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Summary - Mining and Community Rights: Does Consulta Previa Promise Peace or Conflict?

(Image: Roey Yohai)

June 10, 2013

Speakers:

  • Rachel Davis, Managing Director, Shift
  • Emily Greenspan, Senior Policy Advisor, Oxfam America
  • Robert Thompson, Lawyer and Policy Advisor to the Peruvian Superintendent of Banks, Insurance Companies and Pension Funds
  • Christopher Sabatini, Editor-In-Chief, Americas Quarterly; Senior Director of Policy, Americas Society/Council of the Americas (Moderator)

Summary

On June 5, an AS/COA panel brought together a group of experts to discuss ongoing efforts to improve the framework for the practice of community consultation, or consulta previa, in cases of natural resource investment. Panelists addressed the underlying causes of conflict over extraction, ongoing energy and infrastructure projects, the challenges of implementing consulta previa laws, and new approaches that can promote successful community relations in the long term. 

Conflict and the Challenges of Community Consultation

Latin America has a long history of discord associated with the extraction of the region’s natural resources. Today, local communities—many of them indigenous or from other historically marginalized populations—continue to bear the brunt of projects’ negative impacts on the environment, health, and livelihoods. The resulting conflict can often turn violent, exacerbating long-standing mutual distrust between communities, corporations, and the state.

Consulta previa—which requires consultation with indigenous and native communities about major projects and policies that impact them—has increasingly come to the fore as a tool to mitigate social conflict in Latin America. But free, prior, and informed consent is implemented unevenly across the region, despite the fact that 14 Latin American countries have ratified ILO Convention 169, which outlines the rights of indigenous communities. Confusion remains about whether communities have the right to veto projects they oppose, whether governments or companies should take the lead in the consultation process, and over which communities should be granted the right to prior consultation.

Developments in Community Consultation

Panelists agreed that all parties should be concerned about social conflict. Beyond the human cost of violence, major opposition to projects can translate into a potential for companies to lose their investments. The high cost of social conflict for companies includes everything from lost revenue, work stoppages and interruptions, to lost opportunities for expansion and acquisition, to disproportionate staff time spent on conflict resolution. “Companies are not taking these figures and aggregating them in a meaningful way,” said Rachel Davis of Shift. “If you get a reputation for not managing relationships with communities well, then that’s going to stick.”

In response to social conflicts such as the 2009 protests in Bagua ending in 33 deaths, Peru now leads the region with its 2011 consulta previa law, which requires the government to receive consent from indigenous groups before proceeding with legal or administrative measures that affect them. Emily Greenspan of Oxfam pointed out that the success of Peru’s consultation law depends on how it is implemented. One positive aspect of the law is that consent is required for the relocation of communities, but at the same time, Peruvian President Ollanta Humala announced that a large number of Quechua-speaking highland communities will be excluded from the law.

Meanwhile, Peru is also exploring ways to integrate consulta previa requirements into new administrative regulations. Lawyer Robert Thompson explained that he is working with Peru’s Superintendent of Banks, Insurance Companies, and Pension Funds to draft regulations that will require companies to gain broad community support for projects before receiving loans. In addition, community support must be verified by an impartial and independent third party.

According to Thompson, banks are in a unique position to exercise leverage over the mining industry because they can require borrowers to comply with regulations before they receive a loan. Doing so, Thompson argued, will ensure that companies are equipped with the necessary resources, training, and time to understand the communities they will be working with from the very beginning and will help avoid problems down the road.

Models for Successful Community Relations

Panelists noted that there are a number of ways that communities, companies, and governments can work together to avoid conflict over controversial projects. Davis said that a first step is to understand and distinguish between the proximate and underlying causes of conflict. While proximate causes are often related to health, safety, and environmental concerns, the underlying causes are rooted in an unequal distribution of benefits and concerns by community members that they aren’t being heard.

Greenspan pointed out that many project sponsors don’t understand how communities make decisions, so they need to give communities time, ask questions, and follow community protocol. Davis concurred, saying: “there’s an assumption that capacity-building needs to happen on one side, and that’s usually the community side…but very often it’s building capacity in the company as well, to sit around a table with people and meaningfully engage.”

Meanwhile, the private sector’s voluntary approaches to consultation still require guidance, support, and resources from the state, Davis said. By following a principle of “responsible contracting,” governments can determine who has responsibility and establish a grievance mechanism for disagreements. In particularly contentious cases, a neutral third party facilitator sensitive to the cultural context of the particular community should be engaged as a resource for both sides.

Finally, panelists agreed that successful companies do continuous work with local communities and create long-term partnerships. AS/COA’s Christopher Sabatini said that the process of community consultation and dialogue should be ongoing. “It’s not just consulta previa, it’s consulta constante. There should be regular consultation,” he explained.