The Curse of Gold

By Sakura Saunders

This week's CorpWatch feature highlights the plight of indigenous people in Papua New Guinea, where landowners feel that they are cheated out of their resources, livelihoods, and just compensation by the world's largest gold producer, Barrick Gold.

Papua New Guinea represents a case study in how resource extraction just might be the worst possible way to develop a country, especially where 85 percent of the population depends on the environment for their subsistence livelihood. Here, the pollution caused by open-pit mining and cyanide leaching creates an especially vulnerable situation for the indigenous people. In our recent feature, we attached testimonies from the landowners, mine workers, women, and human right activists who are affected by the mine. A principal landowner, Nelson Akiko, describes his disillusionment with the mine:

We depend on our land. You depend on money. Money is not need, it is only a want, but it is need in western society. I live on land, which is my stomach. I grow food from this land and then I survive. But now, where can I get food?

Also, the fact that mineral deposits, including oil, copper, and gold, account for two-thirds of PNG's export earnings leaves them susceptible to the Dutch Disease, or the phenomenon wherein resource exports raise the exchange rate for a country's currency, thereby making their labor less desirable. While this only accounts for a tiny part of the negative consequences of mining, it does illustrate that even within an economic paradigm, mining carries negative consequences for 'development', especially open pit mines because they require less human labor. Large mineral exports also make countries more susceptible to corruption because of the negotiating power held with government gatekeepers.

This is similar to Mali, where gold makes up 65 percent of its exports, dwarfing its former economic bedrock cotton. Some 64 mining companies have active mining and exploration projects in this landlocked African country, but despite a surge in gold prices, Mali's development indicators have stagnated.

A recent Oxfam report 'Hidden treasure: in search of Mali's gold mining revenues' concluded that: "There is not sufficient disclosure in an understandable form for citizens or civic groups to determine whether they are indeed benefiting as they should according to current law in Mali."

The fact that gold is a largely useless metal (that is already hoarded and unused in large quantities) makes the destruction caused by it's extraction all the more tragic. According the No Dirty Gold Campaign, 80% of the gold is used by the jewelry industry. On average, the production of one gold wedding ring produces 20 tons of waste.

Unfortunately, Papua New Guinea is not an isolated example of how gold mines can destroy communities. Mining Watch Canada summed their view of the mining industry in Canada, where 60% of the world's mining companies reside:

Metal prices are booming, and Canadian mining companies are taking advantage of the same prejudicial conditions to expand into all corners of the globe, manipulating, slandering, abusing, and even killing those who dare to oppose them, displacing Indigenous and non-Indigenous communities alike, supporting repressive governments and taking advantage of weak ones, and contaminating and destroying sensitive ecosystems.

CorpWatch has been tracking Barrick elsewhere in the world, most recently at its Pascua Lama project in Argentina.

Barrick's plans to "relocate" three glaciers - 816,000 cubic meters of ice - by means of bulldozers and controlled blasting, is seen by mine-opponents as symbolic of the company's utter insensitivity to the environment. As headwaters for a water basin in an arid region receiving very little rainfall, many opponents are gravely concerned for the ice. They say the mechanical action involved in moving the glaciers will irreversibly melt much of it, jeopardizing a delicate ecological balance further downstream.

In the U.S., Western Shoshone lands now account for the majority of gold produced within the United States and almost 10 percent of world production. The scale of development is unprecedented and will leave a legacy of environmental impacts for centuries into the future.

An excellent article on the boom in gold mining from the Las Vegas Mercury News explains the predicament that Shoshone face.

Is Houston smarter than Detroit? Big Oil versus Big Auto (and a simple solution for global warming)

By Pratap Chatterjee

US car makers and the US oil industry appear to be speeding in opposite directions in what may seem like a complete paradox. Just as companies like Chevron, Exxon and Shell announce the highest profits of any company in history, Chrysler, Ford and General Motors sales are in free fall. Is the oil industry in Houston is smarter than the car industry in Detroit?

Ford announced a global loss of $12.7 billion last year. The company plans to close 16 plants and cut up to 45,000 jobs in North America. Chrysler made a $1.5 billion loss last year and just announced it will cut 13,000 jobs. General Motors cut 35,000 production jobs last year but is suggesting it might have turned a profit after losing $10.6 billion in 2005. (The company "found" $200 million in earnings previously unaccounted for between 2002 and 2006, according to a Friday filing with the Securities and Exchange Commission. But given that it has restated its results seven times in the last two years, the numbers maybe rather meaningless.)

So it may seem astonishing that the Big Three's twin brother - Big Oil - is making money hand over fist. Chevron profits totaled $17.14 billion in 2006, Exxon made $39.5 billion (the highest any company has ever made in history) and Shell made $25.4 billion.

That adds up to $82 billion, three times greater than the losses of the Big Three car companies!

What's the difference between the two industries? Those of us that live in North America know exactly why: the price of gasoline has soared since the invasion of Iraq, and the oil companies have taken advantage of the high prices to cut themselves a bigger piece of the pie. Consumers don't have a choice as the oil industry is an oligopoly.

On the other hand the car industry is much more competitive, so consumers do have some choice.

Instead of buying giant cars that consume more gasoline than the original Model T Ford made in 1908 (the energy efficiency of a Ford Explorer is 16 miles per gallon versus the 25 miles per gallon of the signature Ford car), US consumers have made the cheaper choice and bought Japanese-made cars.

Japanese car maker profits are in stark contrast with the Big Three. Toyota is expecting a $13.4 billion profit for the fiscal year ending next month while Honda is predicting 2006 profits to come in close to $5 billion.

Ten years ago, General Motors controlled about a third of the U.S. market while Toyota's share was closer to eight percent. As General Motors has lost about eight percent of the market, Toyota has gained about the same.

(Another major difference between the two companies: General Motors expects to pay $50 billion in health care costs for its retired workers, while Toyota's Japanese workers are covered by a government health care system.)

Simple, isn't it? Energy conscious vehicles could turn around the US car makers and government provided health care for workers could cut Detroit's losses.

Yet, that would not solve all our problems. Even if the Big Three are losing market share, U.S. citizens are still buying cars that emit greenhouses gases and contribute to global warming. The latest figures show that U.S. greenhouse gas emissions during 2004 increased by 1.7 percent from the previous year, according to the U.S. Environmental Protection Agency (EPA), which released the figures last April. This was the largest annual amount ever produced by any country on record.

Perhaps the price of gasoline is still far too low? If doubling the price of gas has crushed the once mighty U.S. car industry, what if prices were to double again? People might start shopping close by, taking buses and trains to work. New jobs would be created by small local businesses for all those Wal-Mart employees and out-of-work Big Three employees.

Toyota and Honda might have to give way to a bus system or railways! Gasp! How archaic! How could the U.S. pay for a new mass transit system? Well, I heard some folks in Houston just found $82 billion... and the Japanese car makers have another $17 billion. that could pay for a lot. (That's not their money, its money taken out of the pockets of consumers who had no choice)

The U.S. needs mass transportation - and it needs to stop sprawl - lessons on how to do this can be found anyway outside the borders of this country when people live, work and shop in communities and take bicycles, buses and trains to work.

If commuters in the U.S. were to stop driving altogether, we could slash global fossil fuel emissions by 25 percent. Now that would be a revolution, and it would reverberate through history. How America saved the world it might even surpass Superman as a story for ages to come! If not, there won't be much more history to write. But that final page in human history might record that the U.S. failed to act.

P.S. I hear that Richard Branson and Al Gore are offering a $25 million reward for a solution to global warming. You can write that check out to groups like Smart Growth America and Surface Transportation Policy Project. They have the answers to global warming.

Remembering Oil Spills, Old and New

By Sakura Saunders

The week opened with the start of a four month trial against France's oil giant, Total, by groups like Friends of the Earth France.

The Paris tribunal will examine the 1999 Erika tanker disaster that poured 20,000 tonnes of oil into the sea, polluted 250 miles of coastline and caused $1.3 billion in damage. At least 150,000 seabirds were found dead on the coast and up to 10 times as many were probably lost in the oil-blackened seas. Observers say this may also turn into a trial of the "globalized" international shipping system as the Erika was crewed by Indians, sailing under a Maltese flag, chartered by a shipping company registered in the Bahamas for a French oil company.

Meanwhile, a lawsuit between the state of New York against Exxon and four other companies has recently been announced. This suit addresses an oil spill from the 1950's that was several times the size of the Exxon Valdez oil leak in Alaska, but lay undiscovered until 1978. According to New York state attorney Andrew Cuomo, Exxon has been slow to clean up, with an estimated eight million gallons of oil and petroleum byproducts still underground and toxic vapors from the ground threatening neighborhood health.

A Bloomberg article quotes local residents:

"There are people who live above this that still don't know about it,'' said Basil Seggos, chief investigator for Riverkeeper, an environmental group that sued in 2004 to try to force Exxon Mobil to clean up the creek. Others in Greenpoint have become spill experts, according to Seggos, and they say the fumes that rise from basements and sewers are especially bad when the barometer drops before a storm. "The locals tell you they know when it's going to rain because they can smell the oil.''

In other oil spill news, Lagos' Vanguard newspaper reported today that ten Ijaw communities had been displaced and 500 made homeless by a Chevron Nigeria oil spill.

The report quotes Gbabor Okrika, the councilor representing the affected communities:

"Chevron is not bothered about the health of the people they are only concerned about their operations and they have now started a process that can only divide the people and create further division among them."

Also, last month's massive leak in the Chad Cameroon Pipeline caused a storm of criticism regarding the environmental safety of this project. This Exxon-managed pipeline extends from landlocked Chad through Cameroon and extends 11 kilometers off the coast into the Atlantic. This project, which is overseen by the World Bank, has already received much criticism due to money from this project fueling conflict in Chad.

IRIN News quoted Kribi Mayor Gregoire Mba Mba:

"Our town lives on fishing and tourism. If more incidents like this or worse occur it is the economic future of the town that is threatened."

Environmental groups are warning that a similar spill could happen in the Baku-Ceyhan pipeline operated by BP that transports crude 1750 kilometers from the Caspian to the Mediterranean Sea. On Monday, a coalition of Azeri, British and US watchdog groups leaked a report from the U.S. Overseas Private Investment Corporation, which says that cracks and leakages in the coating of the pipeline will need to be monitored closely.

The Fourth Branch of Government

By Pratap Chatterjee

Technology consultants Booz Allen Hamilton may not be on the top of everyone's lists for conflicts of interest, but Congressman Henry Waxman revealed some rather interesting information about this McLean, Virginia, company at last week's hearing on contracting abuse.

Waxman told the hearing that Booz Allen had $97 million in contracts with the Department of Homeland Security in 2005. One job that Booz Allen staff were hired to do was to help plan, award and manage the federal government's SBI-Net program, a high technology security fence between the U.S. and Mexico (Joe Richey wrote us an article on this program - see Border for Sale)

Of the 98 personnel assigned to the SBI-Net project office as of December 2006, 60 work for contractors like Booz Allen. The company that these personnel are overseeing for SBI-Net is Boeing.

What Waxman finds worrying is the fact that Booz Allen has had an ongoing relationship with Boeing since 1993 to assist Boeing in maintaining its market share in the airplane industry, and other extensive relationships with the aircraft manufacturer since 1970.

The question is an important one: how can you be an impartial supervisor over someone who also pays your bills?

Booz Allen is no stranger to the inner workings of government, though. They happen to be one of the largest contractors to the Central Intelligence Agency and the National Security Agency. Tim Shorrock has done some digging into this subject, which you can read in his Mother Jones article: The Spy Who Billed Me.

Contractors supervising their own business partners is fashionable in Washinton DC these days, so we are glad to see that Scott Shane of the New York Times has started a regular series on this subject which he calls "The Fourth Branch of Government". In the first article about this phenomenon he wrote:

In June, short of people to process cases of incompetence and fraud by federal contractors, officials at the General Services Administration responded with what has become the government's reflexive answer to almost every problem.

They hired another contractor.

It did not matter that the company they chose, CACI International, had itself recently avoided a suspension from federal contracting; or that the work, delving into investigative files on other contractors, appeared to pose a conflict of interest; or that each person supplied by the company would cost taxpayers $104 an hour.

... CACI had itself been reviewed in 2004 for possible suspension in connection with supplying interrogators to the Abu Ghraib prison in Iraq.

The use of private interrogators at Abu Ghraib another matter we've been tracking, to read more about that, see David Phinney's article: "Prison Interrogation for Profit". To be fair, CACI is no longer in the interrogation business. To find out more about who has this lucrative work, do read "Intelligence in Iraq: L-3 Supplies Spy Support"