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Legal mining companies in Cajamarca are bringing in thousands of jobs and financial and health benefits as opposed to the criminal organizations that prey and plunder in the area, the author points out. (Photo of Conga by Newmont)
Wednesday, October 31, 2012
Perspectives

Conga: Who Is to Blame?

In Peru’s Conga conflict, value generators confront value destroyers.

BY ALDO R. DEFILIPPI

Accurately determining who is to blame in a country’s domestic clamors can be a daunting task at the best of times. It is rarely as straightforward as pointing one’s finger. As is the case with most divorcing couples, settling on the reasons why the marriage failed comes down to a series of factors rather than pinpointing one particular event. The same can be said of business disputes. Is it always as simple as picking a “good party” and a “bad party”? As long as freethinking human beings come into the equation, provided they do not have access to all information, there will always be some sort of discrepancy amongst them over any given matter. The difference in opinions might be small, but it is there. Now try to imagine the complexity of the situation when the issue at stake is a dispute over the operations of one of the largest gold mines in the world, in one of the poorest regions of the country.

Companies are not infallible. The men and women who run them, for the same reason they are human beings, make mistakes. The mining companies operating in Conga are no exception. The alleged blunders made by those in charge have been widely cited in the media and are now common knowledge. You may agree or disagree. However, can the events currently occurring in Cajamarca be solely blamed on the errors of a few corporate decision-makers? Read on and judge for yourself.

Formal mining companies offer the inhabitants of mineral-rich regions of Peru, usually remote and predominantly agricultural, the opportunity to apply for thousands of well-paid jobs, both skilled and unskilled (with 14 salaries a year plus up to 18 annual bonuses). In addition, those who take advantage of this occasion are provided with life and health insurance, have access to community development programs, housing, schools and hospitals, amongst other benefits that were not available to them as subsistence farmers. This, in turn, indirectly generates thousands of more jobs with similar benefits.

Despite the many benefits brought by such companies, one soon begins to notice the difference between those who took up the opportunity to enter the formal economy and those who failed to jump on the bandwagon. This inequality is further exacerbated by an absent government that fails to provide its people with the most basic of services which, by nature, it is expected to deliver. Subsequently, mining companies become a sort of "piñata" hit by all those who demand from the private sector what the government fails to offer. The fact that the latter is at fault does not make the former responsible, and yet time and time again we see the same scenario unfold.

On the subject, the former Venezuelan Minister of Trade and Industry, Moises Naim, proposes a rational explanation that can be applied for this incoherency. He argues organized crime has evolved into many multinational organizations, which operate informally, and use and support drug trafficking, terrorism, informal timber loggers, illegal miners, amongst many other illicit activities, to further their cause. They prey on and exploit local populations, including children; they pollute, and fail to provide the most basic of labor rights or pay taxes whilst doing so. Therefore, for such organizations, the presence of formal businesses, like Yanacocha, in their “turf” is no longer just seen as a nuisance but now a threat to their sole existence. Such “organized crime” has much to gain from inciting the discontent farmers mentioned above to challenge this perceived threat.

To this already explosive mix we can add other ingredients. Some NGOs, for instance, despite the genuine good hearted intentions that some of them may have, are also often influenced by these mafias. In many cases, those who run these NGOs believe they are championing for the rights of the less fortunate, when in fact they are funding the illicit organizations, allowing them to thrive, and ultimately making the matter worse. Other examples include politicians who see the presence of mining companies as an opportunity to portray the situation as a modern day David and Goliath – where the “defenseless” locals are being “exploited” by the “evil” company, and thus need to be “freed” – in order to further their personal agenda, or those whose ideology depends on there continuing to be a lower class or the existence of polarization in order to remain relevant.

In conclusion, the events currently occurring in Conga are caused by a series of factors far more complex and intertwined than the mistakes made by those running the mining companies extracting the mineral. The truth of the matter is that whilst there continue to be parties who make a profit without generating value, call it parasitism if you must, countries will find it extremely difficult to create wealth. As long as society does not unmask them, not only will they fail to generate any value, they will instead destroy it.

Aldo R. Defilippi is the executive director of the American Chamber of Commerce in Peru. He wrote this column for Latinvex.

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