Saving Roşia Montana from International Trade Law

After years of struggle and, most recently, historic protests throughout Romania and abroad, over 20,000 people took to the streets in Romania last week to protest a mining project in the western commune of Roşia Montana. Among the charges brought by the protestors were irrevocable harm to a historic location (the Romans mined gold there two thousand years ago), environmental harm through the use of over 13,000 tons of cyanide (for which there are now far cleaner alternatives for "green gold"), political corruption, and a lack of transparency. At issue is the state's decision to sign a secret contract with Canadian mining company Gabriel Resources while at the very same time attempting to use its sovereign authority to take private property under the guise of serving the "public interest."

On Monday morning, leading government officials announced that the project would likely not go forward. As a result, Gabriel Resources stocks plunged on the Toronto stock market. Gabriel Resources has threatened to sue the government of Romania for $4 billion dollars in damages for breach of various international trade agreements and provisions of international trade as set out by the World Trade Organization and the General Agreement on Tariffs and Trade.

For every cry against cyanide and every call for solidarity and peaceful protest among the cheers and chants of the protesters, the bottom line issue is the extent to which government (in Romania and elsewhere) allows corporations to dictate national policy. The roots of this predicament run deep: in the last decade of Communism in Eastern Europe and the USSR, the Western world, under the leadership of Thatcher and Reagan, found itself deregulating, trusting in the markets, forcing states to back off of the economic reigns in what would be called the Washington Consensus. As the revolutions of '89 and '90 caused Communist states to fall one after the other like dominos, the hold of neoliberalism was almost absolute in places like the International Monetary Fund, the World Bank, and many of the most powerful international actors.

In response, Romania, like many other countries, liberalized its economy. Following the advice (often attached as mandatory requirements to development loans) of the West, many countries opened up and deregulated their economies, privatized industries, and clamored for foreign direct investment. In Romania's case, foreign corporations gobbled up domestic businesses and closed them down while opening up new businesses that sent profits to shareholders and states abroad. Certainly, there was government corruption involved, but many of the deals may have been technically legal at the same time.

Last week's protests succeeded in halting the travesty in Roşia Montana, but negotiations may well shift to a courtroom abroad, where those same voices are mute. The contract between the Romanian subsidiary of Gabriel Resources -- previously hidden from public view -- will be disclosed in the next few days, and then we'll likely know more about how far the Romanian government has gone in contracting away its sovereign power.

This conflict clearly illustrates the increasing tensions between free market trade principles embodied in bilateral investment treaties and WTO/GATT law and the rights of citizens to enjoy the promises of democracy. Just today, parliament walked back its promise to hold an emergency vote, electing instead to open a special commission to debate the law that would be passed for Gabriel Resources, effectively buying time in the hope that the protests subside. But clearly, the protests -- in this case and others -- will continue. It remains to be seen whose interests will be promoted in the social contract between a state and its people.