Pirates are in the news. Somali bandits at sea commandeer a huge oil tanker, take its crew hostage, and make off with a $3 million ransom.
In our hemispheric neck of the woods, a much smoother form of piracy is now on display. Those demanding payment are dressed in business suits. The ransom is far higher. The hostages are not a small nautical crew but a nation of 6 million. Unlike a Saudi shipping company, those targeted don’t have the means to pay the extortion price. And, thanks to congressional action in 2005, this piracy is perfectly legal.
CAFTA no longer is in the news. People may remember the Central America Free Trade Agreement as some treaty about tariffs between countries which, in small part, it was. But mostly, CAFTA was about who can buy or sell what to whom, and who can or can’t stop them. It was about making critical resources available for sale to any qualified foreign buyer, without the consent of the people whose lives hang in the balance.
So picture this scenario: A Canadian mining company called Pacific Rim Mining Corp. wants to dig for gold in El Salvador. The communities to be strip-mined by the company believe these open pit mines will destroy their land, pollute their water and endanger their health. Communities elsewhere in the country who feel threatened by similar mining projects, including Bangor’s Salvadoran sister city of Carasque, share their alarm. Salvadorans aware of mining-related damage in neighboring Guatemala and Honduras add to the public outcry.
As a result, Pacific Rim’s plans for gold mining in El Salvador become an inflamed national issue. Fearing defeat in a coming presidential election, the Salvadoran government refuses to issue permits for mining excavation.
End of story? Not at all. In the name of fairness to investors, CAFTA entitles a mining company to hold a government hostage for opting to protect its people. In its most flagrant form, CAFTA permits a corporation to sue a government for the profits it might have made, if a country balks at something the company thinks it has a right to buy or sell.
As of Dec. 8, Pacific Rim Mining Corp. has announced its intention to do just that. For how much? The current estimate is in the hundreds of millions of dollars. For reference, the average annual income of El Salvador’s 6 million people is $3,500. The ransom, therefore, is roughly $100,000 per citizen.
You might ask how a Canadian company can sue anybody under a treaty signed by the U.S. and Central America, but not by Canada. Not a problem: Pacific Rim Corp., headquartered in Vancouver, British Columbia, has created a “wholly owned subsidiary” in Reno, Nev. Pac Rim Cayman LLC was established 13 months ago. Pacific Rim will use this address to sue El Salvador on behalf of the Canadian parent company.
As Woody Guthrie wrote, “Some rob you with a six gun, some with a fountain pen.”
Rep. Mike Michaud has submitted a bill called the Trade Reform, Accountability, Development, and Employment Act of 2008. The legislation would rewrite trade bills to balance the rights of investors with worker rights, public health and environmental safety.
Corporate buccaneers might say “Arrrgh.” But those of us concerned with promoting both responsible business practices and sustainable communities say “Amen.” Meanwhile, look out for pirates, on the high seas or in company boardrooms.
Dennis Chinoy works with Bangor-Carasque, El Salvador Sister City Project as a volunteer with Peace through Interamerican Community Action, or PICA.