United Nations Development Programme, Regional Centre Panama

EXTRACTIVE INDUSTRIES AND CONFLICT PREVENTION IN LATIN AMERICA

Photo: Lesley Wright/UNDP

CONTENT

THE LAC CONTEXT

CONFLICTS AND EXTRACTIVE INDUSTRIES: REGIONAL TRENDS

UNPACKING EXTRACTIVE CONFLICTS IN LAC

THE APPROACH OF UNDP

Economic growth and mineral exports in LAC

Growth rates correlated with mineral exports between 2002-2012

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LAC growth rate and mineral exports, 2004-

2014

GDP Growth ( %) Mineral exports (Billions, Current US$)

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GD

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Pe

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Per Capita GDP Extreme Poverty

62

95 9199

72 67 66 69 71

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204215

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186

171164 165 167

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1980 1990 1999 2002 2008 2011 2012 2013 2014

Indigence Poverty

As Per Capita GDP increased, poverty and extreme poverty decreased

Between 2002 and 2012, poverty declined by 60 million people in LAC

1. In 2014, about 20% of global mineral exports originated in the LAC region

2. The Latin American economic model is based on exporting primary goods, hydrocarbons and minerals

3. Mineral exports representabout 13% of total LAC merchandise exports (about twice the global average)

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LAC and the world: share of mineral exports in total merchandise exports, 1962-2014

Mineral exports from LAC as % of global mineral exports

Mineral exports from LAC as % of the region's total exports

Global mineral exports as % of global exports

Mineral and hydrocarbon exports boomed in LAC between 2003-2008 and 2010-2012, following high price cycles

• 10 LAC countries are among the 15 major producers of metals in the world

• By 2013, the region produced 33% of the world’s ethanol fuel, 25% of biofuels and 13% of oil

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Index of International Commodity Prices, January 2000 to May 2013

(Index: January 2005 = 100)

Metals Energy (Oil, natural gas and coal)

1. Between 2003 and 2012, investment in mining exploration increased tenfold, from US$ 566 million to US$ 5 billion.

2. Five of the top 10 destinations for mining investments are located in Latin America (Chile, Mexico, Brazil Peru, Colombia)

Estimated mineral reserves:

• 65% of world’s Lithium; 49% Silver; 44% Copper; 33% Tin; 26% Bauxite; 23% Nickel; 22% Iron

Latin America25 %

Africa17 %

Asia-Pacific7 %

Australia12 %

Canada16 %

United States8 %

Rest of the World 15 %

Distribution of world mineral exploration budget by region or country of destination.

2012. World total: US$ 21.5 billion

Extractive revenues Fiscal revenue from mining and hydrocarbons allowed governments implement stronger social protection policies in the past decade AND counter-cyclical economic policy during the global recession

Fiscal revenue from mining and hydrocarbons

(% of total fiscal revenues)

Mining Hydrocarbons2000-

2003

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2012

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Argentina 0.5 1.0 1.0 8.7 7.9 10.5

Bolivia (Plurinational State of) 0.5 2.2 4.2 11.9 28.9 31.8

Brazil 0.3 0.5 0.8 2.3 3.5 3.0

Chile 4.3 25.8 19.4 - - -

Colombia 0.6 1.6 1.6 5.4 9.6 13.1

Ecuador - - - 30.0 33.5 42.7

Mexico 0.3 0.8 1.5 19.8 33.4 35.1

Peru 1.0 8.6 8.3 3.2 5.5 7.3

Venezuela (Bolivarian Republic of) - - - 48.0 47.8 41.5

2CONFLICT TRENDS IN LATIN

AMERICA

Conflict map

(2009-2010)

X axis: number of

conflicts

Y axis: escalation

and radicalization

of conflicts

Increasing social conflicts and protest

Paradoxical?

1. Consolidated democracies

2. Substantial social and economic

advances in the past decade

A common regional platform

1. Fragmentation of actors

2. Multiple agendas and demands

3. State as the most frequent subject of

demands

4. Polarisation

Three “ideal types”

Socio-economic (47.3%)

– Work, economic conditions, land

tenure

Institutional conflicts (37,7%)

– Management, public services, legal

measures, authority

Cultural conflicts (14.9%)

– Public goods, ideology, politics,

natural resources and the

environment

The State remains the main recipient of demands (69%)

Mapping EI conflicts in LAC

• The extraction of metal ores are the most common cause of environmental conflicts in the region (212)

MINERALSHYDROCARBONS

Regional trends on EI conflicts

• Conflicts arise during all phases of the

extractive chain

• EI conflicts are multi-causal

• People mobilize against EI for both

potential and observed impacts

• International / Local Non-

Governmental organizations play a

major role

• Environmental activists play a major

role

• Peasants, indigenous groups are

present in a majority of cases

Conflict dynamics and outcomes

• Application of existing regulations

(47.3%)

• Increased contestation and participation

(34%)

• Corruption/bribing (32%)

• Compensation (30%)

• Judicialization/criminalization of

activists (29%)

• Repression (27%)

• Migration/displacement (26%)

• Violence (23%)

3Unpacking

extractive conflicts

in LAC

1. Weak participatory mechanisms

Sporadic, fragile and deficient engagement with affected rural and indigenous communities

• Absent/weak institutions

• Limited regulatory frameworks

• Lack of information

• A tendency to judicialize conflicts

Weak consultation mechanisms

• Free, prior, and informed consent rights are well established in the public sphere, but mostly unregulated

• ILO Covenant 169 endorsed by most countries but challenges remain for its effective implementation to reduce the incidence of conflicts

2. Potential and observed impacts of extractive activities

Environmental

• Water pollution / depletion

• Soil contamination / erosion

• Deforestation or loss of biodiversity

• Air pollution

• Waste overflow

Socio-economic

• Environmental-related diseases

• Occupational hazards and diseases

• Human rights violations

• Land / resource dispossession / population displacement

• Loss of livelihood / food insecurity

• Loss of traditional knowledge / practices

3. Inequitable distribution of benefits• Weak job creation at the local level

• Failure in planning and implementation of social and compensation

funds

• Labor “precarization”

• Lack of transparency4. Limited state capacity / lack of credibility of state institutions• Weak capacities to enforce regulations and norms

• Weak capacities to implement programmes to improve living conditions of affected populations or mitigate negative impacts

• Weak environmental governance tools

• Limited territorial oversight capacities

• Insufficient financial – human resources

• Corruption / Collusion with private companies

6. Globalization of social responsibility and transparency standards• Greater access to new technologies of information and communications

• Global and regional activism, increased pressure

• Global corporate standards for transparency (EITI) and accountability

7. Private sector actions

• Short-term solutions

• Minimalist concept of corporate social responsibility

• Poor workplace policies

• Non-compliance of relevant regulatory tools

• Cooptation of leaders and division of communities

• Clashing world views and development models

8. Clashing views on development models

• Private sector prioritize economic interests

• Governments adopt short-term development approaches

• Indigenous communities have different cultural values and interests

4 UNDP WORK IN

LAC

UNDP work on Extractive Industries

At least twelve countries have projects related to EI in region with strong governance components:

• Promoting conflict prevention and

multi-stakeholder dialogue

• Strengthening institutional

capacities to monitor and manage

conflicts (Peace Infrastructures,

Early Warning-Early Response

systems)

• Strengthening institutions in charge

of environmental and mining

regulation

• Designing policies, reforming

normative frameworks, establishing

protocols, improving procedures

• Improving governance at the sub-

national/local level

• Projects designed with a strong

territorial base

UNDP work on Extractive Industries

Initiatives and tools developed

• More agile and user-friendly conflict analysis tools

• Professional facilitation services for dialogue processes

• Early Warning / Early Response systems templates

• Strategies and programmatic tools to promote a shared visión of societies and a culture of peace

• Intervention protocols for conflict management

• Software and new technological tools that can contribute to conflict prevention

• Gender-sensitive methodologies for consensus-building and multi-stakeholder dialogue

• Guidelines for democratic dialogue and conflict prevention

• Systematization of dialogue processes and lessons learned

LESSONS LEARNT

• No “one size fits all” solutions: context specific interventions

• Two main lines of work in conflict prevention and management:

• Operational conflict prevention: building state infrastructures for peace and supporting multi-stakeholder dialogue. Involve the private sector and CSO’s in dialogue and conflict prevention platforms

• Structural conflict prevention: Strengthening environmental governance (regulatory frameworks; technical capacities to manage EI). Focused socio-economic development on excluded and poor communities with or without EI

• UNDP’s convening power is one of its major assets

• UNDP should adopt a DST approach to address conflict in EI

• Interventions must aim at promoting a positive change in state-society relations

EXAMPLES OF PUBLICATIONS

UNDP Regional Hub / Regional Bureau for Latin America and the Caribbean

(+507) 302-4500 rcpanama@undp.org / www.latinamerica.undp.org/