Social Conflicts in the Extractive Sector of Peru:
Moving towards
New Models of Natural Resource Management
German M. Cash
Natural Resource
Management
• Center for International Conflict Resolution at SIPA
• Project with UNDP Peru in the Office of Conflict Prevention
• Conflict between extractive industries and local communities
• Need for more effective policies of Natural Resource
Management
• Drivers of Conflict
•
•
•
•
Environmental Sustainability
Economic growth Vs. Environmental Protections
Lack of Environmental Regulations
Political and Social Exclusion of Affected Groups
Natural Resource Management in
Peru
• Scope of research: Assess the evolution of social conflicts in Peru
linked to natural resource management, the different approaches
adopted by stakeholders (UNDP, Government, Extractive
Companies and Community Organizations,) as well as conflict
prevention and resolution mechanisms being implemented, in order
to provide recommendations for improvement and offer alternative
approaches to natural resource management.
• Client: United Nations Development Program (UNDP) Peru
• Project: Social Conflict Prevention over the Use of Natural
Resources (2012 - 2016)
• Funded by Canadian International Development Agency
(CIDA), UNDP, various Peruvian government agencies
Overview of Peru
•
One of the fastest growing economies in Latin America
•
Main force of economic growth is increased FDI in natural
resource extraction (gold, copper, silver, oil, and natural gas)
•
However, rapid economic growth has fueled social tensions
between local communities and mining companies
•
Documentary on Informal Mining in Peru
Cases and Regions
Informal Mining
(Gold)
Madre de Dios
Camisea Project
(Natural Gas)
Cusco
Conga Project
(Gold)
Cajamarca
Quellaveco Project
(Copper)
Moquegua
Lote 1AB
(Oil)
Loreto
Rio Blanco Project
(Copper)
Piura
Methodology
• Qualitative and quantitative analysis from primary and
secondary sources.
• Field work, two main tools:
1) Interviews (primarily qualitative analysis)
2) Indicators (primarily for quantitative analysis)
Identifying the Conflict
Root Causes
· Historic feelings of social,
economic, and political
marginalization among
communities
· Weak state legitimacy and
low capacity
· Weak representation of
rural areas
·
Poorly coordinated
government strategy for
national and sustainable
economic development
Triggers
New Root Causes
· Social frustration, unrest and
community protests
·
Environmental
degradation
· Economic inequality among
different groups of society
·
Imposition of an
economic development
model from the capital
·
Mismanagement of
decentralized
responsibilities over
canon investment and
conflict resolution in the
regions
·
Absence of strong
mechanisms to address
grievances by the
government
· Economic losses for other
activities (agriculture,
livestock…)
· Absence of strong
mechanisms to address
grievances by the government
Stakeholders and their
Approaches
• Companies
•
•
Profit driven exploitation and social disengagement
“Social Embeddedness”
• Community Organizations
•
•
Social organization and mobilization
“Clientelism” and Corporate Paternalism
• Government
•
•
Mismanagement of revenues, weak state legitimacy, and negligence
Engaging actors through conflict resolution mechanisms like roundtables
Effective and Noneffective Strategies
Stakeholder
Approach
Case
Dollar amount
Cost/Benefit to
stakeholder
Cost:
CSR initiatives that
do not include
Social
Embeddedness
Conga Project
Company
6.8 billion USD in earnings
for the company in 2013
Cost:
Social
disengagement
Rio Blanco Project
1.6 billion USD
lost earnings for the
company in 2011
Benefit:
CSR initiatives that
include Social
Embeddedness
Camisea Project
50 million USD
Effective and Noneffective Strategies
Community
Organization and
Empowerment
Loreto
Communities
Lack of community
organization
Canon
mismanagement
Government
State inability to
mediate
Cajamarca
Inability to assign dollar
amount to benefit due to
ongoing negotiation process
from dispute over
compensation.
Inability to assign dollar
amount to benefit due to
ongoing negotiation process
from dispute over
compensation.
Cost:
Peru
3.5 billion USD
Unused
Cost:
Cajamarca
Weak state legitimacy
1 billion USD
Loss of canon and royalties
Cost:
Madre De Dios
180 million USD
Loss of canon annually
Coming to the Table
1) The outcomes of the process of conflict resolution are directly
dependent on the form of engagement of the company.
2) The company’s engagement in the dynamics of natural resource
management and it’s role in the conflict resolution process are
driven by:
• profit
• pressures and incentives used by the government.
3) The government’s engagement with the companies is influenced
by:
• pressure from community organizations,
• changing international laws and norms
Conclusions
• Increase in FDI in extractive sector is associated with increase in social
conflicts
• Absence in consensus on quantifying costs and damages among
stakeholders
• Social embeddedness plays a significant role in mutual development
• Roundtables are most effective with government support, active
engagement of company, and the backing of international standards
• Social conflicts allow communities to achieve their political objectives,
incentivizing conflict
Recommendations
Problem
1. Difference in perceptions of social development, CSR, and valuation of costs
2. Lack of national coordination of natural resource management
3. Weak state legitimacy
Solution
● Companies
○ Enhance CSR, moving towards social embeddedness
○ Prior consultation with communities before extraction
○ Engaging with state institutions
● Community Organizations
○ Empower community leaders to engage in the process of natural resource
○
management (workshops, monitoring, etc.)
Resist “clientelism,” patron-client traps
Recommendations
● Government
○ Implement National Strategic Development Plan
○ Incentivize social embeddedness by awarding projects and
○
○
concessions to companies with a similar focus
Institutionalize social embeddedness as a norm and responsibility in
the extractive sector
Address issues of weak state legitimacy, Improving government
presence in rural communities
● UNDP
○ Maintain back-track approach to strengthen state legitimacy
○ Allocate resources to civil society groups and government initiatives
○
focused on training communities to monitor the process of extraction
Early warning alerts - Place permanent offices of conflict prevention
in the remaining eleven regions that are of concern