On July 30, 2015, Gabriel Resources registered a request for arbitration against Romania with the International Centre for Settlement of Investment Disputes (ICSID), a part of the World Bank, invoking Bilateral Investment Treaties (BIT) between Canada, the United Kingdom and Romania. Gabriel Resources is a Canadian mining company registered in Canada, with offices also in the U.K. On July 21, 2015, Gabriel Resources issued a press release, which made no reference to environmental studies published by Alburnus Maior, an NGO dedicated to protecting the Roșia Montană area in Romania where the mining company had interest in extracting gold. The gold resources at Roșia Montană are the largest in Europe, estimated at 330 tons of gold and 1,600 tons of silver in the four mountains surrounding the town of Roșia Montană, if the mining were to use blasting and cyanide extraction.
The demands from Gabriel Resources began with the claim that Romania broke the BIT signed in Bucharest on May 8, 2009 between Canada and Romania (BIT Canada) and the BIT signed in London on July 13, 1995, between the U.K. and Romania (BIT UK).
For BIT Canada, according to Gabriel Resources, Romania broke:
- Article 2 which stipulates that investors must receive fair and equitable treatment, and full protection and security.
- Article 3 which stipulates that there should be no distinction between foreign and local investors, and that foreign investors must be able to reap the benefits of their investments.
- Article 8 which stipulates that investments or the returns of investors shall not be nationalized or expropriated except for a public purpose, under due process of law, in a non-discriminatory manner and against prompt, adequate and effective compensation.
For TBI UK, Romania broke, according to Gabriel Resources, articles 2, 3 and 5, similar to TBI Canada.
On June 30, 2017, Gabriel Resources registered a moratorium, asking for US$ 4.4 billion in compensation, based on the fact that Romania has not answered amiably to requests for resolving the dispute initiated in 2015. The first hearing in the case will take place between September 9 and 20, 2019, according to a Reuters article, which makes no reference to the ecological disaster caused by such exploitation and to the massive public protests over the years against this project. The article was published also in The Globe and Mail and CNBC.
About ICSID, ISDS and the mechanism of plunder
The British economist Guy Standing describes in his insightful book, The Corruption of Capitalism, how the International Centre for Settlement of Investment Disputes (ICSID) and Investor-State Dispute Settlement (ISDS) are abused by global capitalism to extract wealth from weak and poor countries. ICSID is part of the World Bank. The idea for such a centre appeared in the 1950s in Germany, where a group of businessmen led by the president of Deutsche Bank sought to establish an arbitration mechanism to protect their investments in developing countries. The idea was adopted by the World Bank, which created ICSID in 1964 despite opposition from the 21 developing countries targeted by this mechanism. Since then, ISDS has been incorporated in over 3,000 trade and investment treaties, including NAFTA (in 1994), the TPP (now defunct), and CETA (2014). Between 1959 and 2002, fewer than 100 requests for arbitrage have been registered, but at the end of 2015 there were close to 700, involving more than 100 countries.
These arbitration suits are a very rich source of income for multinational corporations and their lawyers. The nerve of these multinationals has extended the notions of fair and just treatment and indirect expropriation to cover anything that might affect their cashflow, and the definition of an investor can be extended to cover anybody that has a financial interest.
The ISDS system does not conform to principles of justice. Cases are heard in secret by arbitration tribunals, of which ICSID is the main one. A tribunal consists of three members, and in most cases they are corporate lawyers. One is selected by the corporation, one by the opposing state, and the remaining two choose the president. If they cannot agree, the president is selected by the president of the World Bank, who is an American. The United States has never lost a case.
The system is a scam created by corporations to serve their interest of extracting wealth from public funds. More than half of the cases up to 2015 have been won by corporations. States have won only 37 per cent of the cases, and if they win, they still need to pay arbitration costs that average $8 million, and in some cases as high as $30 million. One notable case is Guatemala v. Goldcorp (another Canadian mining company) where Guatemala was forced to keep the Marlin goldmine open after being threatened with ISDS arbitration, despite facing controversies and grave human and environmental problems. In other cases the arbitration offered compensation over $1 billion. Occidental Petroleum was granted a settlement of $1.8 billion against Ecuador, equivalent to 2 per cent of GDP, for terminating legally an oil concession contract, one year after Ecuador found Chevron responsible for causing damages to the environment in the amount of $18 billion.
On a larger scale, in 2014, ISDS offered a staggering $50 billion against Russia for nationalizing the company Yukos. Another example is Argentina, which, after the major economic crisis of 2001-2002, tried to implement measures for economic stabilization that affected foreign investors. These investors forced Argentina into arbitration asking for $80 billion in compensation, equivalent to 13 per cent of its GDP. Of 27 cases originating from these economic measures, 30 per cent were settled out of court, 44 per cent were won by corporations, and only 15 per cent were won by Argentina. In the end, the government was forced to pay $900 million, not including arbitration costs. These, and many other examples, are detailed in Guy Standing's book.
The judges in the arbitration for Gabriel Resources vs Romania are:
- Horacio A. Grigera Naón, a lawyer that between 2001-2004 worked at White & Case L.L.P, the firm hired by Gabriel Resources
- Zachary Douglas, arbitration expert
- Teresa Cheng, the president
Corporate Europe Observatory (CEO) noted in an article published on February 13, 2017 that CETA will have adverse effects for Romania in the case of Roșia Montană because it will facilitate access for Gabriel Resources to arbitration, therefore increasing their chances of plundering Romanian coffers. The full CEO report is here. The author of the report, Pia Eberhardt said that "VIP rights offered by CETA to foreign investors are in reality a massive corporate coup. These rights will give powers to tens of thousands of corporations to demand enormous sums of public money and intimidate decision makers."
Romanian resistance against plunder
The Romanian people are poised to continue the massive opposition to the mining project, which they find greedy, aggressive, non-transparent, hypocritical, undemocratic, criminal, destructive, partisan, and anti-justice. The ISDS is very business-friendly with global capital. Romanian civil society has begun putting pressure on the Romanian government not to give in to corporate pressures. The people are simply demanding that not one penny from the Romanian budget -- intended to help pensioners below the threshold of poverty, or hospitals in disparage, or infrastructure in decay -- be paid into the coffers of a corporate plunderer.
There will be no Kinder Morgan in Romania.
This article was originally published in Romanian in Strada Democrației (Democracy Street). It was translated by the author and is reprinted here with permission.
Vlad Bunea is an economist and a fiction writer based in Toronto. He is Life Management Institute (FLMI) Fellow, Financial Services Institute (FFSI) Fellow and Secure Retirement Institute (FSRI) Fellow with L.O.M.A. Recent books include A Snowstorm in Cuba (2015), Womb Town (2016), Gals Gods Guns (2017). Upcoming books are The Intimate Diary of Pope Francis II and 2069: An Urban Dictionary of Very Late Capitalism. His website is www.bunea.ca
Creative Commons photo by Marc Pether-Longman.
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