Business under the shadow of the renewable energy sham in Honduras

English Translation by Sharon Cowell

Filtering through the branches, the harsh sunlight fails to disturb the happy sounds coming from the crowd gathered beneath the thicket. With a guitar as accompaniment, the old women, children, and men and women of all ages triumphantly roar out the last line of their song:

Constant protests have been going on for more than a year in the Los Prados 1 and 2 communities, with residents opposing investment by the company Scatec Solar and the development bank Norfund. These two Norwegian organizations are leading the assault by corporate interests seeking to profit and plunder common property through misleading claims about how the planet “urgently” needs renewable energies on a massive scale.

The photovoltaic energy project at Los Prados is not the first case in Honduras or Central America where global financial powers have tried to prevail in their eagerness to fully convert the energy generation matrix into one that “respects the environment” and, as they voraciously forge ahead, installing 500,000 solar panels every day around the world in a profitable business worth US$288 billion, it will not be the last.

It is in the south of Honduras, where the departments of Valle, Choluteca and Francisco Morazán are bathed in sunshine, that international organizations, European development banks and corporations from China, the US, Mexico and Germany (to mention just a few countries) are concentrating their investments. Pretending to save the world from an environmental cataclysm, they encourage mechanisms that will enable the world to shift from intensive fossil fuel use to the large scale expansion of renewable energies, without ever questioning what and who this energy is for or who will be affected in the process.
The investment boom in Honduras began in 2013 when legislative reforms started offering tax exemptions to companies generating renewable energy. These incentives led to 34 contracts for solar capture being approved in Choluteca alone, all with joint Honduran and foreign investment.

By the end of 2016, the installed photovoltaic capacity was already generating 10% of Honduras’s electricity, making solar power the country’s third largest energy source after fossil fuels and hydroelectricity. These solar plants will sell all the energy they produce over the next 20 years to the National Electrical Energy Company (ENEE), the latest publicly-owned organization in Central America to be heading towards privatization. ENEE even offers 20-year performance guarantees for internationally funded contracts as well as technically making the country’s entire electricity production available to the regional Central American market.

One of the key sites competing for the country’s potential solar market, which is valued in excess of one billion US dollars, is the Pavana Solar photovoltaic farm in Choluteca. Built by Yingli Solar, the largest solar panel provider in the world, this solar farm is managed by Enerbasa/Lufussa, a Honduran subsidiary that is part of the group of companies owned by Luis Kafie. This is the oligarch who was involved in the scam that cost the Honduran health sector millions and he later used this money to fund part of the electoral campaign for the country’s current president, Juan Orlando Hernández. Genisa is another Kafie-owned company and it was responsible for the social and environmental disaster caused when the Barro Blanco Dam was built and filled on land belonging to the Ngäbe-Buglé indigenous people in Panama.

Another company involved in illegal practices, albeit with a lower profile, is Scatec Solar. Currently intent on expanding its presence throughout Africa and Europe, this Norwegian company is behind the project at Agua Fría (Nacaome), one of 28 switching stations that make up the Central American Electrical Interconnection System (SIEPAC). Already operational, having cost US$750m, this strategic infrastructure allows Scatec Solar to control private investment in the large-scale renewable energy projects planned for Central America from Mexico to Colombia.

Scatec Solar is the same company that is determined to drive through the photovoltaic energy project at Los Prados. It will be just one of many hubs that urgently need to be built across Honduras to prepare the country’s infrastructure for the profitable energy generation network and up to US$ 18 billion of investment will be needed by 2020 to transport the energy produced, according to estimates by the Inter-American Development Bank (IDB), one of the project’s key backers.

To fight this project, the Los Prados residents have set up a community association and a camp at the entrance to their lands. “The country doesn’t get to use this energy as the government exports it. It’s just a business and it doesn’t bring us any benefits whatsoever. Jobs are available while they’re setting up the project but that’s just for a three or four month period. Once they’ve finished putting all those mirrors in place – and they just block the view for everyone – then there’ll just be one guard at a gate. We don’t want this project because it isn’t going to bring us any benefits whatsoever”, Leonardo Armador, the association’s spokesperson, said."When the solar farm appeared in Norfund Bank’s investment plans at the end of 2015, Scatec Solar interpreted the “immediate” go-ahead for construction to start on a project that had been in the planning since 2013 as permission to ride roughshod over any prior consultation with the communities involved and they sent in their machinery on January 4, 2016. Without any warning, they began to strip the area where the solar panels would be installed. “When we saw that they had numbered all the trees because they were going to chop them down, that was when all of us at Prados 1 and 2 got together to protest and stop their machines”, Leonardo explained.

The joint effort by residents of both Prados communities managed to stop the company’s raid on their lands and made it clear that they rejected the project. The peasant farmers then demanded that the company carry out community work as compensation for its actions. In exchange, they agreed to release the machinery they had seized. “They hauled some stuff for us and dug up a stretch of road where we’ll put a drinking water supply and so we reached a settlement that they would sign an ex parte commitment to say they wouldn’t come back with all their machinery because the communities were very unhappy with the situation. And we told them that if they did come back, we’d set fire to their machines”, Leonardo added. The story of how the Prados communities were founded is no different to that of hundreds of others that were set up in the second half of last century when groups of workers and peasant farmers occupied land with a promise from the government that they could access legal ownership of state-owned and communal (ejidal) lands. Like in many other cases, the Prados lands had been abandoned by their owners, large landowners whose ownership was challenged by the people’s demand for land rights, and the land surrounding the farmers’ homes has been used ever since for agriculture, primarily melon production and shrimp farming.

The original Prados settlers were members of organized groups in the Nacaome Valley, such as the Federation of Agrarian Reform Cooperatives and the National Peasants’ Association of Honduras. These groups have historically operated almost everywhere in Honduras and they worked alongside the National Agrarian Institute (INA) in the region. However, agrarian reform was a mere sham, having been blocked for years by minority groups with huge economic power, by cronyism that was immune to popular movements and by repression against peasant farmers, and no steps were taken to grant legal certainty to those people occupying and working the land.

"This was all just mountains but we cleared the land and planted maize, beans, watermelons and squash and that’s how all of us farmers got by”, the older residents told us, easily recalling the difficulties faced by those who came to these lands without even having anywhere to sleep. “I now have my land deeds. My land is less than 15 acres but at least I have my deeds. In 1982, the authorities, via the INA, retrospectively granted us permission for our homes, for the first 22 houses built”, one of the farmers explained as she told us the story of how the community grew into one with more than 300 homes."

However, the Honduran state neglected the community and failed, for example, to supply basic infrastructure, leaving the peasant farmers to their own devices. Consequently, the villagers had to rely on their own efforts and support from neighbors to solve their daily problems. “The community also brought in its own electricity supply because ENEE, the national electricity company, does nothing to help around here. In the beginning, only the people living in the first houses built actually had electricity but thanks to our own efforts, the community is getting bigger” said Digna Quiroz, who also pointed out that the solar panels would impact villagers’ health as they would disrupt the local climate.

Despite the fact that peasant farmers have lived on these lands for decades, their tenure is unprotected and since the 1990s, they have been living with the possibility that lands may be given over to private owners. In line with the zeal shown for dismantling legal frameworks and privatizing areas of land and services by nation states across Latin America, Honduras pursued and applied agrarian and municipal reforms as formulated by the World Bank, hastening the invasion of lands belonging to peasant farmers and indigenous peoples at the end of the last century.

The neoliberal policies prevalent in Latin America created the conditions for the impoverishment of peasant farmers and the plundering of their lands, the systematic militarization of territories, and the mass exodus of workers in many of the conflicts happening in the region. Subsequently, these same policies would be responsible for the risk to discourse and the large-scale construction of renewable energy projects in Central America, with this practice merely replacing the “fight against poverty” diktat of the international financial organizations dating back to the 1970s.

Nowadays, it is the “fight against climate change” that is used to justify US$30m loans to Honduras to “mitigate” the effects of environmental disaster and to encourage renewable energies “in countries with limited resources” but this inflow of international funds merely facilitates conditions for land grabbing. Norway is a clear example of this sham, given that it promotes itself as an environmentalist country while seeking to expand the oil frontier in the Arctic.

Admittedly, Honduras has been identified as one of the regions most impacted by climate change, especially in the south of the country, which was hit hard by Hurricane Mitch in 1998, and the Garifuna region on the Caribbean coast, which has seen the first climate refugees. Coincidentally, however, the tax breaks and incentives for setting up companies in the renewable energy sector, in line with the diktats from international financial organizations such as the World Bank and the IDB, are enabling these companies to ride roughshod over communities and, in the absence of any prior consultation, residents only learn about a project when work starts.

“They’re going to drain the nearby streams. There’ll be no more birds, no more iguanas. There’ll be loads of animals that’ll just disappear from our community. What they actually want is to get rid of the lot of us, once and for all,” Blanca, the association’s legal counsel, told us. “What will we have left to hold onto?” she asked, before blaming party politics directly for being an enemy of the community."

On one of the fronts in dispute, the Los Prados community is demanding that government recognize their representatives, given the systematic refusal at local government level to enter into talks with members of the association who have been elected by the community.

Leonardo, whose opinions about the solar farm have frequently been ignored, talked angrily about the pressure and harassment they have faced from the companies involved while a group of 30 people showed us the camp organization that enables the community to keep up its actions against Scatec Solar. Complaints have flooded into the office of the local mayor, Douglas Vicente, following his repeated refusals since January 2016 to allow the Los Prados community to manage resources through their new association. Oliva is also accused of extortion and of tricking peasant farmers into setting up another campaign group to replace the Los Prados association. “He took advantage of us by taking people away from here, by giving them a bit of money to get them to leave the camp and that’s how they’ll get the project approved. To do that, you have to produce a list and everyone has to either sign or give their identity number to signal their approval. While he doesn’t have any of this, he alleges that he did comply with these formalities,” said Leonardo.

In the nearby city of Choluteca, Denia Castillo, who offers the Los Prados communities legal support, gave us an overview of the Honduran legal framework, the repeated transgressions by those who should be subject to its laws and the difficulties communities have in obtaining land deeds. “We have signed international treaties and agreements recognizing the right of access to land. Legislation, however, remains difficult. The Civil Code lays down the right to property with ordinary prescription and the right with extraordinary prescription. The former is acquired when a citizen uses an immobile asset continuously, peacefully and uninterruptedly for over 10 years and the latter for over 20 years. These legal positions favor our communities but they are not being respected, making access to this right generally quite difficult for our citizens,” Denia explained, casting blame on the unequal Honduran legal system where the scales are tipped in favor of the privileged minority." Although support is provided for in the country’s legislation, in practice only those with money are able to legalize their property deeds. Applications from the communities are simply ignored. The INA, despite being historically responsible for enforcing agrarian reform law, actually obstructs the process and peasant farmers, constrained by having insufficient funds to hire lawyers, find themselves up against red tape. “There are also groups that claim that the peasant farmers already sold their land, basing their arguments on fake documents with forged signatures. Impunity is deeply rooted in Honduras. In cases like these, where the crimes committed could be easily verified, it would not be so easy to deprive peasant farmers of their land if legal assistance were made available. Moreover, existing laws aimed at helping vulnerable groups in Honduras are either not approved or not ratified. Or they are simply repealed. Peasant farmers find it difficult to get legal access to land and all the companies and their projects take advantage of these problems in order to gain easier access to what they need, namely access to land so that they can start work,” said Denia, pointing to the conspiracy between private capital and state institutions that has allowed peasant farmers to be stripped of their lands. There is also the case of a dozen communities in the municipality of El Triunfo that are opposing open-cast gold mining. In one of these communities, Ojo de Agua, the villagers do not have paperwork for their plots. “So workers from the Los Lirios mining company turned up and offered the peasant farmers there free help with legalizing their plots,” Denia claimed. But blackmail was also part of the deal because the workers then pressurized the peasant farmers into selling their lands at a price set by the company in exchange for the property deeds. And if those strategies don’t work, these companies usually resort to harassing and persecuting those that stand in their way, as illustrated by the recent criminalization of six Ojo de Agua residents who, like most of their fellow villagers, have been opposing mineral extraction since 2000. When one examines the situation in the south of Honduras, one starts to suspect that there is a link between the massive investment in the electrical infrastructure and the growth of energy-intensive industries such as the mining sector, which, since the 2009 fall in prices, has been exponentially increasing production in Latin America. The level of territorial control exerted by corporations becomes clear when one looks at the plans being submitted. For example, the Canadian company Glen Eagle Resources obtained permission to manage a 15,000m2 free zone for the tax-free export of minerals from El Corpus, Choluteca.

In communities all across the region there has, consequently, been a growing backlash over the mining expansion and the subsequent increase in residents’ health problems. For example, residents in San Martín held a town hall meeting to voice their opposition to the extractive industry and in Ojo de Agua (El Triunfo), the whole company is against Electrum’s mining project but the North American company remains determined to start operations with an initial US$1 billion investment. “I remember the response given by one of the speakers, who was a member of the Nature Protection Committees. He said that he was opposing mining because his wife had gone blind after washing in water from the mine,” Denia told us. “These people are fighting to defend themselves because their livestock has died, because they have nowhere to plant their crops and because they have to buy water because they know only too well that their water supply is highly polluted, especially after the public ministry’s order banning the use of the water due to high levels of cyanide,” the lawyer argued. There is also the case of the area around El Tránsito (Nacaome), where the open-cast mining industry has set its sights on Cuculmeca Hill. The large number of miner deaths led to mining being closed down in the area but figures issued by the Public Private Partnership Commission (Coalianza) estimate that there are gold and silver reserves worth US$14m in an area of just six hectares.

According to Denia, the decentralized agency Coalianza plays a key part in the institutional machinery that is allowing land grabbing nationwide. Coalianza is notorious in Honduras and is responsible for promoting a joint investment model that the country has been pioneering in Central America since 2010. This global benchmark model, which involves both the public and private sectors in construction works and public services provision throughout Honduras, is used to maximize profit in sectors that were previously publicly owned. Examples include hydroelectric power generation in the Amazon basin countries and even the prison industry in the United States.

Coalianza manages privatization projects linked to the energy sector, telecommunications, ports, health, water, and especially infrastructure construction. The government is increasingly implementing strategies for selling off the country’s common property and natural assets, as illustrated by both the joint public and private investments for programs such as Honduras 2020 and the setting up of Employment and Economic Development Zones (ZEDE), also known as “Model Cities”, which entail one or more countries or corporations being granted pieces of Honduran land to build business cities.

Denia recalled President Manuel Zelaya Rosales’s time in office as a tipping point in the onset of violence against communities because the policy of openness towards peasant farmers and indigenous groups was one of the triggers for the 2009 coup d’état. “When decree 18-2008 was issued, they sought to allow peasant farmers access to legal ownership of their lands. Honduras was in the middle of this process when the coup d’état took place. The coup was really a joint attack by the military and the corporations and it put an end to the struggle which had started in the villages and which would have directly benefited the people living there. The new government simply repealed the decree and repressed any similar demands,” the lawyer told us. “It was the coup d’état that allowed this excessive abuse of our resources by allowing transnational companies and development banks to demand national legislative reforms. In 2013, when the current President was the Speaker of Congress, more than 39 laws were passed, including the mining law and the fishing law, laws that had been stopped by social pressure,” Denia said. “These new laws practically told businessmen that they shouldn’t worry and that everything would be easy for them because they could do whatever they wanted to in Honduras. We have everything ready for you to come over here and invest. The legal system is ready to help you. We have laws in place”, the lawyer remarked ironically, referring to the “agreements” between the State and the corporations that allowed this legislation to be implemented." Against a backdrop of a constant threat of militarization and pressure from investors over the next date for their attempted foray into the Los Prados lands, intimidation by both the state police forces and the privately-owned security services easily turns into persecution and oppression.

While traveling through the area where electricity infrastructure and transmission towers have been installed, members of our reporting team and our local guides were arbitrarily stopped by the police for photographing a Norfund office a few kilometers from the road leading to Los Prados, even though it turned out that the officers had no idea what they were looking for in our car. One of our young guides from the Zacate Grande Peninsula told the officers that he had his ID papers and an IACHR letter granting him protective measures but the officers’ indecisive response made us realize how useless these papers are in practice. Since 2006 the Inter-American Court of Human Rights has granted protective measures in 49 cases in Honduras but 13 of these so-called beneficiaries have been murdered.

As a recent report by Global Witness stated, 123 people have been murdered in Honduras for defending their land, common property and natural assets since the 2009 coup. The recurring features of these crimes point to corruption in government circles, which is further exacerbated by corporate greed for mega-projects in the mining, hydro-electricity, luxury hotel and, increasingly, renewable energy sectors.

Despite the criminal networks that link the government, companies and security services being singled out as responsible for homicides, such as that of Berta Cáceres, the coordinator at the Civic Council of Popular and Indigenous Organizations of Honduras, the level of impunity in the country covers up and even contributes to the fact that the number of homicides is increasing daily. The tragedy, however, is that this situation is not limited to Honduras. By early March 2017, corporate and state terrorism had perpetuated homicides in Mexico, Guatemala, Honduras, Nicaragua and Colombia, with the latter reporting 23 homicides during the peace re-negotiation talks.

This context makes it important to condemn the support being offered by international financial organizations for new renewable energy projects, despite the numerous reports of abuses against communities being systematically ignored by the World Bank, the International Finance Corporation, the IDB and development banks such as FMO and Finnfund. It is also worth pointing out, as an aside, that these two European banks were involved in the construction of the Agua Zarca hydroelectric dam, which Berta Cáceres opposed while she was alive.

In the case of the Los Prados project, Scatec Solar intends to fork out US$100m on the construction of the photovoltaic farm. This money will come primarily from the Central American Bank for Economic Integration and from Norfund. This Oslo-based bank also gave loans to Ficohsa, the financial group owned by the Atala family, who are accused of supporting the 2009 military coup, under investigation for money laundering in Panama, linked to the diversion of funds from the health sector to the luxury tourist complex at Indura Beach, and involved in investing in Desarrollos Energéticos, the Honduran company implicated in Cáceres’s assassination. In light of this Honduran financial group’s criminal background, questions remain about the apathy and disregard shown by the banks to the crimes facilitated by their investments. Denia, with a particular reference to the legitimacy of the camp at the community entrance, added her voice to condemn the criminalization of communities in Central America. “At the moment, Honduran laws as such help the residents of Los Prados 1 and 2 in their campaign to directly oppose the photovoltaic energy project that is planned for their area. The universal declaration of human rights does, too, because it mentions the right of all citizens to be consulted. In this case, the records granting the project’s environmental license show that villagers were not consulted and that their signatures do not appear on the submissions the company claims were shared with the communities. The villagers are exercising their right and it is a right that has to be respected,” she argued. The process of changing the laws of the country in the wake of the 2009 coup, however, continues, as exemplified by the recent adoption in 2017 of the reforms to the Penal Code. The right to protest by individuals opposed to mega investment projects has been made a criminal offense as such protests are now classified as acts of terrorism. “They have created a legal mechanism to shield businessmen so they can do whatever they want with our country’s resources. And now we have this anti-terrorism law in place and they’re thinking about a sedition crime. This new penal code is laying down much more burdensome reforms and we know that they generally target peasant farmers, trade union members and all those other social movements that have been defending our resources”, the lawyer added.

It is now all change but it is still the same old story. Still rooted in the underdevelopment myth inherited from neoliberal policies, the Honduran state apparatus continues to relax the legal framework in response to capital demands, enabling investors to foray into lands and break up communities as they forge ahead with their infrastructure projects and their new businesses for generating and transporting energy.
In using a development model based on extraction and plundering of common property to the benefit of national and transnational corporations, the Honduran state has itself created the current scenario. The fight by communities like Los Prados helps demonstrate that political discourse such as the renewable energy debate is part and parcel of this very same scenario, namely the “unstoppable” growth of capital, with no alternatives permitted. Even if they do paint it green.

This report is part of a set of issues that will be published the rest of the year, on the context of the climate crisis, militarization and megaprojects in the Mexico-Central America region.

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