MAC: Mines and Communities

Reading between the pipelines

Published by MAC on 2005-06-27

Reading between the pipelines

The Guardian, Oliver Balch

Monday June 27, 2005

Oliver Balch asks if policies adopted by energy firms exploiting Latin American resources are sufficient to protect the continent's indigenous peoples

Presidents come and go in Bolivia. Eduardo Rodríguez, appointed earlier this month, is the country's fifth head of state since 2001.

What doesn't change, however, is the country's position as Latin America's poorest nation. Two other facts also merit note: it boasts the region's largest indigenous population (62%) and it sits on the continent's biggest gas reserves after Venezuela.

Put together they make for a volatile mix, and not just for politicians. Months of street protests and roadblocks ground much of the local economy to a halt, particularly around the capital, La Paz.

Bolivia's current crisis was sparked by the resignation of President Carlos Mesa earlier this month. Mr Mesa's political position became untenable after he opposed a hydrocarbon law calling for a tax on foreign energy companies to be increased from 18% to 50%. Foreign investors in Bolivia, including Britain's BP and BG Group, have invested $3.5bn in the country's gas fields since 1997.

Many among Bolivia's indigenous majority, led by Evo Morales, an Aymara Indian, are now demanding the nationalisation of the country's private energy assets as a way out of poverty.

Nearly 75% of Bolivia's 3.9 million indigenous people live below the poverty level, compared to a national average of 53%. Non-indigenous Bolivians, meanwhile, earn more than twice as much as their indigenous compatriots, who collect an average monthly wage of just 513 bolivianos (£35).

Latin America's 40 million indigenous people are likely to have fewer years of education and less access to basic health services, a recent study by the World Bank found.

BP and BG are adopting "wait and see" positions before deciding what to do with their Bolivian investments, a position shared by companies across the region as indigenous minorities become increasingly politicised and more adept at defending their rights.

The oil company Chevron Texaco, for example, is accused in Ecuador of dumping billions of gallons of toxic water into waterways in the country's eastern Amazonian region. The case was filled in May 2003 on behalf of five indigenous groups, representing 30,000 people.

Other international extractive companies accused of abusing indigenous rights include Hunt Oil and Manhattan Minerals in Peru, Glamis Gold in Guatemala, Alberta Energy and Repsol-YPF in Ecuador, and Petrobas and El Paso Energy in Brazil. How should oil companies treat indigenous people?

"Companies should promote and protect indigenous rights within their sphere of influence, including their core operations, their relationships with subcontractors and their impact on communities." said Peter Frankental, director of Amnesty International's UK business group.

The advice is slowly being heard, with more and more companies adopting business codes pledging the protection of indigenous rights.

Occidental Petroleum adopted its first human rights policy in December last year. All the company's employees must receive training on how to uphold the policy's commitments and are obliged to report alleged violations. Security personnel used by the company are also now subject to background checks and contract provisions to ensure compliance.

Most importantly, the code commits the US energy company not to operate in territories predominantly populated by indigenous people without the prior consent of local communities. This requirement represents a key provision in the International Labour Organisation's convention 169, which addresses the rights of indigenous and tribal people groups.

"As [regards] negotiation for access to indigenous lands, there certainly needs to be local representation and broad information on all that takes place," said Jan Sieving, head of communications for Occidental.

The comments come on the back of a high profile campaign against the US oil company for its exploration activities in the cloudforests of north-east Colombia. The campaign, which lasted almost a decade, was led by the region's 5,000 strong U'Wa people. An alliance of pressure groups such as Rainforest Action Network also took up the cause.

The company cited economic reasons when it eventually withdrew from the disputed territories in 2002. Yet campaigners insist that the decision had more to do with the public relations liability of continued indigenous opposition.

"On paper their [Occidental's] policy looks good", admits Atossa Soltani, director of Amazon Watch, a group that campaigns to defend the rights of indigenous people.

"We're waiting to see how they implement it, though. The true test of it will be how much they try to force their latest project on the Achuar people," she continues, referring to a group of 6,000 indigenous living in Peru's northern jungle where Occidental exercises two oil concessions

As well as obtaining prior consent, another key component for foreign investors is appropriate compensation. Companies are obliged to compensate affected indigenous communities for land use, direct damages or forced resettlement.

In the case of Occidental in Peru, the company met the local indigenous communities nine times over a one-year period to agree a compensation package.

The result was a "business arrangement" whereby an undisclosed sum was paid into two separate funds. Democratic assemblies decide on how the majority of the money should be spent, while local leaders have control over the smaller of the two funds.

But human rights groups are sceptical about the manner in which many compensation schemes are negotiated. Ms Soltani of Amazon Watch said companies commonly use "manipulative techniques", such as reaching agreements with non-representative community members or using military pressure.

"Communities are forced to decipher complex legal agreements and sign them under pressure without technical experts or an independent legal team to support the communities," she said.

Occidental is currently involved in drilling initial test wells in the region. If it strikes oil, the company could potentially be there for decades.The first funding request agreed by the Achuar people was for workshops on negotiation skills.

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