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The Open Pit and the Great Green Macaw in Costa Rica

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By: Lynn Holland, Senior Research Fellow at the Council on Hemispheric Affairs 

This is Part I of a three-part series on the enactment of mining restrictions in Central America.

Reading about the struggle to regulate the mining industry in Latin America can be downright discouraging. The practice of open pit mining in particular has had damaging effects on the environment and usually results in the involuntary loss of land owned by small farmers who live near the site. When these farmers protest, they usually lose out because their leaders at the national level are counting on mining operations to fuel the costs of economic growth, provide jobs, and bring in much needed revenue for social programs. Such has been the case in Peru, Guatemala, Colombia and in most Latin American countries.

The story of how Costa Ricans implemented a nationwide ban against new open pit mining has turned out to be a very different story, however. With a population of less than five million, Costa Rica is one of the smallest countries in Central America and has faced its share of dramatic challenges including mounting debt and persistent poverty. But in one important respect, Costa Rica is leading the way in the Western Hemisphere – that of standing up for the environment against the multibillion dollar metal mining industry.

The Case Against Infinito Gold

In 2002, Costa Rica became the first country in the Western Hemisphere to enact a restrictive ban on new open pit mining projects. This was accomplished through decree by President Abel Pacheco who also called for the cancellation of several existing mining contracts. As he explained, “We have many reasons for rescinding these contracts, and if they sue us for compensation, it will be cheaper than paying for the loss of the country and the improvement of its environment.”

At the time, revelations about the damaging effects of open pit mining were making it even more controversial. As Costa Rican biologist Jorge Lobo tells it, the process involves the use of toxic chemicals including cyanide to leach tiny flecks of gold and other minerals from out of tons of rock. The potential for leakage of these chemicals poses a serious threat to the surrounding environment. Leach pads maintained at the bottom of tailings ponds where waste rock is stored can crack as a result of seismic activity or heavy rainfall and cause the contamination of rivers, ground water, and soil surrounding the site. In addition, the use of dynamite to dig out large craters in the earth and the practice of deforesting the area can cause serious damage to ecosystems.[1] Not only is Costa Rica known to have one of the most diverse life zones “in a small territory” anywhere in the world, it is also highly dependent on the earnings from eco-tourism built around this fabulous diversity. In fact, tourism accounts for thousands of jobs in hundreds of local communities and earns nearly $2 billion annually while metallic mining has played only a minimal role in the country’s development.

Despite broad popular support for the ban in 2008, Óscar Arias, who succeeded Pacheco as president, abolished it through his own decree to allow for an open pit gold mine in the northern town of Las Crucitas. In defense of the above move, Arias argued that the project would be of “national and public interest.” The mine, owned by Infinito Gold, a local subsidiary of a Canadian company, would be located three miles from the San Juan River that formed the country’s border with Nicaragua. According to Infinito, Las Crucitas was the site of at least 1.2 million ounces of gold and perhaps a good deal more than that.

Environmentalists were incensed. Their immediate concern was that Las Crucitas was one of the last homes to the Great Green Macaw, a highly endangered parrot, and the yellow almond tree provides its nesting sites. There are perhaps 2500 of these birds remaining. For many years, they have been hunted and killed for their brilliant feathers or captured for the pet trade. The gradual destruction of their habitat has also contributed to the decline of their population.

As soon as the ban was repealed, Infinito obtained the required permits and began cutting down yellow almond trees in an old-growth rainforest area. Almost immediately, the Northern Union for Life, a powerful environmental group, filed a court appeal against the presidential decree and the Constitutional Court delivered an injunction against the company for violating environmental laws. The appeal cited national laws protecting the green macaw and the almond trees as well as the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) to which Costa Rica was a signatory and which listed the two as endangered species. Las Crucitas was one of their last natural habitats.

The reaction of environmentalists took a political turn as well. President Arias and his Environmental and Energy Minister, Roberto Dobles, came under criminal investigation for having granted the mining permit. Arias was accused of having solicited a donation of $200,000 to the Arias Peace Foundation from Infinito’s largest shareholder, Canadian billionaire Ronald Mannix while Dobles was accused of issuing the permit without a proper environmental impact assessment and in violation of environmental laws.

Arias was succeeded in 2010 by his protégé, Laura Chinchilla, who agreed to continue promoting the Crucitas mining project. Of high priority said Chinchilla, was the need for tax revenue to offset Costa Rica’s soaring national debt and employment for the community. “Poverty is high in the area,” she pointed out, “and the 200 jobs, vocational training, educational support, and infrastructure promised by Infinito are enticing.” On another occasion, she called on supporters of the project to “speak out against radical groups who want(ed) to protect the environment.”   The appearance of corruption due to this and other actions quickly took a toll on her presidency. Only two years later, Chinchilla’s approval rating had fallen to a dismal 13% from a high of 64% at the start of her term, giving her the second lowest rating of any president in the hemisphere.

The Environmental Movement in Costa Rica

Costa Rica wasn’t always so environmentally. In fact, it took the crisis of mass deforestation during the 1960s to turn things around. During that time, cattle ranching, lumbering and the tropical fruit industry were all booming. By comparison to other Latin American countries, Costa Rica had a relatively egalitarian property rights system that rewarded the rapid clearing of forests by smallholders and encouraged land speculation during those years. In addition, the migration of squatters from overcrowded urban areas “emerge(d) as an unprecedented phenomenon” that likely contributed to environmental degradation. The result was the loss of 3% of Costa Rica’s forests and woodlands annually between 1990 and 1994. With 70 percent forest cover in the 1950s, the country had just 20 percent remaining by the late 1980s, the result of one of the fastest deforestation rates in the world during that time.

Noting the dangers of this trend in such a small country, a new generation of biologists and ecologists began to call for a long term view of environmental development. Their research was bolstered by increasing government investment in the biological sciences during that period. The resulting vision included the preservation of species and ecosystems through the promotion of a system of national parks rather than reliance on sporadic reforestation efforts that were the practice at the time.

They also benefited from the support of a growing number of non-government organizations (NGOs) whose aim was the conservation of the world’s resources. The robust tradition of civic organizing in Costa Rica provided fertile ground for these NGOs and resulted in the emergence of a vigorous support system for environmental activists throughout the 1970s. By 1978, Costa Rica’s national park system had grown to seventeen units from just three in 1970.[2]

Interestingly, it was Oscar Arias who, in his first term of office in the late 1980s, established an environment ministry to stimulate research and promote new policies. Arias also strived to fortify the country’s links with international organizations.[3] After 1992, the year of the first global Earth Summit in Rio de Janeiro, Costa Rican officials became involved in international reforestation efforts and played an important part in the UN’s Intergovernmental Panel on Forests. Around this time, the Forestry Financing Department was established to support the development of eco-tourism and national parks, and the Payment for Ecosystem Services (PES) was formed to pay farmers and others to protect their land holdings. This could be done by engaging in one of four services: protection of biodiversity, protection of water sources, landscape beauty, and carbon sequestration. During these years, the Federation for the Conservation of the Environment (FECON), a powerful coalition that promotes environmental regulation and monitors compliance, emerged as “the only network of its kind in Central America.”

Since then, Costa Rica has received considerable recognition for the country’s efforts at protecting its forests and eco-systems. In October 2010, Costa Rica received first prize at the Future Policy Award Ceremony in Nagoya, Japan for its “Biodiversity Law of 1998.” The law was deemed a “milestone of excellence in meeting the goals of the UN Convention on Biological Diversity” in 1993. Moreover, Costa Rica was ranked the number one country in the “Happy Planet Index,” which incorporates an index for a country’s “ecological footprint,” in 2014.

Popular support for environmental protection is heightened by the knowledge that it has become an economic necessity. About 64% of all jobs in Costa Rica are now in tourism and related services, which bring in nearly $2 billion annually while open pit mining is widely seen as a threat to the maintenance of ecosystems that are essential to tourism. Forestry expert Quírico Jiménez has called Infinito’s plan to replace the old-growth forest it would have destroyed, “a joke.” It would take some twenty years for the new trees to provide adequate food for the birds, he pointed out, and another hundred before nesting could take place.

Losing Ground in the Costa Rican Courts

So when President Chinchilla announced to the public that it would cost a billion dollars to compensate Infinito for the closure of the Crucitas mining project, she was met with outrage. A broad coalition of “research centers, experts from universities, political party leaders and representatives of affected communities” petitioned vigorously to nullify the project and reinstate the ban through legislation. Polls showed they had over 80 percent of the public on their side.

In November 2010, Infinito was handed its first defeat when a Costa Rican appeals court struck down the Crucitas mining project. The court determined that it had compromised the ecosystem in the area, violated Costa Rican law and involved the complicity of public officials. Attorney General Ana Lorena Brenes was subpoenaed by the legislature when she appealed this decision and subsequently admitted to having consulted with Arias and his brother about how to handle the case. Around the same time, the legislature unanimously passed a law banning all new open pit metal mining projects making Costa Rica “the first country in the Americas to recognize the severity of environmental harm in open-pit mining and to say no to future open pit mines.”

From 2010 to 2013, Infinito made three appeals to the Supreme Court, all of which were rejected. The company also sued biologist Jorge Lobo and law professor Nicolas Boeglin of the University of Costa Rica, for maligning the company in their documentary film titled Fool’s Gold. Dr. Lobo was also accused of misrepresenting the company in the teaching of his course on open pit mining. Infinito’s request for $1 million in compensation was denied in 2012, however. Moreover, Infinito was ordered to pay $219,000 in court costs to the two university professors and subsequently stood to lose land it had previously purchased near the San Juan River in lieu of payment.

Going International

Ever defiant, Infinito announced that it would take the case to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The company claimed that, by ending the Crucitas mining project, the Costa Rican government had violated the Costa Rica-Canada Bilateral Investment Treaty costing it $1 billion in lost profits. In a recent email, however, lawyer Alvaro Sagot Rodriguez who presented the initial lawsuit against Infinito, explained that according to that agreement, a party can go to ICSID only if “it has not exhausted domestic remedies.” Since the company had already chosen a domestic strategy “where they had the right to choose their own lawyers and had followed all the procedurals steps,” it did not seem likely that ICSID would be an option. In all events, Infinito has since reduced its demand to $93 million, the amount of its investment costs.

Meanwhile the Costa Rican Prosecutor General has ended the investigation of former president Oscar Arias due to a lack of evidence against him. Former Environment Minister Roberto Dobles Mora, however, was given a three-year suspended sentence for breach of public duty in issuing a permit to Infinito. His conviction is currently on appeal.

The Costa Ricans’ valiant fight to maintain the integrity of their ban won considerable support in Infinito’s home country. By early 2014, over 300,000 signatures had been amassed on a Canadian petition calling for Infinito to “drop its $1 billion lawsuit against Costa Rica.” In a separate letter to company president John Morgan from eight high profile environmental groups in Canada, the signers called on Infinito to drop the threat of international arbitration, adhere to the decisions of the Costa Rican Supreme Court, and “respect the will of the vast majority of Costa Ricans.” The letter also called on the Canadian government to “make public any and all information it may have pertaining to this case, including the information requested by Costa Rica” regarding funds that may have been transferred to the Arias Foundation by Infinito’s main backer, Ronald Mannix. The issue also has been raised in Parliament by MP Peter Julien.

This month, Infinito finally called off its long and acrimonious effort to sue the Costa Rican government. All of the company’s officers and directors have resigned and chief stockholder Ronald Mannix has declined to make further loans to keep the struggling company on its feet. In his email, lawyer Sagot said that his legal team is now seeking environmental damages against Infinito to the tune of $10 million. A judgment is expected in the next few months in the Costa Rican courts.

The Costa Rican Edge

How do we explain Costa Rica’s ability to enact, revive and maintain so controversial a law as an outright ban on open pit mining? While Peru has banned informal mining and El Salvador has temporarily ceased permitting for metallic mining, no other Latin American country has gone as far as Costa Rica in restricting mining through legislative action.

As we’ve seen, the Costa Ricans have developed powerful tools over the years in the form of laws, policies and civic organizations to support an ecological approach to development. The fact that so many are dependent on eco-tourism as a livelihood has facilitated strong support for protecting the environment. In addition, these tools have enabled the public or “civil society” to participate in the making of policy regarding open pit mining. Lawyers for environmental organizations acknowledge that “pressure from the public” along with environmental organizations has been instrumental in stopping the Crucitas project. “It was civil society that won a conviction upon the illegal conduct of the State,” stated law professor Nicholas Boeglin.

The process has also been more peaceful than in many other countries. In his email, Sagot wrote, “We haven’t had violence like that that one can read about in Guatemala or El Salvador. Instead, what we’ve seen here is that we consider the legal pathways as a response to social-environmental problems.”

No doubt, too, environmentalism in Costa Rica has benefited from the absence of a powerful mining tradition that characterizes many other Latin American countries and the entrenchment of mining interests that comes with it. This has made economic policy in Costa Rica less subject to the influence of these interests leaving the door open to an alternative path for development.

And so the surviving remnants of the Great Green Macaw population are in good hands. But we must ask, Can the protection of clean drinking water in other countries be just as compelling? Please stay tuned for Part 2 in this series, which is on the ban on metallic mining in El Salvador. . .

By: Lynn Holland, Senior Research Fellow at the Council on Hemispheric Affairs 

Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution. Exclusive rights can be negotiated. For additional news and analysis on Latin America, please go to: LatinNews.com and Rights Action.

Featured Photo: Green Macaw. From: Eric Kilby.

[1] El Oro de los Tontos (Fool’s Gold) [Motion picture]. (2011). Costa Rica: Vice Presidency for Social Action of the University of Costa Rica.

[2] Steinberg, Paul F. Environmental Leadership in Developing Countries: Transnational Relations and Biodiversity Policy in Costa Rica and Bolivia. MIT, 2001. 58-59, 64. Print.

[3] Steinberg, 67, 77.