Sold down the river
by: Simon Worrall, Saturday November 9, 2002, The Guardian
"Scarlet macaws!" shouted Chapal, our Mayan guide, as our canoe reached a tea-coloured lagoon where the Macal and Raspacula rivers meet, deep in the Maya Mountains of southern Belize. Moments later, they came flapping across the sky, their long, red tails trailing behind them, their sapphire blue and yellow wings flashing in the sunlight. To the ancient Maya, the scarlet macaw was, like the jaguar, a symbol of the power and mystery of the universe. Outlined against the dense, green foliage of the rainforest, they looked like rainbow-coloured kites. Marvelling at their beauty, we watched the birds circle overhead, then settle in the crown of a giant ceiba tree. The area we were travelling through is part of what is known as the Selva Maya. It has taken millions of years for the unique ecology of this area to evolve, and since the collapse of Mayan civilisation more than 1,000 years ago this remote, inaccessible part of Belize has remained almost completely undisturbed. It is now one of the last surviving remnants of rainforest in Central America. The technical term for this type of environment is riparian shrubland.
In the rainy season, as water pours off the mountains, the river becomes a roaring torrent of water, as much as 30ft deep. These mighty floods act as a scourer, sweeping dead and rotting vegetation off the valley floor and inundating it with fresh, highly oxygenated water. The floods also bring with them tonnes of soil and minerals, rich in nutrients, which are deposited in the flood plain. When the water recedes, there is an explosive growth of new vegetation, which provides food for a vast number of animals and birds. Tapirs graze on the abundant edible shrubs and plants. There are red brocket deer and wild pigs, known as peccaries; a rare species of otter; a subspecies of crocodile, known as Morelet's crocodile; as well as howler and spider monkeys. In all, 58 species of animals live in the upper Macal River valley. Eight of them are on the World Conservation Union (IUCN) Red List of Threatened Species. A further 28 are rare or threatened, including Belize's signature wild cat, the jaguar. As Jan Meerman, a Dutch-born naturalist who lives and works in Belize, told me:,"You can find all of the animals that live here in other places in Belize. But this is the only place you can find them all in one area."
Of all the creatures that have found a refuge in the upper Macal River valley, the scarlet macaw, Ara macao cyanoptera , is the most vulnerable. Though scarlet macaws can be found in relative abundance all over South America, this is a unique subspecies. Three feet long from top to tail, with blue wings and brilliant scarlet crowns, they are even more magnificent than their more common cousins. At one time, they were plentiful all over Central America. But habitat loss due to exploding human populations, and illegal capture for the pet trade, has made them extinct in most of their former range on the Pacific slopes of Mexico, Honduras and Nicaragua. A last, fragile population of between 60 and 200 scarlet macaws is hanging on here in Belize's upper Macal River valley.
However, if a controversial hydroelectric dam being built by a Canadian multinational corporation is allowed to proceed, the valley will be flooded and their habitat destroyed: this magnificent bird will join the thousands of other species being driven into extinction all over the world in what some naturalists refer to as the biotic holocaust. The proposed Chalillo dam compounds and magnifies the problems that marked the construction of an earlier, smaller dam on the Macal River in 1991. The Mollejon dam was the result of a deal between two powerful Belizean politicians: Ralph Fonseca, chairman of Belize Electricity Board (BEB), and WH Courtney, acting treasurer of Belize's other state power company, Belize Electric Company Limited, or BECOL. BECOL produced power. BEB distributed it to the customer.
In January 1991, Fonseca invited bids from international companies to construct and operate a hydroelectric facility at Mollejon. Packed with generous concessions, including exclusive water rights to the Macal River, the contract was weighted in favour of the purchaser. It was snapped up by Dominion Energy International, the North Carolina-based power giant, for $12m. At the time of the negotiations, Fonseca was a minister of state in the prime minister's office (a non-elected role), as well as chairman of the board at Belize Electricity; he, rather than the minister of finance, signed the tripartite deal with Dominion on behalf of the government, as well as in his capacity as BEB chairman. "I ran the ministry of finance," he told me when I asked him if he had overreached himself.
As soon as the Mollejon dam's turbines began to spin in 1995, it became clear that it could never produce the amount of power for which it had been contracted. But under the contract signed by Fonseca, Dominion was guaranteed $8.5m per year, whether or not the dam lit a single light bulb. These costs were passed on to the Belizean consumer, who ended up paying far more for their power than they should have done. Two years ago, as part of the ongoing privatisation of public utilities being urged upon it by the International Monetary Fund and the World Bank, the last portion of Belize's electricity industry was auctioned off. The theory behind privatisation is that, by breaking up state monopolies, it will increase competition and lower prices. The effect is usually the opposite.
The man overseeing the privatisation of Belize's economy is Ralph Fonseca, the present minister of budget management, investment and public utilities. He - rather than his colleague and friend Said Musa, the current prime minister - effec- tively runs Belize, by controlling its public coffers. Belize abounds with rumours of Fonseca's lavish lifestyle and offshore bank accounts (he frequently flies to Florida, where he is believed to have both a large house and a mistress, and numerous people suggested to me that he has offshore bank accounts in Panama and the Cayman Islands). But Belizeans are notoriously gossipy and love to spread rumours about each other. So these allegations must be treated with caution, and there is no evidence of corruption. Fonseca told me, "I totally and categorically deny that I profited in any way from the contact sold to Dominion."
Five companies, including one from Taiwan, expressed interest in investing in Belize's electricity network when it came up for privatisation. All balked at building a second, far larger dam on the Macal River, at Chalillo. It made no sense economically. The cost to the environment was too high. A Canadian company, Fortis, which owns substantial commercial real estate holdings along the Canadian Atlantic coast, rushed in where others feared to tread.
Under its bullish CEO, Stan Marshall, Fortis was aggressively expanding its operations. It had tried unsuccessfully to acquire a monopoly over Newfoundland's electricity industry in 1994. In Belize, it saw an opportunity to achieve what it could not at home. Most importantly, Fortis had no qualms about dams. Before a moratorium banned the building of dams of the size envisaged on the Macal, it had built most of Newfoundland's hydroelectric facilities. In 1999, despite its own law that prohibited any one investor acquiring more than a 25% stake, the Fonseca-Musa government allowed Fortis to buy controlling interests of 65% and 95% respectively in BECOL and BEL (Belize Electricity Limited, as the old BEB was renamed when it was partially privatised), giving it a monopoly over both the generation and supply of power.
Last year, Fortis's profits in Belize, a developing country of 200,000, mostly poor people, were four times higher than in Newfoundland. Chalillo will push these profits even higher. But there was a snag. Prior to privatisation, the Mollejon dam had been sold by Dominion to another US power company, Duke Energy. Duke was sensitive to its environmental reputation and insisted that, if it were to go ahead with the Chalillo dam, it would need as much as five years to study its environmental impact on the unique flora and fauna of the Macal River valley. The government began to pressure Duke to sell the Mollejon dam by revoking the key clause in its contract guaranteeing Duke revenues of $8.5m, irrespective of whether it produced any electricity. Duke tried unsuccessfully to press its case with the Public Utilities Commission. In January 2001, Duke folded its operation in Belize. Fortis paid $63m for its assets. It could now begin the Chalillo dam project.
When I first came to Belize in the early 1990s, I was amazed - and delighted - by its environmental policies. Nearly half the country had been designated as forest reserves. This, combined with the lowest population density in Central America, had made Belize a Noah's Ark for endangered wild-life. The Chalillo dam, which will cost $30m, will destroy that proud environmental record for ever. At 35m high and 360m wide, the dam is small by world standards but enormous for a country that is not much bigger than Wales. It will flood 11sq km of the upper Macal River valley, obliterating more than 2,000 acres of rainforest, and the irreplaceable wildlife that thrives there.
Chalillo is not even necessary. Belize's electricity needs could be met by an alternative source of energy that would be far less damaging to the environment, and a boost for the country's economy. "Bagasse is a by-product of the sugar cane industry," explains Ambrose Tillett, a Belizean energy expert. "Belize's sugar cane industry produces 400,000 tonnes of bagasse per year which, if efficiently harnessed, could be used to generate electricity. It would also stimulate Belize's sugar cane industry: a win-win situation, if there ever was one."
Bagasse could produce power. What it cannot do is generate the sort of gravy train that guarantees huge profits. The proposal has never been seriously considered in Belize. Instead, the government has relentlessly pushed the Chalillo dam, breaking several of its own laws in the process, including the Monuments and Antiquities Act, which requires potential Mayan archaeological sites to be excavated - none has been in the upper Macal River valley - while using the familiar rhetoric of "development" and "self-sufficiency". As Arundhati Roy writes in The Greater Common Good, her diatribe against the Narmada dam in India, "If you follow the trails of big dams the world over, wherever you go - China, Japan, Malaysia, Thailand, Brazil, Guatemala - you'll rub up against the same story, encounter the same actors: the Iron Triangle (dam jargon for the nexus between politicians, bureaucrats and dam construction companies)... You'll grow to recognise the same inflated rhetoric, the same noble 'People's Dams' slogans."
Said Musa, the prime minister, a dapper, compact man of Palestinian origin who holds a law degree from Manchester University, talks the talk as well as anyone. "Our people suffer from poverty," he told me, as we sat in his office in the capital, Belmopan. "We need development in our country. And much as we want to preserve our environment for this and future generations, we have to develop." When I pointed out that there is a moratorium in Newfoundland on the size of dam that his government is allowing Fortis to build in Belize, he grew testy. "Canada continues to build dams," he said. "The European countries continue to build dams. But little Belize is not allowed to build dams? Is that what you are telling me?"
His most scathing criticism was reserved for Sharon Matola, the American-born director of the Belize Zoo, and the dam's most outspoken critic. "In their zeal to get their message across, their agenda," he said, his voice hardening with anger, "people like this have been giving Belize a bad name."
I found Matola standing by a tall, tree-filled enclosure feeding peanuts to the Belize Zoo's three scarlet macaws. I'd never seen scarlet macaws this close. They were even larger than I had imagined, and the colours were electrifying. From the back, as they spread their wings, they looked like heraldic flags. "These birds are our national treasures," said Matola, stroking the beak of one of the macaws. "They are so rare, so special. You can go a little further south, and they are extinct. You can go a little further north, and they are extinct. What are we doing?"
Before a dam can be built, an Environmental Impact Assessment, or EIA, has to be prepared. The EIA contract for Chalillo, which was funded by the Canadian government at a cost of nearly half a million dollars, was awarded to AMEC, one of Britain's biggest multinational corporations. AMEC is an amalgamation of three of Britain's best known construction companies: Matthew Hall & Co, Fairclough and William Press. The company went global in the early 1990s, when it acquired a 41% holding in the giant French construction company, SPIE Batignolles. Today, AMEC describes itself as an engineering services company (it was one of four firms that managed the Ground Zero site). It has 50,000 employees, 300 offices in 40 countries and annual revenues of £5bn.
As part of its study of the possible effects of building the Chalillo dam, AMEC commissioned a report from the Natural History Museum (NHM) in London, which runs a research station in Belize, at Las Cuevas, not far from the dam site. In the event, the NHM made it plain that the impact of the dam on wildlife would be profoundly negative. AMEC was contractually obliged to publish NHM's findings, but according to Chris Minty, an NHM scientist who runs the research station at Las Cuevas, the 105-page report that he co-authored was shunted into an appendix.
A spokesman for the Natural Resources Defence Council in Washington has called AMEC's report the most flawed EIA he has ever seen. AMEC's director of communications, David Paterson, however, insists that his company did the job it was asked to do. "We were not asked to voice an opinion on whether a dam should or should not be built. The specific mandate of our report was to provide information to the decision-makers in the government of Belize. And we think it is good information."
Paterson also denies that the NHM's report was shunted into an appendix. "We essentially agreed with the NHM's findings, while pointing out a number of shortcomings in the report."
Normally, institutions such as the NHM do not make forthright, critical comments on the projects they are asked to study, but this case was an exception. "This is an important part of the world's biological heritage," says Minty. "We took a bit of a risk by coming out against the dam. But I feel it's very important that institutions like the NHM do take a stance on issues like this."
The geological survey commissioned by AMEC for the dam has also been called into question. "The dam site has been mapped as of uniform granite with no faults," said Brian Holland, an independent American geologist who owns a dolomite mine in Belize, as we walked down to the dam site, "but there are numerous faults here." He pointed at a 6ft deep fissure in the hillside. Taking out his geological hammer, he hacked off a piece of rock. It was sandstone. A few hammer blows and it had shattered into small pieces. "Where we're standing is on what is known as the Cooma Cairn fault," he explained, spreading two geological maps on the ground in front of us. "Which is visible from space, incidentally."
The first map was a British geological map of southern British Honduras (as Belize then was) made by CG Dixon in the 1950s. It showed granite on the northern bank of the river. The area to the south, where we were standing, was shown as sandstone, shale and pebble. Cutting right across the river, like a scar, was the Cooma Cairn fault. It was not marked on the map accompanying the geological survey. To build a dam near a fault line risks disaster. AMEC insists that it has looked at the Cooma Cairn, but that it is too far away from the dam site to be a problem and that it is inactive. Yet dams can themselves trigger earthquakes. In India, water behind the Konya dam caused a major earthquake that seriously damaged the dam and killed 200 people, even though the area was not previously known for seismic activity.
AMEC also insists that the issue of whether granite is present at the site is a red herring. "The issue is not whether there is granite, but whether the rock is of sufficient strength to hold the dam," says David Paterson. "And core samples which were independently tested show that it possesses 20 times the required strength."
Brian Holland remains concerned. "Like the rest of Central America, Belize is in a seismically active zone," he said, as we trudged back up from the riverbed. "In 1976, there was a major earthquake, registering 7.4 on the Richter scale, in Guatemala, which caused extensive damage to San Ignacio, 40 miles from where we are standing."
Julio Sosa is one of the people whose house will be destroyed if there is a dam break. A short, stocky man, he lives with his wife and five children in a small, wooden house on the banks of the Macal River, in the village of Christo Rey, downstream from the proposed dam site.
Ironically, Sosa had just paid $150 to be connected to the electricity grid. "Saying we don't want Chalillo is not saying we don't want electricity," he told me."We want electricity. But we also want our river." Sosa remembers when the Macal was deep enough for large dugout canoes to transport vegetables and other produce to market in San Ignacio. In those days, the river was 6ft deep, even in the dry season. Since the construction of the Mollejon dam, it barely reaches his knees. The river has changed in other ways, too. The natural ebb and flow kept it clean and healthy. Floods washed sediments away. Now, water is released through the turbines at Mollejon at the same time every evening and the banks of the river are coated with a foot-thick layer of mud, instead of white sand. In the dry season, pungent-smelling algae blooms form on the river bottom.
All these effects will be magnified, and intensified, if the Chalillo dam is built. The very fertility of the upper Macal River will become a potentially fatal liability as millions of tonnes of rotting vegetation create a toxic swamp teeming with mutating organisms. The World Commission on Dams concluded that, especially in tropical countries, hydro-lakes release such quantities of carbon dioxide and methane that they often create more pollution than burning fossil fuels. Sediment deposits building up behind the dam may also create large amounts of biological mercury, a poison that can get into the drinking water and into the food chain, via fish. For people such as Julio Sosa and his family, the Chalillo dam may well result in serious health hazards.
Last year, Sosa and other villagers attended a packed meeting at which representatives from BEL and Fortis came to Christo Rey to address their concerns. As one after another villager expressed their anxieties about the dam, the meeting grew raucous. Their main concern was who would pay them compensation in case of a dam burst.
If the people of Christo Rey had known the details of the deal their government had already signed with Fortis, their representatives would have been lucky to escape the meeting with their lives. The contract was kept secret until a lawsuit by local environment groups forced the government to release details. For the next 50 years, one arm of Fortis's Belizean monopoly (the electricity generating company, BECOL) will sell power to the other arm of Fortis's monopoly (the distribution company, BEL), which will in turn sell it to the customer. A "priority dispatch" clause forces BEL - and therefore the consumer - to buy electricity from BECOL even where cheaper energy sources exist.
According to the National Resources Defence Council in Washington, the contract will almost double Fortis's earnings in Belize, from $289.3m to $542.26m. For the next 54 years, Belizeans will be obliged to buy their electricity from a Canadian company at rates four times higher than that company currently charges its customers in Canada.
It gets worse. In one of the contract's concessionary clauses, Fortis has been given something else no company could ever hope to get in the developed world: exclusive water rights. Fortis now effectively owns the Macal River. It can charge farmers or fruit growers for extracting water for irrigation. It can store and release water when it chooses. The agreement also indemnifies Fortis against any third party damages. If Julio Sosa's children happen to be swimming in the river when the sluice gates are opened and are drowned, Fortis is not liable. If there is a dam burst and an entire village is swept away, Fortis has the right to sell the dam to the Belizean government for $1, thereby absolving it of all repair or decommissioning costs.
In an interview from his office in St John's, Newfoundland, Fortis's CEO Stan Marshall insisted that his company was the subject of a "smear campaign" by "environmental terrorists". He said the contract would produce the cheapest power for Belize and that the environmental report commissioned from AMEC was "the most comprehensive survey ever". He also stressed that Fortis's earnings in Belize have been greatly exaggerated. "We are proud of the work we are doing in Belize," he said. "But at the end of the day, Belize is a sovereign country. And it is not for me to decide the trade-off between the environment and development."
It took us nearly two days to canoe down the section of the Macal River that would be destroyed by the Chalillo dam. Giant cedar and mahogany trees towered over the steep-sided valleys. Hummingbirds fed on house-high clumps of purple morning glory and giant yellow heliconias. We saw parrots and scarlet macaws. At night, as we lay in our tents, we heard jaguars roaring in the distance.
Throughout our journey, we kept hoping we would see another of Belize's shyest, and rarest, animals: Baird's tapir ( Tapirus bairdii ). Standing about 3ft tall and weighing up to 300kg, with a long, protruding nose with which it tears up plants and shrubs to eat, a tapir looks like a cross between a baby rhinoceros and a miniature horse. Fossil records show that the tapir has been around for 70 million years. In Belize, where it is known as the mountain cow - the Mayans call it the tzimin - it is the national animal. The tapir is not yet an endangered species. But hunting, mostly by newcomers to the area, and habitat loss are rapidly driving down its numbers. In Belize, the population is now estimated to be fewer than 3,000. If the Chalillo dam is built, one fifth of its last remaining habitat will be destroyed for ever.
When the British naturalist Thomas Belt travelled to neighbouring Nicaragua in the 1890s, hoping to see tapir, he had to content himself with hoof prints in the mud. We saw plenty of these, as well as other signs of their passage: trampled cane, piles of scat on rocks at the edge of the river. Then, at last, we came across one bathing in the river. For a moment, as we approached, it turned and looked at us with myopic, calf eyes. Then it swam quickly away. Moments later, it clambered up on to the riverbank and went clattering off into the forest. I had seen diagrams of the area to be flooded by the dam. I had been shown contour maps of the sterile hydro-lake that will be created behind it. But only now, as I listened to the tapir's hoof-beats fade into the distance, did the full implications of the crime that is about to be committed on the Macal River hit home.
Tropical forests such as the one that is about to be destroyed in Belize have been the engines of bio-diversity for hundreds of millions of years. Their accelerating destruction all over the world threatens to bring these engines grinding to a standstill. In this context, the Chalillo dam project is notorious. "In nearly two decades as an environmental lawyer, this is one of the worst cases I've seen of profiteering at the expense of people and the environment," Robert Kennedy Jr told a meeting in Toronto. "This is globalisation at its worst."
And the battle to stop Chalillo is far from over. In March, environmental groups won the first round in a lawsuit - the first environmental lawsuit in Belize's history - demanding a judicial review of the government's approval of the dam. The decision is expected by the end of the year. Meanwhile, numerous scientists, naturalists and public figures, including the actor Harrison Ford, have signed letters of protest. The governments of Belize and Canada are also under pressure from two major international campaigns by the Natural Resources Defence Council in Washington, Probe International and the Sierra Club of Canada. Documentaries by the Canadian Broadcasting Company and National Geographic Television have awakened the Canadian public to the realisation that their tax dollars have been used to underwrite a dam that will destroy one of the planet's most priceless environmental assets.
On the Belizean street, there are also growing signs that ordinary people are beginning to grasp what their government has perpetrated on them. When I asked a street vendor in San Ignacio what he thought about Chalillo, he said, "I think the politicians who have done this should be taken up the Macal River, chopped into little bits and fed to the crocodiles."
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