Climate Talks Highlight That Money Still Talks in Peru

Peru is struggling to find a balance between developing its economy and protecting the environment.

Last month’s United Nations Climate Change Conference in Peru brought new attention to a long-standing conflict between those seeking to develop the South American country’s economy and those trying to protect its environment.

Consecutive Peruvian governments have been accused of disregarding the effects of extractive activities on the environment and on its indigenous peoples. A general desire to cash in on Peru’s natural resources is seen as a threat in the north of the country while drug traffickers, illegal miners and loggers have helped contribute to the ransacking of the jungle areas of the east.

Yale University’s Environmental Performance Index ranks Peru 110 out of 178 countries worldwide. In the region, only El Salvador and Paraguay do worse.

Peru’s economy has boomed in recent years in large part because of an increase in copper, gold and silver production. The mining industry accounts for 60 percent of exports and was forecast to reach $14 billion last year.

Foreign investment plays a crucial role. Thanks to an attractive legislative and fiscal framework, $70 billion in investment is expected over the next five years, including $42 billion in mining alone.

Under the last government of President Alan García, land disputes and particularly the issue of foreign exploitation of natural resources led to almost two hundred demonstrators being killed in clashes with security forces from 2006 to 2011. During that time, García oversaw legislation that criminalized social unrest.

The northern city of Cajamarca is the site of an ongoing dispute involving the proposed Conga Gold Mining Project. Valued at $4.7 billion, the largest foreign investment project in Peruvian history is sponsored by the Newmont Mining Corporation of Colorado and passed an environmental impact assessment in 2010. Yet in November the following year, it was suspended amid local protests against a feared contamination of the water supply.

Incumbent president Ollanta Humala made an election promise to end such social conflicts through a “prior consultation law” which would guarantee dialogue and agreements between indigenous communities and companies before any action is taken.

Instead, Humala gave the armed forces extraordinary powers, including the right to make arrests without warrant, for a period of sixty days. Several of his ministers resigned in protest and soldiers still patrol the streets of Cajamarca to stop demonstrators, who are now labeled “extremists,” returning.

Late last year, Humala completed his environmental U-turn when a new ruling on hydrocarbons was approved. This removed the need for environmental impact assessments in areas outside the rainforest and exempted petroleum companies from such procedures. Mining minister Eleodoro Mayorga said the ruling would “contribute to the development of Peru, because these industries represent almost two-thirds of the country’s exports and their investment projects are essential for reactivating the economy.”

Although the November ruling retained protection of the rainforest, the Interethnic Association for the Development of the Peruvian Rainforest, an indigenous rights organization, recently claimed economic integration and agricultural development in the Amazon comes at the expense of the rainforest.

The group said informal extractive activities, including illegal gold mining and logging, most common in the east, have a major impact. One fifth of gold mining in Peru is done illegally and this alone is worth $3 billion per year. 80 percent of timber exports are harvested illegally.

The association pointed out that illegal gold mining was responsible for an estimated 20 percent of Peru’s deforestation last year in the southeastern Madre de Dios region and caused widespread mercury pollution.

The government has tried to regulate the activities of “informal miners” but this has met fierce resistance. More than 15,000 miners took to the streets in protest in May.

Beyond the environmental damage illegal mining is causing, it also chips away at state income and undermines investor confidence.

The global scrutiny that came with the United Nations talks underlined that Peru has yet to find a balance between economic development and environmental protection.

After years of prioritizing growth, there are some signs the country is moving toward a more balanced approach. The Ministry of Environment is in the process of setting up specialized courts for the energy, fishing and mining industries in order to expedite cases of alleged environmental abuse. It has also fined more companies for excessive emissions. Peru’s high commissioner for the fight against illegal logging announced measures earlier this week for those operating within the “informal” sector.

But with President Humala reversing his earlier pledges, the indigenous people of Peru, who are most affected by environmental degradation, can hardly be blamed for wondering if the changes will amount to much.