The Corporate Assault on Latin American Democracy
November 03, 2014
The Latest Phase
The Corporate Assault on Latin American Democracy
by JUSTIN DOOLITTLE
Latin America has always been notoriously fertile ground for predatory corporations. For decades, aided by Western-backed governments that were as friendly to them as they were brutal to their own citizens, corporate behemoths made it their mission to suck the region dry – sometimes quite literally. The story of neoliberal plunder in that part of the world, as well as the popular backlash to it among Latin Americans, is hardly a new one. In recent years, though, the ever-aggressive corporate war on Latin American societies has entered a new phase, one in which major battles are being decided on the fourth floor of the World Bank headquarters in Washington, by an obscure and increasingly powerful institution known as the International Center for the Settlement of Investment Disputes.
The first thing you need to know about the ICSID is that it has the authority to make binding decisions that affect entire populations. Most of the time, such decisions are made by small tribunals, typically consisting of just a few people. This secretive institution is part of the ICSID Convention, a multilateral treaty that went into effect in October of 1966, to which 150 countries are currently party. The ICSID Convention “sought to remove major impediments to the free international flows of private investment posed by non-commercial risks and the absence of specialized international methods for investment dispute settlement.” If that sentence creeps you out, well, it should.
The structural and bureaucratic details of the ICSID are boring and involve a lot of corporate-speak. But basically, the ICSID establishes and oversees ostensibly independent tribunals responsible for arbitrating major disputes between private entities and governments. So, for example, when Country X tells Corporation Y that, after further consideration, it wants to change policy and forbid oil drilling in an environmentally vulnerable region, this is where Corporation Y goes to complain. A tribunal is formed and a judgment is eventually made. Both sides in any dispute must agree to the terms laid out, it should be noted, and they each have input in selecting the arbitrators. Nevertheless, with the ICSID’s influence growing along with its caseload, we should consider the wisdom of having these decisions, which often hold major ramifications for both short and long-term environmental health, made via a process from which local residents – the people actually affected by said decisions – are so drastically disconnected.
In recent years, Venezuela, Ecuador, and Bolivia have withdrawn from the ICSID Convention, all for similar reasons. These governments cling to the quaint notion that their societies’ resources ought to belong to the people who live there, and they view the ICSID as a way to grease the skids for the continued pillaging of said resources (which is usually accompanied, of course, by environmental degradation). Bolivia withdrew from the ICSID in 2007; in 2009, Ecuador followed suit. Venezuela finalized its withdrawal from the ICSID in 2012 as the Chavez administration was dealing with a number of disputes surrounding its nationalization policies in the 2000s. All of these governments cited concerns about sovereignty and the ICSID’s persistent bias toward corporations and capital (these concerns reflect popular sentiment throughout Latin America). They’ve proposed an alternative system, involving tribunals based in South America, as opposed to Washington, D.C. In any case, a withdrawal from the ICSID is not a shield from claims by private interests, and states like Venezuela and Ecuador are still staring at billions of dollars in potential compensatory payments stemming from a number of cases over the last decade. States cannot simply ignore these judgments, as it would be viewed like a sovereign default, with all the economic risk that entails.
It involves fairly specialized knowledge, and therefore it’s rarely discussed in popular political discourse, but a broader paradigm shift has taken place in this arena in recent years, one that, shockingly enough, favors the rights of transnational corporations. As a recent McClatchy piece on a high-profile dispute between Oceana Gold Corp. and the government of El Salvador put it, “international investment laws are empowering corporations to act against foreign governments that curtail their future profits, “ and the ICSID is the vehicle these corporations are using to ensure that these profits are not threatened.
The widespread suspicion that this game is essentially rigged in favor of powerful private interests is not entirely unfounded. Here is Robert Bisso, the director of Social Watch, an international network of citizens’ organizations, in a speech to the U.N. in May:
… over two thousand bilateral and regional trade and investment agreements signed in the last few decades have created new rights for transnational corporations, including rights that humans don’t have: corporations have acquired the right to settle anywhere they want and bring with them any personnel they decide they need, they are allowed to repatriate profits without restrictions and even to litigate against governments in demand of profits lost because of democratically decided policies, not through local courts but via international arbitration panels shaped to defend business interests and where human rights do not necessarily prevail. ICSID, the International Center for the Settlement of Investment Disputes, hosted by the World Bank, is an untransparent tribunal that displaces national judiciary and in a way creates its own law by way of ignoring human rights standards and environmental norms, even when they have been ratified as international treaties.
More:
http://www.counterpunch.org/2014/11/03/the-corporate-assault-on-latin-american-democracy/
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