Chilean Minister of Energy Jorge Bunster addressed concerns on Wednesday afternoon over the threat of rising energy prices and the risk of a power shortage in Chile after its Supreme Court ruled on Tuesday to halt the planned Central Castilla thermoelectric power plant and port project. While the $5 billion, 2,100-megawatt planned power plant would provide much needed energy for the growth of the mining industry, Minister Bunster made clear that there were alternative projects that will supply electricity in the medium and long term.
The Supreme Court ruling, coupled with setbacks on other power projects, has caused concern that copper production will slow or become too expensive. Increased costs of electricity also poses the threat of a reduction in mining investments—a major source of national revenue with roughly $20 billion inmining project investments planned over the next 10 years. According to some analysts, the concern is not about a shortage of electricity, but the risk of anincrease in price. Chile’s mining minister, Hernan de Solminihac, has called for a national development solution, so that the mining industry continues to be an engine of growth. Mining represents roughly 15 percent of its gross domestic product.
The Castilla project is a joint venture between Brazilian billionaire Eike Batista’s, MPX Energia SA and Germany’s E.ON. They will now have to go back to the drawing board to reevaluate their strategy in Chile. It remains to be seen whether they will resubmit their proposal with an environmental impact study. The ruling on the project brought cheers from local fisherman and artisan groups who expressed concern over potential environmental effects such asair and water quality.
Top stories this week are likely to include: continued fallout over YPF expropriation; Leon Panetta to South America; Humala approves controversial mining project; and IMF warns of protectionism in Latin America.
Global Response to YPF Seizure: Repsol has threatened to take legal action against any company that invests in YPF SA, its Argentine subsidiary that was nationalized last week. This will complicate efforts by Argentine Planning Minister Julio de Vido to elicit investments in YPF. Beyond Repsol’s response, Argentine President Cristina Fernández de Kirchner faces continued condemnation from Spain and the European Parliament, which is looking at the possibility of imposing trade sanctions on Argentine imports. Petrobras, Brazil’s state-owned oil corporation, has pledged to expand cooperation with Argentina. Look for further official reaction from Europe this week.
Panetta in South America: U.S. Secretary of Defense Leon Panetta departs today for a five-day tour in South America, where he will visit Colombia, Brazil and Chile. A defense official reports that Panetta will stop in Bogotá to evaluate U.S.-funded Plan Colombia and discuss further measures to combat the Revolutionary Armed Forces of Colombia (FARC). Then, he heads to Brasilia and Rio de Janeiro to discuss potential military deals, including Embraer’s participation in a now-cancelled military aircraft contract for the U.S. effort in Afghanistan. AQ Senior Editor Jason Marczak notes, “Although the Embraer deal was worth less than $400 million, getting it back on track would be a huge plus for U.S.-Brazil relations.” Panetta and his Brazilian and Chilean counterparts will also discuss drug interdiction measures off the coasts of Africa and Central America—two of the world’s worst drug transit points.
Peru Approves Conga Mine: Peruvian President Ollanta Humala gave conditional approval last week to the controversial Conga mining project, constructed by U.S.-owned Newmont Mining Corporation. Previously, it had been stalled due to environmental concerns and protests by local Indigenous peoples in the Cajamarca region. Independent environmental auditors recommended a series of changes including larger artificial reservoirs that would allow for the adequate supply of water to local populations; Humala gave Newmont the green light for construction on the condition that these suggestions be met. Cajamarca President Gregorio Santos remains unconvinced, so watch out for the possibility of further local backlash.
IMF Warns of Protectionism: During its spring meetings over the weekend, the International Monetary Fund predicted 3.75 percent growth for the Latin America and Caribbean region this year. The IMF also warned emerging economies against adopting protectionist measures in response to the “accommodative monetary policy” adopted by the U.S. and other developed countries. The 3.75 percent figure represents a moderation of the region’s 4.5 percent growth in 2011. Given Brazil’s criticism of the United States’ monetary behavior, pay attention to whether Latin American economies heed the IMF’s advice.
*RELATED – Angelina Jolie Visits Refugees in Ecuador: In her capacity as a United Nations High Commissioner for Refugees ambassador, Angelina Jolie visited displaced Colombian refugees in Ecuador over the weekend. Read an Americas Quarterly dispatch on refugees in Ecuador from the Winter 2012 issue.
En el Perú, las aguas de la Amazonía que viajan en forma de ríos, que bañan las riberas de los bosques, que traen la vida desde las nubes hasta las sombras de un árbol, que aseguran un hogar a las especies animales o que se deslizan cuenco adentro en las manos de una niña a orillas de una comunidad nativa son las venas de este mundo; el eje de comunicación de muchas poblaciones y la fuente de sustento para pescadores, transportistas, albergues turísticos y operarios de algunas actividades extractivas.
En la Amazonía Peruana, las áreas naturales protegidas buscan salvaguardar que los ríos, bosques, hábitats de especies animales y de comunidades nativas; puedan perpetuarse en el perfecto equilibrio de los ecosistemas amazónicos. Las actividades económicas, sin embargo, que se desarrollan dentro del espacio amazónico no viven, ni dependen del equilibrio amazónico, aparentemente. Es decir, madereros que depredan el bosque sin respetar planes de manejo o mineros artesanales que contaminan las aguas con una visión de corto plazo no asumen que si el ecosistema se rompe, no habrá donde realizar las actividades que los sustentan.
For the second day in a row, Indigenous groups protesting mineral resource extraction and hydroelectric projects in Panama shut down parts of the Pan-American Highway yesterday. Hundreds of Indigenous Panamanians from the Ngabe Buglé comarca in the country’s northwest placed tree branches and rocks at points along the highway in Chiriquí and Veraguas provinces, as well as on the highway between Chiriquí and Boca del Tora. All locations are part of the comarca, a type of reservation for the Ngabe and Buglé Indigenous groups with a high degree of administrative autonomy.
The demonstrators were protesting mining activities and the construction of hydroelectric projects in the region. Their leader, Toribio García, told local press that “we don’t want transnational companies to take over our natural resources and [cause people to] lose their lands.” Specifically, the Indigenous protesters were incensed over the approval last week by the National Assembly’s Commerce Committee of a bill, Ley 415, which addresses the protection of mineral, water and other natural resources in their region. They said they were not consulted during debate over the bill, and demanded that Article 5 of the original bill, which was dropped in the approved version, be reinstated. That article had called for an immediate suspension of all active concessions to national or foreign companies interested in mineral resource extraction or the development of hydroelectric plants within Ngabe Buglé and neighboring territories.
Representative Raúl Hernández, president of the Commerce Committee, said all groups had been invited to contribute, and the bill as it was endorsed “fulfills its obligations from all sides.” Before becoming law, the bill will go through two more rounds of debate and, possibly, further modifications.
In March 2011, faced with strong opposition and protests by Indigenous groups, the Panamanian government was forced to repeal a law that would have opened mining activities in Panama to private and foreign investment.
Peruvian President Ollanta Humala today declared a state of emergency in the northern Peruvian department of Cajamarca in the wake of protests last week that led to the suspension of the multi-billion-dollar Conga gold-mining project. Humala’s press office tweeted last night that the measure would take effect at midnight today and last for 60 days. This decree will affect the provinces of Cajamarca, Celendín, Contumazá, and Hualgayoc.
Last week’s clashes were biggest challenge to date of Humala’s nascent presidency and saw the resignation of his vice-minister of the environment, José de Echave. Humala has blamed the impasse on local Indigenous leaders, stating, “Every possible means has been exhausted to establish dialogue and resolve the conflict democratically, but the intransigence of local and regional leaders has been exposed.”
According to government statements, the emergency declaration is designed to mitigate violence and allow the restoration of basic public services. Police will now have the authority to issue arrests without warrants as well as to limit the right of assembly. Cajamarca’s governor and protest leader, Gregorio Santos, referred to Humala’s pronouncement as an unnecessary provocation and pledged to “continue with our fight.”
In partnership with the UN’s Food and Agriculture Organization (FAO), the Chilean Sub-Secretariat for Fish has launched a collection of 46 seafood recipes, hoping to promote national consumption of Chilean seafood products through “tasty and healthy recipes.” Yesterday, at the Terminal Pesquero Metropolitano in Santiago, First Lady Cecilia Morel presented the cookbook that also was developed with Chefs contra el Hambre (Chefs against Hunger), a network of chefs and food critics dedicating to improving nutrition in Chile, especially among vulnerable populations.
Presented during Semana Santa—the holy week leading up to Easter Sunday celebrated in Catholicism—and as part of the government program Elige Vivir Sano (Choose to Live Healthy) led by Morel, the cookbook is part of a broader push on behalf of the Chilean government to combat obesity among its citizens and to encourage local consumption of natural resources. “In a society where obesity is a grave problem and fish are a national treasure, it’s very important that they be consumed locally,” said Morel.
A December study by the Catholic University of Chile and Banmedical Foundation found that 91 percent of Chileans have “poor” or “unhealthy” diets, with 63 percent eating more than the recommended amount of sweets and only 5 percent eating fish more than twice a week.
The cookbook is the fourth in a series published by Chefs contra el Hambre, following earlier ones dedicated to other elements of typical Latin American diets, including potatoes, beans and corn. It will be distributed for free at government fairs and in schools across the country and be made available online on the Sub-Secretariat’s website.
In a similar initiative, the Sub-Secretariat plans to implement in 2012 a nutrition intervention pilot project in Chilean high schools to increase students’ fish consumption.
The Canadian government revealed this morning that Canadian fighter jets were scrambled to intercept two Russian bombers approaching Canadian airspace near its Northwest Territories on Tuesday. The Canadian jets returned to base without incident once the Russian planes turned around. The announcement comes on the eve of a visit by Prime Minister Stephen Harper to northern Canada to observe military exercises over the Arctic.
The Russian TU-95 Bear jet bombers flew within 30 miles (50 km.) of Canadian soil after having first been spotted nearly 120 nautical miles north of Inuvik, Northwest Territories. Canada has linked the Russian flights over the arctic and near Canadian airspace to competition between Canada, the United States, Russia, and others to secure arctic resources as polar ice caps melt and reveal new potential sources of oil, natural gas and minerals resources.
A similar incident involving Russian bombers occurred last month off Canada’s east coast and again in February 2009. In both cases, Canadian fighter jets were scrambled to intercept the Russian aircraft. Russian officials have repeatedly claimed that their planes never encroached on Canadian airspace.
Posted at 3:10 p.m.
Hundreds of Indigenous people staged protests in several provinces across Ecuador on Monday, voicing concerns over what they perceive to be increased privatization of national resources. The catalyst for the protests is a bill being considered by Congress that indigenous groups say will allow transnational mining corporations to exploit water reserves close to their lands.
In northeastern Ecuador, police intervened to stop the protests, resulting in two injuries.
Leaders of the Confederation of Indigenous Nationalities of Ecuador (CONAIE), who had called for the protests two weeks ago, agreed to suspend the demonstrations Monday. Marlon Santi, president of CONAIE, confirmed Tuesday morning that his group would temporarily halt demonstrations to meet with the government of President Rafael Correa.
But Security Minister Miguel Carvajal said Tuesday that protests in some parts of the country had continued, and that the government would not meet with indigenous representatives until all demonstrations stopped. Nevertheless, the demonstrations have not reached the scale of the CONAIE-organized uprisings that contributed to the fall of President Jamil Mahuad in 2000 and Lucio Gutierrez in 2005.
The proposed water bill is widely expected to pass in the legislature, where Correa enjoys majority backing. Correa has accused indigenous leaders of misrepresenting the bill, which he maintains does not seek to privatize access to water.
Ecuadors indigenous peoples make up some 30 percent of the country's population.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.