A years-long, high-stakes fight against an embattled U.S. hydroelectric dam in Chile has taken a small but important step in the campaign to halt the project that jeopardizes the water supply for some 7 million people living in and around the capital city of Santiago.
And as one corporate blunder after another continues to unmask Alto Maipo as unviable — the 40 percent partner recently walked away from the project, topping off a heap of evidence — leaders in the legal battle against the dam are hopeful that they may soon start to see results.
For Chilean organizer Marcela Mella, the urgency of the movement against Alto Maipo is clear. “What’s at stake here is reclaiming water,” she told teleSUR by phone from Washington, D.C., where she and a fellow activist traveled to put pressure on the big banks behind the project as part of the international leg of the campaign.
On one hand, the story is a familiar one, echoing similar struggles that have sprung up across Latin America as affected communities fight to protect their land, resources and the environment from unwanted corporate projects. On the other hand, Alto Maipo is a unique case, laying bare the dangers of runaway neoliberalism and unfettered privatization, institutionalized in Chile since the dictatorship of General Augusto Pinochet.
Alto Maipo — headed by AES Gener, the local subsidiary of major U.S. power company AES Corporation and already under construction on the outskirts of Santiago — was approved in 2009 in a process rife with irregularities and a lack of transparency. Despite denying the right of affected communities to adequate consultation and botching the environmental impact assessment — including failing to account for the impact climate change and years of drought will have on the water levels that will feed the dam — the company was given the green light to begin construction.
“A good pressure point”
Mella, spokesperson of the Citizen Coordinating Committee in Defense of the Cajon del Maipo, and Juan Pablo Orrego, Executive Director of Chilean organization Ecosistemas, filed formal complaints last week to the World Bank and Inter-American Development Bank in the U.S. capital, urging the financial institutions to review their support in light of the grave environmental and human rights concerns swirling around the highly contentious project.
Orrego explained that while the overarching demand of the movement is for Alto Maipo to be stopped in its tracks, the complaints to major funders in Washington are aimed at getting the banks to admit they violated their own policies in approving financing for Alto Maipo.
“The foundational demand is that the banks withdraw their funds, declare the credit in default, and affect the company to the point of not being able to continue,” Orrego told teleSUR.
The formal complaints against the World Bank — through its International Finance Corporation — and the IDB, however, are just a small piece of the puzzle. Alto Maipo is backed by nine banks, both Chilean and international, and getting the financial institutions to own up to breaching their own policies that condition funding is only a first step in pressuring for divestment.
“The complaint can’t actually result in divestment directly, but it’s a good pressure point,” Kelsey Alford-Jones, senior campaigner at the Center for International Environmental Law, told teleSUR by phone from Washington, where she was accompanying Orrego and Mella. “It is part of a larger strategy to raise awareness about the incredibly harmful impacts that the project will have and the fact that the multilateral banks should not be investing in this type of project.”
AES Gener’s communications chief for Alto Maipo, Gonzalo Aylwin, told teleSUR by email that the project underwent “rigorous review” by financial institutions supporting it. But Alford-Jones pointed out that there were “huge gaps in the information that was presented to the banks.”
“A calamitous project”
Alto Maipo has been a firestorm of problems from the start. Shortly after its approval, a congressional commission presented a damning report on the project, laying out a slew of environmental risks including serious threats to local water supplies, native forests and protected areas in the Cajon del Maipo, such as various nature sanctuaries and the El Morado glacial formation, which is considered a Natural Monument.
The report highlighted “irreversible degradation of the Maipo river basin” and “destruction of the sub-basins of the Volcan, Yeso and Colorado (Rivers) that feed it” as a result of the dam, putting at risk the main source of drinking water for Santiago’s 7 million residents. It also pointed to the Cajon de Maipo’s importance as a cultural and ecological asset in the country’s tourism industry — the picturesque area welcomes some 1.6 million tourists every year — and warned of potential adverse effects as a result of Alto Maipo.
Mella and Orrego in Washington, Jan. 24, 2017.
Despite the harsh review condemning the process as deeply flawed, Alto Maipo’s communications representative claimed that the environmental assessment “complied with all aspects required by the law.” However, Chile’s Environmental Superintendency launched Monday a process to sanction Alto Maipo for non-compliance with environmental regulations on 14 counts, nine of which are considered serious.
Chile, though no stranger to dry spells, suffered its worst drought on record last year after eight consecutive years with a lack of rain. The Alto Maipo project, which environmental groups estimate will reduce the waterways feeding the Maipo River by 60 percent, is expected to worsen the process of desertification already affecting large swatchs of the country and could speed up glacial melting in the Andes region.
Orrego argued that jeopardizing water sources, both for irrigation in agriculture and drinking water for the entire capital city, is an “immense absurdity.”
Already beleaguered by environmental and human rights concerns, Alto Maipo soared over its initial budget of more than US$2 billion in the first years of its construction, due in no small part to poor planning on the part of the developers. During construction of the tunnels in the “run-of-the-river” dam, for example, AES Gener hit softer rock than anticipated, throwing off its preparations and cost projects for dealing with hard rock.
“All of these issues point to the fact that studies conducted were insufficient,” Orrego argued. “This is a calamitous project.”
And local communities have already begun to suffer the consequences. According to Mella, a wall erected around a construction zone — which the company claims is to protect the community from noise and contamination, but Mella said is more about protecting the project — has cut off local residents from the nearby river.
“They are used to going to the river and having access,” she said. “It has affected the quality of life of these people.”
“A citizen’s triumph”
Now, AES Gener’s 40 percent partner in Alto Maipo, the Chilean mining company Antofagasta, recently pulled out of the project, serving yet another blow to its reputation. Antofagasta, part of the Luksic Group conglomerate owned by one of Chile’s wealthiest families, cited the cost of the project in excess of its budget as the reason for abandoning Alto Maipo. The company said in October that the dam had gone over budget by 10 to 20 percent.
Mella heralded the move as “a citizen’s triumph” that gives credence to the movement’s case against the project.
Orrego agreed, calling Antofagasta’s decision to drop its 40 percent share both a “favorable event” for the movement and a “scandal” for AES Gener, the 60 percent partner in Alto Maipo, as Antofagasta “gave the Chilean face and the political guarantee to the project.”
“Mr. Luksic confirmed in the end many of the criticisms that we have put forward,” Orrego said, adding that Luksic’s company essentially walked away from the project “saying its former partner was incompetent.”
AES Gener’s communication representative denied that Antofagasta’s exit has put the project on shaky footing.
“An unnecessary project”
The Alto Maipo project has became one of many hallmarks of Chile’s ongoing challenges stemming from the country’s wholehearted embrace of widespread privatization and aggressive neoliberalism after the 1973 coup against socialist President Salvador Allende. Promoted by U.S. economist Milton Friedman and his “Chicago Boys,” Chile’s neoliberal turn under dictator General Augusto Pinochet helped paved the way for decades of soaring inequality and private control over basic services, including water and electricity — two issues at the core of Alto Maipo and its controversy.
“Chile’s rivers are monopolized. One hundred percent of water in Chile is in private hands,” said Orrego. “Few countries in the world have the three phases of electricity — generation, transmission and distribution — 100 percent privatized.”
In the 1980’s Chile’s electricity sector was completely privatized, a model that remains in place today. It was also the only country to completely privatize urban water and sanitation services, and though the sector has shifted to a concessions model, corporations still control water services in urban areas. According to 2015 government data, the two largest water companies in the market are majority foreign owned.
In addition to concerns over water rights, Alto Maipo has also come under fire for primarily benefiting private mining interests in northern Chile. Estimates have suggested that some 35 percent of power generated would service the Pelambres copper mine in northern Chile, a project of AES Gener’s former partner, Antofagasta.
But the private agenda goes even further. In recent years, Chile — enjoying a surplus of power from its thermoelectric and hydroelectric-dominated energy sector — has pursued a policy of exporting electricity for profit to its neighboring countries, plowing ahead with a for-profit model.
“The Chilean state has decided to create a new form of business, which is to export energy to Argentina and Peru,” explained Mella, adding that the policy is part of a larger development model that hands rights to private corporations while depriving common people of the basic human right to water. “Therefore, Alto Maipo is not a necessary project, not for Chile’s mining production activities and even less for the citizens.”
AES Gener’s communications representative claimed Alto Maipo is a “very important project project for the country” that will fulfill “Chile's growing electricity demand” — a claim starkly at odds with the fact that Chile’s installed electricity capacity in the main power grid in 2015 was 15,609 megawatts, more than double the maximum hourly demand of 7,577 megawatts, according to government data.
Orrego, on the other hand, echoed Mella’s sentiment, saying that organizations fighting against Alto Maipo wish the government would have seized the opportunity of an energy surplus to consider reigning in thermoelectrics power plants — which some affected communities have blamed for rising rates of cancer and respiratory problems — and putting a stop to flawed projects like Alto Maipo.
“A false image”
Orrega argued that the fight to protect the environment and human rights in Chile has been frustrated by the fact that the South American country has long been praised as a success story of neoliberalism.
“Chile has sold to the world a very misleading, very false image,” he said, adding that the dictatorship-imposed economy based on exploitation has since been upheld as a model.
“The challenge is how to achieve a reversal of all this without a return to violence, without an armed revolution,” he added. “It’s complicated because it is a structural problem.”
And while the movement to put a stop to Alto Maipo is a local struggle — with a strategy of also taking aim at international banks — activists also have an eye to the bigger picture.
Mella said that the struggle against Alto Maipo also stands in solidarity with other movements in the region for land, the environment and community rights to water.
“Our final goal is putting an end to the neoliberal model which only benefits corporations and brings poverty and death to many communities in Latin America,” she said.
And eight years after the approval of Alto Maipo, deepening cracks in the case for the dam may be on the brink of creating space for activists to push the project to fall once and for all.
This article was updated to include comments from AES Gener. Originally published Jan. 30. Updated Jan. 31 at 12:50 p.m.