Indigenous communities in Panama obtain recognition and partial mitigation measures by Development Banks FMO and DEG in relation to the Barro Blanco dam

The dam has negatively impacted the communities’ livelihoods, social and spiritual life. The affected communities, supported by SOMO, Both ENDS and the Panamian organisation ACD, have voiced concerns about this for over a decade, advocating not to finance the harmful Barro Blanco project. In this regard, FMO and DEG recognize, in their own words, that “until the dialogue process […] began we had not effectively responded to the concerns and criticisms voiced since the beginning by [the affected communities]”.

In 2022, nearly a year after the banks withdrew from the project following the pre-payment of their loan by project company GENISA, representatives from the communities and the banks started a dialogue with the aim of settling their conflict.

This dialogue has now come to an end with this agreement. Part of this agreement is a community program in the affected communities of Kiad, Nuevo Palomar, Quebrada Caña and Quebrada de Plata, to be implemented by FSC Indigenous Foundation, as chosen by the parties. The program consists of a series of community-chosen projects focussed on seven thematic areas: water and sanitation, home improvement, transport, electrification, cultural preservation, livelihoods, and education.

After more than a decade of collaboration between M10, SOMO and Both ENDS, we are happy to be able to finally welcome the recognition of FMO and DEG that the Barro Blanco project has had negative impacts for the communities. Both ENDS and SOMO intent to continue to monitor the implementation of the agreement, together with M10.

Lessons for the future

The agreement marks a watershed moment, which demonstrates that international financial institutions have a responsibility towards communities whose livelihoods are affected by their investments. Development banks not only have the duty, but also the power, to help mitigate the   harms caused by their investments.

However, as also the banks’ public statement sets out, “the communities affected by this project experienced, and continue to experience significant loss to their territory, environment, ways of life, and to the places they hold sacred”. The agreement between the communities, supported by M10, and the Banks represents only a partial mitigation of the harms suffered by the four Indigenous communities since the Barro Blanco dam became operational in 2016. The affected communities therefore continue to reject the dam.

As such, this case also illustrates the necessity for development banks to ensure that their investments in the Global South not only avoid causing harm to structurally marginalized groups, but also – based on their rights and own priorities - contribute to their collective well-being and aspirations. To do so, development banks must take people’s concerns into account when deciding about their investments.

The dialogue and agreement have come after years of the banks’ dismissal of community voices, and it was the bank’s lack of recognition of Indigenous self-determination including the principle of Free, Prior and Informed Consent (FPIC) that contributed to the harms in the first place. Engagement with communities is fundamental to avoid and mitigate corporate wrongdoing, and we wish for FMO and DEG to draw lessons from this case to systematically integrate communities’ concerns in their investment decision-making of potentially harmful projects.

Background

Both ENDS and SOMO have been supporting M10 since Panamanian civil society organizations brought the case to our attention in 2011. In 2014, we supported M10 in the filing of a formal complaint at the banks’ Independent Complaint Mechanism (ICM).

Back then, the banks largely dismissed community concerns, and pushed for the construction of the Barro Blanco dam, resulting in the flooding of Indigenous land in 2016. Amongst the negative impacts of the dam’s operation are the loss of agricultural land, the geographical isolation of the affected communities, and the permanent submergence of ancient petroglyphs held sacred by the Ngäbe and Buglé peoples and made by their ancestors.

Delayed by the COVID-19 pandemic, the ICM made its final monitoring visit in September 2021, and in 2022 issued a series of recommendations to the banks. This led to the dialogue between the banks and elected representatives of the affected communities, in which SOMO, Both ENDS and the Panamanian organization Alianza para la Conservación y el Desarrollo (ACD) participated as community advisors.

To this day however, neither the Central American Bank of Economic Integration (CABEI/BCIE), nor the project company GENISA, nor the Panamanian State have acknowledged their share of responsibility for a project that will continue to infringe on the rights of the Ngäbe people.