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Business / Archive
25 September, 2006 21:32:33 | in Industry/Mining
Peru's Mining Crisis
(by Enrique Ghersi, first published at the "Independent Institute" - link -)
In recent weeks, Peru has seen violent protests on the part of local communities against foreign investors involved in mining. Some people advocate raising taxes on the mining companies, while others have promoted voluntary cash donations on the part of foreign investors to placate the protestors. But the social crisis that affects mining in Peru will not be resolved with taxes or alms, because it is the consequence not of the lack of state intervention but of its excess.
The crux of that crisis is the fact that the peasants who own the surface of the land do not own the subsoil, which holds the vast mineral riches of our country.
Because of legal artifice arising from a false interpretation of Spanish law prevalent in Peru, the owner of the subsoil is the State, which confers it, in concession, to the mining companies interested in exploiting it.
In recent weeks, Peru has seen violent protests on the part of local communities against foreign investors involved in mining. Some people advocate raising taxes on the mining companies, while others have promoted voluntary cash donations on the part of foreign investors to placate the protestors. But the social crisis that affects mining in Peru will not be resolved with taxes or alms, because it is the consequence not of the lack of state intervention but of its excess.
The crux of that crisis is the fact that the peasants who own the surface of the land do not own the subsoil, which holds the vast mineral riches of our country.
Because of legal artifice arising from a false interpretation of Spanish law prevalent in Peru, the owner of the subsoil is the State, which confers it, in concession, to the mining companies interested in exploiting it.
This leads to the revenue from mining being appropriated by the State and by the mining companies. Mute witnesses to this are the poorest peasants in our country—the same ones who, if they owned the subsoil, would be among the richest people in the continent.
The laws on mining have expropriated the subsoil from the poor, who, while being the owners of the soil, must content themselves with watching the enrichment of others. This expropriation necessarily provokes violence and resentment, conditions which create an ideal environment for the most diverse political interests to do their proselytizing in the open.
From the days of the Roman Empire, a principle of universal law has been that the owner of the soil extends his dominion up to the skies and down to the subsoil, limited only by his convenience and other people’s rights.
If this simple principle were applied to our mining legislation, the peasants and the indigenous communities would not have to resort to violence to obtain crumbs of false charity from bureaucrats and businessmen, but instead would be the legitimate titleholders of the property containing the mineral deposits, and therefore would be the principal beneficiaries of their production.
Once they have become property owners, it would be their decision whether to sit on the mineral—something they hardly would do if they want to profit from it—or whether to enter into partnership with a mining company, or whether to turn over the deposits to third parties for exploitation, or whether to sell or lease them to whomever they think best.
A question I’ve asked my students for the past 20 years is: what is the difference between finding crude oil in your garden in Talara, or in Houston? The answer: if you find it in Houston, you’re rich, because the oil is yours; if you find it in Talara, you’re poor, because it belongs to the government.
Since resources are scarce, the allocation of property rights on the deposits has not only economic consequences, but also political and social ones.
Thus, an inefficient allocation of rights provokes social violence and confrontation. History is full of such examples: urban invasion by squatters, seizure of land by peasants, and today, the mining crisis.
The solution, then, is to privatize the subsoil and turn it over to the legitimate owners of the soil, the peasants and the Andean communities.
Let them benefit from the enormous profits of mining, without the corrupt hypocrisy of social aid or the disdain of charity.
The miners will know how to do business with the new owners. The State will collect its taxes. And, in a short time, emerging among the humblest Peruvians will be a new bourgeoisie, free of manipulation and the owner of its own destiny.
-----------------------------------------------------------------------------------------
The laws on mining have expropriated the subsoil from the poor, who, while being the owners of the soil, must content themselves with watching the enrichment of others. This expropriation necessarily provokes violence and resentment, conditions which create an ideal environment for the most diverse political interests to do their proselytizing in the open.
From the days of the Roman Empire, a principle of universal law has been that the owner of the soil extends his dominion up to the skies and down to the subsoil, limited only by his convenience and other people’s rights.
If this simple principle were applied to our mining legislation, the peasants and the indigenous communities would not have to resort to violence to obtain crumbs of false charity from bureaucrats and businessmen, but instead would be the legitimate titleholders of the property containing the mineral deposits, and therefore would be the principal beneficiaries of their production.
Once they have become property owners, it would be their decision whether to sit on the mineral—something they hardly would do if they want to profit from it—or whether to enter into partnership with a mining company, or whether to turn over the deposits to third parties for exploitation, or whether to sell or lease them to whomever they think best.
A question I’ve asked my students for the past 20 years is: what is the difference between finding crude oil in your garden in Talara, or in Houston? The answer: if you find it in Houston, you’re rich, because the oil is yours; if you find it in Talara, you’re poor, because it belongs to the government.
Since resources are scarce, the allocation of property rights on the deposits has not only economic consequences, but also political and social ones.
Thus, an inefficient allocation of rights provokes social violence and confrontation. History is full of such examples: urban invasion by squatters, seizure of land by peasants, and today, the mining crisis.
The solution, then, is to privatize the subsoil and turn it over to the legitimate owners of the soil, the peasants and the Andean communities.
Let them benefit from the enormous profits of mining, without the corrupt hypocrisy of social aid or the disdain of charity.
The miners will know how to do business with the new owners. The State will collect its taxes. And, in a short time, emerging among the humblest Peruvians will be a new bourgeoisie, free of manipulation and the owner of its own destiny.
-----------------------------------------------------------------------------------------
Enrique Ghersi is an adjunct fellow with the Independent Institute and President of the CITEL think–tank.
- Republished with friendly permission from the "Independent Instititute"
tags : Peru economy business mining law justice protests opinion
7 Comments
# Martin Mount says :
28 September, 2006 [ 06:50 ]
28 September, 2006 [ 10:04 ]
15 October, 2006 [ 09:31 ]
6 November, 2008 [ 05:49 ]
15 January, 2009 [ 10:57 ]
3 February, 2009 [ 06:25 ]
16 March, 2009 [ 12:51 ]
# Martin Mount says :
28 September, 2006 [ 06:50 ]
Enrique Ghersi would be advised to research and understand the whole problem before misleading people with statements like that made above. Such incomplete and misleading statements only create conflict and add to the problem when it is a peaceful and practical solution that is required.# Murray Lytle says :
28 September, 2006 [ 10:04 ]
As a field practitioner, I offer my opinion that Mr. Ghersi is off the mark and his suggestion would seriously endanger an already precarious situation. He should also be aware that in most Canadian jurisdictions subsoil resources are owned and managed by the state and not by the surface land owners. This has resulted in one of the best managed resource development structures in the world. Forcing resource development companies to negotiate complicated agreements with sometimes hundreds of small landowners to pay them large sums of money which will be subsequently taken from the peasants by other "interests" and used against the mining companies will effectively end resource investment in Peru. Hasn't the country learned from the land reform of the 70's? I agree with Mr. Ghersi desired destination to but this is definitely not the way to arrive there.# Edwin Kolausok says :
15 October, 2006 [ 09:31 ]
I am not completely familiar with the regulatory system in Peru;however, it is very important to ensure that the interests of the people of Peru, the environment and the mining industry are addressed in a fair manner. They are all ultimately involved in a relationship that can achieve positive results by working together to find the solution. The solution is definitely there and it will be those companies who take the lead in helping the people to achieve economic and social development through a productive relationship that provides employment, equity partnerships, and good environmental stewardship -that will achieve success. The indigenous people of Peru deserve to have their rights protected and to share in the wealth of their land and resources. Mining companies that listen to the people and are willing to share and communicate with them will do well. By investing in people, community capacity development, and tangible sharing everyone will benefit. My hope is that clear communication, mutual respect and a strong effort by the mining industry to engage meaningful partnerships that add value to the standard of living for the people of Peru will occur. Where I live in the Northwest Territories, Canada, the mining industry is working with the people and starting to share the wealth. The regulatory system also takes a holistic approach that places a high value on environmental protection balanced with economic development. Sharing the wealth untimately helps everyone to achieve a better standard of living. The people of South America have contributed so much wealth to the world and all they are asking for is a share of what is rightfully theirs to enjoy...I hope the mining industy helps them to advance their interests and through this build a win-win situation. Edwin K# Sara Skinner says :
6 November, 2008 [ 05:49 ]
My grandfather was an ordinary man with a small piece of land (chacras) and some sheep enough to provide food for himself and his family. Unfortunately he lived in an area where the soil was rich with minerals. His small land was destroyed with the arrival of foreign mining companies. He could not have anymore animals and crops so he had to immigrate to another town. He and many other people never received anything in compensation and I wonder how many others have been in the same position. Even when he lost money he never lost his pride and I am very proud of my grandfather who worked very hard to provide an education to his daughter (my mother). I wish there were more people like Enrique Ghersi. I support his ideals. Sara S.# CICI QIN FROM CHINA says :
15 January, 2009 [ 10:57 ]
# CICI QIN FROM CHINA says :Gracias amigo,This is Cici from Trans-china logistics,It is a freight forwarder from China .
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POL
Destination Carrier 20GP 40GP 40HQ T/T VIA Valid Qingdao Callao MSC $1,450 $2,700 $2,800 36 BUSAN Jan Qingdao CSAV $1,500 $2,750 $ 2,850 34 BUSAN Jan Shanghai EMC $1,500 $2,700 $2,800 34 COLON Jan Shanghai CSAV $1,406 $2,606 $2,706 27 DIRECT Jan Shenzhen CSCL $1,475 $2,750 $2,850 30 DIRECT Jan Ningbo CSCL $1,475 $2,750 $2,850 30 DIRECT Jan Xiamen K-LINES $1,500 $2,800 $2,900 33 BUSAN Jan Qingdao LIMA CCNI $2,600 $5,200 $5,300 40 BUSAN Jan Shanghai CSAV $1,767 $3,092 $3,192 29 CALLAO Jan Ningbo CSAV $1,736 $2,836 $2,936 35 CALLAO Jan Shenzhen CCNI $2,200 $3,700 $3,800 42 CHIWAN Jan Qingdao PAITA MSC $1,450 $2,700 $2,800 38 BUSAN Jan Shanghai EMC $1,450 $2,900 $3,000 55 COLON Jan Shenzhen MSC $1,400 $2,600 $2,700 45 BUENA Jan Ningbo MSC $1,525 $2,775 $2,875 35 BUENAWTURA Jan Looking forward to your response and anything else you need pls feel free to let me know .Wish your business goes well !
Tks & B.regards!
Cici Qin
Customer Service Dept
Trans-China Logistics Co.,Ltd Qingdao Branch
Add:Room 1003,Power 8,Pacific Plaza,NO.35
Donghai Xi Road ,QINGDAO,CHINA.
Tel:0086-532-85025882
Fax:0086-532-85025939
M:13884956817
E-mail: tao-cus01@trans-china.com
MSN:tao-cus01@trans-china.com
Skype:cici-trans-china
http://www.trans-china.com
Anything's Possible,Just Keep Thinking!
3 February, 2009 [ 06:25 ]
# Leoanrd Herriman says :
HOLA,AMIGO!
Soy un transportista de China, y tenemos filial em todos los principales puertos de China, tenemos grandes agentes Latina en cada pais, incluido el Perú, si algo puedo lacer por usted no dude en hágamelos saber
POL Destination 20GP 40GP 40HQ Carrier T/T VIA Valid QINGDAO CALLAO 1050 2100 2200 CMA 40DAYS BUSAN 15,Feb SHANGHAI 1081 2160 2262 CSAV 27DAYS DIRT 15,Feb NINGBO 1040 2080 2180 CSAV 30DAYS DIRT 15,Feb XIAMEN 1050 2100 2200 CSAV 38DAYS HK 15,Feb QINGDAO LIMA 1450 2900 3000 CSAV 44DAYS CALLAO 15,Feb SHANGHAI 1317 2634 2734 CSAV 29DAYS CALLAO 15,Feb XIAMEN 1300 2600 2700 CSAV 40DAYS HK 15,Feb NINGBO 1276 2552 2652 CSAV 40DAYS CALLAO 15,Feb QINGDAO PAITA 1050 2100 2200 MSC 40DAYS BUSAN 15,Feb SHANGHAI 1100 2200 2300 EMC 55DAYS COLON 15,Feb XIAMEN 1050 2100 2200 MSC 45DAYS CHIWAN 15,Feb NINGBO 1050 2100 2200 MSC 40DAYS IQUIQUE 15,Feb If you need any rates from Peru to China,pls feel let me know.Soy un transportista de China, y tenemos filial em todos los principales puertos de China, tenemos grandes agentes Latina en cada pais, incluido el Perú, si algo puedo lacer por usted no dude en hágamelos saberAll the best!Tks & B.regards!
Cici Qin
Customer Service Dept
Trans-China Logistics Co.,Ltd Qingdao Branch
Add:Room 1003,Power 8,Pacific Plaza,NO.35
Donghai Xi Road ,QINGDAO,CHINA.
Tel:0086-532-85025882
Fax:0086-532-85025939
M:13884956817
E-mail: tao-cus01@trans-china.com
MSN:tao-cus01@trans-china.com
Skype:cici-trans-china
http://www.trans-china.com
Anything's Possible,Just Keep Thinking!
16 March, 2009 [ 12:51 ]
I believe that the real solution would be to include the landowners in the profit sharing of the minieral riches from beneath the land that they own. that way Peru' can still manage and negotiate the contracts but the surface land holder is not left with a worthless pice of paper for land that he no longer has use of.
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