There’s a legal battle underway in Washington right now, between the government of El Salvador and a Canadian mining company called Pacific Rim. Citing the threat of environmental damage, in 2009 the government of El Salvador denied a mining permit to Pacific Rim, which was planning to mine for gold and silver. So the company set up an office in the United States and is suing the government of El Salvador under the rules of the Central America Free Trade Agreement (CAFTA). This has led to two years of hearings at the International Center for Settlement of Investment Disputes in Washington, DC.
There’s a lot riding on this case for the government of El Salvador, beyond the $77 million Pacific Rim is demanding in the suit, which is about one percent of the country’s GDP. El Salvador is a small, densely populated country where there is already a lot of stress on the surface waters on which the citizens depend for drinking and for agriculture. Large-scale industrial mining could have irreversible effects on the country’s fragile and diminishing resources, and a number of courageous people who have dared to organize resistance to mining have been killed.
However when El Salvador signed CAFTA, it became subject to rules that might prevent it from denying mining companies the opportunity to operate on the basis of public safety or environmental protection. Companies can claim this is like having their businesses expropriated. Read the rest of this entry »