World

Shadowy Tribunal Will Decide Whether El Salvador Can Protect Itself From Mining Companies

CREDIT: Alice Ollstein

WASHINGTON, DC — Does a corporation’s right to profit trump a country’s right to protect its land and water?

That was the question today before the International Center for the Settlement of Investment Disputes (ICSID), an obscure tribunal housed within the World Bank in Washington, DC. At a hearing closed to the press and the public, the gold mining company OceanaGold claimed the government of El Salvador owes them hundreds of millions of dollars for denying them a permit to excavate in an ecologically sensitive region.

At a rally outside the World Bank Monday, Manuel Pérez-Rocha with the Institute for Policy Studies explained the situation to ThinkProgress: “The $301 million dollars they are demanding is related to the profit-not-made. It’s not that they invested $301 million. They are saying, ‘Well, if you don’t let me operate in your country the way I want, you must pay me for the profits that you prevented me from making.'”

Pérez-Rocha participated in a fact-finding mission to El Salvador in 2013 to investigate the impact of mining on a country where 90 percent of the country’s groundwater is already contaminated, and nearly 20 percent of the country’s rural population lack access to clean drinking water.

“All of El Salvador is vulnerable,” he said. “Half of all the water comes from the river that would be poisoned by this mine.”

Due to these concerns, El Salvador issued a moratorium on new mining permits in 2008, and many are pushing now for the country to become the first in the world to permanently ban metallic mining.

Pérez-Rocha said not only will this case make or break that effort, it will have a ripple effect across Latin America.

“The world is watching,” he said. “If OceanaGold wins, which I don’t think it will, it will send a sign to other companies that if any permit be denied, they could just come to Washington and get a waiver from the World Bank. It will be a demonstration that ICSID is completely biased toward corporate interests.”

Monday’s tribunal hearing, which seeks to override the government’s decision to deny the mining permit, fell ironically on the country’s independence day.

As Lita Trejo, a social worker and activist from El Salvador, told ThinkProgress, “The case makes a mockery of our independence.”

“We’re celebrating the independence we fought for for hundreds of years against dictators, invaders and conquistadors, but we’re still dominated by corporations. They’re pressuring us, invading us, ordering us around.”

Trejo said when she went back to visit her mother and other relatives in El Salvador this year, she saw the impact existing and even decommissioned mines are having on the San Sebastian river that so much of the country depends on.

“It’s orange and red, thanks to all the arsenic and other chemicals they used when they mined 30 years ago,” she said. “The communities are super poor, and sick, especially with liver problems. Everyone knows that the river is contaminated and they no longer drink the water, but their animals still do. So when people eat chicken or beefs, they still get sick.”

Lawyers representing El Salvador have argued that the corporation never followed the proper procedure for obtaining a mining concession, refusing to conduct an environmental impact assessment and incorrectly claiming it has purchased the right to mine from local landowners.

Trejo believes the $301 million dollar price tag on the lawsuit is more of a message than an exact estimate.

“They’re using the threat of those millions of dollars because they know El Salvador doesn’t have it. It’s just a way of saying, ‘Good, we can keep mining.'”

The case has dragged on for so long that the corporation that originally sued the country — Canada’s Pacific Rim — was purchased by an Australian competitor. Pacific Rim first purchased a shell company in Nevada so that it could sue El Salvador under the Central American Free Trade Agreement (CAFTA) in 2009. When that claim was tossed out by the tribunal, it then pursued a separate challenge under El Salvador’s own investment law. That investment law was drafted in the 1980s, as the country was in the midst of a bloody civil war, and was crafted with heavy influence from the World Bank.

The protesters warned that more lawsuits like this one — a corporation challenging a nation’s domestic laws — will become more common if countries ratify the Trans-Pacific Partnership (TPP), an agreement that is still being drafted between the United States and other countries who share a border on the Pacific Ocean.

“The intention of the United States is for the TPP to contain the same investor settlement dispute mechanisms as other free trade agreements,” Pérez-Rocha said.

A draft of the TPP agreement obtained by Wikileaks shows the sweeping multi-lateral trade pact would set up a similar tribunal system to those operating under NAFTA and CAFTA. Should those provisions make it into the finished text—which remains secret while still in negotiation—an increase in lawsuits like the one facing El Salvador could spell trouble for the countries involved.