Academic journal article McGill Journal of Sustainable Development Law

Recent Developments in Social Impact Management in Extractive Resource Development in Peru

Academic journal article McGill Journal of Sustainable Development Law

Recent Developments in Social Impact Management in Extractive Resource Development in Peru

Article excerpt

1. INTRODUCTION 2. THE FRAMEWORK GOVERNING RESOURCE DEVELOPMENT   2.1 Oficina General de Gestion Social (General Social Management     Bureau) ("OGGS") 3. OGGS AND BEYOND 4. CONCLUSION: UNCERTAINTY IN THE AIR 

Peru is rich in hydrocarbons and other mineral deposits. The country is also home to a large and diverse indigenous population that ranges from jungle-dwelling groups that remain in voluntary isolation to sedentary rural communities dedicated to traditional subsistence farming. Peru is also one of the few mineral-rich countries of Latin America that remains virtually unconditionally open to foreign investment. It continues to attract steady and increasing levels of investment and development activity. Economic development gains notwithstanding, poverty levels remain high and income distribution is far from equitable. (1) More often than not, extractive activities take place in poor areas which, traditionally, have borne the negative results of development while accruing few of the benefits. A result of these conditions is that the development of hydrocarbon and mineral resources in Peru is a source of constant social turmoil, pitching local populations against developers and demanding increasing governmental attention and efforts. A report issued by the Public Defendant's Office in June 2007 listed seventy-five cases of social conflict (2) that were either active or latent. Of the thirty-five active cases, twenty-one were related to mining or hydrocarbon activities. Eighty-one per cent of all cases were in areas where the majority of the population lives below the poverty line. (3) By March 2008, the number of total conflicts had escalated to ninety-three, with the share of cases related to extractive activities and cases located in extreme poverty areas remaining more or less the same. An escalation in the level of violence has also been reported. (4) By the end of July 2008, the total number of cases had reached 147. (5) The Public Defendant's Office attributes the unrest to the population's fear of environmental impacts and a belief that extractive activities are incompatible with traditional subsistence activities. These fears may result from environmental legacy issues and the population's belief that the government is unable to prevent the contamination of their environment. It may also be due to a general feeling of discrimination, including the fact that local communities enjoy few tangible benefits from these resource activities, (6) notwithstanding the 2001 promulgation of a law to ensure fair allocation of the rent from natural resources. (7)

This paper focuses on current efforts by the Peruvian government to ensure that hydrocarbon and mineral resource development is undertaken in a socially responsible and sustainable manner. (8) First, it will provide an overview of the institutional and legal framework that deals with hydrocarbon and other mineral development in Peru. Second, it will explain the role and activities undertaken by the newly-created General Social Management Bureau ("OGGS") of the Ministry of Energy and Mines. Finally, it will provide a brief account of some of the challenges still ahead.

2. THE FRAMEWORK GOVERNING RESOURCE DEVELOPMENT

The 1980s were a turbulent time for Peru, marked by rising social unrest, terrorist activity, and the failure of the economic policies implemented during the first Garcia administration. (9) With the election of President Fujimori in 1990, Peru embarked on an aggressive reform process directed at attracting private investment, primarily to its extractive sector. Several new laws were enacted, including Decree 757 to Promote Private Investment. (10) Decree 757 eliminated the State's exclusive privileges in economic activities and natural resource exploitation, and placed it on par with private parties whenever it is involved in economic activities. (11) It also set the basis for instituting simple and accessible administrative processes and reaffirmed sectoral authority to regulate and manage environmental and related social impacts. …

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