Cida Goes For The Gold

CIDA goes for the gold

Is the aid agency helping the poor -- or our mining companies?

COLIN CAMPBELL, Maclean's magazine

6th July 2006

These are boom times for gold miners in Colombia. President Alvaro Uribe, a hardline conservative, was re-elected last month, bucking Latin America's leftist trend and clamping down on rebels that once made mining exploration too dangerous. Gold prices have been high, and the country, with its vast untapped resources, is wide open to foreign investment. Last month, AngloGold Ashanti Ltd., the world's third-largest gold miner, partnered with Canada's Bema Gold Corp. to begin exploring in Colombia -- the first major producer to enter that country in decades and a sign, many say, of things to come. "I started to look in 2002, and by 2003, 2004, it was pretty clear this was going to be a changed location for investment," says Ian Park, a consulting geologist for Colombia Goldfields Ltd., a U.S.-based gold exploration company operating in Colombia, but run by a group of Canadians. And while companies credit Uribe for this change, they also point to a new, liberalized mining code encouraging foreign investment, that was in part drawn up -- controversially -- by Canada's foreign aid arm, the Canadian International Development Agency, in 2001.

Mining companies love the new environment, and Colombia is no longer the mining world's Wild West. Vancouver-based Greystar Resources Ltd. returned to the South American country in 2003, after pulling out in the late '90s, and this year alone plans to spend $14 million on advanced exploration in the country. "All in all, we are seeing a much greater level of investment and it's been growing more so every year since 2004," says Greystar vice-president Frederick Felder, reached at his company's office in Bucaramanga, Colombia. But indigenous and labour groups across Colombia, while acknowledging that foreign investment brings wealth, say the new code has been a major step backwards. "These policies have been a disaster with respect to our sovereignty over our natural resources," says Francisco Ramirez, the head of Colombia's energy workers union.

CIDA certainly isn't gloating -- far from it. Within the agency, the mining code project elicits a chilly response (the agency refused repeated requests over a two week period for an interview). In recent years, CIDA has come under harsh criticism for its realpolitik tinkering with Colombia's mining laws (some would call the process "Canadianizing"), which helped create a more competitive tax and royalty structure for foreign companies. Why, other aid groups ask, was CIDA, a publicly funded humanitarian organization, promoting outside investment to the benefit of mining companies? And local groups complain that the laws were ultimately drawn up and passed without their input -- although they had been promised a voice -- stripping away earlier provisions that protected their land rights. "Just as the Canadian government has given money to 'reform' Colombia's laws to favour North American companies, they should now provide money to return the laws to their previous state so that our sovereignty over our natural resources can be respected," Ramirez says.

CIDA embarked on the wide-ranging $11-million project in 1997, in partnership with the Calgary-based Canadian Energy Research Institute, an energy industry think tank representing about 100 companies in Canada. For several years, CERI and CIDA canvassed the mining communities in Canada and Colombia, looking for input about how to make Colombia's mining sector more environmentally friendly, and more in line with the industry in developed countries. From the beginning, the aim was far from altruistic. "Canadian energy and mining sector companies with an interest in Colombia will benefit from the development of a stable, consistent and familiar operating environment in this resource-rich developing economy," read CIDA's summary of the project.

Greystar, one of the few foreign companies still in Colombia at the time, was involved in the effort for close to two years, says Felder, providing "input that reflected the mining industry's point of view as to what was important in such legislation to encourage mining." Another aspect of the project involved training Colombian mining officials, and was aimed at putting a "globalized perspective" on future mining activity, according to CERI-CIDA documents from 2001.

Historically, the country's gold and silver mines have been run only by small, local operators, unlike the coal and nickel sector, which is dominated by large-scale, modern operations. So foreign investment (and the jobs and wealth it brings) is welcome, but the transition to modern mining has not been smooth or well-managed by officials, local opponents say. In Canada, criticisms of CIDA's role were raised in 2002 by Ottawa's North-South Institute, an independent international development organization that had been working in Colombia at the time of the CIDA project. "Our project partners in Colombia regard CIDA as having played a large role in supporting and promoting a 'regressive' mining code that has weakened -- rather than strengthened -- democratic procedures," the institute's president, Roy Culpeper, told a foreign affairs committee. The project "has left a vital element of Colombian society feeling that their interests are excluded from the new mining regime," he added.

Such charges have raised broader questions within the aid community about CIDA's objective to improve economic conditions through promoting freer trade and foreign investment -- especially when it doubly acts to promote Canadian industry. Foreign investment is widely considered an important aid tool for poorer countires, but is not a cure-all. "It's surprising to look at what CIDA's doing abroad," says Viviane Weitzner, a senior researcher at the North-South Institute. "Why aren't they also bolstering the social side of things and not just looking at economics or the environmental side? It's a gap that we've noticed."

In an email response, a CIDA spokesperson said the agency's Colombia project did involve the "development of a plan for consultations with indigenous peoples and ethnic minorities regarding the new mining code." CIDA's help in developing the code was also a "relatively minor" part of a broader project to strengthen Colombia's mining sector. Also, "the project itself did not draft mining-related legislation, which was of course the purview of the Government of Colombia." The trouble, says union leader Ramirez, is that the consultations simply never took place. Rightly or wrongly, CIDA's image has taken a beating. Colombia may be booming, but the bad taste from the project lingers in the mouths of many Colombians.