The Debate Over Public-Private Partnership Law and MCC Funding in El Salvador

Last week Pacific Rim Mining Company announced it is seeking $315 million dollars in damages from El Salvador. It was a stark reminder that the 8-year old mining debate, which included several years of threats and violence between mining supporters and opponents, has yet to been resolved and could still result in a devastating economic blow to El Salvador.

As the mining issue continues, another debate with the potential to become just as volatile is brewing. In March the Funes Administration provided some details about its proposal for a second round of funding from the Millennium Challenge Corporation (MCC), a US aid program started by President Bush in 2004. The proposal is worth $413 million dollars, half of which will likely go towards an infrastructure project like improving the Litoral Highway that runs along El Salvador’s southern coast. The other half is likely to help finance public-private partnerships and improve human capital, which seems to mean education.

As details of the proposal emerge, opposition to a second round of MCC funding is growing. So far, opposition has opened on two fronts. The Salvadoran labor movement has been the most outspoken opponent, denouncing the proposed Law on Public Private Partnerships (P3 Law) since last year. Environmentalists and communities in the Lower Lempa region of Usulután have been less outspoken, but oppose the MCC proposal because the public-private partnerships will support tourism, which they strongly oppose. In 2011, members of the anti-mining movement also spoke out against the P3 Law fearing it would result in mining activities.

Mangrove Forests near La Tirana, a community targeted for a large tourism project

Because politicians within the FMLN are supporting the MCC, the politics of opposing the P3 Law and tourism are a little more complicated than opposition to mining was. Other than a protest outside the US Embassy in March and other small activities organized by the labor movement, opposition has remained largely behind closed doors, which may change soon.

            The Public Private Partnership Law

US Ambassador Maria Carmen Aponte said in October 2012 that approval of a second round of MCC funds relies on the passage of the P3 Law. The labor movement and their international supporters, argue that the P3 Law will privatize government operations including the airport, seaports, health care facilities, and other important services. They fear it will result in the loss of thousands of jobs, increasing the country’s already high rates of unemployment and driving wages down even further.

The labor movement and other opponents also do not want the private sector to control important resources and services like water, education, and health controlled. For example, Salvadoran civil society has fought against privatization of water for many years, making it such a toxic issue that politicians are unable to advocate for it publicly. Just like the government has not been able to privatize water, civil society organizations have not been able to pass a water law they have been promoting for over 8 years. Among other things, the law would protect water resources from privatization. Similarly, in 2002 then President Francisco Flores tried to privatize part of the health care system, but health care workers and many others took to the streets and forced the government to back off. Opponents of the P3 law fear it will make it easier for the government to accomplish what it has failed to do in the past – privatizing water and health care.

Supporters of the P3 Law, including President Funes, counter that public-private partnerships are not privatization, and the government will not privatize any important services, like health and education. They argue, instead, that public-private partnerships will result in more foreign direct investments, injecting capital into services and industries that are lagging behind.

The labor movement and other activists fear, however, that while not called privatization, the P3s are a way to accomplish the same goals. Concessions could last as long as 40 years, which means the state is essentially relinquishing control of an asset. Similarly, while capital investments are needed, the P3 Law will allow private, international investors to generate profits from basic services in El Salvador and take the profits overseas instead of re-investing in El Salvador.

Public-private partnerships are not new in El Salvador – they government has contracted out many operations to private companies over the years. One regular criticism is that these relationships prioritize profits over the well being of Salvadorans. For example, in the aftermath of the October 2011 floods, communities and organizations in the Lower Lempa blamed the CEL for washing them out. The CEL is the state-owned agency that manages the dam, generating electricity that private power companies sell for profit. The more electricity produced, the more money the companies make. In the months after the 2011 floods CEL representatives responded frankly, stating they operate the dams to make electricity and generate profits, not protect the people downstream.

FESPAD and Voices on the Borders 2012 legal interns recently published a full analysis of the P3 Law.

Tourism and other Investments

One of the public-private partnerships being proposed in the second MCC compact is tourism – hotels and resorts being built along El Salvador’s Pacific coast. In December the government solicited proposals from the private sector and received 49 responses, 27 of which are tourism projects in Usulután, La Paz, and La Libertad.

Tourism is not inherently bad, but communities in the Lower Lempa of Usulután fear that building hotels and resorts in and around their important and fragile ecosystems will cause irreparable harm. One Lower Lempa community targeted for a tourism project is La Tirana, an isolated and economically poor community located at the edge of one of the most pristine mangrove forest in Central America. In addition to its immense natural beauty, the forest supports thousands of species of flora and fauna. The nearby beaches are protected as a nesting ground for several species of endangered sea turtles. Residents of La Tirana fear tourists would damage the fragile mangroves with construction of houses and resorts, jet skis and motorboats, and solid waste and sewage, while displacing local residents and their farms.

Proponents of tourism argue that resorts and hotels in places like Tirana would provide jobs and spur the local economy. They believe this to be especially important in communities, such as those in the Lower Lempa, that have had their agricultural economy diminished by free trade. But locals doubt resorts will help the local economy. They know that hotels are much more likely to hire bilingual youth from San Salvador who have degrees in hotel management than poor campesinos who barely have a sixth grade education.

Voices staff recently met with community members in La Tirana, and they are very much against outside investors building resorts in their region. Recognizing that they live in a special place, the community board is proposing that the community build a series of small, humble cabanas that would have a small ecological footprint, but provide comfortable housing for a small number of guests. They are also proposing that the community build a small community kitchen that could feed guests. The community wants to develop its own small eco-tourism industry that it can regulate and ensure does not harm the forest or turtle nesting ground. It would also mean that the money from tourism would benefit the community, and not just make wealthy investors in San Salvador or abroad even richer.

Other communities in the region are even more vulnerable than La Tirana. In El Chile and other small communities, many residents still do not have title to their land. They fear that if a private investor wants to build a hotel or resort the State could take their land and they would have no legal recourse.

Our staff also met with other communities in the Lower Lempa – Comunidad Octavio Ortiz, Amando Lopez, Nueva Esperanza – and several local organizations. They are also completely opposed to tourism projects in the region. They fear that hotels and resorts will further destroy agricultural land, use up limited water resources, and destroy local culture. The community of Octavio Ortiz even wrote in their strategic plan that they see tourism as a large threat to farming and their peaceful way of life.

While most of the public-private partnership proposals involve tourism, there are quite a few agricultural projects. According to PRESA, the government agency managing the project proposals, they received 14 requests to support production of exports in dairy, mangoes, limes, and honey. In order to be considered for a public-private partnership, investors have to have $100,000 in capital and be producing export crops. The capital requirement means local farmers will not be able to participate. And the requirement that products be grown for export means even more land will be dedicated to products that do not contribute to food sovereignty, which is a top priority for the region.

There are also civil society leaders and academics in El Salvador who oppose the MCC because they see it as the latest phase in implementing a neoliberal economic agenda in their country. They hold it in the same regard as the privatization of state assets (1990s), dollarization (1995-2001), Central American Free Trade Agreement (2006), the first MCC compact (2007-2012), and Partnership for Growth (2011). Similarly, Gilberto Garcia from Center for Labor Studies (CEAL, in Spanish) believes the

highway projects, including the northern highway funded by the first MCC compact and the Litoral Highway project planned for the second compact, are part of an effort to build a land bridge in Guatemala. The “Inter-Oceanic Corridor” will connect ports on the Pacific coasts of Guatemala and El Salvador with Caribbean or Atlantic ports in Guatemala. ODEPAL is managing the project in what they call a public-private partnership. The land bridge is located in Guatemala, but it is right on the borders with El Salvador and Honduras, giving both countries easy access.

Politics of Opposing the MCC and P3 Law

Building a strong national movement around opposition to the second MCC compact and the P3 Law may be more difficult than organizing Salvadorans against mining. While the anti-mining movement was able to reduce the debate to a single issue that all Salvadorans could understand – i.e. gold mining will destroy water resources for 60% of the country – most people believe that tourism, better highways, and other capital investments are always good. Similarly, the P3 Law is fairly abstract and difficult to reduce into a simple message that the majority of Salvadorans can relate to their everyday lives.

The politics around the MCC and P3 Law will make it more difficult to achieve the kind of nation-wide opposition that the anti-mining movement was able to garner. During the mining debate, the FMLN (leftist political party) was the opposition party and had the political freedom to take an anti-mining position. The FMLN is now in power and has to consider the economic and political interests that helped them get there. President Funes and FMLN presidential candidate Sanchez Cerén support the P3 Law and MCC compact, arguing the investments will be good for the economy. According to anonymous sources, many of the same business interests that helped Mauricio Funes with the 2009 presidential elections will benefit from the P3 Law and MCC funds. FMLN legislators have been a slower to sign on to the P3 Law. At times FMLN legislators have said it was not their top priority, and more recently they have tried to negotiate amendments to exclude certain sectors such as health and education from public-private partnerships. Officials from the conservative ARENA party have accused the FMLN legislators of not supporting the law because they want to implement a socialist economy agenda.

But the civil society organizations, communities, and labor unions that are opposed to the P3 Law and the MCC funding generally make up much of the FMLN’s base. If Sanchez Cerén and his supporters continue to embrace the P3 law and the MCC funding, while many in their base protest against it, it could exacerbate an existing split within the party in the months leading up to the February 2014 presidential elections. Many former FMLN militants and supporters, especially in the Lower Lempa, already believe the movement they once fought for no longer represents their interests and values.

Though the US and Salvadoran governments want to pass the P3 Law and sign the MCC compact before the elections, many opponents are gearing up for a long struggle. Even if the P3 Law passes, when the government wants to enter into a public-private partnership the Legislative Assembly will have to approve it. They are likely to face great scrutiny and opposition. Similarly, developers wanting to break ground on tourism projects in La Tirana and other communities are likely to face some rather significant legal and social barriers – much like Pacific Rim faced in Cabañas.

Discussion on Goldcorp at Salvadoran Consulate – Tuesday, October 30

This morning we (Voices staff) received an invitation for an important event next Tuesday evening (October 30^th) concerning the Cerro Blanco Mine in Guatemala and the environmental implications for El Salvador. The event is sponsored by the Salvadoran Consulate, the Office of the Ombudsman for Human Rights in El Salavdor, and CISPES.

The Cerro Blanco mine, which is owned and operated by Goldcorp –a Canadian mining company –, is in the Guatemalan province of Jutiapa. Environmentalists and local communities are concerned that mining activities will contaminate Lake Guija, which spans the border between El Salvador and Guatemala. Salvadoran environmentalist David Pereira explained a couple years ago that “toxic waste water from the mine will flow into the 45 square kilometers of Lake Guija, and on into the Lempa River, the main river basin in El Salvador.” Fears are substantiated by a study produced by Dina Larios, professor of geochemistry and hydrology at Ohio University, that contains serious warnings about wastewater from the mine.

Here’s some information on the event:

 “Implications of the Cerro Blanco mine on the El Salvador/Guatemala Border Area”

Report presented by the Ombudsman for Human Rights and the Center for Investigation of Commerce and Investment to the Inter-American Commission of Human Rights in Washington DC

Date:             Tuesday, October 30

Time:            6:00 pm

Place:            Salvadoran Consulate

2332 Wisconsin Ave. NW

Washington DC 2007

RSVP:            camelgar@rree.gob.sv or (301) 437-7698

We don’t hear as much about mining in El Salvador these days, but that doesn’t mean it isn’t a huge issue. As long as there is gold, silver, and other minerals of value there will be people trying to extract them.

So if you’re in DC on Tuesday, please try to attend.

Canadian Embassy Denies Access to two of its Own in San Salvador

Yesterday morning (June 13), a small group of anti-mining activists held a peaceful protest and press conference on the sidewalk in front of the Canadian Embassy. The protest was the culmination of a two-week effort by anti-mining activists to hand-deliver a letter to the Canadian Embassy asking them to end their support for Pacific Rim’s lawsuit against El Salvador. (For background on the lawsuit and Pacific Rim’s efforts, click here and here).

One highlight from the event was when two Canadian law students (Erica and Leah) who are interning for Voices on the Border and FESPAD this summer, tried to enter the embassy to deliver the letter, and talk to Embassy officials about the case. The Embassy turned them away without explanation. Yesterday afternoon, Erica wrote:

“This is outrageous treatment. Any citizen of any country is allowed to enter their embassy while traveling abroad – that’s what embassies are for. Your political affiliations don’t affect this basic right, nor do your stances on controversial issues. The embassy is Canadian territory. As citizens, we have the right to enter our embassy. They do not have the right to refuse entry to law-abiding Canadians.”

When they pressed the issue with security guards, they received word from Embassy officials that one of them could enter if they had document problems, otherwise they could not enter. That’s true solidarity! Erica and Leah experienced the kind of exclusion that Salvadorans and impoverished people around the world experience every day as they try to defend their environment, protect their economic security, and build a healthy life for their children.

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Yesterday’s events came almost two weeks after the International Center for Settlement of Investor Disputes (ICSID) tribunal announced their decision on preliminary objections in Pacific Rim’s lawsuit against El Salvador. This round of objections focused on jurisdiction – determining whether ICSID had the authority to hear Pacific Rim’s claim against El Salvador. In their lawsuit, Pacific Rim argues that El Salvador violated rights protected under the Central American Free Trade Agreement (CAFTA) and El Salvador’s investment law. The tribunal decided it did not have jurisdiction to hear the CAFTA claims (Pacific Rim is a Canadian firm and Canada is not a CAFTA signatory), but that it would hear the claims under El Salvador’s investment law.

Following the decision, Gus Van Harten, Associate Professor of Law at Osgoode Hall Law School, said,

“The case will now be one of the rare ones that proceeds under the host state’s domestic law on investment, but it is no less threatening than the treaty cases because of this. The arbitrators retain essentially the same wide-ranging powers, including to decide what a regulatory expropriation is, what is fair or unfair regulation, etc…. and to award damages or make affirmative orders against the government. Their award will also be widely enforceable in the manner of any treaty case.”

The Salvadoran Attorney General has tried to spin the decision as a victory, and that CAFTA works, but few agree. Pacific Rim’s lawsuit is still alive and a victory under Salvadoran law is just as enforceable as a victory under CAFTA.

What happens next remains a little unclear. It could be that Pacific Rim and El Salvador proceed to the next phase of the trial. Pacific Rim will present their complaint and EL Salvador will present their defense. Then the tribunal will hand down their decision. Or it could be that Pacific Rim and El Salvador negotiate a settlement; though El Salvador has yet to indicate they’d even consider doing so.

There is another, more extreme option worth mentioning, if for no other reason than highlighting El Salvador’s more serious problem – the fact they give corporations the right to sue them in the first place.

Historically, individuals and corporations did not have the right to sue a country – only a country could sue another country. That began to change when the U.S., Mexico, and Canada signed the North American Free Trade Agreement, which gave corporations the right to seek arbitration if a signatory country appropriated an investment. International law still dictates that a country has to submit to jurisdiction, and unless they have, individuals and corporations cannot sue. By signing CAFTA, the U.S., Mexico, and Canada all agreed that they would give international courts jurisdiction to arbitrate any disputes with investors.

El Salvador first submitted to jurisdiction in 1999 when the Flores Administration and ARENA-controlled Legislative Assembly passed the Foreign Investment Act – the law Pacific Rim is using now. The also agreed to give international tribunals jurisdiction to arbitrate disputes when they signed CAFTA and other trade agreements.

Professor Van Harten suggested after the recent ruling that one way El Salvador could get out of the Pacific Rim suit would be to repeal part or all of the 1999 Investment Law and no longer submit to jurisdiction. The Legislative Assembly would have to explicitly state that the law is retroactive and apply to any current actions. While that would likely be a popular move at home, it probably wouldn’t go over well with the U.S. and other international bodies, and it seems unlikely that the Salvadoran government would put those relationships at risk without careful consideration.

Withdrawing from jurisdiction may be something El Salvador wants to do anyway. Pacific Rim is only one of many mining companies that have applied for but not received exploitation permits from the Salvadoran government. If Pacific Rim is successful in their lawsuit, many others will likely follow. If El Salvador is unsuccessful in defending itself, it may end up granting more than 30 mining permits or face defending itself against an equal number of very large lawsuits.

Another reason to withdraw jurisdiction from international arbitration panels like ICSID is because future trade agreements may grant investors even more protection and rights than NAFTA and CAFTA.

Just yesterday, Public Citizen published a report on the investor protection provisions in the Trans Pacific Partnership (TPP) – a trade agreement being negotiated by Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the U.S. According Public Citizen’s analysis, some of the most outrageous provisions would:

• Limit how countries can regulate foreign firms operating within their jurisdiction, with requirements to provide them with greater rights than domestic firms;

• Establish a two-track legal system that gives foreign corporations to avoid domestic courts and laws, and sue States in foreign tribunals; and

• Grant foreign corporations the right to demand compensation for financial, health, environmental and land use regulations they claim undermine their TPP privileges, and demand compensation for costs of complying with financial or environmental regulations that apply equally to domestic and foreign firms.

El Salvador is not a signatory to the TPP, and the agreement has not even been signed or ratified, but the pendulum seems to be swinging very far in favor of these kinds of pro-investor rights. Once that is the standard, any efforts to protect local environments and resources are subject to the desires of international corporations… until countries organize and push the pendulum back to protect their interests.

Corporations and the U.S. have worked hard to keep concerned citizens and civil society groups from influencing negotiations of these trade agreements. Public Citizen’s account of how hard the U.S. has worked to keep the TPP negotiations sounds a lot like the CAFTA negotiations eight and nine years ago. While Corporations and business interests have a say in the process, concerned citizens and civil society organizations are left on the sidewalk to protest.

In that context, it’s not really surprising that the Canadian Embassy denied Erica and Leah (the Canadian law students interning in El Salvador) entry to the Embassy – they were hanging out with the wrong crowd. Perhaps if they were interning for Pacific Rim or any other international corporation they  would have had a different experience.

Oxfam Petition on El Salvador and Mining

Word on the street is that the ICSID (International Center for Settlement of Investment Disputes) tribunal hearing Pacific Rim Mining Company’s lawsuit against El Salvador will hand down a decision on the second round of preliminary objections before the end of the month. (Here is an article and a webpage with good information on the case).  Pacific Rim, a Canadian firm based out of Vancouver, filed suit against El Salvador over three years ago for not granting them the permits necessary to extract gold from their Cabañas properties. Between 2002 and 2008, Pacific Rim allegedly invested $77 million in exploring properties in Cabañas and other parts of El Salvador. When the government and people of El Salvador said the mining company could not mine, Pacific Rim sued to recover their investment, lost profits, and damages. If Pacific Rim wins, they could receive a judgment worth more than $100 million.

El Salvador responded to the lawsuit by filing two rounds of preliminary objections, asking the court to dismiss Pacific Rim’s claim on procedural grounds. The first round of objections was unsuccessful, and we should hear about the second round in the next week or so. If the Tribunal finds in favor of El Salvador, they could dismiss part or all of Pacific Rim’s case. If they find for Pacific Rim, the mining company’s suit lives to see another day.

Oxfam is currently organizing a petition asking U.S. citizens to demand that the U.S. end their support for Pacific Rim and their claim against El Salvador. The petition reads:

Act Now: Speak up for El Salvador’s Right to Decide

In El Salvador, communities are fighting for their right to decide how companies can use their lands. Many of them have made a decision: they don’t want the metal mining industry to continue to destroy the environment they live and farm in. And they’re paying the price – each day, community leaders and activists face threats of violence and death because they’re standing up to metal mining companies.

What’s making this fight even harder? Right now, Canadian mining company Pacific Rim is trying to force El Salvador to keep metal mines in business by suing El Salvador for $77 million under the US-Central America Free Trade Agreement (CAFTA). This case could not only cost El Salvador a significant portion of its GDP, but it could prevent citizens from deciding which industries develop in their country.

A win for El Salvador in this case means that El Salvador could choose to stop metal mining – for good. The US government’s support for El Salvador over Pacific Rim in this case has been crucial. That’s where you come in. Will you help us make sure the US supports El Salvador in this case?

Tell Secretary of State Clinton: Support the people of El Salvador.

Please visit the Oxfam site and sign the petition!

The petition is important because some within the US State Department associate anti-mining with being anti-development. They argue that if El Salvador passes a law that bans mining, it means the country is hostile to foreign investment. In 2009, Former Chargé d’Affairs Robert Blau wrote a cable to the U.S. Secretary of State with the Subject line: “New Environment Ministry Moves to Ban Mining, Sends “Anti-Development” Signals.” A ban on mining is not anti-development, it is respecting the wishes of the people who would be most affected by its disastrous environmental impacts.

The cable is worth a read. We recognize that Robert Blau has a pretty extreme view of U.S. foreign policy and that his view may not represent everyone within the Embassy (Blau is no longer at the Salvadoran Embassy). His view, however, exemplifies how neoliberalism affects policies in countries like El Salvador. The same people who want to gut the EPA and remove the environmental regulations that protect air, soil, and water in the U.S., also want to remove any barriers that might prevent them from pillaging resources around the world. Any efforts to protect the environment and the communities where people live are called anti-development.

The petition is important because we have to make sure the State Department understands that Salvadoran communities said no to mining because they want to protect their very limited natural resources. They are not anti-development, rather they don’t want their vision of development trumped by an international corporation that is only interested in profit. The U.S. should not support Pacific Rim and other corporations, but ought to respect the wishes of the affected communities.

Oxfam’s petition is not the only anti-mining news to report. Yesterday the MESA (Roundtable Against Metallic Mining in El Salvador) released a statement expressing their frustrations with the Salvadoran government’s inaction on mining. , the government commissioned a Strategic Evaluation of the Mining Sector to determine whether mining was feasible in El Salvador. The report was supposed to inform the Legislative Assembly and government ministries on how to manage mining, and whether they ought to pass an all out ban on mining, which is what the MESA has been advocating.

The MESA is frustrated with the lack of transparency in completing the study and the release of its findings. They recently filed a request for information about the report under El Salvador’s relatively new Law on Access to Public Information. They also requested information about what mining companies have applied for or hold mining permits. Lina Pohl, the Vice-Minister of the Environment and Natural Resources recently said the only possible scenarios are the suspension of mining permits (so far for just exploration, no mining company currently has an exploitation permit), and not granting new ones. The MESA believes this to be insufficient and that the study fails to take on the most important issues concerning the impact that mining would have on the country. They call on the government to be more proactive in defending Salvadorans and banning mining altogether. The MESA has posted several interviews on Youtube detailing these issues. If you speak Spanish, they are worth watching.

Please sign the petition today!

A new attack against Cabañas Anti Mining Activists

The secretary of the Cabañas Environmental Committee, Neftali Ruíz, was the latest victim of violence and theft this past Friday.  Several young men tied him up in his home and proceeded to search his home, computer files, and cell phones for information and supposed weapons.  This morning Father Neftali, David Pereira, and Bishop Sol held a press conference at the CRIPDES office in San Salvador.  Please read here for a translation of the press release and links to video of the press conference.

Update on Pacific Rim Mining Company

It has been over three years since Pacific Rim closed down its operations in El Salvador and filed a notice of intent to seek arbitration against the Salvadoran Government for denial of mining permits.

Pacific Rim, a Canadian company that bills itself as “an environmentally and socially responsible exploration company,” reports that in the first half of fiscal 2012, their “cash and cash equivalents increased $1.4 million from $0.3 million at April 30, 2011 to $1.7 million at October 31, 2011. The company’s short-term investments increased from $0.8 million to $1.1 million over the same period, resulting in a $1.8 million total increase in assets.

The increase in assets does not indicate that they are all of a sudden profitable. According to a Pacific Rim’s press release announcing their quarterly report, the increase “reflects the cash proceeds of a private placement equity financing undertaken by the Company.” This means that Pacific Rim found new private investors to finance their operations. In fact, the press release states clearly that they have “no source of revenue, and will require additional cash to continue fund legal, exploration and administrative expenses.”

While Pacific Rim’s El Dorado project in San Isidro, Cabañas is their most advanced, the company recently acquired an option to earn 65% interest in the Hog Ranch gold property in Nevada and has begun field exploration. Pacific Rim also has the opportunity to acquire a 100% interest in the Remance property in Panama – an interest they secured in 2010. While they have begun “phase 1 drilling” at Hog Ranch, Pacific Rim reports that the Remance project is “in doubt” and they have no plans for exploring the property.

The biggest question mark for Pacific Rim remains their ICSID claim against El Salvador, which is potentially worth $100 million dollars and the rights to mine gold in Cabañas. In their press release, Pacific Rim says,

“Expenditures related to Pacific Rim’s CAFTA/ILES arbitration claim are expected to continue at present or modestly higher levels during the coming months, and are directly related to the level of arbitration activity. The Company has currently accumulated a liability of approximately $1.4 million related to the CAFTA/ILES arbitration action and is currently discussing vendor-specific alternative financing opportunities that will reduce this accounts payable position.”

The ICSID Tribunal will likely hand down a ruling any day on the last round of preliminary objections filed by El Salvador. If the Tribunal finds in favor of El Salvador, part or all of Pacific Rim’s claim could be dismissed. If the Tribunal finds for Pacific Rim, the case moves a little closer to a full hearing.

In anticipation of the decision, a group of labor, union, environmental and other civil society leaders will hold a rally outside the World Bank tomorrow (Thursday, December 15) protesting Pacific Rim’s claim. Those attending the rally will present a letter to World Bank and ICSID officials calling on them to respect El Salvador’s decision to prohibit mining in order to protect their local communities and water resources from environmental damage.

Though Pacific Rim continues to engage in minor exploration activities, their primary activity and asset is this lawsuit. A favorable outcome of the ICSID arbitration would be a windfall for Pacific Rim’s investors, possibly allowing them to recoup their $77 million investment and perhaps damages and lost profits.

Body of Young Anti-Mining Activist Exhumed from Common Grave

Investigation into latest assassination begins

SAN SALVADOR, EL SALVADOR

Danielle Mackey

The body of murdered fourth-year university student and active member of the environmental movement in the area of Ilobasco, Cabanas, Juan Francisco Duran Ayala, has finally been returned to his family in San Salvador. On June 24, 2011, the family gathered together with members of civil society and representatives from government agencies to exhume his body from a common grave in the Bermeja Cemetery, where he had been buried by the National Civilian Police. Juan Francisco, who lived in Ilobasco, left his home at 9 a.m. on June 3 to attend his classes in San Salvador and never arrived. His body was found on the same day by the police, next to a basketball court in the community of Amatepec in metropolitan San Salvador, with two gunshot wounds to the head.

Juan Francisco’s cousin and a designated family representative, Norberto Hernandez Ayala, claims that because the cadaver had several tattoos, the coroner’s office labeled it as an unidentified person and probable gang member, and buried it in a common grave. Juan Francisco had a tattoo of Che Guevara on his abdomen, and another two of the Barcelona soccer team and a favorite U.S. basketball team on his side and back, respectively.

His body was identified on June 14 by his father, Jose Benjamin Ayala, in photographs provided by the coroner’s office. Logistical negotiations between the attorney general’s office and the family slowed the process of exhumation ten days. Juan Francisco was laid to rest in a funeral on Saturday June 25, 2011.

Though there exist various theories about the motive for Juan Francisco’s assassination, in a press conference today, Hernandez Ayala confirmed that the primary hypothesis is the young man’s involvement as an environmental activist. The victim’s mother, Marta Duran, added, “What is clear here is that they’re killing innocent people. My son was only a student, dedicated to his studies. I just want justice for my son.”

Father Neftali and Juan Francisco's Mother (in mask)

The afternoon before he disappeared, June 2, Juan Francisco had been seen putting up fliers around the Ilobasco area where he lived, as an active volunteer for the Environmental Committee of Cabanas (CAC.) The messages on the fliers included an open invitation to a public forum on mining, phrases promoting respect for the environment, and a demand for the controversial Canadian mining company, Pacific Rim, to retire its operation from El Salvador. (Pacific Rim is one of two mining companies that have sued the Salvadoran government for a total of almost $200 million, for refusing to grant them permits to conduct metallic mineral mining in several regions of the country.)

Juan is the fourth person active in the anti-mining movement in the department of Cabanas to be murdered in the past two years, and the third victim from the CAC specifically. In a press release published by the CAC, the committee declares, “This assassination comes only two years since the kidnapping and assassination of the anti-mining activist Marcelo Rivera and the assassinations of two of our members, Ramiro Rivera and Dora Alicia Sorto. We believe that if these cases are not cleared up with an investigation that leads to the intellectual authors, impunity will continue reigning in Cabanas, and the intimidation, violence and assassinations will continue.”

A secondary hypothesis of Juan Francisco’s murder is that he was yet one more victim of the constant daily violence that plagues this nation of only 6 million people. According to data from the National Civilian Police, the current daily murder average is 11, and on the date of Juan’s killing, four other unidentified partial-or-complete corpses were found. That number does not include the identified victims of that day. In fact, if the violence continues at this pace, the homicide total for 2011 would be more than 4,000. The local organization Voices on the Border points out that this is an astoundingly high number when compared to New York City, whose population size is higher than El Salvador’s and reports only 412 homicides for the entirety of 2009. The environmental movement discards this theory, stating that Juan Francisco’s involvement with the movement was too public and too recent to his sudden murder for these things to be unconnected. They also cite the continuing string of assassinations involving anti-mining activists.

Local environmental activists call on the National Civilian Police and the Attorney General of the Republic to conduct exhaustive investigations of the string of violent crimes in the department of Cabanas. They cite corruption and illicit trades within three local mayoral offices—facts they claim to be well-known among the local population, and which they list in today’s press release—as well as ties between the aforementioned authorities and the mining company Pacific Rim, as possible motives for the violence. As Francisco Pineda, President of the CAC and recent recipient of the internationally recognized Goldman Environmental Prize, asserts, “We can make a good guess about who are the intellectual authors of this crime given our lived experiences here, but that’s not our responsibility. The attorney general and the police have the obligation to investigate and determine the guilty parties.”

On June 24, the attorney general’s office informed Juan Francisco’s family that they had appointed them a lawyer. On the same day, the police also assured them that the investigation had begun. Hernandez Ayala says that the family trusts that what they’ve been told is true, and that justice will take its course. However, a lingering concern is the Salvadoran court system’s lack of precedent in completing exhaustive investigations. A United Nations Development Program report from 2007 found that only 14% of cases enter the judicial system, and only 3.8% are ever fully prosecuted, with the guilty party brought to justice. Speaking specifically of the anti-mining struggle, in all four previous assassination cases, material authors were quickly rounded up and prosecuted, but there exists significant evidence to suggest that they were hired assassins. In none of these cases — of which Juan Francisco is simply the most recent, and the movement fears will not be the last — have intellectual authors been identified by the authorities.

Juan Francisco’s family remembers him as humble, respectful and optimistic. His university professors say that he stood out for his willingness to work together with his peers and his dedication to his studies. He was thirty years old at the time of death, and would have graduated next year with a degree in Linguistics from the Technological University of San Salvador.

The casket for Juan Francisco

 

Action Alert – Disappearance of Juan Francisco Duran Ayala in Cabañas

On Sunday we posted an alert that anti-mining activist Juan Francisco Duran Ayala has been missing for over a week. He disappeared the day after he was hanging anti-mining posters in Ilobasco, Cabañas. Representatives of the CAC, the local environmental organization to which Juan Francisco belongs, report that the Mayor of Ilobasco, José Maria “Cheyo” Castellanos ordered municipal police to remove the signs that Juan Francisco was hanging the day before he disappeared.

Please join Juan Francisco’s family and friends in calling on the Salvadoran authorities, including the Attorney General’s office and the National Civilian Police, to set up a special search party to find Juan Francisco, as well as investigate all cases of threats and violence against civil society actors in the region. The CAC demands that these investigations also consider the links between the powerful network of local mayors, including Mayor José Bautista of San Isidro, Mayor Edgar Bonilla of Sensuntepeque, and Mayor “Cheyo” Castellanos of Ilobasco, and Pacific Rim Mining Company.

Cheyo Castellanos - Mayor of Ilobasco

Here’s what you can do:

1. Send an email to the Attorney General Romeo Barahona (see sample email below) and Manuel Melgar, the Minister of Justice and Security, to demand a full investigation and protection for the victims. Please send the email to Barahona’s assistant at hector.burgos@fgr.gob.sv and to Minister Melgar jusegministro@seguridad.gob.sv and his assistant Sandra.lazo@seguridad.gob.sv.
   1. If you speak Spanish, please also call Salvadoran Attorney General Romeo Barahona at 011-503- 2230-6350 (see sample script below). Please also call Minister Melgar 011-503-7070-0081 (see sample script below).

Sample Email to Attorney General Barahona
hector.burgos@fgr.gob.sv

Estimado Señor Fiscal General de la República,

Como miembro de la comunidad internacional, quiero expresar mi profunda preocupación sobre las nuevas amenazas y los casos de violencia contra líderes sociales en Cabañas.

Hace más de una semana Juan Francisco Duran Ayala, miembro del Comité Ambiental de Cabañas en Defensa del Agua y Cultura (CAC) desapareció, a pocos días después de haber participado en actividades contra la minería en Cabañas.  Urge que el PNC y la Fiscalía establezcan un equipo especializado de investigación sobre este caso.

Además, urge una investigación profunda y eficaz sobre este último caso y todas las amenazas contra los ambientalistas de Cabañas, para determinar quiénes son los autores materiales, intelectuales y financieros. Es necesario también re-abrir los casos de Marcelo Rivera, Dora Alicia Sorto y Ramiro Rivera para investigar vínculos entre estos caso, los asesinatos de Darwin Serrano y Gerardo Abrego León, las nuevas amenazas contra el personal de Radio Victoria, y la desaparición de Juan Francisco Duran Ayala.

Finalmente, tomando en cuenta los nexos entre esta violencia y la lucha contra la minería, los casos de violencia y las amenazas contra líderes sociales en Cabañas requieren una investigación profunda para identificar los autores materiales e intelectuales.  Estas investigaciones deben de incluir posibles nexos entre la violencia y la compañía minera Pacific Rim, y las autoridades locales como los alcaldes de San Isidro, Ilobasco y Sensuntepeque.

El hecho de que la violencia y amenazas que se han dado en Cabañas desde 2007 siguen en impunidad ha permitido que surgieran los nuevos casos de violencia. Pido que, por favor, tome las medidas necesarias para asegurar justicia y protección para los afectados.

Agradezco de antemano sus gestiones para agilizar las investigaciones y espero que pronto se haga justicia en estos casos. Estaré pendiente de las acciones de la Fiscalía y seguiré informando a los y las funcionarias de gobierno en mi país sobre estos casos.
Atentamente,
Your Name

---

Sample Email to Minister of Justice and Security jusegministro@seguridad.gob.sv and Sandra.lazo@seguridad.gob.sv

Estimado Señor Ministro de Seguridad y Justicia,

Como miembro de la comunidad internacional, quiero expresar mi profunda preocupación sobre las nuevas amenazas y los casos de violencia contra líderes sociales en Cabañas.

Hace más de una semana Juan Francisco Duran Ayala, miembro del Comité Ambiental de Cabañas en Defensa del Agua y Cultura (CAC) desapareció, a pocos días después de haber participado en actividades contra la minería en Cabañas.  Urge que el PNC y la Fiscalía establezcan un equipo especializado de investigación sobre este caso.

Además, urge una investigación profunda y eficaz sobre este último caso y todas las amenazas contra los ambientalistas de Cabañas, para determinar quiénes son los autores materiales, intelectuales y financieros. Es necesario también re-abrir los casos de Marcelo Rivera, Dora Alicia Sorto y Ramiro Rivera para investigar vínculos entre estos casos, los asesinatos de Darwin Serrano y Gerardo Abrego León, las nuevas amenazas contra el personal de Radio Victoria, y la desaparición de Juan Francisco Duran Ayala.

Finalmente, tomando en cuenta los nexos entre esta violencia y la lucha contra la minería, los casos de violencia y las amenazas contra líderes sociales en Cabañas requieren una investigación profunda para identificar los autores materiales e intelectuales.  Estas investigaciones deben de incluir posibles nexos entre la violencia y la compañía minera Pacific Rim, y las autoridades locales como los alcaldes de San Isidro, Ilobasco y Sensuntepeque.

El hecho de que la violencia y amenazas que se han dado en Cabañas desde 2007 siguen en impunidad ha permitido que surgieran los nuevos casos de violencia. Pido que, por favor, tome las medidas necesarias para asegurar justicia y protección para los afectados.

Agradezco de antemano sus gestiones para agilizar las investigaciones y espero que pronto se haga justicia en estos casos. Estaré pendiente de las acciones de la PNC y seguiré informando a los y las funcionarias de gobierno en mi país sobre estos casos.

Atentamente,
Your Name

---

 Translation

As a member of the international community, I want to express my deep concern about the new cases of violence and threats against social leaders in Cabañas.

More than a week ago Juan Francisco Duran Ayala, member of the Environmental Committee of Cabañas in Defense of Water and Cultura (CAC) disappeared, a few days after having participated in activities protesting mining in Cabañas.  A specialized task force of prosecutors and members of the National Civilian police should be assigned to investigate this case.

In addition, there needs to be a thorough and efficient investigations into this recent case and all of the threats to environmentalists in Cabañas, to determine who the material, intellectual and financial authors are.  It is also necessary to re-open the Marcelo Rivera, Dora Alicia Sorto, and Ramiro Rivera cases in order to investigate links between those cases, the murders of Darwin Serrano and Gerardo Abrego León, the new threats against the staff of Radio Victoria, and the disappearance of Juan Francisco Duran Ayala.

Finally, taking into account the ties between this violence and the anti-mining struggles, the cases of violence and threats against Cabañas social movement leaders require a thorough investigation to identify the material and intellectual authors. These investigations should look into the possible ties between the violence and the mining company Pacific Rim as well as local authorities like the mayors of San Isidro, Ilobasco, and Sensuntepeque.

This new case of violence has arisen because the violence and threats that have occurred in Cabañas since 2007 remain in impunity. I ask that you please take the necessary measures to assure justice and protection for those affected.

Thank you in advance for your efforts to begin thorough investigations and I hope that soon there will be justice in these cases.  I will continue to follow the actions of the Attorney General’s office and the National Civil Police (PCN) and will continue informing my elected officials about these cases.

---

Call Script for Attorney General Barahona (direct number for his assistant, Hector Burgos: 011-503- 2230-6350)

Buenos (días/tardes)

Mi nombre es_______________________ y llamo para expresar mi preocupación sobre la desaparición de Juan Francisco Duran Ayala y la violencia contra líderes sociales en Cabañas.

Urge una investigación profunda sobre la desaparición del Señor Duran Ayala con un equipo especializado, y así también es necesario re-abrir los casos de Marcelo Rivera, Dora Alicia Sorto y Ramiro Rivera para investigar vínculos entre estos caso, los asesinatos de Darwin Serrano y Gerardo Abrego León, las nuevas amenazas contra el personal de Radio Victoria y la desaparición del Señor Duran Ayala.

El hecho de que la violencia y amenazas anteriores quedaron en impunidad ha permitido que surgieran los nuevos hechos de violencia. Pido que el Fiscal General tome las medidas necesarias para asegurar justicia y protección para las y los afectados.

Gracias

---

Call Script for Minister of Justice and Security Manuel Melgar (direct number: 011-503- 7070-0081)

Buenos (días/tardes)

Mi nombre es_______________________ y llamo para expresar mi preocupación sobre la desaparición de Juan Francisco Duran Ayala y la violencia contra líderes sociales en Cabañas.

Urge una investigación profunda sobre la desaparición del Señor Duran Ayala con un equipo especializado, y así también es necesario re-abrir los casos de Marcelo Rivera, Dora Alicia Sorto y Ramiro Rivera para investigar vínculos entre estos caso, los asesinatos de Darwin Serrano y Gerardo Abrego León, las nuevas amenazas contra el personal de Radio Victoria y la desaparición del Señor Duran Ayala.

El hecho de que la violencia y amenazas anteriores quedaron en impunidad ha permitido que surgieran los nuevos hechos de violencia. Pido que el PNC tome las medidas necesarias para asegurar justicia y protección para las y los afectados.

Gracias.

And we’d like to thank the folks at CISPES and US Sister Cities for their hard work in drafting the letter and script!

Cheyo Castellanos – Mayor of Ilobasco

More on Radio Victoria

On Friday, we posted an appeal for funds to help protect our friends at Radio Victoria from the threats of violence they’ve been receiving. To everyone who has already contributed – thank you! Over the weekend you helped us raise $2500! But that’s only a small part of what the Radio needs to implement additional security measures. If you haven’t donated, its not too late – please click on the donate now button to the right of this post. Its fast, secure, and tax-deductible, and 100% of your donation will go directly to the Radio for security.

In December 2010, some of the folks at the Radio made a short documentary about their current situation, which is posted below. Since they made this video, the Radio and its staff have received many, many other threats and have been terrorized by people following them home and loitering outside the Radio at night. Please watch:

We don’t know exactly who is making the threats, but members of the radio and other locals believe its a network of organized criminals, which may include local politicians, who are threatened by the Radio’s programming and the strengthening of civil society. The Radio gives a voice to the people – and the last thing organized criminals want is an empowered population and civil society interfering with their work and calling for an end of the culture of impunity upon which they depend to engage in their illicit activities.

Please join us in helping to protect the lives of these brave young journalists and ensuring that the Radio and local civil society continues to give a voice to the people of Cabanas.

Ecuador’s Article 422 to Set Example for Rest of Region?

As El Salvador prepares for the next round of hearings before an International Commission for Settlement of International Disputes (ICSID) tribunal, a growing chorus of civil society organizations is calling for a renegotiation of CAFTA-DR (the Central American Free Trade Agreement). Their primary complaint is that the settlement dispute provisions in CAFTA-DR give private corporations the right to sue sovereign nations over investment disputes, limiting the country’s ability to protect its workers and environment. Though an ICSID tribunal recently dismissed the Commerce Group’s claim against El Salvador, Pacific Rim Mining Company’s suit claiming an estimated $100 million in lost investments and profits, lives on. You can read more about the Pacific Rim suit here, here and here).

In recent years, Ecuador has had to defend itself in several investment trade disputes similar to the one Pacific Rim has brought against El Salvador. As a result, when Ecuador adopted a new constitution last year, they included a provision (Article 422) that protects the country from international investors. Article 422 could set an important precedent for other nations in the region, including El Salvador.

Currently, Ecuador has been the subject of thirteen investment disputes before ICSID tribunals, the majority of which have involved oil and energy production. Of these thirteen cases, four were decided on the merits, three have been settled, one has been discontinued, and five remain pending. Though Ecuador won three of the four cases decided on their merits, the country has paid approximately $90 million in damages and settlements. These payments motivated Ecuadorans to reconsider their consent to ICSID and other tribunals.

Article 422 simply states that Ecuador will not sign treaties or international instruments in which the State cedes sovereign jurisdiction in instances of arbitration in contract or business disputes of any kind between the State and a natural or legal person. The exceptions are treaties and instruments that create dispute resolution mechanisms between States and persons in Latin America by regional arbitration or by judicial bodies from signatory countries.

Ecuador’s new approach has drawn both praise and criticism. Critics are concerned that parts of Article 422 are vague and will be difficult to implement, raising concerns about how it will affect Ecuador’s relationships with foreign investors. Without an adequate dispute settlement protection, the risk of investment increases, which could scare away much-needed development. Critics are also concerned that by opting out of arbitration in some cases but not others they are creating another level of discrimination in the Ecuadoran legal system, allowing domestic investors more rights than international investors. Such discrimination is troubling for a modern legal system that is supposed to be based on equality.

 

Supporters of Article 422 praise it as Ecuador’s protecting its sovereignty and national identity, which has been a priority for Ecuadoran President Rafael Correa. Though Ecuador has never been reflexively anti-U.S., the relationship between the two countries has been steeped in economic, political, and military pressure.  Article 422 is seen by many as a move to assert greater independence. It also contributes to a growing sense of Latin American regionalism by deepening the economic and political integration among its neighbors.

Though article 422 limits Ecuador’s exposure to investor-state arbitration, it allows investors to file a complaint in a domestic court. This will limit Ecuador’s exposure and protect their regulatory authority, while ensuring that investors have a way to protect themselves.

Ecuador’s move to protect itself against the onslaught of investor suits is an important development in the debate over investor-state relations. It also contributes to the renewed vision of Latin American regionalism. Whether other nations in Central and South American follow in Ecuador’s footsteps remains to be seen. But it is clear that the debate over investor rights in El Salvador and other countries is not over.

 

http://www.crowell.com/documents/ICSID-Arbitration-in-the-Americas_GAR_Ali_de-Gramont_Nov-07.pdf

 

http://www.iisd.org/itn/2008/07/17/in-depth-latin-america-s-new-model-bilateral-investment-treaties/

 

http://www.boalt.org/bjil/docs/BJIL27.2_Schill.pdf

 

https://litigation-essentials.lexisnexis.com/webcd/app?action=DocumentDisplay&crawlid=1&doctype=cite&docid=11+N.Y.U.+Envtl.+L.J.+19&srctype=smi&srcid=3B15&key=804bf01e38419d502b25eb2ea81ce9bc

 

http://www.asambleaconstituyente.gov.ec/documentos/constitucion_de_bolsillo.pdf

 

http://globalis.gvu.unu.edu/indicator_detail.cfm?Country=EC&IndicatorID=155

 

http://www.iisd.org/itn/2010/12/16/fairness-and-independence-in-investment-arbitration-a-critique-of-development-and-outcomes-of-investment-treaty-arbitration/

 

http://www.iisd.org/pdf/2006/itn_may16_2006.pdf