Multinational Monitor

APR 2000
VOL 21 No. 4


The IMF on the Run: The International Monetary Fund Tries to Outrun its Critics
by Robert Weissman

Twenty Questions on the IMF
by the Monitor Staff


Unraveling the Washington Consensus
An Interview with Joseph Stiglitz

Globalization, Regionalism and Democracy
An Interview with Samir Amin


Behind the Lines

Against IMF "Realism"
- Brutal Banking

The Front
BHP's Big Mining Mess - The U'wa/Oxy Standoff

The Lawrence Summers Memorial Award

Book and Video Notes

Names In the News


The Front

BHP's Big Mining Mess

It has been a year of reversals for BHP, Australia's largest mining company, and the Ok Tedi gold and copper mine that it operates in Papua New Guinea.

Last June, consultants to Ok Tedi Mining Limited (OTML), the subsidiary that operates the mine for BHP and its partners (the Papua New Guinea government and Inment Corporation of Canada), found that the environmental impacts of the mine were far worse than previously acknowledged.

In March, the World Bank recommended that Ok Tedi be shut down to prevent any further environmental damage downstream of the mine. BHP has indicated its support for the closure option. But first the company is trying to shift responsibility for the damage caused by the mine to the government. And the government, which depends on mine revenues, is resisting a shutdown.

The OTML consultants' report made clear that the millions of tons of silt, sand and other mine waste poured into the Ok Tedi and Fly Rivers over the past decade is likely to make flooding so frequent that by 2010 it will kill the existing trees on 800 square kilometers of floodplain and perhaps kill the trees on another 400 square kilometers. This "dieback" zone will be created even if mining stops tomorrow.

It is the scale of the operation that makes the mine so destructive: Ok Tedi dumps over 80,000 tons of mine tailings waste every day into the Fly River system. That is the equivalent of 200 semi-trailers, each off-loading 40 tons of dirt and rocks, day after day for the past 15 years.

For the 15,000 landowners living downstream of the mine, the "discovery" that there is severe environmental impacts is not news. They have long contended that the mine is destroying the ecosystem and their way of life, and even successfully took BHP to court in Australia, a case which was settled for $115 million in 1996. But in the settlement BHP denied the true impacts of the disaster, instead claiming they could be mitigated  with river dredging and other technological fixes such as a tailings retention system. Until the settlement, BHP had insisted that a tailings retention system was not an option, especially after the first tailings dam constructed for the mine collapsed in 1984.

Following the consultants' findings last year, however, BHP acknowledged the significant environmental damage caused by the mine and said that the mine operation is contrary to the company's current environmental charter. The company has even expressed regret over ever becoming involved in Ok Tedi, which has failed to yield a return on the firm's investment.

In November, BHP started to consider options for the mine's future, including an early closure.  Word of the possibility of closure sparked fear in government circles, because 10 percent of the government's income comes from mine earnings. Government officials asked the World Bank to examine the findings of the OTML consultants and to assess available options. Now that the World Bank has concluded closure is environmentally mandated, the government is caught between that rock and the hard reality of its economic needs.

Earlier this year, Paul Anderson, BHP's managing director, said there is no easy answer: "The best environmental outcome has the highest social cost and the best social outcome has the worst environmental outcome. The final decision on this will be with the  Papua New Guinea government."

But for activists working on this issue, the responsibility lies with BHP. According to Wep Kanawi, spokesperson for Papua New Guinea's Non-governmental Environmental Watchdog Group, "a mine closure plan needs to be put in place immediately. At the mine site, BHP must fund a transition to a sustainable local economy. The communities affected by loss of fish and destruction of riverbank gardens downstream must be compensated and their environment rehabilitated."

If BHP were operating the mine in an industrialized country, it certainly would be required to clean the site, points out Steve D'Esposito of the Mineral Policy Center in Washington, D.C. In 1998, D'Esposito says, when a tailings pile collapsed at BHP's Pinto Valley Mine in Arizona, the company conducted a full clean-up of the pristine Pinto Creek, as required by U.S. law. D'Esposito asks, "Why is the Ok Tedi river any different, except in scale?"

Repeated calls to both BHP and the World Bank's Papua New Guinea Desk Office were not returned.

-- Danny Kennedy
Danny Kennedy works with Project Underground, in Berkeley, California.

The U'wa-Oxy Standoff

Occidental Petroleum's efforts to drill on land in northeastern Columbia claimed by the U'wa people as their ancestral territory has provoked both an on-the-ground standoff in Columbia and escalating protests in the United States. 

Observers in the town of Gibraltar, located near Oxy's proposed drill site, report a heavy military and police presence in the area. The U'wa have blockaded the road leading to the site, which lies just half a mile from the U'wa reservation. 

The Colombian government recently expanded the reservation in an attempt to settle the question of where Occidental can drill, but the U'wa assert that the proposed drill site is still within their ancestral territory. They have repeatedly stated that they "are willing to die" to keep oil drilling off of  their ancestral lands.

On February 11, the Colombian police attempted to break up the blockade with tear gas. The U'wa reported that three indigenous children drowned when the group was pushed back into a river.

Four days later, rural workers throughout the region responded with a general strike. Two thousand five hundred workers, students and campesinos joined over one thousand U'wa and other indigenous peoples in the blockade.

The secretary of the local Association of Campesinos (ADUC), Reina Rojas, says the mobilization and blockade "will only end with a commitment from the government to halt the petroleum exploration in the Samore Block."

U.S. human rights organizations believe the Colombian military and police will not attempt to permanently dismantle the blockade by force at least until the U.S. Congress approves a $1.3 billion Colombian aid package proposed by the Clinton administration.

Occidental was the only party outside of the Clinton Administration to testify before Congress on behalf of the aid package, which has since bogged down in House bipartisan procedural quarrels.

Occidental says the aid is necessary to protect the oil operations from guerrilla assaults. It has paid millions of dollars in recent years to support Colombian army units which defend the company's Cano Limon-Covenas pipeline.  The pipeline was bombed a record 79 times last year by rebels opposed to what they see as excessive involvement of foreign multinationals in Columbia's oil industry. National Liberation Army (ELN) rebels have also reportedly sabotaged construction equipment at the proposed drilling site.

In his testimony before a House committee hearing held in February, Occidental Vice President Lawrence Meriage said the 1.4 billion barrel project in Colombia is a crucial alternative to drugs as a means of developing the country's economy.

Meriage also suggested that "the guerrillas and the U.S.-based NGOs [non-governmental organizations opposed to Oxy's plan to drill on U'wa territory] are both engaged in the cynical manipulation of the small indigenous U'wa community in order to advance their own agendas. ... The U'wa live in a guerrilla-infested area that has seen a spectacular increase in the production of illegal drugs bound for the U.S., and the community has been under intense pressure by the guerrillas to oppose oil development anywhere in the region." 

The U'wa have demanded that Occidental "rectify" the accusation that they are guerrilla sympathizers.

Meriage also testified that Occidental contractors are regularly forced to pay a "war tax" to rebel groups in order to operate.

"Oxy is escalating the potential for violence in the region and furthering U.S. involvement in Colombia's civil war," says Steve Kretzmann of Amazon Watch, a group working to stop the project.

Meanwhile, protesters have hammered Al Gore along the U.S. presidential campaign trail for his long-term connections to Occidental and for not weighing in on the standoff in Columbia.

Gore controls $500,000 in Occidental stock. His father, Al Gore Sr., served for 28 years on Occidental's board after retiring from the U.S. Senate, and left his son with land that generates an income from Occidental of $20,000 per year for mining rights the company has not yet exercised after paying Gore for 20 years. Occidental is also a major Democratic party donor, giving nearly $500,000 in soft money since 1992.

"There's probably no company in America today," says Charles Lewis of the Center for Public Integrity, "that is as close personally and financially to the vice president as Occidental Petroleum" [see "The Buying of the President," Multinational Monitor, March 2000].

"Al Gore has no direct business connection to Occidental Petroleum," Occidental vice president Lawrence Meriage told the Monitor. 

Eight activists were arrested for shutting down Gore's campaign headquarters in Manchester, New Hampshire in January. The activists have demanded that Gore take action that results in an immediate suspension of Oxy's project, and a significant reduction of tension on the ground.

Gore has studiously avoided commenting about the U'wa situation to the media. Activists say he has said he didn't believe there was much he could do.

-- Charlie Cray

The Lawrence Summers Memorial Award

The April 2000 Lawrence Summers Memorial Award* goes to Joseph Cullman, former chair of Philip Morris. Asked in 1971 on CBS's Face the Nation by Morton Mintz if he was aware of a massive UK study of 17,000 pregnant women and their newborns and its conclusion that babies of smoking mothers had greater incidence of low birth weight, increased risk of stillbirth and infant death within 28 days of birth than babies from non-smoking mothers, Cullman said he was aware of the study and its results. His response: "Some women would prefer having smaller babies."

Thanks to Simon Chapman, who located this item in the tobacco industry papers.

*In a 1991 internal memorandum, then-World Bank economist and current Secretary of Treasury Lawrence Summers argued for the transfer of waste and dirty industries from industrialized to developing countries. "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" Summers wrote. "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. ... I've always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City." Summers later said the memo was meant to be ironic.

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