In the Keystone Suit, It’s Big Oil vs. Democracy

A few years back, I was one of the hundreds of climate activists arrested while protesting the Keystone XL pipeline outside the White House. So when the president finally pulled the plug on the project last November, it felt like a huge victory – symbolic, maybe, but definitely worth a trip to the booking station.

In the new global economy, however, no victory is safe. I thought back to Miguel.

I met Miguel Rivera in 2009. He and four fellow activists were being honored with the Institute for Policy Studies’ Letelier-Moffitt human rights award for their leadership in El Salvador’s fight against toxic gold mining. Under massive public pressure, the government had agreed to a five-year moratorium on new gold mining permits and was considering the world’s first permanent ban.

Democracy, it seemed, had worked.

Then the Canadian mining company Pacific Rim, later bought by the Australian conglomerate Oceana Gold, sued El Salvador for more than $300 million for denying permits to dig. Brushing aside concerns that the mining would poison the Lempa River, the country’s primary source of drinking water, Pacific Rim claimed that the government was discriminating against it and was obliged under the Central American Free Trade Agreement (CAFTA) to protect its investments and potential future profits from mining.

Apparently democracy had an asterisk: “free trade.”

Corporate Privilege

A provision in CAFTA known as an “investor-state dispute settlement” clause, now ubiquitous in free trade agreements, allows foreign investors to challenge any national laws and regulations that undercut their ability to make money. Worse still, the fate of these cases is often decided behind closed doors in unaccountable tribunals – like the World Bank’s International Center for the Settlement of Investment Disputes, or ICSID.

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