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Peru, Free Trade, and Extractive Industries

Peru, Free Trade, and Extractive Industries

Some general info about Peru:

Peru is a country of about 50% rainforest and a large indigenous population (about 30% of the total population. Peru has no clear government environmental protection agency. Environmental exploitation and exporting natural resources are heavily tied in with Peru’s growing economy. Mining, deforestation, and oil and gas extraction are growing. Oil and gas extraction alone is planned for over 70% of Peru’s rainforests. [1] Despite a growing economy, poverty is a big issue and has been cited as a reason or justification for the exploitation. Most of those in poverty are among the the rural population, but it is companies (Peruvian and foreign) that are substantially benefiting. These practices have led to tensions and violent conflicts between the government and the indigenous population.

Thereare untapped mining resources available in the country (30% have thus far been used), and the government is pushing further investment. Domestic and foreign companies have responded with tens of billions of dollars. The environmental damage in just two areas has been estimated at five hundred million.
Mining has acontributed to air pollution and water pollution. For instance, a “potential problem related to mining is the usage of highly toxic mercury for the separation of gold in marginal or outlaw mining operations. Uncontrolled, mercury has been released into the aquatic environment. HStudies have documented hazardous levels of Mercury in fish and mother's milk. There have even been reports of neurological damage due to vapor and food exposure. Mercury releases have the potential to affect many people among the rural populations residing close to the affected water courses and river basins.”[2]

Two major causes of deforestation in Peru are logging and agriculture.

Logging: “illegal loggers continue to clear the forests upon which the tribes depend for subsistence, according to a report released by the organization Upper Amazon Conservancy. In addition, the loggers themselves are introducing diseases that are decimating the tribal communities. The neighboring Alto Purús National Park and Murunahua together contain the majority of Peru’s estimated 15 indigenous groups that have experienced little or no interaction with modern society”[3]
“Currently most logging in Peru is illegal. One scientist at the Research Institute of the Peruvian Amazon estimates that 95 percent of the mahogany logged in the country is harvested illegally. Because the wood is so valuable, traffickers are known to cut trees inside national parks and reserves. They also have little to fear: as of early 2006, not a single commercial logger had been imprisoned in Peru for illegal logging.”[4]
There have been reports degradation would affect 56% of the jungle in the best case scenario, and 91% in the worst case.[5]
Significant to note is that 80% of these illegal wood exports end up in the United States.

Agriculture: Slash and burn farming by poor native populations is a major cause of deforestation, and provides limited agricultural yield because the cleared land has nutrient poor soil and is not even marginally favorable to crops,. But “because it’s all they have, locals must clear new forest areas every couple of years in order to keep growing food. Deforestation continues on.”[6]

Natural Gas
“Peru's Camisea Gas Project is arguably the most damaging project in the Amazon Basin… cutting through an Amazon biodiversity hotspot described by scientists as "the last place on earth" to drill for fossil fuels.

Nearly 75 percent of gas extraction operations for "Block 88", as the original Camisea concession is known, are located inside a state reserve for indigenous peoples living in isolation. In violation of both stated company policy and international laws such as ILO Convention 169 and the American Declaration on the Rights of Indigenous Peoples, employees of Veritas, a contractor working for consortia member Pluspetrol have made contact with these communities, pressuring them to abandon their ancestral lands.[7]

Natural Gas Extracting Chart[8]
Year Production Estimates Percent Increase %
2006 560,000,000 -38.46 %
2007 860,000,000 53.57 %
2008 1,780,000,000 106.98 %
2009 3,400,000,000 91.01 %

- Just this June there was an oil spill in the Amazon by a foreign company that prompted the state to call a state of emergency. “The oil was spilled by Argentine company Pluspetrol…This is far from the first time. According to a June 25 article in the Peruvian weekly Hildebrandt en sus trece, the same company has spilled oil 78 times in the last four years in this region: four spills in 2006, 23 in 2007, 18 in 2008, 23 in 2009, and 10 this year already.”[9]
- 28 indigenous communities, thousands of people, rely on this river for drinking and cooking.
As said before, 70% of the Amazon has been planned for extraction of oil and gas and the government is currently pushing for more.

June 21, 2010: Brazilian and Peruvian President signed a deal to build six dams in the Amazon. Critics say the dams will flood tens of thousands of hectares of rainforest, devastate the lifestyles of a number of indigenous groups, and only serve big Brazilian corporations.[10]
Highways being constructed are also a problem (about 30%), they are being built in the Amazon, and threatening biodiversity and bring with it all the population a highway has.
Also interesting to note, all the wetlands in Trujillo, are estimated to disappear within 10 years because of infrastructure projects like this.

Government / Indigenous Tensions
Many of the oil and gas concessions that the government has granted overlap with areas already protected for wildlife and indigenous groups
There are countless examples of protests against the government decisions to expand the exploitation, effectively forcing them out and aggravating their poverty by taking away the resources which they rely on. Many have turned to violence where a good number (cumulatively in the hundreds) have died.

Passage of the Peru Free Trade Agreement and Its Aftermath
By December 4th, 2007, many Democrats in the House voted in favor of the Peru Trade Promotion Agreement after they were promised it would include environmental and worker protection clauses. As Nancy Pelosi said, representing the dangerous compromiser, "I absolutely refuse to have the Democratic Party viewed as an anti-trade party” (“Bipartisan Trade Deal”). Meanwhile, activists predicted that the agreement would, “harm workers, users of generic medications including people with AIDS, family farmers, social security beneficiaries, indigenous communities, endangered rainforests, wildlife, and farmed animals” (“Democrats Sell Out”). Less than a year after its enactment in January 2009, Peruvians have repeatedly had to protest to enforce protection of their rights and their land because the FTA has failed to force Peruvian President Alan Garcia to do so (“Free Trade with Peru”).

Between 2003 and 2008, 70% of Peru's Amazon rainforests had been divided into concessions for oil and natural gas investments (“Petroleum Sullies the Amazon”). As a result, protests have Peru. Most recently, beginning April 9th, 2009, Wampi and Aguaruna indigenous people peacefully protested for the right to their land. For almost two months, 30,000 indigenous people blocked roads and river traffic, until the government resorted to massacre. Over fifty protesters were killed and a hundred were missing. In an editorial in El Comercio, Peruvian President Alan Garcia wrote, “There are millions of hectares of timber lying idle, another millions of hectares that communities and associations have not and will not cultivate, hundreds of mineral deposits that are not dug up and millions of hectares of ocean not used for aquaculture” (“Trade Agreement Kills Amazon Indians”). To Garcia, the protest and resulting massacre seem to represent an overall hatred for interference with market progress, with the FTA transforming this hatred into an investment.

By the time the FTA was enacted, Peru did not meet International Labor Organization's Declaration on Fundamental Principles and Rights to Work, even though language in the FTA requires this of Peru. This Declaration calls for freedom of association and recognition of the right to collectively bargain. According to laws passed in 2008 prior to the FTA, the Peru Labor Department may ignore the rights of laborers to collectively bargain if they feel that it is “reasonable” (“Schwab Certifies Peru”). In February 20, 2010, after workers walked out of Buenaventura, Peru's largest precious metals miner, the Labor Ministry declared that the walkout was illegal. (“Union Ends Strike”). On July 8th, workers numbering in the thousands marched through Lima. A member of Topy Top factory, a textile factory, said, "We are participating in the demonstration basically because of the effects of the Law 2242 for nontraditional export contracts, which allows the firm to cut their workforce and fire personnel whenever they find it convenient and not when their contracts end...The government supports this law” (“Thousands of Peruvian Workers”). Milagros Salazar writes in 'Peru: Signing Away too many rights?': "The number of collective bargaining agreements between organized workers and employers on wages and conditions was 434 in 2007, but declined sharply to 233 in 2009." Privatization has also led to protests, showing the discontent they have caused. On November 5, 2009, port workers of the top mineral exporters of Callao led a nationwide strike over privatization of ports. (“Peru Port Workers”). Protests over the FTA began when it was still being debated, and now that it is a reality, the protests continue.

On June 1, 2010, President Obama met with President Garcia. Obama said to Garcia, “Peru I think has been an extraordinary success story over the last several years. We’ve seen not only the solidification of a thriving democracy but also an extraordinary economic success story.” Garcia gave the FTA the credit for Peru's success, describing it as the "waning effect of socialist capitalism” (“As Obama Meets with President”). While the Peru and the United States may have had their predictions for massive investment potential come true, the predictions of the workers, indigenous groups, environmentalist groups, and much of the FTA-hating public has also come true: the United States Peru Free Trade Agreement has aided in the takeover of indigenous land, caused widespread unrest by impoverished workers, and, in the end, has caused the murder of those who would simply like to see protection measures within the FTA actually enforced.

[1] http://news.mongabay.com/2009/0606-oil_or_death_in_the_amazon.html
[2] http://www1.american.edu/TED/perumine.htm#r1 <http://www1.american.edu/TED/perumine.htm>
[3] http://e360.yale.edu/content/digest.msp?id=2513
[4] http://rainforests.mongabay.com/20peru.htm
[5] http://www.bicusa.org/en/Article.11748.aspx
[6] http://www.livinginperu.com/blogs/features/1163
[7] http://www.amazonwatch.org/amazon/PE/camisea/
[8] http://www.indexmundi.com/peru/natural_gas_production.html
[9] http://upsidedownworld.org/main/peru-archives-76/2582-oil-spill-devastates-amazon-region-in-peru
[10] http://news.mongabay.com/2010/0621-hance_dams_peru.html


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