Coercive mandates

The investor arbitration provisions in free trade agreements and bilateral investment treaties pit the interests of transnational capital against economic self-determination and sustainable development. Transnational corporations seeking to extract oil, minerals and gas in the developing world are increasingly turning to these mechanisms in order to protect their investor rights. These extractive industries are often supported by Western neoliberal economic policies and international financial institutions, such as the World Bank and International Monetary Fund, that finance and direct development initiatives that demand privatization and free trade. Latin American countries are disproportionately affected by this tactic. As of March 2013, Latin American and Caribbean countries comprised only 14 percent of the 158 ICSID member states. But together, Latin American and Caribbean countries were responsible for 46 percent of the ICSID docket and more than 50 percent of the pending cases involving the extractive industries. The World Bank claims to offer a neutral and cost-effective dispute resolution mechanism that is entirely consensual. But arbitration mandates built into trade and investment agreements compel impoverished countries to submit to its jurisdiction. Far from alleviating poverty, the bank’s removal of community and national control over local projects threatens to further impoverish marginalized communities that are most often affected by extractive projects. As Oxfam America concluded in its 2008 report on the costs and benefits of mining in Central America, local community support and participation is essential to realizing the benefits and reducing the risks of such projects.

The people of El Salvador and their government do not want mining to ravage their landscape, degrade their environment and compromise their health.

The Pacific Rim case is also emblematic of a much broader global tension between development and environmental sustainability. The communities surrounding the proposed mine fear that pollution from it would threaten their already contaminated water supplies and degrade the environment. A number of local civil society organizations, including the Catholic Church, oppose the extraction of minerals, and the vast majority of Salvadorans do not want the mines in their communities. Former President Tony Saca and outgoing President Mauricio Funes declined to issue a permit to Pacific Rim, and President-elect Salvador Sánchez Cerén has vowed to maintain the de facto moratorium on mining. El Salvador efforts to fend off the exploitation of its natural resources and protect the nation’s environmental health will reverberate globally. El Salvador’s water supply is already compromised: The country’s Ministry of the Environment and Natural Resources has estimated that 90 percent of the country’s surface water is contaminated. Pacific Rim was planning an open-pit cyanide-leaching mine, a water-intensive extraction method that many believe would further pollute and deplete the region’s already inadequate clean-water resources. In addition, mining-related conflicts in Guatemala, Peru and Honduras provide chilling examples of the devastating environmental and social effects of transnational mining projects. Communities surrounding proposed, inoperative and closed mines decry the widespread contamination and depletion of water resources, deforestation, health harms to people and livestock, displacement, divisive local conflicts, the criminalization of human rights defenders and the intimidation and murder of anti-mining activists. Reports of environmental contamination at a mining site in the province of La Unión compounded concerns raised by local claims of property destruction, wells drying up and the murder of four anti-mining activists.

A costly precedent