Global Trends by Martin Khor

Monday 21 June 2010

Poor nations should also be paid for eco-disasters

The US$20 billion put aside by BP to pay for the effects of the Gulf of Mexico oil spill contrasts with the lack of accountability of big companies that cause environmental harm in developing countries.


Last week, the President Barrack Obama of the United States succeeded in getting the oil company BP to set aside at least US$20 bil in a fund to meet claims for losses arising from the Gulf of Mexico oil spill.

It is both interesting and heartening that a government is able to pressurise a big company to agree upfront to compensate for the damage it is causing. The funds will be used to meet claims for economic losses of local people in the Gulf Coast states for loss of income (for example from reduced fishing or tourism) and to pay the cost of environmental clean up.

Another US$100 million fund will be set up to pay workers laid off due to suspension of offshore drilling.  BP will also suspend paying dividends so that there is enough cash for the new funds.

Both agreed to this package because of the growing public anger at the negligence of BP and the government's lack of regulatory actions, as well as that after two months the oil is still gushing from the broken BP oil installation.

It has been described as the worst US environmental disaster.  But worse ecological catastrophes have been caused by international companies in developing countries, with greater loss to life, income and the environment.

But little if any compensation has been paid by these companies.  And the governments of the countries whose people own the companies usually turn a blind eye.

The most outstanding case is that of Bhopal, India, in which the emission of poisonous gas from the US-owned company Union Carbide in 1984 affected half a million people, killed 2,300 people immediately, with another 15,000 to 30,000 dying subsequently and many thousands of others maimed seriously.  Even now the land and water in the vicinity continue to be contaminated with toxic chemicals that affect human health.

Neither Union Carbide or Dow Chemical which bought the firm in 2001 accepted responsibility for the disaster.  The Bhopal factory was sold to a local firm in 1992.  An arrest warrant for Union Carbide's then chairman Warren Anderson was issued in India but he has not been brought to trial. 

Union Carbide paid US$470 million in a deal in 1989 with the Indian government, but this is a small amount, given the enormous numbers of people who died, were injured and continue to suffer.

On 7 June this year, an Indian court found 7 former executives of the Indian subsidiary of the company guilty of negligence and they were given sentences of two years' jail, which is being appealed against.  The Bhopal residents and their supporters are dismayed such a light sentence, and that they are still demanding proper compensation.

A second case is Ecuador's Amazon region being contaminated by oil and toxic waste in amounts far larger than the Gulf Oil spill so far.  The oil and waste was discharged by Texaco (bought over by Chevron in 2001) when it operated an oil concession in 1964-1990.

The New York Times in May 2009 reported indigenous people in the area saying that toxic chemicals had leaked into their soils, groundwater and streams, and that some of their children had died from the poisoning.  It cited a report of an expert (contested by the company) who estimated that 1,400 people had died of cancer because of oil contamination.           

The indigenous groups have taken a court case against Chevron for US$27 bil in damages.  They accuse Chevron of dumping more than 345 million gallons of crude oil into the rainforest.  Chevron is also said to have dumped 18.5 billion gallons of toxic waste in pits in the forests.

Experts claim that the disaster has devastated their lands, income and health to a degree far larger than the BP spill in the Gulf.   The company paid Ecuador's government US$40 mil in the early 1990s for clean-up costs, but this amount is seen as much too little given the immensity of the damage.

 US Congressman  James P. McGovern, vice-chairman of the House Rules Committee, visited Ecuador in 2009 and is reported to have written to Obama that “the degradation and contamination left behind by [Chevron] in a poor part of the world made me angry and ashamed… I also saw the infrastructure Texaco/Chevron created that allowed the wholesale dumping of formation water and other highly toxic materials directly into the Amazon and its waters."

A third case is the Niger Delta in Nigeria, a major oil producing region in which Shell and other companies operate.  An article in The Observer entitled “Nigeria's agony dwarfs the Gulf oil spill:  The US and Europe ignore it”, describes spilt oil has contaminated swamps, rivers, forests and farmlands in the region.

“In fact, more oil is spilled from the delta's network of terminals, pipes, pumping stations and oil platforms every year than has been lost in the Gulf of Mexico,” wrote John Vidal.

A report by environment groups calculated in 2006 that up to 1.5m tons of oil – 50 times the pollution unleashed in the Exxon Valdez tanker disaster in Alaska – has been spilled in the delta over the past half century. Last year Amnesty calculated that the equivalent of at least 9m barrels of oil was spilled and accused the oil companies of a human rights outrage.

On 1 May a ruptured ExxonMobil pipeline spilled more than a million gallons into the delta over seven days and thick balls of tar are being washed up along the coast. Local people blame the oil pollution for the fall in life expectancy in the rural communities to a little above 40 years.

The article quotes the Nigerian writer Ben Ikari, "This kind of spill happens all the time in the delta. The oil companies just ignore it. When I see the efforts that are being made in the US I feel a great sense of sadness at the double standards.”

It also quotes Nnimo Bassey, Nigerian head of Friends of the Earth International, "We see frantic efforts being made to stop the spill in the US.  But in Nigeria, oil companies largely ignore their spills, cover them up and destroy people's livelihood and environments. The Gulf spill can be seen as a metaphor for what is happening daily in the oilfields of Nigeria and other parts of Africa.”

These cases show a big contrast between what the US administration is doing to hold a multinational company financially accountable, and how similar companies that cause ecological catastrophes in developing countries are able to get away either freely or with grossly inadequate pay-outs.

What the US administration and Congress are doing to get BP to compensate for the environmental and economic damage it is causing is commendable and should be supported. 

Developing countries should learn a lesson from the US and take similar action in line with the “polluter pays” principle.

And just as importantly, the governments of the home countries of the multinationals should also act to make their companies accountable for their actions when they operate in other countries, and to compensate adequately when they cause environmental damage.