Dialogue Processes in Peru. Challenges and Opportunities

0
FINAL REPORT
International Conflict Resolution Practicum
School of International and Public Affairs
Columbia University
Dialogue Processes in Peru: Challenges and Opportunities
Authors:
Riza Aryani
Felipe Camargo
Michael Gibbons
Devin Glick
October 2015

1
LIST OF ABBREVIATIONS
ANA Autoridad Nacional del Agua (National Water Authority)
ANMA Antamina Mining Corporation
AAP Anglo American Plc.
ARMA Autoridad Regional del Medioambiente Arequipa [DG1]
(Regional Environmental Authority, Arequipa)
BGC Barrick Gold Corporation
CARE Cooperative for Care and Relief Everywhere International
CIFOR Center for International Forestry Research
CRV Sociedad Minera Cerro Verde (Cerro Verde Mining Society)
CSR Corporate Social Responsibility
DAR DAR Acciones Reales (DAR Live Action)
DDP Defensoría del Pueblo (Ombudsman Office)
FDI Foreign Direct Investment
FUDIDECH Del Frente de Defensa de los Intereses del Distrito de
Challhuahuacho (The Chuahuhuacho District Front of Interests)
GDP Gross Domestic Product
GDMDS Grupo de Diálogo, Minería y Desarrollo Sostenible
(Group of Dialogue, Mining and Sustainable Development)
GXP Glencore Xstrata PLC
HRWB Human Rights without Borders
ILO International Labor Organization
IDMA Instituto de Desarrollo y Medio Ambiente (Institute of Development
and Environment)
INGEMMET Instituto Geológico Minero y Metalurgico (Geologic, Mining, and
Metallurgic Institute)
MINAGRI Ministerio de Agricultura (Ministry of Agriculture)
MINAM Ministerio del Ambiente (Ministry of Environment)
MINCU Ministerio de Cultura (Ministry of Culture)
MINEM Ministerio de Energía y Minas (Ministry of Energy and Mines)

2
MINSA Ministerio de la Salud (Ministry of Health)
MEF Ministerio de la Economía y Finanzas (Ministry of Economy and Finance)
MMC MinMetals Corporation
MNC Multinational Corporation
OEFA Organismo de Evaluación y Fiscalización Ambiental
(Environmental Evaluation and Auditing Office)
ONDS Oficina Nacional de Diálogo y Sostenibilidad
(National Office of Dialogue and Sustainability)
PCM Presidencia del Consejo de Ministros
(Presidency of the Council of Ministries)
PRODUCE Ministerio de la Producción (Ministry of Production)
SCC Southern Copper Corporation
SENACE Servicio Nacional de Certificación Ambiental (National Environmental
Certification Service)
SNMPE Sociedad Nacional de Minería, Petróleo y Energía (National Society of
Mining, Petroleum, and Energy)
UNDP United Nations Development Program

3
Table of Contents
I. Background
Natural Resources Governance and Politics in Peru
I.1 Mining Activities and Peruvian Economy
I.2 Democratic Transition and Decentralization Process
I.3 Regulatory Framework Related to Mining in Peru
I.4 Dealing with Mining conflict in Peru : Dialogue Tables in Peru
I.5 Dialogue Table : Case Studies
I.5.a Moquegua Dialogue Table
I.5.b Arequipa Dialogue table
I.5.c Espinar dialogue table
I.5.d Challhuahuacho dialogue table
I.5.e Hudbay Dialogue Table
I.6 Grupo de Diálogo, Minería y Desarrollo Sostenible
II. Research Methodology
III. Strategic Considerations for Dialogue
IV.Research Findings
IV. 1 The Contemporary Roots of Conflict Are Consistent With Previous Studies
IV. 1.a Environmental Problems Related to Mining Operation: Perception and Reality
IV.1.b Managing Expectations and Underdevelopment in The Andes
IV.1. c Weak Governance and Decentralization
IV. 2 Evaluation of Dialogue Processes in Peru
V. Conclusion
VI. Recommendations

4
I. Background
Natural Resources Governance and Politics in Peru
The management of natural resources is one of the most difficult challenges facing developing
countries today. Natural resources extraction is often identified as one of the key factors
triggering, escalating or sustaining conflicts in countries endowed with natural resources1
.
Mismanagement of natural resources can lead to long-term negative consequences for
developing countries. Conflict will become problematic especially when there is lack or absence
of mechanisms and institutions to manage conflict and ensure the prevention of violence. In the
case of Peru, its natural resources wealth, multicultural nature, geography, economic and social
structure, regulatory framework, as well as its democratic transition and decentralization process
provides a complex background for developing institutions and mechanisms to prevent and
manage conflict2
.
I.1 Mining Activities and Peruvian Economy
Peru is a mineral-rich nation that is heavily dependent on its extractive industry. Currently, Peru
is ranked second in the world in the amount of silver and copper extracted, sixth for the amount
of gold, and also extracts many other minerals found primarily in the country’s Andean region3
.
Nearly six percent of Peru’s GDP and 66 percent of its exported goods come from its extractives
industry4
. It is one of the most important sources of fiscal revenue for Peru5
. About 32 percent of
government revenue is from extractives. Mineral sector will continue to become significant part
of Peru’s economy, and this dependency on extractives makes it likely to favor expansion of the
industry.
1
UN Interagency Framework for Preventive Action. Extractive Industries and Conflict. 2012.p.
2
UNDP. 2014. Democratic Institutionality for Dialogue and Conflict Prevention : The Case of Peru. pg. 20 . This report provides
information related to the current tools and mechanisms to address social and environmental coflict2
UNDP. 2014. Democratic Institutionality for Dialogue and Conflict Prevention : The Case of Peru. pg. 20 . This report provides
information related to the current tools and mechanisms to address social and environmental coflict
3
KPMG. “Peru: Country Mining Guide.” KPMG International, 2013.
4
Extractive Industries Transparency Initiative, Peru. 12 Feb. 2012. https://eiti.org/Peru
5
Ernst & Young, 2015

5
Throughout the 1980s, the Peruvian economy started to decline following nearly two decades of
nationalization policies in the mining and petroleum industries6
. Following the economic crisis,
President Alberto Fujimori (1990-2001), with assistance from the International Monetary Fund
and the World Bank, pushed mining-friendly legislation to encourage FDI to open the economy.
The privatization of the mining sector spurred an unprecedented amount investment throughout
the 1990s into the turn of the century. The rise in global demand for Peru’s mineral resources has
generated an increase in proposal to undertake mining projects in Peru. In 2011 government
granted 3,100 mining permits, this figure increased dramatically in 2012 to 4,668 permits issued
to 582 companies7
. An estimated USD 59.5 billion is expected to flow into Peru in the next few
years. About 62% will be invested in copper projects. Mines and project expansion are expected
to more than double Peru’s copper production by 2016. Peru’s overdependence on minerals and
metals expose the country’s economy to fluctuations in world prices8
.
President Ollanta Humala took office in July 2011. Ever since he has maintained pro-business
policies and he is determined to attract foreign investment to maintain Peru’s economic growth9
.
Concessions in Peru are granted on first come, first served basis without any preference given to
technical and financial qualification of the applicant With the exception of mining located in
urban expansion area, mining concession is granted indefinitely provided the titleholder fulfills
all obligations10
. Government of Peru is eager to attract investor and seems very careful not to
upset the companies, this often created tension with Peru’s effort to protect its environment or
fulfill demands from communities.
In order to combat a recent two-quarter decline in economic activity, Peru has attempted to
attract more Foreign Direct Investment (FDI) in the mining sector, as to maintain its economic
growth, but seemingly at the cost of upholding environmental safeguards11
. In 2012, Peru
6
Eliana Carranza, Jorge Fernández-Baca and Eduardo Morón. 2003. Peru,Markets Government and the Sources of Growth,
Universidad del Pacifico .
7
Council on Hemispheric Affairs. (2013). Corporate Conquistadores: Peru’s Mineral Extraction Industry Boosts Economy
While Rural Poor Continue To Suffer–Analysis. eurasiareview.com (pp. 1–11).
8
Ernst & Young. (2015). Peru’s mining & metals investment guide 2014 / 2015.
9
Ernst & Young. (2015). Peru’s mining & metals investment guide 2014 / 2015.p. 12
10
KPMG International. (2013). Peru Country mining guide.p. 9 .
11
Al-Jazeera. “Is environmental deregulation in Peru's best interest?”. 24 Aug. 2014.
http://www.aljazeera.com/indepth/opinion/2014/08/environmental-deregulation-per-2014812111722135954.html

6
implemented a new oversight function to improve the reliability of its Environment Impact
Assessments (EIA) by removing sole granting authority from the Ministerio de Energia y minas,
(MINEM, Ministry of Energy and Mining), which has traditionally been responsible for
promoting new investments in the industry. Instead, The Servicio Nacional de Certificación
Ambiental (SENACE, National Environmental Certification Service), which is comprised of 6
ministries, will approve all EIAs12
. In this approval process each of the six ministries (MINEM,
Ministerio del Ambiente, (MINAM, Ministry of Environment), Ministerio de la Agricultura
(MINAGRI, Ministry of Agriculture), Ministerio de Economía y Finanzas (MEF, Ministry of
Economics and Finance), Ministerio de la Producción (PRODUCE, Ministry of Production), and
the Ministerio de la Salud (MINSA, Ministry of Health)) carry an equally weighted vote towards
the approval of EIAs.
I.2 Democratic Transition and Decentralization Process
Following Fujimori’s impeachment in 2000, President Alejandro Toledo swiftly decentralized
power to regional and local levels of government. This rapid decentralization of authority placed
social development projects, education, food programs, and healthcare at the direction of local
leaders, most of whom had little experience managing and implementing these programs.
A well-implemented decentralization may generate welfare gains, but a poorly managed one has
the opposite effect13
. There has been little initiative from the Peruvian government to build local
leaders’ capacities; this lack of local capacity is exacerbated by major political turnover every 4
years. Reports from our research show the lack of continuity as a major source of incentives to
bad spending and corruption, while not only have little or no capacity to govern under the
institutions of the country, but also lead to discontinuity of public servants and policies given the
rotation of workers indicated by each of the elected officials. The rapid and poorly executed
decentralization process was a major reason for contemporary deficiencies of development,
which will be discussed later.
12
Jonathan Watts and Dan Collyns. 2012. Peru’s Environment Minister Hail’s Landmark Mining Reforms
13
Stephen Calabrese, Dennis N. Epple, Richard Romano. Inefficiencies from Metropolitan Political and Fiscal Decentralization:
Failures of Tiebout Competition. 2011. p.2-3

7
President Alan Garcia’s second term (2006-2011) coincides with the largest increase in social
unrest relating to mining. Garcia was praised for increasing Peru’s GDP growth by seven percent
and keeping inflation low14
. However, he is also criticised for allowing increased environmental
damage, which is the base for the increased social conflicts that followed. In 2004, the number of
conflicts peaked and then started to decline in 2007. Near the end of 2014, there were 276
conflicts registered with the central government, of which 161 were active15
.
Many local and regional leaders suffer from the lack of technical expertise needed to promote
local development and meet the needs of their constituents. While money is often assumed to
solve development problems, in Peru, mismanagement of funds and a lack of local capacity have
actually created more development problems in regions with a heftier public budget. Canon
Minero is the government revenue from mining that is distributed to local communities. The
Canon system was created in 1979 under the Constitution to compensate regions affected by
extractive operations. Although only 25 percent of canon is allocated to the central government,
nearly 75 percent is distributed to district municipalities and local communities16
. However,
these funds lack specific expenditure conditions – they can be expended at the discretion of
regional and municipal governments. Districts with mineral production receive more government
transfers than other districts, calculated as a percentage of mining revenues in the area. The
rationale behind this distribution is that mining operations negatively impact mining districts and
therefore require greater compensation. The inequality of distribution has fostered jealousy and
contention between non-mining districts and those that receive more transfers. We could access
this behavior in the field when, in many occasions, community leaders would have the inclusion
of its village in closer circles of influence from the mine as their main concerns in the dialog
table, or when companies representatives mention the difficulty to define the same circles of
influence because of interests among different communities. This case is not unique to Peru.
Designing a proper benefit sharing mechanism is often challenging, especially in developing
countries like Peru. The remaining twenty-five percent of government revenue is distributed at
the central levels of government, the Mining and Metallurgical Geological Institute, and the
14
aft-Morales, Maureen.”Peru In Brief: Political and Economic Conditions and Relations with the United States.” Congressional
Research Service. 2013, pg. 1. http://fas.org/sgp/crs/row/R42523.pdf
15
“18th Annual Report Jan.-Dec. 2014.” Office of the Ombudsman, 2015.
http://www.defensoria.gob.pe/modules/Downloads/informes/anuales/Decimoctavo-Informe-Anual.pdf
16
“Wealth and Sustainability: The Environmental and Social Conditions in Peru.” The World Bank, 2005.

8
Mining Public Registry17
. For example, the central government received 12.2 billion dollars from
taxes and royalties in 2013, of which 55 percent was from the extractive industry18
. This
generates 6.71 billion dollars in government revenue, with nearly 5 billion circulating back to the
local level. With the limited ability to generate taxes due to a lack of employment opportunities,
local communities are increasingly dependent on these government transfers to fund their
budgets, which must be made every four years and carry immense political weight at the local
level19
. Additionally, there has been little coordination between districts and communities for
development projects. The canon minero also creates coordination problem between national,
regional and local government that causes poor monitoring these problems are compounded by
lack of capacity to manage the fund20
. This result in poor quality spending that does not generate
sustainable and long-term growth, but instead create more inequality between regions. Of the
few development efforts that have been created, most are aimed at entertainment, monuments, or
infrastructure that is not used and poorly maintained21
.
In addition to the inequality between districts, there is also an increasing disparity between
political elites in the coastal urban areas who receive a huge share of profits compared to rural
communities, even those who are within the producing district22
. This inequality is exacerbated
by limited transparency at all levels of government and its inability to reduce corruption and
foster trust23
.
The use of force has dominated the political atmosphere in Peru, which was exemplified by
President Fujimori’s alarming use of harsh military action against the Shining Path in the 1990s.
This force, coupled with decades of false promises, repeatedly ignoring environmental
safeguards in the name of investment, a long history of racism, and numerous corruption charges
against political figures with a low conviction rate, has produced very distrustful relationship
17
18
Extractive Industries Transparency Initiative, Peru. 19 Feb. 2014.
19
Loayza, Norman. “Poverrty, Inequality, and the Local Natural resource Curse.” Institute for the Study of Labor, IZA
http://ftp.iza.org/dp7226.pdf.
20
Javier Arellano-Yanguas. “A Thoroughly Modern Resource Curse : The New Natural Resources Policy Agenda and the
Mining Revival in Peru”.IDS Working Paper 300.2008
21
Interview notes
22
“Mining Conflicts In Peru: Critical Condition.” Oxfam America, 2009.
23

9
between Peruvians and their government24
. A 2011 poll on corruption indicated that Peruvians
view corruption as a greater national concern than unemployment, poverty, and drug use25
.
Between 2002-2009, Chief of Cabinet Javier Velasquez, told Congress that 11,876 public
employees had been accused of corruption charges, of which only 1,000 were found guilty26
.
The most notable corruption case in recent history is the former President Fujimori, who was
impeached in 2000 and fled the country to avoid corruption charges that are estimated between
600 million to 2.4 billion U.S. dollars. Fujimori was later apprehended and sentenced to 25 years
in prison. In 2010, the Office of the Auditor General released a statement that nearly 350 million
soles (116 million USD) was missing due to government corruption27
. In 2008, a joint effort by
the Ombudsman office and Transparency International focused on corruption within the
education system, which has traditionally been used to reward political supporters. This is
exacerbated by the limited accountability; the exact number of which is unknown28
.
24
Interview Notes
25
2011 Transparency International Corruption Index Report.
26
“Velásquez: Más de 11 mil funcionarios públicos fueron procesados por corrupción desde 2002.” Andina. 30 Oct.
27
Contraloría: 350 millones de soles están vinculados a delitos de corrupción.” El Comercio, September 2010.
28
Samuel Rotta Castilia. “Corruption Free Education.” CMI Michelsen Institute. Bergen, Norway.
http://www.cmi.no/publications/file/3004-corruption-free-education.pdf

10
I.3 Regulatory Framework Related to Mining in Peru
The legal framework that guides Peru’s extractive industries has changed throughout the 1990s
and 2000s. Before this, legal guidelines did not heavily restrict extractive companies’ actions.
The mining boom of the 1990s onward and the privatization of the mining industry amplified the
destruction inflicted by mining companies. On July 11, 2014 Peru introduced a law that
streamlines EIA putting them on 45 days maximum fast track. This was initially designed to
reduce bottlenecking in business-permit process application, to ease investment in the country.
However, it engendered loopholes in the environmental preservation that may be exposed by the
company. Failure to meet the 45 days deadline will result in automatic project approval. This law
also halved fines for all environmental violations by extractive industries except for the most
egregious ones. This deregulation also limit the ability of the MINAM’s body for Assessment
and Audit (OEFA) to penalize companies for breaching environmental safeguards for three years
unless the circumstances are exceptional29
. It currently has 20 technicians to review EIAs
submitted by mining companies. They are understaffed and under-resourced to properly perform
their assessments.
The Law of Prior Consultation was passed in 2008 following protests by indigenous
communities in the Amazon region. The law’s focus is to reduce conflict by consulting
indigenous and native communities prior to granting any concessions that could affect their
identity as a community or way of life.30
The Law of Prior Consultation, however, only applies
to indigenous communities. Additionally, the classification of what actually constitutes an
indigenous person has raised many concerns considering many Andean communities have
maintained their land for hundreds of years. Another factor is due to years of discrimination
towards indigenous people that causes some indigenous people to not associate themselves with
the term.
The government encourages community involvement in the EIA process. The law for the
Sustainable Use of Natural Resources (N* 26821) encourages community participation in the
EIA process; however, the government retains authority to grant concessions regardless of
community participation or discrepancy31
. When communities do participate, the issue of
29
Frank Bajak. July 2014. New Peru Law Weakens Environmental Safeguards. Associated Press
30
2013 Columbia ICR study pg. 25
31
2013 Columbia ICR study pg. 25

11
asymmetric information arises and the difficulty of digesting technical information. It is the
community's responsibility to seek outside assistance through NGOs or consultants to
disseminate this information. Many of these services are difficult to receive either due to the
limited number of NGOs or the high price for consultancy. As a result, there is a lack of
community participation in the EIA process. The Instituto Geológico Minero y Metalurgico
(INGEMMET) grants exploration rights to lands that have been managed by people for decades
or longer which only exacerbates social unrest.
Authority for the extractive industry and environment reside within the national government.
Legislation to address corruption was passed in 2003 with the law number 27.806 and protection
for Whistleblowers in June 2010. However, the ability to enforce these laws has proved to be
minimal at best. Anti-corruption is a main point for political discourse and was the foundation of
current president Ollanta Humala’s campaign in 2011.
I.4 Dealing with Mining conflict in Peru : Dialogue Tables in Peru
In an effort to reduce conflicts throughout the country, the government created the Red de Alerta
Temprana (Early Alert Network)32
. There are now roughly 13 offices throughout the country that
register conflicts and alert the national government to take action. The main form of action is
usually a dialogue table to mitigate the conflict before it becomes intractable33
. However, this
nascent alert system resides within the MINAM and is only utilized when the conflict involves
environmental damage34
. A government official must submit a form to the Ministry to register
the conflict. ONDS, which is the primary state facilitator of dialogue, is only involved in the
Early Alert Network when the conflict involves other ministries in addition to MINAM.
Otherwise, if the conflict is treated, it is only treated within each ministry’s own conflict
management system.
President Humala’s administration decided to promote dialogue as conflict prevention and
resolution tool35
. In 2012, the Council of Ministers, under the administration of President Ollanta
Humala, created ONDS. The creation of ONDS represents an attempt to organize and ensure
32
The Ministry of Environment with the objective of conflict prevention created the "Red de Alerta Temprana" (Early Alert
Network). The regional offices register conflicts related to environmental issues. For more information
http://www.minam.gob.pe/oaas/que-es-la-rets/
33
Interview Notes
34
Interview Notes
35
UNDP. 2014. Democratic Institutionality for Dialogue and Conflict Prevention : The case of Peru.

12
consistency in the state’s general strategy for conflict prevention and dialogue36
. ONDS
performs its function in five areas : prevention, dialogue management37
, public policy making,
citizen education and systematization and documentation38
.This bureau is responsible for
analyzing and cataloging each of the conflicts, giving it a score of intensity and danger level.
Another agency, La Defensoría del Pueblo (The Ombudsman’s Office), also has been doing a
similar cataloging and monitoring role years before the existence of the ONDS. Additionally
ONDS is responsible for creating dialogue tables and solving conflicts to maintain peace in the
region, the people’s wellbeing and the mining production. ONDS has different approaches to
different cases of conflict they classify dialogue tables as39
:
● Dialogue table: The purpose of the dialogue table is to solve a conflict after it has
already started. Its objective is to resolve the conflict by providing the medium for the
stakeholders to meet and exchange their differences to reach agreement.
● Technical tables (or working tables): They are composed of specialists or technical
experts in certain areas. There are often multiple technical tables formed by a dialogue
table to provide solutions and technical assistance.
● Development tables: These tables are the preventive tool of ONDS, implemented before
conflict starts to reach agreements on long-term solutions or analyze plans and funding
for sustainable development.
I.5 Dialogue Table : Case Studies40
The type of conflict, the characteristics of the dialogue table, its institutional design, and
participating actors all affect the efficacy of a dialogue table41
. There are numerous dialogue
tables in Peru related to mining. Only a handful of dialogue tables that are considered successful.
So far there is no mechanism to evaluate a dialogue table. For example, Espinar dialogue table
led by PCM was considered successful by the government because the table managed to bring
together various stakeholders to discuss the issue. However when talking to members of civil
society organizations, this table is considered flawed and it has not addressed the roots of the
36
UNDP. 2014
37
This function entails designing and participation in dialogue, mediation or negotiation process. In our interview one of the
respondents stated that ONDS is expected to identify and encourage stakeholders turnout throughout their vast network of
regional and local offices.
38
UNDP.2014
39
Metals and Mining Daily Volume 1, Issue 79. Oct 4, 2013.
40
We obtained information regarding dialogue tables from interviews and reports provided by respondents from both company
and civil society that we visited during our fieldwork.
41
Frewer. 2000

13
problem. 42
Each dialogue table is unique. This section seeks to highlight the lessons learnt from
each of the dialogue table.
I.5.a Moquegua Dialogue Table43
This table was considered one of the very few successful examples of dialogue process in Peru.
The presence of a table calmed the population in Moquegua. As a result of the table, the
company was also willing to adjust the design of the mine to better accommodate the
community’s claims and concerns.
This table took place before the construction of the project. It was set up in April 2011 and was
formalized by PCM resolution in May 201244
. The process lasted for 18 months. This dialogue
table initiated in response to community’s rejection to Quellaveco project in Moquegua. In 2010
the company (AngloAmerican) obtained the permit however, the community in Moquegua
rejected the project. This table has been concluded and reached 26 agreements.
The table was governed by a written set of rules that was developed and agreed upon in the
beginning of the dialogue. The rules define the table, participants of the table, and most
importantly topics that will be discussed. The table has a plenary, special invitees, technical
commissions, and technical secretariat. The table agreed to discuss three things:
1. Water- the dialogue seeked to identify and agree on the mechanisms needed to ensure supply
and optimal use of water resource for population use, farming and mining.
2. Environmental issues- identify and agree on mechanisms to ensure compliance with and
monitoring of environmental commitments
3. Social Investment- identify and agree on sustainable development projects in the area of
Moquegua.
This dialogue was facilitated by a representative from the MINEM. Eduardo Rubio a
representative from AngloAmerican mentioned that the dialogue in Moquegua worked because
they worked with the right stakeholders at the local level. Rubio acknowledged the national
42
We interviewed civil society organizations who were involved from the inception of the dialogue table. They are currently
working on a study evaluating the Espinar dialogue table.
43
Source : Interview with Eduardo Rubio, Director of External Affairs- AngloAmerican; AngloAmerican.Dialogue Table in
Moquegua : Summary Report.
44
Annegret Flohr. May 2014.Corporate- Community Conflict and Dialogue in Peru’s Mining Sector. Paper presented at the Latin
American Studies Association.

14
government is very weak. Approval from the national government was considered insufficient by
the company. However, it should be noted that in the case of Anglo-American the government of
Peru withheld the permit until the company resolved the dispute with the population. There was
an element of leveling the power relations between the company and community that may have
contributed to the success of this dialogue table45
.
I.5.b Arequipa Dialogue table
Arequipa has two primary conflicts. The first is over the mine Tía María, which is centered
around the company not obtaining a social license from the community while still pursuing its
interests. Currently this is one of the most active conflicts in Peru. The second is Cerro Verde,
which is viewed by many as a responsible company that has a positive working relationship with
Arequipa. Cerro Verde did obtain a social license; however, there has been much dispute over
water contamination from the company and its future projects. The company is expanding its
operations and has a proposal for a water treatment plant. This water treatment facility is not
only going to provide Cerro Verde the increased supply of water it needs for its expansion, but
also a source of potable water for Arequipa. The point of contention is that many of Arequipa’s
citizens believe the mine will take too much of the water for its operations and leave them with a
insufficient amount. Cerro Verde is funding 80 percent of the treatment plant because the
municipal government refused to provide the service. As a company, Cerro Verde is unique in
that it has its headquarters in the city of Arequipa which is also where the mine is located, which
places the company senior leadership closer to the city it impacts. Cerro Verde only maintains a
small governmental affairs office in Lima. The effect on the city of Arequipa is notably different
than mines near small towns because Arequipa’s size can accommodate the influx of workers
during the summer months.
I.5.c Espinar dialogue table
Espinar is a small town of around twenty-thousand people in the region of Cusco. It has had
more than twenty years of mining operations and ore exploitation, through changes in companies
who possess the mining permits. Espinar’s citizens’ complaints are related to a lack of local
development and the company’s and federal government’s responsibility to promote investments
to increase the well being, education and health care. Lorenzo Cappa believes, the conflicts are
45
Annegret Flohr. May 2014.Corporate- Community Conflict and Dialogue in Peru’s Mining Sector. Paper presented at the Latin
American Studies Association.

15
long-standing, and the dialogue is led by the government. Community leaders claim that
companies are not fulfilling their part of the agreements.
In the past, conflict had existed there without a solution, even with the use of dialogue. Oscar
believes, the region had many strikes in the 1990’s under the government of Alberto Fujimori.
Government who led the police to break a strike in the region and accused the mayor of the time
for inciting violence. Until now, people on the city who participate in the strakes and were
involved in manifestations face prosecution.
I.5.d Challhuahuacho dialogue table
The Challhuahuacho dialogue involves the Las Bambas mine. Recently, the mine undergoing its
construction phase and has recently changed ownership between Glencore Xstrata Plc. and the
Chinese dominated consortium consisting of MGM Limited, Guoxin International Investment
Corp., and CITIC Metal Corp.46
The Challhuahuacho table is one of two dialogues related to Las
Bambas. The first is the provincial table (Cotabambas) which consists of support groups focused
on economic development, education, health, and the environmental problems of the
unsustainable use of water for mining operations. The Challhuahuacho table is primarily
multilateral and includes the company, municipal government, community representatives and
state ministries. The district table focuses on development, the lack of jobs in the mine for locals,
and the limited amount of water in the areas reservoirs. This table is unique in that
Challhuahuacho is a “boomtown.” Before the mine started its construction phase,
Challhuahuacho had 800 residents, now it has nearly 20,000 that rotate through to work at the
mine. The mines have a diverse labor force from Spain, Colombia, Argentina, and other regions
of Peru.
In the town of Challhuahuacho, the price for consumer goods is high and most people’s income
is derived directly from mining or indirectly from the influx of business that is provided by
mining workers entering the town. When mining operations slowed in 2013-2014 fewer workers
were coming through town and businesses started to decline. This created a great deal of
economic strain that led to a further increase of prices and cost of living that resulted in locals
not being able to afford to live there and businesses failing. One drastic effect of this was the
46
http://ftalphaville.ft.com/files/2014/04/Sale-of-Las-Bambas-Copper-Mine-Project.pdf

16
lack of teachers that wanted to relocate to Challhuahuacho due to their inability to afford the cost
of living. Because of these problems, development goals are a priority for the community and
have subsequently the focus of dialogue.
Many interviewees believe that if the government had had more presence in Challhuahuacho and
had engaged in dialogue with the companies the amount of conflict would have been less. The
signatories on the agreements that came out of the dialogue tables are important because they
will ultimately dictate the follow-up assessments that will hold parties accountable to the
agreement.
I.5.e Hudbay Dialogue Table47
Hudbay dialogue table is centered around the Constancia project located in the district of
Chamaca, Chumbivilcas province in the region of Cusco. This projects is owned by a Canadian
company, Hudbay. The source of conflict was related to inability of the company to fulfill its
commitments with the local populations. This project is worth US$1.8billion and expects an
annual production of 80,000 tonnes of metal. It’s one of the most important copper projects in
Peru48
.
The dialogue table was initiated in January 2015. It was initially planned for five months.
However, no agreement was reached after five months. The table, led by the mayor of Chamaca,
is now being extended. There were 35 community groups that were involved in this dialogue
table. PCM acts only as an observer in this table. The table is ongoing and the community
member that we interviewed expressed disappointment over the lack of participation from
community. There are currently twelve agendas being discussed in this table. Another
community member that we interviewed expressed his expectation that PCM should be involved
in this dialogue table
In contrast to the dialogue spaces held by GDMDS, dialogues led by ONDS have more specific
goals and defined beginnings and ends. The goal of the ONDS is to avoid violence by using
47
This is an ongoing dialogue table. We were not able to obtain enough information about this table.
48
Cooperacion. 2014.Peruvian Community Denounces Hudbay Minerals for Human Rights Violantions over Constancia Project.
www.miningwatch.ca . Cooperacion is a Peruvian NGO focuses on social, economic, political and cultural and other aspects of
development in order to promote alternative to extractive development.

17
dialogue to achieve mutually beneficial agreements and enforce fulfillment of commitments
made in those agreements. One ONDS representative that we interviewed stated that the moment
a dialogue should be implemented is “whenever one of the stakeholders comes to ask for help”,
and the dialogue process ends when the parties reach an agreement. After the dialogue process
ends, the bureau follows up with the signatories to ensure that they follow through with their
commitments.
The argument in favor of ONDS’ dialogue style, in comparison with GDMDS’, is that the results
are tangible and can be measured, while GDMDS’ dialogue is loose and it is difficult to measure
its benefits. On the other hand, dialogue created by ONDS are more comparable to negotiations
where the communities ask for compensation in return for the company to explore the area and
extract minerals.
As members of relevant governments institutions, ONDS can attend GDMDS dialogues,
although many interviewees mentioned that it can be very difficult for a government official to
divorce herself from her title, as they are never there representing themselves as GDMDS would
say is the best platform to create transformative dialogue.
I.6 Grupo de Diálogo, Minería y Desarrollo Sostenible49
Grupo de Diálogo, Minería y Desarrollo Sostenible (GDMDS, Group of Dialogue, Mining and
Sustainable Development) was founded by Jose Luis Folegatti. The idea of the group was born in
a meeting in 1999, during which time relations between LABOR (the NGO where José Luis
Follegatti was working) and the company Southern Peru were in bad shape50
. Follegatti’s idea
was to make your “enemy” your “friend”. With the help of other stakeholders, Follegatti created
a dialogue space where people could listen to each other without the prejudice and implications
of viewing the other as the “enemy”.
49
Diálogos que transforman is a book written by José Luis López Follegatti about his idea of dialogue and his experience with
GDMDS.
50
Folegatti used a lot of anecdotes to illustrate his point in his book One anecdote he used to illustrate situation that influence his
idea on dialogue was his encounter with a new manager from Southern, who didn’t know the NGOs representatives. He went to
the dialogue group meeting with only one piece of information: “[the NGOs] are the devil”. When he met José Luis Follegatti,
they began to talk and decided to leave their ideological differences aside for a moment and just get to know each other. In doing
so, this meeting was much more successful than previous meetings. Because of this personal connection that began to grow,
future meetings became more productive and enlightening. Follegatti realized this was a new concept that could be used to
improve dialogue in the context of conflict resolution in Peru, where ideology plays a big role.

18
José Luis López Follegatti is primary leader, driver, and face of the GDMDS, although on paper
he shares executive direction with two others. Follegatti has been responsible for implementing
GDMDS since 2001, when it was first started in Lima and supported by companies and other
civil society actors to open a non-binding space with the objective of bringing together
companies, NGOs, civil society members, community leaders, and all actors willing to
participate on the basis of Transformative Dialogues. In his book Diálogos que transforman, Mr.
Follegatti put forth 6 lessons to be learned from dialogue: dialogue spaces are schools to learn
how to listen; the bonds transforms the participants; the role of the facilitators grow with
dialogue; consensus is created from shared truths; dialogue reinforces peace not violence;
development has to be present in dialogue.
In his book, Folegatti explains the theoretical framework behind GDMDS. GDMDS’s dialogue
space is meant to be an open space, where anyone is welcome to talk about their experiences,
express their feelings and be heard by others. While the people who attend these dialogue spaces
may be government officers, community leaders, or CEOs, within this space all people are equal
and represent themselves rather than their position or institution. Now, GDMDS connects
around 600 people in Peru, representing 120 institutions, accounting for 80 percent of
stakeholders from the mining sector in the country. The only goal of the dialogue group is to
create a space for interaction among the stakeholders.
GDMDS is concentrated in Lima. Lima is Peru’s capital with one third of the country’s
population, making it the center for most of the main offices of mining companies and the central
government. This centrality makes Lima the principal place of direct action for GDMDS. The
dialogue space is not limited to Lima specifically, so representatives from other parts of Peru are
travel to the meetings. To be more accessible to all the stakeholders, GDMDS provides some
financial support to cover travel costs of those who live further away from Lima.
“Transformative dialogues” is a concept proposed by José Luis López Follegatti in his book
Diálogos que transforman (2015) and put into practice by the Grupo de Diálogo, Minería y
Desarrollo Sostenible (Group of Dialogue, Mining and Sustainable Development, GDMDS).

19
The underlying principles of transformative dialogues are very different than the standard
negotiation process of strikes, forced dialogue, signing agreements, doubtful implementation
and lack of transparency in the process. Instead, the transformative dialogue focuses on
understanding the other’s perspective, mutual respect and commitment for a common cause.
GDMDS is based on the premise of non binding dialogue process, and it does not seek to reach
an agreement in the end. These dialogues are not supposed to “end”, they are supposed to
extinguish, only when all the differences and problems from all the parts were solved or
discussed and all the parts understand they have nothing else to get from each other. This type of
dialogue is fundamentally different from the government’s implementation of dialogue. Many
people that were interviewed for this research interviewed indicated that dialogue with an end
goal was more useful.
Transformative dialogue has a set of underlying rules of conduct to facilitate an open dialogue
process. First step would be the main stakeholders be invited to participate in the dialogue space.
It is expected for these people to form the base for discussion in the dialogue and represent the
full amount of stakeholders involved in the process relating the meeting in question. The second
step is to call more people to participate on the dialogue with the goal of representing all interests
in the dialogue space. This is important given the participation of external actor from out the
conflict can help the parts see their real problems and concerns.
The third step related in the book “Dialogos que Constroem” is to set the space and format of the
meetings. In most cases the space should take the form of a circle, but in the case of an
exposition or presentation, dialogue can take place in a semicircle. It is important that the format
reflects equality among all the participants, without excluding anyone. Step four is define the
moderator, who is responsible to set and implements the pre-determined agenda for the meeting.
Participants must respect time limits so all can speak and make their contributions to the
dialogue. Respect others and opinions on the table is one of the main reasonings of opening this
space. At least, five, participants plan to follow-up what was discussed in the dialogue. For that,
the moderator creates working groups and plans for monitoring those working groups and the
dialogue group itself. The working groups are composed, mainly, by the most interest people in

20
the situation in discussion, however, anyone in the meetings can participate, with the consent of
the group, usually represented by the decision of the moderator.
The Dialogue Group was used as a model for other initiatives in different regions of Peru.
GDMDS maintains connections with smaller dialogue groups in Arequipa, Ancash, Apurimac
and formerly Cajamarca. These smaller dialogue groups have a partnership with GDMDS, but
are not administered by it. GDMDS interacts with these local groups in two ways: first, by
inviting people from the region to the dialogues in the Lima; and second, by offering a leadership
training program. The goal of the training program is to create a network of leaders in the
regions, who can promote dialogue spaces even without the presence of the GDMDS. The
expectation is that they are trained to promote better and healthier dialogue and have the tools to
try to hinder or solve conflicts.
II. Research Methodology
Data collection for this report was conducted in Peru from June 8 - July 31, 2015 by four
students representing the Center for International Conflict Resolution (CICR) at Columbia
University’s School of International and Public Affairs. This is a qualitative research drawing
from both primary and secondary sources. We conducted perception survey and observation
during our field trip.
The team travelled to five regions to understand the impact of dialogue process. The regions
selected, after consultation with various stakeholders from GDMDS, UNDP Lima, and NGOs
working on the issues of mining conflict, were Ancash (June 18 - June 30), Cusco (July 2 - July
16), Apurimac (July 10 - July 13), Arequipa (July 19 - July 25) and Lima (June 8 - June 17).
Each region has unique conflicts with different drivers of conflict and different experiences of
the dialogue processes, which provided a comprehensive overview of the social and
environmental conflict related to natural resource extraction in Peru.

21
The interviews followed a semi-structured format that allows for a natural flow of conversation.
Within this format we posed several basic questions for each informant followed by more in-
depth discussion. We developed a survey aimed at:
1. Identifying the source(s) of conflict related to mining projects in Peru
2. Characterizing the dialogue process
3. Assessing the efficacy of the dialogue process
4. Assessing how stakeholders perceive the dialogue process
5. Exploring possible suggestions for improvement for the GDMDS
To get respondents we used “snowball”51
technique where we asked our respondents to refer us
to additional respondents. It was considered necessary to use this technique given the topic we
are researching, it was more likely for us to get more respondents using this techniques than
getting respondents targeted through “cold calls”.
We interviewed 56 respondents. 21 respondents from national and regional government, 31
respondents from civil society organizations including 6 community leaders, and 10 respondents
from private companies. We also observed three dialogue table meetings (two in Lima and one in
Ancash). Interviewees were chosen based on their involvement in the dialogue processes in Peru.
Our initial list of respondents consisted of people actively involved with GDMDS, and some
respondents who are not involved with GDMDS. We also interviewed respondents that were
involved in other dialogue tables in Peru including ONDS dialogue tables to obtain the context
of dialogue in Peru.
Our initial interviews in Lima provided broad overview of conflict and mining in Peru and the
role of GDMDS. Our team travelled to Ancash where our visit focused on Grupo de Diálogo
Ancash (GDA). We attended a GDA meeting and interviewed people who are involved with
GDA. We also travelled to Parón, San Marcos and Santa Cruz de Picchu, all of which are areas
affected by mining projects. In Cusco we spent time in the capital of the region to understand the
51
Snowballing or chain referral sampling refers to method that yields study sample through referrals among people who share
characteristics/ knowledge that are relevant to research interest. It is particularly applicable when the focus of the study is a
sensitive issue that requires insiders knowledge to locate people for the study. This definition is stated in Patrick Biernacki and
Dan Waldorf. Snowball Sampling : Problems and Techniques of Chain Referral Sampling. November 1981. Sage Publication.

22
various mining conflicts in the south and we travelled to Espinar, the city next to the Antapaccay
mine. In Apurímac we visited the region’s capital, Abancay, as well as the area of influence of
the Las Bambas mine. In Arequipa we focused more on the mining projects in the region,
including the mine Cerro Verde, which is next to the region’s capital, and Tía María further to
the south.
Most of our interviews are recorded (audio recording) with consent from our respondents. For
data analysis, we code responses from our interviews and group the responses based on the
general themes emerging from our interviews. From the initial consideration of the data we
observe distinction in terms of perception between groups of respondents. Therefore we decided
to group our respondents into four categories: civil society, private company, community
members/leaders and government. This allow us to compare perception among different
stakeholder groups. Since we are working with perception data, when necessary we triangulate
our findings with other qualitative and quantitative data from literatures.
UNDP officials were not present during our visits and interviews. The findings and conclusion of
this report are independent from the view of UNDP Peru.
Limitations
This research faced several limitations. First, we interviewed a limited number of respondents
from the private sector. After sending numerous emails and requests to several private
companies, we received little or no response. This discrepancy could possibly affect the analyses
especially when comparing perspectives amongst the actors involved in the dialogue process
seeing that the companies themselves are not equally represented in the research. Second, our
snowballing technique may have introduced bias as we were referred to contacts that may share
similar views as the person who referred us. We mitigated this limitation by selecting initial
interviewees with diverse backgrounds52
.
52
Bleich and Pekkanen. How to Report Interview Data. p.87

23
III. Strategic Considerations for Dialogue
Addressing the underlying causes of conflict related to natural resources extraction requires a
concerted and multifaceted approach that encompasses governance, economic stability, capacity
building, and creative approaches to increase opportunities to dialogue53
. GDMDS provides
valuable lesson learned. It is especially important considering one of UNDP’s regional goals in
Latin America, to systematize and assess dialogue experiences at different levels, and identify
and disseminate lessons learned from the dialogue processes54
.
The UN Toolkit and Guidance for Preventing and Managing Natural Resources Conflict has
identified six keys opportunities for preventing conflicts related to extractive industries,
including55
:
1. Effective engagement of communities and stakeholders
2. Ensuring equitable benefit sharing
3. Mitigating the negative economic, social, environmental and gender impacts
4. Transparent and effective management of revenues
5. Strengthening the institution and legal framework
GDMDS provides a great venue to pursue these opportunities, but with limited life span.
GDMDS meetings provide constant communication channels between stakeholders. If organized
strategically, GDMDS meetings can ensure stakeholder access to information required to ensure
meaningful engagement. These communication channels are also important to ensure inclusive
conversation. This is important to ensure equitable and legitimate benefit sharing agreement.
Communication and information sharing are also crucial to ensure transparency. Increasing
transparency is important to ensure effective management of revenues. GDMDS indirectly
strengthens the capacity of civil society.
As discussed in the previous section, many negative impacts related to mining projects often
stem from negative perception. Therefore it is important to have a venue where stakeholders can
voice their concerns and discuss risk and perceived risks openly. Establishing a robust legal and
institutional framework is crucial to ensure that the rights of relevant stakeholders are respected.
53
The UN Interagency Framework Team for Prevention Action. 2012. Toolkit and Guidance for Preventing and Managing Land
and Natural Resources Conflict.
54
UNDP. Democratic Institutionality for Dialogue and Conflict Prevention: The Case of Peru. 2014.
55
This document was produced by the UN framework Team in cooperation with the EU as part of a strategic multi-agency
project focused on building capacity of national stakeholders, the UN System and the EU to prevent land and natural resources
from contributing to violent conflict.

24
Several respondents have stated that GDMDS contributed in the early discussions of canon
minero and FPIC.
However, it should be noted that although dialogue is a method for confidence and relationship
building, it is not effective for addressing development deficiencies to include promises that are
made without the firm commitment of the government to enforce regulations and company
community agreements. During conflict, particularly during times of violence and loss of life, the
breakdown of communication between parties is never positive due to the increased polarity that
follows this is supported by our findings from the field. Following the loss of life, dialogue tends
to be a less effective method in the short run, but does contribute to bringing both parties
together in the long-run. The timing of dialogue matters to ensure its efficacy. Additionally,
dialogue is completely depended on the willingness of the participants. If those participating
truly do not want to create consensus, it will not happen.
IV.Research Findings
IV. 1 The Contemporary Roots of Conflict Are Consistent With Previous Studies
Conflict is created as a result of interactions between multiple political, economic, social,
historical and cultural factors56
. Social and environmental conflict in Peru mostly centers on the
mismanagement of funds that stagnate development, environmental damage and general
suspicion of the local population towards mining. This suspicion stems from the long history of
degrading mining practices. However, there are variations of perceptions on the driver of conflict
across stakeholders depending on region and the type of stakeholders.
Common themes of conflict are: environmental issues (including pollution, water contamination,
water scarcity and sometimes climate change), unequal benefit sharing, lack of development and
the general lack of trust in companies and the state. However, the perceived root causes that have
the greatest impact on conflict varies by region. Respondents in Lima generally stated lack of
information or misinformation as the main source. In Ancash environmental issues are perceived
as the root cause. This focus on the environment is also analogous to the dominant source of
conflict identified in Arequipa. In Apurimac, unmet expectations and the company's’ negative
56
USAID. June 2012. Follow the Water : Emerging Issues of Climate Change and Conflict in Peru.CMM discussion Paper No. 5

25
reputation are the two drivers of conflict. Despite the differences in the source of conflict, there
is a general agreement across regions that the main driver is also accompanied by a combination
of the common themes mentioned above. This section sets out some key findings and strategic
considerations that our research wishes to highlight for UNDP Lima based on our field research
in Ancash, Cusco, Apurimac, and Arequipa.
IV. 1.a Environmental Problems Related to Mining Operation: Perception and Reality
Technically all stages of mining operations carry the risk of negatively impacting the
environment. Detrimental environmental impacts can be generated through improper disposal of
waste rock, inadequate containment and treatment of tailings, toxic waste leakage into water
sources, and the degradation that comes from regular construction of infrastructure and
supporting infrastructure for mining projects. All of these risks can be minimized and even
eliminated with proper planning. EIAs specifically are one of the mechanisms to minimize these
risks. It is the history of these intrinsic side-effects that has generated communal feelings of
mistrust towards all mining operations.
The relationship between natural resources, the environment and conflict is multidimensional
and complex. This is especially true in Peru. The poor environmental performances of some
companies combined with existing mistrust has made mining and environmental concerns an
extremely volatile. Natural resource exploitation and environmental stress alone has incited
social conflicts57
.
Hydrocarbons do impact communities, but not on the same scale as mining. Conflict is also
driven by uncertainty about the livelihood and control of key assets such as water and land; this
feeling is generated not only by the actual extraction itself, but the attempt to exploit mineral
deposits58
. Communities react strongly when there is a perceived risk to their livelihood, as many
communities around the world do. Additionally, mining concessions often overlap with
community claims and water resources. There is less conflict related to hydrocarbon projects
than mining because the environmental impact of hydrocarbon projects is smaller and more
concentrated, thus affecting less people.59
57
Matthew, Brown & Jensen. 2009. p.8
58
Bebbington.2012. p. 90
59
Interview

26
The runoff from mining operations is damaging water sources. It is estimated that mining only
uses 5 percent of Peru’s water; however, a good portion of mining activities happen in headwater
areas like the Andean mountains. This poses both serious environmental and health risks due to
water pollution. It is estimated that every year mining and metallurgy releases over 13 Billion m2
of chemicals into freshwater ways60
. Members from ANA mentioned that the water authority
sees the importance of the Department of Water Conflict, given more than 70 percent of conflicts
are related to mining in some capacity.
Majority of Defensoria del Pueblo’s representatives agree that mining companies often fail to
prevent the negative impacts of their operations, subsequently affecting community health and
environment, especially in the nascent stage of mining operations. Many of our respondents,
especially community members, stated that water scarcity and pollution are among the main
sources of grievance in their communities, and although companies contributed to development
projects, they often ignore their responsibility to the environment. Mining projects operating in
close proximity to populated center also affect the water supply for the community and their
ability to provide water for livestock. In Parón, specifically, the community organized and went
on strike to secure access to their local lake that is their primary water source. The concession to
this lake was given to a private company from the government without community consent.
Currently, Paron has access to the lake at least during periods of rainfall, but Duke Energy still
owns the lake 61
.
Perception is very powerful. The distinction between risk and perceived risks of environmental
pollution and its intrinsic effects are often blurred. Majority of members throughout the Ancash
region mentioned that a main sources of conflict is not the actually pollution itself, but the
perception that Antamina is polluting the environment. Members of ANA, NGOs, and
government officials all agreed on the importance of managing perception to avoid conflict.
Regarding water pollution, specifically, degradation comes from mining operations. Respondents
mentioned that the state would monitor the quality of water but the community disregarded the
results even though the test showed no evidence of pollution in the water. The community was
60
Bebbington. 2012. p. 192
61
The community in Santa Cruz de Picchu mainly works in agricultural sector.

27
convinced that their water sources were polluted despite the negative results of the test because
their livestock had been dying. The community began to notice an increase in the mortality rate
of their livestock since the company began their operations. The death of livestock was the
communities justification that pollution was present, despite the collected data against it.
There is extensive evidence showing that highland areas of Peru are experiencing serious
negative impacts from climate change. These impacts include glacier retreat, warmer
temperatures, more erratic and intense weather events, water scarcity, and contamination62
(acid
rock drainage) by glacier retreat63
. Both glacier retreat and mining activities produce toxic heavy
metals that emerge in waterways. This creates uncertainty about the source of contamination that
subsequently leads to accusations against the nearest mining company without the ability to trace
the pollution. Traditionally, community ideology is anti-mining and the perceived catalyst is the
company and not climate change.
The ideology that mining and environmental degradation are intrinsically linked has resulted in
outright rejection of mining projects. The fear of pollution and environmental degradation is
commonly used for political advancement of local and regional government leaders from their
strong opposition to mining projects to generate political support.64
These perceived risks are
further exacerbated by the lack of community trust in both the company and the state. All mining
companies unanimously agreed that perception is the main source of conflict, which is to be
expected given the companies’ position. These perceived risks are instilled in communities from
the long history of poor environmental performances of the company and the state's lack of
enforcing environmental safeguards. This finding is consistent with theories of risk perception.
The asymmetry of information is creating intransigence. The general public has the tendency to
view risks differently than experts. This difference of understanding is often the result of the
large amount of technical information that only experts can digest, which leads to
62
As the glaciers recede, water and oxygen combine with sulfur in the newly exposed surfaces to make sulfuric acid. The sulfuric
acid releases the toxic heavy metal found in the exposed rocks. These toxic materials are then carried by glacier melt into the
surface and groundwater.
63
USAID. Follow the water : emerging issues of climate change and conflict in Peru. p. 6
64
Majority of respondents agreed on this.

28
misunderstanding or lack of information regarding the EIA, specifically.65
The EIA is usually the
main source of information to which the community has access, and they are highly technical
documents that requires certain levels of expertise to comprehend. To overcome this asymmetry,
communities are dependent upon secondary parties to assess and communicate the information.
Civil society are calling on the limited number of NGOs that can provide legal advice to explain
complex issues about the environment and economics66
. Second, party assistance helps reduce
informational asymmetry between companies and communities. The problem with this assistance
is that it comes from either the government, scientists, other community members who share or
contest community interest and values67
. The lack of firsthand comprehension of these materials
leads communities to further suspicion. To further exacerbate the information gap, majority of
communities have to independently pay for consultants.68
Many companies created participatory environmental monitoring as a key strategy to gain the
trust of communities and alter the perception of risk related to environmental pollution69
.
Building trust is important to minimize perceived environmental risks, of which the state is
poorly equipped to address.
One of the key elements in managing natural resources is the ability and willingness to monitor
environmental impacts. However, most of the time there are tensions between the efforts to
attract investment in extractives and ensuring sustainable development70
. The State’s ability to
monitor environmental impacts of mining projects is constrained by the lack of resources and
deep mistrust from the population. Our respondents noted that people in the highlands,
especially, feel abandoned and excluded due to the lack of state presence and the lack of
engagement these communities receive from their national representatives. Community members
tend to believe that the state will always take the side of the company above their grievances and
concerns. Perceived vested interests have quickly eroded public trust.
65
According Zacarias Madariaga Coaquira, Gerente of ARMA# (The Regional Environmental Authority of Arequipa),
66
This information was obtained from one of our interviews with a national NGO working on the issues related to mining and
development (Cooperacion).
67
Eiset.2012.p.7
68
Majority of NGO, civil society, and community member respondents from all regions mentioned this
69
The information is obtained from interview with Cerro Verde’s representative.
70
Bebbington. 2012.p.28

29
The media is perceived as misleading. Media can influence the public’s risk perception71
. Edgar
Palma, an independent journalist in Ancash stated that media in Peru is led to this false
dichotomy of being pro or anti-mining. Majority of government, company, and community
members agree that the press can be easily bought and media companies lack transparency. In
general, media reporting on mining and mining conflicts is shallow and lacks real investigation.
Without clear and accurate information about the problems and situation, readers are at a
disadvantage and lose confidence in the government and corporations.
IV.1.b Managing Expectations and Underdevelopment in The Andes
In many parts of the world, indigenous communities are excluded from resource control. This
leads to unsatisfactory benefit sharing arrangement or a burden that is not proportionate for the
local community. Experiencing negative externalities of mining projects without receiving fair
benefits exacerbates grievances felt by the community. Even though Peru’s economy is one of
the largest in Latin America, 25% of the population in Peru still lives below the national poverty
line72
. The national rural poverty rate remains very high at 50%, with nearly 20% of those
residing in the mineral rich Andean region considered being extremely poor73
.
Underdevelopment in the Andean region is a result of government neglect. This perception is
shared by most community members that we interviewed in Ancash, and Apurimac. This
sentiment is also echoed by our respondents from private companies. Communities and
companies alike believe the government of Peru has neglected the Andean community for
decades. Therefore, the presence of mining companies in these regions is perceived by local
communities as the only facilitator of development. Representatives from mining companies
believe that companies are replacing the role of the state by providing basic services and
facilitating regional and local development, even though these company believes it is not their
responsibility. The majority of the companies agree that private companies are not supposed to
replace the role of state because it undermines its authority and legitimacy. Ideally, companies
paying their taxes should be enough. But, the management of Canon and corruption has created
inefficiency in the distribution of government transfers and development. Seeing that companies
71
EU.p.7
72
Council on Hemispheric Affairs, 2013, pg. 3
73
Council on Hemispheric Affairs, 2013, pg. 4

30
are contributing to development regardless of their opposition to it, companies need to start to
focus more on regional development, not just local, to overcome its stagnation.
Communities believe the state will react to protests and violence. For years, communities have
used traditional channels of communication to generate state support and representation with
little success. This lack of success brought the use of protests and violence as a strategy to gain
the attention of the state. NGOs, companies, and community leaders believe that if communities
don’t use violence, the state will not pay attention. This is the result of the government’s
reactive strategy in handling conflict. The state only intervenes when the conflict materializes.
IV.1. c Weak Governance and Decentralization
Well-implemented decentralization may generate welfare gains, but a poorly managed one has
the opposite effect74
. Respondents in all regions expressed disappointment over the lack of
development despite increasing Canon revenues. The regional governments in mining areas
received between US$0.68 bn (in 2006) and US$1.15 bn (in 2009). One of the main arguments
for further expansion of mining industry is the possibility of new development and poverty
reduction programs funded by such revenue75
. However often times this benefit does not trickle
down or materialize into development. All stakeholders interviewed acknowledge that local
governments are lacking the capacity to manage funds from Canon. This inequality is
exacerbated by limited transparency at all levels of government and its inability to reduce
corruption and foster trust76
.
IV. 2 Evaluation of Dialogue Processes in Peru
Dialogue is an inclusive process. Participants of dialogue must be willing to address the root
causes of the problem not just the immediate symptoms to alter long-term perspective77
. Ideally
dialogue is meant to complement or lay the groundwork for other political processes and should
not be treated as an end solution by itself. Based on our findings of the roots of conflict, a
74
Stephen Calabrese, Dennis N. Epple, Richard Romano. Inefficiencies from Metropolitan Political and Fiscal Decentralization:
Failures of Tiebout Competition. 2011. p.2-3
75
Leonith Hinojosa. Mining and Water Governance in Peru.
This information was obtained from Peru Support Group Website. Peru Support Group is an NGO working on human right
issues, social inclusion and democracy in Peru.
76
77
UNDP. “ Why Dialogue Matters for Conflict Prevention and Peacebuilding”. February 2009

31
process of dialogue is necessary to bring stakeholders together and challenge assumptions and
beliefs. Dialogue can establish basic conditions such as trust and political will, by facilitating
space where stakeholders can express their concern and be exposed to other stakeholders’
perspectives.
Establishing dialogue tables is the government’s strategy to mitigate conflict, and it is always
reactionary. The timing of a dialogue process is important in ensuring success. The majority of
our respondents agree that dialogue has to happen before conflict materialize to provide a true
preventive measure. Some even suggests that dialogue should be a continuing process that occurs
before, during, and after conflict. The majority of our respondents from mining companies and
civil society agree that dialogue needs to happen before a conflict foments, even as early as the
initial project exploration process. However, all conflicts came to the attention of authorities only
after escalation. Most stakeholders believe that dialogue should be established before the conflict
starts. It is increasingly difficult to mollify a conflict once the loss of life occurs, and with the
government's reliance on reactionary dialogue as the primary method to quell these conflicts, the
chances rise that conflicts will become intransient do to the use of force. After the use of
violence, the situation is no longer conducive for parties cooperate or to dialogue, further
prolonging the conflict.78
. Conflict monitoring capacities were nonexistent in the early 2000s,
neither were practical tools to prevent socio-environmental unrest.
Forms of the dialogue process impact the success of the dialogue more so than the substance or
issues under discussion79
. Respondents mentioned that dialogue tables are often treated as
“negotiation tables”, which is fundamentally different from a dialogue table. In a negotiation
stakeholders are seeking consensus, whereas the aim of dialogue is to bridge communities, share
perspective and discover new ideas80
. In a dialogue table, it is common for stakeholders to
promise communities that they will commit to a project or initiative and then fail to follow their
commitments. These unfulfilled commitments only creates more grievances and exemplifies how
fundamental it is to ensure stakeholders understand what dialogue is and is not. However, now
that the practice of dialogue has evolved in Peru, people’s expectation to dialogue process is also
78
UNDP. “Democratic Institutionality for Dialogue and Conflict Prevention ; The Case of Peru”.2014
79
UNDP. “Democratic Institutionality for Dialogue and Conflict Prevention ; The Case of Peru”.2014
80
UNDP. “Democratic Institutionality for Dialogue and Conflict Prevention ; The Case of Peru”

32
changing. Some of the respondents that we spoke to said that dialogue tables have to reach an
agreement in the end, otherwise it’s just a waste of time. Respondents then pointed out that when
the parties are trying to reach an agreement, they tend to be less honest compared to when no
agreement is reached. It appears that many participants of dialogue do not fundamentally
understand its structure.
There are variation of opinion when it comes to government involvement in the dialogue
process. Some community members believe that state led dialogue tables or multilateral dialogue
tables 81
is preferable since it provides a guarantee and ensures accountability from the company.
It is widely agreed by respondents from both the community and the company that the state’s
role in promoting development is irreplaceable. However, two respondents from mining
companies pointed out that having the state partake in dialogue often slows the process. This can
be attributed to the characteristics of bureaucratic institutions. It is also likely that the companies
would take this position, because without the state the company has more influence over
communities. Additionally, stakeholders stated that government officials often do not know how
to dialogue 82
.
Government-led dialogue tables often lack legitimacy. Based on our interviews, people in the
regions strongly believe that the national government is always slanted in favor of the mining
company. This belief affects their perception on dialogue tables initiated or mediated by the
government. This table is considered bias and only a stop-gap solution to make sure investment
in mining will continue to flow into the country. The fact that many communities, especially
those that are adjacent to the projects, don’t receive the benefit makes it harder to convince them
that government has the interest of the people as its priority. The dialogue table not only lacks
legitimacy, but also is problematic since it is reactive in nature.
Another problem with dialogue is asymmetric information and asymmetric power relations.
Dialogue and deliberation processes are still considered inadequate to deal with power relations
and eradicate structural, social, and economic inequality because it often takes place within
81
During our interviews respondents often differentiate dialogue tables as bilateral referring to dialogue table in which only
company and community are the parties, and multi-actor dialogue table in which state is also involved.
82
Our respondent was stating her perception based on the dialogue process she was involved in.

33
existing institutional, political, and legal framework that remains top-down. Even when it is
inclusive, the process fosters structural bias in which the strongest actors are able to dominate the
process83
, which places communities at a disadvantage in dialogue tables. Dialogue tables are
often organized in Spanish, disregarding the fact that many community members in the Andean
region only speak Quechua. This is problematic because it excludes the community from the
dialogue and creates resentment from communities making it more challenging for stakeholders
to build consensus.
Community members often lack the required level of expertise to interpret technical documents
nor are they able to access assistance. Building capacity for community leaders is an important
aspect to ensure they are even capable of partaking in the dialogue process. GDA Ancash and
RNL have provided training for community leaders and this has been considered a success.
Community leaders that have attended the training stated how the training helped them build
their understanding and ability to partake in dialogue, while also understanding their rights and
obligations in front of the state and companies.
Majority of respondents agree that GDMDS-led dialogue tables are exhaustive because they lack
tangible results. GDMDS is an informal space that facilitates the free flow of ideas because in
theory people are not restricted to representing their organization’s official position. GDMDS is
a facilitator by providing networking opportunities for stakeholders. On the other hand, GDMDS
is often viewed as ineffective because its meetings lack a concrete outcome or tangible benefits,
even though tangible outcomes is not what a dialogue is intended to provide. We also found that
many become exhausted with talking and sharing feelings. A dialogue that is implemented for
years and produces no outcome exhausts its participants and loses its impact.
V. Conclusion
Dialogue has taken many forms and has many different interpretations in Peru. Government’s
approach to dialogue is considered less strategic. The timing and stakeholders involved in the
dialogue undermine the efficacy of the dialogue process. In addition to that, the government of
Peru still has not address the root causes of conflict related to mining such as structural
83
Isabelle Anguelovski. “Understanding the Dynamics of Community Engagement of Corporations in Communities: the Iterative
Processes and Local Protest at the Tintaya Copper Mine in Peru”. Society and Natural Resources Vol 23 Issue 4. 2010

34
inequality, and underdevelopment. Government also still needs to regain trust from the
community especially in the Andean region. In this context GDMDS can help create basic
conditions for effective dialogue. Many attributes of GDMDS set them apart from government
led dialogue table.
In the context of social conflict related to mining in Peru, GDMDS can help create basic
conditions for effective dialogue such as political willingness and trust. Dialogue is not only
necessary to mitigate conflict but also to manage perception of stakeholders involved. The
absence of transparency and accessible information not only creates risk, but also benefits
mining activities due to poor corporate practices and weak government control. This has
contributed to conflict escalation in Peru for the past decades. A venue to share information may
help mitigate the risk of conflict. However, GDSMS should improve several aspects to be more
effective.
VI. Recommendations
Based on our main findings in this research, there are several areas where GDMDS can improve
and take actions that will maximize its contribution and relevance in reducing the risks of
conflict related to mining projects in Peru.
1. GDMDS should be more institutionalized and create clear protocols:
GDMDS dialogue process has no specific goal. It only seeks to create a space for people to
strengthen relationships between stakeholders. This can be seen as a disadvantage in the short-
run. Many community leaders do not see the effectiveness in this dialogue concept. They
mentioned the necessity for a signed agreement or document to create an official record of
responsibilities from the part of the company and the government. The signature in the document
is a means for building trust between the communities and the companies and the government.
By developing a more structured protocol and a set of clear goals for its processes, GDMDS can
overcome this stigma of not being ineffective, and create a binding relation between the

35
stakeholders. The objective is to show a clear path of development, creating a transparency and
building on trust of the stakeholders.
2. GDMDS should have smaller and more decentralized meetings
Many interviewees, specially from the private sector, mentioned the increasing number of people
attending the group meetings. This can be good for the group because new people create a larger
and network and brings more stakeholders into the discussion. However, when the amount of
people in the space becomes unwieldy and the quality of the discussion is impacted, the dialogue
weakens and people will have an incentive to abandon the space.
By decentralizing the meetings, there would be fewer people who attend each of the meetings,
and the participants would be able to discuss topics that really interest them. Also, by being
selective with who is invited to join the dialogue space does not mean that the space will lose
stakeholder representation. Rather, it is a matter of careful selection.
3. Explore possible partnerships with Universities
The ability of GDMDS to solve conflicts relies on its capacity to create connections between
people in mining areas and to build their capacity through dialogue training. One of the findings
of our research was that universities in the country weren’t able to fulfill their role, even though
five percent of the Canon is designated for universities to conduct research relating to mining.
Given that, it is be important for GDMDS to use the universities as a channel to improve its
capacity and presence in the regions and develop more ways to impact mining conflicts. Even in
universities without government assistance, the partnership would help the group to disseminate
its ideas and provide more connections.
4. GDMDS should expand beyond mining issues
Although mining is the main source of conflict in Peru today, it is not the only one. Other
extractive industries, such as oil and gas in the Amazon, have analogous problems and have
grown in recent years. GDMDS can use its network of influence to act in those new conflicts.
The idea of using dialogue in the beginning of the conflict situation is also applicable. By
expanding the mission of the group, GDMDS not only will increase its net of connections, but

36
also will have the opportunity to become a major conflict resolution tool throughout the country.
Additionally, this is a good way to get more financing and expand dialogue training programs in
the regions.
5. GDMDS should intensify its engagement with all stakeholders including national and
local government officials and ensure broad representations
Today GDMDS is very concentrated in Lima. Regional dialogue groups and stakeholders based
outside of Lima are invited to meetings, and many times travel expenses are covered.
If GDMDS remains concentrated in one geographical site, the group will lose its influence have
a more difficult time to create the network of contacts it needs to improve the conflict resolution
process in Peru. If GDMDS could create regional offices in mining areas with potential for
conflict, the outcomes from the network it creates would be greater. Also, not only would the
training program be more effective, but also the stakeholders from the regions would be more
connected to each other.

37
WORKS CITED
Al-Jazeera. “Is environmental deregulation in Peru's best interest?”. 24 Aug. 2014.
Andina. “Velásquez: Más de 11 mil funcionarios públicos fueron procesados por corrupción desde
2002.” 30 Oct 2010
Annegret Flohr. “Corporate- Community Conflict and Dialogue in Peru’s Mining Sector”. Paper
presented at the Latin American Studies Association. May 2014.
http://www.aljazeera.com/indepth/opinion/2014/08/environmental-deregulation-per-
2014812111722135954.html
Bebbington, A. (Ed.). (2012). Social Conflict, Economic Development and Extractive Industry:
Evidence from South America. New York.
Council on Hemispheric Affairs. (2013). Corporate Conquistadores: Peru’s Mineral Extraction
Industry Boosts Economy While Rural Poor Continue To Suffer–Analysis. eurasiareview.com
(pp. 1–11).
Eliana Carranza, Jorge Fernández-Baca and Eduardo Morón. Peru,Markets Government and the
Sources of Growth, Universidad del Pacifico . 2003.
El Comercio. “Contraloría: 350 millones de soles están vinculados a delitos de corrupción.”
September 2010.
Extractive Industries Transparency Initiative, Peru. 12 Feb. 2012. https://eiti.org/Peru
Ernst & Young. (2015). Peru’s mining & metals investment guide 2014 / 2015.
Frank Bajak. “New Peru Law Weakens Environmental Safeguards”. Associated Press. July 2014.
Isabelle Anguelovski. “Understanding the Dynamics of Community Engagement of Corporations in
Communities: the Iterative Processes and Local Protest at the Tintaya Copper Mine in Peru”.
Society and Natural Resources Vol 23 Issue 4. 2010
Javier Arellano-Yanguas. “A Thoroughly Modern Resource Curse : The New Natural Resources
Policy Agenda and the Mining Revival in Peru”.IDS Working Paper 300.2008
Jonathan Watts and Dan Collyns. Peru’s Environment Minister Hail’s Landmark Mining Reforms.
2012.
Jose Luis Follegatti. Diálogos que transforman
KPMG. “Peru: Country Mining Guide.” KPMG International, 2013.
Leonith Hinojosa. Mining and Water Governance in Peru.

38
Loayza, Norman. “Poverty, Inequality, and the Local Natural resource Curse.” Institute for the Study
of Labor, IZA http://ftp.iza.org/dp7226.pdf.
Metals and Mining Daily Volume 1, Issue 79. Oct 4, 2013.
Office of the Ombudsman, “18th Annual Report Jan.-Dec. 2014.” 2015.
http://www.defensoria.gob.pe/modules/Downloads/informes/anuales/Decimoctavo-Informe-
Anual.pdf
Oxfam America. “Mining Conflicts In Peru: Condition Critical.” 2009
Patrick Biernacki and Dan Waldorf. Snowball Sampling : Problems and Techniques of Chain Referral
Sampling. November 1981. Sage Publication.
Peru. Columbia University ICR Practicum Report. 2013
Samuel Rotta Castilia. “Corruption Free Education.” CMI Michelsen Institute. Bergen, Norway.
http://www.cmi.no/publications/file/3004-corruption-free-education.pdf
Stephen Calabrese, Dennis N. Epple, Richard Romano. Inefficiencies from Metropolitan Political and
Fiscal Decentralization: Failures of Tiebout Competition. 2011. p.2-3
Taft-Morales, Maureen.”Peru In Brief: Political and Economic Conditions and Relations with the
United States.” Congressional Research Service. 2013, pg. 1.
http://fas.org/sgp/crs/row/R42523.pdf
Transparency International Corruption Index Report. 2011
The UN Interagency Framework Team for Prevention Action. Toolkit and Guidance for Preventing
and Managing Land and Natural Resources Conflict. 2012.
The World Bank, “Wealth and Sustainability: The Environmental and Social Conditions in Peru.”
2005.
UN Interagency Framework for Preventive Action. Extractive Industries and Conflict. 2012
UNDP. “ Why Dialogue Matters for Conflict Prevention and Peacebuilding”. February 2009
UNDP. Democratic Institutionality for Dialogue and Conflict Prevention : The Case of Peru. 2014
USAID. June 2012. Follow the Water : Emerging Issues of Climate Change and Conflict in
Peru.CMM discussion Paper No. 5

Dialogue Processes in Peru. Challenges and Opportunities

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (9)

Similar to Dialogue Processes in Peru. Challenges and Opportunities

Similar to Dialogue Processes in Peru. Challenges and Opportunities (20)

Dialogue Processes in Peru. Challenges and Opportunities