On Thursday, May 14, we shared with our readers some of the thoughts that Cristina Pekarik had about protecting the interests of Canadian investors in foreign countries, particularly when those countries would revoke mining rights for political gain. She is in a position to know what happens, because she was born in Latin America where her father worked in the mining industry after getting his start in Canada.
Here are her further views:
“Today, our economy has changed dramatically. While there are still the ultra-wealthy running mining companies, the truth of the matter is well laid out in Diane Francis’ new book, ‘Who Owns Canada Now?’ What she reveals is a cheering fact: ownership and investment in this country has been ‘democratized’. Through the growth of the mutual fund and pension industries, and Canadians investing more (and saving less); the average Canadian is now an investor. This has changed in one or two generations. Along with this has come more public regulation and scrutiny of those looking to raise capital on the markets. When the current Ecuadorian government rescinds on the rights it has issued (and investors invested in good faith that the rights granted would be honoured), it has put people’s pensions at risk. Should the Canadian government care? I think so; in fact I want the Canadian government to care on my behalf. I also would like to see the exchanges help ensure Canadian investors are informed of this kind of systematic risk, security by security.
“What some of the [foreign political] posturing reveals, I believe, is something deeper. I think that in many places around the world (including spots in Canada), the government does not have enough legitimacy to have a ‘sustained social licence’ to issue rights and interests, including honouring rights already granted. This is a deep problem indeed, but all the political posturing and posing is not going to help address this issue. If I look here in Canada, this has been very much an issue with First Nations. My observations of recent history here in the Yukon is that the resolution of most land claims (an outstanding bit of business on the part of Canada and First Nations) is allowing Canada and the Yukon to recover or earn that social licence.
“Again, to the question of imperialism – let’s compare the actions of, say Ecuador to China, Russia or India. The latter three, to the best of my knowledge, are respecting the rights they granted to companies investing there. At the very least, they are not systematically revoking rights as Ecuador has, and other Latin countries are considering similar actions. And that’s what I think of as breaking the ‘gentleman’s agreement’ or ‘handshake’ part of the modern economy – oh yeah, and sometimes breaking or conveniently reversing one’s own laws.
“Again, another point on the question of imperialism. The Latin America I know is infinitely more complex today than it was in the ’70s and ’80s. In many countries, there is a whole generation of professionals and skilled labourers who invested their youth, family savings and education with the hopes of having the opportunities associated with modern development. Politicians that make straw dogs of the investing companies providing professional opportunities, jobs and improved standards and quality of living are certainly not advancing the interests of this sector of their nation. Today, there are quite a few Ecuadorian and Venezuelan engineers and geologists working in the expat global community, [because of] the disservice of these systematic withdrawals of mineral and petroleum rights at home.
“I leave you with this vignette: as a young woman, living in Honduras in the ’70s, I was often yelled at on the streets. ‘Go home Yankee imperialist,’ was a popular one. Never mind that I was a Canadian and born in Honduras. Never mind that my parents gave their adult lives to educating a generation to have an opportunity to participate in the global economy, and providing employment to a handful of people in the mining industry. The charge was so far from the truth. It was simply a political slogan. The source of the anger I could then and still can understand and empathize with. I appreciate the apprehension of ‘imperialism’, but I suggest that the issues and circumstances are far more complex than that We should not avoid giving investors clear and as full as possible information, and also encourage other governments to reconsider (and pay the costs of) sweeping revocations of rights already granted.”