CAFTA: Threatening Development and Democracy in El Salvador

The Salvadoran government has been under corporate assault recently for allegedly dragging its feet on issuing mining permits to foreign investors. If the permitting process has in fact been delayed, it has likely been delayed because the Salvadoran government is responding to public outcry and is considering the environmental and public health affects associated with mining for precious metals in a country the size of Massachusetts.   

In May, I posted that a Nevadan subsidiary of Canadian mining company Pacific Rim filed a $77 million CAFTA investment suit against the Salvadoran government claiming that the government was dragging its feet during the permitting process for the proposed El Dorado mine in Cabanas, El Salvador.

In late August, Milwaukee-based Commerce Group Corps also decided to take a shot at using CAFTA to pressure the Salvadoran government into ignoring community leaders and environmentalists. The company has filed a $100 million CAFTA investment claim.

Luke Eric Peterson reports in Investment Arbitration Reporter that:

Commerce Group and its partner [San Sebastian Gold Mines Inc.] allege that El Salvador has breached the Central American Free Trade Agreement (CAFTA) by “frustrating” development of mining interests in the country.

The pair say that they have been engaged in gold production in the country on-and-off since the late 1960s, however they allege that growing hostility on the part of the current government to mining activity has led to the revocation of a key environmental permit, as well as ongoing “de facto” denials of new permit and licensing applications.

Meanwhile, community leaders are continuing to stand firm against mining practices that could destroy vital natural resources and limit community access to clean water. However, the death in July of anti-mining activist Marcelo Rivera, presumed by many to have been a politically motivated murder, underscores the severity of the push back against activists in El Salvador. 

 

All the while the Salvadoran government has ALSO been facing threats of other foreign investment suits against government actions to protect public health. Luke Eric Peterson reports in September that:

Foreign shareholders in a battery manufacturing and recycling plant have threatened several arbitration claims against the Republic of El Salvador following the abrupt 2007 shuttering of the facility.The plant has been at the center of a heated campaign by local citizens and environmental groups who complained that pollution from the facility was responsible for adverse health and environmental impacts. The company is understood to have rebutted these allegations.

Following several years of increasingly vocal public opposition to the facility, El Salvador’s Health Ministry authorized the closure of the site in September of 2007.Several company shareholders, including members of the Lacayo family, as well as a UK entity, Oak Investments LP, allege that El Salvador’s actions breach protections contained in the UK-El Salvador bilateral investment treaty and the Central American Free Trade Agreement (CAFTA).

This pattern of foreign companies trying to use CAFTA investment suits as a way to steamroll the Salvadoran government into allowing operations that might threaten public health is nothing short of disgraceful.

 

Regardless of whether or not the companies win these claims, the Salvadoran government will need to funnel millions of dollars towards defending or settling them instead of spending tax dollars on meeting critical public needs. It will also make it that much more difficult for Salvadoran communities to get their government's ear next time a foreign investor's project poses a serious environmental or public health risk.

Comments

[Carefulspider]

I have no sympathy for corporations after seeing what they did the people of Ecuador while drilling for oil. These trade deals should be scrapped but of course it's a far more powerful lobby than citizens who should have access to clean water and livable environments. This kind of thing disgusts me to no end. Get the heck out of countries and leave the people alone.