• Maria Fustic

Canada and Structural Adjustment Programs: Mining Away Developments in Latin America

Canadians reuse, reduce, recycle, and even compost. We have national parks and environmental conservation areas. In fact, Vancouver is known as one of the world’s greenest cities (1). However, Canada is a natural resource extraction hub, with our oil sands being the center of a contentious debate between the benefits of economic growth and the adverse effects on our environment and local indigenous communities. Unfortunately, Canada’s impact on climate change and ignorance of indigenous rights are not at all limited to this case, or even to Canada’s own borders. In fact, about 70% of the world’s mining corporations are Canadian, but they actually operate mainly in Latin America, scouring for gold, silver, copper, and nickel (2). Canadian mining companies claim that their mines bring development to developing nations through employment and economic growth (3). The reality is, however, that these companies, such as Gold Corps (headquartered in the green city of Vancouver) are routinely involved in human rights and environmental violations (4). Through recent and rapid globalization, foreign direct investments (FDIs), such as those made by Canadian mining companies but also by the Western world in general, have increased quite rapidly over the past 30 years or so (5). It is important to understand the two main international economic organizations that facilitate this recent spike in economic globalization, and with a basic understanding of them, we can delve deeper into the case of Canadian mining corporations abroad.

The IMF and the World Bank originated during World War Two at the UN Monetary and Financial Conference at Bretton Woods, New Hampshire (6). Their founders believed that economic stability and the dissolution of poverty could be achieved through collective action, regulated by global economic institutions that follow the neoliberal economic policy prescriptions proposed by the Washington Consensus (7). Basically, they proposed that open and free-markets with zero state-interference were the path to prosperity for all. One of the main tools used by the IMF and World Bank, and supported by developed countries such as Canada, are Structural Adjustment Programs (SAPs) (8). These are loans given by the IMF and the World Bank to developing countries. However, in order to receive these loans, a country must partake in “structural reforms” of their economy and government (10). These reforms range from cutbacks in government spending and taxes, higher interest rates, increased transparency, and complete openness of their market (11).

The market system that the IMF and World Bank push for has some benefits, but there are several problems that prevent it from functioning in reality as perfectly as it does in theory. Firstly, for it to work, states require clearly established property rights and reliable justice systems to enforce them (12). Developing countries often lack the necessary infrastructure and resources to enjoy the benefits produced by solid governing institutions (13). Secondly, power is taken away from states and put into the hands of profit-oriented companies. As a result, there exists a disproportionality in the representation of the citizens of that country relative to the companies, especially for the people who don’t even live in the company’s headquarter country (14). Companies use the power they gain to maximize profits without consideration of environmental consequences. Moreover, countries participate in SAP’s when they are in desperate need of money (15). For instance, SAPs are implemented to revive and rebuild communities after a natural disaster or during a huge financial crisis. The problem is, that while developing countries are essentially forced by SAPs to open up their markets to the goods of developed countries, Western countries keep their own markets protected through tariffs and quotas (16). So the West continues to grow richer and richer by relying on protectionist measures, while exploiting the labor and resources of nations in already difficult situations (17). Thus, the IMF and the World Bank run the rules of the game of globalization in a way that perpetuates the exploitation of people and resources by multinational corporations, leading to environmental degradation, and the ignorance of the the pleas of indigenous, impoverished, and minority voices. Canadian mining companies are just one of many examples of this phenomenon.

Canadian mining companies are not the only companies using this neoliberal framework to their advantage, but they are an incredibly powerful and important example that is affecting the environment and people of Latin America in unprecedented ways. Hurricane Mitch left much of Latin America severely affected (18). Honduras, especially, was desperate for help (19). With public attention focused on the disaster, the Honduran government, under the pressure of Canadian mining companies, drafted and passed a new law that granted broad and vast rights to mining companies (20). In fact, much of the law was drafted by the companies themselves (21). The law included rights to the use of unlimited amounts of local water, rights to evict people living on the land granted to the companies, and the reduction of environmental controls (22). Latin American countries suffered billions of dollars of debt after taking up loans from the WB post-Hurricane Mitch (23). Moreover the enforcement of the IMF's SAPs rendered the economies of these nations open to exploitative mining companies.

Mining can have devastating environmental effects. The mining process uses tens of thousands of liters of water per hour (24). Since the rise of the Canadian mining industry in foreign nations, dozens of rivers have completely dried up, leaving indigenous communities with no water to bathe in or even drink (25). The few remaining rivers used as drinking water sources have been reported to cause high levels of metals in people’s blood, leading to birth defects, miscarriages, and arsenic poisoning amongst other health problems (26). Even in areas that are legally classified as national parks and ecological reserves, the companies have managed to operate within them or indirectly pollute and affect them (27). Community consultations, known as consultas in Latin America, do peaceful democratic votes to determine if people are in favor or against the mining operations (28). It is not surprising, then, that over 95% of people vote against having mines in their own communities (29). Protests have broken out, and military personnel, often ordered by the mining companies, have responded through violence; in some cases, officials have burned entire villages down to the ground or even shot and killed individuals (30). Canadian mining companies have continued operations even after warnings against their human rights and environmental violations (31). They claim that their mines actually bring development through jobs (32). In reality, most locals whose homes are destroyed do not get jobs at all (33). The few that do get employed face inhumane working conditions, and do so only because their previous livelihood of living off the land has been destroyed (34).

So, what is the solution? On a global level, the IMF and World Bank, must face structural adjustment themselves. Their policy solutions grant overwhelming decision-making power to the commercial and financial sectors of the West (35). The IMF chooses leaders and decision makers behind closed doors, and they are almost always Europeans with little to no experience in the developing world (36). The president of the World Bank has always been an American, nominated by the United States, and the only country with the power to veto all decisions in the IMF is, once again, America (37). Only rich educated economists from developing countries have a voice in making decisions, and their decision-making process has zero transparency (38). The truth is, there are educated economists from developing countries who are more knowledgeable about their own societies, who should have a voice in policy-making. The implementation of indigenous, as well as gender, ethnic, religious, and racial minority voices, should also be a priority in the decision making process. For instance, the consultas votes that show that 95% of people do not want mines in their home regions, should be taken into account.

The IMF and the World Bank are not all to blame. Canadian mining companies must be held accountable by our own government as well. In 2009, John Mckay of the Liberal Party sponsored a private member’s bill, Bill C-300, the Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act (39). The stated purpose of the bill was “to promote environmental best practices and to ensure the protection and promotion of international human rights standards in respect of the mining, oil or gas activities of Canadian corporations in developing countries” (40). However the bill did not pass and failed to become law (41). Both Liberals and Conservatives were and are unwilling to implement binding mechanisms to hold companies accountable for the crimes they commit abroad. Reusing, reducing, and recycling is not enough. Canadian companies are among the worst environmental and human rights offenders around the world. While we enjoy our own national parks, similar ones abroad are destroyed by Canadian corporate greed. The only solution is to continue to put public pressure on our governments and on international organizations such that they begin to prioritize the people and the environment that they are meant to serve, over the profits of companies.

  1. Lindsay William-Ross, “Vancouver ranked world's 4th greenest city,” VanCity Buzz, Oct. 21 2014, http://www.vancitybuzz.com/2014/10/vancouver-ranked-worlds-4th-greenest-city/

  2. Denis Severno, “Western Intervention and Control: Canadian Mining Corporations in Latin America”, Athabasca University, Introduction

  3. Steven Schnoor, Nov 30, 2016.

  4. Ibid

  5. Denis Severno, “Western Intervention and Control: Canadian Mining Corporations in Latin America”, Athabasca University, Abstract

  6. International Monetary Fund (About the IMF)

  7. Ibid.

  8. Jospeh Stiglitz, Globalization and its Discontents. 2002:3

  9. Ibid.

  10. Ibid.

  11. Ibid.

  12. Deena Khatkhate. "East Asian Financial Crisis and the IMF: Chasing Shadows". Economic and Political Weekly. 33 (17):1998: 966

  13. Ibid.

  14. Denis Severno, “Western Intervention and Control: Canadian Mining Corporations in Latin America”, Athabasca University, Foreign Direct Investment and The Emergent Economy

  15. Seth Mydans. “Pressed by I.M.F., Indonesia Accepts Economic Reforms” 1998

  16. Erik Kohunta. Sept 21, 2016

  17. Ibid.

  18. Steven Schnoor, Nov 30, 2016

  19. Ibid.

  20. Ibid.

  21. Ibid.

  22. John Burdick et al, “Beyond Neoliberalism in Latin America? Societies and Politics at the Crossroads”, Palgrave Macmillan, 2009, 125.

  23. Steven Schnoor, Nov 30, 2016

  24. Ibid.

  25. Ibid.

  26. Ibid.

  27. The impact of Canadian Mining in Latin America and Canada’s Responsibility, Executive Summary of the Report submitted to the Inter-American Commission on Human Rights, Working Group on Mining and Human Rights in Latin America, p. 22

  28. Steven Schnoor, Nov 30, 2016

  29. Ibid.

  30. Ibid.

  31. The impact of Canadian Mining in Latin America and Canada’s Responsibility, Executive Summary of the Report submitted to the Inter-American Commission on Human Rights, Working Group on Mining and Human Rights in Latin America, p. 25

  32. Ibid.

  33. Ibid.

  34. Ibid.

  35. Jospeh Stiglitz, Globalization and its Discontents.2002:13

  36. Jospeh Stiglitz, Globalization and its Discontents.2002:19

  37. Ibid.

  38. Ibid.

  39. Bill C-300 (Historical), https://openparliament.ca/bills/40-3/C-300/

  40. Ibid.

  41. Ibid.

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