Revenue Watch Institute (RWI) has developed an index of the quality of governance specifically for the mining, oil and gas sectors covering 58 countries and based around 173 questions. In its 2013 index, the most recent to be published, Peru achieves a rating of 73; it is thus classed as ‘satisfactory’ and comes eleventh in the list. Norway leads with 98, perfection being 100.
http://www.resourcegovernance.org/rgi

This information sits oddly with the current conflict over the Tía María mine proposal, now into its sixth week. The government is scheduled to hold talks with communities this week, but the issues have been inflamed by reports of police violence and the company executive who referred to protesters as ‘anti-mining terrorists’. Carlos Monge, Regional Coordinator for Revenue Watch, is quoted as giving the project no chance: “It seems to me that the gap in resolving the dispute has increased, between the population and the company and the population and the government” https://www2.snl.com/Interactivex/article.aspx?CdId=A-32373265-12336. At the heart of the conflict is a community – like many others in the Peruvian highlands – that believes it has not been properly consulted, feels extremely vulnerable and has little trust in the institutions supposedly protecting it.

So what does this good rating on governance really tell us? First, when we look into the detail, we find that the Revenue Watch questionnaire method gives full marks to Peru for having legislation that requires an Environmental Impact Assessment (EIA), requires consultation and insists that the EIA is published.

But what earns Peru such good marks for consultation is having on the books Law 29785, asserting the ‘prior consultation right of indigenous peoples’ in situations where collective rights may be directly affected by legislative or administrative measures that seek to implement the law. The language used by the law itself is quite strong in that a project may not go ahead until agreement has been reached. Yet the rating given to Peru needs to be qualified because the secondary legislation limits the application of this law to a small number of indigenous communities named in the government’s data base. All are in the Amazon region, so that the communities potentially affected by Tia Maria are excluded, as are all others in the Peruvian highlands.

There is admittedly a regulation in the norms governing the environmental legislation that calls for ‘consultation’, alongside procedures for publishing plans and holding public meetings, but this is far weaker than the wording of the Prior Consultation Law itself and these procedures require energetic supervision to have any meaning.

The focus of the RWI index on the primary law, rather than on the regulations guiding implementation, means that no direct evaluation is built in regarding the quality or performance of the institutions responsible for implementation. And we have seen over the last two years how the powers, capacities and resources of the already weak oversight institutions within the Ministry of the Environment have been eroded. Today a further attack is pending: INDECOPI, the consumer watchdog, has to rule on the case made by a number of companies against the legitimacy of the Aporte para la Regulación (APR), a payment companies are required to make to cover the cost of their regulation. Were this change to be allowed, the budget of the evaluation unit within the Ministry would be savagely cut.

It is true however that the institutional context is given some weight in the Revenue Watch index. One of its four elements is precisely this, and for this it relies on the World Bank’s overall governance index. But the weight given to this element is only 20%, and this index itself is partly based on the quality of the formal rules, particularly those governing the transparency of the budget process. Even with this element giving Peru good marks, Peru’s score is only 55. See http://info.worldbank.org/governance/wgi/pdf/c174.pdf.

Surely a fair evaluation of the governance of extractives as ‘satisfactory’ must give more weight to the quality of implementation. The formal laws are of course an important first step, but to come close to equating satisfactory primary legislation with satisfactory governance can be dangerously misleading.