Mining, Displacement and the World Bank: A Case Analysis of Compania Minera

Antamina's Operations in Peru

David Szablowski

2002

[Relaciones entre actores: las mineras y las comunidades locales]

[Los orígenes de la “responsabilidad social” corporativa]

[Para mitigar el daño local causado por proyectos de infraestructura pública auspiciados por el
BM, éste estableció la directiva operacional 4.30 de reasentamiento involuntario (1990), que
luego migró hacia el sector privado y se aplicó en los grandes proyectos mineros. Según el
articulista, esto fue lo q generó la formación dentro de las mineras del departamento de
responsabilidad social…. y con esto, tb el contenido nebuloso de la terminología y condiciones
de aplicabilidad].

[Los accionistas de las empresas transnacionales mineras junto con el BM quieren minimizar el
riesgo de que la empresa no vuelva a obtener el permiso social para seguir explotando el
recurso en otras partes del mundo… Aquí nada tiene q ver el desarrollo sostenible ni nada
parecido]

**************

Originally codified by the World Bank as part of an internal regulatory regime to limit and
mitigate local harms arising from its public sector infrastructure projects, these standards and
principles have since migrated to the private sector, and increasingly are being applied by large
transnational mining projects operating in the South. They are codified in the Bank's
Operational Directive 4.30 on Involuntary Resettlement ("OD 4.30" or "the Directive") and, as I
will discuss later on, form part of a regulatory regime - or legal field - that operates on a
transnational scale, with limited regard for national borders. The spread of this emerging legal
field, I will argue, is strongly implicated within the mining industry push towards "social
responsibility" and with the struggle over that term's relatively nebulous content.

I am concerned with its regulatory impact upon relationships between mining companies and
communities, as well as with its "legitimation effect" in providing standards which, once met,
can serve to certify a degree of responsible behaviour on the part of the company.

1. The World Bank, Mining and Involuntary Resettlement

Legal fields

The concept of a "legal field" is borrowed from the work of Pierre Bourdieu (1987). Arguing
against formalist or instrumentalist accounts of the operation of law, Bourdieu has based his
inquiry upon an analysis of the social field composed of the ensemble of actors involved in the
production of judicial decisions. Bourdieu is interested in how symbolic capital, interpretive
authority, and power are distributed, and competed over, among actors occupying different
structural roles in the field (lawyers, judges, academics, etc.). The principles underlying this
competition and distribution help to structure what Bourdieu calls "habitus", a set of disposi
tions, or patterned ways of thinking and behaving, that is shared by groups of participants
within the field. Bourdieu's point is that a nuanced and practical understanding of the
operation of a legal regime requires a close understanding of the structures and contested
rules of the game underlying the "social universe" within which the operation takes place.

Legal fields are involved in the production of two effects: regulation and legitimation. That is to
say a field works both to assert a particular social order and to legitimate it (Trubek et al.,
1994, pp. 417-418). Depending on the characteristics of the field and those of the society(ies)
within which it is embedded, either of these interrelated functions may be performed with
greater or lesser success (Thompson, 1975, pp. 258-269). This paper offers an analysis of the
operation of the transnational legal field enforcing the World Bank Directive on Involuntary
Resettlement in the context of mining development. This analysis will focus on the ensemble
of actors involved in producing the field's "decisions", their structural roles in this process, and
the nature of their contests over symbolic capital and interpretive authority. The aim is to
elucidate how the field performs in the context of mining development: what form of
regulatory influence does it exert over relations between mining companies and local
communities? And to what degree does it legitimate these relations?

The origin of the field

Over the last ten years, an increasing number of mining transnationals have adopted and publi
cized Corporate Social Responsibility (CSR) policies dealing with social, environmental, and
ethical issues. As with other globalizing industries, this has been a strategic response to
persistent outside pressures for new levels of accountability. Changing public perceptions and
expectations, particularly in the North, are often cited as the root cause (see Warhurst, 1998).
These changes are to no small extent tied to the emergence of transnational advocacy
networks propounding alternative public discourses which aim to undermine the industry's
desired message concerning the benefits of TNC-led economic development. Loose networks
of actors in the North and South (including NGOs, grassroots organizations, academics,
activists, and journalists) have drawn public attention to the "dark side" of globalizing business
activity. In the mining sector this has involved the "David and Goliath" struggles of local and
indigenous peoples facing appropriation of their lands, environmental threats, and violations
of human rights. Canadian mining transnationals in particular came under scrutiny in the late
1990s after a series of environmentally disastrous tailings spills in Guyana, the Philippines, and
Spain. Despite the mining industry's best efforts, senior figures still have cause to lament the
"increasing public disfavour" plaguing the industry, and the fact that it is perhaps seen at best
as "a necessary evil" (Wilson, 2000).

The key threat this poses to the transnational mining industry is a potential reversal of its hard
won favourable regulatory climate. Furthermore, those companies identified as "bad players"
could be targeted for environmental liability, special sanctions, or could be at a disadvantage
when attempting to acquire new mining concessions. Although hard to quantify, these risks
are of particular concern to the industry's financial stakeholders (Hutchinson, 1998; Warhurst,
1998). Development of a large mining project requires the investment of considerable
amounts of capital into an immobile, and thus ultimately vulnerable enterprise. Investors,
lenders, and insurers all want risk minimized and act as important drivers of the industry's drift
towards "social responsibility".

Operational Directive 4.30 on Involuntary Resettlement: Text and Regulatory Architecture

The movement towards social responsibility has prompted a search for appropriate
standards, in which OD 4.30 has featured prominently. Some mining companies have adopted
the Directive as a voluntary standard, however the regulatory regime described here only
comes into play when a company becomes a commercial client of one of the agencies of the
World Bank Group. The Directive is a "social safeguard policy", created in the 1980s and
revised in its current form in 1990, that is applied by each of the agencies of the Group.
Compliance with the Directive is mandatory for all mining projects that contract for financial
services from one the private sector arms of the World Bank Group: the International Finance
Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). These agencies
were created in 1957 and 1988 respectively, and have as their mission the promotion of
private sector development in developing countries in order to reduce poverty. IFC acts as a
banker and investor, providing equity and debt to private sector investment projects. MIGA is
a loan guarantor that provides political risk insurance. In a contract for financial services made
with either of these agencies, a client must covenant to comply with the agencies safeguard
policies (including the Directive) and submit to the agency's supervision and enforcement
procedures. Failure to comply constitutes grounds for termination of the contract.

The stated purpose of OD 4.30 is to "ensure that the population displaced by a project receives
benefits from it" (para. 3). This is to be achieved first by addressing the considerable risks of
socioeconomic harm which can arise to local populations from the forced acquisition of land
by a project, and second by assisting such populations with their efforts to "improve their
former living standards, income earning capacity, and production levels" (para. 3). For local
people, forced sale of land can mean a loss of access to resources, income-earning
opportunities, shelter, and/or the disruption of social networks which underpin production
systems. The result, repeatedly documented in studies on the subject, is deepening
impoverishment (see Cernea, 1999, 1997, 1988; Cernea and McDowell, 2000; McDowell, 1996;
World Bank, 1996). The Directive refers to these socioeconomic harms as "displacement" and
calls their prescribed cure "resettlement". The Directive's central requirement is that those
impacted by a project's land acquisition process should be at least as well off afterwards as
before the project's intervention into their lives (para. 3). To this end, the project sponsor (i.e.
the Bank agency's customer) must structure land acquisition as a participatory development
intervention. This intervention, termed a "Resettlement Plan", must be designed and managed
by qualified experts. Effective compensatory measures must guard against the threat of
impoverishment for local communities, and should permit them to increase their standard of
living (paras. 3-5).

At its core, the intention of the Directive is similar to that of a far older regulatory mechanism
employed by liberal states: the requirement for compensation for the expropriation of private
property pursuant to the state's power of "eminent domain"[expropiación]. Under eminent
domain, states reserve the right to force a sale of property that is required in the public
interest. Sale is made at fair market value: a sum presumed sufficient to compensate a rational
actor operating within a market economy (who will then be in a position to purchase a
productive asset equivalent to the one sold). Eminent domain recognizes that absolute
freedom of contract and property could obstruct or impose unfair costs on certain needed
public goods (Rose, 1986, p. 750). The violation of these freedoms through forced sale is
justified by the public importance of the good pursued and by the full compensation of the
property holder according to a liberal framework of values (i.e. compensation for fair market
value of legally-recognized property interests). Further more, internalizing the compensation
cost within the cost of the public project is intended to ensure that only projects with a net
benefit will be pursued (Rose, 1994, ch. 6).

However, the Directive has been created as a response to the repeated failures of state-pre
scribed market-based compensation systems to prevent deepening impoverishment among
developing-country populations forced to make way for large infrastructure projects (see
Cernea, 1999, 1997, 1988; Cernea and McDowell, 2000; McDowell, 1996; World Bank, 1996).
State imposed market-based systems restrict compensation to officially-recognized forms of
property ignoring what is often a substantial part of the resource base underlying rural
livelihoods (i.e. informal or de facto property rights recognized locally); they neglect entire
categories of loss inflicted on disrupted communities (including lost access to social networks
crucial to agricul tural production systems and startup costs faced by relocated people); they
assume that cash is an uncomplicated form of compensation easily translated into new
productive assets (disregarding such issues as local capacities and opportunities for money
management, local inflationary effects, and cash as a form of property that can be
appropriated by a single actor).

The Directive asserts a very different logic from the liberal, market-oriented rationality used
both by states and enterprises in property transactions. Instead it reads (unsurprisingly, given
its origins) like a version of eminent domain conceived by social scientists and development
professionals. It seeks to base compensation on a more comprehensive socioeconomic
accounting of community assets and project-related impacts. It directs the project sponsor (i.e.
the company) to treat formal and informal property equally; it emphasizes the need to
facilitate the reconstruc tion of damaged social components of local production systems; it
focuses attention on the impacts of lost income earning opportunities and lost access to public
services (paras. 2, 3, 7, 14, 17). It emphasizes the need to tailor compensation carefully to the
target population and to view the situation overall as a development opportunity.

The basket of compensatory measures available to rebuild and improve local living standards
includes asset replacement, cash compensation, development projects to improve physical
assets (e.g. land reclamation, irrigation projects), development projects to improve human
capacities (e.g. training), and the provision of employment opportunities (paras. 13-19). In the
case of rural populations, the Directive strongly favours land-for-land exchanges over
exchanges of cash for land (para. 13). Furthermore, it views the full remedying of harm (i.e. the
reconstruction of pre-existing liveli hoods) as the minimum level of acceptable compensation
(para. 3). The Directive also draws attention to equity issues, calling upon the project sponsor
to identify marginalized groups within the affected population (referred to as "vulnerable"
groups - which may be women, indigenous people, landless peasants, etc.) and to ensure that
such groups are properly included in the compensation framework (paras. 8, 16). And finally,
the Directive requires that planning, execution, and follow-up of resettlement activities be
conducted with the participation of both the affected population and any "host" commu nities
to which they may be relocated (paras. 7-10, 13).

The Directive thus represents a considerable normative challenge to how business is conven
tionally transacted by a mining enterprise. First, it argues for much broader conceptions of
property and compensation than those specified within state systems. Second, and more
funda mentally, the Directive calls for a wholesale reconstruction of the property transaction
rela tionship. In a liberal market framework, the responsibilities of the parties to one another
usually end with the exchange of compensation for land. The Directive however, holds the
project sponsor responsible for the economic outcomes of its transactions with local people.
The company is directed to ensure that its compensation actually does "at least [. . .] restore"
to pre project levels the "living standards, income earning capacity, and production levels" of
"displaced persons." The company is cast into an unfamiliar role as a fiduciary with
considerable paternalist responsibilities and (as we shall see) powers. This is a foreseeable site
of normative conflict. The legal field which emerges around the Directive will have to respond
to forces within (and perhaps external to) the mining company that seek to maintain the logics
and practices of "business as usual". We can predict that the result of this normative conflict
will have a significant impact upon the overall regulatory influence of the field.

Of course terms such as "living standards", "displaced persons", and "participation" are far
from self-defining, particularly when transplanted into different socioeconomic environments.
What forms of harm are compensable? When is a harm considered to be remedied? Who
counts as displaced? What is a valid participatory process? The regulatory impact of the
Directive's legal field will to a large extent depend upon the mechanisms and structures
through which the Directive is interpreted and applied in the local environment. This
"regulatory architecture" is set out in OD 4.30 itself, in the sponsor's contract with the IFC or
MIGA, and occurs in the planning and permitting processes that accompany project design and
development.

Briefly, the project sponsor is charged with conducting the field research and participatory
consultation necessary for its design of the Resettlement Plan. This material (in the form of
written reports) and the Plan itself are reviewed for approval by the IFC or MIGA in
Washington and by the "Independent Engineer" (an environmental engineering consulting firm
contracted pursuant to the financing agreement to act as an independent monitor of environ
mental and social compliance). In the case of a large mining project, staff from the Bank
agency will also typically arrange for a short visit to the project site. After any revisions, the
Plan is then implemented by the project sponsor who is required to make ongoing progress
reports to the Bank agency. Since 2000, a Compliance Advisor Ombudsman (CAO) office has
been established to address compliance issues respecting IFC and MIGA-financed projects,
including local complaints.

What are the implications of this structure? One of the most striking is the marginalization of
local people within the process of interpreting and applying the Directive in their local cir
cumstances. There is no requirement to provide local people with copies of the Directive, nor
is it required that they be made aware of its exis tence as a body of rules binding company
action with respect to compensation of their livelihoods and property. Furthermore, there is
no requirement to advise local people of the existence of the IFC, MIGA, the Independent
Engineer, or the CAO or of the means of contacting them. Accordingly, local people are
effectively shut out of any direct involvement in the IFC/MIGA review process. The form and
extent of their involvement is determined by the company's participatory process and their
input is mediated to the supervising agency via the company's reports. In contrast, the Bank
agency has a positive duty to inform its customer of the Directive (para. 24) and to finance
technical assistance to enable the customer to carry out its resettlement responsibilities (para.
23). Without alternative input, the company's reports tend to become the only authoritative
"legal facts" describing the local environment, its economic and social structures, the degrees
of impact, and the needs and entitlements found to exist among local people. Reviewers at the
Bank agency and the Independent Engineer are able to check for reasonableness,
methodological soundness and consistency, but are largely faced with the facts as presented.
Subsequent discussions regarding the application of the Directive are conducted exclusively
among the company and the reviewing agencies.

This construction of the role played by local people is markedly different from the role
accorded to "legal persons" by liberal legal systems. Liberal legal systems derive their legiti
macy from a conceptualization of the individual as an active, rights-bearing agent, who is pro
tected from arbitrary government action by the rule of law and by the principles of procedural
fairness. A person is entitled to know the rules s/he faces, and is entitled not to be
dispossessed without the opportunity to present a case which contests the facts and legal
interpretations asserted by another party. Within the liberal legal frame work, abuse of these
rights de-legitimizes the result. In contrast, the Directive circumscribes the role played by local
people as actors, and casts them instead as passive subjects. While they are to provide
information and to be consulted as to their preferences, principally they are expected to act as
the objects of expert study. Interpretive conclusions are drawn by experts who elicit and use
the input of local people alongside other raw material. Under the recently created CAO
complaint procedures, local people can gain some measure of active participation once
something "goes wrong". However as previously noted, initiating such a complaint requires a
knowledge of the structure and procedures of the Directive's legal regime which can be quite
difficult for local people to obtain and which the regime itself does little to facilitate.

Rather than granting formal procedural rights to local people, the Directive imposes a duty on
the project sponsor to ensure their "participation" in planning and decision-making.
"Participation" denotes an unspecified or general form of procedural involvement that has
become a near-universal practice among development practitioners and within some circles of
researchers. It is a flexible rather than formalistic approach. The practical content of partici
pation is tailored by development and research professionals to be appropriate to local circum
stances and the issues in question (Davis and Soeftestad, 1995). Participation has become ubiq
uitous within the development industry: every new project must declare itself participatory.
Despite this, the question of what constitutes valid and effective means of participation
remains highly contested. It is often argued that much participation is tokenistic, involving no
real impact upon the decision-making process (Cooper and Elliot, 2000; Lohmann, 1998).
Certainly a wide spectrum of perspectives and practices currently are classed within the
category of "participation": participation may involve a rigorous involvement in decision-
making procedures or it may not (compare for example the approach set out in IFC
Environment Division (1998) with the nuanced analysis suggested by Carter (1998) and the
emphasis on accountability in Feeney (1998)). The ambiguous requirement of "participation"
also indicates a paternalistic framing of the role played by local people. While the paternalist
presumptions of the Directive affirm the need for special measures to ensure the effective
compensation of local people, they offer a decidedly limited respect for local agency. As a
result, the degree and manner of local involvement in the process is another factor to be
determined largely by the project sponsor.

It is worth recalling that, for local people, there is a great deal at stake in the way the Directive
is interpreted and implemented. The results of the processes of interpretation and
implementation will determine whether they are dispossessed of their livelihoods and
provided - or not ? with effective means for reconstruction or compensation. Furthermore, as
will be discussed, the application of the Directive can have an important legitimation effect
upon the land acquisition process which in turn may impede the community's capacity to
mobilize support from transnational allies. Given the importance of these matters to the lives
of local people, the marginalization of local people within the process of interpreting and
applying the Directive demands a very high burden of justification.

What then is intended to ensure the integrity and legitimacy of this process? It is the expertise
and integrity of the professionals hired to run it (OD 4.30 paras. 22, 25). In the legal field of the
Directive, interpretation is regarded as a technical activity rather than a political or contestable
one. Specialized personnel are employed by both the mining company and the IFC/MIGA. The
research, analysis, participatory design, and resettlement planning are performed by the
company's specialists and reviewed by the Bank's specialists. These tasks are assessed
(presumably) on the basis of a shared professional perspective on standards of practice,
accepted procedures, and mutually recognized norms. It is analogous to scientific peer review:
the adequacy of the practitioner's credentials and methodology, the thoroughness of the
procedures, and the reasonableness of her/his conclusions within the accepted parameters of
a professional discourse all attest to the work's validity. In the same spirit, the interpretation of
terms such as "participation", "displaced person", "living standards", and "resettlement"
ultimately derive from the content of these shared professional practices, standards, and judg
ments. The integrity and legitimacy of these interpretations therefore rests upon the premise
that they will be produced by disinterested and autonomous technical professionals, applying
scientifically-validated professional norms and judgments. The functioning of the legal field (in
terms of its regulatory and legitimation effects) is for these reasons bound up with the con
struction of this new form of professional specialization, its autonomy, and its interpretive
authority.

The social specialist

The demand for formulation and implementation of Corporate Social Responsibility (CSR)
policies in the mining industry has created a new and evolving professional category: the
"social specialist". Social specialists are professionals or experts hired by mining companies to
frame and address community issues. They play a key role in the construction of who and what
is "the community": its geographical and political scope, its social, cultural, and economic
character, its legitimate needs and entitlements. The conclusions of social specialists are
invested with the symbolic capital of their individual academic and professional credentials. On
the face of it, social specialists would appear to play a role analogous to that of lawyers within
the national legal field: they are the field's specialized interpreters. Just as legal training is
required in order to translate a controversy into the language and logic of a lawsuit (and to
transform it in the process - Bourdieu, 1987, p. 833), so it is the particular task of the social
specialist to phrase controversial issues within a "social responsibility" frame work.

Social specialists do not exercise their interpretive functions in a vacuum. Their activities are
integrated within the hierarchical planning and decision-making structure of the mining enter
prise, typically under a department responsible for "community relations" which either
employs them as staff or retains them as external consultants. Decisions taken by the
department take place within the corporate hierarchy and must be coordinated with other
departments. Land acquisition and resettlement planning, for example, will also involve staff
from departments responsible for legal compliance, environmental issues, operations, etc. and
must be structured within the overall budgeting and timetabling processes for planning and
project development.

This suggests another series of related questions. What authority or influence is carried by
social specialists within this organizational structure? To what extent, and in what
circumstances, do social specialists possess the symbolic capital required to assert
interpretations and representations that will be carried out in practice? How strong is the
interpretive authority of social specialists within their institutions as compared with that of
other corporate actors? There are a number of compelling reasons to question the extent and
depth of their influence and interpretive authority.

First, there is a lack of consensus within the mining industry concerning the legitimacy of CSR
policies. Strong feelings exist throughout the industry that it has been the victim of unfair and
misinformed criticism (Wilson, 2000). According to this view, the creation of social
responsibility policies and community relations departments represents an unreasonable
concession to "political correctness". At their most extreme, proponents of this view contend
that CSR activities should consist chiefly of public relations efforts rather than promotion of
substantive change. A less extreme version of this line of thought places social issues at the
periphery of a mining company's core concerns: they may have to be addressed, but must not
get in the way of "real" work.

Second, both mining companies and environmental consulting firms are dominated by
professionals from physical science disciplines such as geology, biology, and engineering. Social
scientists working on interdisciplinary impact assessment teams have identified among many
physical scientists a tendency towards a "disciplinary chauvinsm" characterized by a lack of
understanding of or respect for the premises, methodologies, and results of social science
inquiry (see Burdge and Vanclay, 1996; Burdge and Opreyszek, 1994; and see for a discussion
of the perspectives of engineers Chase, 1990). These attitudes, particularly when they are held
by senior decision-makers or "research brokers", may result in the underfunding of social
research ("What is it you guys really do to use all that money?") and the failure to contract
qualified personnel to address social issues ("anyone can determine the social consequences
of development").

Third, there are strong structural motivations in the industry for continuing with "business as
usual" - particularly with regard to diminishing the impact of social responsibility requirements
on the timing and cost of other operations. Strict control of production costs and timetables
are paramount values within the mining industry. Metals prices are established on volatile
world markets, and the success of a mining enterprise depends on achieving production at the
lowest possible cost. In addition, the need for considerable borrowing in order to develop a
large mine places a high premium on the efficient use of time: the faster a mine can become
productive, the less debt servicing will be necessary. These values are deeply embedded in a
company's institutional culture as well as in the individual professional cultures of its staff. The
capacity of social specialists to insist on action that increases costs or requires delays may be
limited by both overt policy and by the "natural" dispositions of company personnel active in
the decision-making process (including the social specialists themselves).

Finally, the profession of "social specialist" in the context of mining remains poorly
institutionalized and offers little to bolster the interpretive authority of individual practitioners.
It is not a professional category with accreditation, compulsory professional standards or
disciplinary self-regulation. It is not clear what qualifications are required for "social
specialists". While many who are hired in this capacity are anthropologists or sociologists,
others may be physical scientists or managers who have acquired some practical experience
with community issues. In Peru it is not uncommon to find Peruvian mining engineers ("old
hands" at dealing with peasant communities) or even former industry-side labour negotiators
in senior positions in community relations departments. Not surprisingly, little foundation
exists for the creation of interpretive consenses which help to consolidate a profession's
specialized authority (see Burdge and Vanclay, 1996, pp. 66-70; for evidence of growing
institutionalization of professional standards see Interorganizational Committee on Guidelines
and Principles for Social Impact Assessment, 1995).

These observations call into question two assumptions concerning the capacity of social
specialists to ensure the integrity and legitimacy of "decisions" produced by the Directive's
legal field. It is not clear that social specialists operating within the mining industry have a
strong sense of shared professional standards and judgements to serve as authoritiative and
reviewable guidance in interpreting and applying the Directive (particularly with respect to the
Directive's specialized terms such terms as "displacement", "resettlement" etc.). In addition,
these observations suggest that social specialists may have difficulty formulating or asserting
interpretations (that are carried into practice) which conflict with dominant logics,
assumptions, and practices within the company. We can expect that internal contests for
interpretive authority and symbolic capital are important issues with respect to how mining
companies define and address social issues.

Insight into the dynamics of these contests may be derived from the trajectory of the introduc
tion of social specialists within the individual agencies of the World Bank Group themselves.
The World Bank introduced its "social safeguard policies" and social departments in response
to concerted outside pressures. Since the 1980s, advocacy networks connecting Washington-
based NGOs with grassroots movements and NGOs in the South have waged sustained
campaigns to promote change and accountability in Bank funded projects (Fox and Brown,
1998). While these pressures have scored significant successes in establishing or changing
formal policies and procedures at the Bank, changes in actual practice have been much more
elusive. For example, the Bank-wide review of public sector projects carried out between 1986
and 1993 revealed a systematic and widespread pattern of noncompliance with the
Resettlement Directive (World Bank, 1996). Social specialists employed at the public sector
side of the Bank have been free to write and publish as they wish; however, they have had to
struggle against the marginalization of their influence upon actual practice (Fox, 1998; Francis
and Jacobs, 1999; Gopinath, 1996). Factors identified as contributing to this marginalization
include the economist-led corporate culture of the Bank, and institutional disincentives to
rigorous application of social safeguard policies.

Fox and Brown (1998) have suggested that external pressure on the Bank can help to increase
the symbolic capital and "reform" opportunities available to social staff within the Bank.
Informants interviewed within the social departments of the World Bank agencies agreed with
this suggestion: they felt that the presence of outside pressure helped to increase their
standing within their organizations. As community issues become more important problems,
those qualified to "solve' them gain greater importance and authority. This dynamic is likely to
apply as well to the social departments working within mining companies: that the symbolic
capital of social specialists will be strongly influenced by the relative presence, absence and
form of outside pressure and scrutiny of the process.

The institutionalization of social issues and social department within the Bank Group's private
sector agencies, has also been closely related to the presence of outside pressure. Until the
1990s, the IFC's institutional investment in social auditing was negligible. Activist campaigns
had up until this point, not targeted its operations. In 1995 however, the IFC was rocked by
local and transnational protests concerning its funding of the Biobio River hydroelectric
projects in Chile. The report of an independent commission found that the project was
conducted in disregard of the Bank Group's social safeguard policies. Since this debacle, the
IFC has doubled the size of its environmental department and has for the first time, begun
hiring (non economist) social scientists (Friends of the Earth, 2000). The MIGA in contrast, has
to date kept out of the spotlight. Accordingly, its social and environmental department is the
smallest of all the agencies, comprising three staff at the time interviews were conducted in
2000, none of whom were social scientists.

2. Case Study: CMA's Entry into the District of San Marcos

This case study concerns the initial phases of relations between a transnational mining
enterprise and local communities in a remote rural district in Andean Peru. The study presents
an account of the opening phases of corporate community relationships - those dealing with
acquisition of land and introduction of project into local environment. This work is based upon
field research conducted in 2000 at the mine site in the district of San Marcos, as well as in the
departmental and national capitals. Interviews were conducted with a wide range of
informants including campesinos, campesino leaders, municipal officials, company staff and
management, government representatives, NGO staff, etc. Additional interviews were
conducted in Washington DC. with NGO representatives, and with social and environmental
staff from the World Bank, the IFC, and MIGA.

The District of San Marcos

The district of San Marcos is located in the Conchucos canyon region, in the department of
Ancash, in the central Peruvian Andes. According to the 1993 census, the district's population
was 11 660, with 2784 residing in its capital (also called San Marcos). Nationally, San Marcos is
counted among the poorest and most marginalized of regions, with high levels of malnutrition
and illiteracy, and a significant rate of permanent emigration. The majority of its residents are
Quechua-speaking indigenous peasants who practice subsistence agriculture.

San Marcos, and the Andes generally, do not lend themselves to tidy, comfortable images of
"community". Andean environments such as these are riven with a long history of opposing
solidarities, internal divisions, and conflict (particularly conflicts over land). They are currently
in the grip of a long term economic crisis, and profound socioeconomic transformation. While
there is not space here to give these subjects the treatment they deserve, I will touch on each
briefly in order to develop a framework with which to outline certain local attitudes and
expectations respecting the mining company.

"Indigenousness" and ethnicity are complex issues in the Peruvian Andes. Indio (Indian) is a
derogatory term, generally rejected for self description in favour of campesino (peasant).
However conceptions of mythologized, essentialized ethnic differences pervade Andean
society as the product of 500 years of racialized strategies of rule and resistance. While
campesinos and mestizos (mixed, i.e. of Spanish descent) are thought to have different
degrees of Spanish "blood" in them, in practice the distinguishing marks tend to be class,
education, dress, wealth, the manner of one's involvement in traditional networks and market
exchange, and most importantly, power (Gose, 1994; Stein, 1985). Mestizos inhabit the town
of San Marcos and tend to occupy its positions of power as municipal officials, teachers, shop
owners, etc. "Indianness" is relative (with some being "more indian" than others) and can
depend on circumstances. "Indianness" is also associated with altitude: those living in the
warmer fertile valley are "less Indian" than those residing higher in the mountains. These
shifting conceptions of identity articulate the means by which overlapping social divisions and
solidarities are forged. Mestizo identity combines a symbolic (and potentially violent) rejection
of what is "Indian" with the potential for close identification with a shared sense of tradition
and community. While divided, a prosperous shopkeeper and an illiterate shepherd may also
be linked by strong ties, whether as extended family or through traditional forms of patronage
(compadrazgo).

Andean society has been experiencing profound and ongoing transformation over recent
decades. The entrenched system of feudal relations between and campesinos and mestizo
land lords and bosses (which persisted over 200 years of republican history) was dealt a
decisive blow only in the late 1960s and early 1970s with the land reform program of the
revolutionary Velasco dictatorship. The break up of the landlords' haciendas (plantations) and
the redistribution of land to newly-formed campesino communities removed the linchpin of
the existing system of mestizo dominance. New freedoms, together with the crisis of the rural
economy, and then political violence in 1980s and early 1990s con tributed to a huge increase
in emigration to the coast. The result has shattered Peru's two "solitudes'. The "modern"
criollo coast has been deluged with millions upon millions of Andean migrants vigorously
engaged in informal urbanization and commerce (see De Soto, 1989) and struggling with
economic and social marginalization (see M?ndez, 1996). The "traditional" rural Andes has
experienced a constant flow of returning and visiting migrants with profound and ongoing
effects upon Andean social and political institutions (Paerregaard, 1998; Diez, 1999). As a
result, even the most "remote" corners of the Andes are continuously and closely articulated
with the urban world. This articulation, and the spanning by migrants of spaces with different
(and changing) rationalities, puts into question, and into play, the meaning of Andean
identities. It opens for campesinos, the possibility of social and economic transformation, of
greater access to the benefits of the modern, metropolitan world.

Andean agriculture is characterized by the exploitation of marginal resources in conditions of

substantial risk. Over centuries, peasant farmers have adapted complex production systems
for securing a relatively reliable but poor livelihood in these conditions (Figueroa, 1982; Mayer
and de la Cadena, 1989). These systems involve risk management strategies, cooperative
creation and maintenance of different ecological production zones, and internal systems of
non market exchange of goods and services. They are made possible through forms of social
organization and collective institutions such as the campesino community (Murra, 1975;
Alberti and Mayer, 1974). Livelihoods in the Andes are based upon a fragile balance. To
whatever degree possible, traditional production and exchange is supplemented by production
for regional markets, seasonal migration for salaried labour, and remittances from permanent
migrants. However the need created by demographic pressures far exceeds the productive
capacity of these strategies, and has produced massive emigration to Peru's coastal cities
where marginalization, and un- and under-employment are more the norm than the
exception. In defiance of indigenist accounts of Andean identity, campesinos have assiduously
pursued market economic opportunities.

Diversified agricultural production is managed across different ecological zones which vary
with altitude and microclimate. Families and communities ensure access to a mixed basket of
goods by spreading their own production across various zones and by maintaining local
networks involving both traditional and market forms of exchange. The district capital (also
called San Marcos) is located at 3000 metres above sea level in the lowest part of the valley,
while the highest production zones reach above 4200 metres. The Antamina copper-zinc
deposit is located within this upper area, beneath a mountain lake, at an elevation of 4300
metres. This upper region, called the puna, is chiefly used to keep livestock (including llamas,
alpacas, and sheep). To exploit the deposit, Compania Minera Antamina (CMA) sought to
acquire some 7000 hectares of land in this area.

The lands in question were owned by a number of extended families of private owners and,
principally, by two campesino communities. A campesino community is a legally-recognized
form of local indigenous organization in which collective title to land is vested. A great many
such communities were formed in the late 1960s and early 1970s when the Velasco land
reform program redistributed hacienda lands to their former peones. However, the campesino
community also corresponds to a form of agrarian Andean social organization with roots that
can be traced at least as far back as the colonial period. It is a key locus of local cultural identi
fication, collective organization, and traditional exchange networks, and, despite the significant
and ongoing social change taking place within Andean environments, it remains the most
important institution within much of the Andean countryside. Many "traditional" communities
which had retained control over land became legally-recognized entities for the first time
during Peru's land reform process in the late 1960s and early 1970s (see Seligmann, 1993).
Each campesino community is represented by an elected leadership, and a two thirds vote of
community members (comuneros) is required to authorize the sale of collective land.

The arrival of CMA into the local environment in San Marcos therefore, presents important
opportunities and risks to campesinos. It brings the possibility of badly needed and potentially
transformative economic opportunities - such as salaried employment, improved
infrastructure and services, the promise of "development", and a market for local goods. And it
also presents communities with a potential threat to the basis of existing community
livelihoods, through the company's need for land, its potentially rapacious behaviour, and the
risk of long term environmental disaster.

Compania Minera Antamina

In September 1996, Canadian partners Rio Algom and Inmet won the right to exploit the
Antamina copper concession, an as-yet-undeveloped holding of Centromin, a state-owned
mining company. In their successful bid for the newly-privatized concession, the two mining
companies pledged to the Peruvian government to invest US$2.5 billion in the mine by 2002
and to pay a 30 percent penalty on any shortfall (Mining Journal, 1998a). The partners of the
newly formed Compania Minera Antamina (CMA) were gambling that the deposit was in fact
much richer than expected. Pursuant to their contract with the government of Peru, CMA had
two years within which it could pull out of its investment commitment with no strings. This left
the company with two years (i.e. until September 1998) within which to determine actual
reserves and ascertain the feasibility of all aspects of the project ? design, cost, construction,
infrastruc ture, financing, permitting, and of course the acquisition of land.

During the 1990s, Peru became a very attractive site for international mining exploration and
investment - particularly from Canada. Beginning in 1990, the Fujimori regime conducted a
drastic structural adjustment program (mandated by the International Monetary Fund) which
featured radical a restructuring of the mining sector to favour foreign investment, involving
substantial legal changes and several rounds of privatizations of state holdings. Desperate for
the hard currency and exports provided by mining, the government declared the promotion of
mining investment a national priority.25 These changes sparked an exploration boom which
was dominated by Canadian junior companies, while many senior Canadian com panies were
among those transnationals consid ering major investments in Peru (Aste, 1997). The
Antamina project represents the largest of these investments, and is of significant macro
economic importance to the Peruvian govern ment. In November 2001, shortly after achieving
full production capacity, the Antamina mine was officially opened by Peru's new president
Alejandro Toledo (CooperAccion, 2001).

In late 1996, CMA's exploration teams constituted the company's first presence in San Marcos.
After nearly a year of testing produced positive results, the company began to take shape. An
enormous project was planned. It would eventually involve the construction of mine, mill and
related facilities at altitudes of between 3500 and 4500 metres, two new road segments, and a
pipeline to carry concentrate across 302 km of alpine environments to a new port facility on
the coast. To carry out the construction, a multitude of companies were contracted and
centrally administered by the project's general contractor, the transnational construction giant
Bechtel. The project was expected to require an overall investment of US$2.3 billion, US$1.32
billion of which was raised from a consortium of lenders (Financial Post, 1999). Production was
initially planned to commence in 2002. In 1997, CMA formed a Community Relations
department responsible for all aspects of corporate-community interactions, including the
acquisition of land. From early on, senior CMA management articulated on behalf of the
company a strong commitment to social responsibility in public fora in Lima, San Marcos, and
abroad.

What do mining companies want from local communities? First, access to required lands; and
second, peaceful - and perhaps good - relations. Local trouble, particularly when publicized
through transnational advocacy and media linkages, can cause a mining company substantial
long and short-term problems with a company's access to capital, favourable regulatory
treatment, and new exploitation sites. Mining projects are inherently vulnerable: they require
that huge amounts of capital be tied to specific and fixed geographic sites. As observed earlier,
the industry's financial stakeholders are strong drivers of the trend towards addressing commu
nity issues (Hughes and Warhurst, 1998). Spending on community relations is an investment in
goodwill that is thought to have two potential effects. It may provide "insurance" against
problems that could affect project viability (Crowson, 1998); it may also act as a "social licence"
that facilitates access to capital and favourable treatment. The dilemma for a mining company
that has, on some level, accepted this logic is: how much should it spend and on what? What
constitutes a reasonable investment in community goodwill? Mining executives fear a
pandora's box of responsibilities, floodgates of local need, simple extortion, and finding
themselves being substituted for the ineffectual or absent state (Labonne, 1999, p. 317). In
summary, the managers of a mining project seek in their relations with local people to obtain
both land and community peace (and perhaps goodwill) at a reasonably certain and affordable
price.

Planning land acquisition and community relations

The basic components of CMA's community relations approach were decided upon within the
context of the overall process of project planning. These were outlined within the company's
Environmental Impact Statement (EIS), sub mitted to the Peruvian government in March 1998.
As part of the financing package being negotiated during this period, MIGA agreed to provide a
series of equity and debt guarantees to CMA's investors and lenders. While CMA publicly
undertook in its EIS to comply with the Directive as a voluntary commitment, these guarantees
subsequently established that compliance with the Directive was a binding obligation of the
company's financing arrangements.

CMA consultants and planners conceived of the company's interactions with local people as
falling into three categories: the purchase of land from its owners, the resettlement of
residents on purchased land, and the provision of local development projects (Klohn Crippen,
1998). As presented in the company's EIS, these were considered to be separate processes,
each regulated according to a different normative system.

The purchase of land was expected to be conducted according to Peruvian law. CMA had
acquired the rights to the Antamina mineral concession, however to exploit it, the company
would have to acquire rights of access or ownership over the surface territories from their
current owners. Peruvian law provides that this can be done by agreement (typically a contract
of sale) or, if an agreement is not forthcoming, the concession-holder may apply to the
Ministry of Energy and Mines (MEM) to obtain a servitude (servidumbre): a right-of-way
permitting access to the surface-owner's property for the purposes of mining. The grant of a
mining servitude would essentially expropriate the surface owner's right in exchange for
minimal compensation set by the Ministry of Agriculture. While the state strongly favours
mining investment, its position with respect to the mining servitude is more equivocal than it
seems. Intense community conflicts that have arisen in the 1990s as a result of the servitude
process have made the MEM extremely loath to use its expropriation power. However, strong
resistance from the mining lobby has kept the mining servitude on the books. The uncertain
compromise that has been in place is one in which the servitude serves as a symbolic threat
useable by companies to coerce contracts of sale. Accordingly, the acqui sition of land was
expected to take place pursuant to a process of land titling, followed by negoti ations with
owners.

Resettlement activities were planned in accordance with the Directive and CMA's general
philosophy of social responsibility. The initial Resettlement Plan contemplated a land-for-land
exchange whereby new terrain and homes would be provided in nearby pastureland for the
relocation of residents of the terrain purchased by the company. The company also planned to
cover transportation and relocation costs (Klohn Crippen, 1998).

CMA committed itself in its EIS to spend an overall US$6.3 million by 2001 on development
projects within those areas affected by its operations. The company's plan included social,
economic, and cultural development components, with most of its spending focused in the
areas of health, education, agriculture and enterprise development. This spending would be
spread among a number of districts other than San Marcos, including the port area on the
coast.31

Assessment and monitoring of resettlement plan

MIGA's overall process for evaluating an application for a project-related investment

guarantee requires a review of the project according to its social and environmental safeguard
policies, including the Operational Directive on Involuntary Resettlement. With respect to the
Antamina project, final approval was formalized in the financing agreements signed by the
project's investors, lenders, and guarantors in June 1999. During the period of environmental
and social assessment, MIGA had not yet established formal environmental or social review
procedures (these were enacted for the first time in July 1999). In the place of such
procedures, the MIGA team used its "best professional judgement" in the interpretation and
application of the Bank's safeguard policies, including the Directive (CAO, 2001).
In an interview, MIGA social and environmental staff reported that assessment of a large
mining project is conducted in two steps. The primary evaluation consists of a desk review of
project documents (the EIS in particular) concerning project design, community characteris
tics, social impacts, and planned resettlement activities. This is followed by a visit of several
days to the site of the project itself. While the project documents constitute the "legal facts"
with which the project is assessed, the site visit is intended to verify the overall picture
presented and to get a sense of the good faith and expertise of the team responsible for social
issues at the project. MIGA staff conducted such a site visit at Antamina in 1999 (CAO, 2001).
The responsibilities of subsequent monitoring and supervision of compliance with safeguard
policies (including the Directive) were delegated to the Independent Engineer. Neither MIGA
nor the firm contracted as the Independent Engineer included personnel with social science
expertise within their assessment teams (CAO, 2001).

With respect to the interpretation of the Directive itself, the informant interviewed from
MIGA's social and environmental department signalled that OD 4.30 was viewed as a "deeply
flawed" document, largely inappropriate for the private sector. In addition, this informant
argued that there was substantial disagreement among social specialists concerning the
proper interpretation of the Directive. The informant stated that the key to assessment at
MIGA of a project's compliance with the Directive involves an assessment of the participatory
procedures used in resettlement planning. Where these procedures were adequate, it was
suggested that the Resettlement Plan would likely be considered adequate.

Purchase of land

The Community Relations staff were given the task of acquiring legal title to lands required by
project designers for the mine and its associated infrastructure. They were required to
convince land owners to sell using a pre-set package of inducements and threats. Negotiations
with the various land owners took place over one year, with the final sales formalized close to
the September 1998 pull-out deadline. Negotiations were first initiated with one of the
campesino communities, and thereupon undertaken with the other community and the
various families of smallholders. Over the course of these negotiations, it is likely that CMA
negotiating strategies evolved, as staff discovered what tended to persuade campesinos and
what did not.

Reports from campesino informants concerning this strategy, whether community leaders,
comuneros, or private owners, are very consistent. CMA and campesino negotiators did not
restrict their discussion to the narrow issue of price - campesinos wanted to know how the
arrival of the mine would change their lives and the environment around them. CMA
representatives responded by presenting the company's pre-set plans respecting land
compensation and commu nity development; they also described what campesinos could
expect once the mine was in operation. CMA staff offered what was viewed at that time as a
high purchase price for land (US$400 per hectare of pastureland and US$1000 per hectare of
agricultural land), the promise to replace purchased lands in a subsequent resettle ment
process, and a commitment to undertake a range of development projects for the benefit of
local people. In addition, a great many informants report that at least some CMA represen
tatives made promises they would have known to be false. Chief among these was the promise
that the mine would bring large-scale, secure employment for the local people of the region.

CMA negotiators also tactically used the threat of the servitude process. The threat was ener
getically deployed against intransigent sellers, however it appears also to have been used
more generally to assert a particular set of power relations between campesinos and the
company. CMA negotiators portrayed the servitude law as if it gave the company all the cards:
through an administrative process CMA could take over campesino lands with minimal
payment if it wished. This representation of reality asserts, on the one hand, the futility of
opposition (to oppose the company would be to lose out on its offered benefits and to end up
opposing the state), while on the other, it suggests something about the company's character:
its trustworthiness and benevolence. By invoking the servitude, CMA negotiators asserted that
the company was not bound to act generously, but was doing so anyway. Although it had the
power to dictate terms to campesinos, it chose to dictate terms that favoured local interests. It
was CMA's policy to do so, they said, to operate as an engine for local and national
development. CMA would be a powerful, benevolent, and trustworthy neighbour.

Campesino accounts suggest that they knew full well they were not powerless: their
compliance was desired by the company and could be withheld. However the cost appeared to
be a confrontation with both the company and the state.35 This message was reinforced by
visible state support in the land titling process that preceded negotiations and by the absence
of state intervention on behalf of local interests. 36 Furthermore, long experience would have
provided little expectation among campesinos that the administration of justice would veer far
from the interests of power.37 The expected cost of this confrontation - and the risk of losing
both land and the offered compensation - doubtless strongly influenced the compromise and
risks that campesinos were willing to accept.

With this taken into account, the CMA negotiating strategy appeared to be, from the
company's perspective, extremely successful. Land owners signed, title was formalized and
trans ferred, cash compensation was paid, and the company was popular. This early success
occurred, I would argue, in part because the terms of the accord appeared to each party to
respond to certain fundamental concerns and requirements identified earlier in the discussion.

Among comuneros and private landowning campesino families, the accord responded to both
sets of concerns: the promise of transformative opportunities for social and economic change,
and the protection of the basis of existing livelihoods. While the offer of cash, work,
development programs, and a market for goods responded to local hopes for opportunity, the
company's "good behaviour" and particularly its commitment to replace lands in a subsequent
resettlement process promised that existing production systems would not be dismantled as a
result of the sale. It is likely that different campesinos placed very different values upon these
risks and opportunities, yet the ability to respond to both appears to have been fundamental
to gaining widespread support. This is demonstrated in the case of the campesino community
of Ango Raju de Carhuayoc which was asked to sell all of its puna pastureland (and therefore
its entire livestock production zone) to the company. During its negotiations with the
company, the community remained deadlocked between a faction that favoured the sale and
another that supported fighting to defend the community lands. Resolution of the conflict was
finally facilitated when company representatives agreed to put CMA's resettlement and
development promises into writing as direct commitments to the community. Once this was
agreed, the community obtained the two thirds majority needed to authorize the sale. Faced
with similar pressures from other land owners, CMA provided a number of written guarantees
of resettlement rights (made specificly to owners) during land acquisition negotiations (see
GRADE, 2000).

How did the land sale agreements made meet with the needs and expectations of CMA (or
appear to)? The Community Relations department succeeded on three counts, first it obtained
title to the lands required; second it maintained both the popularity of the company locally
and the appearance of harmony and fair play for outside observers; and third it appeared to
achieve these two goals at a fixed price that remained under CMA's control.

Execution of the resettlement plan

By the end of 1998, after the land purchases had been finalized, the CMA resettlement plan
was in gear: a census had been conducted, consultations with residents and their extended
families concerning potential sites for relocation were underway, and some resettlement land
had been set aside by the company.38 Following their timetable, Community Relations staff
began to relocate families onto new land. This process came to a sudden halt in February of
1999. The Operations department reported to Community Relations staff that its construction
site was being invaded by returning peasants, and that confrontations were taking place. After
some confusion, it was discovered that those identified as "returnees" by Operations were in
fact the very peasants whom Community Relations had been resettling. Unknown to
Community Relations, the design plans for the project had been redrawn. The lands previously
designated for resettlement had been appropriated by the expanded construction site. As a
result, Operations viewed Community Relations' resettiers as unwanted returnees on company
land. This was not the only sobering discovery. Under the new design, Community Relations
staff were required to sharply accelerate the timetable for the departure of puna (high altitude
pasture) residents - amounting to a matter of weeks, rather than months.

Community Relations accepted these constraints. It began an accelerated program to nego

tiate for the immediate departure of residents. A period of hectic dealings ensued. It was
evident that the existing plan could not be implemented. Replacing land and residences was
not possible within the time allotted, and campesinos refused to leave their lands on the
promise of compensation in the future. CMA staff claim that the company's offer to place a
dollar sum in escrow as security for CMA's promise (the sum being the cost per family to CMA
of resettling each family) was soon converted into an offer of immediate cash for immediate
departure. Thus "resettlement" was redefined as a cash payment of US$33 000 to each family
resident in the lands acquired by CMA. The eventual evictions were conducted with the
assistance of a judge from the provincial court in Huari (and later by a local justice of the
peace) accompanied by police and CMA representatives. Over the months of March and April,
oustees were transported off the acquired lands, had their animals purchased by CMA, and
were paid US$33 000 per family identified as permanently resident. Some 68 families were
compensated in this way.
These events spelled the end of peaceful relations between CMA and communities in San
Marcos. Favourable local popular opinion was replaced by outrage and distrust. CMA's agree
ments and representations became known as engaños - deceptions, falsehoods used to fool
and rob campesinos. For many local people the events of 1999 demonstrated the betrayal of
the promises CMA had made to secure its entry into San Marcos. If, as I have argued earlier,
the company's initial success in gaining the acceptance of many sanmarquinos depended upon
its commitment both to protect the basis of existing livelihoods and to provide widespread
transformative economic and social opportunities, then the popular antagonism it generated
subsequently depended upon the betrayal of these two commitments. When the dust settled
from CMA's resettlement process, many perceived that the basis of existing livelihoods had
been appropriated without being replaced, and that the expected modern transformative
economic and social opportunities had not been realized.

Frustration of transformative economic and social opportunities

First, and for many most important, was the absence of large-scale local employment with the
mine. Unlike the large mines of decades past, high-tech operations such as Antamina require
only a relatively small permanent workforce of highly skilled workers. The need for unskilled
labour is temporary and small. Furthermore, during the phase of mining construction, nearly
all work was carried out not by CMA itself but by its contractors - none of whom had made any
commitment to hire locally. Second, local people found that the mine did not provide them
with a market for their goods. The company contracted to feed the project's labour force (the
french transnational Sodexho) chose to import its produce. Third, CMA's cost-conscious
investors had put its promised local development projects on hold. Until well into the year
2000, campesinos would see little tangible evidence of such projects in San Marcos. Fourth,
the payment of cash to both owners and "resettled" residents proved to many to be of less
benefit than many hoped. In the absence of other expected benefits, these payments had to
be looked upon to do double duty: they had to replace the socioeconomic role that the puna
had played in local livelihoods, and to provide the added transformative benefits craved by
many. It is uncertain whether in many cases even the former goal was achieved. This is
discussed further below.

Failure to protect the basis of existing livelihoods

The key questions to answer at this stage are who was impacted by the loss of the puna land,
who was compensated, and how? The puna production zone is an integral part of multi-level
Andean agriculture. It is the highest production zone (typically above 3800 metres) and is
chiefly used for pasturing livestock. It is a zone upon which a large number of people depend
for a significant portion of their livelihoods, but in which few people actually live, and even
fewer on a year round basis. Many different types of people keep animals in the puna -
including the official owners of the land, extended family, renters, and retainers.39 Animals are
generally herded together, and tended by a shepherd, often a retainer or poor relation who
may be paid with animals, food, or pehaps money. Renters who keep animals on someone
else's land will pay its owner. Those who do not have a shepherd may share shepherding
duties on a rotating basis with several other family members who keep animals in the herd.
Each of four siblings, for example, may spend three months a year up in the puna tending the
herd. Other land owners or their extended family may spend little or no time with their
animals. In addition to goods such as meat and wool, the animals kept in the puna provide
their owners with an important source of cash. For the most part, agricultural goods in San
Marcos are not produced for regional or national markets (production and transportation costs
exceed market prices). However, the market for meat and animals ensures that money can be
stored in animals until it is needed for immediate costs such as medicine or a child's education
(Rios, 1992). Accordingly, livelihood reliance upon the puna takes several forms - including
cash income, goods, domicile, and employment - and varies from person to person, family to
family (Orlove, 1977).

CMA's pledge to replace the lands the lands it purchased suggested that each of these
different constellations of rights and interests in the land, and the social networks underlying
them, could be maintained. However, when the offer of "resettlement" was translated into
money, it was made only to those deemed to be permanent residents of the purchased lands.
In this process, the majority of those dependent on these lands were dispossessed, while an
unprecedented amount of cash compensation was awarded to a limited number. To make
matters worse, residency was inconsistently adjudicated by the company. CMA's census did
not adequately take into account the seasonal pattern of residency and included some people
who lived in the puna year-round, some who resided there seasonally, and some who almost
never lived there (GRADE, 2000). This was a highly divisive turn of events, which split both
families and communities apart. A gold rush mentality ensued as campesinos deluged CMA
with claims for the same "resettlement" payments received by their neighbours or relations 40 -
prompting the company to close its doors.

The criterion of residency to determine entitlement to "resettlement" made little sense to

campesinos. Their points of reference were the agreements and representations made by
company staff. "Resettlement" was a promise initially made to land owners not residents.
Landowners who had bargained for written promises of "resettlement" were among the most
indignant claimants for the company's subsequent "resettlement payments". Further
confusion was created by the fact that these payments could be more generous than the
portions of the lands' sale price received by individual owners. In many cases the large number
of co-owners meant that, once the sale proceeds were divided among them, each one could
receive perhaps several thousand dollars. The retainer who acted as their shepherd likely
received US$33 000. This inverted a set of local conceptions of status and right 41 that CMA had
previously appeared to be respecting: that ownership of land connoted high status within the
social network of those associated with the puna, and the strongest of rights to land. Living in
the puna on the other hand demonstrated low status and a correspondingly low interest in
land, reflected in a dependency on its owners. The reversal of this order served to incense non-
resident land owners, who found the symbolic capital of their own payments markedly
devalued within the local moral economy (GRADE, 2000; Alberti and Mayer, 1974).42

Did the cash compensation received by owners and residents enable them to rebuild their
previous standard of living? Due to the lack of effective pre-resettlement socioeconomic
baseline data, this is very difficult to assess.43 A Lima-based development research institute
subsequently contracted to evaluate the resettlement process has argued that the monetary
payments offer no guarantee that medium or long term living standards have been maintained
(GRADE, 2000). Certainly, there is evidence to suggest that many recipients were not able to
translate the payments they received into new productive assets. Local inflation, especially in
prices for land and housing, sharply diminished the payments' value. 44 For many, cash proved
to be easily susceptible to (unscrupulous) appropriation, to claims made through family and
social networks, or to simple consumption. Many campesino informants reported that after
two years, both the money and the land were gone. The notion that many had experienced a
net loss from the transactions was strongly asserted by campesino informants. While it is very
likely that some possessed effective money management skills, others (in particular the
shepherds of the puna) had no experience with large sums of money and had limited
opportunities to invest it. It is likely that for many campesinos, a form of productive property,
had been exchanged for one that would chiefly be consumed.

Epilogue

The story told here is of course part of an ongoing and multifaceted conflict. A few further
points are required to put the events described into a fuller context. Despite their marginaliza
tion within it, local people in San Marcos have succeeded in prompting further dimensions of
regulatory action from the Directive's legal field. In early 2000, frustrated by CMA's continuing
intransigence, municipal, local civil society, and campesino community leaders drafted a letter
of complaint that was sent to various authorities - including the President of Peru, the
Congress, the Ombudsman, the Canadian embassy, and (as a result of some mention of the
World Bank by CMA personnel) to the World Bank offices in Lima. A lawyer for the district
municipality (a sanmarquino resident in Lima) drafted the complaint to the Bank after learning
of the Bank's safeguard policies at a conference in Lima. While nothing came of the other
letters, the complaint was forwarded to the MIGA in Washington. This has triggered a set of
ongoing processes, including a compliance review, which appear to have transformed the
context of relations between CMA and communities in San Marcos. These events and their
repercussions are still in motion, and will be addressed in future work.

4. Regulation and legitimation effects of the directive's legal field

What then can be concluded about how the Directive and its legal field order and legitimate
relations between transnational mining companies and local communities? As emphasized
above, the case study offered here gives us a partial picture of the field's operation. It presents
only the opening phases of struggles and relations connected to the 1998 CMA land
transactions. Nevertheless, this account does provide certain cautionary insights into the
structure and operation of the Directive's legal field.

This discussion began with the observation that the Directive is part of a transnational legal
regime that has been called upon in the context of transnational mineral development to
remedy perceived deficiencies in national regulatory activity. Both mining companies and
World Bank agencies are concerned by criticism of their treatment of project-impacted local
populations. The Directive has been mobilized to help regulate corporate-community relations
and thereby answer critics, both actual and potential. In doing so, the legal field that has
emerged around the Directive faces significant challenges. In particular, the Directive
represents a way of conducting land transactions that is paradigmatically different from the
standard conventions of business (as recognized by mining companies, lenders and loan
guarantors). The text of the Directive proposes an enduring fiduciary relationship among local
people coercively dispossessed of land and the company responsible for this dispossession.

An analysis of the legal field of OD 4.30 found that it places considerable reliance upon the
expertise of the social specialist for both its regulation and its legitimation effects. It is the
social specialist's singular expertise and scientific knowledge that is deemed to structure and
validate the authoritative "judgements" (e.g. awards or denials of compensation) made within
the field. This view is supported by the notion that there is a set of shared professional
standards, understandings, and judgments which allow one specialist to review and evaluate
the work of another. It is this shared expertise which is understood to shape the interpretation
and application of the Directive (and its key terms) within a local context. Additional regulatory
and legitimation effects are produced by the field's requirement for "participation" of affected
people. This injects a measure of democracy into the interpretive enterprise - how much
however, remains under the control of the professional judgments of social specialists. While
local people are marginalized in this process, their interests are allegedly protected by the
impartial nature of the expertise of social specialists.

Subsequent to this analysis, certain questions were raised. It was argued that the autonomy
and impartiality of social specialists is not in itself a given. In particular, doubts were raised
concerning the capacity of social experts (both within the Bank reviewing agency and the
mining company) to assert interpretations of the Directive that conflict with dominant
conceptions, practices, and ways of doing business within their institutions. Also called into
question was the notion that a strong set of sufficiently specific professional standards and
judgments had been institutionalized among social specialists to serve as concrete shared
guides to interpreting the Directive's key terms. Finally, it was asserted that, particularly given
what is at stake for local people, the denial of procedural rights demands a very high burden of
justification.

An analysis of the case study concerning the processes of land acquisition and resettlement
conducted by CMA in the district of San Marcos offers a number of insights into these
questions.

Interpretive authority of social specialists

CMA's social specialists were provided with a departmental organization, a set budget, and
space within the construction timetable; the company committed personnel, time, and funds
to community relations work in an overt strategy to win local hearts and minds. However
despite the platform given to social specialists within CMA, the case study has shown that in
many respects their status has been quite limited within the organization: over the period
examined the Community Relations department was subject to unexpected external revisions
of its plans and budget, and it was excluded from important information-sharing and decision-
making processes involving its key operations.

The case study also suggests that, in important ways, the interpretive logic used by CMA's
social specialists in applying the Directive was strongly influenced by the demands of current
corporate imperatives. This is evidenced by the monetization of "resettlement" in
contravention of the directions of OD 4.30; and it is also shown in the protean definition of
"displaced person". While during the land negotiations, the resettlement program was
presented as a pledge to land owners (and perhaps to the greater puna-dependent
community) to replace purchased land, "resettlement" was later reconceived by CMA staff as a
right that belonged exclusively to puna residents. Essentially the term "displaced person",
denoting entitlement to "resettlement" compensation under the Directive, was redefined. This
shifting conceptualization occurred in sync with the changing demands placed on Community
Relations staff by "core" corporate priorities accompanying the step-by-step advancement
towards mine development: first the owners need to be persuaded to sell; next the occupiers
need to be persuaded to leave. The close alignment with corporate objectives in this case
suggests limits to the capacity of corporate-employed social specialists to act as the impartial
guarantors of the Directive's application.

The existence of shared professional standards regarding the Directive

This case study reveals little evidence of a set of sufficiently specific professional standards
available among social specialists to guide or evaluate the interpretation and application of the
Directive on the ground. This is likely to have been exacerbated by the absence of social
scientists among the evaluation teams of MIGA and the Independent Engineer (CAO, 2001).
MIGA's compliance review with respect to the Directive was based significantly upon an
assessment of the adequacy of the participatory procedures under taken with respect to
resettlement planning. The adequacy of these procedures is discussed below.

Justification for the denial of full procedural rights to affected people

What procedural involvement was afforded as a result of CMA's commitment to

"participation" of affected people? To what degree were local people involved in the
interpretation and application of the Directive? The case study shows that this involvement
took place over various stages. During the initial stages of resettlement planning, local people
were studied by social specialists and voiced their concerns at informational meetings
conducted by CMA. The review of the Resettlement Plan by MIGA took place without active
local input (although accounts of local perspectives were provided by CMA reports). During the
sale of land process, those identified as land owners were involved in negotiations. However,
CMA negotiators took pains to ensure that these negotiations did not result in any change in
the company's established plans. During the resettlement process, negotiations began with
residents concerning sites for relocation; however as described above, this soon became an
ultimatum demanding near-immediate departure.

Throughout, CMA sought to retain unilateral control of the interpretation and planning
functions. Its repeated modus operandi was to select the "entitled" group according to its own
criteria, decide upon a compensation plan, then approach the group while seeking to compel it
to accept the plan without change. Local people were not provided with copies of the
Directive; they were not provided with explanations of its contents; they were not provided
with the technical assistance necessary to understand and represent their own interests. CMA
did refer publicly to the Directive, but only as a voluntary policy that the company had elected
to follow (see Klohn Crippen, 1998, Appendix II). CMA did not advertise its binding
commitment to apply the Directive, nor, as far as I have been able to ascertain, did it advise
local people of the existence of potential complaint procedures through MIGA (or after 2000
through the CAO).

As a result, the broad population of puna dependent families (many of whom did not fall
within CMA's categories of owner or permanent resident) were not engaged in the process of
determining who would be "displaced" by the land transactions, how they would be impacted,
and what forms of "resettlement" would help to remedy the situation. 45 What justifications can
be forwarded for this state of affairs? Certainly not that the impartiality and expertise of CMA's
social specialists made public engagement unnecessary. Rather than justified, the company's
marginalization of the affected population from active involvement in interpreting the
Directive has served simply to limit community bargaining power.

Implications for Regulation and Legitimation

It would appear that in the case of CMA, over the period described, the legal field's system of
exerting a legitimated regulatory influence through the use of social specialists failed. The
actions carried out by CMA in San Marcos under the aegis of the Directive have very little local
legitimacy.46 Of course, the field itself has little meaning for campesinos, since over this period
they were mostly unaware of its existence. For sanmarquinos, the discussion of the validity or
invalidity of CMA's actions in the land acquisition process focuses naturally upon the key point
of reference available to local people: the agree ments and representations made by CMA staff
in the process itself. Campesinos regard that they have been tricked and lied to, and have
suffered as a result. Many local people have lost all faith in the assurances of the company and
are convinced that CMA will pollute and destroy their land and water.

However, this is not to say that even with these failures that the field cannot exert a relatively
successful legitimation effect outside of the local sphere. Unless the community gets its
message out, the story that is heard will be conveyed by the company. From the perspective of
Lima, Washington or Toronto, the details of local issues and conflicts in San Marcos become
blurred and indistinct. It is here that the expert reports provided by social specialists are
perhaps most valuable, as they outline interlinked processes of community participation,
identification of dis placed persons, and the provision of generous resettlement benefits. The
knowledge required to understand whether and how this picture is defective is obtained
through substantial on-the ground research. As Li has observed in her work in Indonesia (Li,
2000, p. 171), ease of access and the effective communication of uncomplicated and dramatic
struggles greatly facilitate linkages between local actors and national and transnational NGOs.
This observation is equally applicable to the media.

In conclusion, it can be said that the Directive's legal field does hold promise for local people to
realize some rights to existing livelihoods and development benefits to which they may not
otherwise have access. However, the case study suggests that the manner in which the field is
currently operationalized in the context of mining is seriously flawed and not at all guaranteed
to achieve this goal. The Directive may in fact fail to protect the interests of local people, and
instead help to distance them from the very information, alliances, and resources could assist
them in their aims.