by Todd Gordon
THE SANCTITY OF FOREIGN INVESTMENTS
Another problem for Canadian capital regarding investment predictability and stability—and a reminder that Correa can only be trusted so far—came when the Correa government informed Canada that it was withdrawing from their Foreign Investment Protection Agreement (FIPA) on October 30, 2010. The Canada-Ecuador FIPA came into force in 1997, almost a decade before Correa’s election. Ecuador had previously announced the termination of thirteen of its Bilateral Investment Treaties (the more common name for what Canada calls FIPAs) in 2009, arguing that since their dispute arbitrations take place at the International Centre for the Settlement of Investment Disputes in Washington, they violate the new constitution which stipulates that Ecuadorian laws cannot be adjudicated outside of South America. Under terms of the FIPA, Ecuador can withdraw one year after formally announcing its intention to do so.
Canada treated the announcement not as a formal declaration but as an informal expression of the intention to eventually do so. Ecuador’s musing about withdrawing from the Treaty, at a time when uncertainty of a new mining law was swirling around Canadian investors, predictably sparked more frustration and pressure from Canada. During his visit in August 2010 to discuss Canadian investment more generally, Kent reminded his Ecuadorian interlocutors that Canada expects the Correa government to respect the FIPA. In a letter to the Ecuadorian-Canadian Chamber of Commerce in Guayaquil, Ambassador Shisko stressed that the possible end of the bilateral investment treaty “is causing profound concern in Canada. A stable and transparent investment environment is fundamental for the success of Canadian investment in Ecuador”’— a point which he has repeated in the Ecuadorian media.1008 In March 2012, the Vice Minister for the Americas, Jon Allen, travelled to Ecuador to meet with Ecuadorian officials and stress the importance of the FIPA to Canada, and came away from his meetings, after declaring the potential commitment of more Canadian investment in natural resources and hydroelectricity, confident that the treaty would not be cancelled.1009
THE USES OF AID
In 2005, before Correa was elected, CIDA decided to close the bilateral program (the last funded program wrapped up in 2010) when the Liberal government began to concentrate aid on a smaller group of countries. The Harper government continued with the concentrated aid focus and shifted its attention towards the Andes, though they did not include Ecuador in the revamped structure. Bolivia, Colombia, and Peru were targeted instead because they were identified as having governments amenable to free trade, and aid policy was seen as a way of helping to advance that agenda.1010 The original Liberal decision to end bilateral aid to Ecuador was initially left untouched by the Conservatives and was apparently viewed as unproblematic by CIDA itself. As one of many examples of the politicization of Canadian aid policy, however, the termination of CIDA’s bilateral aid program became a point of concern and discussion amongst officials in CIDA, FAIT, and the mining industry after Correa’s election, and particularly after Correa actually requested greater developmental aid from Canada. The discussion centred on whether the bilateral program could be revived, and if not, given that a decision to terminate had already been set in motion, what if anything could take its place.
While some form of aid was identified as important to supporting the expansion of Canadian capital in the country, there was significant dicussion on whether CIDA could be used as a way of responding to threats to the mining industry and supporting Canadian companies by promoting Canadian-CSR “capacity building” or “indigenous exchanges” between the two countries.1011 The pressure to rethink CIDA’s Ecuador orientation came from FAIT, which has been in more direct and regular contact with Canadian investors in Ecuador, to push for reinstatement of the bilateral program in some fashion, whereas CIDA officials were more hestitant given they had already begun the process of winding the program down. Bilateral aid of some kind, according to FAIT officials, “could be a positive result to support our trade interests.”1012 Ultimately, however, bilateral programming was not restored, as the concentrated aid monies had already been budgeted and CIDA’s bilateral aid envelope was already terminated. The discussion proceeded to how to make up for this gap.
CIDA officials noted that multilateral funding to Ecuador should be highlighted in discussion with the Ecuadorian government, but FAIT representatives clearly were unsatisfied with this reponse. There was also discussion of increasing the funding for the Canada Fund for Local Initiatives (budgeted through CIDA but disbursed through the embassy). One suggestion discussed was to double it to C$200,000 (still a very small amount relative to what a Country of Focus program would entail) to “allow for more strategic engagement.”1013
When the Vice Minister for the Americas, Jon Allen, travelled to Ecuador in March 2012 to discuss the FIPA, he also suggested Canadian aid could continue outside the bilateral CIDA framework to help develop the country’s mining and environmental regulatory system.1014 In fact, this project was being discussed by FAIT and CIDA officials as early as 2009, when they saw an opening after Correa made some overtures to fostering stronger bilateral relations with Canada—the Canadians identified it as an opportunity to influence mining policy under the framework of CSR development.1015 In the meantime, CIDA did finance an FDI-promotion course for CORPEI led by an ex-Canadian diplomat.1016 CORPEI is a Guayaquil-based organization that builds relations between the government and private capital with the aim of promoting foreign investment and Ecuador’s further insertion into the international market.
CONCLUSION
This chapter has sought to provide a mapping of the systematic role of Canadian imperialism in seeking to undermine any and all extension of meaningful democracy in Ecuador in an effort to protect the considerable investments of Canadian corporations in mining and other sectors, as well as to protect the longer term strategic interests of Canadian geopolitics in Ecuador and South America more generally. Moreover, we have tried to convey the complexity of the present political conjuncture in the country, as Correa distances himself from the demands of popular social movements while, simultaneously, entering into conflict with imperialism on a number of fronts. The Canadian embassy in Quito and the decision-makers in Ottawa, alongside and in conjunction with representatives of Canadian corporations with operations in Ecuador, have attempted to navigate this complexity in such a way as to ensure the best of possible outcomes for Canadian capital.
Correa is clearly not their preferred interlocutor, but the Canadians have recognized that his administration is amenable to meeting most of their key, underlying needs in the area of mining, as well as in other sectors of the economy. While Canada has been unable to secure the entirety of its desires in the Ecuadorian economy and political outcomes, this chapter has revealed the extent to which Ottawa was capable of helping turn around many of the anti-neoliberal components of the mining mandate and establishing a new legal terrain in which its companies can continue to profit. However, Canadian power is hardly omnipotent or immutable in the country. The biggest threat to Canadian imperialism in Ecuador, and therefore also the most important reservoir of hope, remains the ebb and flow of anti-mining resistance which, despite concerted efforts of repression and cooptation from on high, has not been successfully tamed.
CHAPTER 8
VENEZUELA’S THREAT OF A GOOD EXAMPLE
The inner-city parish of La Vega sits in the lush mountain terrain of Western Caracas. Roughly 130,000 poor residents are cordoned off sociologically from nearby El Paraíso, a wealthy neighborhood that supplies the clients for the upscale shopping centre that separates the two communities. In La Vega, the bottom 20 percent of households live on US$125 per month, while the average family income is US$409. Well over a third of households are led by a single mother. Proletarians of mixed African, indigenous, and European ancestries populate the barrio’s informal economies.1017
In Venezuela, one of the most urbanized countries in Latin America, these households constitute a key
demographic base of chavismo. Six years ago, the journalist Jacobo Rivero asked a 50-year-old black woman from La Vega what would happen if Chávez died. The Bolivarian process “is irreversible,” she told him, its roots are too deep to be easily torn asunder in the absence of el comandante. In the years since Chávez’s rise to the presidency in 1999—an interval of unprecedented popular political participation and education for the poor—the woman had learned, for the first time, the history of African slavery and the stories of her ancestors. The historical roots of injustice were being demystified, their causes sorted out. Dignity was being restored in inner-city communities, and their political confidence was on the rise. There had been motive, it now seemed to her, behind the manufactured ignorance of the dispossessed.1018 The “Venezuelan people stood up,” political theorist George Ciccariello-Maher observes, “and it is difficult if not impossible to tell a people on their feet to get back down on their knees.”1019
The residents of La Vega, Petare, San Agustín, and 23 de Enero, among the other poor urban barrios of Caracas, entered an extended period of public commiseration, of shared mourning, on March 5, 2013, when Vice President Nicolás Maduro announced on television that Hugo Chávez had passed away at the age of fifty-eight, after fourteen years as president, the last two years of which he struggled with cancer.1020 Identification with this improbable president ran in the veins of the popular classes of contemporary Venezuela.
Elected in late December 1998, Hugo Chávez assumed the presidency of Venezuela in February 1999, and was succeeded by the chavista loyalist Nicolás Maduro, Chávez’s former vice-president. Given that Venezuela is Canada’s second largest export market in South America, and that Canada’s foreign investment stock in the country amounted to between C$800 million and C$1 billion between 2007 and 2012, the direct interests of Canadian capital in taming the radicalism of Chávez’s government were not insignificant. One of the embassy’s goals, as it explained in a Country Strategy report, is to “defend and promote Canadian business interests,” 1021 a task whose importance was undoubtedly shaped by the Chávez’s government’s selective apprehension towards the influence of foreign capital in Venezuela, and its often publicly hostile stance towards imperialist power. Perhaps searching for a silver lining in the grey cloud of chavismo, the embassy suggested to Ottawa as late as 2006 that, “the good news for Canadian investors and exporters is that Venezuela remains highly dependent on foreign capital and technology, especially in extractive industries.” In reality, however, it has been much more difficult for a number of Canadian companies, which have experienced the Chávez administrations as a period of uncertainty and frustration.1022 Venezuelan dependency did not play out under Chávez as Canada would have preferred.
This chapter begins by mapping Canadian investment interests in the country, as well as its wider geo-strategic concerns over the possibility that the Venezuelan example of confronting neoliberalism under Chávez might spread to other parts of Latin America. From here it shifts to an analysis of the reality of Chávez’s legacy domestically compared to the demonization he faced in rhetoric of the state managers of the most powerful states in the world system and much of the international mainstream media. Next the chapter examines critically the oft-repeated claims that Chávez was responsible for a Venezuelan turn toward authoritarianism, clientelism, and institutional decay. On this historical basis, the chapter proceeds next to dissect Canada’s role in drumming up the image of Chávez as dictator. Flowing from this assessment of the Canadian diplomatic record vis-à-vis Chávez, a following section explores the precise role of Canadian mainstream media in the defamation of the Venezuelan government. Finally, the chapter provides an interrogation of Canada’s foreign policy in Venezuela since the death of Chávez.
CANADIAN CAPITAL IN VENEZUELA
Three Canadian companies launched lawsuits against the Chávez government under the Canada-Venezuela Foreign Investment Protection Agreement (FIPA). Two of these lawsuits are related to the lucrative Las Cristinas property, Venezuela’s largest gold deposit. Canadian company Placer Dome (subsequently acquired by Barrick Gold) co-owned Las Cristinas with a Venezuelan government company. When Placer sold its share to Vannessa Ventures—which subsequently changed its name to Infinito Gold and attempted to sue Costa Rica over the Las Crucitas mine—Venezuela terminated the company’s ownership in 2001 arguing that the sale was illegal. Vannessa Ventures responded by suing for over C$1 billion, though the case was dismissed in 2013 when the International Centre for the Settlement of Investment Disputes found that Venezuela did not violate the FIPA despite Canada’s intervention on behalf of the Canadian company.1023 After taking Las Cristinas from Vannessa Ventures, Venezuela transferred it to another Canadian company, Crystallex International, launching a new saga. Crystallex’s investment in Venezuela was fraught with uncertainty for a decade. Approval of its environmental impact study from the Ministry of the Environment and Natural Resources took roughly three-and-a-half years, and even after this period, the company still faced roadblocks from the government in its efforts to proceed.
Meanwhile, the initial start date of 2008 the company had projected for commencing production came and went. Then in November of that year, the Venezuelan government announced it was planning to nationalize Las Cristinas, as it sought to increase its gold reserves in the wake of the global crisis and the rising price of gold on the world market. Though the planned nationalization never took place, three years of ambiguity dragged on as Crystallex’s hopes of developing the Las Cristinas money pit were stuck in a state of limbo. The death knell was finally sounded in early 2011, and all prospects for the Crystallex development permanently thwarted, when the Venezuelan government terminated the company’s rights to the mine. Crystallex initiated a lawsuit under the FIPA in 2011 for C$3.8 billion. Facing debts it could not repay, the company was forced to file for bankruptcy, and was delisted from the Toronto Stock Exchange. In 2012, Venezuela commenced a partnership with a Chinese state investment company to develop Las Cristinas.1024
The Crystallex experience proved to be more representative of the overarching investment climate than the Canadians had initially hoped. In 2009, to point to another example, Gold Reserve Inc. had its Las Brisas project terminated by the government after receiving a permit from the Ministry of Environment and Natural Resources in 2007. It responded by suing Venezuela for C$2 billion in damages.1025 Similarly, PetroCanada exited the country in 2007 due to the uncertainty in the oil sector.
Canadian frustrations with Chávez’s challenge to neoliberal imperialism were not restricted to the domestic Venezuelan sphere, and the fate of specific Canadian investments therein. Canadian political leaders and Foreign Affairs officials have been more concerned about the broader regional implications of Chavismo for Canadian interests—regional implications understood both in terms of the example “twenty-first century socialism” in Venezuela might represent beyond its borders, and in terms of Chávez’s efforts to actively influence developments in the regional political economy in a manner designed to privilege Latin American autonomy over relations with North American powers. Canada’s engagement with Venezuela has been driven by these decisive geopolitical concerns. The mandate letter to the Ambassador to Venezuela, Perry Calwood, on his appointment in 2007, from the Deputy Ministers of Foreign Affairs and International Trade was clear: “Canada’s presence in Venezuela is increasingly important to our broader strategic interests.” 1026
Country Strategy reports were obviously keenly aware of Chávez’s place within the emergent sphere of left-of-centre Latin American governments, noting, for example, that “Venezuela is an increasingly important regional player, working closely with Cuba as well as newly elected leaders such as Bolivian President Morales, Ecuadorian President Correa and Nicaraguan President Ortega.”1027 But his potential influence extended beyond these allies, and included Venezuela’s outreach to “the Caribbean region, providing subsidized fuel oil to Carribbean stat
es under the Petrocaribe initiative.”1028 Petrocaribe was born as an oil agreement in 2005 between a series of Caribbean states and Venezuela. According to the terms of the agreement, Caribbean states were able to acquire access to Venezuelan oil on preferential terms, unavailable on the open market.
In 2013, Petrocaribe solidified links with the Bolivarian Alliance for the Peoples of our America (ALBA) to promote further economic ties that went beyond merely oil transactions. The use of subsidized oil to foster relations in the region would be a regular thematic focus of FAIT assessments of Chávez, sparking FAIT’s Inter-American Relations Division to reflect on Canada’s potential to contain Venezuela’s regional influence through subsidized oil with its own dominance in natural resources: “as an emerging energy power internationally [redacted] Canada is a serious and credible partner that can offer a different model, one in which democratic governance is efficient, transparent and accountable.”1029 The reality Canadian policymakers and capital had to face, though, was, as the Caracas embassy acknowledged, “Chavez [sic] increasing popularity amongst the region’s masses.”1030
Haiti was one country FAIT identified to which Chávez’s influence could potentially extend, and in which Canada has been playing a leading role in reinforcing imperialist power. Ottawa and the embassies in Port-au-Prince and Caracas, for example, watched closely as Chávez’s efforts to build stronger ties to Haitian President René Préval developed during a March 2007 visit to the Caribbean nation. In particular, the Canadians expressed concern about a US$20 million Venezuelan and Cuban funding agreement for the health and energy sectors (not a significant amount of money relative to Canadian aid). “If successfully carried out,” according to the Canadian embassy in Port-au-Prince, it “will likely have highly visible results” and strengthen Venezuelan and Cuban credibility in the impoverished nation where Canadian aid has focused more heavily on the highly problematic security sector.1031
