Their mines ruined communities. Now they want compensation

Truthdig | 22 January 2024

Their mines ruined communities. Now they want compensation

At COP28 in December, Colombian President Gustavo Petro announced that his country, the biggest coal producer in South America, had formally joined an alliance of nations calling for a fossil fuel non-proliferation treaty to prevent the “omnicide of planet Earth.” The treaty is very much in line with the progressive president’s aim to steer his country toward a bold energy transformation, which he has championed since taking office in 2022.

Petro, however, faces an intimidating legal obstacle: the Investor-State Dispute Settlement. ISDS is a global investment protection scheme that enables foreign corporations to sue states for actions affecting their investments in the country. Because of ISDS, in Colombia, a covert and high-stakes legal clash is now unfolding between the government and the Swiss multinational mining giant Glencore.

At the heart of the conflict is El Cerrejón, the largest coal mine in Latin America and the 10th biggest in the world. Roughly eight times the size of Paris, extending more than 690 square kilometers, the mine has been dubbed by locals “The Monster.”

Glencore purchased it from ExxonMobil in 2002 for a reported $600 million. Mining operations had already been ongoing for 20 years, with constant growth in output. In 1984, El Cerrejón’s first train trip transported 8,500 tons of coal to the port city of Puerto Bolívar. By 2018, the mine produced 30.7 million tons of coal. Some 50% of its financing over the last six years, amounting to just over €41 billion, has been issued from European banks, including giants UBS and Société Generale.

Consuming almost 8 million gallons of water daily, Glencore’s mining operations have had ruinous environmental impacts, with dire consequences for local communities, particularly the indigenous Wayúu people of La Guajira in northern Colombia. According to a report by the Institute for Policy Studies, a think tank, Glencore’s activity at El Cerrejón has directly displaced 25 Wayúu communities, and led to the disappearance of 18 rivers, contributing to the deaths of thousands of children due to a lack of clean water.

El Cerrejón’s environmental record has been so bad that in 2020 U.N. special rapporteur on human rights and the environment, David Boyd, called on Colombia to close the mine. A report by Oxfam denounced “serious human rights violations committed by Glencore in Colombia,” with 70 violations reported between 1995 and 2022. Glencore has continued its operations unabated, recently diverting 3.6 kilometers of the Bruno River. In response to the worsening environmental situation in the region that’s been exacerbated by severe drought, President Petro declared a state of emergency this summer and urged Wayúu communities to collect rainwater to cope with the drought.

(Glencore, which has operated in Colombia since 1996, also managed the Calenturitas and La Jagua coal mines in the northern Cesar Department through its subsidiary C.I. Prodeco. Economic factors led to the closure of both sites in 2021, which, as at El Cerrejon, had been marred by significant humanitarian and environmental issues.)

Juan Pablo Gutierrez, an international delegate for the Indigenous Yukpa community in Cesar, told me that Glencore’s mining activities had undermined their food security and devastated their ancestral lands. “As a semi-nomadic agricultural community, we traditionally rely on hunting, gathering and fishing,” said Gutierrez. “However, due to the mining, our rivers are contaminated, leaving us with barely any fish. We’re forced to travel to the lower mountains to purchase fish. The local wildlife, our primary food source, is also dwindling. The mining has desecrated our sacred sites, including cemeteries.” He added, “We have never seen this [kind of destruction] in the history of our people.”

In 2015, Wayúu communities, with the aid and support of Colombian nongovernmental organizations, fought back. They filed a lawsuit with the Colombian constitutional court claiming that Glencore had violated their rights by diverting the Bruno River, the last remaining tributary of the Ranchería River and a vital source of water for many Wayúu. In 2017, they won the suit, and the court ordered Glencore to halt the planned expansion of the mine. The court also acknowledged both the need for the protection of the Bruno River and the company’s rampant violations of Wayúu rights to water, health and food sovereignty.

It was a monumental decision, marking a significant shift because it prioritized the well-being of the environment and the rights and welfare of an Indigenous group over the interests of a multinational corporation. Beyond its legal ramifications, the ruling served as a beacon of hope for the embattled Wayúu. It challenged centuries of resource exploitation in South America while setting a precedent for environmental and Indigenous rights in the region and beyond.

Petro recently expressed his desire for Glencore’s “concerted exit” from Colombia. The Swiss giant, however, is digging in its heels, insisting on a hefty financial payout before giving any leeway. Glencore is playing its strategic cards by deploying the ISDS mechanism, a tool enshrined in the Colombia-Switzerland investment treaty of 2006, to press for compensation. They argue that their foreign investments have taken a hit, and they’re not backing down without a payout.

A key element of ISDS cases is that they are deliberated entirely behind closed doors. Few documents are released to the public and journalists don’t have access to the proceedings of the tribunal. So it is with the Colombia vs. Glencore case, where little information is known other than the names of arbitrators and party representatives. Furthermore, the tribunal’s verdict is final, and no appeal is possible. The opaque nature of ISDS cases, the lack of transparency and public oversight, raises concerns about accountability, democratic principles and the protection of community interests.

The roots of ISDS stretch back to the colonial era, when European and American firms, with government backing, ventured into developing nations. After World War II, as nationalism surged and fears of expropriation grew, these multinationals, wary of local legal systems, pushed for a treaty-based means to settle disputes. This birthed the modern ISDS system, which saw its first case initiated in 1987. Shaped by former colonial powers and influential bodies like the World Bank, the system evolved slowly at first but picked up pace in the 1990s against a backdrop of stark wealth disparities and global poverty.

Originally, the ISDS system was developed to protect former colonial powers’ foreign investors and their assets from the risk of arbitrary expropriation and discriminatory treatment “by countries with fragile political regimes,” Stephanie Caligara, a lawyer at the Global Legal Action Network, told me. The system served as a guarantor of stability and was viewed as beneficial in that it was an attractant of foreign investment in developing economies. While ISDS might have made sense at the time, the system today, said Caligara, is often “manipulated by corporations and their lawyers, used for purposes which very much deviate from those for which the mechanism was initially created.”

“I find it scandalous that some companies weaponize this mechanism to seek astronomical sums of damages from states,” she told me. “The goal is to disincentivize them from implementing public policies serving the general interest, such as climate policies or measures to protect the environment.”

Aura Robles, a Wayúu plaintiff involved in the 2017 constitutional court ruling, shared a similar sentiment, saying he was surprised by Glencore’s ISDS lawsuit. “The company should have hung its head in shame for all the destruction it has caused,” Robles told me. “I can’t grasp how the person that is hurting you can then come and demand millions of dollars.”

This is not the first ISDS claim that Glencore has brought against Colombia. In 2016, the company won an investment dispute case and filed another suit in 2019 regarding a concession contract for Puerto Nuevo, a public services port for the export of coal in the municipality of Ciénaga in northern Colombia. In November, Glencore lodged a fourth ISDS suit against Colombia. Details of this latest case are scarce but the International Centre for Settlement of Investment Disputes says it concerns a mining concession.

Caligara characterized this fourth ISDS claim as an “intimidation technique” by Glencore. She warned that the potential multimillion euros in damages the country could be condemned to pay could pressure the government to revoke measures like the 2017 constitutional court decision. “Colombia might want to avoid seeing that public money going into the pockets of foreign investors such as Glencore, which in this case clearly weaponizes the ISDS system,” she told me.

Glencore is not the sole entity to have initiated ISDS claims against Colombia. The county’s eight bilateral investment treaties and nine free trade agreements have given transnational corporations across the globe the ability to use ISDS against it. The National Agency for Legal Defense of the State reports that as of March 2023, there were 14 open ISDS cases against the state of Colombia, totaling $13.2 billion in claims by transnational corporations. That’s equivalent to nearly 13% of the nation’s budget for 2023.

Beyond Colombia, the wider global south is vulnerable to depredations from the ISDS system. According to a report by Boston University’s Global Development Policy Center, countries like Guyana and Mozambique face ISDS risks significantly higher than the total value of their GDP, while at the same time they are among the most climate-vulnerable nations. Other highly vulnerable countries include Senegal (facing $2.4 billion of ISDS risk, roughly 10% of GDP) and the Republic of the Congo ($1.5 billion of ISDS risk, about 12% of GDP).

Other nations, such as Nigeria and Indonesia, grapple with substantial ISDS risks as they pursue their climate goals. African countries face a particularly precarious situation, with investment in climate adaptation potentially hampered by the hefty costs of compensating investors for whatever climate action they do take.

While COP28’s groundbreaking “loss and damage” fund marks a step forward, obliging affluent countries to compensate developing ones for climate impacts, many activists say it falls short. Notably, the loss and damage fund agreement sidestepped the ISDS issue. The persistence of this dilemma was highlighted in a November appeal by over 200 civil society groups to President Joe Biden, urging the U.S. and its allies to find a way out of the ISDS morass. This collective call to action signals that the ISDS story is far from over.

source: Truthdig