Productive diversification, climate change and governance of the extractive sector: 75 proposals for a transition agenda in Colombia is the title of the publication of Foro Región Central and Foro Nacional por Colombia, which had the support of Brot für die Welt and Ford Foundation, which presents the result of more than ten years of systematic analysis on the behavior of mining and hydrocarbons in the country. The Agenda raises several important issues for the current debate on the construction of a fairer, more sustainable and equitable development model in Colombia, with the participation of the communities in the decisions that are made regarding the territory, the economy and the protection of the environment. .

The Agenda presents a diagnosis of the results of public policies promoted by recent governments that have favored the exploitation and export of minerals and hydrocarbons. In addition, it shows the inconvenience of the extractivist emphasis of our development model, since it has generated a reprimarization of the economy – that is, the economy has been based on activities of the primary or extractive sector – without generating the positive impact on formal employment that It is expected and has put the country in a very vulnerable situation in the face of fluctuations in the international prices of raw materials.

Likewise, it draws attention to the sector, since despite the impacts generated by large farms in the territories and their population – as well as in the ecosystems and the sustainability of fauna and flora, rivers and sources of water – A large part of the communities and local authorities are excluded from decisions about mining and hydrocarbons. This fact has become one of the main sources of social conflicts in Colombia and is related to the threats and deaths of social leaders who seek to defend their territory from extractive projects.

The Agenda points out a route to advance in the discussion of a development model less dependent on minerals and hydrocarbons. There are 75 proposals in terms of productive diversification, energy transition and governance. Each of them identifies the measures that the government can adopt, the institutional changes that are required, the fiscal resources that must be available, and the role of public, private, and social actors in this process.

In terms of productive diversification, the country must considerably reduce its high dependence on the income generated by the export of minerals and hydrocarbons, because most of the economic blocks have proposed measures to reduce the use of these fuels and if the country does not align to these measures and does not encourage the growth of other productive sectors, could experience a deep economic crisis in the medium term.

An issue of great relevance is the energy transition, on which Colombia must give a serious discussion to change its consumption matrix, including renewable energy sources and, in addition, with the duty to reduce its contribution to the international inventory of polluting emissions due to its export of oil and coal. This is in harmony with the climate change agenda that requires urgent measures from all states to stop an environmental catastrophe in the coming decades, the need to protect water sources and nature, and the importance of conserving the livelihoods of communities. .

Also, the Governance Agenda outlines measures to promote dialogue between the nation and the territories, to reach agreements on a fairer development model, and proposes strategies to include citizen participation in public policy decisions, with actions to guarantee transparent rules of the game for all stakeholders interested in contributing to the development of the country.

Finally, this Agenda proposes a transition approach with a time horizon of ten to fifteen years, understanding that it is not possible to change the extractivist economic approach overnight. Therefore, progressive measures must be included so that a negative impact is not generated on the income of the State and on the territories that depend on mining and hydrocarbons. Likewise, it makes a call to implement institutional, regulatory and policy changes that must be specified, carried out and guarantee their continuity.

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This document will be presented at an event called Just and Sustainable Post-Extractivist Transition in Colombia: Challenges and Proposals, which is organized by Foro Región Central, Foro Nacional por Colombia and the Faculty of Finance, Government and International Relations of the Externado de Colombia University.

The event will take place next Thursday, September 29 at the Externado de Colombia University: calle 12 # 1 – 17 Este from 9:00 a.m. to 5:00 p.m. to 12:00 p.m. Registration is enabled at the following link: https://bit.ly/3U8LBlu (limited capacity).

The post Agenda with 75 proposals for the post-extractivist transition in Colombia appeared first on Mesa de la Sociedad Civil para la transparencia en las Industrias Extractivas.

These “natural resource-backed loans” are granted by companies from developed countries, such as China, in order to gain access to the exploitation of these resources, which are fundamental for their businesses, usually in emerging countries that need the money for infrastructure development projects.

Jyhjong Hwang, one of the authors of the report, a doctoral candidate in political science at Ohio State University, stated that beyond the potential benefits they may provide, what these agreements establish from the outset is an imbalance of power.

“Natural resource-backed deals are high-risk bets against players who have the upper hand,” Hwang explains. “Chinese state-owned enterprises have strategic interests in securing natural resources and deploy all their expertise and negotiating skills to get a good deal,” he said.

The formula always seems to be the same: in the negotiation, an emerging country uses as collateral a specific volume of future production of a national resource -such as oil, a commodity that commonly serves as a backing for this type of agreement-. In return, it obtains advance funds with which it can invest in roads, power grids and water treatment facilities.

Researchers note that these loans sometimes do produce tangible benefits for the borrowing country. But in analyzing 52 such loans made between 2004 and 2018-whichcombined total $164 billion-theyfound that, by and large, the deals are unclear and risky for the borrowing countries. Only in one case were the details of the loan publicly known.

David Mihalyi, another of the report’s authors and an economist at NRGI, compared them to a quick or immediate loan. “They have short maturities, high interest rates and do not require specifics on how the money will be used. Governments should proceed with caution with these loans.”

Sometimes it happens that countries are unable to increase their resource production fast enough to start paying the interest and loan balance. The report indicates that the International Monetary Fund (IMF) warned that this could be the case in Ghana, whose government borrowed $2 billion from Sinohydro, a Chinese state-owned engineering company. The backing for the loan is bauxite, a sedimentary rock with a fairly high aluminum content. There are reports from Mongabay and other news portals showing that the country is doing its best to increase bauxite production, including in the Atewa Forest Reserve, habitat for a great many species of fauna and flora.

In 2017, the government of Guinea borrowed $20 billion, which is equivalent to nearly two years’ worth of that country’s GDP, according to the NRGI report. GDP is a measure of all the products and services a country generates per year. In addition, last year Mongabay reported thatbauxite mining was causing the destruction of West African chimpanzee (Pan troglodytes verus) habitat in the Boké region, and has even put at risk a national park established to protect the critically endangered species.

In addition to all the potential environmental problems, the authors of the report point out that communities are rarely consulted on loan terms even though they often bear the brunt of the impact of mining on forests.water quality and social conflicts.

Countries that take out such loans run the risk of losing control of their natural resources, which in the long run are likely to prove more valuable than the loan itself. And in return, what they get are crippling debts.

Venezuela’s $59 billion loan portfolio, for example, is backed by its oil reserves. The report argues that such loans threaten the country’s economic stability, as well as that of several African countries, including Angola, Chad, the Democratic Republic of Congo and South Sudan.

Transparency is imperative to address this issue. The researchers could not even find out the interest rate on almost two-thirds of the loans analyzed.

There are efforts to encourage more open processes, such as the Extractive Industry Transparency Initiative. Hwang and Mihalyi recommend involving legal experts in contract negotiations to achieve mutually agreeable terms. They also propose adopting a flexible payment schedule.

According to Mihalyi, both parties benefit from a fair loan. “We must learn from the mistakes made in the past,” he argues.

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