The extraction of natural resources, such as oil, gas, metals and minerals, is supposed to boost the economy and improve the quality of life of the residents of resource rich countries. However, in too many cases, resource extraction has led to social inequality, environmental degradation and corruption. In places like Colombia, it aggravates conflict.
The global Extractive Industries Transparency Initiative Standard (EITI Standard) is an international standard for the mining and hydrocarbon industries. By establishing a participatory approach that ensures the collaboration of governments, private sector actors, and civil society organizations, the EITI Standard promotes a fairer, more transparent accounting of resources.
The EITI was launched in 2002 by then-Prime Minister Tony Blair of the United Kingdom to promote accountability and transparency in both the mining and hydrocarbon sectors and to the fight against the so-called “resource curse.” According to EITI Board Chair Clare Short and the head of the EITI Secretariat, Jonas Moberg, “public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable development.”
As of September 2014, 46 countries—working in collaboration with more than 80 private supporting companies and 21 partner organizations such as the Inter-American Development Bank—had implemented the initiative.
Exportation in Colombia has been, and remains, a significant driving factor for large-scale mineral exploration, extraction and production by multinational corporations. According to the Banco de la República, the Colombian mining sector contributed to a record high proportion of the country’s total exports in 2011 and 2012, at 71 percent.
Fossil fuels especially constituted an integral component of mining sector production, with oil and coal representing 70 percent and 20 percent of production, respectively. A 2011 report produced by Carolynna Arce, deputy director of the Agencia Nacional de Hidrocarburos (National Hydrocarbon Agency), reported that Colombia received an estimated $4 billion in foreign direct investment in the oil and gas sector in 2010. This could explain why, earlier this year, Colombia Reports ran the headline that “66% of Colombians think mining is positive for the country.”
Such optimism arguably overlooks various Colombian mining scandals, such as the illegal assignment of mining titles in National Parks by Ingeominas that surfaced in 2011. That aside, ABColombia, The Guardian, Peace Brigade International and Guillermo Rudas of Colombia’s Universidad Javeriana all vocally highlighted the tax breaks enjoyed by multinational mining companies in Colombia.
It is now official: Enrique Peña Nieto of the Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI) is president-elect of Mexico. The nation’s highest electoral court, the Tribunal Electoral del Poder Judicial de la Federación (Electoral Tribunal of the Federative Judicial Power—TEPJF) declared July’s presidential contest valid, after runner-up Andrés Manuel López Obrador (AMLO) questioned the credibility of the election. Having reviewed and analyzed numerous pages of accusations of vote-buying, the court has decided Peña Nieto won, marking the PRI’s return to power after a 12-year hiatus.
TEPJF Justice Pedro Peñagos surmised the tribunal’s decision best: “In a democracy, one vote makes the difference. If Enrique Peña Nieto received an advantage of millions of votes in relation to the candidate that reached second place, then it follows that [Peña Nieto] should be declared the winner.” Peña Nieto received just over 19 million votes, versus 16 million for AMLO.
AMLO rejected the court’s decision: “The elections were not clean, free or genuine.” Memories of 2006 now pester downtown residents in Mexico City—and with reason. Over the weekend, the weakened #YoSoy132 youth movement, along with Mexico’s electricians’ union, marched towards the deputy’s chamber. More marches are expected, to including a demonstration at the iconic Zócalo next weekend.
Notwithstanding, the president-elect is already moving toward setting his legislative agenda. The PRI maintains a plurality in both the deputies and senate chambers, but will need to negotiate with President Felipe Calderón’s Partido Acción Nacional (National Action Party—PAN) and AMLO’s Partido de la Revolución Democrática (Party of the Democratic Revolution—PRD) to pass legislation. In the lower house, PRI, PAN and PRD were elected to 207, 114 and 100 seats, respectively; and in the upper house 52 (PRI), 38 (PAN) and 16 (PRD) seats. In both chambers, the PRI counts on old political dogs as party leaders; Deputy Manilo Fabio Beltrones is serving a third non-conescutive term, and previously served as governor of Sonora state. He was president of the senate until last week. Senator Emilio Gamboa has also served as senator, deputy, minister, and deputy minister under two PRI presidents. Both are party men who follow former U.S. President Lyndon B. Johnson’s famous tactics of squeezing, prodding and logrolling to get legislation passed.
Democracy in Mexico has failed to dismantle the gigantic inheritors of crony capitalism that were born during seven decades of authoritarian rule. One or two big companies dominate almost every market in the country—from the paint industry to broadcasting and mobile telecommunications. Where privatization and market regulation does not benefit a well-connected entrepreneur, the state itself runs the monopoly—as in the energy sector through PEMEX or the CFE (Comisión Federal de Electricidad, or Federal Commission of Electricity).
It is estimated that in 30 percent of the economy, consumers pay prices that are, on average, 40 percent higher than those in competitive markets. This reality hits harder on people with low incomes. The limited number of suppliers of telephone and Internet services, as well as the barriers to entry for new players, increases prices by more than 30 percent. In the pharmaceutical sector, the impact on prices goes up to 40 percent. Prices for dairy products are estimated to be 18 percent higher than they would be with greater competition.
Consumers, small- and medium-size enterprises, and government authorities are trying to open access to these traditionally closed markets. Last year, Cristina Massa joined the fight against monopolies as the first female regulator to serve as commissioner of the Comisión Federal de Competencia (Federal Competition Commission—CFC). What she and her colleagues do in the foreseeable future will determine the competitiveness of Mexican economy.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.