García and the Canon Comunitaria

5 December 2015

A useful blog written by Maritza Paredes of Lima’s Catholic University (PUCP) takes issue with the proposal, recently made by Alan García, to introduce a ‘canon comunitaria’ by which communities in the immediate vicinity of extractive industries would receive a share of their profits.

She quotes García in saying how communities in the United States, Canada and South Africa have become beacons of economic development, where environmental regulations are observed and conflict is something of the past, because people are direct beneficiaries.

Questioning this idea, Paredes highlights the case of Beattyville in Kentucky, a ghost town following the decline of the coal industry. Here, in the heady boom days, money did roll in (‘la plata llega sola’ to quote a phrase attributed to García), but rolled out just as fast as the economic cycle changed.

Money, she suggests does not, of itself help build communities, improve the quality of education and help diversify the economy.

The legacy of canon spending by regional governments and by administrations at the local level in Peru is not a great advertisement for García’s idea of a community canon. In regions like Cuzco and Ancash, which because of the extractive wealth have received the lion’s share of canon spending in recent years, the legacy is one of waste and corruption.

The canon (derived from a share of the corporate tax paid by extractive companies and distributed between different tiers of sub-national government) has favoured those places where extractive industries are sited but has led to a plethora of infrastructure projects of doubtful utility and poor design which, in themselves, have done little to resolve longstanding development needs.

Paredes lists a number of places in the United States and elsewhere where local communities have resisted extractive industries, despite the temporary flows of money they bring in. Looking to the longer term, sustainable activities like agriculture bring more by way of social and economic benefit. And the environmental risks involved are graphically illustrated by the immense spill resulting from the failure of a tailings dam in Minas Gerais at a mine operated jointly by Vale and BHP-Billiton.

Finally, Paredes argues that a canon of this sort is no substitute for respect towards the rights of communities for prior consultation, a notion that García tenaciously opposed during his second government (2006-11). Such rights, however, have to be fully honoured in practice rather than simply observed on paper.

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