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The Economics of Exploitation: Indigenous Peoples and the Impact of Resource Extraction

by

In 1937 George Orwell said that coal mining was the ‘metabolism’ of western civilisation. What he meant by this striking metaphor was that coal was the catalyst for an earlier industrial revolution, just as enzymes act as the life-sustaining catalyst within the cells of living organisms to maintain life. If Orwell were alive today however he would have good cause to reformulate his perceptive observation. For modern mining-the extraction of oil, gas and rich minerals, including, again, coal-is now the alchemic catalyst driving the metabolism of 21st century economic globalisation. Unfortunately however the consequences and effects of modern mining take on a very grim symbolism in relation to the chemical metaphor referenced above. For rather than sustaining life on the planet, instead, much of 21st century resource extraction now acts as the catalyst in obliterating unique and diverse life systems- in particular, traditional peoples and societies- by harmful extractive processes and practices, and the cumulative social, environmental and cultural impact of those processes.

As a result, and this is where the symbolism becomes really grim, the incredibly rich biocultural diversity integral to indigenous peoples’ cultures is now under threat from exploitative commercial extraction as never before. The symbiotic relationship between culture, ecology and biology in indigenous societies, cultivated by thousands of years of iterative ecological knowledge, collective resilience, and complex adaptive strategies to diverse environments, is now disappearing at an accelerating rate. This cataclysmic loss, if we are not careful, could even become irreversible.

A growing global demand for natural resources, fuelling large-scale resource development

Since the advent of the current round of economic globalisation, in the last quarter of a century, there has been a full-scale pursuit by mining companies for increasingly scarce fossil fuels and mineral resources. This pursuit has lead the extractive industry into ever more vulnerable and remote regions of the planet, where indigenous groups predominately live. Fast growing global demand for natural resource commodities along with years of historically high prices particularly in the 2000s has generated scores of mega extractive projects. Many of these extractive projects are built near or on the lands of indigenous peoples- see here for example.

Mega mining-projects are highly capital intensive, the cost of extraction is huge and it can take many years to yield significant returns on investment. And returns on investments are highly uncertain as the price of oil is inherently unstable. But when energy projects do become commercially operational, the payoff in profits is huge. A lot therefore is riding on their success. But moreover, failure entails huge loss not of only immediate profits but also of future market share for extractive firms. Consequently, in a highly competitive market, commercial failure impacts on not only corporate status but also, increasingly, on national and geopolitical status.

For governments the stakes are also high, even higher in fact. Revenue from the extractive sector contributes significantly to GDP in developing countries. Extractive revenues can be used to fund social programmes for education and poverty alleviation, Brazil and Venezuela being cases in point. But unfortunately, more often than not, they also fund corruption, conflict and in the case of indigenous peoples, a slow ‘cultural genocide’. And, just as culture and biology form a symbiotic relationship in indigenous societies, that relationship is mirrored, darkly, by an opaque parallel relationship between resource rich governments and profit-hungry extractive firms. That relationship is one which has been frequently characterised by corruption, intimidation and violence, and in some of the worst excesses, murder of activists.

Just recently, in a not untypical illustration of this Faustian relationship, a group of Indonesian villagers were permitted by a Washington judge under the Alien Tort Claims Act to further their claims of serious human rights abuses against high ranking members of Exxon Mobil Corporation. The villagers allege that top figures in the oil and gas company may have known that local military forces in Aceh province tortured, raped and killed villagers. The company hired military and paramilitary forces to protect its profitable asset, knowing well that the Indonesian military/state apparatus has a horrendous human rights record, dating back to at least the 1960s as Joshua Oppenheimer’s extraordinary documentaries-the Act of Killing and The Look of Silence attests to. Whether or not the plaintiff’s case proceeds through the American judicial system remain to be seen though. In 2010, a similar human rights claim, brought by Nigerian citizens, against Royal Dutch Petroleum for corporate liability for similar crimes, was ruled against in a judgment by the US Supreme Court. The ruling was a significant blow against corporate culpability for crimes committed in their names abroad, particularly the culpability of the extractive sector-the climate of impunity across the globe from legal sanction has continued ever since.

The New Enclosure Movement

The ‘upstream’ phase of extractive production-the initial stage of exploration, drilling and extracting raw materials-is where much of capital investment is concentrated. Huge amounts of capital is needed for the purchasing and exploration of hydrocarbon reserves, oil platforms, drilling equipment, and the installation of pipes. In 2013, the big five publicly traded companies-Sinopec, Royal Dutch Shell, Exxon Mobil, BP and PetroChina-all in the top twenty largest public companies in the world and with a combined revenue of almost $2.15 trillion, spent hundreds of billions on upstream projects. The Mega- extractive project cycle on average costs between $3 billion and $15 billion, and can take anything up to 10 years, or more, to complete.

In other words, and at the risk of merely stating an elementary truism: transforming raw commodities into shareholder value and government revenue is big business-very, very big business.

Many governments in the global South, and increasingly in the North, are turning to private sector investment in mining as a way to develop unexploited regions which are rich in natural resources; regional ecosystems that are also often rich in cultural and bio-diversity. These regions are usually geographically isolated and culturally unique: tropical rain forests in the Amazon region, open prairie lands in Alberta, Canada and expansive rangelands in Tibet for instance. It is in these areas where much sought after sub-surface fossil fuels and rich minerals are now ever more concentrated.

As global demand for finite and non-renewable mineral and hydrocarbon resources has increased, so too, has there been a direct inverse effect: the communal lands of indigenous groups have become highly prized as commercially profitable commodities. Unsurprisingly, in this unequal relationship between international extractive firms and traditional societies the power dynamic lies decisively with the extractive corporations. Consequently, communal lands are being expropriated, “enclosed” and mined for commercial profit. Thus indigenous and nomadic communal cultures, rich in spiritual and temporal wealth and knowledge, are being slowly decimated.

The initial process of procuring access to natural resources, although often protracted and opaque in how it is achieved, is straightforward. Extractive companies secure exploration licences, concessions, titles and leases from central governments in far off capital cities, frequently illicitly. A licence or a title has been the preferred method as it entails unilateral permission from governments to the extractive industry to exploit resources, a scenario which has been much more beneficial to companies than to governments. Although contracts between both actors, involving a mutually binding set of agreements among the contracting parties, is preferred by governments.

From then on, in the initial upstream phase of production, the crucial phase in the extraction cycle of oil, gas and valuable minerals, the brute economic imperative is clear for governments and industry: the process must proceed with as little interference from anything which might slow production. Again at the risk of stating an obvious truism; time wasted, is profit lost.

Moreover, central governments are often literally and metaphorically hundreds and sometimes thousands of miles away from culturally distinct indigenous groups and the regions in which they live. The problem of literal and metaphorical distance is also compounded by mutual distrust. The central state, controlled often by national elites with a vested interest in the extractive process (powerful families, corrupt politicians, and military commanders), is not only distant it is also largely absent, and usually antagonistic to indigenous resistance to resource extraction, for the above reasons.

There are enormous amounts of money to be made by excavating fossilised carbon, and there are enormous amounts to be lost worrying about such nebulous concepts such indigenous livelihoods and cultural integrity, ancient mountains and forests regarded as sacred, and the collective rights of traditional peoples to have a say on whether their territories are to be exploited. The calculation by governments and the extractive industries is clear: at best pay lip service to the idea of human rights, at worst, send in the men with guns to quieten and quell the restless natives. It is a calculated formula that Joseph Conrad understood well over a hundred years ago in in the Heart of Darkness, his excoriation of European imperialism and the scramble for ivory in the Belgian Congo. The book’s main protagonist, the narrator Marlow, in discussing the brute force of the conquerors, and their addiction to profit and economic efficiency, makes it clear what the true motives of the colonists were:

“They grabbed what they could get for the sake of what was to be got. It was just robbery with violence… The conquest of the earth, which mostly means the taking it away from those who have a different complexion or slightly flatter noses than ourselves, is not a pretty thing when you look into it too much.”

International Human Rights Law to the Rescue?

The problem then for indigenous peoples when the extraction process begins becomes one of proving legal ownership of land-lands are held communally in indigenous societies, meaning at least in theory that customary ownership should be possible. If ownership cannot to be proven however, communities will not receive royalty payments when the revenue from extraction flows. Under international law indigenous groups are entitled to free, prior and conformed consent. Yet, time and time again, many communities are not consulted before exploration by mining companies begins.

Unfortunately community land rights relating to indigenous groups are weak, often non-existent, in most developing countries; as a result there is little legal protection and invariably even less formal legal title to community lands. Although great work is being done by many global legal advocacy groups, including Lawyers for Resource Justice, invariably, human rights violations follow. Including: physical displacement (forced evictions) and dispossession of lands as a result of land grabs, destruction of property and livelihoods, dumping of untreated chemical waste leading to environmental degradation, and, often when communities fight back violent death , as discussed above in the face of indigenous opposition to the corporate/state extractive industry nexus.

Although an international legal framework exists which can, and often does, defend human rights relating to land and community rights, it is largely weak in its ability to implement enforcement mechanisms, and, critically, post hoc justice in remedying human rights violations. Moreover, although states have obligations under international law, large extractive firms have only voluntary responsibilities. Consequently, they are ‘encouraged’ but not legally obliged to respect human rights in other words. A crucial distinction and one that makes it very difficult to force extractive firms to admit any social or environmental liability, whether directly or indirectly, in human rights abuses.

Unfortunately, as in so many other areas of international human rights law the practice of human rights does not live up to the principles. The reality, you could say, more than often not trumps the lofty theoretical rhetoric.

Resource nightmare

It is not a resource curse which these communities face but rather it is a resource nightmare, a more accurate description, and one which better captures the multiplicity of social and cultural consequences and effects which befall indigenous communities in the wake of resource development. The extraction of resources does not just leave an ugly physical imprint, the scarred landscapes of indigenous and nomadic lands are also mirrored by an equally negative cultural and social imprint-endemic poverty, low level conflict and ecological collapse, amongst other serious effects.

Indigenous societies are often racialised by governments with reductive mischaracterisations such as ‘backward’, ‘primitive’ and ‘uncivilised’. They are deemed to be literally and metaphorically in the way of development-and to obstruct development, at least in the official ideological development narrative so beloved by the IMFs, World Banks and neoliberal governments of this world, is to impede progress. Subsequently, it is a short step to consider them as superfluous, and if they are superfluous-cultural, socially and in every other conceivable way- it is even a shorter step to discard and, ultimately, destroy them. Arundhati Roy has written of this phenomenon movingly and with great conviction in her 1999 essay the Greater Common Good. In one particularly memorable phrase she evocatively talks of indigenous peoples in India (scheduled tribes) being “sacrificed…at the altar of national progress”, carelessly dispossessed and displaced by dams, highways, and of course, by energy companies. The Indian state, a fully paid up member of the neoliberal juggernaut, in its march to modernity absolves itself of responsibility (unless it is forced to act by global and domestic civil society) to its thoroughly marginalised indigenous citizens by the neat ideological trick of conflating industrial development as progress for the common good.

At best indigenous peoples will be perhaps low-cost labour; at worst, the human flotsam, jetsam, and derelict of contemporary economic globalisation. The above shipwreck metaphor is especially apt, particularly derelict. Derelict is the cargo which fell to the bottom of the ocean, away from any possibility or hope of reclamation-in maritime law not worth saving. Due to their rapacious pursuit into Indigenous land, the extractive sector-the engine of contemporary economic globalisation- deems indigenous peoples and their cultures to be expendable, the inexorable commercial logic of neoliberal globalisation demands it so. This may be an overly pessimistic prognosis. For all our sakes, let’s hope it is not.

Mark Kernan is a Freelance Writer and Independent Researcher. Follow him @markkernan1

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