The people, the mine and the World Bank

Romania
Mining
Democracy
Activism

The sum is $4.4 billion.

It’s enough money to feed one million people three meals a day for a year,1  or for Romania to hire some 100,000 teachers for 10 years.2

It’s also two per cent of Romania’s GDP, and it’s what Canadian mining company Gabriel Resources is suing the country for after it halted a long-stalled goldmine project in Rosia Montana, in the northwest.

Rosia Montana is a historic mountain village sitting on 2,000-year-old Roman mine galleries – and on Europe’s largest known gold deposit. Since 1997, Gabriel Resources has had plans to build Europe’s biggest open-pit goldmine using cyanide extraction – a project that would blast away four mountain peaks, the ancient mine galleries and four villages in the area.

The map shows the location of Rosia Montana within Romania
The map shows the location of Rosia Montana within Romania. Via OpenStreetMap

The project would also pose an environmental threat for years to come: cyanide is a highly toxic compound, and in the best case scenario the project would create a waste lake with a much longer lifespan than the mine itself – if no spills occurred.

After a troubled process, the Romanian government prepared a bill to authorize the project as well as the expropriation and relocation of the entire Rosia Montana community. Some welcomed the idea of having well-paid jobs for over a decade, while others refused to leave at any cost.

It took over a decade of intense grassroots organizing, and some of the biggest demonstrations in Romania’s post-communist history to kill the bill and prevent the mine from going ahead.

‘After 15 years of fighting, we thought the place was finally safe,’ Roxana Pencea tells New Internationalist in a Skype interview. Roxana is an activist with Mining Watch and has been active in the ‘Save Rosia Montana’ campaign.

An article appeared on Foreign Policy in November 2016 celebrated the victory. ‘That ordinary people could stop this massively lucrative mining project... counts as a monumental victory,’ it reads.

But the fight was still far from over. Almost as soon as one political battle, full of twists and turns, came to an end, a new, completely different battle began.

Explore the timeline below to find more about what happened in Rosia Montana. Loading might take a few seconds...

Another goldmine

In July 2015, Gabriel Resources filed a claim of damages against Romania to a World Bank commission – the International Centre for Settlement of Investment Disputes (ICSID).

Essentially, this is an international commission where foreign corporations can sue a country if they feel it has violated a treaty or other obligations, or if they feel discriminated against.

The damages sought were confirmed on 30 June 2017: $4.4 billion – a figure Roxana calls ‘a fantasy tale with nothing in common with reality’.

‘The issue we’ve had in Romania is that the project has been over-politicized. Politics has got in the way of progress,’ Gabriel Resources Chief Executive, Jonathan Henry, told Reuters. The company was not able to comment for New Internationalist.

‘We are claiming that Romania has expropriated our project and we are left with no alternative but to seek compensations.’

It will be a long process. If there is no settlement, the arbitration will last at least three years. Now, parties are exchanging arguments, and the first hearing will not be until September 2019.

After that, the timetable becomes blurry and there is no chance to appeal.

A life under arbitration

The Gabriel Resources vs Romania case is a perfect example of what life is like for communities when corporations can sue countries.

There is very little room for Romanians to have their say, or even know what exactly is going on.

All is kept to a technical exchange of legal arguments about a 1996 and a 2011 investment treaty between company and government representatives. The risk of ‘politicizing’ the matter, as Gabriel Resources puts it, is kept to a minimum.

Romanians don’t even know for sure what their government’s stance is: proceedings are kept confidential, and take place in Washington DC, US.

‘Corporations are attempting to achieve by stealth – through secretly negotiated trade
agreements – what they could not attain in an open political process’ – Nobel Prize-winning economist Joseph Stiglitz

Pia Eberhardt, a campaigner and Corporate Europe Observatory researcher, explains that both parties can decide to disclose information, but that they have been very reluctant to do so.

‘Especially in the first months, we couldn’t even find very basic documents on the ICSID website.

‘After pressure from civil society, and from Romania, some documents appeared suddenly – over a year after the start of the process.’

The lack of transparency worries campaigners, especially that coming from their government’s side. A rooted lack of trust in the Romanian government for its poor handling of the case contributes to a sense of uncertainty in citizens.

‘The secrecy is very dangerous,’ says Roxana. ‘It’s evident the government is not being fair to its citizens.’

But the secrecy is not the only concern: in the proceeding, there’s very little, if any, room for the community to have a say at all. In the beginning, local communities were not even meant to be part of the process.

After a group, Alburnus Maior, requested to submit an outline of their argument, they were given a slot to submit a non-binding amicus correus brief to the tribunal.

‘Basically, it only means Alburnus Maior said they are interested in the case and would like to outline their arguments, but the commission doesn’t even have to take them into account,’ says Pia. ‘And this comes very late in the proceedings – September 2018.’

The same community that caused the goldmine project to go down is made to sit and wait.

The rise of arbitration

Cases like Gabriel Resources vs Romania are not new. They are called Investor-State Dispute Settlements (ISDS), and they are booming.

Think Chevron vs Ecuador.

Think NAFTA (which made Canada the most sued country in the ‘developed’ world).

Think of the protests that spread through Europe for the TTIP deal with the US, or the CETA deal negotiated between the EU and Canada.

Campaigners believe Rosia Montana could show how things might work in Europe if such treaties are approved with the respective ISDS clauses.

If Romania is made to pay damages, it could turn public opinion against Rosia Montana, and against public demonstrations in general

According to the United Nations Conference on Trade and Development, there were three known ISDS cases in 1995 – and a whopping average of 49 cases per year in the past decade. 2015 set the record high with 74 new cases, and as of 1 January 2017 the UN counted 767 open disputes.

Claudiu Craciun, a lecturer in European Politics at Bucharest’s National School of Political Science and Administration, who was also involved in the protests against the mine in 2013, explains that most ISDS’s are a legacy of bilateral investment treaties, and sometimes of trade agreements.

‘The mechanism was born as a way to force countries from the periphery or semi-periphery of the world to comply [with corporations’ and ‘developed’ countries’ plans],’ says Dr Craciun.

He thinks that the claim against Romania has legal grounds: ‘It’s a blast from the past, but it has a legal basis, although a questionable one – we do have signed those treaties.’

Dr Craciun he believes the treaties are obsolete and abusive.

‘The relations between the community, the state authorities and the corporations have been very asymmetric,’ he says. ‘The resources distribution between parties and the way the community has been treated could seem like a way of bullying.

‘I have nothing against international trade, but it should not hit the bottom of society.’

Trying to establish Romania’s chances of success is difficult at the time of writing. In an article of ‘tips for foreign investors’, Dentons law firm told Lexology: ‘ Investors should bear in mind that 30-40 per cent of investment disputes typically settle before a final award is issued. Commencing a claim can create leverage to help the investor reach a satisfactory result.’

Rosia Montana in limbo

For now, the arbitration means that Rosia Montana remains safe.

The government’s commitment to protecting the site looks shaky at times, but as long as the arbitration runs, it’s unlikely that the project will advance.

For that reason, when campaigners and Rosia Montana residents found out about the arbitration, they celebrated.

‘We opened a bottle of champagne together with the people in Rosia Montana,’ Roxana remembers. ‘We were relieved: after all our fights, we had made the project impossible to proceed with.’

But the relief quickly gave way to anger: a defeat in the arbitration would be a massive setback for the whole environmentalist movement in Romania.

Dr Craciun explains that if Romania is made to pay damages, it could turn public opinion against Rosia Montana, against public demonstrations in general, and against the politically-responsible thinking that built up in Romania after the fall of communism.

Roxana agrees: ‘There is no way we would agree to any kind of compensation to Gabriel Resources.

‘Rosia Montana was the most important struggle in many years in Romania – in preserving the state of law and respecting the ideals of a democracy. We won as a society against a greedy corporation.

‘If a tribunal in Washington now decides in their favour, it will be a slap in our faces.’

Rosia Montana remains in limbo. As long as the arbitration runs, it is safe. But until a win is on the horizon, the next round of champagne bottles might need to be kept on ice.

What you can do to help:

  • Sign the petition to urge the Romanian government to refuse to pay damages to Gabriel Resources;
  • If you are on Facebook, join the group ‘Save Rosia Montana’;
  • Share this article or any other related material to inform public opinion together.

Alessio Perrone is a journalist who joined New Internationalist in 2016. You can follow him on Twitter.

The top image shows a protest in Bucharest’s Piața Universității on 15 Setember 2013. Photo by Bogdan Giușcă

At $17 per day
At 1,300 lei per month ($350) the average salary of a Romanian teacher

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