Tag Archives: mining

Canada’s neoliberal policies enable exploitation in Zambia

While few Canadians could find Zambia on a map, the Great White North has significant influence over the southern African nation.

A big beneficiary of internationally sponsored neoliberal reforms, a Vancouver firm is the largest foreign investor in the landlocked country of 16 million.

First Quantum Minerals (FQM) has been embroiled in various ecological, labour and tax controversies in the copper rich nation over the past decade. At the end of last year First Quantum was sued for US$1.4 billion by Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH), a state entity with minority stakes in most of the country’s mining firms. The statement of claim against First Quantum listed improper borrowing and a massive tax liability.

In a politically charged move, President Edgar Lungu recently ordered ZCCM-IH to drop the case and seek an “amicable” out of court settlement with FQM. Social movements criticized the government for (again) caving to powerful mining interests exploiting the country’s natural resources. According to War on Want, Zambia is losing $3 billion a year to tax dodges by multinationals, mainly in the lucrative mining sector. A recent Africa Confidential report on the row between First Quantum and ZCCM-IH highlighted the Vancouver firm’s political influence, pointing out that “top government officials are frequently feted and hosted by FQM.”

First Quantum’s presence in Zambia dates to the late 1990s privatization of the Zambian Consolidated Copper Mines (ZCCM), which once produced 700,000 tonnes of copper per year. In a report on the sale, John Lungu and Alastair Fraser explain that “the division of ZCCM into several smaller companies and their sale to private investors between 1997 and 2000 marked the completion of one of the most comprehensive and rapid privatisation processes seen anywhere in the world.”

The highly indebted country was under immense pressure to sell its copper and public mining company. Zambia’s former Finance Minister Edith Nawakwi said, “we were told by advisers, who included the International Monetary Fund and the World Bank that…for the next 20 years, Zambian copper would not make a profit. [But, if we privatised] we would be able to access debt relief, and this was a huge carrot in front of us — like waving medicine in front of a dying woman. We had no option” but to privatize.

Ottawa played a part in the privatization push. Canada was part of the World-Bank-led Consultative Group of donors that promoted the copper selloff. With the sale moving too slowly for the donors, a May 1998 Consultative Group meeting in Paris made $530 US million in balance of payments support dependent on privatizing the rest of ZCCM.

(Canada had been a proponent of neoliberal reform in Zambia since the late 1980s. At the time Ottawa slowed aid to the country in a successful bid to change the government’s attitude to neoliberal reforms, explains Carolyn Bassett in The Use of Canadian Aid to Support Structural Adjustment in Africa. After Zambia fell into line with the International Monetary Fund, CIDA recharged its aid program. As part of a push for economic reform Ottawa secured an agreement that gave a former vice president of the Bank of Canada the role of governor of the Bank of Zambia, where he oversaw the country’s monetary policies and “responses to the IMF”. In her 1991 Ph.D thesis Bassett notes, “instrumental in developing Zambia’s new ‘domestically designed’ [economic] program was the new head of the Bank of Zambia, Canadian Jacques Boussières.” Paid by Ottawa, Boussières was the first foreign governor of the Bank of Zambia since independence. This was not well received by some. Africa Events described Boussières as “a White Canadian who came to de- Zambianise the bank post under controversial circumstances.”)

The hasty sale of the public mining behemoth was highly unfavourable to Zambians. The price of copper was at a historic low and the individual leading the negotiations, Francis Kaunda, was later jailed for defrauding the public company. “ZCCM’s privatization was carried out with a complete lack of transparency, no debate in parliament, and with one-sided contracts which few of us have ever seen,” said James Lungu, a professor at Zambia’s Copperbelt University.

Taking advantage of the government’s weak bargaining position, First Quantum and other foreign companies picked up the valuable assets for rock bottom prices and left the government with ZCCM’s liabilities, including pensions. The foreign mining companies also negotiated ultra low royalty rates and the right to take the government to international arbitration if tax exemptions were withdrawn for 15 years or more. Many of the multinationals made their money back in a year or two and when the price of copper rose five fold in the mid-2000s they made bundles.

Having conceded tax exemptions and ultra low royalty rates, the government captured little from the surge in global copper prices. In 2006 Zambian royalties from copper represented about $24 million on $4 billion worth of copper extracted. The .6% royalty rate was thought to be the lowest in the world. The government take from taxing the mining companies wasn’t a whole lot better. Between 2000 and 2007 Zambia exported $12.24 billion US in copper but the government only collected $246 million in tax.

Since 2008 Zambia has wrestled more from the companies, but they’ve had to overcome stiff corporate resistance. When the government suggested an increased royalty in 2005 First Quantum’s commercial manager Andrew Hickman complained that it “would probably make any new mining ventures in Zambia uneconomical” while three years later First Quantum said it would have “no choice” but to take legal action if a new tax regime breached the agreement it signed during the privatization process.

With billions of dollars tied up in the country, First Quantum had good reason to campaign aggressively to maintain the country’s generous mining policy.

First Quantum stands accused of cheating Zambia out of tens of millions of dollars in taxes. An audit found that between 2006 and 2008 Mopani Copper Mines under-reported cobalt extracts and manipulated internal prices to shift profits to First Quantum and Glencore subsidiaries in the British Virgin Islands and Bermuda, allowing it to evade millions of dollars of tax in Zambia.

In Offshore Finance and Global Governance: Disciplining the Tax Nomad William Vlcek explains:

As a corporate entity, First Quantum does not directly manage the mining operations in Zambia, rather it owns a subsidiary in Ireland which in turn owns subsidiary corporations registered in The British Virgin Islands and Zambia. … The overall corporate organization involves similar subordinate corporate structures with subsidiaries registered in Barbados, British Virgin Islands, Ireland, Luxembourg, and Netherlands, none of which jurisdictions include a mine or smelter operated by First Quantum. … Jurisdictions such as the British Virgin Islands … do not impose a corporate income tax on foreign-sourced income. Thus, First Quantum’s subsidiaries will pay corporate income tax on their operations in Zambia to the Zambian government, but any income that flows through to the BVI-registered subsidiary will not be taxed before flowing onward.

In a bid to cut down on corporate ‘transfer pricing’ and tax evasion, the Zambian government sought to simplify the mining fee structure. In 2013 Lusaka proposed eliminating income tax on mining companies and substantially increasing royalty rates (up to 20% for open-pit mines and 8% on underground operations). In 2015 Minister of Finance Alexander B. Chikwanda told Parliament:

The tax system was vulnerable to all forms of tax planning schemes such as transfer pricing, hedging and trading through ‘shell’ companies which are not directly linked to the core business. Sir, it has been a challenge for the revenue administration to detect and abate such practices. Further, provisions on capital allowances and carry forward of losses eliminated potential taxable profits. Mr Speaker, the tax structure was simply illusory as only two mining companies were paying Company Income Tax under the previous tax regime as most of them claimed that they were not in tax-paying positions.

First Quantum, Toronto’s Barrick Gold and a number of other foreign mining companies screamed murder and worked to derail the Zambian government. First Quantum government affairs manager John Gladston said “the new system doesn’t incentivise investment in new capital projects which in turn, will inevitably be translated into fewer new jobs and less opportunities for wealth creation for Zambians.” To spur a backlash in the job-hungry country, First Quantum laid off 350 workers at its Kansanshi mine. The government responded by saying First Quantum wasn’t adhering to the country’s labour law. Government spokesperson Chishimba Kambwili told Xinhua that “all mining companies are aware of the standing order, which obliges them to consult the government through the Ministry of Labour before any decision to sack any worker becomes effective.”

Barrick Gold also threatened to lay off workers if the government increased royalty rates. The Toronto company said it would shutter its Lumwana Mine, which prompted 2,000 workers, fearing for their jobs, to hold a one-day strike. The foreign-run Chamber of Mines of Zambia claimed 12,000 jobs would be lost if the royalty changes went through and the IMF added its voice to those opposing the royalty hike.

The mining corporations’ strong-armed tactics succeeded. After a six-month standoff, the government backed off.

First Quantum, Barrick and the other foreign mining companies exploited the immense power ZCCM’s privatization gave them over Zambian economic life. By shuttering their mines they could produce economic hardship for thousands of people. (With an 80% unemployment rate and most Zambians living on less than a dollar a day, each formally employed individual provides for many others.) Some suggested the foreign mining companies were even “powerful enough to manipulate the exchange rate” of the country.

Canadian officials actively backed FQM and other mining companies in Zambia. At the 2013 Prospectors and Developers Association of Canada Convention Ottawa announced the start of negotiations on a Foreign Investment Promotion and Protection Agreement with Zambia, which would allow Canadian companies to pursue Zambia in international tribunal for lost profits. The next year the Head of Office at the Canadian High Commission, Sharad Kumar Gupta, “said the Canadian government is trying to encourage the private sector to explore… opportunities in Zambia’s mining sector,” reported Lusaka’s news.hot877.com.

After the leftist Patriotic Front opposition party accused First Quantum of blocking workers from voting in a 2005 parliamentary by-election, the Canadian High Commissioner defended the Vancouver company. John Deyell, who previously worked at mining giants Inco and Falconbridge in Sudbury, claimed First Quantum wasn’t responsible for day-to-day operations despite owning a sixth of MCM stock and controlling two seats on MCM’s executive board. In response the Patriotic Front sought to take their protest against MCM’s violation of workers’ rights to the Canadian High Commission, but the police denied them a permit.

In Zambia, as with elsewhere in Africa, Canada’s mining industry, foreign policy and neoliberalism overlap tightly. It’s a subject Canadians ought to pay attention to if we want our country to be a force for good in the world.

Comments Off on Canada’s neoliberal policies enable exploitation in Zambia

Filed under Canada in Africa

Toronto Star leaves readers ignorant of Canada’s real role in Africa

The media’s foreign affairs motto often seems to be ignorance is bliss. The Toronto Star, for instance, has devoted significant attention to the Trudeau government’s plan to dispatch 600 soldiers to Africa, but it has largely ignored the most relevant information.

In a recent installment of its “Should Canada go to Africa?” series the Star quoted former Royal Military College board member Jack Granatstein saying, “wherever we go in Africa is not where we should be going” and Canada’s contribution will “achieve nothing.” Countering Granatstein’s Afro-pessimism, the story cited Royal Military College professor Walter Dorn’s blanket support for UN missions since “the image of the peacekeeper is key to the Canadian identity.”

While Canada’s most progressive English daily offers its pages to embarrassingly simplistic pro and con positions, the Star has all but ignored the economic, geopolitical and historical context necessary to judge deploying 600 troops to the continent. While the Star published 19 stories last year discussing a potential Canadian peacekeeping mission in Africa, only one mentioned Canada’s main mark on the continent and that story simply noted, “officials also considered the extensive business interests of the Canadian mining industry” when deciding not to deploy troops to the Congo seven years ago.

That’s it? Even though Canada is home to half of all internationally listed mining companies operating in Africa. Even though Canada’s government has paid for geological educationjoint NGO–mining company projects and extractive sector policy initiatives, as well as opposing debt forgiveness and negotiating Foreign Investment Promotion and Protection Agreements with a dozen African countries — all to support corporate Canada’s $30 billion in mining investment. Even though the two most cited possible destinations to send troops – Mali and Congo – are home to a significant Canadian mining presence.

In addition to Canadian mining interests, Star coverage has ignored Canada’s growing military footprint in Africa over the past decade. Working closely with the new United States’ Africa Command (AFRICOM), Ottawa has funded and staffed various military training centres across the continent and Canadian special forces have trained numerous African militaries. The Canadian Forces Operational Support Hub also moved to establish small permanent bases on the east and west coasts of the continent and the Canadian Navy has expanded its presence, particularly off the coast of Somalia.

Evaluating Canada’s current military and economic role on the continent is a prerequisite for having a proper debate about deploying troops. So, is a critical look at past UN missions, which has also been absent from the Star.

For example, in 1960 the UN launched a peacekeeping force that delivered a major blow to Congolese democratic aspirations by undermining elected Prime Minister Patrice Lumumba. As detailed in Canada, the Congo Crisis, and UN Peacekeeping, 1960-64, Canadian soldiers played a significant role in the mission that enabled Lumumba’s assassination by US and Belgian-backed forces.

In 1992, about 900 Canadian military personnel joined a US-led humanitarian intervention into Somalia, which later came under UN command. While the soldiers who used the N-word and tortured a teenager to death received significant attention, the economic and geopolitical considerations driving the deployment did not. In 1993 Project Censored Canada found the prospects for extracting oil – Chevron, Amoco, Phillips, and Conoco had exploration rights to two-thirds of Somalia – the most under-reported Canadian news item that year. Alongside securing hydrocarbons from the ground, planners had an eye to the oil passing near Somalia’s 1,000-mile coastline. Whoever controls this territory is well placed to exert influence over oil shipped from the Persian Gulf.

Three years after the Somalia debacle Canada led a short-lived UN force into eastern Zaire. Presented as a way to protect one million Hutu refugees, it was really designed to dissipate French pressure for a UN force to deal with the refugee crisis and ensure Paris didn’t take command of a force that could impede Rwanda’s invasion of what’s now the Democratic Republic of the Congo. Washington proposed Ottawa, with many French speakers at its disposal, lead the UN mission since it didn’t want pro-Joseph-Mobutu-Sese-Seko France to gain control of the UN force. Ultimately, most of the Canadian-led UN force was not deployed since peacekeepers would have slowed down or prevented Rwanda, Uganda and its allies from triumphing, but not before Canadian, British and US officials “managed the magical disappearance” of half a million refugees, to quote Oxfam Emergencies Director Nick Stockton. That 1996 US-backed Rwandan invasion of the Congo and reinvasion in 1998 led to a deadly eight-country war and is the reason UN forces are there today.

But, little context — economic interests, past military involvement or critical history in general — has been presented.

While it’s published two editorials promoting planned UN mission, Star coverage of the issue demonstratesCanada isn’t ready to deploy troops to Africa. The public is almost entirely ignorant of this country’s role on the continent and our political culture gives politicians immense latitude to pursue self-serving policies there, present them as altruistic and face few questions.

Canadians who want a foreign policy that is a force for good in the world (or at least does no harm) must demand better of our media.

Comments Off on Toronto Star leaves readers ignorant of Canada’s real role in Africa

Filed under A Propaganda System, Canada in Africa

Real ‘aid’ means ending exploitation of Africa

What is wrong here? While Canadian companies exploit African resources for their own benefit this country’s charities call on us to join Africa “hope” walks.

Last week Toronto-based Lundin Mining hired the Bank of Montreal to help it decide what to do with its stake in the massive Tenke Fungurume copper-cobalt mine in Eastern Congo (Kinshasa). Unfortunately, it is not uncommon for Toronto firms to make economic decisions that affect hundreds of thousands of Africans and for Canadian companies to exchange African mineral assets among themselves.

A number of companies based and traded here have even taken African names. African Queen Mines, Tanzanian Royalty Exploration, Lake Victoria Mining Company, African Aura Resources, Katanga Mining, Société d’Exploitation Minière d’Afrique de l’Ouest (SEMAFO), Uganda Gold Mining, East Africa Metals, Timbuktu Gold, Sahelian Goldfields, African Gold Group and International African Mining Gold (IAMGOLD) are all Canadian. With a mere 0.5 percent of the world’s population, Canada is home to half of all internationally listed mining companies operating in Africa.

Active in 43 different African countries, Canadian mining firms have been responsible for dispossessing farmers, displacing communities, employing forced labour, devastating ecosystems and spurring human rights violations. And, as I detail in Canada in Africa300 Years of Aid and Exploitation, numerous Canadian mining companies have been accused of bribing officials and evading taxes. Last year TSX-listed MagIndustries was accused of paying$100,000 to tax officials in a bid to avoid paying taxes on its $1.5-billion potash mine and processing facility in Congo (Brazzaville). In April a Tanzanian tribunal ruled that Barrick Gold organized a “sophisticated schemeof tax evasion” in the East African country. As its Tanzanian operations delivered over US$400-million profit to shareholders between 2010 and 2013, the Toronto company failed to pay any corporate taxes, bilking the country out of $41.25 million.

While Canadian companies loot (legally and illegally) African resources, government-funded “charities” (aka NGOs) and the dominant media call on Canadians to walk for “hope” in Africa. Last weekend the Aga Khan Foundation Canada organized the World Partnership Walk in 10 cities across the country. In an article titled “How the World Partnership Walk” lets Canadians bring hope to African communities the organization’s International Development Champion, Attiya Hirj, writes about visiting Aga Khan Foundation and Global Affairs Canada sponsored projects in Tanzania and Mozambique. Hirj says her “trip really opened my eyes to what rural communities truly need, which is a sense of hope.” She suggests the situation can be remedied if enough Canadians come “together to fundraise and generate awareness through activities such as the World Partnership Walk.” There is no mention of the need for African resources to be controlled by and for Africans.

Hirj’s article reflects an extreme example of Canadian paternalism towards Africans. But it’s deeply rooted in our political culture.  Gripped by a desire to rid “darkest Africa” of “nakedness” and “heathenism”, Canadian missionaries helped the European colonial powers penetrate African society. In 1893 a couple of Torontonians founded what later became the largest interdenominational Protestant mission on the continent and by the end of the colonial period as many as 2,500 Canadians were proselytizing across Africa.

Today, all the media-anointed Africa “experts” promote a similarly paternalistic version of ‘aid’ and largely ignore Canadian companies’ role in pillaging the continent’s wealth. But, Canadians concerned about African impoverishment should point their fingers at the Canadian firms controlling the continent’s resources and offer solidarity to those sisters and brothers fighting for African resources to be controlled by and for Africans.

Comments Off on Real ‘aid’ means ending exploitation of Africa

Filed under Canada in Africa

Mining the leaders’ debate

The Liberal, NDP and Conservative leaders are set to debate Canada’s role in the world at an event put on by Munk Debates, an organization named after and financed by a wealthy businessman who made his fortune in mining. It will be interesting, therefore, to see if mining as a topic is given much, if any, attention by the leaders tonight.

Through his Aurea Foundation, Peter Munk, the founder of Barrick Gold, established Munk Debates in 2008. Peter’s son Anthony Munk is part of the committee overseeing the debate series.

Peter Munk espouses strong political views. In the late 1990s he publicly praised Chilean dictator Augusto Pinochet at a Barrick meeting while a decade later he compared polarizing Venezuelan president Hugo Chávez to Hitler. In a March 2011 Globe and Mail interview, Munk played down criticism of Barrick’s security force in Papua New Guinea by claiming “gang rape is a cultural habit” in that country.

The company Munk founded, like other Canadian mining companies, stands to gain or lose depending on Canadian foreign policy. For example, in 2011 the now defunct Canadian International Development Agency invested $500,000 in a World Vision Canada/Barrick Gold project. “In Peru,” noted the aid agency, “CIDA is supporting World Vision Canada, in a program that will increase the income and standard of living of 1,000 families affected by mining operations.” World Vision and Barrick combined to match CIDA’s donation.

In response Miguel Palacin, the head of a Peruvian indigenous organization, sent a letter to World Vision, Barrick and CIDA claiming that “no ‘social works’ carried out with the mining companies can compensate for the damage done” by mining operations while the former co-ordinator of Common Frontiers Canada, Rick Arnold, described the NGO initiative as “a pacification program, and not a development project.”

Barrick has also benefited from Canadian diplomatic support, including visits by the prime minister. In 2007 Stephen Harper met Barrick officials in Tanzania days after the company claimed a strike at one of its Tanzanian mines was illegal and looked to replace a thousand striking miners. Four months earlier Barrick gained important support for its Pascua-Lama operations, which spurred large-scale protests, during Harper’s trip to Chile. He visited the company’s Chilean office and said “Barrick follows Canadian standards of corporate social responsibility.”

Barrick, which operates some of the most controversial mining projects in the world, has opposed moves to withhold diplomatic and financial support to Canadian companies found responsible for significant abuses abroad. In 2008, the Toronto-based company opposed the recommendations of a business/civil society mining roundtable launched by the previous Liberal government, and two years later the company lobbied against Liberal MP John McKay’s private members bill C-300 (An Act Respecting Corporate Accountability for the Activities of Mining, Oil or Gas Corporations in Developing Countries).

Canadian-based companies dominate the international mining industry, operating in most countries around the world. In African and Latin American countries particularly, Canadian diplomats expend significant energy lobbying in favor of mining interests, aid dollars are channeled towards initiatives benefiting the sector, and officials in Ottawa seek to allay mining companies’ fears by negotiating foreign investment promotion and protection agreements.

Canada’s status as a global mining superpower ought to be part of a foreign policy debate. Let’s hope tonight we voters are able to hear from the party leaders a serious discussion of regulating mining activities abroad or the appropriate level of government “aid” to profitable private companies.

This article first appeared on The Tyee.

Comments Off on Mining the leaders’ debate

Filed under Black Book of Canadian Foreign Policy, Canada in Africa, The Ugly Canadian

Corporate profits the point of Harper’s Africa policy

Despite rhetoric about providing aid to the poorest, the Harper Conservatives have worked assiduously to ensure that Canadian corporations profit from Africa’s vast mineral resources, rather than the continent’s people.

Even widespread criticism of their operations has failed to dampen the Conservatives’ support for Canada’s many mining interests in Africa. Canadian mining companies have been accused of bribing officials, evading taxes, dispossessing farmers, displacing communities, employing forced labour, devastating ecosystems and spurring human rights violations.

But more important than the specific instances of abuse, which I detail in my forthcoming book Canada in Africa: 300 Years of Aid and Exploitation, the mining industry contributes little to sustainable economic development. Instead it vacuums up resources to benefit wealthy people, very few of whom live in Africa.

The mining industry has found a set of loyal lobbyists in the Harper government. Indifferent to the deleterious impacts of the sector, International Trade Minister Ed Fast has included numerous mining executives in his delegations to the continent, and former foreign minister John Baird focused his visits to Africa on countries where Canadian resource companies sought business. For his part, International Development Minister Christian Paradis praised the sector’s development benefits in a bid to (misleadingly) convince African officials that “Canada owes much of its economic growth to extractive industries.”

Prime Minister Stephen Harper has personally promoted Canadian mining companies, for instance, when Benin’s president visited Ottawa in 2013. During a trip to Senegal in 2012 the PM met with representatives from several mining firms and publicly lauded the sector.

On a visit to Tanzania in 2007, Harper met with more than 10 Canadian resource firms, calling this an opportunity to discuss “the general business climate [and] what the government of Canada can do to assist in building our investments here.” In the months after Harper’s visit, the Canadian High Commission lobbied Tanzania’s Parliament to reject the recommendation of the country’s Mineral Sector Review Committee that the government keep more of the profits resulting from higher mineral prices.

Since 2012 Ottawa has pumped huge sums of public money into mining initiatives in Africa. The public money helped establish branch offices of a professional society, the Canadian Institute of Mining, Metallurgy and Petroleum, in Senegal and Burkina Faso as well as a Senegalese school for geomatics (combining geography and information technology to map natural resources).

Last year, Canada pledged $18.5 million of tax money to provide training in the extractives industry in Mozambique, and earlier this year Ottawa announced a $12-million grant for a project called Strengthening Education for Mining in Ethiopia “to develop more industry driven geology and mining engineering undergraduate programs.” In 2014 the government budgeted up to $25 million per year for the Extractives Cooperation for Enhanced Economic Development (EXCEED) initiative, which it described as “a new funding mechanism to expand Canada’s involvement in areas of high development impact in the extractive sector in Africa.”

In addition to promoting the sector in general, the Conservatives are now channelling foreign “aid” through mining companies, ploughing millions of dollars into corporate social responsibility projects. One example of this “aid” was a $4.5-million grant to Lundin for Africa, a charity financed by mining behemoth Lundin Group of Companies, for its operations in Ghana, Mali and Senegal. Ottawa also put up $5.6 million for a project between NGO Plan Canada and IAMGOLD near the company’s mine in Burkina Faso.

As the Conservatives pumped tens of millions of “aid” dollars into supporting an industry notorious for abuses in countries with weak legal structures, they also blocked domestic attempts at regulation while ensuring Canadian mining companies held the upper hand in foreign jurisdictions.

The Conservatives defeated Bill C-300, which would have withheld diplomatic and financial support from companies found responsible for significant abuses abroad. They also opposed legislation modeled on the U.S. Alien Torts Claims Act that would have allowed lawsuits against Canadian companies responsible for major human rights violations or ecological destruction abroad.

After two decades of privatization and loosened restrictions on foreign investment, mining companies operating on the continent fear a reversal of these policies. And so, in what may be their most significant support to Canadian mining corporations in Africa, the Conservatives negotiated Foreign Investment Protection Agreements with a number of African countries. FIPAs give corporations the right to sue governments — in private, investor-friendly tribunals — for interfering with profits, such as expropriating a concession, changing investment rules or requiring that value-added production take place in the country rather than abroad.

In essence, these agreements aim to counter “resource nationalism.” “Canada appears keen to negotiate FIPAs with some of the most economically and politically vulnerable but resource rich African countries before they develop a taste for resource sovereignty,” notes academic and author Paula Butler in Canadian Dimension.

Canadian policy in Africa has become largely synonymous with the interests of Canadian mining companies. The Harper Conservatives have sought to ensure that the continent’s mining policy serves the interests of foreign corporations, the majority of Africans be damned.

This article first appeared in Ricochet

Comments Off on Corporate profits the point of Harper’s Africa policy

Filed under Canada in Africa

Good for business, bad for Africans

Sometimes what is good for business can be bad for people. Most Canadians understand this and cherish their right to protest “bad deals” and to elect new governments willing to reverse so-called “business-friendly” policies. This is called democracy.

So what do we call it when Ottawa signs a deal with an unelected regime that would prevent any future elected government in a small African nation from changing its laws regulating Canadian-owned mines for almost two decades?

In April Harper’s Conservatives signed a Foreign Investment Promotion and Protection Agreement (FIPA) with the interim government of Burkina Faso. According to the official release, the West African nation was represented at the signing ceremony in Ottawa by Prime Minister Yacouba Isaac Zida, who was deputy commander of the presidential guard when Blaise Compaore was ousted by popular protest last October. A U.S. and Canadian trained Lieutenant Colonel, Zida is one of five military men in a cabinet overseeing the landlocked country’s transition towards elections after President Compaore’s 27 year rule.

While the caretaker government is supposed to move aside after an election planned for October, the investment treaty will live on for at least 16 years. According to the FIPA, “the termination of this Agreement will be effective one year after notice of termination has been received by the other Party.” The subsequent line, however, reads that “in respect of investments or commitments to invest made prior to the date when the termination of this Agreement becomes effective, Articles 1 to 42 inclusive, as well as paragraphs 1, 2 and 3 of this Article, shall remain in force for a period of 15 years.” In other words, any elected government will be effectively bound by the accord for another decade and a half.

The FIPA’s Investor State Dispute Settlement mechanism clearly undermines (forgive the pun) democracy. It gives Canadian corporations the right to sue Burkina Faso’s government – in a private, investor-friendly international tribunal – for pursuing policies that interfere with their profit making. While Ottawa says the process protects Canadian investors “against discriminatory and arbitrary practices”, it also undermines the public’s ability to determine economic policy.

What is of concern to the Conservatives is the impoverished nation’s mining sector, which is dominated by corporate Canada. Since ousting Compaore, community groups and mine workers have launched a wave of protests against foreign-owned mining companies. After local residents damaged equipment in January, Vancouver’s True Gold Mining shuttered its Karma gold project and an official from Montréal-based Semafo recently told Bloomberg that the company was looking to fund a new police unit that would focus on protecting mining interests.

Under the FIPA a Canadian mining firm could sue if the central government listened to a community opposed to a mine. Canadian companies have already used investment treaties to claim hundreds of millions of dollars in damages from Latin American countries that withdrew mining licenses after stiff local resistance.

A company could also sue if a new government required a certain level of domestic purchasing. The accord explicitly precludes “domestic content” requirements or any effort to “accord a preference to a good produced or service provided in its territory.”

At a broader level, the aim of the FIPA is to counter a resurgence of “resource nationalism”. Having received a free hand during the last decade of Compaore’s rule, Canadian companies fear a reversal of these policies. So, they seek rights to sue the country if a new government expropriates a concession, changes investment rules or requires value added production in the country.

Over the past decade Canada has become a mining superpower in Africa and the Conservatives have aggressively pushed the industry’s agenda. To protect $31 billion in Canadian mining investment from policy shifts, the federal government has signed or negotiated FIPAs with 15 African countries and officials have sent a message that aid is more likely to flow to a government that signs a FIPA.

The Conservatives are undermining African democracy in their haste to defend mining companies. It is unjust to persuade an elected government to concede power to an international investment tribunal and simply indefensible to sign a deal with an unelected transition administration that binds future governments.

Comments Off on Good for business, bad for Africans

Filed under Canada in Africa