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LATIN AMERICA
Extractivism is not inevitable: we must find alternatives
Carlos Monge Salgado*
11/26/2014
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People’s resistance to neoliberal, corrupt, and authoritarian governments has resulted that in most of the countries of Latin America today are governing leftist or progressive parties.

In several cases of the rise to power of new progressive political elites, the issue of natural resources was key. In fact, at the core of the emergence of Venezuelan chavismo (complete nationalization of the oil industry), of the Bolivian Movement Towards Socialism (MAS) and of the Ecuadorian Citizen Revolution (nationalization of revenue and control the end-use of resources) was the defense of national sovereignty over minerals and petroleum which until then were held by concession companies that took the lion’s share of profits, leaving almost nothing to the states and the populations, the ultimate owners of these resources.

These progressive governments, as well as the neoliberal governments of Colombia, Peru and Mexico and moderate governments such as those in Brazil and Chile have centrally wagered to the extraction and export of minerals and oil as a source of economic growth and government revenue. The progressive commitment to the extraction and export of natural resources has been dubbed “new extractivism” by Eduardo Gudynas.1 The ideology-transcending coincidence between progressives and conservatives who support this model is what Maristella Svampa has characterized as the move from the Washington consensus to the “commodities consensus.”2

An interesting exception to this consensus is the government of the Farabundo Marti National Liberation Front (FMLN) in El Salvador, which has declared a moratorium on mining concessions and even stopped the start of mining projects that were already authorized, explicitly rejecting the push to large-scale mining as a strategy for growth and development. El Salvador is already facing a lawsuit from the Australian company Oceana Gold before the International Center for Settlement of Investment Disputes (ICSID).3

While the “super cycle” of high demand and high prices for our minerals and our oil has lasted, both governments of the right and left who wagered to the export of commodities managed to maintain high rates of economic growth and to substantially increase social spending, resulting in significant reductions in poverty and inequality.4

Socio-environmental impacts
However, economic, social and environmental problems of no less importance also resulted. The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has drawn attention to the growing “re-primarization” of our economies, to the increasing exposure to volatility in demand and prices, the symptoms of Dutch disease, and the enormous productivity gaps between sectors, etc.5 

To this we should add the constant need to expand the mining and energy frontier as old fields are depleted (recall that these are non-renewable resources), leading to the invasion of protected areas and indigenous lands or territories where populations have other productive vocations and opt for other lifestyles.

Environmental damages in these territories, such as deforestation, the destruction of water sources and contamination of waterways, have not been the only results of this mining and energy frontier expansion.  In addition to these local environmental damages, another result has been the paradox of progressive governments that, by specializing in the export of oil to international markets, have become active contributors of greenhouse gases which contribute to global warming and has such a strong negative impact on majority populations, particularly the poorest.

In regards to social issues, the result has been an intense cycle of social conflict that traverses the continent with a trail of numerous deaths and wounded and increasing criminalization of social protest by governments promoting large mining investments.6 In fact, in both Bolivia and Ecuador there already is a chasm between important sectors of indigenous organizations and the governments due to disagreements over issues such as access roads and oil concessions in the Isiboro Secure National Park and Indigenous Territory (TIPNIS) and the extraction of oil in the Yasuni National Park, respectively.

Finally, in the field of politics, another consequence of this commitment to extractivism is the growing dependence for political survival of progressive regimes on their ability to generate and distribute the income generated by extractive activities to the most vulnerable sectors of the population (Dignity Bonds, Juancito Pinto and Juana Azurduy in Bolivia, the Missions in Venezuela).

An urgent change in direction
Today, as China’s growth rate has decreased and the demand for and price of commodities have fallen, the primary-export redistributive nationalist model faces structural limitations. Venezuela and Ecuador are greatly indebted to China and must pay these loans in oil, while each month they receive lower profits from the petroleum they are able to sell in other markets. Bolivia will receive lower revenues from selling gas to Brazil and Argentina because its price is also tied to the price of oil in international markets.

In these circumstances, it is essential to suggest a change in direction.  This is certainly not a suggestion to return to a neoliberal extractivist model that benefits large corporations. Nor is it about undoing all that has been achieved in terms of sovereignty over natural resources, the renewal of the political elite, the democratization of politics, or the expansion of the exercise of rights.

It is rather about exploring other paths aimed at diversifying production using renewable natural resources in a sustainable way, using less fossil fuels, protecting the environment and respecting the territorial rights and the consultation rights of indigenous peoples.

In Latin America, the debate on the rapid need for this change already exists. For example, the recent ECLAC proposal of the Compacts for Equality is based on a substantive review of the primary-export model and on the desire to diversify the economy to create quality jobs and generating added value in all industries.7

Even in a country like Peru, which has radically opted for neoliberal extractivism, the government sectors now bring up the need for a conscious, state-driven initiative to diversify the structure, recognizing that the model has reached a limit.8

A component of the diversification debate has to do with the ways of how to use the extractive industries themselves and the income they generate to encourage such diversification. For example, governments could use some of the income to invest in science and technology to address technological bottlenecks that now hinder the development of other productive sectors. Another example could be to take some of that same income from the economy and put it in sovereign funds to prevent Dutch disease from decreasing competitiveness in other productive sectors. A final example could be implementing policies of local content (local purchases of goods and services) to generate local accumulation processes that could later serve other developments.

Similarly, the civil society in various countries discusses as an alternative option the need for a “post-extractive transition”9, characterized by:

i)  A triple transition of the economy.

a. Transition from an emphasis on the exploitation of non-renewable natural resources to a focus on renewable natural resources.

b. Transition from an emphasis on large corporations to focus on small and medium business owners, cooperatives or community business.

c. Transition from an emphasis on exports to a greater attention to the domestic market.

ii) An energy transition towards non-conventional renewable energy resources so that economic growth does not contribute to global warming.

iii) An institutional reform towards a state that guarantees the rights of indigenous peoples and the rights of future generations to inherit abundant and quality renewable natural resources.

iv) A questioning of the prevailing unsustainable consumerism in our societies, seeking to balance the satisfaction of needs with production and reproduction capabilities of ecosystems and the planet in general.

The points of departure for these transitions will be different in every country, but in all cases it is inevitable that countries will have medium- and long-term processes that require consistent and sustained application of public policies to achieve this goal.

For this it is necessary to have clear political leadership that has a defined vision of how to achieve sustainable welfare for the majority in a way that does not trample over the environment and the rights of indigenous peoples only to make short-term social gains, and also helping to stop the global warming process.

*Peruvian anthropologist and historian, associate investigator at the Center for the Study and Promotion of Development (DESCO) and Latin America Regional Coordinator of the Natural Resource Governance Institute.

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1 Gudynas, Eduardo. “Diez tesis urgentes sobre el nuevo extractivismo. Contextos y demandas bajo el progresismo sudamericano actual” (“Ten urgent theses on new extractivism. Context and demands under the current South American progressivism”) in Extractivismo, política y Sociedad (Extractivism, politics and society) several authors, CAAP (Centro Andino de Acción Popular) and CLAES (Centro Latinoamericano de Ecología Social), Quito, Ecuador. November 2009, pp. 187-225.   
2 Svampa, Maristella. “El ‘consenso de los commodities’ y el lenguaje de valoración en América Latina (“The ‘Consensus of Commodities’ and languages of valuation in Latin America”), Revista Nueva Sociedad, No. 244, March-April 2013.
3
http://business-humanrights.org/es/se-inicia-arbitraje-en-demanda-de-oceanagold-contra-el-salvador-en-tribunal-del-banco-mundial
4 ECLAC, Social Panorama of Latin America 2013 and Rosales, Osvaldo and Kuwayama, Mikio, “China y América Latina y el Caribe. Hacia una relación económica y comercial estratégica” (“China and Latin America and the Caribbean. Towards a strategic economic and trade relationship”), 2012.
5 Barcenas, Alicia. “Gobernanza de los Recursos Naturales en América Latina y el Caribe” (“Governance of Natural Resources in Latin America and the Caribbean”), ECLAC, 2012.
6 See OCMAL, Cuando tiemblan los derechos. Extractivismo y criminalización en América Latina (When rights tremble. Extractivism and criminalization in Latin America), Quito, 2011. In
http://www.conflictosmineros.net/biblioteca/publicaciones/publicaciones-ocmal/cuando-tiemblan-los-derechos-extractivismo-y-criminalizacion-en-america-latina/detail
7 ECLAC, Compacts for Equality, Santiago de Chile, 2014
8 Government of Peru, Ministry of Production, National Plan of Productive Diversification, Lima, 2014.
9 Red GE, Caminos de transición. Alternativa al extractivismo y propuestas para otros desarrollos en el Perú (Transition Paths. Alternatives to extractivism and proposals for other developments in Peru), Lima, 2014, in
http://www.redge.org.pe


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