The Dark Legacy of Canadian Foreign Aid

Jaquelin Coulson is a second year International Relations student at the University of Western Ontario, and has served as a Columnist of The General Assembly since its inception in October 2017. Her areas on interest are nuclear proliferation, global security, and international development. She can be reached at jcoulso4@uwo.ca.

As Canada continues to conflate development aid with extractive sector corporate subsidies, dangerous consequences emerge.

As the world’s largest gold mining company, Barrick Gold Corporation has been named among the top 10 most controversial mining companies for having been the subject of international protests and criticism. Its mines have long faced allegations of human rights abuses and environmental degradation. It is also one of many Canadian mining companies which benefit from millions of dollars in foreign aid from the Canadian federal government.

According to the Global Affairs Canada database, Canada has spent approximately $445 million in Official Development Assistance (ODA) on initiatives related to mining and mineral policy and training since 2008, a pragmatic investment considering that 75% of the world’s mining companies in 2008 were Canadian. Indeed, former Minister of International Cooperation Julian Fantino has asserted that ODA support is intended to give Canadian mining companies a competitive advantage internationally and to ensure that Canadians benefit. Although ODA seldom goes directly to corporations, there are many ways in which it indirectly subsidizes them.

In 2011, the Canadian government announced a series of ‘pilot projects’ which would partner mining companies with development NGOs. These three projects had a budget of $9.5 million, 70% of which was funded by ODA. The programs involved training residents to work in the mines and developing the company’s “Corporate Social Responsibility” strategy, but were void of opportunities for partner NGOs to make substantive changes to the companies’ practices or to advocate for affected residents. Because the NGOs’ funding was made contingent on cooperation with corporate public relations campaigns, their development mandates were compromised. PLAN Canada, for instance, pledged not only to refrain from commenting on allegations against its partner IAMGOLD, but moreover to help manage public outcry in such an event. Mining companies thus garner positive publicity from superficial development projects funded primarily by ODA.

Aid funds have additionally been used to enact pro-corporate legislation at the expense of host countries. In Colombia, a $10 million ODA grant enabled Canadian agents to revise the mining code, reducing the royalty tax levied on foreign mining corporations from 15% to a mere 0.4%, and instituting an “unheard of” 30-year tax exemption on timber cut down in quarry preparation. Such policies reduce to “almost nothing” the government royalty revenues which are meant to finance public services and do little to compensate by benefiting workers. Indeed, despite increased investment, extractive sector employment as a proportion of total jobs fell by 19% after the implementation of this policy,[1] a trend stemming from the capital- rather than labour-intensive nature of mining.

By indirectly subsidizing mining companies with the aim of promoting Canadian business interests, the federal government has compromised the official intent of ODA. The 2008 Official Development Assistance Accountability Act puts forth three key principles to which Canadian foreign aid should adhere, those being human rights, environmental stewardship, and poverty reduction. Subsidizing the extractive sector has proved an ineffective means of advancing these principles, and may actually violate them.

A 2009 publication found that in regions where Canadian ODA has encouraged investment by mining corporations, over 80% of human rights violations and murders of union leaders were concentrated in mineral-rich communities. Similarly, a 2016 report documented 30 “targeted” deaths and 709 cases of criminalization of anti-mining activists. High rates of violence are compounded by intentionally inadequate human rights and labour codes which inhibit victims from getting justice through legal avenues. In 2011, Human Rights Watch reported acts of gang rape committed by Barrick Gold security officers and identified “systemic failures” which prevented the company from responding adequately. Barrick’s subsequent monetary compensation of the victims and pledge to improve oversight was unfortunately undermined by their CEO’s comment that policing employee behaviour would be “impossible” where “gang rape is a cultural habit.” Whether these human rights issues are rectified depends on the capacity of governments to investigate and the willingness of corporations to cooperate, since Canada has no mechanism for holding Canadian companies accountable for overseas operations.

The environmental record of ODA-funded mining corporations is no better. In Guatemala, Goldcorp Marlin’s open pit mining site uses and expels 250,000 litres of water every hour, necessarily contaminating it with toxic industrial by-products which then leach into the soil. Already, arsenic has been found in unsafe concentrations in nearby groundwater wells and the urine of nearby residents, elevating their risk of cancer and nervous system damage. There is also an economic risk for agricultural producers, as contaminated water degrades the soil and reduces crop yields. What is more, even after they are closed, these mines will require ongoing maintenance for over a hundred years, burdening developing governments and communities with either the exorbitant costs of maintenance or the catastrophic consequences of dilapidation. It is for these reasons that a report by Tufts University described the economic benefits of mining projects as “meagre and short-lived” compared to the long-term environmental risks.

Yet, there remains a question of whether, despite the negative effects, supporting the extractive sector with foreign aid supports poverty reduction and economic development. Canada’s shift towards mining has been accompanied by a re-definition in 2009 of ‘target countries,’ shifting focus away from poorer African countries and towards wealthier Latin American ones.[2] The rationale for this shift was explicated in a 2013 internal department assessment, which highlighted commercial mining interests as a key factor in most of the Latin American regions, suggesting a lesser concern for poverty reduction. The rationale for bolstering the extractive sector as a means of development is itself dubious, since a negative relationship in developing countries, non-fuel mineral dependence often has a negative relationship with GDP per capita and other forms of development. Moreover, even if mining operations do create a temporary economic boom, this does not necessarily imply development. For ‘factory towns’ that depend entirely on corporate mining revenues, the inevitable exhaustion of mineral reserves typically spells economic collapse.

Although extractive sector funding represents a small proportion of Canada’s foreign aid flows, the irresponsibility of Canadian mining companies and the magnitude of their harm should not be tolerated, let alone subsidized by the government. This is not an unconditional condemnation of all mining operations; there are certainly ways in which Canada could support responsible mining practices and equitable economic partnerships with mineral-rich developing nations, but as of yet, corporate interests have taken precedence over this. By tacitly sanctioning the human rights abuses and environmental devastation exacted by the extractive industry, Canada also risks tarnishing its own international reputation. While swift and substantial policy reforms would be a step towards saving this reputation, the damage will remain at Canadian mining sites abroad, in the communities of victims for whom any retroactive policy changes will be too little, too late.

 

[1] Elizabeth Blackwood and Veronika Stewart, “CIDA and the Mining Sector: Extractive Industries as an Overseas Development Strategy,” in Struggling for Effectiveness: CIDA and Canadian Foreign Aid, ed. Stephen Brown (Montreal; Kingston; London: McGill-Queen’s University Press, 2012), 233.

[2] Ibid., 222.