Tuesday, February 27, 2007

Bolivia Reclaims Vinto, Unveiling a Tangled Web

On February 9, the Bolivian government renationalized the country’s only tin smelter - the Empresa Metalurgica Vinto plant. Located on the outskirts of Oruro, 110 miles southeast of the capital La Paz, Vinto was formerly the world’s largest privately-owned operating smelter – not anymore.

Morales has called 2007 the year of recovering Bolivia’s mineral resources. And while Vinto is another step in the process, this move by the Morales administration goes deep into Bolivia – revisiting historical exploitation of the country’s resources and strange bedfellows with direct ties to Washington D.C.

Skeletons in the Closet

President Morales and Mining Minister Guillermo Dallence recently announced that Bolivia will not compensate Glencore for the nationalization of the Vinto plant. Morales called the privatization sale of the company illegal. Meanwhile, Vinto’s owner - the Swiss company Glencore Mining International AG - has threatened to seek international mediation against Bolivia, stating it will take all means necessary to guarantee full compensation.

The Economist called Morales’ move a “political vendetta”, but if the past actions of both Glencore and its original founder, Marc Rich are any indication of its business ethics - Morales may be correct.

Glencore is one of the world's largest suppliers of commodities and raw materials, and is also among the world's largest privately held companies. The company boasts a checkered history, rife with unethical behavior and powerful friends in high places.

Glencore was formerly Marc Rich & Company and its founder was involved in one of the largest tax frauds in U.S. history. Charged with tax evasion of $48 million dollars, Rich was once considered America's most-wanted white collar criminal and listed on the FBI's most-wanted list. He and his partner were eventually pardoned in 2001 during President Bill Clinton’s last few hours in office. Rich's lawyer from 1985 to 2000 was Scooter Libby - Vice-President Dick Cheney's former Chief of Staff who was forced to resign in 2005 and is currently facing trial for perjury.

An oil trader during the 1970’s, Rich became a billionaire trading commodities through his private firm. At one point his company’s subsidiary, Alphe Limitada, controlled 45 percent of Bolivia's sales of tin.

During the 1980’s, Rich’s influence over the metals market in Bolivia impacted millions of trading dollars. In 1982, Bolivia was swindled out of $4 million with the illegal sale of 400 metric tons of tin to a company in Thailand. And while on the run, Rich’s fugitive status diminished the marketing prospects of Bolivia’s tin. It is widely believed that Rich’s company precipitated a failed attempt by Malaysia to corner the tin market and raise prices on a world-scale. The fiscal scandal cost the Malaysian government $150 million.

Eventually Rich’s business practices came to a head. In 1983, then U.S. District Attorney Rudy Giuliani, indicted Rich and his partner Pincus “Pinky” Green on 51 counts of tax evasion, fraud and racketeering. The charges also included violating a presidential decree that forbade trading with the Republic of Iran during the American hostage crisis. The Belgian-born Rich denounced his U.S. citizenship as he and Green fled New York for Switzerland in 1984.

While an international fugitive, Rich continued to manage his company and accumulate wealth - safe from extradition under Swiss law. Widely noted for his secretive oil-trading inner circle, Rich eventually sold his majority share in Marc Rich & Company AG back to the company in 1994 – at which time it assumed the name Glencore in an attempt to create distance from its fugitive founder.

However, Glencore’s questionable behavior continued long after Rich’s departure.

In 2001, the United States, Britain and France barred Glencore from buying more Iraqi oil because of allegations that it violated U.N. rules in the Iraqi Oil-for-Food program. The company was accused of profiting from the diversion of a U.S.-bound shipment of 1 million barrels of Iraqi oil to Croatia, where the oil was sold for about $ 3 more per barrel than it would have in the United States. After being confronted with evidence by UN experts, Glencore agreed to pay $ 3 million into a U.N. fund to buy food, medicine and other humanitarian supplies for Iraq.

Also questionable is the sale of Bolivian mining assets, including Vinto, in 2005.

Pass the Vinto

The Vinto plant has changed hands a few times since originally opening under state management in 1971. In order to meet World Bank and International Monetary Fund lending conditions, Vinto was privatized in 1999 when Britain’s Allied Deals paid $27 million for the smelter and a nearby Huanuni mine.

Later changing its name to RBC Corporation, Allied Deals was investigated by the British government on fraud charges. In the fray, Vinto was liquidated for a mere $6 million in 2002 to a consortium headed by Comsur - a private mining company whose largest stockholder at the time was former Bolivian President Gonzalo (Goni) Sanchez de Lozada.

Goni, himself an international fugitive, fled to Washington DC in 2003 after he resigned as president. He is wanted by the Bolivian government for his role in Black October when 67 people were killed after Goni called in the Bolivian military on protesting citizens. To date, the U.S. government has resisted extraditing Goni who currently lives in Chevy Chase, Maryland.

In 2005 Goni sold Vinto and several mines to Glencore. The price was not disclosed, but it is widely estimated at $220 million, with $90 million being paid for the smelter alone. The sale figure indicates a 1500 percent return on Comsur’s original investment in the tin smelter.

Glencore’s subsidiary Sinchi Wayra, continues to operate 5 mines in the Oruro and Potosi regions that mine and process tin, silver, gold and zinc. As a privately owned company, Glencore’s full financials are not made public, however as of 2006, it was Europe's sixth-largest company with turnover worth of $91 billion and total assets of $32.4 billion. The company has powerful friends with access to the highest levels of influence economically and politically.

Bolivia’s metal markets have been a source of great wealth for international empresarios, at a significant cost to Bolivia's population. Advocating for Glencore, the Swiss ambassador to Bolivia, Beat Luelicer, has asked for legal security. After meeting with Bolivia's mining minister, Luelicer announced serious concern that a bilateral agreement signed in 1991 between Switzerland and Bolivia, for protection of investments, was not applied. The nationalization of Vinto has potential to cause a stir between the Bolivian, U.S. and Swiss governments. However, Morales has more immediate concerns – the demands of his constituents.

Morales’ government has only recently mended a fracture with Bolivia’s mining cooperatives over a proposed increase in mining taxes that would have meant steep increases - between 50 and 160 percent - for the nation’s 536 mining cooperatives that operate in the departments of Cochabamba, La Paz, Oruro and Potosí.

The proposal was modified by Morales’ administration earlier this month after thousands of miners descended upon La Paz to protest the increase. Protestors clashed with police, exploded sticks of dynamite in the street and took two anti-riot police hostage. After a six-hour meeting between miner leadership and Morales, the cooperatives received a reprieve from the tax increase and in addition were granted two out of six seats on the board of directors of the state mining company Comibol to help represent their 55,000 members.

Upon nationalizing Vinto earlier this month Morales announced that the government will create new jobs at the plant and invest $10 million in its modernization.

"I am delivering on the mandate given by the Bolivian people, which was to recover our natural resources," Morales stated.


Monday, February 12, 2007

The Guise of Scholarship

“Teaching Official U.S. Native Peoples Policies"

For the second consecutive year a program sponsored by the U.S. State Department brought Bolivian indigenous student leaders to the U.S. to participate in a four-week program that involved visits to various sites in the United States.

The program which ran from January 13 through February 9 was hosted by the Institute for Training and Development, based in Amherst, Massachusetts. The students who hailed from the Universidad Mayor de San Simon in Cochabamba and the Universidad Mayor de San Andres in La Paz, spent most of their time learning about the history, culture and government of the United States at Amherst College. They also traveled to Washington D.C. and the Tohono O'odham Reservation near Tucson, Arizona.
According to various State Department officials, the United States Institute for Bolivian Indigenous Student Leaders program “reflects the U.S. commitment to work with historically marginalized populations.” Yet contrary to that commitment, the United States continues to engage in practices both domestically and internationally that threaten the mere survival of many indigenous communities.

In November of last year the U.S. was instrumental in serving the world-wide indigenous community a devastating setback by heading a United Nations delegation that worked to deny approval of the Declaration on the Rights of Indigenous Peoples.

The declaration - 30 years in the making - had achieved support from a majority of the U.N. General Assembly’s 191 member nations, but protests by the United States, Canada, Australia, Russia and New Zealand – all nations with large indigenous populations – prevented the declaration from being ratified.

According to Armstrong Wiggins, a Miskito leader from Nicaragua who is director of the Washington, D.C. office of the Indian Law Resource Center, the declaration puts pressure on governments to live up to universal principles of justice, democracy, respect for human rights. ''It has been a long process working to advance our rights on every level with the United Nations, the World Bank, the Inter-American Development Bank and other agencies.''

Although a non-binding resolution, the declaration would be a major step towards international recognition of the self-determination of indigenous peoples - often the poorest and most marginalized individuals in their respective societies.

Bolivia serves as an example. The country boasts the largest indigenous population in the world and sits on top of vast resources of natural gas, silver and tin, yet is one of the poorest nation’s in the Western Hemisphere – even though one silver mine in the Potosi region bankrolled the entire Spanish colonial empire for over a hundred years.

There are more than 370 million indigenous people world-wide with 562 federally recognized tribes resting in the U.S. alone. Native Americans in the U.S. suffer from the highest rates of poverty, unemployment, suicide, diabetes, heart disease, inadequate health care and inadequate food access.

One of the visiting Bolivian students was quoted as being pleasantly surprised and moved after talking to members of the Tohono O'odham tribe who share the same family customs, challenges and Spanish language of his people in Bolivia. However, in the richest country in the world, the living conditions of the Tohono O’odham Nation are bleak: life expectancy among male tribal members is below 60 years of age and 52 percent of the Tohono O'odham people suffer from Type 2 diabetes - six times higher than the rest of the United States. The unemployment rate is 40 percent and per capita income is $19,000 annually. Half of the reservation’s households have no electricity or telephone service and one-third lack indoor plumbing.

Curiously the Chairwoman of the Tohono O'odham Nation, Vivian Juan-Saunders, publicly offered support to Republican Senator John McCain, head of the Senate Indian Affairs Committee and 2008 Presidential hopeful, saying “You have my vote.” McCain has been supportive of the Secure Fence Act, legislation that passed the U.S. House of Representatives in September 2006. The law would approve construction of 700 miles of fence across a third of the U.S.-Mexico border, cutting through portions of Texas, New Mexico, Arizona and California. Beyond imposing ecological disruption on indigenous lands, the fence would cut off 1,400 Tohono O'odham members who live on the other side of the Mexican border.

Secretary of State Condoleeza Rice has emphasized the importance of helping the 5,000 different groups of indigenous people who live in more than 70 countries around the world. Perhaps the U.S. should start within its own borders, beginning in the nation’s capital. Washington D.C. benefits economically from using a racially derogative team mascot for its football team that propagates negative stereotypes of Native Americans – a situation that is duplicated across sports genres throughout the country.

Among the reasons cited by the State Department for assisting indigenous people is that natives are excellent stewards for environmental protection. Indigenous peoples often live in areas rich in biodiversity, and their cultural knowledge of medicinal uses of plants can be transformed to benefit non-indigenous people.

Yet, the activities of capitalist societies reinforced by the United States and international economic institutions such as the World Bank and International Monetary Fund continuously threaten the ancestral lands of indigenous people as global warming creates unknown consequences. Recently, scientists throughout Latin America have noted the rapid loss of glaciers in Peru, Venezuela, Colombia and Bolivia. According to predictions of Jaime Argollo Bautista, director of the Institute of Geological Investigation at Bolivia's University of San Andres – Bolivia’s glaciers will disappear in 30 to 40 years. The situation will wipe out Bolivia’s only ski resort in Chacaltaya where 80 percent of its glacier has melted in the past 20 years but most importantly threaten water supplies for drinking and hydroelectric plants that supply power to La Paz and El Alto.

Most undoubtedly, the 15 Bolivian students who visited the U.S. gained an insight into the “official” American way of life that will remain unknown to most indigenous Bolivianos & those of the United States. However the information shared with these young collegiate age leaders about “American” style democracy and leadership may well be considered contradictory to U.S. actions that continue to undermine the human rights of indigenous people in the Americas and throughout the world. The State Department’s director of the Office of Andean Affairs, Philip French stated that the students “were going to take back lessons learned on American democracy.” With an active voter participation rate of just under 50 percent compared with Bolivia’s recent turnout of 83 percent that ushered in the election of its first indigenous president, perhaps the United States has lessons it could learn from Bolivian public participation in the political process called democracy.