Blood of Extraction
Page 35
Thus the mandate seemed to indicate a fairly decisive victory for the anti-mining movements in terms of their ability to wrestle major structural reforms from the Correa government in potentially the most important component of the economy in coming years and decades. At this phase in the Correa government, moreover, the mandate was suggestive of the limitations of Canadian diplomatic intervention thus far, given that Canada was diametrically opposed to the contents of the mandate. The movements and the internal Left within the governing coalition, then, seemed to be on the rise, whereas the internal Right of the coalition, including Correa, as well as the various manifestations of Canadian imperial power, seemed to be on the wane. Unfortunately, this was but a fleeting expression of the balance of forces in the mining industry, particularly, but also in the political and economic sphere more generally, which was to be reversed fairly decisively over the year following the mandate.
Soon after the mandate was issued, Correa began to publicly reassure foreign private mining capital that their fundamental interests would be protected despite any appearances to the contrary.939 Correa began to distance himself rhetorically and politically from social movements, and escalated levels of state repression against sectors of the anti-mining movement. A simultaneous battle commenced against the internal Left of the ruling coalition, leading to the resignations of Acosta and Chují, as well as the collapse of the “mega-bloc.” Many of the central components of the mandate were not implemented, and a process of rushed legislation was set in motion to establish a new mining law. No truly national debate on the potential contents of the law and its relationship to the mandate and the constitution was facilitated by the Correa government and, indeed, vocal and visible opponents received the blunt end of the state’s club.940
Directed and supported in Ottawa by FAIT, CIDA, and NRCan, and working in concert with Canadian companies, the embassy set out immediately to defeat the Mining mandate and protect Canadian investors through a strategy of aggressive diplomatic intervention. “Canadian interests,” an embassy report notes following the issuance of the decree, “will be heavily affected by this decision.”941 The embassy, as the ambassador, Christian Lapointe, assuaged an IAMGOLD executive, was immediately “undertaking diplomatic actions at the highest level possible here in Ecuador.”942 A new law was to be written 180 days following the issuance of the mandate—an opening taken by the Canadians to reframe the debate around mining and challenge the push for stronger environmental protections and checks on the power of foreign capital that was occuring most stridently outside of the President’s office. As ambassador Lapointe wrote to Ottawa, the mandate appeared in his view to contradict Correa’s openness to “responsible” large-scale mining, suggesting that the President, while perhaps less compliant than preferred, could nonetheless be pressured to protect Canadian interests and contain those forces inside and outside his government advocating for more far-reaching reforms.
Likewise, Patrick Anderson, Chief Executive of Aurelian Resources, distinguished between Correa and a section of his party connected to the social movements, remarking that “it’s an extremely left-wing faction of the president’s party who have an anti-mining agenda.”943 Thus while the embassy defended Canadian mining publicly to Ecuadorians, it also spent considerable energy behind the scenes pressuring Correa and his ministers directly. Indeed, Correa became a strong—if never fully subservient—advocate of Canadian interests and, as Jennifer Moore and Teresa Velásquez argue, played a central role in advancing Canada’s agenda of presenting Canadian companies
as key investors who would help Ecuador realize its national objectives,…[while] any debate about asserting the country’s ability to choose a different economic model and move toward reducing dependency on extractive industries was squelched and its proponents characterized as turncoats: self-interested and infantile, subversive and manipulated by foreign interests.944
In fact, on the day of the mandate’s release Correa spoke with executives of Canadian companies and issued a press release that sought to placate supporters of mining while addressing those concerned about (but not outright opposed to) the consequences of large-scale projects. Correa’s public position in the face of the mandate echoed the PR line promoted by the embassy and industry: reaffirm a commitment to large-scale industrial mining while making reference to a commitment to social responsibility, and cite Canadian companies as exemplars of socially responsible mining, the record to the contrary notwithstanding.945 The embassy and industry meetings with Correa and his cabinet clearly influenced how the President responded to the mandate.
While the embassy and industry seemed alarmed by the issuance of the mandate, and were concerned for the future of Canadian interests, they clearly had prior knowledge of the strong possibility of a mandate; it was not a complete surprise, in other words. They had actually been discussing the potential reforms to the mining regime with the Ministry of Mines and Energy months before the mandate was even passed, and had been given reassurances that the concessions of several companies would be unaffected.946 The ambassador and the embassy trade representatives began monthly meetings in March—a few weeks before the mandate was passed—with Ecuador’s Vice-Minister of International Commerce to discuss trade and investment relations, and Lapointe met with Canadian company representatives to discuss strategy for these meetings.947 These pre-mandate meetings were a proactive response, part of the diplomatic strategy going back to before Correa’s inauguration, toward establishing a pattern of firm engagement with Correa and other officials.
The meetings continued after the mandate was decreed. During the weeks immediately following the mandate’s release, Correa, his advisors, and representatives from the Ministry of Mines and Energy met a number times with mining company representatives and Canadian ambassador Christian Lapointe. Formal diplomatic letters were also sent by Canada’s Ministers for International Trade, Foreign Affairs, Natural Resources, and Finance, and the ambassador explicitly called for the Correa government to defend Canadian investment.948 In this series of meetings, the Canadians made demands for clarity on the future of their investments, reminded their interlocutors of the general importance of Canadian investment to Ecuador’s fragile economy, and stressed the rights of Canadian investors under the bilateral FIPA.949 The mandate, they put forward bluntly, created a “total loss of credibility by our investors in Ecuador.”950 During one of the meetings Correa, according to an Ecuadorian official, counselled the Canadians to “stay calm” as the government develops its new mining law, and invited mining leaders to participate in the National Mining Dialogue (established for Ecuadorians to discuss a new mining law) in late April—a goal the embassy was discussing with Ottawa prior to the issuing of the mining mandate.951
The embassy and industry also accompanied their aggressive defense of Canadian interests during meetings with Ecuadorian government officials with the reminder of Canada’s commitment to social responsibility, which Correa could use as a selling point with his supporters who were more ambivalent than he towards mining. This is a theme that came up repeatedly following the mandate, with every opportunity taken to influence national debate and government thinking. The National Mining Dialogue, for instance, bringing together Ecuadorian government officials, environmental NGOs, and industry representatives provided an opportunity in a national-level formal process, with Correa’s invitation, to position Canada as a socially and environmentally friendly ally of Ecuadorian development sensitivies. The Canadians, as made clear in communications between the embassy and Ottawa, were hoping to leverage their experience with the concept of CSR and the National Roundtable process in Canada—called by the Harper government in the face of a growing push for binding legislation to hold Canadian companies responsible for their practices abroad—to be able to insert themselves into the debate in Ecuador in general and the National Mining Dialogue in particular as people that care about the environment and have a track record in dialoguing with l
ocal indigenous communities and environmentalists.
The fact that the National Roundtable was largely condemned by environmentalists in Canada as a cover for inaction was, of course, ignored by Canadians in Ecuador—nor was it broached by Correa.952 At the same time, the Responsible Mining Council, another creation of the industry with the support of the embassy, was “in constant dialogue with the Government of Ecuador,”953 “in an effort,” the embassy reported to Ottawa, “to brand Canadian companies working in Ecuador as responsible and respectful of human rights and the environment.”954 The embassy also organized CSR seminars bringing together Canadian companies and Ecuadorian officials, and, according to a FAIT report on mining in Ecuador, NRCan “sent video material which highlights Canadian mining companies operating in sensitive environments and success stories on CSR practices in Canada.”955
Despite the undeniably terrible track record of Canadian mining corporations in Ecuador, Correa, who was open to Canadian influence from the time of his first election, took up the mantra pushed by the embassy and industry and began to frame Canadian investors as the leading edge of social and environmental responsibility. This was an important strategy given that there was clearly widespread concern amongst Ecuadorians of the potential environmental harms associated with the practices of these companies, including among, importantly from Correa’s perspective, those not already outrightly opposed to large-scale mining.
As noted above, the mandate period initiated the first wave of a pattern of frequent trips to Ecuador by high-level Canadian cabinet ministers as well as representatives from state ministeries. Minister of Trade, Michael Fortier, travelled to Ecuador in mid-August 2008, according to embassy reports, to “meet with key decision makers” from Ecuador and demonstrate “support for…Canadian mining investment in the region.”956 Fortier also held a roundtable with company leaders to learn what “the Canadian government [can] do to further support trade with Ecuador.”957 The company executives responded that continued visits by Canadian political leaders would be an important tool. Fortier’s meetings with various Ecuadorian political leaders and constant reiteration of the need for clarity for investors, of the rights of Canadian capital under international law and bilateral treaties, and of the socially and environmentally responsible nature of mining companies “sent a strong message to Ecuadorian officials that Canadian companies are not alone in their commercial interests in Ecuador, as the GoC [Government of Canada] stands in solidarity with them.”958
The Director General for Latin America and the Caribbean and former ambassador to Guatemala, James Lambert (whose mining advocacy we discuss in the chapter on Guatemala), followed Fortier to Ecuador in December 2008 to meet with officials from Ecuador’s Ministry of Foreign Affairs and International Trade, the Minister of Mines and Energy, the Presidential advisor on mining, and mining executives.959 As their counterparts did in Central America, the embassy in Quito used the annual meetings in Toronto of the Prospectors and Developers Association to strengthen relations with key decision makers in the local country, inviting the Ministers for Mining and the Environment to accompany them to Toronto in the spring of 2008 in the midst of a heated national debate.
It was not just representatives from FAIT that visited Ecuador after the mandate to push for its defeat. Included among those travelling from Canada were Health Canada officials, who, along with some indigenous peoples from Canada they sponsored, participated in a conference organized by Health Canada addressing indigenous health determinants in Ecuador in the fall of 2008. The trip was financially supported by the embassy.960 Natural Resources Canada (NRCan) also played an important role in what amounted to a “whole-of-government” approach to protecting Canadian capital against the wishes of local communities in Ecuador.961 One Canadian company, EcuaCorriente—or, in the words of the embassy, “one of our largest mining clients”—sent an Ecuadorian-based executive to Ottawa in the fall of 2008, which included a meeting with NRCan officials, in order to help the latter “get a better sense of the situation” in the Andean country and “how GoC can support [the industry] from Ottawa.”962
Meanwhile, tensions mounted between supporters of the mining mandate, on the one hand, and the industry and the Correa presidency, on the other, as the National Mining Dialogue proceeded. In this context, the embassy and industry gave close watch to their Ecuadorian opponents. Activities of the anti-mining organizations, including demonstrations and even public forums (such as one featuring a documentary by Canadian filmmaker Malcolm Rogge) were noted and discussed by embassy staff. The embassy discussed with mining companies different possibilities of how to respond to a CONAIE mobilization in October 2008 that demanded Canadian companies leave the country.963 Canadian companies, with the support of the embassy and the Correa government, helped to organize pro-mining demonstrations in several cities “to create sympathy and support from the people.”964 Correa spoke at a pro-mining demonstration on May 6, 2008 in front of the Presidential Palace shortly after the mandate was decreed, defending Canadian mining projects as “responsible.” Thousands of people were allegedly bused in from around the country in a rally touting the jobs and economic development offered by the industry. The pro-mining demonstrations were part of what the embassy called a “pro-image campaign,” which also included “an aggressive advertisement campaign, in favour of the development of mining in Ecuador.”965
The aggressive, all-out drive against the mandate by the embassy, Canadian cabinet leaders, and the various institutions of the Canadian state, provided mining companies with considerable access to Ecuadorian decision-makers, as noted above. But this was not simply a medium for lobbying; the industry gained the opportunity, during both the Mining Dialogue and, more importantly, its private meetings with Ecuadorian cabinet ministers and mining ministry officials, to provide direct input on the drafting of the new mining law. As one embassy report notes, “Company’s [sic] reiterated their strong participation in the drafting of the new mining legislation and will work closely with the Ministry of Mines and Energy of Ecuador on this front.”966 As we discuss below, the new law that emerged from the heated national debate following the mandate was not considered a full success by the industry or embassy. During the writing process, mining executives expressed concerns to Correa and officials with the Ministry of Mines and Energy (who did not appear to be consistently on the same page as Correa in terms of how stringent the new law should be towards foreign investors) over perceived “ambiguity,” particularly as it related to the potential arbitrariness of the tax regime, requirements to restart projects on previously-owned concessions and its possible unconstitutionality vis-à-vis the new constitution (the exact nature of this latter concern is redacted in the embassy report; anti-mining activists have themselves pointed to the conflict between the mining law and the rights of nature in the constitution and the water law, which they argue trump the rights of foreign investors).967 Nevertheless, the law clearly represented a major advance for the Canadians over the mandate and, by extension, a significant setback for the anti-mining and environmental movements. The mandate was ultimately defeated, and a new law was submitted to Correa by the Ministry of Mines and Energy eighty dates following the issuance of the mandate—one hundred days before the deadline.968
THE NEW MINING LAW
On January 12, 2009, a new mining law was hurriedly signed by Correa with the support of the Alianza País majority in an interim Legislative and Oversight Commission.969
Without doubt, the new mining law represented a break with the orthodox neoliberal juridical framework that it replaced. The state returned to the industry with a more elaborate regulatory role, and a National Mining Company was established. The new law required environmental impact studies to be reviewed by the Ministry of Environment before any concessions would be granted. It also required companies to receive an environmental license from the Ministry before proceeding with exploration and exploitation. Companies must provide annual e
nvironmental reports to the state, and mining concessions can be revoked if they are shown to cause negative social, cultural, or environmental harm. In terms of the royalty and taxation regime governing the industry, the law restored royalties as a legal concept in the industry, with the state to receive no less than 5 percent of the value of sales of minerals in royalties, with 60 percent of those royalties earmarked for local development projects run by municipal governments. In effect, royalty rates will need to be negotiated with the government on a case-by-case basis.
In addition, a range of separate tax increases were introduced that are to provide the state with a greater share of the revenue generated from mineral extraction, particularly in the case of extraordinary profits.970 Included in the new taxation system is a 15 percent net profit sharing mechanism for workers and social projects, on top of income tax (25 percent) and value added tax (12 percent) on export activities. Concessions are also limited to five thousand hectares and contracts are capped at twenty-five years in duration.
However, the new law does not correspond with several environmental, pluricultural, and social aspects of the new constitution, and falls far short of the guiding principles of the mining mandate that preceded it. The law is weak on limiting monopolization of concessions in few hands, on the socio-environmental regulation of the mining industry, and allows for little participation of affected communities in mining processes, while simultaneously granting considerable discretionary power to the President. It is vital, too, that the law does not oblige companies or the government to obtain previous free and informed consent from affected communities before industrial mining projects are put in place.971 In a sign of the limits of the reforms embedded in the new law, it is important to point out that it was optimistically received by various Canadian mining companies with investments in the country, and has spurred ongoing opposition from social movements.