Wealth disparity and ineffective mining wealth distribution – national issues affecting mining-community conflicts in Peru

In a country with considerable mineral wealth, mining-community conflicts have become a part of the socio-political landscape in Peru. For example, the government’s latest report on social conflict noted 214 conflicts across the country, which are mapped below (Defensoria del Pueblo del Peru 2011, 1). Importantly, those areas identified in red below as having 11 or more registered conflicts, are all associated with mining activity.

 National social conflict map – July 2011

(Defensoria del Pueblo del Peru 2011, 4). (Activo=active, latente=latent, socioambiental=socio-environmental)

While there are always specific localised motivators to conflict, it is undeniable that there are underlying pre-existing issues that contribute to these conflicts. The rise of extractive conflicts nationally is generally related to:

  • wealth disparity
  • the neo-liberal reforms that reduced taxes and royalties coupled with local municipal inability to effectively distribute mining related revenues(Arellano-Yanguas 2011, 619).

Mining in Peru over the last decade has typically occurred in remote regions that are typified by their extreme poverty and lack of services. Indeed, despite steady decreases in poverty levels in the coastal populations over the last decade, the rural Andean region’s poverty levels have increased, culminating in a shocking 69% in 2008 (Arellano-Yanguas 2010, 60). Further, these disparities between rural and urban poverty levels are the most severe in Peru, even when compared to its poorer Andean neighbours (Arellano-Yanguas 2010, 61).

Put simply, mining ventures often bring incredible wealth and services to areas that are marked by their lack of these resources. Consequentially, mining companies end up becoming quasi-governmental service providers, and issues arise when companies are not able to effectively take on their new-found role. Further, the companies direct injection of wealth into the communities surrounding it are finite: employment and contracting opportunities generated by mines are limited, and those whom are lucky enough to be recipients become an elevated class; leaving behind those that are not able (or wish) to participate (Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region 2006, 105–106). Indeed, Arellano-Yanguas argues that the desire of communities to enjoy a greater share of the economic or financial benefits of mining is a strong motivator of conflicts in Peru; where disruptive conflict is seen by communities as the only viable and effective bargaining tool (2010, 111).

The level and distribution of mining related governmental revenue is another feature of these conflicts. President Alberto Fujimoro undertook an aggressive neo-liberalisation project in the 1990s in order to attract foreign investment in the country’s ailing economy. As part of this project, mining taxes and royalties were reduced to be some of the lowest in the world, resulting in many communities voicing concerns (Vasquez 2011, 24). In response, the government undertook activities to increase the amount of mining revenue flowing back into affected communities through the Mining Canon (Canon Minero). However, local governments are often ill-equipped to effectively invest the funds in ways that adequately and sustainably addresses the array of social issues affecting remote communities, resulting in the problem persisting (Vasquez 2011, 24; Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region 2006, 109).

Arellano-Yanguas. 2011. “Aggravating the resource curse: Decentralisation, mining and conflict in Peru.” Journal of Development Studies 47 (4): 617-638. doi:10.1080/00220381003706478.

Arellano-Yanguas, Javier. 2010. Local politics, conflict, and development in Peruvian mining regions. PhD, England: University of Sussex.

Defensoria del Pueblo del Peru. 2011. Reporte de Conflictos Sociales. Peru: Defensoria del Pueblo del Peru, July.

Elizalde, Bernarda, Christina Sabater, and Melissa Whellams. 2009. Appendix 1: Narrative Reports – 1E Minera Yanacocha, Peru. In Community Relationships Review – Global Summary Report, Newmont, ed. Gare Smith and Daniel Feldman. Foley Hoag.

Environmentally and Socially Sustainable Development Department – Latin America and Caribbean Region. 2006. Republic of Peru – Wealth and Sustainability: The Environmentaland Social Dimensions of the Mining Sector in Peru. The World Bank.

Vasquez, Maria. 2011. The role of employee capacity building in reducing mining company-community conflicts in Peru. Masters, Vancouver: University of British Columbia.

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