El Salvador: Gold, Suspicion, and International Arbitration Courts

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Potential mining Projects in El Salvador’s Gold Belt

By Tobias Roberts, MCC Guatemala

El Salvador, despite being the smallest country of Central America, almost always seems to find its way into the center of attention and conflict.  Roque Dalton, the famous Salvadoran poet in his often recited “Love Poem”, considered Salvadorans to “always be suspicious of everything”.   That suspicion undoubtedly has its roots in the iniquitous amount of injustice and violence that the Salvadoran people have endured over the centuries and it is a suspicion that is also the foundation of their fierce defense of their collective dignity. And that, defending dignity, tends to be dangerous to the vested interests of money and power.  For defending their dignity, over 80,000 Salvadorans were killed in the Civil War of the 1980´s.  Today, that same spirit of faithfulness to preserving their dignity has led El Salvador into the spotlight of yet another conflict.

In recent years, multinational mining companies have discovered a vein of gold running from Mexico down to Costa Rica.  According to the El Salvadoran government, the vein is thickest in El Salvador. With the price of gold at historic highs, applications for mining permits began to flood the government offices with applications for mining permits compromising around 5% of the El Salvador´s territory.

Previous right-wing governments that advocated neoliberal economic policies began to dole out exploration permits. Pacific Rim, a small, Canadian based mining company received one of those permits and began exploration of a mine in the northern state of Cabañas, one of the poorest areas in the country.

Despite the companies claims that the mine was to be one of the most environmentally friendly in Latin America, the local population rose up in resistance to the mine.  Feeling the ecological stress of living in a crowded country with little land and less water, the communities feared the negative environmental effects of a mega-gold mine in their communities.

This grassroots opposition led to severe conflicts and division within the community.  In 2009, a series of unresolved murders of community leaders that opposed the mine forced Pacific Rim executives to testify before Canadian Parliament.  These murders also spurred a more organized and country-wide hostility to mining in the country.   Later that year, right wing president Tony Saca, despite being a pro-business champion of foreign investment, put a moratorium on mining and refused to grant licenses for exploration or exploitation of mines in the country.  Since then, the new left leaning government of the political party FMLN has introduced legislation to become the first country in the world to outlaw mining.  The law is slated to be debated by the Salvadoran Congress in the first semester of 2013.

It would seem that this struggle against mining in El Salvador was a victory for grassroots and community organizations joining together to make their voices heard and respected through policy decisions of the national government.   However, in our globalized, capitalist society, the right of corporations to invest trumps the right of individuals and communities to decide over their lands, and even undermines national sovereignty.

Shortly after the government of El Salvador opted to respect the voice of its people and prohibit mining, Pacific Rim took the government of El Salvador to an international arbitration court seeking over 70 million dollars in reparations.  According to Pacific Rim, the free trade agreement that El Salvador signed with the United States in 2003 obligated the country to indiscriminately open its borders to foreign investment. Pacific Rim is making this claim through its US-based subsidiary because Canada in not part of the Central Americal Free Trade Agreement.  Despite a series of appeals by the Salvadoran government, it appears that Pacific Rim has won the arbitration and El Salvador will have to pay up.

The “suspicious nature” of the Salvadoran people is more than warranted in cases such as this one. When a foreign corporation has more rights over a piece of land than the people who have lived there for centuries; or when the demands of a multinational corporation trump the sovereign decisions of a national government, something is dreadfully wrong in our society.

Even more forbidding is the precedent that this case creates.  According to James Fredrick in World Politics Review: “Other gold mining companies with operations in Central America, such as Goldcorp (owner of the Marlin Mine in Guatemala), say they may use the Pacific Rim case to adjudicate disputes of their own.”