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Learning from the Impact of the Extractive Industries in Latin America

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Extractive Industries in the Andean Region: Issues, actors, challenges Paper prepared by Anthony Bebbington

PROCASUR Regional Corporation

July, 2011

Extractive Industries in the Andean Region: Issues, actors, challenges

Extractive Industries in the Andean Region: Issues, actors, challenges Extractive Industries in the Andean Region: Issues, actors, challenges Anthony Bebbington1 There are five main sections to this background issues note on extractive industries in the Andean Region (which I take to include the Pacific Coasts, Highlands, Eastern humid tropical slopes and lowlands of Peru, Bolivia, Ecuador and Colombia, and the Chaco lowlands of Bolivia). The first part lays out some of the broad political economic context of the sector. The second section discusses ways in which this context (which is one of rapid expansion) intersects with local economies. The third section builds on the second, addressing relationships between extraction and processes of local development. The fourth section discusses ways in which extraction has been negotiated by communities.

The final section highlights issues that fall out of this analysis and that constitute domains for policy, institution building and research.

A. Political Economic Context The New Extraction Since the early 1990s Latin America, and the Andean-Amazonian region in particular, has been the terrain of a new phase of expanded investment in the mining, oil and gas sectors.

Three broad factors drive this expansion: increasing global demand for minerals, oil and natural gas (in particular from China and India, but also Brazil and other large emerging economies) coupled with price increases that make even low grade and complicated ores financially attractive; technological changes that allow the extraction of such dispersed ores as well as of hard to access hydrocarbons; and policy and institutional changes that have provided favorable tax, royalty and regulatory environments for investors (Bridge, 2004). The industry itself also recognizes this. The International Council for Mining and Metals notes how Peru’s “legislation created an extremely attractive investment regime for large multinational companies” (ICMM, 2006).

This is not the first time such a mix of factors has fostered expanded extraction in the Andes: as Gil Montero (2011) and others note, 17 th Century mining expansion in the southern Andes also reflected favorable policies on labor (the mita), increasing demand (in Europe), and technological changes (the use of mercury amalgams). However, the late twentieth/early twenty-first century variant of these changes is different. Most importantly it has led to expanded investment in new frontiers which have no modern history of large scale extraction as well as in traditional regions of extraction. This is so both among and within countries. Thus investment has moved both to “traditional” extractive economies (e.g. Chile and Peru for mining, Peru and Ecuador for hydrocarbons) and also to countries with no such history (e.g. mining in Ecuador, Argentina or El Salvador, and hydrocarbons across Central America). Meanwhile within the Andean countries, investment has gone not only to traditional mining regions (e.g.

Potosí, Oruro, Pasco) and hydrocarbon frontiers (e.g. Loreto, Tarija, Pastaza) but also moved into new ones. The last fifteen years have, thus, seen important mining interest in Piura and Ayacucho in Peru, in Santa Cruz in Bolivia, and in the Cordillera del Condor of Peru and Ecuador, as well as new hydrocarbon frontiers opening up in the altiplano of Peru, the northern lowlands of Bolivia and the South-east of Ecuador. As a result of this process the often presumed association of mining with the highlands, and of

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Anthony Bebbington, Ph.D is Director of the Graduate School of Geography and Higgins Professor of Environment and Society at Clark University, USA. He is also Professorial Research Fellow at the University of Manchester and Research Associate of the Centro Peruano de Estudios Sociales, Peru. His work addresses the political ecology of rural change with a particular focus on social movements, indigenous organizations, livelihoods, extractive industries and socio-environmental conflicts (www.sed.manchester.ac.uk/research/andes). He has worked throughout South and Central America, though primarily in Peru, Ecuador and Bolivia.

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Extractive Industries in the Andean Region: Issues, actors, challenges hydrocarbons with the humid tropical lowlands is breaking down with both forms of extraction now being found across the full transect of Coast-Andes-Amazon.

Figures 1 to 8 (see annex) reveal some of the historical, geographical and macroeconomic manifestations of this process. By the end of the 2000s, experts estimated that some 55% of Peru’s highland peasant communities were affected by mining concessions, and that between 2002-07 the area of these concessions had increased 77.4% (from 7,045,000 ha to 13,224,000 hectares). Meanwhile between 2004 and 2008 the proportion of Peru’s Amazon basin covered by hydrocarbon concessions increased from 14% to over 70%, with concessions overlapping with protected areas, indigenous territories and lands reserved for indigenous peoples (Chase-Smith, 2009).

While in Ecuador the area affected by mining concessions is far less, at around 10%, this is still remarkable given that the country has no significant mining history at all; meanwhile some 65% of its Amazon basin is concessioned, or available, for hydrocarbon activity (Finer et al., 2008). Fifty-five percent of Bolivia’s surface is deemed available for hydrocarbon exploration (Humphreys Bebbington and Bebbington, 2010).

This is also an extractive boom of unprecedented speed and scale that mobilizes a new suite of technologies that have new and uneven effects. In the mineral sector, open cast mining delivers unprecedented forms of landscape transformation (mountains “chopped down”, gaping holes appearing), while conversely in the hydrocarbon sector new extraction technologies probably reduce the scope of physical landscape change in comparison with earlier periods. Perhaps more significant though, are the novel ways in which this extraction articulates with the political economy of development. Thus, while the most significant struggles over access to resources in Latin America’s twentieth century involved peasantries seeking to break up the concentration of property and wealth in the countryside, in the current round of struggles against the extractive economy the converse applies: in many instances these are struggles triggered by a progressive re-concentration of rural property and wealth. Moreover, while struggles over land in the mid-twentieth century addressed critical issues of resource access and social justice, they did not call into question models of national economic development.

Indeed, one of the reasons why land reform went ahead in many countries was because the latifundia economy was no longer central (or even functional) to the main pillars of national economic strategy. In contrast, many contemporary struggles over extraction challenge the very core of national models of wealth creation and accumulation. Indeed, some of these struggles are questioning the principal economic policy commitments of all countries in the greater Andean region. Given that each of these countries has made natural extraction one of the most important pillars – and in various instances the most important pillar - of strategies for growth and social policy financing, to the extent that this pillar is being challenged then so is the broader macroeconomic program of which it is a part (Bebbington and Humphreys Bebbington, 2011). In this regard, the political resonance and analytical significance of these struggles is substantially different from those of yesteryear.

These patterns underlie the claim that this new round of extraction has done nothing less than rewrite the political ecology of the Andes (Bebbington, 2009). This rewriting – or maybe more precisely remapping –has been produced from centres of power where particular visions of resource led growth (from government) and resource-based entrepreneurial strategies (from companies) have driven an effort to order national landscapes so that they can more easily be made functional to such visions and strategies. These mappings intersect with territorial and livelihood dynamics in ways that further suggest a fundamental reworking of the political ecology of the region. But before the paper comments on these intersections, it is important to address the particular contexts of Ecuador and Bolivia.

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Extractive Industries in the Andean Region: Issues, actors, challenges

Neoliberalism, post-neoliberalism and the extractive economy One of the factors facilitating increased investment in extractive industry in the Andean region has been the passage of legislation, typically characterized as “neoliberal” by critics, that favors investment (and investors) in the sector (Bridge, 2004; Bury, 2005 [2007 in Spanish]). While taking slightly differing forms in different countries, this legislation has typically sought to promote investment through easing access to concessions and surface rights, through creating favorable tax and royalty regimes and/or offering tax and royalty holidays, through issuing special decrees allowing foreign companies to operate close to national borders, and through the promotion of selfregulation by the industry. However, there is no sense in which any of Peru, Colombia, Ecuador or Bolivia might be referred to as “perfectly” neoliberal – for alongside market friendly extractive industry policies, in each country there are also countervailing bodies of legislation and significant resistance. Furthermore, since 2005/6 both Bolivia and Ecuador have been governed by administrations often referred to as post-neoliberal.

This section explores some of the ways in which this broad ideological orientation of governments in the four countries, coupled with variations in the ways in which they deal with indigenous and citizenship rights, have gone to shape the governance of their extractive sectors.

Peru June 2008 saw an attempt by the then government of Alan Garcia to pass into law a series of decrees that would, inter alia, ease third party access to collectively held indigenous and campesino land (Burneo, 2008). Though it appears they were primarily intended to unblock stalled mining projects in the Andean highlands, this barrage of laws catalyzed an “Amazonian strike” led by indigenous organizations and involving river blockades and occupation of hydrocarbon installations. That strike ended when the government agreed to revisit some of the laws, but when by 2009 it was still dragging its feet, indigenous organizations mobilized again. That mobilization culminated in a stand-off between protestors and the police on the Curva del Diablo, a stretch of road outside the town of Bagua. By the end of the day, 33 people had been killed, twentythree of them police men eleven of whom were had initially been held hostage at an oil pumping station and were then deliberately murdered by their Awajun-Wampis captors in retaliation for the shooting of indigenous people. Even in a country so accustomed to violence and where some 70,000 people were killed during the armed conflict of the 1980s and 90s (CVR, 2003), the events in Bagua rocked political debate and everyday conversation, and absorbed pages in both national and international press (e.g. Vidal, 2009).

The Peruvian government’s responses to Bagua were at best half-hearted, if not cynical.

A Commission was created to investigate events, and round-tables were convened so that government and indigenous leaders could negotiate a way forward. However, at the same time as indigenous leaders participated in round tables they were also being pursued by public prosecutors as the intellectual authors of the deaths in Bagua.

Meanwhile, when the Commission finally delivered its report it was signed by just four of its seven members and two members (a nun and the indigenous President of the Commission) produced a dissident letter citing forty-three reasons why they did not sign (Manacés Valverde and Gómez Calleja, 2009).

Beyond the terrible human tragedy of Bagua, these events can be understood in terms of broader processes unfolding in the Andean-Amazonian region. The violence in Bagua had evident roots in deeper processes of structural change – the long history of usurpation of indigenous lands, the four decades of indigenous organizing in the lowlands, the sustained failure of government to respond to lowland territorial claims.

However, its immediate precursor was what Peruvian political and economic

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Extractive Industries in the Andean Region: Issues, actors, challenges commentator Humberto Campodonico (2008) called a “torrent” of decrees issued by the Executive Office under competencies given to it in December 2007 by Law 29157. This law delegated to the Executive the power to circumvent Congress and directly pass legislation necessary for implementing the terms of the Free Trade Agreement signed in 2006 with the USA. These powers were delegated for 180 days from January 1st, 2008, and on their basis the Executive issued a hundred or so decrees, a great many of which were issued toward the end of the 180 day period (hence the notion of “torrent”). A number of the laws had the effect of weakening communal forms of property, of facilitating private investment in areas historically occupied and owned by peasant and indigenous communities, and of strengthening the hand of the state in achieving the outcomes it wanted on these properties. A leading constitutional lawyer, Francisco Eguiguren, deemed that a number of these laws had nothing to do with the Free Trade Agreement, and that as such the Executive Office had misused the powers given to it (CNR, 2008). Other actors – including indigenous organizations, legal defence groups and the Ombudsman - also considered that under the provisions of ILO 169 and Peru’s Constitution, several of these laws should have been (but were not) consulted on with indigenous communities prior to their emission, and that as such they were neither legitimate nor constitutional (Chase Smith, 2009; Rénique, 2009).

Many of these decrees reflected the translation into legislative proposals of a manifesto for Peruvian development that Peru’s President Alan Garcia had published (just two months before the passage of Law 29157) under the banner of “The Dog-in-the-Manger Syndrome.” He used columns in the main national newspaper, El Comercio, to lay out his views regarding the main factors preventing Peru from entering into a full-blown “take-off” along the lines proposed by W.W. Rostow in his theory of the stages of growth (Rostow, 1960). In essence Garcia saw two main problems: a land and resource tenure system that offered indigenous and formally registered communities a degree of protection to rights of collective property and of consultation prior to large scale capital investment on their lands; and a set of civil society organizations and activists that sought to defend these rights. These organizations were, for Garcia, the dogs-in-themanger who wanted to prevent large scale capital from deriving value from resources that indigenous and peasant communities could not transform themselves. Garcia (2007) complained “there are millions of hectares for timber extraction that lie idle, millions more that communities and associations have not, and will never, cultivate, in addition to hundreds of mineral deposits that cannot be worked.” “That same land, sold in large lots, would bring in technology from which community members would also benefit but the ideological web of the 19th century continues as an impediment: the dog in the manger.” Hydrocarbon expansion was moving slowly because “against oil they have created the image of the ‘non-contact’ jungle native” while for mineral development the problem was that “barely a tenth of these resources are being exploited because here we are still discussing whether mining destroys the environment,” a non-issue for him. These arguments imply a vision of development for Peru in which the role of modern technology, private property, large scale capital, and a combination of both foreign direct and domestic investment are paramount – a development process led by capitalists and in which the rest of the population participates as beneficiaries. Indeed, Richard Chase Smith has argued that this was a manifesto for a “clear project of state reform that leads to an ultra-neoliberal model oriented towards the concentration of land and natural resources in private hands” (Chase Smith, 2009: 51): a project that is, furthermore, remarkably well organized. A “torrent” of a hundred or so new laws does not appear easily – it requires an orchestrated network of lawyers to prepare these laws, guided and resourced by interests committed to this project.

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Extractive Industries in the Andean Region: Issues, actors, challenges

Colombia2 While Colombia is often viewed as falling within the same broad Latin American neoliberal camp as Peru, elements of the Colombian context give a particular dimension to the governance of extractive industry that distinguish it from the Peruvian context.

One of these is the general challenge of security and violence within Colombia, though we pay less attention to that here. The other is that, even as Colombia has pursued broadly neoliberal economic policies, it has also undertaken constitutional and legislative changes that have served as important resources in efforts to strengthen indigenous peoples’ abilities to engage with and exercise some influence over extractive industry.

Though Colombia has long experience with the large scale extraction of hydrocarbons and coal, in the metal mining sector the experience has been different. Notwithstanding the country’s pre-colonial and colonial history of metal mining, large scale metal mining is only a recent phenomenon which, though it began to grow in the 1990s, has only recently been viewed as a potentially significant part of the national economy. The current government, however, has identified mining as one of the pillars of its macroeconomic strategy and more generally the last decade and a half has seen policies that seek to promote investment in the sector. These policies (seeking to regulate consultation, modify mining codes, and foster privatization) have in turn led to problems related to territory, environment and impacts on agricultural communities, Indigenous and Afro-Colombian communities (NSI, 2002). Indeed, significant mineral deposits overlap many indigenous territories, in particular in the departments of Antioquia, Choco, Cauca, Tolima, Huila, Caldas, Risaralda and Guajira.

Any extraction in these areas is governed not only by mining codes but also by principles introduced under a political Constitution adopted in 1991 and which drew special attention to the ethnically and culturally diverse nature of Colombia and in turn granted certain rights to the bearers of this diversity. Citing North-South Institute 2002: “The Constitutional Court affirms and explains these rights with the following interpretation in decision T-380-93, which reads in part: the Indigenous community is no longer just a factual and legal reality and has become a subject of fundamental rights. In its case, the interests that are worthy of constitutional protection and that can be covered by these fundamental rights are not reduced to those that are predicated for its members considered individually but can also take root in the community itself, which enjoys its own singularity, which is precisely the assumption for the express recognition made in the Constitution of the ethnic and cultural diversity of the Colombian nation…acknowledging that Colombia is a multi-ethnic and multicultural nation.

The Constitution laid the basis for recognizing that Colombia’s indigenous peoples had a right to territory, to cultural identity, to self-determination, to self-government and to exercise their own forms of governance and Justice. 3 Indeed, North-South Institute (2011) has suggested that “Colombia boasts one of the most progressive frameworks for ethnic rights protection in the world” though go on to note in the next that these “rights are not upheld in practice.” These principles have been mobilized in legal disputes over indigenous peoples and extraction, as for instance in the conflict between Occidental Petroleum and U’wa. The U’wa argued that consultation over oil extraction on their territories had to refer not only to environmental issues, but also to the preservation of

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This section depends very heavily on material produced by one of the organizations involved in the Ruta, the North-South Institute working in conjunction with indigenous organizations in Colombia. See especially North-South Institute, 2002 and 2011.

3 Another interesting aspect of the Colombian constitutional and legislative context is that it allows for indigenous peoples mining rights within their own territories. Indeed, in some instances it may be that discussions in Colombia were not per se “anti-mining” but rather of how the mining would be governed and by whom it would be conducted. This seems to presage more recent trends in the politics of mining in Peru.

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Extractive Industries in the Andean Region: Issues, actors, challenges the ethnic and cultural integrity of Indigenous Peoples.

Constitutional Court each supported this position.

The Ombudsperson and

Subsequent mining legislation has sought to weaken these rights to consultation (a pattern that is visible across all four countries). Nonetheless the precedent of the constitution has made Colombia a particularly interesting arena in discussions over consultation and questions of free, prior and informed consent (FPIC). North-South Institute, the Proceso de Comunidades Negras, and various indigenous organizations have been key in these debates (see also Escobar, 2008). Some of this work may be yielding fruit as the Constitutional Court has upheld the right to FPIC in recent decisions.

However, all this is in a context in which violence is widespread and even basic citizenship rights are frequently and easily contravened.

Ecuador After assuming power in January 2007, Ecuador’s president Rafael Correa spoke of his new government as bringing the country out of its “long neoliberal night,” characterized among other things by the indiscriminate granting of mineral licenses with immensely favorable conditions for license owners. Initially, Correa’s government appeared to target the extractive sector as one in which it was going to prove its post-neoliberal credentials and craft new ways of governing the economy and natural resources. Indeed, the first Minister of Energy and Mines, Alberto Acosta, declared a commitment to a different way of managing oil. This proposal hinged around the sensitive field of YasuníITT (Ishpingo Tambococha Tiputini), located beneath a protected area of great biodiversity and occupied by the Huaraoni and Ecuador’s two remaining indigenous peoples living in voluntary isolation (Sevilla 2010). The government committed itself to pursuing an alternative proposal for the governance of ITT, in which the oil would be left underground if the international community guaranteed half the revenue that Ecuador would otherwise have received from the oil. These funds would be placed in a trust fund that the Ecuadorian government could then use for broad development purposes.

Correa and Acosta subsequently parted ways and since late 2008 Ecuador has seen new legislation that is much more favorable to the large-scale mining sector. While the process leading to that new legislation and its constitutional foundation is not transparent, reports attest that Correa intervened directly by telephone in sessions of Ecuador’s Constituent Assembly working groups that were finessing articles dealing with extractive industries and the issues of free, prior and informed consent. Another change since 2007 has been a progressive hardening of Correa’s position on the rights of citizens to protest against extractive industry.

The ecologists are extortionists. It is not the communities that are protesting, just a small group of terrorists. People from the Amazon support us. It is romantic environmentalists and those infantile leftists who want to destabilize government.

(Correa 2007) I’ll say it again, with the law in my hand, we will not allow such abuse, we will not allow uprisings that block roads that attack private property. (Correa 2008) As the executive’s commitment to extraction hardened, the Yasuní-ITT initiative also encountered problems. In January 2010, Correa rejected a long negotiated deal that had been brokered by his own government with the UNDP, Germany, Spain and others that would have secured about half of the money required for the trust fund. Correa argued that donors were attaching too many conditions to the use of these monies.

If that is how it is going to be, keep your money and in June we’ll begin to exploit ITT. Here we are not going to trade in our sovereignty. (Correa cited in EFE 2010)

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Extractive Industries in the Andean Region: Issues, actors, challenges Versions vary as to how far this breakdown was due to intransigence on the part of Correa or of the German minister. Whatever the case Correa’s rejection of the deal led his Foreign Minister to resign. The significance of the Yasuní-ITT experiment failing would stretch well beyond Ecuador (where Correa’s statements have left a profound sense of disappointment among some public intellectuals). More recently Correa appears to be trying to re-start the Yasuni process in Germany. However, the government is also clear that with or without Yasuni, oil development will continue, and the mining sector will be promoted.

Bolivia The links between fiscal realities, extractive policy and political projects are clearer in the case of Bolivia because securing surplus for redistribution is at the core of MAS’s strategy of extraction: in the words of Bolivia’s Vice President Alvaro García Linera (2009), The social-state need[s] to generate economic surpluses that are the state’s responsibility, you need to produce on a large scale, to implement processes of expansive industrialization that provide you with a social surplus that can be redistributed and support other processes of campesino, communitarian and small scale modernization.

The strategy for doing this has been twofold. First has been a form of hydrocarbons nationalization that, while not involving outright state ownership, has massively increased the state’s revenue from hydrocarbons (by an order of seven, according to some claims by Morales). Second has been the concerted effort to extend the extractive frontier (primarily for hydrocarbons) into both traditional and non-traditional areas of extraction.

In addition to securing overall macroeconomic stability, this surplus is needed, according to the government, for two main reasons. The first is to increase transfers to those departments (sub-national administrative units) that currently receive no or few fiscal transfers from extraction. In the short term this revenue would be delivered through a direct hydrocarbons tax (Impuesto Directo a Hidrocarburos, IDH) on existing operations.

Some of this IDH tax will be re-directed by central government to non-producing departments. In the longer term, the goal is to open new extractive frontiers in these departments, so that they too can produce their own oil, gas and minerals and hence receive royalties directly. The second reason is to fund the range of social programs initiated or broadened by the MAS government and which constitute an important program of redistributive and targeted social spending. The reach and visibility of these programs has made them central pillars of the viability of MAS’ political project.

What, then, is Bolivia going to live off if some NGOs say ‘Amazonia without oil’? ….They are saying, in other words, that the Bolivian people should not have money, that there should be neither IDH nor royalties, and also that there should be no Juancito Pinto, Renta Dignidad nor Juana Azurduy [all cash transfer and social programs] (Morales 2009).

Policy on extraction has triggered resistance among lowland indigenous organizations and CONAMAQ in the highlands (though is supported by the sindicalist highland organizations and their confederations). The Consejo de Capitanes Guaraní-Tapiete de Tarija (CCGTT, Council of Guaraní and Tapiete Captains of Tarija), the coordinating body of indigenous organizations in Tarija (by far the main gas-producing department of Bolivia) issued a resolution complaining that: [W]e are not prepared to continue seeing our demands subordinated to the interests and whims of other sectors and continuously passed over…. We wish to express our concern and annoyance that our territories are being permanently

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Extractive Industries in the Andean Region: Issues, actors, challenges affected by natural resource extraction activities and infrastructure construction without any consultation with our organizations as laid down by constitutional principles and current laws…. No argument can justify government authorities or representatives of state or private companies simply ignoring all the rights that have been gained by indigenous peoples and that constitute the essence of the process of change underway in our country (CCGTT 2010).

CPILAP, the Confederation of Indigenous Peoples of La Paz, expressed similar discontent; [W]e the indigenous peoples have been leaders in this process of change, but the minute we ask respect for indigenous issues and processes of consultation we’ve been accused of belonging to the right, and of being part of separatist movements (CPILAP cited in Servindi 2010).

In ways that echo sentiments of Alan García in Peru, the head of Bolivia’s state hydrocarbons company Yacimientos Petrolíferas Fiscales de Bolivia (YPFB), Carlos Villegas, stated in 2010 that: ‘The issue of environmental permits and consultation and participation has become an obstacle (to investment)’, and that: ‘This year we want to undo these obstacles.’ A new draft hydrocarbons law reworking social and environmental safeguards so that ‘social issues will not be an obstacle to investment’ is now being prepared (quotations from La Razón 2010).

The general pattern across the Andean countries appears to be that central government – and particularly the Executive office – is consistently promoting the expansion of extractive industry, prioritizing national agendas over territorial demands or livelihood concerns, and using discursive and/or material force in order to push this policy agenda through. Different tropes are used to justify hostility to those who question this approach, and they run from the invocation of sovereignty, through the urgency of necessity and on to the denigration of critics as stupid, selfish, infantile, leftist and terrorist. The willingness to use physical force shows more variation, with most restraint apparent in Bolivia – however, the determination to push the extractive frontier outwards is clear across all three countries.

The ingenuous question must be “why?” One interpretation is that as García, Correa, Morales and García Linera survey their own macroeconomic prospects, each comes to the conclusion that their best options reside in the extraction of their subsoil resources and that, as they look to the medium term, they conclude that resource extraction is where their macro-economies’ main comparative advantage lies. They might also feel that revenue from extractive industry is easier to appropriate and control than are the more dispersed and difficult-to-tax revenues deriving from the smaller-scale, informal economy. Furthermore, such centralized revenues might seem an attractive means of financing the sorts of centrally-provided state services that are more effective in generating political capital and votes than would be the case with more decentralized, bottom-up forms of development. Finally, it may be that these presidencies recognize the risks associated with extractive industry but feel that this time they can do things differently, and in that way appease movements’ concerns about government’s ability to ensure adequate regulation of extraction, to protect citizens’ rights and to share the benefits of extraction more broadly. This said, while fiscal concerns may constitute one set of factors that lead towards expanded extraction, another is undoubtedly interest group and coalition politics. The lobbies – both domestic and international – to expand extractive industry are very powerful. In addition to the normal suspects (hydrocarbon companies, consultancies, civil engineering companies, publicly owned oil companies) sit less frequently commented ones (extractive industry workers’ unions and the military).

More perplexing is why such thinking so easily translates into authoritarianism and the use of force. One answer might be that these three presidencies and their respective parties just happen to have authoritarian tendencies. Another answer might be that

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Extractive Industries in the Andean Region: Issues, actors, challenges these regimes see extraction as their only option. This is worrying because it would speak to just how constrained they see their policy options as being and also because it would imply that they are gambling that their future will be different from their past. Put another way, if their options are indeed so constrained, then this would imply that their prior dependence on extraction has brought them to this point and has not fostered economic dynamism or diversification – yet they are banking their future on a similar dependence upon extraction. Concern about just such scenarios underlie a growing interest among some civil society thinkers to imagine what “post-extractive” economies would look like (RedGe/CLAES, 2011; http://www.otrodesarrollo.com/postextractivo/index.html).

B.

Extractive industry expansion and local political economy dynamics

The expansion of extractive industry interacts with local political economies in different ways. This section summarizes four perceived or real consequences of this interaction: uncertainty; loss; uneven opportunities; and the creation of conditions conducive to different forms of conflict.

Uncertainty Maps of mineral and hydrocarbon concessions are quite different from (and more extensive than) maps of actual operations. For this reason, some in the extractives sector have criticized activists and researchers for using concession maps in their public information and advocacy work, on the grounds that these maps bear no resemblance to areas ultimately affected by mines, wells and pipelines. What, then, do concession maps represent? One argument is that they represent geographies of real and perceived uncertainty and risk. As there is no local consultation when concessions are given, the first residents know a concession has been given on their land is when geologists begin exploring or when companies come to initiate negotiations over access to the surface rights in areas to be explored, or when land markets begin to operate in strange ways.

Uncertainty is all the greater when people learn that exploration has found minerals beneath their communities. At this point, people’s sense of the future changes forever, for much worse or much better depending on their views on mining. Some of the most significant conflict over extraction occurs in these exploration phases, and one interpretation is that this is a response to uncertainty (another is that movements recognize that this is the only phase at which extraction can be stopped, and that once operations begin there is no turning back).

Loss Asset loss can begin during exploration (e.g. through land purchases) but becomes more apparent once an extractive project goes ahead. Various types of loss (or in the language of some, “dispossession”) occur. First is the loss of livelihood assets, in particular land, water and forest. The amount of land to which people lose access varies depending on the location and type of project. In some regions, such as Cajamarca, Peru, whole communities have lost access to grazing, and many families have lost land to agriculture also, leading to responses such as intensification on remaining land or migration (see chapters by Bury and by Bebbington et al. in Bebbington, 2007).

Evidence suggests financial compensation is less resilient than physical assets, leaving rural households decapitalized (Bury, in Bebbington, 2007). The sense, however, is that residents worry most of all about loss and contamination of water resources.

When concessions are mapped onto watersheds the reasons for such concerns seem clear. By 2008, fifteen of Peru’s largest rivers had 25% or more of their basins under concession (Bebbington and Bury, 2009). In Tarija, Guaraní organizations have been particularly concerned about the potential loss of water supply from protected areas slated to be explored for hydrocarbons (Humphreys Bebbington, 2011).

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Extractive Industries in the Andean Region: Issues, actors, challenges A second loss is of ways of living. “We want to live in a health environment and in peace,” read a banner of protestors at a Constituent Assembly consultation at Loja, Ecuador. Indeed, both research and media suggest that extraction transforms not only familiar landscapes but also everyday modes of social interaction. Research in SE Ecuador reports how everyday calculations of which taxis to take, or which hair salons to use, are affected by where people fall on the pro/anti mining continuum (Warnaars, 2011).

The loss of ways of living is closely related to the loss of ability to control space, as the main actor in territorial governance shifts from the community or even municipality to the extractive company. Visible indications of this loss of control are fences, armed guards or even road signs with company logos, as well as the everyday visibility of others (workers, professionals, drivers) living and working in former community spaces.

Uneven opportunities Extraction also generates a range of opportunities and much protest (see below) around the extractive sector is oriented towards securing or enhancing such opportunities.

These opportunities are, however, unevenly distributed.

Four particular types of opportunity stand out as significant.

Discourse around new projects emphasizes employment benefits. However, medium to long-term direct employment effects of modern extractive industry are limited as capital has increasingly substituted for labor. Moreoever these fixed employment opportunities are concentrated in skilled sectors and generally employ workers who are not local. In some instances, labor lives in camps separate from local centres, triggering dissatisfaction at its failure to dynamize local economies. In other cases (e.g. gas fields in Tarija), professional workers simply commute between the site of operations and their homes in other departments. Conversely if skilled labor resides locally – as is the case in Cajamarca – its purchasing power leads to price inflation, particularly in the property market, as well as an increasing segmentation among local consumers between those mine-workers who consume certain services (high end restaurants, prostitution) and a local middle class population who cannot, again generating discontent (Gorritti, 2005).

At a community level, employment opportunities are concentrated during the construction phase, with more limited options during the operational phase. These opportunities privilege men over women, and typically younger men over older men.

Another challenge is that companies might guarantee a certain number of jobs per community and then communities have to find ways of allocating these jobs, generally on a rotating basis. This makes for complex intra-community negotiations as well as the frustration that few jobs become full time.

A second set of opportunities derive from company social responsibility and community development programs and funds. This is an area in which companies’ learning curves have been steep and many companies recognize errors made in the past. In Cajamarca, for instance, early community relations work by Yanacocha involved – at the admission of their own community development teams – making bilateral agreements with those individuals and communities that it was necessary to placate (if they threatened protest) or whose acquiescence had to be secured in order for mining activity and expansion to continue. This strategy merely encouraged other local actors to demand benefits of one sort or another. In some cases the funds associated with community development initiatives become very significant raising massive challenges for local organizations. For instance, in Michiquillay, an Anglo-American project in Cajamarca, the company committed a fund of $200 million simply for the exploration phase. This in turn induced political maneuvering within the two communities, itself refracted through prior landholding structures and political conflicts, and risked further weakening community decision making structures (Burneo and Chaparro, 2010).

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Extractive Industries in the Andean Region: Issues, actors, challenges

A third set of opportunities are those provided to local service providers.

Extractive industry demand for equipment, maintenance, gang labor, advertising etc. creates opportunities for local capital and is associated with the emergence of new business both in regional urban centres and in communities where labor recruiting companies become consolidated. This in turn fosters new forms of differentiation and relationships of power in the local and regional economy as well as constant maneuvering to win sub-contracts with the extractive industry company.

The fourth, and financially most significant opportunity created by the extractive economy derives from the tax and royalties paid by companies. The amount of such payments and how they are distributed (geographically and socially) hinges on national tax and royalty rates as well as company-specific agreements. In some instances – such as Chile – central government controls these income streams whereas in others (such as Peru and Bolivia) significant proportions are redistributed to the regions in which extraction occurs. The resources generated in this way can be very large, leading to significant inequalities among regions regarding the revenue they control. Thus in 2007 in Peru, about 67 % of all mining tax (canon minero) transfers and 52% of combined canon and royalty transfers were concentrated in just 6 of the country’s 25 regions and among just 16% of the population (Arellano-Yanguas, 2011). Meanwhile in 2008 in Bolivia, the department of Tarija produced 70% of Bolivia’s natural gas and received 35% of the country’s entire decentralized budget (Humphreys Bebbington, 2010).

Recent figures show that while Tarija has a budget of $US350 million (reflecting the fact that natural gas prices were high last year), the altiplano department of Oruro, with a similar sized population, but far poorer, had a budget of just US$36 million.

What emerges from these complexes of uncertainty, loss and opportunity are the inevitably unequal and unequalizing nature of their effects. We see inequalities between territories deriving from both geological differences and fiscal arrangements that produce geographic unevenness in redistribution. And we see inequalities within territories in which the new inequalities of power that accompany the arrival of extractive industry lead to new inequalities in exposure to uncertainty and vulnerability, access to resources and labor markets, participation in service provision markets, access to community development interventions and more.

Conditions conducive to conflict These effects help explain the high and growing levels of social conflict that have been part of the expansion of extractive industry across much of the Andes and caution against singular explanations of this conflict. Mobilization and conflict have probably been driven by a range of motivations, anxieties, grievances and incentives. This combination suggests that the juxtaposition of “greed or grievance” in explanations of conflicts around extraction is an unhelpful simplification (Collier and Hoeffler, 2004, 2005; see Caballero, 2011 for Peru).

Some protests and conflicts are best understood as responses to uncertainty and perceived risk. These conflicts manifest themselves subsequent to the granting of concessions to conduct exploration but prior to exploitation. In many instances these occur before any actual exploitation has occurred (e.g. much of Ecuador, Piura, Islay, Tambogrande, Puno in Peru, Norte La Paz in Bolivia). In other cases, such protests may occur when an existing mine seeks to expand its operations in ways that are perceived to generate threats to nearby populations and environments, and especially to water supplies. A particularly significant example of this much noted in Peru was the struggle over Cerro Quilish in Cajamarca. Water is omnipresent in these conflicts because many mining concessions are located in headwaters, because hydrocarbon extraction has such a poor history of water pollution throughout the Western Amazon, and also because the highlands and coasts of the region are already water constrained environments. Indeed,

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Extractive Industries in the Andean Region: Issues, actors, challenges arguments between different interests in these conflicts as to whether mining will or won’t affect water quantity and quality, and whether it does so more or less than does agriculture and urbanization, are far from resolved and constitute perhaps the principal domain of struggle over the definition of hegemonic ideas in debates over extraction in the region.

A second group of protests seem more motivated by annoyance at actual dispossession.

In these conflicts, grievances include the payment of very low prices for land that later prove to be immensely valuable, the drying up or actual contamination of water courses, the loss of territorial autonomy, or the loss of authority among local elites.

A third set of conflicts reflect demands for opportunities. Some mobilizations have been led by mine workers, or populations hoping for employment. Other conflicts appear to be orchestrated by local and regional entrepreneurs demanding contracts (or protesting the loss of a contract), or even communities demanding compensation of some sort.

Here conflict is used as a way of forcing extractive industry to recruit their services or provide benefits of some sort. Another variant on the same theme are those conflicts in which communities left out of company CSR and community development programs seek to make themselves visible and so also demand the attention of these programs.

Fourth are mobilizations facilitated by political authorities. In some instances this may be seen as a mean of enhancing their electoral prospects, and in others of increasing the revenue that these authorities derive from extraction. One striking example of this phenomenon was the conflict in 2009 between the southern Peruvian regions of Tacna and Moquegua, each important producers of copper. In this instance the copper is produced by the company Southern Peru Copper, using ore drawn from the two departments. Fiscal transfers back to the departments had been based on the volume of ore extracted, such that Moquegua received 22% and Tacna 78% of the transfers based on Southern Peru’s tax payments. However, the ore in Moquegua is much richer than Tacna’s which meant that in fact over three quarters of the final copper metal produced came from Moquegua. The region thus organized massive street protests demanding increased transfers and culminating in a violent stand-off between protestors from the two regions. When central government finally yielded and agreed to increase transfers to Moquegua, the Tacna authorities complained bitterly and protests resumed. These mobilizations also involved municipal authorities and municipal populations. Indeed, transfers to the regions had become such that in a number of municipalities the bulk of the population was employed by the municipal government using funds generated by tax transfers. Both authorities and the population feared for their political influence and jobs respectively if transfers were to be reduced (Arellano-Yanguas, 2011).

A second example from Tarija reflects how both regional and national political authorities can each facilitate conflicts in ways that converge with their broader political objectives.

The bulk of Tarija’s gas comes from the Gran Chaco province of the department. By law 45% of the transfers of gas revenue to Tarija had been earmarked for Gran Chaco, fifteen percent to each of its three municipalities. These funds, however, passed through the departmental government who would only release them if the Gran Chaco proposed uses of the money that converged with Tarija’s departmental priorities and investment criteria. While tension over this influence of the departmental government had existed for a number of years, it became accentuated in 2008 in a context of wider political conflict between the central government and the lowland departments of Bolivia. In the midst of this conflict, the central government sought an alliance with the authorities of the Gran Chaco (who were far from natural allies of the governing party), offering them a referendum on whether they should receive the resources directly from central government and manage them autonomously of Tarija (not surprisingly they voted “yes”). For the central government this response to the conflict became functional to the goal of weakening the authorities in Tarija, and the Gran Chaco it allowed them to achieve the autonomy that they sought.

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Extractive Industries in the Andean Region: Issues, actors, challenges

C. Linking extraction to territorially based development There are different routes through which extractive industry might contribute to territorially based development dynamics. The first of these routes operates through the multiplier effects of an extractive industry’s presence in a territory (such as demand for labour, services and products), the second through community and socio-economic development initiatives that extractive enterprises often implement as part of their broader programmes of corporate social responsibility, and the third through the transfer of tax and royalty incomes back to the regions in which extraction was occurring. A fourth route operates through the influence of extraction on institutional arrangements, incentives, expectations and perceptions of risk and opportunity.

In addition to influencing the functioning of the first three channels, these effects have consequences of their own which can be significant even when these other channels are not yet in place.

While evidence and claims diverge across the region, it seems reasonable to conclude that, overall, the first routes has rarely fostered sustained economic dynamism in the territories in which extractive industry operates for reasons noted above. Meanwhile company sponsored community and socio-economic development programmes tend ultimately to be oriented more to business strategy than the fostering of sustained local economic development (though this is a claim that many in extractive enterprises would hotly contest).

If these two channels are so relatively weak, then it is to tax and royalty transfers that one must look to find any significant effects of the extractive economy on territorially based growth and livelihood development. It is in this sense that recent research in Peru

by Javier Arellano-Yanguas (2010, 2011) is significant, for he concludes that even though these transfers are massive, their effects on the strength and health of local economies is at best ambiguous. While he draws attention to jobs created through such transfers, these jobs are rarely sustainable, depend largely on direct public expenditure and make few positive contributions to the local economy.

More important still, however, is Arellano-Yanguas’s conclusion that these tax transfers have also induced significant levels of social conflict in the territories that receive them, as different social groups and local authorities struggle to increase their share of and control over these resources. The worrying implication is that the economic effects of such fiscal transfers might ultimately be negative: on the one hand they generate unsustainable jobs, and on the other hand they create levels of conflict that are likely to dampen other forms of investment in the local economy. Combining these conclusions with those of an earlier section, the image is one of more or less sustained conflict over the cycle of extraction – initially triggered by the uncertainties and expectations triggered by exploration, and later deepened by the struggles to control fiscal transfers.

How far fiscal transfers do or do not facilitate local and regional development may, though, depend on the rules governing how these resources can be used and the level of government receiving resources. Municipalities will want to spend at the municipal level rather than contribute to strategic investments going beyond municipal boundaries. In addition, stringent central government rules may restrict actual investment of resources (as is the case in Peru). Indeed, in Tarija, Bolivia, where significant transfers went to the departmental government, a number of these were invested in strategic departmental initiatives: large scale infrastructure (mostly roads), small scale agricultural credits focused on particular commodity chains, health insurance for poorer families among others. In this instance, evidence suggests that such investments have fostered growth and a reduction of poverty in the department (Hinojosa et al., 2011).

A general observation deriving from these points echoes arguments made by Bonnie Campbell (2003, 2006, 2008) on mining reforms and policy in Africa. One of her

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Extractive Industries in the Andean Region: Issues, actors, challenges criticisms is that mining reforms sponsored by international financial institutions have focused only on the mining sector, seeking policies that aim to increase investment. The focus of policy, she suggests, should instead be on relationships between mining and regional development, mining-agriculture linkages, or mining and the environment. In the Andes, this has often not been the case – extractive industry policy focuses on the sector itself, while links to development are only considered later and through other instruments that may not be coordinated with policies on extractives, and are often subsidiary to these policies.

D. Negotiating extraction Many strategies have been used in the region to negotiate relationships with extractive industry.

These range from direct action, violence, mesas de dialogo (roundtables), direct intervention of central government authorities, legal defense, policy advocacy, cultivation of ties with parliamentarians and advocacy in the public domain, among others. It is impossible to determine which of these is more or less successful, though it is perhaps possible to make three observations: -

Direct intervention by high level central government teams seems particularly prone to fail, and furthermore encourages protestors in other conflicts to refuse to negotiate with anyone but a Minister or Prime Minister Direct action does occasionally lead to withdrawal of extractive industry in the short/medium term, but (a) does not lead to regulatory change by itself and (b) runs the risk of accentuating repression and violence Legal defense is clearly a source of concern for the extractive sector – as witnessed by the direct pressure born by the Canadian government on Canadian Lutheran World Relief to withdraw all support to legal defence NGOs.

Rather than isolate any one strategy, what is perhaps especially important to understand in detail is how different components of these strategies have been combined in networks of “incidencia” in ways that have led to steps toward changes in regulation of the extractive sector that pay greater attention to rights, the environment, and democratic process. One possible example of such networks that may be deemed to have achieved this (at least so far) is that which mobilized around the Río Blanco project in Piura.

Key players in this experience include Fedepaz (for legal advocacy), Cooperacción (for technical and informational support), rondas campesinas in the region, the pastoral social of the Church and members of the Peruvian Congress.

The experience is very far from perfect, but may hold lessons. Another example, with its own ups and downs and in a different context of an already existing mine, would be the negotiation around Tintaya in Cusco. Key actors here would include Cooperacción again, CONACAMI (though key players are now to be found in COAI), and Oxfam America.

Another such experience would be that around Itika Guasu and the Campo Margarita gas field in Tarija, Bolivia. In Colombia, the work of North-South Institute in conjunction with national organizations such as PCN appears as another relevant experience.

Finally, as a footnote to these negotiating strategies, it is important to note the roles played by some consulting groups and research/consulting organizations that attempt to use the consulting relationship to influence how extraction enters a territory. Of particular interest here would be the experience of the research centre GRADE which, while contracted to mining companies, has sought to create spaces for participation. It is not clear how successful this mechanism is, but an off the record discussion with the GRADE team would be very fruitful.

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Extractive Industries in the Andean Region: Issues, actors, challenges

E. Issues for policy, institution building and research As debates on the interactions among extractive industry, development, democracy and environment have progressed, both sceptics and proponents of extractive industry seem to have converged on the centrality of institutional arrangements in determining the quality of these relationships. Therefore in this final section identifying issues of particular significance for the sector in the Andes, there is a certain emphasis on questions of governance and institutional arrangements.

1. Information and asymmetries: on observatories and research capacity While the provision of, and access to, information does not resolve all asymmetries (in the extractive sector or elsewhere), it is nonetheless critically important. Indeed one of the lessons of the Andean experience has been that civil society was largely caught by surprise by the rapid increase in investment in the sector, and lacked the informational and analytical instruments to respond quickly. Indeed, much of the last fifteen years has been a period of catch-up for civil society, and arguably the absence of information has meant both that extractive enterprises have been poorly regulated by society, and that society has turned to denunciation and conflict as a mode of regulation in the absence of adequate information. Another lesson is that the provision of information has been critical in fostering public debate on the issues at stake.

Information provision has to be organized of course, and this can be done through research whose results can be placed in the public domain (unlike company sponsored research, of which there is quite a lot), through the creation of “observatories” and through externally induced mechanisms of transparency.

While diverse sorts of information seem critical, this paper notes four.

Anticipatory information. For regulation to be more than reaction, information of likely future trends and patterns in the sector is critical. Companies garner such information through their strategic planning units, but society and government has been far weaker in doing the same. One significant exception in Peru has been the work of Cooperacción that since the mid-1990s began to track the mining sector and had the foresight to monitor concessions (as lead indicators of investment) and to provide information on concessions in cartographic form. More recently the Instituto del Bien Común began to do the same for hydrocarbons. This information and these maps have been critical to public debate and in the case of IBC’s work (together with Environmental Defense) were also important in forcing reflection within the InterAmerican Development Bank on its investments in the hydrocarbon sector (though whether this debate made any real difference is a moot point). In Bolivia CEADESC has done something similar for hydrocarbons.

Conflict information. Monitoring the trends of social conflicts is similarly important for, among other issues, anticipating the interactions between extraction, human rights and democracy. It is also important to the extent that conflicts provide insights into the actual nature of extraction-development-environment interactions, and can also serve as one of the most fruitful sources of institutional change. Once again, society and government have been playing catch up in this regard, though have innovated in important ways. In Peru, the most fruitful innovation was led by the Defensoria del Pueblo (Ombudsman’s Office) which established in the early 2000s a system for monitoring and cataloguing conflicts and making the material publicly available. This system draws on the presence of Defensoría staff in the provinces who provide regular information. This is then systematized at a central level. This information is used widely by all actors in the sector. NGO monitoring mechanisms like OCMAL, OBIE and the Plataforma Energetica in Bolivia, as well as FLACSO’s Observatorio Socio Ambiental in

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Extractive Industries in the Andean Region: Issues, actors, challenges Ecuador have also played important roles in providing information and analysis and helping communities connect to one another.

Fiscal monitoring Given that struggles over resource rents and their use are so significant, efforts to increase transparency and analysis of these rents, how they are divided between profits and tax/royalty payments, and how these tax payments are distributed and then spent, become critical as a means both of reducing tension, inducing more responsible fiscal behavior, and tracing links between extraction and development. This monitoring can be done at national and subnational levels. In the Andean region, Peru is the most advanced in this regard. At a national level, the EITI process is one mechanism, and Peru is a candidate country (though this process has been fraught with resistance from, in particular, national companies); another mechanism is the work of Revenue Watch International. Sub-nationally, the NGO consortium project, Propuesta Ciudadana, has attempted to trace fiscal transfers and their use. Again, this information is often used in public debate. Such instruments are far less well developed in the other Andean countries though efforts are underway to increase such monitoring (e.g. at Tierra in Bolivia).

Water monitoring Given the significance and sensitivity of water in conflicts over extraction and in considering how far, and where, extractive industries should expand, systems for information provision on water play critical roles in planning the extractive sector nationally and locally, as well as in conflict dynamics. Given that the status of knowledge claims is so disputed in this area, it is also critical that any such systems appear as independent as possible of special interests, as grounded in science as possible, and as committed to the legitimacy of local knowledge as possible. Progress in this field is still limited and has mostly been concentrated at a local level with the (important) creation of participatory water monitoring initiatives. The Grupo de Dialogo Minero in Peru is an important source here.

2. Land Use Planning, with links to powers of different levels of government One of the most significant problems associated with the extractive economy is that it is centrally managed and consistently deemed (by law as well as executive attitude) to take precedence over local development dynamics and objectives. Thus it is that concessions are granted without local or departmental authorities knowing and thus, by definition, without their having any say in such decisions. Concessions often stand at odds with local development dynamics leading to conflicts with other forms of land use and livelihood: eg with organic banana production in El Oro, with dairy farming in Azuay, with market oriented fruit production in Tambogrande etc.

In response, there has been an increasing argument that any expansion of mining and hydrocarbon activity should only occur subsequent to a prior process of ecological and economic zoning that would seek to characterize the most appropriate land uses in different areas.

This zoning process would then be followed by a process of ordenamiento territorial (OT, territorial planning), which would take the results of the zoning exercise and convert them into land use plans that would be binding and would therefore structure any subsequent geographies of investment – be these in mining, hydrocarbons, house building, commercial agriculture or other domains.

In Peru, modest experiments with OT/ZEE are underway in the regional government of Cajamarca, and local governments in Piura, for instance. There are still many questions regarding these ideas. One relates to the the political feasibility of OT in contexts where the interests at stake are substantially different, and where asymmetries of power are immense – it is one thing to have a set of landscape characterizations (ZEE), and quite another to turn these into rules (OT) that will permit the favored land uses of some stakeholders and forbid those favored by other more powerful stakeholders. Also there is the question of the relative authority of different OTs produced at different administrative levels (regional, municipal etc.). Furthermore, while civil society groups

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Extractive Industries in the Andean Region: Issues, actors, challenges in Peru are very keen on OT/ZEE, some critical researchers in Colombia are more skeptical and view OT instead as an instrument that allows the state to organize space in such a way as to allow extraction, and to foster processes of state formation that are not in the interests of local populations (Asher and Ojeda, 2010 for the case of OT in Afrocolombian regions in Colombia).

Regardless, OT/ZEE will be an area of activity in coming years – and possibly of legislative activity. It will also point to an area (along with discussions of fiscal transfers) where the governance of extraction becomes caught up with discussions of decentralization policy. On this issue, key organizations include SER, the regional government of Cajamarca, and a loose discussion forum of experts facilitated by the Red Peruana por una Globalización con Equidad (RedGE).

3. Free, prior informed consent and consultation Also related to these questions of the levels of society and the state at which binding decisions are made is the debate over free, prior and informed consent (FPIC, or CPLI in Spanish). It is recurrently noted that though Andean countries are signatories to ILO Convention 169 and the principle of FPIC, they have not passed enabling legislation that would allow FPIC to be implemented and indeed have resisted doing so. In Peru, both the Ombudsman’s office and groups of legislators have sought to pass a Consultation Law but this has not been given space in legislative sessions.

There are many issues related here, but let us note three. First is the apparent confusion on FPIC insofar as it is widely dismissed (or celebrated) as giving a power of veto to indigenous populations. While at the margins this may be so, FPIC seems more appropriately understood as a mechanism that would strengthen indigenous peoples’ leverage in the process of negotiating the design of extractive projects on their territories. Indeed, some companies have accepted the principle of FPIC (including companies operating in the Andean region: Xstrata, Anglo-American, Talisman Energy …). Second is that the FPIC debate shows how debates over extractive industry are bundled with discussions of the nature of the pluri-national state, of pluri-national democracy and of the powers, rights and authorities that indigenous peoples might have within their legally recognized territories. Thus FPIC may be resisted not only because industry or Ministries of Finance and of Energy and Mines have concerns, but also because of these larger constitutional and political issues it raises. Third, for FPIC to become meaningful will require far greater provision of information that is produced in ways that are reasonably independent – otherwise “consent” can’t be “informed.” This again points to the importance of the first issue raised in this section.

There have been important debates on FPIC in both Peru and Colombia, where actors include the Ombudsman’s offices of each country, the Constitutional Court of Colombia and several NGOs. Perhaps particularly interesting has been the work of North South Institute with the Proceso de Comunidades Negras and the Embera Chamí of the Resguardo Indígena Cañamomo Lomaprieta (the Cañamomo Lomaprieta Indigenous reserve).

4. Territory and extraction Closely related to the issue of FPIC is the relationship between indigenous territories and extractive industry. For many indigenous populations, the issue here is how to protect and expand territorial claims, rights and control in contexts where territories (actual or claimed) overlap with extractive resources and/or concessions. Two observations frame this issue. The first is that demands for territory encounter far more obstacles and resistance when they include areas where hydrocarbon or mineral deposits are known or suspected to exist. The second is that it is not clear that indigenous populations living in such contexts are necessarily against extraction of resources from the subsoil. While

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Extractive Industries in the Andean Region: Issues, actors, challenges this may be sometimes the case, in other conflicts it appears that what is sought is instead greater influence over how extraction occurs, how benefits will be distributed, and how the life cycle of the extractive project will be governed.

Furthermore, ethnographic work suggests that local populations are often not of one mind on these issues anyway.

Thus a critical issue on which there appear to be more general statements than specified and nuanced strategies is whether and how indigenous territorial and extractive projects can co-exist, and what such co-existence would mean for processes of consultation, governance and revenue sharing. A related question is, assuming “ideal type” endpoints can be definable, what this would mean for strategies of negotiation on the part of indigenous peoples and their allies, and what it would mean for re-working different bodies of legislation governing the subsoil, the surface, and indigenous rights in ways that would make these laws complementary and consistent with each other. It is not clear that there are best-practice examples in this regard, though organizations that have dedicated careful thought to these issues would be the Defensoría del Pueblo, IBC, Oxfam-America and potentially Aidesep in Peru, and the PCN in Colombia.

5. Human rights, criminalization of protest, security The FPIC discussion is also one manifestation of the broader issue of the relationship between the extractive economy and human rights. Indeed, a significant number of the civil society actors that have engaged in the issue of extractive industries come from a human rights background (e.g. SER, FEDEPAZ, the Coordinadora de Derechos Humanos in Peru; INREDH, CEDHU and CDES in Ecuador, CEJIS and CEADESC in Bolivia). Rights issues raised are many – rights to consultation, to clean environments, to participation, to bodily security, to life, to association and to protest. As suggested in the context section, there are many who sense that the expansion of extraction has led to a curtailment of a number of these rights, and that central authorities and executive offices have endorsed such curtailment – albeit often on the grounds that if protest were to block extraction (and thus the income it will generate) it would in turn infringe the social and economic rights of other citizens who would have otherwise been beneficiaries of increased government expenditure (see the Morales quotes above).

One particularly significant issue here is the question of security. Activists frequently frame this as the privatization of security coupled with the criminalization of protest.

Certainly national legislation, and the work of fiscales, in Peru and Ecuador point to such a criminalization of protest. Whether privatization of security is the best way to refer to what is happening is less clear, but extractive industry conflicts – given their propensity to become violent – have raised the question as to who and what national security forces should defend first and foremost, and as to where the boundary lies between direct action and criminal activity. These questions go to the core of the nature of the contemporary state in the region. However, one senses that they are not being worked on systematically – this is a debate that operates more in the realm of denunciation than analysis. This may be because it is an especially sensitive and dangerous debate to become involved in. It is however critical.

6. Free trade agreements and the regulation of extraction.

An increasingly important issue in the region is the bundling of the regulation of the extractive sector with the free trade agreements that have been signed with the US, Canada and other countries. Companies whose projects have stalled when sustained social protest which leads government to cancel concessions or to introduce moratoria on extraction have threatened to use provisions under FTAs to sue Latin American governments. This is currently being threatened by a Canadian company that has lost a project in Puno, Peru, while in El Salvador (obviously out of our region) there are currently two cases that have been taken by US and Canadian companies to ICSID. This

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Extractive Industries in the Andean Region: Issues, actors, challenges mechanism is still poorly understood in the region, as are the conditions in which complainant companies are more or less likely to win cases. It is quite possible that shifts towards tighter regulation, some of which would be applied ex-post (i.e. after projects have progressed), will generate more such litigation. This is an area where much more anticipatory knowledge is needed (to refer back to an earlier point in this section).

7. Small scale, informal and artisanal mining.

The bulk of civil society and social organization activity, and indeed of public debate and academic research, has been oriented toward large scale mining and the challenges that it brings for democracy, environment and development. Indeed, this issues paper reflects this bias. However, there is also a very significant and little understand small scale mining sector in each country. These are the cooperatives of highland Bolivia, the small scale mining camps dotted across the Peruvian sierra and ceja de selva, and the small scale miners in Loja, Zamora-Chinchipe, El Oro and Morona Santiago in Ecuador.

These activities are little understood – in terms of their politics, their inter-relations with illicit economies, the volume of taxes that they do not pay, and their internal organization. It is generally accepted though that they have nefarious implications for the environment, laborer safety and human rights. The informal sector sector is also important discursively as it is often used to try and discredit critiques of large scale mining, as when sympathizers with large scale mining ask why NGOs or researchers don’t focus their attention on informal mining, given that it is a far greater source of contamination than is large scale mining. Organizations doing some work on informal and small scale mining include Cooperacción in Peru, and Cedla in Bolivia.

8. Post-extractivism and macro-development models.

Finally, there is a still incipient but growing discussion in the region on “postextractivism.” This discussion seeks to understand what transitions to a post-extractive economy in the Andes might actually look like. Arguably the discussion has been more effective at polemicizing extraction and imagining alternatives than at exploring the political conditions of possibility for post-extractivism. Nonetheless, this discussion will gain greater traction in time – among other things because it allows for the bundling of the discussion of extraction with discussions of climate change mitigation, but also because it involves some of the leading critical thinkers on extraction in the region (Alberto Acosta, Jose de Echave, Eduardo Gudynas, Carlos Monge, Jurgen Schuldt etc.).

Key organizations here are CLAES in Uruguay and the Red Peruana por una Globalización con Equidad.

At this more macro scale, two other issues also merit attention. One is the move on the parts of Ecuador and Bolivia to increase the place of the state in the economic regulation of the sector – be this through “nationalization”, changes in fiscal arrangements or the creation of state enterprises. While important in terms of discourses of popular politics, these options leave many details undeveloped and, according to some, may do little more than provide discursive cover for programs that continue to look very similar to those of the past. The other issue that merits more attention is to understand the relationship between EI investments and the on-going program of large scale infrastructural investment in the region, particularly under the auspices of IIRSA. Once again, things are said regarding the synergies between these two processes but far more work is needed to make explicit, and then understand, the actual links involved.

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Extractive Industries in the Andean Region: Issues, actors, challenges

ANNEX

24

Figure 1.

The growth of mining claims in Peru, 1990-2007

4000

8000

3500

7000

3000

6000

2500

5000

2000

4000

1500

3000

1000

2000

500

1000 0

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Claims-29,417 (79% of all Mining Claims); Total Hectares-13,723,347 (89% of All Mining Claims)

Size of Claims

# of Annual Claims

Frequency

Thousands Hectares

Peru Mining Claims 1990-2007

Figure 2 Geographies of mining (left) and hydrocarbon (right) concessions in Peru, 2008/9

Figure 3: Hydrocarbon concessions and contracts, western Amazon Source: courtesy of Matt Finer, Save America’s Forests,

Figure 4: Hydrocarbon lots, Colombia, 2010 (Source: courtesy of Jeff Bury, University of California)

Figure 5 Indigenous Territories and Mining in Colombia Source: North South Institute, 2002

Figure 6: Expansion of mining concessions, pre1990-2008, Norther Peru and Cajamarca

Source: Bebbington and Bury, 2011

Figure 7: Extractive industries share in GDP, 1990-2007 (Hinojosa, 2010 – TCD-Andes)

Figure 8: Extractive industries share of exports (Hinojosa, 2010 – TCDAndes)