International Corporations and the Developing World: Pacific Rim vs. El Salvador

As court proceedings were set to reconvene in June in the case of Pacific Rim Mining Corporation versus the government of El Salvador, human rights activists converged in Vancouver, British Columbia to protest Pacific Rim at its Canadian headquarters. Protesters (led by CISPES) were there in an act of solidarity with the people of El Salvador, who wish to maintain their right to decide when and if international corporations should be allowed to mine their country’s natural resources. Furthermore, the Salvadorans are focused on bringing an end to the violence directed at activists in the country and the impunity that currently exists for those who commit such violence.

In truth, I myself didn’t know much about this case when I agreed to drive the three hours north to Vancouver. I went on a whim, trusting there was a good reason activists would drive from all around Oregon, Washington and Canada to attend this protest. I soon found myself in the home of a seasoned activist in a suburb of Vancouver, putting together protest signs, making “contaminated” bottles of water, and discovering why this group was so concerned about some Canadian mining corporation.

The reason was fairly simple. Due to concerns over environmental impact on a country, which ranks just barely above Haiti for access to potable drinking water, the government and people of El Salvador have denied Pacific Rim Mining Corporation an Exploitation Permit. This permit would allow the corporation to mine for gold within the country, and very likely allow for the contamination of their already limited supply of water. Neighboring Honduras has already seen the effects of such mining, and El Salvador does not wish to follow in its footsteps. Additionally, these natural resources would serve to make far more money for Pacific Rim than the country of El Salvador. As a developing nation, El Salvador cannot afford to lose that potential income.

Pacific Rim, meanwhile, is arguing that El Salvador is in need of job creation, and that is exactly what they can offer the country if they are allowed to continue mining. The Salvadorans remain reasonably skeptical.

As a result of the denial of an Exploitation Permit, Pacific Rim has filed a $77 million lawsuit against the country of El Salvador, using the Central America Free Trade Agreement (CAFTA) as a legal justification to overrule the judgment of the local government and the desires of the people of El Salvador. As Canada is not actually a signatory to CAFTA, they have filed the suit through a subsidiary in Nevada, as the U.S. is signatory to the agreement.

As the legal battle continues, there are two things we ought to keep in mind about this dispute between a country and an international corporation. First, to what extent does an international corporation have the right to do business in the country of their choice? In other words, does Pacific Rim truly have any legal standing here, or merely the hope that they can outlast El Salvador in a legal battle? Second, if Pacific Rim is to win this legal battle, what does that mean for other developing nations? There is definite potential for other international corporations to see the success of Pacific Rim as a license to force their way into countries with desirable natural resources. This is a slippery slope, and it would behoove the international community to avoid it.

Photo credit: Corrie Hulse