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  Number 363 | Octubre 2011
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Central America

Do indigenous peoples think these investments are fair?

Often we call something fair when it is shared in equal parts, is clear and transparent and treats everyone involved with respect and dignity. These fundamental premises are conspicuously absent in all processes related to the extractive industry, Central America’s governments and the indigenous communities. Here we analyze a prototype case: Guatemala’s Marlin Mine.

Jordi Vives y Matthew Murphy

The combination of large projects to extract natural resources in indigenous communities could become explosive, particularly in Central America. envío already analyzed the situation of the Ngöbe-Buglé in Panama in an April 2011 report by Jorge Sarsanedas and the case of the Pacific Rim Mining Company in El Salvador in a January 2010 report by Elaine Freedman.

Coveted natural resources

Historically indigenous populations have always been among the most marginalized in Central American societies. Their lands have frequently been objects of colonization, their cultures have been suppressed and their sovereignty denied. In recent decades indigenous peoples and their territories have been under constant attack by governments and companies looking for coveted natural resources. The increased demand for raw materials for the new emerging economies and the consequent escalation in prices and industry’s advanced technologies has put the natural resources of indigenous communities in the spotlight. Isolated raw material deposits whose excavation was previously costly are today coveted, highly profitable virginal paradises.

The operations related to large-scale mining of natural resources in areas of indigenous populations have been and continue to be blamed for the deterioration of the environment and violations of human rights including child labor, discrimination against women, threats to union leaders and forced removal of indigenous communities.

Indigenous voices begin to reverberate

Globalization has brought new avenues of communication that allow indigenous communities to raise their voices and, with much effort, obtain the needed international attention. Progressive initiatives from within both civil society and the business world—for example, “Business Leaders Initiative on Human Rights”—are calling on the private sector to improve its accountability and respect basic human rights standards.

The United Nations has also taken notice. In 2005 Secretary General Kofi Annan appointed John Ruggie, a Harvard professor, as his Special Representative on Business and Human Rights. Since then the UN has worked explicitly to identify standards that can regulate relationships between business and human rights. In May of this year the General Assembly approved a document based on three major core themes: the duty of the State to protect, the duty of the corporations to respect and the need to provide a wide range of compensatory and remedial measures for those affected.

Legal Justice isn’t enough

An early direct consequence of the pressure exerted by all these movements is Convention No. 169 of the International Labor Organization (ILO), adopted on June 27, 1989, which is a legally binding international treaty. Three of its articles hold special relevance for the problems Central American indigenous communities face.

Article 7 recognizes indigenous peoples’ fundamental right to control their own social, economic and cultural development in accordance with their needs. Article 15 recognizes their right to participate in the use, development and conservation of their natural resources. And article 16 establishes that indigenous communities can only be relocated from their lands with their free and informed consent.

In 2007 the UN General Assembly approved the Declaration of Rights of Indigenous Peoples (UNDRIP). Although it is not a legally binding document, it is a source of inspiration for legislation to protect indigenous people’s rights. UNDRIP points out the need to obtain the free and informed consensual consent of the affected people prior to approval and implementation of any development project or natural resource exploitation.

Despite these advances, the existence of a legally binding international framework with clear reference standards unfortunately does not directly translate into the indigenous communities feeling they are treated fairly. The negotiations they have to deal with must not only be fair and act in accordance with international legislation on human rights, but also must be perceived as fair. Faced with this contradiction, the theories of organizational justice can be useful for indigenous communities and businesses to develop their projects in a more humane and respectful manner concerning the rights of these ancient cultures.

Perceptions of justice: It will be fair if...

The theories of organizational justice speak of perceptions of justice from the perspective of the organization, i.e. what we understand as fair: It will be fair if not only the economic aspect but also the assumed risks are distributed equally among the parties. It will be fair if they are distributed following a transparent and participatory process. It will be fair if those who participate in the process are treated with dignity and respect at all times.

With these three elements we can label any process as fair. Without them we would find it difficult to discern the sense of justice. Organizational justice does not debate what is and isn’t fair. It leaves that to philosophers such as Plato, Kant, Bentham or Rawls. Organizational justice only tries to elucidate the factors and elements that help foster feelings of justice.

Three types and three tools of justice

Within this current thinking one can identify three types of justice: distributive, procedural and interactive. Distributive justice is related to what we receive as the fruits or results of our actions. Procedural justice has to do not only with the results but also with the importance of the processes used to get there. Interactive justice emphasizes that what is perceived as fair is based not only on what is distributed or the process through which it is distributed, but also on the quality of the personal treatment received and the information shared.

These three simple ideas can be useful in public institutions, nongovernmental organizations, businesses and especially indigenous communities as an instrument for analyzing if mining projects are really implemented fairly and appropriately.

Distributive justice: We’ll share the pie

Distributive justice examines the perceptions of justice based on the distribution of benefits and risks as a result of the action. The underlying idea is that we perceive an action as fair provided we get the same amount as the other person or group that has contributed similar resources to us. Distributive justice is based on a combination of three principles: equality, fairness and need.

Equality means that all those involved receive and risk the same. Fairness means each individual receives a quantity according to what s/he contributed. And need means that the amount distributed depends on the urgency of the need.

The indigenous communities emphasize a complete worldview that integrates everything that surrounds them. Thus, when we talk about distributive justice in relationships between the extracting industries and the indigenous communities we must keep in mind not only the economic aspects but also the other dimensions that come into play, such as the ecological, social and spiritual dimensions. Indications are that the economic benefits the extracting industry can offer communities would be hard put to compensate them in the short and long run for the losses and risks to those who must resettle or for the pollution, biodiversity damage, social costs and disturbance to their sacred spaces.

Procedural justice: How to share the pie

The techniques and procedures used to resolve disputes or make decisions about how to determine the sharing of any type of benefits—economic, social, environmental, etc.—are also determinant to deciding if a deal is perceived as fair. This is what we mean by procedural justice, i.e. the implementation of fair processes that are consistent, unbiased, precise, representative and ethical and that have a direct influence on the degree of legitimacy the public or private institutions inspire.

If a government ministry arbitrarily licenses exploration rights to a mining company without transparency, even if it has employed distributive justice criteria, it will result in the total process being perceived as unfair. Procedural justice not only refers to the process itself but also to the ability to change or influence the distributive criteria of the shared benefits.

The control of the natural resources usually is in the hands of the corporations or national governments, which are rarely viewed as neutral entities by indigenous communities. In addition, these entities habitually give the communities very little direct control over the natural resource extraction processes that affect them.

Interactive justice: Sharing it amicably

Interactive justice deals with the quality of the treatment people receive when the decisions made affect them. It has to do with how people perceive the way they are treated by someone who has decision-making power over them.

We tend to think that a deal is fair if the person with whom we’ve reached agreement treats us with dignity, respect and politeness. But it’s not only about the treatment received; it’s also about the quality and availability of information from which we can make decisions.

Indigenous communities differ from many other communities in the intricate ties that exist in them among the social networks, natural surroundings and belief systems. Interactive justice has to recognize and respect this complexity, which is often run over by the wheels of the strict profit maximization criteria that move the large extracting companies.

The Marlin Mine in Guatemala:
A prototype case

All the elements of a reality that is constantly repeated in Central America come together in the case of the Marlin Mine, operated by the Canadian company Goldcorp. Organizational justice ideas highlight the complexity of the case and the issue.

Goldcorp is one of the largest gold producers in the world, with mines in the United States, Guatemala, Honduras, the Dominican Republic and Argentina. The Marlin Mine, located near the Mexican border in the Guatemalan department of San Marcos, is in an area populated by the Mayan Mam communities, which are the majority population of San Miguel Ixtahuacan, the region where 85% of the mining is found. The remaining population lives in the municipality of Sipacapa and belongs to the Mayan Sipacapen group. Both the Mam and Sipacapen Mayans live by farming and cattle raising.

Fair distribution?

The benefits of the mine’s arrival in San Miguel and Sipacapa have varied. Some members of the community sold their land at prices well above the market price. Others have enjoyed getting jobs at the mine. Others have benefited from the increased economic activity in the area. In addition, Goldcorp has its own NGO on the ground, the Sierra Madre Foundation, which contributes through programs of reforestation, education and improvements of various infrastructures. Despite all these well-publicized Goldcorp initiatives, many who live near the mine and the NGO agree that the risks and costs are disproportionate to the benefits to the communities vs. those to the company. A study by the Association for Research and Social Studies at Guatemala’s Rafael Landívar University estimates that only 13.9% of the profit generated by the mines stays in the country and that the economic, environmental and social costs for Guatemalan society, especially for the communities near the mining operations, total close to $177 million dollars annually.

In 2005 the cost-benefit ratio was 1.81 to 1. In 2008 it went up to 3.51 to 1. The study does not include the medium and long-range economic, social and environmental costs that the mine, which Goldcorp predicts it will close in 2019, might produce. Furthermore, Goldcorp is still not under any legal obligation to repair the damage caused once the mining operation is closed.

A valid process?

The Guatemalan Ministry of Energy and Mines granted a mining license to Goldcorp to develop and exploit the Marlin Mine on November 27, 2003, without any consultation process with the indigenous communities

This event marked the beginning of a systematic violation of the right to prior consultation and informed consent and the indigenous people’s right to decide for themselves the type of development they wanted as established by the ILO Convention No. 169. From the company’s perspective, it had complied with all local legislation and even went beyond what is required by addressing the affected communities’ development needs.

In terms of procedural justice, Goldcorp believes it has always respected the strictest legal terms. It appears to ignore that the local legislation does not follow Convention No. 169, ratified by Guatemala. Thus, the legality it says it operating under is in reality false and does not comply with international law.
It did not take long for the indigenous community to protest the lack of consultation. The first referendum organized by the mining communities began in February 2004. From then on there has been a wave of referendums on mining organized throughout the country with the result that they have all sent a resounding NO to the idea of mining in Guatemalan indigenous communities.

Goldcorp and the Guatemalan government, rather than listen to this negative response and collaborate in complying with Convention No. 169, took numerous steps to try to stop the negative feedback. The ILO itself and the Inter-American Commission on Human Rights were among those that criticized the government’s reaction. Both petitioned for an interim suspension of the mining activities and a thorough investigation of the Marlin situation. In addition, James Anaya, the UN’s Special Rapporteur on Human Rights, expressed his deep concern for the situation in which the communities around Marlin were living. All the petitions and complaints have been utterly ignored by the government and the mining company.

The perceptions concerning the level of procedural justice have been uneven among the communities, the government and Goldcorp. While the government and the mining company have taken refuge in their application of local legislation, the communities and civic organizations are asking, nine years after Guatemala ratified Convention No. 169, that the right to a referendum be respected.

With dignity and respect?

Goldcorp designed a Development Plan for Indigenous Communities, in which it states that respect for the customs and cultures of the indigenous communities is central to the company’s action. There is, however, no description of how the company “understands” these traditions and cultures in either the plan or the social and environmental impact studies it published.

How can Goldcorp work respectfully and fairly and cultivate interactive justice if it doesn’t know the first thing about the communities with which it is dealing? The environment around the mines is hostile. Community members have been the object of violence: intimidation and threats by mine employees and individuals connected with the mining industry, and even murder. Furthermore, the repeated refusal to hold an informed referendum only perpetuates the racist and exclusionary feelings against the indigenous communities.

Access to clear and transparent information to the communities prior to approval of the project so they could give their informed consent, as would be the case if one were following a process of informational justice, was also poor. The publishing of information relevant to the communities in the written Spanish-language media and furthermore writing it in a complex and technical style when most of the community members don’t have access to newspapers or are almost illiterate didn’t follow the dictates of informational justice.

More responsibility is
needed in sensitive regions

Companies like Goldcorp have to understand that they aren’t removed from what happens around them. They can’t be passive toward what happens in communities where they set up operations, at the very least because everything that happens impacts their operations and, by extension, their much-beloved bottom line. When companies work in areas that are sensitive—whether because of environmental fragility, the complexity of post-conflict societies or ongoing poverty—many of their usual policies can lead to disastrous consequences.

Even without wishing to, Goldcorp’s presence in San Miguel and Sipacapa has contributed directly to the climate of violence and social upheaval that exists in that region, bringing tragedy to many of the inhabitants.

In this type of region companies should act responsibly and respectfully toward everything around them and follow the principle of maximum transparency and respect for the decisions of the indigenous institutions, as required by international law. As John Ruggie’s report pointed out, companies are obliged to follow international laws and agreements even if local legislation does not require it. If they don’t, the doors to any project can be irrevocably closed.

Each indigenous community is unique and relates in a unique way to the spiritual, social and natural environment aspects of life. Indigenous peoples’ holistic vision of the interrelationship among these spheres has deep implications for their concept of the meaning of the word “development.” This must be kept in mind because there can be great differences between what public institutions and companies consider fair and what the affected indigenous populations consider truly fair.

The sin of companies and governments

Beyond Goldcorp’s case, governments and companies should understand that protecting and respecting the rights of indigenous peoples requires working with the perceptions of justice the people in the specific communities hold. If these communities don’t feel they’re being treated fairly by the governments and the companies that plan to develop any operation in their territory, they probably won’t give their consent.

An adequate study of the perceptions of justice might illuminate the way to achieve more productive, long-lasting and transparent relationships for all parties. Analyzing the perceptions of justice well could lead to more socially and environmentally responsible development projects and at the same time reduce the companies’ investment risks.

Since perceptions of justice consist of a mixture of visions about it—including distributive, procedural and interactive ones—it’s totally inadequate for the companies and public institutions to focus exclusively on the development benefits (distributive justice), or strictly hold to legal processes (procedural justice).

Governments and companies are guilty of ethnocentrism if they try to impose their own development models, usually based on the classic Western criteria of wellbeing. Indigenous communities have fought for and won the right to decide for themselves what type of development is best suited to them.


Jordi Vives and Matthew Murphy are researchers at the Institute of Social Innovation, Esade Business School in Barcelona, Spain.

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