Category Archives: agriculture

State Capitalism at its Best: US Support for the Biotechnology Industry

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These transgenic plums called C5 contain a gene that makes them highly resistant to plum pox virus. Image from wikipedia

American diplomats lobbied aggressively overseas to promote genetically modified (GM) food crops such as soy beans, an analysis of official cable traffic revealed on Tuesday.  The review of more than 900 diplomatic cables by the campaign group Food and Water Watch showed a carefully crafted campaign to break down resistance to GM products in Europe and other countries, and so help promote the bottom line of big American agricultural businesses.

The cables, which first surfaced with the Wikileaks disclosures two years ago, described a series of separate public relations strategies, unrolled at dozens of press junkets and biotech conferences, aimed at convincing scientists, media, industry, farmers, elected officials and others of the safety and benefits of GM products..The public relations effort unrolled by the State Department also ventured into legal terrain, according to the report. US officials stationed overseas opposed GM food labelling laws as well as rules blocking the import of GM foods. The report notes that some of the lobbying effort had direct benefits. About 7% of the cables mentioned specific companies, and 6% mentioned Monsanto. "This corporate diplomacy was nearly twice as common as diplomatic efforts on food aid," the report said....

In some instances, there was little pretence at hiding that resort to pressure – at least within US government circles. In a 2007 cable, released during the earlier Wikileaks disclosures, Craig Stapleton, a friend and former business partner of George Bush, advised Washington to draw up a target list in Europe in response to a move by France to ban a variety of GM Monsanto corn.  "Country team Paris recommends that we calibrate a target retaliation list that causes some pain across the EU since this is a collective responsibility, but that also focuses in part on the worst culprits," Stapleton wrote at the time."The list should be measured rather than vicious and must be sustainable over the long term, since we should not expect an early victory. Moving to retaliation will make clear that the current path has real costs to EU interests and could help strengthen European pro-biotech voices," he wrote.

Excerpts, Suzanne Goldenberg,Diplomatic cables reveal aggressive GM lobbying by US officials, Guardian, May 15, 2013

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Water Shortages in the MIddle East: Tigris and Euphrates

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tigris and euphrates. image from wikipedia

According to a study in Water Resources Research, an American scientific journal, between 2003 and 2009 the region that stretches from eastern Turkey to western Iran lost 144 cubic kilometres of fresh water.  That figure is vast. It is equivalent in volume to the Dead Sea and, according to the study’s senior author, Jay Famiglietti of the University of California, Irvine, implies that the region is suffering the world’s second-fastest rate of water depletion after northern India. The water table sank by 0.3 metres (one foot) a year in 2006-09. At the point where the Euphrates crosses from Syria into Iraq, it now flows at only 70% of the rate it once did. All this in an area that already faces severe water shortages.

The study provides the first accurate estimate of all the water in the basin. National statistics are flawed and incomplete; some figures are even state secrets. But the study uses satellite data from America’s NASA which is not subject to these restrictions. These satellites not only measure surface water by photographs but, thanks to precise measurements of the effect of bodies of water on the atmosphere, can even calculate the amount of water in the aquifer below them.

The main reason for the depletion turns out to be that more water is being taken out of the underground aquifer, mainly by farmers. The rate of loss accelerated after drought hit the region in 2007. Between 2007 and 2009, in response to reduced flows of water in the rivers, Iraq’s government dug 1,000 new wells and abstracted four-fifths of all its groundwater reserves. The aquifer is not being replenished at anything like that rate, so this cannot continue for long.

The rapid depletion has implications for managing the basin, which is shared by Turkey, Syria, Iraq and Iran. All the countries have extensive dams, reservoirs and other sorts of infrastructure on both rivers which control the water’s flow. But they have no international treaty governing when and by how much they can shut the flow down.

Over the years, this has not mattered much. The countries have rubbed along, sometimes amicably, sometimes not, with downstream ones (notably Syria and Iraq) assuming there would always be enough water in the upstream reservoirs of Turkey for them all. But if the new study is any guide, that assumption may not hold for much longer.

The Tigris and Euphrates: Less fertile crescent, Economist, Mar. 9, 2013, at 42

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Water in the Middle East: investment

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desert kuwait

Amidst a growing water crisis in the predominantly arid Middle East and North Africa (MENA), some of the world’s most influential water experts will meet Jan. 15-17 at the International Water Summit (IWS) in Abu Dhabi, United Arab Emirates (UAE) to look for sustainable solutions.The World Bank has already warned that MENA is the world’s “most water-scarce region, home to 6.3 percent of the world’s population but with just 1.4 percent of renewable fresh water.”

The six countries that comprise the Gulf Cooperation Council – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE – are expected to spend a staggering 725 billion dollars over the next two decades on new water projects, desalination plants, infrastructure-building and high-tech innovations...

At the Abu Dhabi summit, Project Stream will offer a major opportunity for developers and investors to “connect and accelerate the building of sustainable water solutions”.  The summit, which is is part of the Abu Dhabi Sustainability Week being hosted by Masdar, described as “a sustainable green energy city of the future”, will also bring together financiers and some of the world’s leading engineering, technology and service providers.

Peter McConnell, show director for IWS, says that GCC countries have been investing heavily in water sustainability over the last few years.  “And Project Stream will in essence become a networking platform that will connect solution providers from around the world to project developers from the region,” he added.  These projects, McConnell, said range from multi-billion-dollar government infrastructure ventures to high-tech innovations in areas such as low-energy desalination, water leakage prevention and water efficiency.  “These will contribute in a significant way to address the worldwide challenges surrounding clear water supply,” he added...

The industry think-tank Global Water Intelligence (GWI), which is collaborating with Project Stream in Abu Dhabi, has reported major planned investments by Gulf countries, amounting as much as 725 billion dollars over the next two decades.  Between 2013 and 2017, Qatar is planning to invest some 1.1 billion dollars in desalination capacity through independent water and power projects (IWPPs).  Kuwait has a combined municipal water/wastewater capital expenditure budget of 4.4 billion dollars from 2013 to 2016, while the UAE’s budget reaches 13.0 billion dollars.  Saudi Arabia is expected to spend about 53.9 billion dollars over the next two decades to build, operate and maintain water projects to meet the growing demand in the Kingdom, according to GWI estimates

Excerpts,  Thalif Deen, Water Summit to Focus on Resolving Scarcities in Mideast, IPS, Jan. 11, 2012

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Reversing Deforestation in the Amazon

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amazon deforestation. Image from wikipedia

Brazilian policymakers can take some of the credit for a dramatic slowdown in the deforestation rate in the Brazilian Amazon, say experts – but that’s not the whole story.  In November Brazil (2012) announced deforestation rates in the Amazon declined 27 percent from August 2011 to July 2012, reaching the lowest rates ever recorded for the fourth consecutive year.  According to Brazil’s National Institute for Space Research (INPE), 4656 square kilometres of Amazon rainforest were cleared over the twelve months, compared with 27,772 square kilometres in 2004.

Brazil’s government says this represents a 76 percent reduction since 2004 – coming close to the country’s commitment to reduce deforestation in the Amazon region 80 percent by 2020.  It has attributed the dramatic results to a package of policies known as PPCDAm (The Action Plan for Prevention and Control of Legal Amazon Deforestation) that were first implemented in 2004.

PPCDAm comprises more than 200 initiatives across 14 ministries that together aim to reduce deforestation in the Amazon...Over the last decade, the country has established new protected areas, indigenous lands and sustainable use areas covering 709,000 square kilometres.  This has decreased both deforestation and the incidence of fires – and crucially, more of them than previously are located near particularly threatened areas, making them more effective.We know every day where deforestation is going on in the Amazon…from detection to having people in the field stopping illegal loggers takes just five days....Brazil’s space agency, remote sensing centre, and law enforcement agencies collaborate to detect and precisely locate deforestation and forest degradation, and to apprehend perpetrators.  From detection to having people in the field stopping illegal loggers takes just five days....  Last year [Brazil]  confiscated 110 chainsaws, nine bulldozers, and 329 trucks...

Jorge Hargrave – who  worked with Wunder on the UNEP report (pdf) – and colleagues assessed the effectiveness of the PPPDAm policies.  They found that these policies were responsible for curbing deforestation – and that the command-and-control policies, particularly the issuance of environmental fines, had the most impact.  The government’s decision to focus on 36 specific municipalities where deforestation was most intense was also very effective, they found, as was the cross sector coordination and high-level political support for the program.

However, Hargrave also cautioned against over-confidence about the recent encouraging results. “It’s not clear that if the government changes or the policy changes, deforestation can’t go up again,” he said.  “In addition, the lack of land tenure security in the region was consistently identified as a key problem and the biggest bottleneck to further progress.”

In another recent study, Clarissa Costalonga e Gandour and colleagues from the Climate Policy Initiative showed that environmental policies are important – but are only part of the deforestation-reduction story.  The study found that agricultural prices – particularly meat and soybeans – had a significant impact on deforestation as well...The study makes special mention of a 2008 policy that made rural credit for agricultural activities in the Amazon conditional on proof of compliance with environmental regulations – with exceptions for smallholders.

Excerpts, KATE EVANS, How much credit can Brazil take for slowing Amazon deforestation – and how low can it go?, CIFOR, Jan. 15, 2013

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Coerced Transparency: the Leaked Climate Change Report

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Satellite image of w:ship tracks, clouds created by the exhaust of ship smokestacks. Image from wikipedia

The fifth assessment report (AR5) by the Intergovernmental Panel on Climate Change, which is not due to be published in full until September 2013, was uploaded onto a website called Stop Green Suicide on Thursday and has since been mirrored elsewhere on the internet.  The IPCC, which confirmed the draft is genuine, said in a statement: "The IPCC regrets this unauthorized posting which interferes with the process of assessment and review. We will continue not to comment on the contents of draft reports, as they are works in progress."

A little-known US-based climate sceptic called Alex Rawls, who had been accepted by the IPCC to be one of the report's 800 expert reviewers, admitted to leaking the document. In a statement posted online, he sought to justify the leak: "The addition of one single sentence [discussing the influence of cosmic rays on the earth's climate] demands the release of the whole. That sentence is an astounding bit of honesty, a killing admission that completely undercuts the main premise and the main conclusion of the full report, revealing the fundamental dishonesty of the whole."  Climate sceptics have heralded the sentence – which they interpret as meaning that cosmic rays could have a greater warming influence on the planet than mankind's emissions – as "game-changing".

The isolation by climate sceptics of one sentence in the 14-chapter draft report was described as "completely ridiculous" by one of the report's lead authors. Prof Steve Sherwood, a director of the Climate Change Research Centre at the University of New South Wales, told ABC Radio in Australia: "You could go and read those paragraphs yourself and the summary of it and see that we conclude exactly the opposite, that this cosmic ray effect that the paragraph is discussing appears to be negligible … It's a pretty severe case of [cherry-picking], because even the sentence doesn't say what [climate sceptics] say and certainly if you look at the context, we're really saying the opposite."  The leaked draft "summary for policymakers" contains a statement that appears to contradict the climate sceptics' interpretation.  It says: "There is consistent evidence from observations of a net energy uptake of the earth system due to an imbalance in the energy budget. It is virtually certain that this is caused by human activities, primarily by the increase in CO2 concentrations. There is very high confidence that natural forcing contributes only a small fraction to this imbalance."  By "virtually certain", the scientists say they mean they are now 99% sure that man's emissions are responsible. By comparison, in the IPCC's last report, published in 2007, the scientists said they had a "very high confidence" – 90% sure – humans were principally responsible for causing the planet to warm.

Richard Betts, a climate scientist at the Met Office Hadley Centre and an AR5 lead author, tweeted that the report is still a draft and could well change: "Worth pointing out that the wording in the leaked IPCC WG1 [working group 1, which examines the "physical science basis" of climate change] draft chapters may still change in the final versions, following review comments."  Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science, said that Rawls appeared to have broken the confidentiality agreement signed by reviewers: "As a registered reviewer of the IPCC report, I condemn the decision by a climate change sceptic to violate the confidentiality of the review process. The review of the IPCC report is being carried out in line with the principles of peer review which operate throughout academic science, including an expectation of high standards of ethical behaviour by reviewers. It is disappointing, if not surprising, that climate change sceptics have been unable to meet these high standards of ethical behaviour."

The IPCC, which publishes a detailed synthesis of the latest climate science every seven years to help guide policy makers, has experienced leaks before. In 2000, the third assessment report was leaked to the New York Times, while the fourth assessment report was published in 2006 by the US government a year ahead of its official publication.

Prof Bill McGuire, Professor of Geophysical & Climate Hazards at University College London and contributing author on the recent IPCC report on climate change and extreme events, said that sceptics' reading of the draft was incorrect: "Alex Rawls' interpretation of what IPCC5 says is quite simply wrong. In fact, while temperatures have been ramping up in recent decades, solar activity has been pretty subdued, so any interaction with cosmic rays is clearly having minimal – if any – effects. IPCC AR5 reiterates what we can be absolutely certain of: that contemporary climate change is not a natural process, but the consequence of human activities."

Prof Piers Forster, Professor of Climate Change at the University of Leeds, said: "Although this may seem like a 'leak', the draft IPCC reports are not kept secret and the review process is open. The rationale in not disseminating the findings until the final version is complete, is to try and iron out all the errors and inconsistencies which might be inadvertently included. Personally, I would be happy if the whole IPCC process were even more open and public, and I think we as scientists need to explore how we can best match the development of measured critical arguments with those of the Twitter generation."

Landmark climate change report leaked online, Guardian, Dec. 14,2012

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Bankers with Chainsaws; how logging corporations cheat through the HSBC

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Some big banks do little more than pay lip service to environmental issues. HSBC likes to think of itself as different. It has signed up to many initiatives, including the Equator Principles, a set of social and environmental standards launched in 2003 for project financiers....

Sarawak (Malaysia) has lost more than 90% of its “primary” forests to logging and has the fastest rate of deforestation in Asia. Sarawak has only 0.5% of the world’s tropical forest but accounted for 25% of tropical-log exports in 2010. As timber stocks have become depleted, the loggers have moved into the palm-oil business, clearing peat-swamp forests to make way for plantations. The deforestation has been accompanied by abuses against indigenous groups, including harassment and illegal evictions. Allegations of corruption and abuse of public office dog Abdul Taib Mahmud, Sarawak’s chief minister, finance minister and planning-and-resources minister, who is believed to have firm control over the granting of logging licences. Mr Taib has long denied being corrupt.

Global Witness, a campaigning group, has analysed the publicly available financial records of seven of Sarawak’s largest logging and plantation companies.  [Report in PDF] It identified loans and other financial services from HSBC that it estimates have generated at least $116m in interest payments and $13.6m in fees for the bank since 1977. Although lending has declined over the past decade, HSBC continues to list Sarawak loggers among its clients, in apparent violation of its own Forest Land and Forest Products Sector Policy.

On paper HSBC’s forest policy gets high marks, including from BankTrack, a network of NGOs that monitors lenders. When it was drawn up in 2004, the policy required clients to have 70% of their activities certified by the Forest Stewardship Council (FSC), or equivalent, by 2009, with evidence that the remainder was legal. (The FSC is a global non-profit body that sets standards and does independent certification for logging and forest products.)

Not only did the seven firms analysed fail to meet that deadline, but none has any FSC-certified operations today. Ta Ann Holdings, for example, listed HSBC as a “principal banker” in its 2011 annual report. Ta Ann does not have FSC certification, and has failed to obtain full verification of the legality of its Sarawak concession under the independent “Verified Legal Origin” scheme. The firm has been accused of clear-felling rainforest that is home to endangered orangutan and of cutting down conservation forest for plantations. Ta Ann told Global Witness it is “collaborating closely with HSBC towards achieving full compliance” with its forest policy.

Another forestry conglomerate that is still banking with HSBC, according to its annual report, is WTK Holdings, whose intensive logging is widely believed by pressure groups to have caused landslides that ended up blocking a 50km (31-mile) stretch of river in 2010. None of WTK’s operations is FSC-certified.

In all, Global Witness identified six loans, totalling $25m, made by HSBC to non-compliant Sarawak loggers since the bank introduced its forest policy. HSBC said in 2004 that it would stop doing business with clients that failed to make a reasonable effort to comply by 2009.  The Economist asked HSBC to comment. The bank declined to discuss its clients because of confidentiality, but said it is “not accurate” to state that its clients are in violation of its forestland and forest-products policy. It said current data show that 99% of its forest-sector clients worldwide (by size of lending) are “compliant” or “near-compliant” with its policy. What precisely it means by “near-compliant” is unclear.....HSBC's  continued involvement, however modest, allows logging firms to claim credentials they don’t deserve. Ta Ann, for instance, has run adverts saying it holds forest-policy certification from HSBC. That looks like a figleaf.

Deforestation in Sarawak: Log tale, Economist, Nov. 3, 2012, at 75

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Palm Oil Industry: environmental and human impacts

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Indonesia’s largest palm oil company, Sinar Mas, ran into trouble recently when communities in Liberia complained about a 33,000 ha. operation being developed on their lands by its indirectly-owned subsidiary, Golden Veroleum in Butaw District, Sinoe County. Alfred Brownell, the lawyer from Green Advocates representing the Kru tribes impacted by the project who is attending the 10th Roundtable on Sustainable Palm Oil (RSPO) being held in Singapore this week noted:

Golden Veroleum is in clear violation of the RSPO’s New Planting Procedure as it has not advertised its plans to clear and plant oil palms and carry out and publicise a High Conservation Value Assessment in advance of expanding its operations. Under the RSPO procedure, the company should now cease clearance until due process is followed. The villagers are concerned that their lands are being taken without their fully informed or free consent.

This is the second palm oil development involving a prominent RSPO member to run into controversy in Liberia. Last year, a subsidiary of Malaysia’s largest palm oil consortium, Sime Darby, was criticised for expanding its operations without respecting local peoples’ rights. The company was in the early stages of developing a 220,000 ha. operation but was halted in its tracks by complaints, which, to its credit, the company has responded to by entering into dialogue with the communities.

The spotlight is now on two large palm oil operations in Cameroon. One is planned by a company called BioPalm, a subsidiary of India-based corporation Siva Group which is marking out its planned operations without consultation on the lands of the Bagyeli “Pygmies” in Océan Département in western Cameroon. The company claims to be an RSPO member but does not show up on the RSPO’s membership lists. Messe Venant, Project Coordinator of the community-based indigenous NGO Okani says:  As the affected Bagyeli communities have told us, the forest is their memory. If they lose it, they lose their past, their present and their future. They will no longer be Bagyeli. To destroy the forest is to reduce them to nothingness.

Another palm oil developer is SG Sustainable Oils Cameroon PLC (SGSOC), owned by Herakles Farms from the USA and an affiliate of Herakles Capital, which is also involved in the telecommunications, energy, infrastructure, mining and agro-industrial sectors in Africa. SGSOC is developing an oil palm plantation further north in Cameroon, but has also run into sustained opposition from local communities and concerned NGOs and has announced it will pull out of the RSPO.

Other cases are highlighted in a searching review of 15 companies’ operations carried out by the Forest Peoples Programme and SawitWatch with a consortium of other NGOs and community organisations in Liberia, Cameroon, the Democratic Republic of Congo, the Philippines, Malaysia and Indonesia.

One case examined is the operation being developed by Genting Plantations, a client of HSBC, and a subsidiary of the vast Genting group which runs a casino, hotel and property empire in Malaysia. Both companies are prominent RSPO members. Genting is now in a protracted land dispute with the Dusun and Sungai peoples in Tongod District in Sabah over the imposition of the oil palm plantation. Leonard Alaza representing the Indigenous Peoples Network of Malaysia or Jaringan Orang Asal SeMalaysia (JOAS) at the 10th Roundtable of the RSPO underway in Singapore, says:  The communities have been objecting to this plantation since 2000 and filed a court case 10 years ago asking the court to recognise their rights and freeze the company’s expansion. But instead of recognising our rights, as the RSPO standard requires, the company has been contesting even the admissibility of our case and meanwhile has taken over and planted all the disputed lands.

Excerpt from Press Release of Forest Peoples Programme, New oil palm land grabs exposed: Asian palm oil companies run into trouble in Africa, Nov. 1, 2012

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Water, Oil and Gas, resource wars: the Stans of Central Asia

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Tajikistan's president, Emomali Rakhmon, likes things big. He has built the world’s tallest flagpole. Last year he opened the region’s largest library (with few books in it so far). But one gigantic project is proving contentious with the neighbours: building the world’s tallest hydroelectric dam.

Islam Karimov, the strongman who rules downstream Uzbekistan, says the proposed 335-metre Rogun dam, on a tributary of the Amu Darya, will give Tajikistan unfair control over water resources and endanger millions in the event of an earthquake. On September 7th, he said such projects could lead to “not just serious confrontation, but even wars”.  Mr Karimov wasn’t talking only about Tajikistan. Upstream from Uzbekistan on a tributary of the region’s other major river, the Syr Darya, Kyrgyzstan is seeking investment for a project of its own, called Kambarata. The two proposed dams (Rogun at 3.6 gigawatts and Kambarata at 1.9) would theoretically end their respective countries’ frequent power shortages and provide badly needed export earnings.

Both were conceived in the twilight of the communist era and stalled when subsidies from Moscow evaporated at independence. Soviet leaders envisioned managing the region’s water flows, energy trades and competing interests, and their Russian successors still maintain an interest. During a visit to Bishkek on September 20th, Russia’s president, Vladimir Putin, promised help with Kambarata in exchange for, among other things, an extension of military-basing rights in Kyrgyzstan. Tajikistan has sought Russian help for Rogun, too. Mr Putin promised $2 billion for the dam in 2004. But that deal fell apart three years later, when the two countries could not agree about the dam’s height.

Spurring on both projects is Uzbekistan’s bad behaviour, egregious even in a tetchy region. Unlike Uzbekistan, neither Tajikistan nor Kyrgyzstan, the two poorest former Soviet republics, has reliable access to oil or gas. Uzbekistan’s Mr Karimov has a habit of changing gas prices and cutting deliveries during the coldest months. He has prevented electricity supplies to his indigent neighbours from transiting his country’s Soviet-era grid. Uzbekistan has also unilaterally closed most border checkpoints with both upstream countries, set mines along parts of the boundary with Tajikistan, and often holds up commercial traffic. When a rail bridge in southern Uzbekistan mysteriously exploded last autumn, depriving southern Tajikistan of its rail connections, few believed Uzbek claims of a terrorist attack. Indeed, rather than fix the track, the Uzbeks dismantled it. Tajikistan calls the actions a blockade.

Though it seems unlikely Mr Karimov will drive his tanks over the border just yet, shoot-outs on the disputed borders are not uncommon. All of this worries NATO officials. All three countries help supply the war in Afghanistan and will be crucial for NATO’s withdrawal.

Excerpt, Water wars in Central Asia: Dammed if they do, Economist, Sept. 29, 2012, at 44

One the international agreements between states on water and electricity exchanges, see Elli Louka International Environmental Law

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WTO and the Level Playing Field, European Union and Russia

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Europe's trade chief threatened to take Russia to the World Trade Organization over a string of restrictive practices saying Moscow needed to play by the rules now it was a member of the global body.  Trade Commissioner Karel De Gucht singled out Russia's ban on European live animal imports, plans to levy fees on imported vehicles, two anti-dumping cases and another trade defense case launched by Moscow against Europe in recent months.  In the same week that the European Commission opened an investigation into Russia's Gazprom and China's solar panel exports, De Gucht said the measures sent "the wrong signal", Reuters reports.

"Membership of the WTO means a country is subject to the dispute settlement mechanism of that organization," he told an EU-Russia seminar in Helsinki. "Russia should understand that Europe takes that mechanism very seriously and that we will not hesitate to enforce our rights where they are violated," he added.

Russia joined the WTO last month after an 18-year wait. President Vladimir Putin said on Wednesday the country would use its membership to try to develop freer trade across the world, but he'll also be hoping it will further boost the energy-driven $1.9 trillion economy.  De Gucht said Russia was violating WTO rules by keeping its markets closed to competitors.  "What these and other measures ... have in common is that they affect products where significant market opening is due to take place under Russia's WTO commitments," De Gucht said.  "This is the wrong signal to send at a time when liberalization is supposed to be moving forward."

Russia and the EU are deeply intertwined, with Europe relying heavily on Russian energy exports and Russians hungry for EU products and access to its 500 million consumers.  But the two sides argue over issues ranging from energy supplies, trade and market access to human rights. While relations are at times frosty, both refer to each other as "strategic partners" and meet for twice-yearly summits.  Negotiations between Russia and the EU towards closer economic and political ties have also stalled, and Brussels is concerned by Putin's plan to develop a "Eurasian union" of ex-Soviet states, including Kazakhstan and Belarus.

EU warns Russia to play by WTO rules or face action, Reuters, Sept. 7, 2012

Russian President Vladimir Putin signed a decree giving the government the right to protect its natural gas-export monopoly, OAO Gazprom (GAZP), from an anti-trust inquiry by the European Union.  Putin’s measure bans strategic companies from disclosing information, disposing of assets or amending contracts without government approval in case claims are made by foreign states or entities, the president’s office said in an e-mailed statement from Moscow today. The Russian leader on Sept. 9 warned the EU, which relies on Russia for a quarter of its gas needs, that there would be “losses on both sides” if the issue isn’t resolved. He accused the 27-nation bloc of trying to shift responsibility for subsidizing former communist EU members onto Russia by forcing Gazprom to cut prices for customers in eastern and central Europe.

Excerpt, By Henry Meyer, Putin Moves to Protect Gazprom From EU Pricing Dispute, Bloomberg, Sept. 11, 2012

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Mining Peru: the right to consultation and environmental protection

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The first law signed by Mr Humala [Peru's President] required the government to consult with local communities before approving extractive projects. This was followed by measures to increase the total tax-take from mining by about $1 billion a year. His popularity soared. A year later, conflicts are rising again: the ombudsman's office reports 149 disputes involving extractive industries. The government has declared a state of emergency in one area, and sent troops to another. Eight protesters have been killed by the police since March. Mr Humala's approval rating is down to 45%, according to Ipsos-Apoyo, a polling firm.

The fiercest fight involves Minas Conga, a $4.8 billion gold and copper project in Cajamarca, in the north, by Newmont, an American firm, and Peru's Buenaventura. This would have turned several Andean lakes into reservoirs or tailings ponds. That alarmed peasant communities. After protests flared, Mr Humala promised to invest $2 billion in Cajamarca and ordered a fresh environmental study. This recommended changes, to save two lakes. But Gregorio Santos, Cajamarca's regional president, has vowed to stop Conga. He may get his way. Newmont has scaled back its investment in Peru this year, and said that Conga will no longer start in 2014, as planned, but perhaps in 2017. Three other projects in the same area, with total investment of $5 billion, are also in jeopardy.

Last month two people were killed and buildings set alight in Espinar, in the southern highlands, in a protest against Xstrata, an Anglo-Swiss company that owns a copper mine at Tintaya and is building another nearby. The government arrested the mayor, who led the protests. He wants Xstrata to raise its contribution to a social fund from 3% to 30% of pre-tax profits. When that gained little support in other parts of the country, he began to complain of pollution. But a dozen studies since 2005 have found the presence of heavy metals in water to be within legal limits.

Mining investment, forecast at over $50 billion in the next five years, is starting to fall. A score of giant projects account for over 85% of the planned spending. Of these, 11 face social conflicts, according to a note by Canada's Scotiabank. Five legislators have left Mr Humala's party over the protests, weakening the government in Congress. The president seems to have few ideas as to how to prevent disputes, or how to negotiate when they do break out. Having spent years posing as the protesters' champion, Mr Humala is now reaping the bitter harvest of dashed expectations

Mining in Peru: Dashed expectations, Economist,June 23, 2012, at 42

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