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Corporation vs. Nation: The Ultimate Showdown
Corporation vs. Nation: The Ultimate Showdown
A secluded private courthouse in Washington DC is currently the scene of a gargantuan legal battle that could have serious ramifications for all of us. Yet virtually nobody knows about it.
On one side of the battle is the tiny, poverty-crippled Central American nation of El Salvador; on the other is Pacific Rim, a Canadian mining company that was acquired by the Australian corporation Oceana Gold in 2013. At stake is the basic issue of who owns what in tomorrow’s world.
Putting Gold Before Water
In 2009, Pacific Rim filed a private lawsuit – what is referred to in the impenetrable jargon of modern globalism as an Investor-State Dispute Settlement (ISDS) – against the government of El Salvador for $301 million, equivalent to just over 2% of the country’s $24 billion GDP. As BBC World reports (in Spanish), the amount is equivalent to three years’ combined public spending on health, education and security.
The company argues that El Salvador unfairly denied its mining permit after it began an exploration process for gold mining, costing it hundreds of millions of dollars of “potential future profits.”
ISDS was originally intended to insulate investors from the costly consequences of expropriation, but it is now increasingly being used by companies to claim future profits foregone as a result of government legislation aimed at protecting the public, as well as to intimidate governments into changing or abandoning such legislation.
In the case of El Salvador, the government changed its mining legislation in order to safeguard the nation’s water supply. As Ciara Nugent writes in the Argentina Independent, a startling 97% of its water is currently unsuitable for human consumption, primarily as a result of the mining activities of companies like Pacific Rim. The miner’s proposed new project, due to take place in the northern San Isidro de Cabañas region, would have implied risks of contamination to the little water that remains:
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For the Love of Water: El Salvador’s Mining Ban
For the Love of Water: El Salvador’s Mining Ban
For some time now, U.S. and Canadian mining companies have been seeking out new mining sites in Latin America and elsewhere in the developing world. This is partly because high-grade ores that are easily accessible in the U.S. and Canada are in the process of being used up. It is also due to expensive litigation and mitigation costs that mining companies must undertake in developed countries. Not long ago, Salvadorans welcomed foreign owned mining companies into their country. Yet for the last several years, metal mining has been banned in El Salvador by presidential decree and citizen groups are now working to enact a permanent nationwide ban on such undertaking.
With six million people, El Salvador is the smallest and most densely populated country in Central America, as well as the most water-scarce. It also is one of the most environmentally degraded countries in Latin America. A period of rapid urbanization and industrialization in the 1990s deprived the country of about 20 percent of its subsurface water. Today, over 90 percent of its surface water is contaminated with industrial chemicals, making it unsuitable to drink even if the water is boiled, chlorinated or filtered beforehand.
In order to extract tiny particles of gold, mining companies have to apply a leaching process that involves the use of cyanide and enormous amounts of water. As NACLA reported in 2011, “the average metallic mine uses 24,000 gallons of water per hour, or about what a typical Salvadoran family consumes in 20 years.” In less developed countries where regulatory agencies are weak and water scarce, then metal mining can have serious public health and environmental consequences.
Back in 1992, after a lengthy and devastating civil war, reformed-minded Salvadorans were eager to rebuild their conflicted ravaged country. In the years that followed, the rate of economic growth was well above the average for Latin American countries.
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