Peruvian Indigenous Communities Break Off Talks With Maple Energy

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Last week, Accountability Counsel – a long-time ERI partner organization – announced the failure of talks between two Peruvian indigenous communities and Maple Gas, an oil company that used to be headquartered in the U.S., over the severe health impacts of repeated oil spills in the creeks the communities use for drinking and bathing water.  The communities had hoped that this mediation – sponsored by the International Finance Corporation (IFC), which is invested in the extraction project – would help convince Maple to clean up its act and pay compensation.  Unfortunately, the process has run aground over – of all things – the communities’ request that Maple pay for an assessment simply to study the health impacts of its operations.

This development strikes me as being both frustrating and hopeful, at the same time.  On the positive side, the fact that the communities were willing to break off talks suggest a determination not to be bought off, and a display of willpower that will sustain them in the battles that are doubtless to come.  Many other communities, if put in a similar situation, might be overawed by the presence of international financial institution representatives and company officials, and conclude that whatever came out of the negotiation process would simply be the best that they could get.  I suppose I shouldn’t be surprised, though; the last time the communities of Canaán de Cachiyacu and Nuevo Sucre felt that the company wasn’t living up to its promises, they dressed in full traditional war garb and occupied Maple’s production facilities, shutting them down for days.  And with the capable accompaniment of Accountability Counsel, the communities clearly knew when to walk away.

My frustrations stem from two issues – one involving companies’ approach to settling disputes with communities, and the other with the IFC’s involvement.  Maple’s attitude toward the talks particularly infuriates me.  The company has operated in the communities for close to twenty years – arrogantly and in near-complete disregard of community members’ needs and rights.  It has polluted previously pristine waterways, causing widespread illness and even, in some cases, deaths.  In two documented cases, it sent local men into the river to clean up oil spills without any protective gear, exposing them to petroleum and other highly toxic chemicals.  Although it eventually agreed to talks, its strategy has always been to offer to pay for token projects and community improvements.  The impasse came when the communities insisted that this was not good enough – that in order to make peace, the company would have to actually work with them to identify and address past impacts.  In other words, Maple is happy to talk when it thinks it can buy peace cheaply, but it’s not willing to even find out what it would take to clean up the harm it has done.

My other frustration is more of an institutional issue.  The mission of the IFC – the private sector investment arm of the World Bank – is to promote economic development by making loans and investments in private industry in the developing world.  Specifically, the IFC gets involved in projects that otherwise wouldn’t be able to attract sufficient financing, on the expectation that projects with the IFC stamp of approval will be able to leverage that initial investment to raise private funds.  Civil society groups have successfully pushed the IFC to enact policies to ensure that the IFC only invests in projects that are environmentally and socially responsible and observe internationally recognized protections for indigenous peoples.  Theoretically, this means that IFC-supported projects should avoid most of the negative impacts associated with unrestrained resource development in sensitive indigenous areas.

indigenous Peruvians cleaning oil by hand

The problem arises with the procedures the IFC has created in order to police compliance with these safeguards and standards.  The Office of the Compliance Advisor/Ombudsman (CAO) has the unenviable job of accepting complaints from communities who claim that IFC-funded projects are violating IFC policies, attempting to mediate the disputes between the complainants and the private sector operator, and issuing findings about the IFC’s observance of its own requirements.  However, all it can do is ask the parties to sit down and issue recommendations.

What it all boils down to is this: the IFC opens the door to natural resource exploitation projects that wouldn’t be viable without its participation, holding out its environmental and social safeguards as protection for affected communities.  But when things go wrong, all it can do is refer the problem to the CAO, who can ask the private operator to sit down at the table to talk.  The CAO can’t even credibly threaten to terminate IFC funding, because the CAO doesn’t get to make that decision; besides, IFC executives don’t have to listen to the CAO’s recommendations.  And even if the IFC were willing to walk, this threat may no longer have the power to compel a change in corporate behavior, beceause the operator has already successfully leveraged the IFC’s participation to raise enough private funds for the project, which is now well under way.

All these weaknesses are in play in the Maple case.  According to Accountablity Counsel’s timeline, The IFC invested in 2007, despite Maple’s strikingly poor track record of environmental and social performance.  This investment, which allowed the company to greatly expand its operations, appears to violate a number of the institution’s policies.  Regardless, the IFC’s $40 million dollars successfully provided Maple with the momentum to raise enough private cash to build new pipelines and dig new wells.  A series of devastating oil spills began in 2009 (the last one occurred just last month), and the communities filed a letter with the IFC, which agreed to study the problem.  A formal complaint followed, the CAO’s Assessment Report was issued in January 2011, and dialogue began in April, a full eighteen months after the initial request for assistance.  And now it turns out that the CAO’s involvement is not inducement enough for Maple to seriously engage and address the communities’ concerns.  Meanwhile, oil has continued to gush into the creeks that sustain the communities of Canaán and Nuevo Sucre, and it appears that the institution that made it all possible can do nothing about it.

I have no doubt that the communities will continue to seek justice and remediation through other channels, and that they will one day find a way to hold Maple accountable for its misconduct.  It just breaks my heart that they spent so much time on a mechanism that had no power to deliver for them in the end.

(photos courtesy of Komala Ramachandra)

This post was written by Jonathan Kaufman, former staff.

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