Silvia Santacruz

Gold Is Not the Enemy – Poverty Is

by Silvia Santacruz on December 31, 2008

in Energy, Environment, International

National Geographic magazine has published an article titled The Price of Gold focusing on the high price of gold and the high human costs of gold production. The piece reveals useful data on artisan miners in the world and the health hazards they face daily while mixing mercury to separate rock from gold. Overall, the article leans firmly against India’s growing demand for gold and the metal’s global providers: 75% of the world’s gold comes from large-scale mining companies, and 25% from artisan miners.

The article questions gold exploitation per se, and overlooks that responsible mining companies may be the solution to eliminate poverty and the damage caused by informal miners. But, the piece does recognize that responsible large-scale mining brings prosperity to developing countries.

Baru Hijau was supposed to be a model mine, and Newmont likes to tout its benefits: the $391 million in local royalties and taxes it paid in 2007, the more than 8,000 jobs it has created for Indonesians, the reported $600 million spent to minimize environmental damage. Then there’s the more than $3 million Newmont spend each year on community development. It may be a pittance compared with the company’s annual revenues, but it has provided the five villages closest to the mine with electricity, health clinics, irrigation dams, and agriculture projects.

That single paragraph is a very powerful one, yet it is followed by a negative paragraph that describes the jealously of other communities that do not directly benefit from the project.

But the most important issue in this matter it is not the hunger for gold from India, or the millions in profits mining companies are making, but how a single industry can change the lives of thousands of the poor by providing job opportunities and basic services. Larger modern firms can also put an end to risky informal miners and children miners, who risk their lives everyday. These men, women, girls and boys often subsist on bunches of coca leaves they chew—nothing more. And they sometimes pour local liqueurs called pisco at the mine entrance in tribute to spirits they hope will keep them alive as in La Rinconada, in Perú.

Banana Entrepreneurs Should Follow the Cocoa Initiative

by Silvia Santacruz on November 7, 2008 · 1 comment

in Agriculture, International, Trade

Last Wednesday, The New York Times ran an appealing story on the rise of an Ecuadorian Quichua community from a cocoa grower to a chocolate producer.  The 850-families cooperative, located in the Amazonian rainforest, sells rich chocolate bars to American supermarkets without intermediaries.

This initiative is worth emulating, and should be followed by Ecuadorian agribusiness men who export fruits with no added value, such as bananas, mangoes, passion fruits, and coffee beans.  Read NYT’s When Chocolate is a Way of Life

Wearing a faded red t-shirt and worn out sneakers, a banana farmer was happy to chat with me about the “green gold,” as the fruit is called, back in my days as an agribusiness reporter in Ecuador. Without an appointment, I was able to jump from the road into the plantation to have my first hands-on experience in the banana business.  Like the farmer I met, over two million Ecuadorians depend on banana production either directly or indirectly.  Bananas are the main agricultural export of Ecuador, with a monthly volume of 20 million boxes, according to the Banana Exporters Association (AEBE).

Despite Ecuador’s leading position in the global banana market, sales of the fruit represented only 8.1 percent of the nation’s exports between January and August 2008. That’s because Ecuador is an oil-producing country, and margins on basic products such as agricultural products are low.  A solution, then, is to graduate up the producer ladder into products that have added value such as processed agricultural goods.

If my country, like many other developing nations, could learn from the Quichua cocoa experience, maybe next time I visit my hometown I won’t provoke giggles from the skillful artisans who offer hand-woven bags and placemats made of dry banana leaves on Ecuador’s streets when I suggest they market their products overseas. After the Quichua success, my encouragement to sell such handcrafts internationally should inspire excitement rather than laughs or sighs.

Entrepreneurs are the ones that should take advantage of these opportunities, export these unique products to America or Europe, and change the lives of the world’s poorest.

Oil Prices Plunge Hits Ecuador

by Silvia Santacruz on November 4, 2008 · 4 comments

in Energy, International

Today’s Washington Times features an article on Ecuador “Economic Crisis Starts to Show up in Ecuador”, in which author John Zarocostas writes:

“The global economic crisis that began in the United States has spread to several nations in Latin America – and Ecuador, an Andean nation dependent on oil exports, is among the hardest hit.”

Ecuador, is in fact, an oil-dependent economy. Over 60 percent of its $13.7 billion in exports consist of crude oil, according to the Ecuadorian Central Bank. Oil revenues finance about 40 percent the country’s budget. And according to a J.P. Morgan study, every $10 drop in the oil price would lead to an increase in the current account deficit equivalent to 2 percent of the country’s GDP, and an increase in the fiscal deficit equivalent to 1.3 percent of GDP.

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Latin America Should be on Washington’s Agenda

by Silvia Santacruz on October 9, 2008 · 2 comments

in International, Politics as Usual

Yesterday, Nelson Cunningham, one of the panelists at a Hudson Institute conference on Latin America’s “Radical Populism Challenge” commented that it is better that the presidential campaign and debates don’t even mention the region. He said that speaking of Latin America would only bring bad news: illegal immigration and drug-trafficking.

As a Latin American myself, I could not disagree more. The region is one of the United States’ most important commercial partners, with U.S. exports valued at more than $150 billion a year, almost as much as its exports to the European Union, as Inter American Dialogue President Peter Hakim notes.

A more balanced argument was delivered by Jaime Daremblum, director of Hudson’s Center for Latin American Studies, who moderated the panel, but didn’t argue with the speaker. In his article, “What Will the Election Mean for Latin America?,” he shows how the 9/11 terrorist attacks pushed Latin America to the background of the U.S. foreign policy discussion. Meanwhile, Russia is gaining ground exploring oil fields in Venezuela.

The same controversial panelist also commented that Senator Barack Obama, if he becomes President, would probably enjoy future good relationship with Latin America—because of his Indonesian background. It is not clear how his Indonesian experience can increase his interest in a region he didn’t consider visiting during his international campaign.

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