Mining company allowed to continue its attack on El Salvador

Mining company allowed to continue its attack on El Salvador

CISPES Press release

4 June 2012

International tribunal allows Canadian mining company to continue attacking El Salvador's land, water and democracy

Washington, DC: On June 1, a tribunal at the International Centre for the Settlement of Investment Disputes (ICSID) housed at the World Bank, granted jurisdiction to Canadian mining company, Pacific Rim, to continue with its attack on the people of El Salvador. Since 2009, the Vancouver-based company has been pursuing over $100 million from the government of El Salvador for not having granted the company a permit to mine gold in the northern region of Cabañas.

Since 2005, the rural communities around the proposed mining sites have organized a vibrant resistance movement to prevent the contamination of their water and land by the two tons of cyanide that Pacific Rim mining proposed to use daily to extract gold at the El Dorado mine.

As the National Roundtable Against Metallic Mining recently stated, "[We've shown that ] metallic mining, an industry that senselessly uses and contaminates water, is not viable in El Salvador, a small country with a high population density and a severe lack of water." Between 2009 and 2010, four environmental activists were murdered; political motivations have thus far been ignored in the investigations.

The tribunal dismissed Pacific Rim's claim that the government of El Salvador had violated the rules of the Central America Free Trade Agreement (DR-CAFTA), approved by the US Congress in 2005, on the grounds that the Canadian company moved a subsidiary from the Cayman Islands to Nevada in 2007, presumably to take advantage of the extraordinary rights afforded to corporations under CAFTA, did not have "substantial business activities" in the US.

Though the tribunal dismissed Pacific Rim's CAFTA attack, they refused to waive millions in tribunal costs and legal fees that El Salvador has paid in order to defend itself against it; in legal fees alone, the government has paid over $5 million to date, money which could have been used to educate 140,000 adults through the government's National Literacy Program.

Worse, the tribunal agreed to continue to hear the case based on Pacific Rim's claim that El Salvador had violated its own Investment Law, approved in 1999 under the administration of President Flores. Lisa Fuller, Program Director for CISPES explains, "This Investment Law is just like CAFTA and other so-called free trade agreements, in that countries like El Salvador must forfeit their own democratic processes in the name of attracting foreign investment, which is a hallmark of neoliberal economic policy."

As Lori Wallach, director of Public Citizen's Global Trade Watch, commented, "The fact that corporate attacks on a sovereign country's domestic environmental policy before a foreign tribunal would even be possible - much less cost a country millions when a key element of the attack is dismissed - highlights what is wrong with our ‘trade' agreement model."

In response to Friday's decision, the National Roundtable against Metallic Mining has called on President Funes to eliminate chapter 15 of El Salvador's Investment Law, which allows foreign corporations to bring suits like this one against the government at the ICSID, as well as to push forward a national ban on metallic mining.

Please follow these links to read more analysis of the decision and background on the case from Public Citizen and Mining Watch Canada.

Contact: Alexis Stoumbelis (202) 521-2510 ext. 205