GUATEMALA
OCTOBER 2008
THE EXTRACTIVE INDUSTRY IS AN AGRARIAN PROBLEM
Leonor Hurtado
Food First, Institute for Food and Development Policy
The extractive industry attacks farmers’ very existence as a productive social group, because it destroys the social fabric interwoven in their land, resources, means of organization, means of production, and way of life.
CONTENTS
1. Introduction: Thieves Flying the Flag of Development (2)
2. The Extractive Industry is an Agrarian Problem (6)
3. The Current Situation in Guatemala (11)
4. Conclusions (17)
5. Demands (17)
6. REFERENCES (18)
THE EXTRACTIVE INDUSTRY IS AN AGRARIAN PROBLEM
Leonor Hurtado, September 2008
Food First, Institute for Food and Development Policy
1. Introduction: Thieves Flying the Flag of Development
Faced with the current global food crisis, it is essential that we duly weigh the proposals issued by La Via Campesina, the world’s foremost organization that brings together small and medium-sized agricultural producers from fifty-six countries throughout Africa, North and South America, Asia and Europe. La Via Campesina defends the peasant model of healthy food production, peoples’ food sovereignty and decentralized food production and supply chains. These fair demands are violated not only by the seed, raw material and processed food industries, but also by an extractive industry dominated by multinational corporations and national power elites and supported by corrupt government participation and international financial institutions, such as the World Bank (WB), the International Monetary Fund (IMF), other banks and the World Trade Organization (WTO).
To effectively confront the food crisis, it is vital that all grassroots organizations aspiring to build a fair, equal and democratic society, in a sustainable and sovereign manner, unite ideas, efforts and struggles. We must do so in the belief that an agro-ecological model of peasant agriculture is the only viable solution to the world’s hunger crisis and the only way farmers can earn a dignified living in the fields.
With this in mind, we acknowledge that the extractive industry is indeed an agrarian problem. The extractive industry constitutes all activities that extract non-renewable natural resources from the earth: oil and natural gas extraction and the mining of metals, construction and industrial minerals and water. It is characterized as an industry that seeks to maximize production profits, while ignoring the negative effects it may have on the environment or the community that lives and/or works in or around the mine[1].
The First World’s extractive industry, an extremely productive enterprise, has grown stronger and invaded the Third World, destroying the environment and robbing our natural resources. First World multinational corporations keep getting richer, accumulating resources and capital without two thoughts to how they acquire it or who they rob, harm or destroy. They use all methods imaginable to forge vast industries, even though said methods may not be sustainable, ethical, legal, fair or democratic, and justify their actions under the guise that all investments promote economic development. These companies are thieves flying the flag of development. While they claim to act in the name of development, they fail to mention the only economic development they are after is their own.
With the exception of oil, the extractive industry in the First World has reached a virtual standstill, because:
· First World mines have been exploited for centuries and are now exhausted.
· The mining industry is a costly enterprise that entails high wages, workers’ benefits, taxes and insurance fees.
· Rigorous environmental and health and safety regulations have been established, resulting in strict supervision.
· Powerful environmental advocacy groups formally oppose the extractive industry.
· First World inhabitants have greater access to information, more channels of expression and enhanced means of negotiation. Furthermore, the repression wielded by the government or other power groups is more restricted and less brutal.
Consequently, First World extractive corporations have sprung up throughout the Third World and are investing heavily. In Latin America, for example, mining investments increased 400% between 1990 and 1997.[2]
The capitalist system moves in cycles. We currently find ourselves amidst a crisis, an inherent part of capitalism and a by-product of the social nature of production and the privatization of products. This form of production entails anarchy, which culminates in crises of relative overproduction and the increased concentration of capital in a small number of hands.[3] Capitalism strives to expand and increase profits through all enterprises. Thus, capitalist consortiums rely on a diverse strategic arsenal that includes inventing new technologies, relocating business to a place where labor is cheaper, securing government subsidies, destroying existing markets to then colonize them with their own products, etc. Raw materials and labor are not given due value during production, as their earnings depend on this exploitation. Relative overproduction is the end result. The problem is not that there are too many products in the market, but that the workers cannot afford them. One method the United States adopts to sell its products is devaluing the dollar, making its goods more affordable in the global market. The crisis means that banks and international corporations are currently holding excess liquidity. Thus, these sectors have a dire need to invest capital, grant loans and use the extractive industry to convert paper money, which is losing value, into durable goods like gold or other metals.[4]
Conditions in the First World do not work in the extractive industry’s favor. Third World conditions, on the other hand, paint an extremely welcoming and advantageous picture for mining companies, because they are the ones who imposed them. Global economic forces and Third World elites have established a series of investment and mining conditions they claim promote development. Yet these conditions, listed below, merely benefit the mining corporations and power elites concerned:
· The Third World is open to foreign investment and willingly grants corporations permits to explore previously untouched, mineral-rich geographic locations. These permits quickly become mining concessions without consulting the inhabitants directly affected, even though the companies do not provide the legally required environmental and social impact studies or adhere to lawfully required procedures.
· Heeding the advice of World Bank consultants, the laws regulating the extractive industry in the Third World were “modernized” in the 1990s, as part of the Structural Adjustment Program. This legislation favors the mining companies and represents a legal and practical violation of the human, social, cultural and environmental rights of the areas’ inhabitants and lands, as well as an attack on the countries’ sovereignty.
· The Third World’s government bodies and powerful bourgeoisie have formed a pact with the mining companies: they are accomplices. And to secure objectives, they misinform the people, pressure them and repress them.
· They seize on the fact that the Third World’s rural and poor communities’ scope of action has been severely beaten and weakened by the exploitation, discrimination, repression and genocide that governments have wielded for centuries, promoted and backed by the successive US administrations. Each country, however, is different. In Guatemala, for example, the war, a confrontation between government and army-led forces and the people, is the determining factor in today’s situation.
Mining caters to the banks’ and international corporations’ need to invest excess liquidity, the accumulation of capital, yielding windfall profits. After signing the Peace Accords in 1996, marking an end to Guatemala’s 36 years of warfare, the Álvaro Arzú-headed government listened to World Bank consultants and modified the Mining Law in 1997. They allowed for 100% foreign investment, reduced royalties from 6% to 1% and limited taxes from 58% to 31%.[5] In 2005, the World Bank granted the Canadian company Glamis Gold a $45 million loan to mine for gold. This loan was the shining light that protected and blessed the mining investment, making it seem like the investment would help develop Guatemala and local communities[6].
Armed with these advantages, international corporations currently collect more returns through mining than they could in any other industrial field. In the Marlin Mine in San Marcos, Guatemala, the total operating cost needed to acquire 1oz of gold is $121.00[7]. In August 2008, 1oz of gold is valued at $959.30[8]. This means that Goldcorp Inc.[9], the company that owns the Marlin mine, collects a 793% return on investment. Name another industry that could yield similar profits in its home country? The answer, of course, is none. Yet they come to the Third World claiming to be taking a risk in the name of development.
Due to the weak dollar and the instability of paper money in today’s capitalist crisis, the price of gold has skyrocketed. Gold is now deemed to be safer than the dollar. More dollars are needed to buy gold and demand is increasing. Under these circumstances, natural resources, which include all extractive industry products, take on more value that dollars.
This situation brings into question Guatemala’s economy and banks, currently saturated with dollars from family remittances. In 2007, family remittances totaled $4,128,407,000.60[10], while currency returns on coffee exports, the country’s primary export, rounded $577,533,000.00.[11] Anyone can see that the country reaps more economic benefits exporting labor than exporting products. Is this the government’s line-of-thinking when it lets mining companies evict farmers from their lands? And another question: Are the banks investing in mining?
Mining is a dirty, destructive business that pollutes the air and water, provokes noise pollution through explosions, rock crushing and high vehicle flow, destroys fertile land and annihilates flora and fauna. What’s more, it wreaks havoc without picking up the check to help mitigate the environmental impact or compensate affected communities. This level of destruction requires massive amounts of water, which companies consume without paying a dime. They also take advantage of the low cost energy the industry is provided. The Marlin Mine, for example, consumes 577,000m3 of water per year, free-of-charge, and 15.3 MW of electricity.[12] Conditions this beneficial are but a pipe-dream in the companies’ home countries. Now, let’s visualize what these statistics really mean. While a farmer in Guatemala uses 30 liters of water per day, Montana Exploradora uses and pollutes 250,000 liters of water per hour. In other words, Montana uses and pollutes the same amount of water in one hour that 8,300 farmers consume in one day. And they call this sustainable mining!
The extractive industry does not benefit the communities living near the mine or its host country. The extractive industry is not a sustainable industry, but one that destroys the potential for agricultural production and grossly compromises the local communities’ economic, political, social, and cultural well-being. It does not help people in procuring their most basic needs, and even less to alleviate the food crisis.
First World corporations are much more equipped to meet their goal of controlling the world’s resources. Yet in the face of unfavorable and unjust conditions, the struggle launched by the affected communities to vindicate their rights is snowballing. Affected communities have formed information networks and bolstered their levels of organization, determination, and mobilization, at local, grassroots levels, to defend their land, identity and right to life.
Today, faced with a global food crisis, it is essential we bring the extractive industry to an immediate standstill. We cannot sit back and watch while the minority’s greedy, criminal interests destroy Mother Earth and deny the vast majority of people the right to food. All efforts and investments must be directed towards a sustainable and sovereign model of agricultural production.
2. The Extractive Industry is an Agrarian Problem
The extractive industry attacks farmers’ very existence as a productive group, because it destroys the social fabric interwoven in their land, resources, means of organization, means of production, and way of life. The farming community is an institution comprised of farmer families. These families are organized according to a series of predetermined norms and social and cultural parameters, which allow them to produce their own food and provide for the urban population. This organization was created to endure the family unit’s trying physical and social conditions, allowing its members to subsist and advance. It is also based on family participation and community cooperation, two key factors in the struggle to improve levels of production and well-being.
The farming community is an integral organization that covers all aspects of life, albeit economic/productive, political/social, or cultural/spiritual. It is an organization that has been developed and consolidated over the course of its history, sustained in its quest to find harmony and balance between agricultural production and the local ecosystem. Conversely, the capitalist system eradicates the farmers’ integral tradition of sustainable production. It cuts off their means of production, forces them out of the work they know and love and quells any chance for them to reproduce and produce their own food.[13] As a consequence, poverty and hunger are growing.
Mining is a means of capitalist expansion that transforms developmental tendencies in the rural territories in which it appears. It alters social relationships and the way territories govern the environment. These transformations generate resistance at individual, family, community, national, and international levels, and could give rise to social movements.[14]
Mining destroys the productive land that communities use for agriculture and animal husbandry, fells forests, annihilates flora and fauna and kills all life in the exploited area. Despoiling the mountains and forests in this manner interrupts water’s natural cycle, resulting in insufficient rainfall, low water-levels in wells and dry springs and rivers.
Mining also impacts the surrounding areas’ agrarian production, as the industry has large advantages with respect to water consumption. The massive amounts of water it consumes are taken from rural communities, limiting its availability in agricultural production. Mining pollutes the water it uses with toxic chemicals and lets it drain into rivers. This practice pollutes both above and below-ground water sources, wiping out fluvial life and threatening the rural communities’ very existence. The Marlin Mine drills wells that run deeper than those used by rural inhabitants and uses electric pumps to extract water. This harms the farming community.[15] The inhabitants of San Juan Sacatepéquez, Guatemala, fear that this will happen to their lands and demand the matter be fully explained before any mining project begins.[16]