increased by 65 percent, in contrast with the 12 percent overall increase in FDI.744 Mining investment expanded exponentially, from US$200 million in 1993, to US$1.5 billion in 2000, and to US$5 billion in 2010. Some estimates expect investment to continue along these lines, on a scale of US$35.4 billion between 2010 and 2016.745 However, this rate of investment might now be cooling down in a changing world context. The recent global downturn in commodity prices, with slowing demand in China, has meant a corresponding easing of Peru’s growth generally, and in mining in particular. In 2014, the country expanded by only 2.6 percent, the lowest growth rate in a number of years.746
Peru ranks among the highest producers in Latin America, and indeed the world, across a number of different mining minerals: tin, first in Latin America and third internationally; zinc, first in Latin America and second internationally; lead, first in Latin America and fourth internationally; gold, first in Latin America and sixth internationally; silver, first in Latin America and first in the world; copper, second in Latin America and second in the world; iron, fifth in Latin America and seventh in the world.747 This natural abundance, in conjunction with domestic economic restructuring and the insatiable thirst of mining capital in a boom context, helps explain over two decades of continuous mining expansion and intensification. Between 1994 and 2009, mining accounted for an average of 6 percent of Peru’s GDP, 60 percent of its exports, and 21 percent of foreign direct investment flowing into the country. At the same time, it accounted for an astonishingly low 1 percent of employment.748 Between 2002 and 2007, the contribution of mining to internal tax revenue shot up from 3.6 to 24.7 percent.749 Geographically, the sheer territorial area covered by mining concessions has increased impressively, from 2.3 million hectares at the beginning of the 1990s to 24 million hectares, or 19 percent of national territory, by November 2013.750 While once an economic activity confined exclusively to the Andean highlands of the country, the recent geographical spread of concessions has come to encompass valley areas, coastal regions, and the highlands and lowlands of the Amazon.751
Of Peru’s 229 mining properties at the end of 2013, 180 were owned by Canadian companies. There are also a dozen Canadian oil and gas companies with operations in the country.752 In 2012, Canadian engineering firm Dessau acquired a Peruvian counterpart that specializes in energy infrastructure, making it the second largest engineering company in the country. Dessau’s Peruvian growth followed 2011 acquisitions in Colombia and Chile.753 A free trade agreement between Canada and Peru in effect since 2009, together with Canadian dominance in the natural resource sectors of the Peruvian economy, has also provided a platform for extension in other areas, not least in banking: Scotiabank was the third largest bank in Peru by 2011, with 17 percent of the country’s market share. Scotiabank’s expansion in Peru, as has been the case elsewhere in Latin America, is tightly linked to Canada’s growing weight in the country’s natural resources and energy sectors.754
The nefarious socio-ecological impact of mining growth in the country has accounted for much of the uptick in social conflict in the country in recent years. According to the monthly reports on social conflict issued by the country`s Ombudsman, roughly 50 percent can be characterized as socio-environmental, with conflicts over hydrocarbon extraction, and, especially, mining, accounting for most of the conflict in this area. In 2010, for example, mining conflicts apparently constituted 64 percent of the socio-environmental disputes documented that year.755
The level of confrontation in mining zones is unsurprising given what we know about the consequences of capitalist extraction across Latin America in recent years. There is now ample evidence of the impact of such intensified extractivism—including open-pit mining and Amazonian oil development in the Peruvian case. Some of the ecological and social repercussions include the destruction of ecological systems and natural habitats, pollution, displacement of local communities, destruction of regional economies, manipulation and imposition by representatives of foreign mining corporations and the state vis-à-vis rural and indigenous communities, as well as rampant everyday corruption.756 This runs alongside the type of development that this kind of mining predictably produces, a type of development incapable of improving the lives of Peruvians or protecting the environment, in which the presence of multinational mining and oil companies involves their simultaneous and connected activities of expatriating profits and externalizing the social and environmental costs of mining production.757 Finally, there is the basic fact of declining resources—that is, the ecological limits on exhaustible mineral extraction, or the incalculable permanent loss of this natural wealth once it has been extracted and exported from the country.758 A recent paper of mainstream economists sought to measure “the loss of natural capital and [correct] the measure of economic income generated by the metal mining of Peru during the period 1992–2006.” In the dry, measured language of the economics profession, the authors find that “metal mining activities have caused significant environmental impacts,” and that their “estimates show that the economic income corrected for the depreciation of mineral resources and the environmental degradation has been significantly overestimated by the usual GDP measure for the period.”759
WATER STRESS
By some accounts, mining activities now affect roughly 50 percent of Peru’s peasant communities.760 Water is one of their principal worries. Access to and control over water quantity and quality have been at the centre of many recent conflict
s between indigenous and peasant communities and mining companies. “Peru is South America’s most water-stressed country,” note Anthony Bebbington and Mark Williams, a geographer and hydrologist respectively. “Water draining from the Andean highlands serves as a water tower that supports the downstream population and attendant agricultural activities, including the country’s dynamic agricultural export economy.”761 Water scarcity in the country makes it, according to some experts, the third most vulnerable country to the outcomes of climate change in the world.
Already scarce quantities of water have been put under tremendous pressure as mining has expanded. Many mining concessions in Peru are situated in headwater regions of the Andes, and mining’s adverse impact on water quality—acid mine drainage (from acids and heavy metals used for ore separation), leakage of ancillary products of production, and dumping of tailings (finely ground rock from which ore has been extracted)—can therefore extend well beyond the immediate mine site, carried along by rivers and aquifers.762 “In July 2008,” Bebbington and Williams remind us, “Peru declared a state of emergency at a mine near Lima over fears that its tailings dam, weakened by seismic activity and subterranean water filtration, could release arsenic, lead, and cadmium into the main water supply for the capital.” They point out that experts estimate that “every year mining and metallurgy release over 13 billion m³ of effluent into Peru’s water courses.”763
