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Cablegate: The Majaz Referendum: A Vote Against Mining

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FM AMEMBASSY LIMA
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INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 1805
RUEHBO/AMEMBASSY BOGOTA PRIORITY 5106
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7592
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RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9310
RUEHQT/AMEMBASSY QUITO PRIORITY 1467
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1496
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY
RUEHC/DEPT OF INTERIOR WASHINGTON DC PRIORITY

UNCLAS LIMA 003217

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SENSITIVE
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INTERIOR PASS TO USGS/RESTON FOR
D.MENZIE/A.GURMENDI/D.ELELSTEIN

E.O. 12958: N/A
TAGS: PGOV PREL ECON EINV EMIN PE PINR
SUBJECT: THE MAJAZ REFERENDUM: A VOTE AGAINST MINING

REF: LIMA 03075

1. (SBU) Summary: Residents of three districts in the
northern region of Piura voted September 16 to reject
development of the Majaz copper deposit owned by the Chinese
Zijin Consortium. The referendum is the latest event in two
years of conflict between civil society and community groups
that argue mining degrades the environment and hurts the
poor, and the government and mine owners who promise clean
practices and funds for development on the other. After
criticizing as interlopers the NGOs and clergy that backed
the referendum, the GOP has since invited the parties to the
negotiating table. Despite the government's efforts, the
non-binding referendum has spooked the mining industry --
Peru's largest taxpayer and foreign exchange earner -- and
underscores widespread skepticism about the benefits
investment brings to local communities. End Summary.

The Referendum
--------------
2. (U) In a symbolic, non-binding vote, residents of the
remote districts of Ayabaca, Pacaipampa, and Carmen de la
Frontera in the northern region of Piura voted overwhelmingly
September 16 to reject investment in the nearby Majaz copper
mine via the Rio Blanco project. Although only half of
eligible voters participated, about 94.5% voted against
"mining activity" in the area. Organizers and backers of the
referendum included local and foreign NGOS such as the Red
Muqui, CONACAMI, and Oxfam, church representatives, and local
government officials. A similar (non-binding) referendum
held at the Tambogrande copper deposit in Piura in 2002 --
along with constant community harrasment and attacks on
company facilities -- led investors to back out of that area.

Accusations Against Majaz
-------------------------
3. (U) Organizers and backers of the referendum allege that
investment at Majaz will destroy the delicate local ecosystem
and disrupt peasant agriculture. According to one Oxfam
document, the mining concession is covered with "cloud
forests that act as a sponge that captures the water from
rain and feeds the rivers that support the agricultural
zones" in the region. Critics also cite a recent University
of Texas environmental study stating that "the exploration
phase of the Rio Blanco mining project in Peru's northwestern
Andes mountains caused damages to the area's biological
diversity." The report further argues that mining at Majaz
"could lead to an interruption of the links between
ecosystems" and threaten wildlife. Anti-mining groups argue
that the Majaz owners have not presented their plans to
mitigate environmental impact and have been unwilling to
dialogue. Claiming the support of the government's human
rights Ombudsman, they also accuse the company of beginning
exploration without the legally required permission of local
communities (Law 26505). One Nationalist Party Congressman
told poloff that the fundamental issues are jobs and poverty,
and the perception that large mining operations hurt rather
than help the poor.

The Government and Industry Response
------------------------------------
4. (U) President Garcia initially responded to the vote by
blasting the interventionism of NGOs and church groups that
supported the referendum. "Just like I do not like the
governments of Venezuela or Argentina to intervene in policy,
I also do not like the Vatican to intervene in policy," he
said according to press. "Foreign priests should go fight
for revolution in their own lands and not here." Prime
Minister Jorge del Castillo criticized NGOs for misinforming
the local populace and said that if a town does not want
private investment, it does not deserve public services. The
National Election Committee (JNE) declared the vote an
illegal usurpation of its powers and contrary to the legal
order.

5. (U) The GOP and Majaz owners have since called for
dialogue. The President's Council of Ministers convoked a
September 27 meeting in Piura with local officials to resolve
the conflict, and Garcia publicly stressed the importance of
investment for job creation and the way responsible mining
companies can protect the environment. Majaz officials
echoed the call for dialogue, stating that Peru's
environmental regulations require all new mining projects to
use the most modern, environmentally-friendly mining methods.
Majaz's manager said that their priority is to inform local
communities about the Rio Blanco project, the technology to
be employed, and the planned social investments.

Anti-systemic Groups Spreading Social Conflict?
--------------------------------------------- --
6. (SBU) The referendum results spooked other mining
interests who fear that its success could encourage similar
referenda elsewhere, and ignited speculation that
antisystemic groups are behind the Majaz confict. A security
analyst at the majority U.S.-owned Yanacocha gold mine in
Cajamarca (REF) worried that social sectors were moving
faster than the government and that the GOP did nothing to
prevent the referendum. He told poloff that the Cajamarca
head of the Communist New Left Movement (aka Patria Roja) --
Gregorio Santos Guerrero -- actively backed the Piura
referendum and might now return home to promote a similar
vote. Former Prime Minister Pedro Pablo Kuszynsky told
Poloff that opium traffickers, fearing the increased security
presence of a large mine in a key narco-export corridor,
helped back the referendum. A September 10 press report,
citing intelligence sources, claimed that a group of radical
NGOs backed by Venezuelan President Hugo Chavez were
conspiring against mining companies to destabilize the
Peruvian government. Even Ollanta Humala got involved by
disseminating a flyer promoting a no vote in the referendum.

7. (SBU) Comment: Mining is Peru's most significant industry,
its largest tax payer and foreign exchange earner, critical
for the nation's macro development. At the same time, the
communities closest to mine fields often reject the industry
because of a combination of misinformation, past company
mistakes, and their own experience of continuing poverty in
the face of wealth. Although many firms have made great
strides in improving community outreach and local development
programs, problems continue. The ongoing challenge for the
GOP is to proactively mediate conflicts while showing that
investment can bring development. End Comment.
MCKINLEY

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