From the Franklin River to the Chalillo Dam
Energy and Repressive Politics in Central America
by Toni Solo
November 11, 2003
Twenty years ago a bitter environmental conflict over the Franklin dam in Tasmania ended with a victory for environmentalists concerned about preventing needless destruction of their country's ecosystem. Now people in another British ex-colony, Belize, are also fighting a controversial hydroelectric project, the Chalillo dam, against the Canadian multinational company Fortis. The dam fits into the controversial regional Plan Puebla Panama aimed at neo-liberal style economic integration in the Central American isthmus. The contrast between the Franklin dam in Australia and the record of hydroelectric projects in Central America is sharp and opportune.
Decisions taken now about energy policy in Central America will irrevocably affect the region's future development. Opponents of the vertically imposed Plan Puebla Panama are often derided as ignorant anarchist opponents of any economic development in the region. In fact, even the World Bank has recognized that environmental concerns and poverty reduction are inextricably linked. In 1995 Kenneth Newcombe, Chief of Global Environment Coordination at the World Bank said, "Our aim has always been to abolish poverty. Now we understand that solving poverty and protecting the environment go hand in hand." It is a shame that 1995 insight has been lost along the way somewhere. 
Lack of democracy means irrational energy solutions
In most of Central America, electricity demand is likely to increase steadily at between 5%-6% per year, needing billions of dollars of investment. Honduras alone expects to need to spend US$140 million per year over the next decade, for example. But who is taking the decisions about that investment in a region where governments are weak, notoriously undemocratic, often repressive and generally corrupt? The Central American Electrical Interconnection System (SIEPAC) now being installed was agreed with hardly any consultation with the peoples of Mexico and Central America.
Regional governing elites strike deals with multilateral lending organizations and transnational corporations on programs that clearly prejudice the best interests of local people financially, environmentally and politically. Local people incur higher levels of national debt for services which will cost them more both in terms of capital investment and in end-user charges in years to come. Their environment will be irreversibly damaged. Many indigenous groups will suffer. Genuine democratic participation in planning processes is not even considered.
That was the reality in Australia too until twenty years ago a coalition of environmentalists blockaded the dam construction on a tributary of the Franklin River in Tasmania, Australia's last wild river. They were fighting the country's Hydro Electric Commission, a giant state entity habitually accustomed to getting its own way. The environmental coalition was lucky to get television coverage. They used it effectively to get across to people in Australia the extent of the environmental loss the Franklin dam project implied.
In June 1980, 10,000 protestors marched through Tasmania's capital, Hobart. In response, the state government tried to argue for a less damaging dam project that would still have drowned much of the wilderness area. Through July 1980 the conflict sharpened. Organized labor supported the dam. But protestors undercut pro-dam propaganda with an effective information campaign showing viable energy options that offered better employment prospects and substantial capital savings.
A compromise referendum to break the deadlock in December 1981 offered voters a choice between two dams. More than a third of voters spoiled their ballot papers writing on them "NO DAMS". By November 1982, over 2500 people were helping to physically blockade the dam protesting the Australian federal government's decision not to intervene and stop construction. Local opinion polls showed people two to one against the dam. A total of 1217 people were arrested during the blockade. In June 1983 a newly elected Labour government won a court decision and the dam was stopped.
Central America's dismal record: Chixoy and El Cajón
Central America has more than its fair share of similarly conflictive hydroelectric projects but the political conditions are very different. In Guatemala, the Chixoy hydroelectric program was controversial from the start. Begun in 1975, it was run by German, Swiss and US companies with money from the World Bank and the Italian government.
Around the time when thousands were marching in Hobart, Tasmania, in 1980, the Guatemalan army murdered 70 indigenous women and over 100 children near Chixoy. Between 1980 and 1982 a total of over 400 Maya Achi people were massacred in separate incidents during attempts to secure justice for their communities, affected by the dam. On top of that human cost, the dam has been an expensive failure, overunning its original cost projection of US$270 million by over five times. In the early 1990s 45% of Guatemala's national debt derived from the Chixoy dam project.
Other hydroelectric projects causing conflict in the region in recent years have included the Bayano and Tabasará dams in Panama, the Usumacinte and Chapparal Frontera dams in Mexico and the Patuca and El Tigre dams in Honduras. Honduras has perhaps the most emblematic hydroelectric project in the region, the El Cajón dam, about 150 kilometres northwest of the capital Tegucigalpa. Protected by an army base at its entrance, the huge dam was finished in 1985 with over US$700 million from the World Bank and the Inter American Development Bank.
Honduras is still paying off those loans now. For five years the dam's four huge turbines supplied nearly three quarters of the country's electricity and even generated a small amount of foreign exchange through sales of power exported to neighbouring countries. But the project quickly developed major engineering problems, massive water filtration and chronic environmental deterioration in the adjacent countryside.
As the dam failed, by 1995 the country was losing around US$20 million a month in lost industrial production. The government had to make repeated requests for additional finance to the international financial institutions, who paid up rather than see the project fail completely. Even for government bureaucrats, the environmentalist climate change message was already sinking in.
Decreased rainfall, compounded by aggravated erosion when the rains did arrive, accelerated deforestation, filling the dam's reservoir with sediment. The dam managers did well to avoid catastrophic failure during Hurricane Mitch in 1998. Describing the El Cajon basin this year the Sustainable Development Unit of the Organization of American States writes, "The basin presents a generalized erosion process, signifying irrecoverable loss of nutrients due to the overexploitation of natural resources. In its turn this causes negative effects on the flora, wildlife, water quality and fish population." 
These large dams provoke soil erosion that results from deforestation caused by the overall impact of the dam's construction. This soil erosion begins sedimentation processes that start to affect the dam's performance within a few years. Below the dam, clear unsedimented flowing water tends to accelerate erosion. But the main problem is the ambient deforestation.
The combination of these major civil engineering projects with widespread illegal logging in fragile biospheres devastates the environment and accelerates climate change. A fundamental cause of this process is weak or absent government regulation, an endemic phenomenon in Central America made more acute by arrogant know-all neo-liberal bureaucrats in the World Bank, the International Monetary Fund and the Inter-American Development Bank. Exactly these factors have jeopardised the important Rio Platano Biosphere, again in Honduras, and the Bosawas natural reserve in Nicaragua. But Rio Platano and Bosawas, like the Macal River Valley in Belize, are typical of vulnerable environmental areas throughout the isthmus.
The neglected factor is sustainability. As Fred Pearce of the World Wildlife Fund writes, " Sustainable development need not require the total cessation of dam building. But it will require detailed assessment of the environmental and social impacts in advance, and in particular a clear understanding of the benefits of freshwater ecosystems, including wetlands and groundwaters, and their dependence on hydrological flows."
Pearce contends that dams disrupt downstream flows sustaining fisheries and fertile soils. He points out that large dam reservoirs can generate as much or more greenhouse gases than fossil fuel power plants. As they grow old they become significantly less efficient, more costly to maintain and run risks of catastrophic failure as climate change causes extremes of rainfall and drought. El Cajón in Honduras is a perfect example of this syndrome. Pearce also notes the negative affects of badly designed hydro-power projects on rural communities, often forced out of fertile valley regions into less fertile highlands. 
While it may be true currently that Central American governments are tending to reduce reliance on poorly planned hydro-power, that may not necessarily be good news. Governments are trapped between the need to guarantee future power needs and the limited options allowed them by IMF, World Bank and Inter American Development Bank policies. These bodies have promoted the bogus benefits of "free-market" policies and privatisation for over twenty years.
Inherently hopeless anyway for the poor majority in Central America, these policies offer no help to countries faced with the accumulating effects of regional climate change. In terms of energy policy, climate change provokes uncertainty among regional policy makers about further development of hydro-electric projects. Factors exacerbating their uncertainty are repeated droughts affecting agricultural production, higher incidence of forest fires, and increased displacement of populations abandoning agricultral areas rendered arid and unsustainable.
Of all the countries in the region Costa Rica is the best placed to develop a genuinely sustainable energy policy. It has conserved its environment and resisted pressure to privatize its state utilities. This fact and the country's relatively low level of foreign debt leaves the government more options in terms of infrastructure investment to meet its growing energy needs.
In neighbouring countries, high indebtedness, public sector cutbacks as a result of structural adjustment programs and privatization of state owned public utilities, mean that governments are unable to invest in energy infrastructure. So investment decisions favor the wishes and needs of multilateral lenders and corporate private investors. These decisions are not taken democratically.
Decision makers typically ignore the wishes and interests of local people. Renewable options like wind, tidal and solar power generation get low priority when they are considered at all. Only lip service is paid to the sustainability of hydro-power projects - leaving the way open for yet more loans for inappropriate giant hydroelectric schemes and yet more debt, as happened in Honduras with El Cajón and in Guatemala with Chixoy. This mix is self-evidently disastrous for people in Central America.
The recipe for irrational decision-making is clearly present in the case of the Chalillo dam in Belize. Electricity generation and distribution in the country is controlled by Belize Electricity Limited (BEL). BEL buys about 85% of the country`s electrical energy from Mexico`s national power company the Comision Federal de Electricidad (CFE) and the Canadian owned Belize Electricity Company Limited (BECOL), a subsidiary of Fortis Incorporated. Currently BECOL owns the only hydroelectric plant in Belize, the 25MW (megawatt) Mollejon dam. BEL generates the country's remaining power requirement from diesel-burning thermal plants.
For the last five years, Fortis has been trying to build a dam at Chalillo in the Macal River Valley in Maya mountains. The dam will provide an additional 5.3 MW of generating capacity with some estimates suggesting a possible generating capacity of up to 9MW. The Chalillo Dam will flood 1,100 hectares of virgin jungle, destroying habitat for wildlife including rare jaguar, tapirs in danger of extinction, and the Morelet crocodile. The project might also damage the world's largest coral reef after the Great Barrier reef in Australia, as well as Mayan archeological sites.
The Belize Alliance of Conservation NGO's, has been trying to block Fortis from completing the dam. They argue that the devastating environmental effects will provoke an irreversible ecological catastrophe. Belize fits the pattern of other impoverished Central American countries with a feeble government dominated by domestic and foreign business interests. Frequently, national governments in the region are unable to afford an Environmental Impact Assessment (EIA) on this kind of project, leaving it in the hands of agencies who often have a conflict of interest. That was the case in Chalillo.
It was in the interests of AMEC, the Canadian company who carried out the EIA, for the project to go ahead. So evidence against the project was left out or played down. Even AMEC's information on the geology of the rocks beneath the dam was found to be misleading. Canada's Probe International discovered that core samples indicating sandstone and shale were misrepresented as indicating granite. Information about geological fault lines was fudged too, omitting to mention possible risks to the structural integrity of the dam.
Compounding its omissions, AMEC's report also discounted input from eminent conservation advisers. A senior scientist who worked on the British Natural History Museum's authoritative ecological report on the dam proposal, Lt. Colonel Alistair Rogers, wrote: "It is absolutely clear that constructing a dam at Chalillo would cause major, irreversible, negative environmental impacts of national and international significance -- and that no effective mitigation measures would be possible." 
Studies on the dam's effects are incomplete. Most independent studies indicate the dam is not economically viable. Several have indicated that electricity prices will rise as a result of the Chalillo dam. Roger Sant, President of US energy multinational AES Global Power and also Chairman of the Board of World Wildlife Fund-US, has acknowledged concerns about the environmental impacts and described the project as "not economically feasible".  Still, Fortis and the Belizean government intend to go ahead.
In August this year court action in Britain, the former colonial power, for an injunction to halt work on the dam failed. The final decision on the dam's future now rests in London with the British Privy Council's Judicial Committee, an arcane, unrepresentative appointed body inherited from feudal times. Comprised of senior judges from British Commonwealth countries and judges from the UK parliament's House of Lords, the Committee provides a final appeal court for member countries of the British Commonwealth that choose to accept its authority.  A public announcement of their judgment is expected in January 2004.
An inseparable trio: business, energy, politics
In July this year, the Second Meso-American Forum against Dams "For the Peoples' Water and Life" took place, appropriately, in Honduras. The 150 delegates noted in a statement that around 500 hydroelectric projects exist in the region "the proliferation of hydroelectric projects in our countries is not due to the energy needs of our peoples but responds to the need to set up the necessary infrastructure to develop the neo-liberal economic model through the Free Trade Area of the Americas (FTAA), the various Free Trade agreements on a continental level, the Puebla-Panama Plan and the Colombia Plan, among others."
The Chalillo dam is a relatively small project. But it encapsulates everything that is wrong with energy policy decision making in Central America. The contrast with the Franklin dam experience in Australia is instructive. Chalillo is yet another example of how the needs of the majority in Central America are trodden underfoot. The main components are always multinational corporations and weak governments using undemocratic decision making processes approved by the main international financial institutions. As a result, sustainable development in Central America is as much on the verge of extinction as the Belizean tapirs.
Toni Solo is an activist based in Central America. Contact:- firstname.lastname@example.org
1) "Lights Out in Honduras", James Gollin November 1995, www.planeta.com
2) Unit for Sustainable Development and Environment - Organization of American States, report issued this year 2003
3) WWF INTERNATIONAL Research Paper "Dams and Floods" Fred Pearce June 2001
4) Probe International, Letter to AMEC Urging Retraction of Faulty Environmental Assessment, February 21, 2002, www.probeinternational.org
5) Tropical Education Centre Press release. August 9th, 1999, www.belizezoo.org/zoo/zoo.html