Call It What It Is:

Corporate Social Responsibility: Only So Far As Its Good Business

How Canadian mining companies behave in Latin America: Pascua-Lama (Chile) Vs. Marlin Mine

(Guatemala): The role of business, state and civil society in Canadian-Latin American mining.

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“(I)f China becomes the factory of the world and India its services

provider, what is left for Latin America, except the export of natural

resources?” - Blouin (2008, p. 2)

This question in a report published by the Canadian International

Council on Foreign Policy in the Americas feels like an updated version of

William Blake’s ‘Europe supported by Africa and America’ engraving. The engraving

features a fair skinned woman (Europe) propped up by two women; one with a

dark complexion (Africa) and one warm (America). Created in 1796, Blake’s

engraving portrays the colonial relationship wherein the privilege of an

imperialist power is perpetuated by services rendered by adjacent figures.

Their intertwined arms create an infinity symbol, suggesting that there is

reciprocal relationship between all three actors; however, the adjacent

figures are clearly cast as actors in this dynamic whose position ultimately

benefits ‘Europe’ most out of the three (Blake 1796). Almost 220 years

later, Bloudin’s question offers a sobering and stark perspective

reminiscent of Blake on the place of Latin America in the current globalised

economic network.

The narrative of Latin America being cast in this adjacent position is

not new. Extraction of natural resources in the region has been a central

theme in Latin American development since Conquest (Bazo & Studnicki-Gizbert

2013, p. 73). Applying the imagery of Blake’s engraving to Latin American

history since Conquest, the name of the imperialist power changes. The name

reflects the relevance of the rise and fall of empires. ‘Europe,’ as the

imperialist power in Blake’s engraving, was relevant to the time it was

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created. It could have also alluded to a specific European power such as the

United Kingdom or the Spanish Empire. Over time, the imperialist power

occupying this space would have been the United States of America in

addition to Europe. Most recently, the northern neighbour of the United

States has been thought of as a highly relevant imperial power in

international relations literature (Gordon & Webber 2008, p. 64).

Canada’s Strategy for Engagement with the Americas was “renewed” in 2012 “with a

vision of a more prosperous, secure and democratic” relationship with Latin

and Central America (International.gc.ca 2014). This idea easily translates

to the proclamation that the Canadian state will actively seek a prosperous

economic engagement, increased business security, and amenable governments

in the region. I posit actively over aggressively since the actions of an

imperial power like Canada do not need to reflect actual invasions, forced

settlements or territorial conquests of Latin America. Rather, the

historical influence of the extractive industry over the region since

independence from the Spanish in the early 1900s has made modern Latin

American states highly amenable to the influences of imperial powers.

The parallel drawn from Blake’s work to the current climate of

extractive industry concerning Latin America is as follows: Latin America

has been cast as essential to the success of an imperialist power through

its own disempowerment. This refers to orchestrating the relationship

between the countries of Latin America and the ‘imperial’ power of the time

in a way that never truly allows for the former to maneuver out of the

‘supporting role’ position. This relationship will be supported not only by

the imperialist state power, but by powerful economic actors who hold the

favour of the state. Returning to the theme of natural resource extraction,

when conceiving Canada as a relevant imperialist power, we should note that

the Canadian mining companies addressed in this paper have certainly

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received legal and financial backing from their home governments and

legislators (Heidrich Blundell 2013 p. 3).

What makes a current study of the extractive industry in Latin America

interesting is the dynamic between mining companies, their home supporters

and modern Latin American state institutions. The Latin American nations

discussed in this paper are not new to foreign bodies willing to invest in

mineral extraction; rather, the strength of the individual modern state

apparatus is noticeably different in each subsequent case. The state

apparatus consists of the three arms of government of the Latin American

Republic we are concerned with, the executive, legislative and judicial.

Evidently, these arms serve to reinforce the legitimacy of the government as

well as acting an avenue for upcoming and local civil society concerns. In

the coming analysis, the tension between Latin American civil society

actors, Canadian mining companies, and the state apparatus of all actors

concerned will illustrate the complex relationship between this version of

Blake’s engraving.

The relative strength of modern Latin American states as compared to

Canadian mining companies and the Canadian state supports of the extractive

industry will be a crucial factor in determining the makeup of the power

dynamics in each scenario (Gordon & Webber 2008, p. 64). This connection

suggests that the dynamic between Canadian mining companies and

weaker/stronger Latin American states will translate into palpable

differences in the behaviour of said businesses. Differences will be seen in

the details of the economic, legal, and social relationship between the

aforementioned actors. The capacity for resource wealth management in the

Latin American state will be a framing mechanism for this relationship.

Resource wealth management includes several areas such as the implementation

of taxation schemes and reinvestment of royalties and taxes into selective

programs and areas. Tax rates outlined in legal agreements are

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straightforward to discuss; however, reinvestment schemes are another area

that merits analysis.

An integral part of this analysis will be the extent and reasoning

behind ‘socially responsible’ investment on behalf of Canadian mining

companies. This kind of investment is either done in partnership and

conjunction with Latin American state resources or simply with its blessing.

Corporate Social Responsibility or CSR refers to the idea that businesses

should invest in areas outside direct corporate concerns to foster a

cooperative social environment from which to continue business, which in

this case is mineral extraction (North, Patroni & Clark 2006, p. 3). There

are many criticisms to this approach, and the instances where we see CSR

investment on behalf of mining companies will illustrate an underlying

desire to fundamentally further business initiatives (Weinstein 1997, p.

84).

Pitting powerful imperialist economic actors in conjunction with the

Canadian state against any Latin American state ultimately leads to the same

narrative with the latter playing a supporting role. Developing the state’s

strength has the capacity to challenge such roles; however, post Cold-War

neoliberal economic theory and the legislative agreements that enshrine it

weaken the capacity of the Latin American state overall (North, Patroni &

Clark 2006, p. 6). The ultimate goal of extractive industry investors is to

foster an environment conducive to the reproduction and perpetuation of

invested capital (North, Patroni & Clark 2006, p. 6). In neo-liberal

economic terms this is simply ‘good business.’ An important part of this can

be conducting business in a way that sidesteps strengthening the host state.

Mining companies may invest in social development areas, but they avoid

state capacity building projects. For example, constructing infrastructure

projects, such as schools and bridges, and providing high paying albeit

temporary employment while avoiding proportionally fair taxes, or creating

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enclave economies serve to bypass and ultimately weaken the state (Jamasmie

2012; CBC 2012; Heidrich & Blundell 2013, p. 1). The benefit of a weakened

or complacent host state is the weakening of the formal apparatus that has

the mandate to regulate and critique the behaviour extractive industry

investors. The primary directive of these investors is to maintain an

economically viable project. To what extent this includes CSR initiatives

remains to be seen.

Let’s call extractive industry behaviour what it is, and what it

always has been: investments whose purpose is to ensure the continuation of

business. Latin American state strength is stronger than in the 19th

century; however it is the interest of the extractive industry to only

encourage that growth so far. When faced with states of different strengths,

the approach of industry actors must be tailored accordingly. Comparing the

extractive industry relationships of different Latin American states will

illustrate is that at the turn of the century mining companies must

negotiate with these states and civil societies in ways that were not

necessary before.

The Latin American states in this analysis are the Republics of Chile

and Guatemala. The mining operations examined here are firstly, the Barrick

Gold Corporation also known as ‘Barrick’ owned Pascua-Lama operation on the

border of Chile & Argentina; and the notorious Marlin Mine owned by GoldCorp

Incorporation. Chile and Guatemala differ on state and institutional

strength, since both modern states inherit a comparable (however not

transferable) experience with state building projects and extractive

industry influence. Presently, the Chilean state holds certain state

apparatus and extractive industry relationship strengths over Guatemala.

This suggests that the Chilean state may be better equipped than the

Guatemalan state to negotiate better terms with regards to Canadian mining

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companies. Also, the tax and royalty rates on mining differ significantly

between the two Republics. Furthermore, Chile enjoys a better defined

economic relationship with Canada than Guatemala. This also suggests that

the Canadian-Chilean state relationship has more potential to lead to

reinvestment in compliance with Chilean state-defined national interest;

even if it is not directly in sync with the business interests of mining

companies (Jamasmie 2013f). Interestingly, the judicial arms of both

Republics have illustrated inconsistencies with the endeavours of the

extractive industry and their respective constitutions (Gonzalez 2006;

Maheandiran, DiFederico, Aguilera 2010, p. 6; Dougherty 2011, p. 404). Even

more interesting is that both mining companies maintained their permits to

operate despite these irregularities. Both countries have also experienced

recent positive changes in mining tax and royalty schemes (GoldCorp Inc

2012; PriceWaterhouseCoopers 2012, p. 21). Consequently, we can see that

while both states are stronger contenders than in previous centuries, the

structure of the power dynamic does not fundamentally change from one

portrayed in Blake’s engraving.

We begin this analysis by outlining the social and economic impact of

extractive industry behaviour from the early 19th century until now. From

this research comes an understanding of how and why Latin American states

appear to be so amenable to foreign mining investment. Next, we will examine

the current position of the Canadian state in relation to mining companies

including an analysis of Bill C-300. This bill would have served as a legal

foundation from which cases could be brought against Canadian mining

companies in Canadian courts for negligence and unsafe practices in overseas

mines (Keenan 2013, p. 112). The emergence of legal action against Canadian

mining companies despite the defeat of bill C-300 indicates the aptitude of

Latin American and Canadian civil society actors and the respective

legislative and judicial arms to bring such cases to light (Marotte 2013).

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This serves as a springboard to examine the legal frameworks that surround

Canadian mining in both Chile and Guatemala. It will include a comparison

between established legal frameworks as well as recent taxation changes

implemented by the Chilean and Guatemalan State. Finally, we will discuss

the reasoning and impact of CSR activities on behalf of mining companies in

Chile and Guatemala.

Amenable Neighbours

Modern Latin American states have inherited a history that makes them

quite amenable to the influences of foreign extractive industry actors. An

integral part of maintaining this influence resides in ensuring that the

Latin American state never gains the strength to rival that of the foreign-

owned extractive industry power (Weinstein 1997, p. 94). However, to claim

that Latin American state institutions are hapless in the face of foreign

business initiatives would be to give too little credit to any modern Latin

American Republic. Instead, we should see the scenario as clearly crafted

and heavily nuanced. The history of the extractive industry in Latin America

has promoted the underdevelopment of the state (Frank 1967). Hence, the

modern Latin American state is left with few alternatives other than to make

deep concessions to extractive industry investors. The primary directive of

these investors has always been to maintain an economically viable project

(Veltmeyer 2013, p. 86).

Advocates of the extractive industry would argue for the potential

financial gains of development projects in the host countries (Woodside

2009, p. 5). However, such projects depend on the strength of the state;

subsequently, extractive industries do not traditionally aid in

strengthening the state apparatus (North 2006, p. 6; Bazo & Studnicki-

Gizbert 2013, p. 73). Until recently, there has been little rhetoric

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regarding foreign investors aiding and strengthening Latin America state

institutions (Randall 2010, p. 38; Blouin 2008, p. 8).The narrative is very

clear on being highly conditional in aiding Latin American state

institutions in a way that will continue to include foreign owned extractive

industries (Government of Canada 2009, p. 3). Looking at the Latin American

narrative, we see an essentially linear relationship of the Latin America in

a Blakean supporting role from Conquest to interaction with modern

‘imperialist’ states. This narrative sets the stage for modern Latin

American states to be amenable to foreign investment.

The composition of newly independent Latin American states in the 19th

century serve as a backdrop for the ease of which they serve a Blakean

supporting role in the modern global economic network. At this time, newly

independent states were cast into this role by extractive industry actors

under supporting development of the state. In the 19th century was

exemplified through extractive companies being well-placed within the

executive infrastructure of burgeoning states; and hence implementing

systems that ultimately benefit their investment above other actors (Salas

2009, p. 207). A poignant example of this is the setup of enclave economies.

Extractive operations in 19th century Latin America:

“contributed little to national economic development because, for the

most part, they were organized in "enclaves" isolated from the

functioning of the national economies: the operations were almost

always owned by foreigners ...who repatriated profits to their home

countries and investors. Because the activities were technologically

sophisticated and capital-intensive, the relatively few workers hired

could scarcely generate enough demand for goods to spur the growth of

national markets, especially when they were required to buy

necessities from corporate-owned commissaries” (North 2006, p. 3).

Enclave economies serve to promote the underdevelopment of the state by

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providing services that employees and surrounding communities of extractive

projects consume while bypassing the reinvestment of strength into the host

state apparatus. As nation-building projects were steadily under

construction, extractive companies were still able to maintain important

influence in the region (Salas 2009, p. 207). Nation-building projects were

taking place all over the region during this time, and by the end of the

20th century differences in the strength of the state apparatus between

countries could be observed.

At the beginning of the 20th century we see the first signs of

comparable state strength. Maintaining that extractive companies continued

to exert considerable influence over the region, Chile was one of the

countries whose state apparatus was able to reinvest "in infrastructure and

public services useful for industrialization and social advancement". By

contrast, in countries where "the state did not intervene to tax and

otherwise regulate mining operations, the contribution of mining to national

economic development could be practically nil” (North 2006, p. 4). By the

mid-20th century, both Chilean and Guatemalan governments sought to

implement land reforms that would have threatened foreign-owned extractive

operations (Miller 2011; Salas 2009, p. 206). Both governments were

ultimately removed from power by coups backed by the Central Intelligence

Agency in the mid 20th century (Miller 2011; Cia.gov 2000). These

dictatorships served to literally capture the state and further manipulate

it to bend to the will of extractive industry exploiters. The trajectory of

the political turmoil of this time in both countries served to mold the

strength of their modern states.

In Chile, the Pinochet regime served to bolster the relative strength

of the modern Chilean state. General Pinochet ruled from 1973 to 1990 and in

those years implemented neoliberal economic reforms which served to aid

business interests in investing in the country (Gordon & Webber 2008, p.

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73). The consecutive democratic governments of the left-leaning coalition La

Concertación (and the one right wing Renovación Nacional term) have maintained yet

(moderately) modified these economic reforms (Gordon & Webber 2008, p. 73;

Jamasmie 2013f; Woods 2012). Today, Chile has emerged as the Latin American

country with the most neoliberal economic climate of the region. Chile has

the most Free Trade Agreements (FTA) of any Latin American country

(Department of Foreign Affairs Trade and Development 2013, p. 1).

Guatemalan intervention in the second half of the 20th century also

revolved around economic concerns of the United States’ extractive industry

(Miller 2011; Imani, Maheandiran, Crystal 2012, p. 5). However the

Guatemalan experience has created a less fortified state than Chile (Silva

2002, p. 132). An integral part of this difference is due to Guatemalan

Civil War (GCW), which lasted from 1960 to 1996 (Silva 2002, p. 132). The

GCW was a tumultuous time that served to weaken the state through seeing

numerous heads of state rise and fall from executive power as well as

massive human rights violations (Miller 2011). When comparing the Chilean

and Guatemalan experience during this time, we see that the capture of the

state in Chile started later, did not last as long, and was more a tightly-

controlled project than in Guatemala. Peace accords were ratified in

Guatemala in 1996, in conjunction with the end of the GCW and the return to

democracy (Miller 2011). Presently, Guatemala has become the “second largest

trading partner [for Canada] in the Central America region” (Government of

Canada 2014a). In conjunction with the Canada-Chile FTA signed in 1997, the

related treaties from both countries serve as international legal and

economic tools that successfully envelope these states in a Blakean

supporting role. Hence we see that at the turn of the 21st century, both

states are important to Canadian interests in Latin America.

In the early 21st century, Latin American states have an inherited a

history of interventions by foreign powers who desire natural resources.

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This is coupled with state institutions who have always had powerful

extractive industry actors in their ear and a firm guiding arm around their

shoulders. However, what we see in the 21th century is the natural

progression of this dynamic: with a stronger state apparatus than before and

a civil society to match, extractive industries have had to take the

concerns of such actors into consideration more seriously in order to

continue business relationships.

While recalling the literature promoting the positive impact of the

extractive industry through taxation and job creation, it is important to

note where Latin America stands at the beginning of the 21st century in

regards to these and more supposed benefits. The results have been

underwhelming. “Latin America's ratio of debt to gross domestic product

(GDP) stood exactly where it was” before the Cold War and during dictatorial

rule of the 70s and 80s (North 2006, p. 6). “Even by their own stated goals,

liberalization and export orientation proved to be failures” (North 2006,

p. 6). This suggests that the extractive industry did not bring important

benefits to Latin American states over the centuries as supporters of the

industry would say (CBC 2012). What modern Latin American states can do is

try to derive benefits as realistically as possible. Hence, extractive

industry actors must accept certain conditions imposed by Latin American

states in order to continue business relations. One way to do this is under

better taxation and royalty schemes (Forest 2010; Ernst & Young 2012;

GoldCorp Inc. 2012). It is through such schemes that modern states and civil

society actors can both benefit.

Civil society has always been an important player in the relationship

between extractive companies and Latin American states. While the

dictatorships of the late 20th century did serve to weaken civil society to

a degree (in Chile more so than Guatemala); the “constituent power” of civil

society has asserted itself and its need to be recognised (Cameron 2008, p.

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24; Urkidi 2011, p. 692). Protests in Chile led the state and extractive

companies to implement better labour laws in the early 20th century (North

2006, p. 4). In the 21st century, both Chilean and Guatemalan indigenous

groups have enacted their constituent power as civil society actors and

exerted considerable amounts of pressure on Canadian mining companies

(Jamasmie 2013b; Jamasmie 2013b).

The renewed strength of the Latin American state and the pressure

exerted by civil society on extractive industries has created a unique

dynamic for the latest wave of relationship between these actors.

Nonetheless, this dynamic still entails a relationship that is defined with

colonial, imperialist undertones (Gordon & Webber 2008; Veltmeyer 2013). The

modern dynamic between stronger Latin American states, civil society, and

foreign extractive industry actors is dubbed a “new extravisim” (Veltmeyer

2013, p. 82). This system is identified through the importance of the Latin

American extractive industry to the globalised world (ultimately supporting

an imperial power), and the relevance of the foreign capital investors on

which it depends (the investment capital of the imperial power). Hence,

modern Latin American states are concerned with:

foreign direct investment in the natural resource sector and the

export of natural resources in primary commodity form. What is new

about this strategic shift is that it is based on a new policy regime,

designed to ensure a more equitable sharing of the resource wealth

through the collection by the government of resource rents or that the

resources themselves in some cases ….are nationalised and managed in a

sustainable way. What this means in practice is a new regulatory

regime designed to regulate foreign investments in resource extraction

and the operations of the mining companies in order to ensure a more

positive economic development outcome and to mitigate or protect the

society and the economy, as well as the environment, from the all-too-

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well-documented negative consequences of natural resource development

(Veltmeyer 2013, p. 82).

This is a new form of resource management that is a direct result of the

current dynamic between modern Latin American states, civil society and the

relevant ‘imperial’ power addressed in this paper, the Canadian state and

its legal and rhetorical supports of the extractive industry. The Blakean

supporting role is still not fundamentally altered, but the relationship

does grow more complex and reciprocal. Amazingly, the words “colonial

mentality” are still relevant for critics of the amenability and willingness

of modern Latin American governments regarding extractive industry investors

(Jamasmie 2013a). Environmental integrity and territorial sovereignty are

two areas of concern to critics; while proponents of the industry try to

frame these problems as solvable through proper project management (Jamasmie

2013a). The latter once again maintains Blakean proportions.

Presently and moving forward, Canadian extractive industry investors

must avoid previous presumptions about how to most efficiently interact with

modern Latin American states (Cameron & Hecht 2008, p. 24). Not only do

industry actors need to conduct business in way that advances their own

financial goals; but must do so in a way that also supports “democratic

developments” of the Latin American state (Cameron & Hecht 2008, p. 24).The

major presumption that has defined previous waves of the relationship

between Latin American state and foreign extractive industry actors is that

“economic and political reforms are [always] mutually reinforcing” (Cameron

& Hecht 2008, p. 24). In other words, maintaining a political climate

conducive to the advancement of the extractive industry will inevitably

bring rewards to those involved in the advancement of the industry. This

presumably includes all actors and members of civil society.

The fundamental problem with this presumption is that such “political

and economic reforms” have served to weaken the state as a critical actor in

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that relationship (Cameron & Hecht 2008, p. 24). The trajectory of the

extractive industry as outlined above has created an environment where the

private sector is assigned “the responsibility that most international

development theorists ...assign to the state or the public sector”. It

refers to the responsibility of ensuring “economic growth is socially

inclusive”, that policies are simultaneously “pro-growth” [and] “pro-poor”

(Veltmeyer 2013, p. 86). Assuming that the private sector is willing or

capable of fulfilling such a narrative is highly problematic because,

according to academics in the field, this logic is fundamentally flawed. The

idea that “a capitalist institution, the mining corporation, whose sole

duciary responsibility is to generate pro ts for its shareholders” could fi fi

“act as an agent of socially inclusive development” is irreconcilable for

some (Veltmeyer 2013, p. 86). While Gordon & Webber (2008) echo this by

pointing out the insatiable and self-perpetuating nature of capital;

Veltmeyer (2013) talks about this reality as the new resource wealth

management scheme. Here we are reminded again of Blake’s engraving. The

current system is an update of the old. It is not a break from the system,

just a rehashing of the details of the same one.

The expansion of the extractive industry over the centuries

subordinates all actors involved to the “whims of capital” (Gordon & Webber

2008, p. 65). Extractive industry investors have the means to input capital

into a project and collect benefits to redistribute or reinvest as it sees

fit (much like a the traditional definition of the state). Hence, in our

modern context extractive companies have the potential to act as “quasi-

diplomatic envoys on behalf of the Canadian government” (Sagebien et al

2008, p. 120). What follows from this is a conviction that private industry

actors can recognise having public sector responsibilities (Government of

Canada 2014b). In light of this climate of highly amenable Latin American

states, “social and environmental concerns are increasingly addressed

through voluntary codes and corporate social responsibility (CSR) programs

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favoured by the Canadian and other governments” (North & Young 2013, p. 96).

With what reasoning and to what extent such programs are implemented will

highlight the criteria of the necessity of those programs according to

extractive industry investors.

Corporate Social Responsibility

The modern legal framework surrounding Canadian and Chilean/Guatemalan

relations is a product of the history of extractive industry influence over

the region. The modern neoliberal economic climate is characterised by Latin

American states whose relationship has been heavily crafted to be highly

amenable to foreign extractive industry actors. In light of this economic

and political era, such aforementioned actors and investors are faced with

an ideological shift which explicitly addresses something that was not so in

previous eras of the extractive industry in Latin America. This is the idea

of Corporate Social Responsibility (CSR); the concept that (in this case,

Canadian) businesses operating in other areas of the world should strive to

behave in an “economic, social and environmentally sustainable manner”

(Government of Canada 2014b). For a business to operate in such a way that

addresses these areas is to recognise that certain public sector concerns

are being encouraged to be addressed by the private sector (Sagebien et. al

2008, p. 120).

CSR practices are defined as “voluntary activities” wherein businesses

conduct themselves ways that acknowledge and address social, economic and

environmental concerns within specific operations as well as surrounding

communities (Government of Canada 2014b). Keeping this shift in dynamic in

mind, mining companies step into a more present and complex relationship

than in previous times. However, companies are sure to voluntarily address such

issues only as far as business sense dictates (Bazo & Studnicki-Gizberta

2013, p. 72). Nevertheless, the push for businesses to behave responsibly

and address such areas is part of the present dynamic between modern Latin

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American states and foreign extractive industry investors. The firm guiding

arm of extractive industry influence now needs to move in conjunction with

the Latin American state, and not simply dictate to it.

The criticisms of businesses embracing CSR practices in a realistic,

practical sense echo the same concerns of previous eras. Echoing the

concerns of Cameron & Hecht (2008), the presumption is that “not only [are]

corporate and community interests ...compatible but also that the

differences between them are strictly quantitative (that is, a question of

dollars and cents) rather than qualitative (that is, based on completely

different visions of development)” (North 2006, p. 3). There is much room

for concern wherein companies taking on responsibilities due to a sense of

duty is not only unrealistic, but CSR actions undertaken by companies are

themselves temporary and unsustainable (much like the business nature of

extractive industries) (CBC 2012). Barrick Inc & GoldCorp Inc both have CSR

guidelines prominently featured on their websites. These guidelines address

human rights, environmental standards, occupational safety, security, and

ethical concerns of their extractive operations (Barrick 2014; GoldCorp Inc.

2014b). We will examine the practical impact of such policies in later

sections. The writing of CSR practices into the portfolios of extractive

businesses “reinforces the retreat of the state”, despite the “rhetoric”

that CSR practices can successfully bridge (or fill) “governance gaps” of

the countries in which they operate (North 2006, p. 8; Sagebien 2008, p.

112; Gordon & Webber 2008, p. 72).

Canadian Legal Framework - Bill C-300: Implications of defeat

In Canada, the pressure for mining companies to comply with CSR

practices and guidelines led to Bill C-300 (An Act respecting Corporate

Accountability for the Activities of Mining, Oil and Gas in Developing

Countries). Its narrow defeat in 2010 indicates of a number of things. One,

it is indicative of the influence mining companies have over the Canadian

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government. Also, it is indicative of how businesses undertaking CSR

activities is likely to remain highly conditional and voluntary for the near

future (Simons & Macklin 2010).

Bill C-300 contained “prescriptive CSR (corporate social

responsibility) guidelines that would be binding on Canadian mining

companies operating in developing countries” (Dagenais 2010). It would have

assigned responsibility to the Minister of Foreign Affairs and Minister of

International Trade “to issue [these] guidelines”; furthermore, submit an

annual report to “both Houses of Parliament”on the “corporate accountability

standards for mining, oil or gas activities” of companies receiving

government funding (Openparliament.ca). These CSR guidelines would be based

on “World Bank Performance Standards, the Voluntary Principles on Security

and Human Rights and international human rights law” (Studnicki-Gizbert &

Bazo 2013, p. 76). Canadian mining companies receiving “political and

financial support” from Canadian federal bodies such as DFATD (Department of

Foreign Affairs Trade and Development), EDC (Export Development Canada) and

CCP (Canada Pension Plan) would be required to “demonstrate compliance with

these standards in order to receive” such support (Keenan 2013, p. 112).

Ergo, these agencies would also be “obliged to withdraw their support and to

condition future support on demonstrated compliance” with these standards

(Studnicki-Gizbert & Bazo 2013, p. 76).

The resistance on behalf of Canadian mining companies and by extension

the Canadian government to be legally being bound to comply with CSR

practices clashes with the push from local governments and Canadian and

Latin American civil societies to see such practices implemented. Critics of

the bill argue that implementing such policies would “negatively impact

Canada's competitiveness” in global mining. Some argue that Bill C-300’s

funding criteria and “complaints mechanism” “would have created a strong

incentive for Canadian companies operating in the developing world to

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relocate outside Canada or avoid financing” from government agencies (Keenan

2013, p. 111; Dagenais 2010). However, this is also a presumption that is

based on the unwillingness of extractive companies to invest beyond what is

strictly necessary for business purposes. While academics of the field are

highly critical of companies voluntarily behaving in such a way, other

research concludes that CSR practices can impact positively on a company’s

profit margin (Robins 2011). The problem therein lies that CSR duties can be

vague and hence difficult to measure (Tsoutsoura 2004). Bill C-300 could

have acted as an initial stepping stone in rectifying this vagueness.

Simons & Macklin call the defeat of C-300 “a missed opportunity” for

the extractive industry and Canadian government “to take leadership roles in

promoting ethical corporate conduct” abroad (2010). “The bill would have

helped to rehabilitate the industry's global reputation by showing that

Canada stands behind responsible corporate behaviour” (Simons and Macklin,

2010). Passing and enacting the bill could have been “a matter of good

public policy”; maintaining that Canadian extractive industry actors “be

held to the same human rights and environmental standards wherever they

operate” (Simons and Macklin, 2010).

Research conducted by Maheandiran et al (2010) and Tsoutsoura (2004)

respond directly to Dagenais’ (2010) claim that the bill would have

adversely affected Canada’s global competitiveness. Their research claims

the exact opposite of Dagenais; that CSR duties may drive up operational

costs so much so that mining companies abandon Canada. These contradictory

claims are based in ideology as much as data. Socially responsible practices

can produce sustainability and longevity of mining operations, and doing so

may drive up operational costs and diminish immediate profit margins.

Dagenais is from a school of thought that prioritises repatriating profits

from overseas extractive operations and sees the temporary lifespan of

mining projects and effects on the surrounding community as part of the

19

territory. Maheandiran et al. and Tsoutsoura take a critical approach to the

same issue; they understand the landscape of CSR duties differently and

rearranging those priorities.

Canadian Extractive Industry Legal-Judicial Tension

Despite the defeat of bill C-300, Canadian and Latin American civil

society have nevertheless used avenues within the state apparatus in the

continuing effort to hold Canadian mining companies accountable for

irresponsible behaviour overseas. In the face of the vastly “silent” voice

of Canadian corporate and government responsibility; a space opens in the

judicial arm of the Canadian government for civil society actors to push for

greater corporate accountability (Collenette 2013).

Recently there has been an increasing spotlight on HudBay Minerals

Inc. and a case of alleged human rights abuses in Guatemala. The plaintiffs

claim that they were subjected to physical and sexual violence at the hands

of security personnel “at a Guatemalan mine owned by a subsidiary” of HudBay

Minerals Inc. (Marotte 2013). While “similar accusations against Canadian

mining firms” have increased of late, “no similar lawsuit has made it past

the preliminary stages” (Gray 2013). In July 2013, Ontario Superior Court

Justice Carole Brown ruled that HudBay Minerals Inc. can be held liable in

Canada for the case (Marotte 2013). This ruling is as much a “precedent-

setting” case as it is a law changing one. This ruling comes up against the

“well-established corporate law principle that parent companies are not

liable for the actions of their subsidiaries” (Gray 2013). Co-counsel for

the plaintiffs, Cory Wanless stated that:

“It is the first time that a Canadian court has ruled that a claim can

be made against a Canadian parent corporation for negligently failing

to prevent human rights abuses at its foreign mining project. We fully

expect that more claims like this one will be brought against Canadian

20

mining companies until these kinds of abuses stop.” (Marotte, 2013)

Since the ruling, the plaintiffs of this case have been subject to

intimidation and manipulation in attempts to get them to drop charges

(Fletcher 2013). HudBay Minerals Inc has decided not to appeal the ruling,

so the case will eventually go to court (Posadzki 2013). This situation is

illustrative of the push for accountability of mining companies from civil

society actors. Pressure from this sector of society arises when these

concerns are not directly addressed by governments or industry decision

makers.

Canada-Latin American Legal Framework and Relationships

In Latin America, civil society actors have responded with similar

critiques of Canadian mining companies. The judicial arms of both Latin

American Republics are increasingly important actors in the push for

Canadian mining corporate accountability. We have already seen that certain

academics find the pursuit of socially responsible behaviour on behalf of

mining companies problematic. Undertaking such behaviour can be considered

the antithesis of the primary directive of any “capitalist institution” such

as a mining company (Veltmeyer 2013, p. 86). Others conclude that it is the

way of the future for mining (Robins 2011; Tsoutsoura 2004). Either way,

socially responsible behaviours are only seen from mining companies in Latin

America when deemed necessary to ensure that business relationships

continue. Interestingly, academics site inconsistencies with respect to the

dynamic of extractive operations and the respective constitutions of both

Chile and Guatemala (Gonzalez 2006; Maheandiran, DiFederico, Aguilera 2010,

p. 6; Dougherty 2011, p. 404). An analysis of both Republics’ relationships

with the Canadian extractive industry will highlight noticeable gaps and

differences between the two.

A report by the North-South Institute (2013) gives us some insight

21

into the different relationships between Canadian mining companies and Chile

and Guatemala respectively. In 2011, Canadian mining companies in Chile

employed 11,622 people and 2,030 people in Guatemala (Heidrich & Blundell

2013, p. 2). GoldCorp’s website currently cites 3,270 jobs at Marlin alone

(GoldCorp Inc. 2014b). Guatemala is particularly amenable to investment,

hence the increase in employment during a few short years (Dougherty 2011,

p. 404). The North-South Institute report also stipulates that Chile has

some of the best mining schools in the region, while Guatemala has none

(Heidrich & Blundell 2013, p. 3). With regards differences in tax rates, a

report by PriceWaterhouseCoopers (PWC) (2012) cites the highest level of

Chilean Corporate Income Tax at 17%, and ore and minerals at between 0-14%

(Ernst & Young 2012; Woods 2012). Canadian tax rates are noticeably higher;

with combined provincial and federal Corporate Income tax rate topping 31%.

At a provincial level, ore and mineral tax rates in Quebec, British Columbia

and Ontario vary from 16%, 2-13% and 5-10% respectively (PWC 2012). The

Guatemalan mining tax rate is 1%. This royalty is to be shared between the

national and municipal levels (Centre for Excellence in CSR 2014; GoldCorp

Inc. 2012). GoldCorp and the Guatemalan government agreed upon an increase

of the tax royalty rate to 4% at the beginning of 2012 (GoldCorp Inc. 2012).

The Canada-Chile judicial and legislative dynamic frames extractive industry

tension in the region, specifically surrounding the Pascua-Lama project.

Chilean Legal Framework - Judicial-Legislative Tension, Pascua Lama

In Chile, there exists tension regarding the constitutionality of

extractive projects. Specifically, concerns surround territorial sovereignty

and environmental integrity. Lets start at the turn of the 21st century. In

order for mining companies (such as Barrick) to operate in Chile; both Chile

and Argentina signed and later ratified the Mining and Complementation

Treaty in 1997. This treaty concerned natural resources that cross the

borders of Chile and Argentina; wherein both countries agreed cede certain

22

territorial powers in order to allow exploration and exploitation of

resources in the area (Bilaterals.org 2007). The Barrick owned Pascua-Lama

mine site is one such project. It exists on the border of Chile and

Argentina, with 75 percent of raw mineral on the Chilean side of the border.

The Treaty complements the Canada-Chile Free Trade Agreement (CCFTA) that

was also signed in 1997; and sets the legal stage for mining exploitation

(Gonzalez 2006).Barrick Inc operations rely on both the Treaty and CCFTA to

conduct business, and was heavily involved in “lobbying” for the Treaty to

come about (Bilaterals.org 2007).

However, inconsistencies exist with the provision of Canadian mining

permits and interpretations of the Chilean constitution. The legal framework

for such permits was molded in the time of transition out of dictatorial

rule of General Pinochet to the democratic government of Eduardo Frei

(Gonzalez 2006; Bilaterals.org 2007). According to critics, the Mining and

Complementation Treaty clashes with the Chilean constitution, which “clearly

states that absolutely no mining concessions shall be granted for any

deposit situated in border zones” (Gonzalez 2006). Furthermore, “the

concession-approval mechanisms, permits for services (road construction and

other infrastructure works) and even the very procedure through which the

treaty was ratified have all been criticised as unconstitutional” (Gonzalez

2006). According to critics, the Mining and Complementation Treaty should

have been treated an “organic constitutional law” instead of a “basic law”.

The former requires “the approval of two-thirds of Congress” while the

former only requires a simple majority (Gonzalez 2006).

Apart from the bilateral trade agreements between Chile and Argentina,

the CCFTA sets out provisions as to how Canadian mining companies are to

operate in Chile. The CCFTA sets out trade, environmental and labour

provisions that Canadian companies are expected to adhere to (Department of

Foreign Affairs Trade and Development 2013). The CCFTA is “the most

23

economically-significant trade agreement since the North America Free Trade

Agreement (NAFTA)”. For Chile, it was the first comprehensive free trade

agreement concluded with a leading industrialised country (Department of

Foreign Affairs Trade and Development 2013). Barrick has been sanctioned for

failing to meet environmental standards at the Pascua-Lama project. Despite

these concerns, extractive projects continue. However, where CCFTA

provisions, Chilean environmental standards investigation bodies and a

ruling by the highest judicial court of the Republic meet is where we find a

tenable boundary which Barrick cannot ignore.

In 2012 a Chilean court accepted an injunction on behalf of indigenous

communities concerned that the project threatens local water supply and the

integrity of nearby glaciers (Jamasmie 2013b; Jamasmie 2013c). Since then,

the Supreme Court of Chile cast a ruling demanding that Barrick comply with

environmental permit conditions (Barrick 2013). Barrick has been ordered to

cease operations at the mine site and also pay a hefty US $16 million fine

(Jamasmie 2013e). A revision of the order now demands that Barrick be

charged separately for each of the 23 operation permit infringements found

by the Chilean Superintendency of the Environment (Superintendencia del

Medio Ambiente or SMA). So far Barrick has been charged with 23

infringements, 22 of which the company acknowledges. (Jamasmie 2014). It

remains the responsibility of Barrick to address these irregularities before

mining operations can re-commence (Mineria Chilena 2014; Barrick 2013).

Barrick predicts that this may be by mid-2016; as opposed to previous plans

of mid-2014 (Barrick 2013).

In this case, Barrick initially failed to uphold certain environmental

standards concerning the Pascua-Lama mine site. It was through the concerns

of civil society actors with the recognition of such concerns by the

judicial arm of the Republic of Chile that such significant pressure was

able to be exerted on Barrick. Barrick has had to delay this project

24

approximately two year and has incurred significant financial and legal

repercussions.

In retrospect, it seems curious to assume that Barrick was

sufficiently careless in their management of this project; so much as to

allow the potential for such mismanagement to occur. Barrick not only is the

“world’s biggest gold mining company”, but the US$8.5 billion project “was

set to become one of the top gold and silver mines in Chile” (Business in

Canada 2013; Jamasmie 2014). It seems more likely that the management team

of the project was well read in the legislative regulations for the mine

site; however still chose to construct a project with such irregularities

that had the potential to incur such penalties.

Ultimately neither the concerns about territorial sovereignty nor

environmental sanctuary were upheld by the Supreme Court ruling. Barrick

will still be privy to operation permits, only so far as it complies with

environmental provisions that are in place to minimize environmental damage.

To eliminate the potential for such damage, mining permits would need to be

revoked. Chilean governments in the 21st century have not seriously

considered this alternative. Nor have extractive industry actors considered

it a possibility. Underlying reasons for this can be as colonial as they are

Blakean.

Barrick knowingly and purposefully tested the boundaries of

responsible behaviour at Pascua-Lama. Only when confronted with concerned

civil society actors and the responsiveness of the highest judicial court of

the Republic did Barrick reach an explicit boundary. The number of

irregularities found by SMA at this project is embarrassing and offensive.

In this scenario Barrick failed to comply with its CSR duties. The true

voluntary nature of CSR duties (which include environmental provisions as

stated by CCFTA and the Chilean government) is highlighted here as it will

be in the coming Guatemalan case. A company as large as Barrick has only one

25

excuse for not rectifying its lack of CSR duties before having the case

brought to the highest judicial court of the Republic. That excuse is

mandate. Barrick only agreed to rectify the situation when faced with a

ruling from the Supreme Court of Chile. The company’s statmate on the ruling

cites it as pleasing and stands behind its commitment “to operating at the

highest environmental standards at all of its operations around the world,

including at Pascua-Lama” (Barrick 2013). Pleasantries aside, here we see

real Canada-Chile legislative-judicial tension that represents the

bolstering of a Blakean adjacent accessory state to relevant imperialist

power. Based on this case, the relationship between the imperial and

accessory power may be going in two directions. Either, the chains of the

bond between the two are slowly breaking down, or they are simply getting

better defined in their eternal position.

These judicial, legal and financial issues that have all been cast

upon Barrick Gold in this case are quite noteworthy. These issues started

with concerned Chilean civil society actors, subsequently they were

acknowledged by the appropriate Chilean judicial arm and co-incided with

CCFTA provisions. This case of judicial-legislative tension stands as a

testament to the potential for Chilean civil society actors and Chilean and

Canadian state actors to bring about fundamental changes in how Canadian

mining companies operate. This case works because of the strong Chilean

state mechanisms responding to civil society concerns. In Guatemala, we will

see a comparable story with differences in state strength, state

responsiveness to civil concerns, and the logistics of bringing Canadian

mining company behaviour into question when warranted.

Guatemalan Legal Framework - Judicial-Legislative Tension, Marlin

We have seen various examples of clashes between Canadian mining

companies and the Canadian and Latin American judicial systems. In Canada,

26

we see the tension between HudBay Minerals Incorporated and the Canadian

judicial system. When this high profile case goes to court, it will call

into question the extent of responsibility the company holds for human

rights abuses that take place overseas at a mine owned by a subsidiary. This

case will have the potential to clash heavily with the established legal

principle that companies cannot be held liable in such cases (Gray 2013). In

Chile, “the world’s biggest mining company” Barrick Gold has incurred

considerable financial and logistical problems due to constitutional and

civil concerns raised by indigenous groups (Business in Canada 2013; Barrick

2013). The Supreme Court of Chile upheld the operational permit of Barrick

while temporarily suspending it until the company complies with

environmental regulations (Barrick 2013).

In Guatemala, GoldCorp has recently faced similar issues. In this

case, concerns surround the place of Canadian mining companies and

constitutionally protected indigenous and environmental rights (Maheandiran,

DiFederico, Aguilera 2010). The conflict between Goldcorp Inc. and the

Constitutional Court of Guatemala addresses the extent to which Goldcorp’s

activities recognise the legitimacy of these claims and the willingness of

the Guatemalan judicial system in responding to such claims (Dougherty 2011,

p. 404). The manner in which the executive arm of the Guatemalan state

apparatus responds to this tension is furthermore telling of how “lenient”

the state can be in responding to Canadian extractive companies (Dougherty

2011, p. 404). An analysis of the legal and taxation framework applicable to

Canadian mining companies in Guatemala as compared to the Chilean

relationship will show certain differences between the two. One observation

may suggest that the Guatemalan state has not yet achieved the same playing

power that the Chilean state has. This may be understandable, given the

different state and institutional strengths of Chile compared to Guatemala

(Section 2). However, another observation is that Guatemalan civil society

is visibly more active in protesting the behaviour of mining companies than

27

the Chilean (Urkidi 2011, p. 692; Jamasmie 2013d). The modern Guatemalan

state and civil society hence does have avenues of “redress”; and Canadian

mining companies must once again be more critically aware of the needs and

demands of the Guatemalan state and civil society in order to continue

business relationships (Dougherty 2011, p. 404).

The Marlin mine owned by a subsidiary of GoldCorp (Montana

Exploradora) has been the focus of much scrutiny and serves as an example of

the power dynamic between civil society, different arms of the Guatemalan

government, and the mining company itself. The Marlin mine began operating

in 2005. It is located “in the indigenous Western Highlands of the

Department of San Marcos” and deposits span both the Municipalities of San

Miguel Ixtahuacán and Sipacapa (Dougherty & Olsen 2014, p. 421).

Interestingly, there has been more local discontent from indigenous groups

at Marlin than other Goldcorp mines, such as the smaller and more recent

Cerro Blanco mine (Dougherty & Olsen 2014, p. 427). GoldCorp Inc has not

released an updated monitoring report on Marlin Mine since 2009. It has

however provided reports on its Human Rights Assessment cases starting in

2009 (GoldCorp Inc. 2014c)

In 2010 Marlin was ordered to close on advice from the Inter-American

Commission on Human Rights (IACHR), citing environmental and human rights

violations (Mittelstaedt 2010). The Commission is part of the Organisation

of American States (OAS) and considers its rulings binding wherein dignitary

states agree to adhere to such rulings (Mittelstaedt 2010). Around a year

and a half later, IACHR reversed its decision on Marlin. A central player in

this reversal was the Presidential Commission on Human Rights, a body

created and executed “on behalf of” the Guatemalan government (GoldCorp Inc.

2011). The Commission petitioned IACHR claiming that there is “no proof”

that “operations at the Marlin mine” presented “serious or imminent” threats

to health and environmental integrity (GoldCorp Inc. 2011). IACHR did press

28

that the Guatemalan government to “ensure the quality of water sources” for

the numerous surrounding communities (GoldCorp Inc. 2011). To state that the

Commission was created and executed “on behalf of” the Guatemalan government

is to say that it was done with the support of main actors in (at least) the

executive and legislative arm. The initial decision and its subsequent

overturning by the same body speaks volumes about the power the extractive

industry has on the Guatemalan state apparatus.

The judicial arm of the Guatemalan government has been critical about

the constitutionality of extractive industries; however, not on the right

for the state to make decisions regarding mining (Maheandiran, DiFederico,

Aguilera 2010, p. 6). The Constitutional Court of Guatemala ruled in 2009

that “several sections of the Mining Act were unconstitutional as they

contravened the environmental protection sections of the Guatemalan

Constitution” (Maheandiran, DiFederico, Aguilera 2010, p. 6). Concerns

surrounding Marlin revolve around the lack of consultation and consent

obtained (or not) from indigenous communities and the effect on their way of

life and livelihoods. FREDEMI (Frente de Migüelense contra la

Minería/Miguelense Front against Mining), a Guatemalan NGO concluded that

Goldcorp:

“violated the right to free, prior and informed consent of the

indigenous community, has structurally damaged houses in the village,

thereby violating the right to property of the home owners, and

contaminating the water, violating the right to health of the

campesinos” (Maheandiran, DiFederico, Aguilera 2010, p. 10).

Data from the Canadian Institute for Mining, Metallurgy and Petroleum (CIM)

tells us that based on these conclusions, the Guatemalan government “failed

to abide by the terms” international treaties ratified during the 1996 peace

accords, which facilitated the end of the Guatemalan Civil War and the

transition to democracy in Guatemala (Centre for Excellence in CSR 2014).

29

The failure to properly consult surrounding communities breaches the

International Labour Organisation’s “Convention 169 on Indigenous and Tribal

Peoples” (Centre for Excellence in CSR 2014). Since this ruling, President

Colom has issued a suspension on “issuing of any further licenses” (Centre

for Excellence in CSR 2014). However, companies such as Goldcorp, whose

licences were issued before this ruling maintain their licenced right “to

engage in resource exploration and extraction-related activities” (Centre

for Excellence in CSR 2014). Hence, despite these constitutional concerns,

Goldcorp maintains the right to keep Marlin operational due to the recent

ruling of IACHR.

In effect, this ruling is not quite different from the Chilean case.

In both cases, the judicial arms of both Republics cited inconsistencies

with the behaviour of Canadian mining companies and their respective

constitutions. Ultimately, both mining companies kept their operational

permits, with both companies being cited for clean water supply concerns in

the communities surrounding the mine. The main difference being that IACHR

declared that it was the responsibility of the Guatemalan government to

ensure environmental measures were taken care of. In Chile, it remained the

responsibility of Barrick Gold Corp. Operations at Marlin never ceased while

operations at Pascua-Lama have (Goldcorp.com 2011; Hill 2013).

This case also speaks similarly to the Pascua-Lama case in regards to

a Canadian company being expected to uphold its CSR duties. Concerned

Guatemalan civil society actors brought this case before the highest

judicial arm of the Republic to bring injustices to light. These injustices

concerned constitutionally protected environmental and indigenous rights.

Behaving in a manner that recognises and respects those rights would be

behaving in ways that uphold CSR duties. Considering that Marlin currently

remains operational and never incurred fines or a temporary suspension of

operational permits furthermore suggests that upholding CSR duties remains

30

truly voluntary. It should not seem that Goldcorp learnt nothing from the

ruling; however, revisions to Guatemala’s mining law are currently underway.

“The revisions aim to tighten regulations surrounding environmental

protection and address issues such as royalties paid by foreign companies,

regulations on mine closings, and the consultation process with affected

communities” (Centre for Excellence in CSR 2014).

Following this, Goldcorp and the Guatemalan government have recently

agreed on a mining tax royalty increase. This “voluntary” increase coincides

nicely with the tone of CSR duties and a renewed sense of Goldcorp

recognising it must do more to maintain conducive business relations with

Guatemala. While this is a positive move that increases revenue for the

Guatemalan state and institutions, when we compare the tax rate between

Chile and Guatemala, we see a considerable difference. The Guatemalan tax

rate had been only 1%, to be divided 50/50 between the municipal and

national levels. GoldCorp’s statement stipulates that the tax rate will be

raised to 4% to split between both levels. Additionally, the company has

agreed to pay an additional 1% “voluntary” royalty to be split 80/20 between

the surrounding Municipalities and developing the “institutional capacity”

of the national Ministries of mining and natural resources (GoldCorp Inc.

2012).

Despite the rhetoric of a “voluntary” royalty increase, in comparable

terms Goldcorp can get away with operating at significantly lower royalty

and tax rates than Chile (and obviously Canada). This translates to a

weakened national and municipal state power in the face of Canadian mining

company power. The investments made in state institutional power by Canadian

mining companies such as Goldcorp and Barrick are clearly motivated to

cultivate an environment that will remain conducive to extractive industry

endeavours. Furthermore, the executive arms of the Republics remain amenable

to such investment. In essence, the Blakean structure never changed. The

31

infinity symbol made by the arms of the imperial and adjacent powers remains

perpetual. Modern Latin American states that are the adjacent powers have

been able to put pressure on the relationship at hand. However, this

pressure has only served to better define it. The difference in extractive

industry tax rates and consequences of poor management on Canadian mining

companies between both Republics clearly defines their subordinate

relationship with the imperial power. The integral dynamic of resource

exploitation of Latin America is perpetuated nonetheless.

Conclusion

It would be highly disappointing to conclude that independent Latin

American states do not have a place in the globalised economic network that

serves their own development purposes above others. Equally as disenchanting

would be that appropriate actors in the state apparatus of Latin American

states have been convinced that the dynamic does serve development purposes,

however tangible examples and data contradict that proposition. Latin

America has always been important on the global stage. The region is rich in

natural resources, the birthplace of marvels of modern literature and the

land of tirelessly proud and brave heroes of liberation. The power struggle

over who reaps the benefits of the extractive industry has been an important

theme in Latin American history. This struggle is what has earned the region

its most blatant and aggressive tales of foreign intervention since

Conquest. Cortez used Spanish troops, the United States used political

fortitude, and Canada has used economic relationships to furthermore bind

Latin America in a supporting role to its imperialist benefits.

We have seen examples of struggles between modern Latin American

states and extractive powers who have had to modify their corporate

behaviours to continue such relations. The state apparatus of both

Republics has proven able to confront and punish Canadian mining companies

32

for illegal and unsafe practices; however both have also served to

ultimately aid extractive companies to continue mining projects. In Chile,

Barrick has suffered considerable financial and logistical setbacks for not

meeting environmental standards at the Pascua-Lama project. A Guatemalan

presidential commission lobbied for a suspension order on GoldCorp’s Marlin

Mine to be reversed, and it was. The highest judicial courts of both

Republics cited inconsistencies with operational permits of Canadian mining

companies and their respective constitutions. Concerned civil society

members brought these inconsistencies to light through well reasoned

arguments that the courts could not ignore. Civil society members have been

more outspoken in protest of mining companies in Guatemala than Chile. Taxes

and royalties on mining in Chile are more than three times the amount in

Guatemala. The political turmoil of the mid-20th century serves to

highlight this and other differences in the Canada-Chile/-Guatemala

relationship. In Canada, the state apparatus has also aided Canadian mining

companies to reap benefits from the extractive industry insofar as shielding

them from certain sanctions. Bill C-300 would have seen CSR guidelines

enshrined in law much like the Chile-Canada FTA and trading laws with

Guatemala. Despite the defeat of bill C-300, Canadian courts will soon hear

a case concerning the responsibility of a Canadian mining company in

protecting human rights at mining operations in Latin America.

The narrative that appears here is that the power dynamic depicted in

Blake’s engraving remains as relevant as ever. The name of the imperial

power changes with the relevant rise and fall of empires, however the

struggle to extract resources while simultaneously supporting development

projects of the state only so far as the state remains amenable to foreign

capital providers has never truly broken. The infinity symbol created by the

intertwined arms of the three women is made of chains. While not featured in

33

Blake’s engraving, they exist in maintaining the integral structure examined

in this paper.

Looking to the future, there seems to be no palpable alternative to

this Blakean dynamic. There have been Latin American leaders come to power

who dream of a reality where these chains may be truly broken, however they

are branded dangerous by the imperial power and therefore merit being

removed by the same forces. Salvador Allende and Jacobo Arbenz were the

Chilean and Guatemalan presidents who dreamed such a dream in the mid 20th

century and suffered for it. Today figures such as Fidel Castro and the late

Hugo Chavez still inspire this dream and their images have also been cast in

the same light. The difference lies in the manner in which the legitimacy of

these dangerous dreamers is attempted to be tarnished by the imperial power.

The new legitimacy of imperial power subordinating modern Latin American

development projects is not done through the barrel of a gun and the fear of

political paranoia like during the Cold War. Instead it is done through the

naturalisation of neoliberal economic theory that has underdelivered on all

fronts the imperial power promised.

The amenability of the state apparatus is a project that is developing

still, and is key to altering this Blakean dynamic. Latin American

governments that challenge the imperial power too much don’t survive as long

as the ones who play the part assigned. But hope remains in considering that

the name of the imperialist power has changed over time. Latin America is a

comparatively stable region of the world endowed with goods that foreign

capital actively seeks. To be actively sought after for resources is to hold

immense bargaining power. Nationalist, socialist and populist governments

such as that of Allende and Arbenz recognise this and imperial powers have

actively sought to undermine them. Such narratives held tremendous sway in

Latin America, as the forced removal of Allende and Arbenz demonstrate.

34

Modern Latin American civil society actors still hold issue with foreign

extractive bodies not conducting themselves in a way that recognises the

needs of the region. Unless this is done more effectively than in the cases

examined above, the risk is run that such ‘dangerous’ nationalist, socialist

and populist ideas will find popular legitimacy again, even in the most

neoliberalised Latin American Republic.

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