The Destiny of the Bio-Bío River: Hydro Development at Any Cost

The Mapuche people are the largest ethnic group in Chile and constitute approximately 10% (more than 1 million) of the Chilean population. Pehuenches, people of the pehuen tree (araucaria) area, is a branch of the Mapuche people, who live in the Andes and alongside the Bío-Bío River. In 1990, the newly elected Chilean government approved plans for hydro development on the Bío-Bío River by ENDESA, a Chilean private energy and resource-development corporation. Implementing this project would require invoking the National Energy Law (decreed during Pinochet’s regime in 1982) to privatize Pehuenche reservation land.

ENDESA asked the World Bank Group to provide funding for state-sanctioned, private development of seven hydroelectric dams. The World Bank Group funds such private-sector development projects through its subsidiary, the International Finance Corporation (IFC). In December 1992 IFC board approved the decision to invest in the first step, the Pangue Dam project, and in October 1993 the IFC and ENDESA signed an investment agreement providing a US$170 million loan to ENDESA to construct the Pangue dam, in return IFC got a 2,5% equity interest in Pangue S.A., the ENDESA subsidiary that built and operates Pangue. The IFC also brokered funds from several European public and private source, a US$28 million loan through the Swedish board for Industrial and Technical Cooperation (BITS) and a US$ 14 million from the Norwegian Agency for Development Cooperation (NORAD). Finally, ten European Banks gave US$100 million dollar. When the World Bank director – James Wolfensohn – after several independent investigations of the Pangue-project had to go public with an apology to the Pehuenche people, it was already late – ENDESA had refinanced the project.

Now the battle is about Ralco – the second dam of totally seven planned dams (Pangue, Ralco, Huequecura, Aguas Blancas, Quintremán, Ranquil and Queuco). Ralco is the most extensive dam, and will, when ready, put an area of 3.467 ha under water, forcing some 91 Pehuenche families to move from their lands. Today, 84 Pehuenche families have signed the contract to move, but 7 families are still resisting, claiming the right to their land and the river they have lived by – and of – for centuries. Leading the resistance is a group consisting of five women – Mapu Domuche Newén (Women with the Power of Land) – that have fought against the project for more than ten years. The initiator and coordinator of the group is the 54 years old Sara Imilmaqui. Together with GABB (Grupo de Acción por el Bío-Bío) Mapu Domuche Newén has, among other recognitions, obtained the Right Livelihood Award, also known as the Alternative Nobel Prize (Stockholm 1998) and the Petra Kelly Prize (Berlin 2000) for their resistance.

The National Indigenous Law, which came into force in 1993, proclaims that the Pehuenches – as indigenous beings – cannot be forced to move from their land. ENDESA dismisses the relevance of this law, arguing that under the 1982 Energy Law, the nation’s need for energy supersedes indigenous rights. If Ralco is finally approved, it is hard to see how there can be any legal way to stop the five additional dam projects on the Bío-Bío River. The Ralco Dam has become a rallying cry for Chile’s indigenous movement. It is the first time that the National Indigenous Law has been tried in court against another law, and if the dam is approved, the law – designed to protect the rights to land, water, and resources of indigenous peoples – is said to be meaningless. It is now for the court to decide which of the Laws that is superior, the national Energy Law or the Indigenous Law.

The Bío-Bío project has been object to much discussion and criticism both on an international and a national agenda. Indigenous organizations, governmental institutions, grass root organization, individuals, politicians and others have publicly questioned and denounced their rejection of the project. Independent investigations and also reports from the Chilean Department of Energy (CNE) show that, there is no need in Chile for the energy that the plants will produce, but still the hydro development project has been “pushed through” and today 40% of the Ralco dam is completed.

It is the intention of the article to illustrate the long term consequences of Nordic Aid projects, because even though both NORAD and BITS later withdrew themselves from the Pangue project, the aid that they provided turned out to be the key that paved the way for further development on the Bío-Bío River.

Ralco – The Silenced Dam

In order to be able to give aid to the Pangue project, NORAD and BITS had to make several strange political maneuvers. First of all, they had to deny the existence of the intentions to construct Ralco and the four other dams planned on the river. Both IFC, NORAD and BITS seemed to accept the fact that one would have to look at the cumulative impacts if more than one dam was planned on the river. Secondly, Chile is not considered as a “developing country” and certainly not among the “most needed countries” normally granted to receive aid according to OECD-rules. Furthermore, in the case of Pangue, the aid was – with reference to normal procedures – not given to the local community or to a State Authority, but to ENDESA, at that time already a multinational Chilean company with strong liaisons to the former military dictatorship. The agreement between the company and the Nordic Aid Institutions had not even got any form of guarantees from the Chilean state or government. Finally, Pangue was considered a profitable project that could be financed without public funding. The case was, however, that without the aid from NORAD and BITS, Kværner would not have been in a position to compete with the other bidders, and would probably have lost the contract.

No Matter the Costs…

As time passed several external institutions evaluated the environmental statement (EIS) of ENDESA. While BITS had given this task to the consultancy company Sweco, NORAD gave similar tasks to two state authorities: the Norwegian Water Resources and Energy Administration (NVE) and the Norwegian Directorate for Nature Management (DN), finally an anthropologist was also involved in the evaluation. NVE, just like Sweco, presented several critical points regarding the quality of ENDESA’s report, and also of the project itself. The list of violations was long: IFC’s violation of environmental assessment; violation of environmental policy for dam and reservoir projects; confusion related to Ralco and other dams’ status; lack of relevant background information; lack of reassurance of a minimum flow of the river in order to avoid the river bed to dry out; and lack of consideration for the strong resistance from the local population. DN even pointed at the fact that Chile, as earlier argued, was a strange candidate for Norwegian aid.

After such an extensive and serious critique, it is difficult to understand how BITS and NORAD still could approve Pangue, and even the new general director, Sven Holmsen, admitted that he found the project rather questionable. However, the political pressure to force the project through – no matter the costs – must have been strong, because NORAD asked NVE to redo the evaluation, and this time to “get the answers right”. NVE did not visit the site of the dam nor Santiago. Instead NVE went to IFC’s main office in Washington D.C. to gather more information. The conclusion of the second report was far less critical. NVE even put forward an excuse to IFC regarding their former statement that IFC had broken World Bank policies, and claimed that this statement was due to lack of access to important documents.

It was eventually necessary with an official guarantee to calm the critics in Norway, which were worried that constructing Pangue would pave the way for more dams on the Bío-Bío River. Patricio Aylwin, the Chilean president at the time, even admitted that there were plans to construct more dams on the river, but promised the Norwegian prime minister Gro Harlem Brundtland, that he personally would oppose that these plans were put into action. The Norwegian prime minister and the minister of aid chose to trust in Aylwin’s words, and neglected the technical information available which clearly indicated that the Ralco dam was to be built. The Norwegian Minister for Development Aid at the time, Kari Norheim-Larsen approved Norwegian aid to Pangue on August the 30th 1994.

Evading responsibility

In August 1995 several non-governmental organisations (NGOs) and committed persons from Chile, Norway and Sweden wrote a letter to the Nordic governments, claiming that they take “retroactive responsibility” for Pangue, since ENDESA at that time had confirmed their plans to build Ralco.

In December the Swedish Sida had a “dialogue” with the Chilean Environmental Ministry (CONAMA) regarding the possibility of assisting them with the environmental statement (EIS) for Ralco. They finally reached the conclusion that a public review had to be done in Chile by competent Chilean authorities. At the same time, NORAD and the Norwegian aid-system handled the Bío-Bío case in a totally different manner and ignored the letter of protest from 1995. The aid was legitimised with the argument that one could not demand countries in the South, which had not reached the same level of development as the Nordic countries to live up to the strict Norwegian environmental conditions related to hydroelectric development.

Then What?

In May 1995 The World Bank hired anthropologist Theodore Downing to evaluate the effectiveness of the Pehuen Foundation, an agency created by ENDESA to mitigate and provide aid to affected Pehuenche Indians. The Bank also ordered a broad inquiry into the Bío-Bío-project’s environmental and social concerns. This last inquiry was carried out by former National Wildlife Federation president and past president of IUCN Jay Hair. The two reports resulting from the inquiries were highly critical towards the project, and were withheld for several months while some of the most important decisions regarding Ralco were reviewed and made. Among other factors, the reports revealed the IFC’s own lack of compliance with over 80 percent of World Bank environmental and social requirements. Releasing the reports would clearly have damaged efforts to have Ralco approved. This in turn would have damaged IFC’s investment (red.; the 2.5% equity share)”.

The Norwegian government only canceled NORAD’s loan agreement with Pangue S.A., the subsidiary of ENDESA, in May 1997, when ENDESA, after the strong critics from IFC that followed Hair’s and Downing’s reports, canceled the contract with IFC and evaded the critique by refinancing the project through the German Dresdner Bank. At that time, however, most of the Norwegian aid was already paid and used.

The Environmental Law of Chile

In Chile a total of 22 different public institutions and 4 ministries evaluated the Environmental Impact Statement (EIS) of Ralco, all of them being highly critical towards the project and recommending that it be rejected. As a result, the revision committee of CONAMA (the Chilean Envrionmental Ministry) coordinated by its Executive Director in June 1996 declares the Ralco’s EIS unsatisfactory. However, already in August the same year CONAMA informs ENDESA that they will accept an addendum to ENDESA’s former EIS studies. It is the first time in CONAMA’s history that this happens, as the procedure is to demand a new EIS study and not an addendum. It is clearly the pressure from ENDESA and high government officials that convinces CONAMA to back off. CONAMA gives the final approval of the Ralco project’s environmental assessment in June 1997 in the report “Calificación Ambiental del Proyecto Central Hidroeléctrica Ralco”, though with three main conditions. CONAMA’s director Vivian Blanlot expressed that these conditions were the minimum environmental standards that her Ministry could accept. Provoked by the conditions ENDESA claimed that: “CONAMA is exaggerating and exceeding their authority”. Shortly after, Blanlot left her position supposedly due to “personal reasons”. The new director, Rodrigo Egana, reduces the minimum environmental conditions that Blanlot had put forward.

The Indigenous Law of Chile

After CONAMA’s approval of Ralco, the only thing that stood in the way of the Ralco dam was the Indigenous Law – and the Pehuenche families that remained opposed to the project.
In March 1996, the Director of CONADI (Chile’s National Indigenous Development Commission), Mauricio Huenchulaf, personally denounces his rejection of the Ralco project. Later the same month, apparently frustrated with the stance that central persons within CONADI are expressing, the Chilean president at that time, Eduardo Frei – himself a hydraulic engineer – replaces Huenchulaf with Domingo Namuncura, who is known to be a strong advocate of the Ralco project. However, in August 1998 Frei also demands the resignation of Domingo Namancura – the day before CONADI has to vote for acceptance or opposition to the land-exchange deals between the individual Pehuenches and ENDESA. Removing Namancura seems a strange move, since it was Frei that nominated Namancura for the position in the first place. On the 17th of August, Rodrigo González López, is nominated as the new director of CONADI, but the indigenous members of the board are not willing to accept a non-indigenous as leader of CONADI and threaten to resign from the board and remove themselves from any further negotiations with the government. In January 1999 CONADI publicly announce that they are about to finish the evaluation of the land permutes and that the majority of the individual resettlement agreements have been accepted. The eight indigenous representatives of the board are not present. As a response to CONADI’s acceptance of the land exchange deals, several protests and manifestations are taking place in Upper Bío-Bío. Foreigners are being expulsed from the country and several Pehuenche-Indians are being imprisoned.

On March the 11th 2000 only few hours before leaving office, the Frei Administration gives ENDESA the final electrical concession for the construction of Ralco, and ENDESA immediately takes up the constructions. The administrative process in front of the concession has been widely debated in Chile, since it turns out that the permission had been treated directly by the Juridical Department, thus evading the normal administrative procedures.

Concluding Remarks

There are still lawsuits pending in the Ralco case. The most important are two claims against Ricardo Lago and the Minister of Economy, Jóse de Gregorio, brought in for the Court of Appeal in Santiago by the Quintremán sisters from Mapu Domuche Newén. The first is demanding the nullification of the Electric Concession given to ENDESA by the Frei Administration and the second is for violations of the National Indigenous Law. The two lawsuits have been postponed several times. The court was gathered to reveal the cases in the end of April 2001, but still no verdict is reached. Furthermore, in the lawsuit regarding the nullification of the EIS for Ralco brought in for the Sixth Civil Court of Santiago no verdict is reached either, and thus this specific case has been pending in the system for four years. It is a fact that the more the constructions in the Ralco area are advancing, the more unlikely it will be that the court rule in favor of the Indigenous Law. It seems that ENDESA and their collaborators are applying a “war of exhaustion”. After having fought for years the Pehuenche Indians are getting tired and the more the constructions are advancing, the more disillusioned they are becoming.

The Pehuenche People

The Pehuenche Indians are descendants of mounted warriors who held back the Spanish conquest for more than 200 years, with the Bío-Bío River as the natural borderline. The Pehuenche people were also the leading middlemen in the Chilean and Argentinean livestock trade across the pampas in the 18th and early 19th centuries, and the only indigenous group to retain a distinctive identity. They comprise a single ethnic group with a shared, distinctive identity. They are related to other Mapuche speakers in Chile, but there are notable dialectic differences. Thus, they are described as the last Chilean indigenous group to live by traditional means on traditional lands.
The Mapuche-Pehuenche Indians of the Upper Bío-Bío lives in extreme poverty. In Chile in total 16,1% of the population live below the poverty line, while the percentage in Alto Bío-Bío-Bío reach 22,3%. 30% of the Pehuenche Indians are analphabets and the malnutrition reach more than 10%.

In the last century, the land held by the Pehuenche people has shrunk from 54 million hectares to 30,000 hectares due to military take-over and non-Indian territorial expansion. By 1929, territorial expansion by non-Indians and military defeat reduced the Pehuenche’s holdings to seven reservations (reducciónes). Even during the last two decades the Pehuenche Indians have lost territories, much due to two decrees that Pinochet designed and implemented during his dictatorship, whit the obvious aim of dissolving the last part of the indigenous tribes society in the Southern part of Chile. Thus, during the last century the Pehuenche Indians have constantly being forced further up the valley of Bío-Bío. With the Ralco dam the Pehuenche Indians are once again obliged to accept land higher up the valley (at 1000 meter above sea level), where the climatic conditions are even tougher and the soil even more impoverished.
Ingeborg Nordbø er forskningsstipendiat ved Universitet i Aalborg i Danmark, og leder av SPOR Interkulturelle Senter.