Corporate Rights over People’s Rights: The Expansion of ENEL in Latin America

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By Tobias Roberts, MCC Guatemala

About a month after my wife and I arrived to the small, Mayan-Ixil town of Nebaj, Guatemala, we received our welcoming into the reality of the Ixil people when the town was occupied by a thousand military troops armed with machine guns and small tanks.  The military was called in to forcefully disperse a road block that local communities had maintained for months as a protest against the construction of a mega-hydroelectric dam on their ancestral territories. The dam was being built by the Italian company ENEL.

Since that moment, ENEL has been at the forefront of controversy and conflict that has engulfed the Ixil region of Guatemala.  In many ways, the situation with ENEL also serves as a representation of how certain events are unfolding in Latin America that give priority to the rights of corporations over the rights of individuals, communities and national governments.

ENEL is one of the biggest energy companies in the world.  It operates in 40 countries worldwide and generates 98 GW of energy.  According to its website, in 2011 ENEL posted revenues exceeding 79.5 billion dollars.  Two of ENEL´s recent investments in Latin America shed light on the issue of the legal partiality towards the rights of corporations.

The Case of Guatemala

In 2009, ENEL began construction on the Palo Viejo Dam in the town of Cotzal in the Ixil region of northern Guatemala. The dam was built on the land of a private coffee farm that was stolen from the Maya Ixil people 100 years ago by a European land baron. Since the beginning of construction of the dam, local rivers have been ecologically devastated and thousands of local families living downstream from the dam have lost the ability to subsist from fishing the rivers which was once their main livelihood.  The arrival of the multinational ENEL also brought much social conflict as communities divided between those that supported the company and those that protested it.  Community claims that their rights as indigenous peoples over their ancestral lands had been violated brought the response of military occupation.

All of this tension eventually led to a dialogue between ENEL executives and local indigenous authorities.  The dialogue was heralded by many as a unique chance to create a new type of relationship between multinational corporations and local, indigenous communities where mega-projects were to be put into operation.  Unfortunately, the dialogue was used by ENEL as a strategy to divide communities and buy time before finishing the construction of the project.  This blatant disregard towards the rights of indigenous people led to the failure of the dialogue and the result of the local communities leaving the negotiations empty handed.

The Case of El Salvador

In 2002, ENEL partnered with the El Salvadoran government to invest in the national geothermal energy plant “La Geo” that provides 25% of the country´s energy needs and yielded around 80 million dollars in annual revenue for the government.  ENEL, recognizing that “La Geo” was a profitable business venture, sought to invest 127 million dollars into the company and thus increase its participation to 53% of the shares effectively privatizing a national energy industry.  The government of El Salvador blocked that investment and ENEL took them to an international arbitration court that ruled that ENEL had the “right” to invest and thus will become the majority stakeholder of the previously national geothermal plant.

Corporate Rights Prevail

In both cases of Guatemala and El Salvador, the right of ENEL to invest as a multinational corporation trumped the rights of both indigenous people over their ancestral lands and a national government over its strategic energy reserves and production.  These cases expose a clear tendency to favor the rights of corporations to invest over the territorial rights of communities and national governments.  They also consolidate the power of companies like ENEL and encourage them to increase and expand their investments.  ENEL recently disclosed its plans to invest more than 2 billion Euros by 2016 in the renewable energy markets of Latin America. How many of those investments will come at the mercy of indigenous populations losing access to their ancestral lands or national governments losing the sovereignty  over their natural resources?