Peasants Lose Out in Scramble for Oil Wealth

Flying in a small plane from Guatemala City to the isolated oil fields along Guatemala's northern border with Mexico, one gets an encapsulated look at the country and a bird's eye view of its social problems. Leaving behind the occasional tall office buildings in the capital, the plane gains altitude over the outlying barrancas - the steep gullies covered with teetering shacks where part of Guatemala's impoverished population makes its home. Ahead lie the Sierra de las Minas, rolling masses of brown, treeless earth parceled into minifundios - small plots of land where the Guatemalan campesinos raise subsistence crops of corn and beans. At intervals, clusters of green provide relief to the eye-the verdant plantations of large landowners whose houses are hidden away from the surrounding scarcity.

As the hills recede behind the plane, the vast, soggy plains of the Northern Transversal Strip (FTN) stretch out to the north and west. The vegetation appears thick and heavy; the rain clouds hover low over the land. Few signs of settlement can be spotted from above, perhaps a house and a couple of fields every few miles. Then on the horizon appears a thin wisp of smoke which grows taller and thicker as the plane approaches. The jungle landscape begins to thin out and the smoke can be seen rising from a tall oil well, tongues of flame leaping from the steel structure. A landing strip awaits below. The plane touches down and you have landed at the pride of Guatemala-the Rubelsanto oil fields.

Development of Guatemala's oil reserves is a fledgling activity. Studies of the geological formations in the Peten and Alta Verapaz, the two regions bordering Mexico and exhibiting characteristics similar to the rich Mexican Reforma oil fields, were first carried out in the late 1950s. It was not until the 1970s, when oil prices skyrocketed on the international market, that Guatemala first encouraged oil companies to explore for commercially exploitable reserves. By 1978 seven foreign oil companies had been granted contracts and concessions by the Guatemalan government and in 1977 the first commercially exploitable well was spudded by Basic Resources International at Rubelsanto.

Basic Resources, an international consortium based in Luxembourg and headed by English banker and publisher (L'Express), Sir James Goldsmith, has dominated the Guatemalan oil scene for over 25 years. In the 1950s its founder, John D. Park, helped the Guatemalan government draw up the 1955 Petroleum Law. The country was just entering a period of increased cooperation with foreign investors after the CIA-inspired coup against the popular government of Jacobo Arbenz, an action precipitated by the Arbenz government's attempt to nationalize property belonging to the United Fruit Company. The terms of the 1955 law tipped strongly in favor of the oil companies: they would be granted concessions for exploration and exploitation of oil reserves, the oil would be the property of the companies, and the Guatemalan government would receive a 1217c share of profits after a ten-year grace period.

The difficulties inherent in searching for oil in a jungle without roads or other means of transportation were enough to deter extensive exploration until the oil crisis of the 1970s: Before then Basic Resources concentrated its efforts on a 5,000 acre concession containing an operating copper mine, a deposit of seven million tons of raw magnesite ore and laterite nickel deposits of 43 million metric tons of ore. Nickel deposits along the western edge of Lake Izabal attracted another large corporation, the Canadian International Nickel Company, in the early 1960s, which formed a partnership with the U.S.-based Hanna Mining Company under the name EXMIBAL. Negotiations with the Guatemalan government to create a mining law favorable to EXMIBAL went on for a decade, until in 1973 construction of a nickel plant began. EXMIBAL by Thai time was familiar enough with the Lake Izabal-Alta Verapaz region to recognize the potential for oil reserves and formed Centram-Zamora which, together with Basic, began the first serious oil explorations in 1973.

In 1974 the Guatemalan government launched a campaign to promote oil exploration and exploitation. It abolished the 1955 Petroleum Law and wrote a new one under which oil companies were invited to bid for six contract areas in Alta Verapaz and the Peten. The new regulations are stricter: the Guatemalan government receives at least 55 percent of the oil produced and the companies are required to provide greater capital expenditure over a shorter period of time than under the 1955 law. Foreign companies at first balked at what they considered overly-rigid regulations. But after four years of negotiations six contract areas were opened for bidding and Getty Oil. Texaco-Amoco, the Spanish Hispanoil and the French Elf-Aquitaine applied for and received contracts in Alta Verapaz and the Peten.

Basic Resources and its local operating company, Petromaya, have always been in the forefront of these activities.[1] In 1978. Basic, in partnership with Shenandoah Oil, began pumping 3,500 barrels per day (bpd) at the Rubelsanto well. A second well, Chinaja, was soon approved for production. By late 1978 the first pieces of iron piping for a pipeline to the Atlantic Coast at Santo Tomas were laid down along a route passing through the Alta Verapaz region to the shores of Lake Izabal, site of the EXMIBAL operation. Over protests from environmentalists concerned about contamination of the lake and the scenic Rio Dulce by the oil barges ferrying oil to Santo Tomas, the pipeline received government approval.

In 1977 the nickel mine began operations and both government and company officials held optimistic outlooks for a nickel-lined future. The region was infused with new capital investment from the oil and nickel companies. The pipeline was under construction and a major highway from Lake Izabal through the Northern Transversal Strip was being constructed by the Guatemalan Army Corps of Engineers. As multinational attention turned northward, many native Guatemalans showed increased interest in the region also. Foremost among these was Guatemalan president General Romeo Lucas Garcia whose family owned a 100,000 acre estate along the path of the pipeline in Alta Verapaz. Other officials of the military government officials and businessmen started making claims to the wilderness of the Transversal; some filed legal suits to gain ownership of now-promising land: some resorted to simple threat and intimidation.

Many of the traditional inhabitants of Alta Verapaz are Kekchi and Pokomam Indians, people who were colonized under the direction of Bartolome de las Casas, a Spanish priest, in the 16th century. Numerous attempts to relocate these Indians in the preceding four centuries have failed. They believe that to live on a piece of Iand for generations, to farm it, and to pray to the gods living in its rocks and caves is sufficient proof of ownership. When outsiders attempt to push them off the land, threatening them with starvation, they resist.

In the village of Chabon, in Alt. Verapaz province, a group of campesinos, most of them Indians, organized in 1978 to counter claims to their land. They appealed to the Guatemala government to adjudicate their case The campesinos were called to th municipal center of Panzos, in Ma 1970, ostensibly to hear a pubL, reading of the government's response When the group of several hundred men, women and children reached the town center, there was an ominous surprise waiting. Reserve troops had been called in from a nearby garrison Angry words were exchanged between the campesinos and town officials Soldiers stationed along the rooftop of the municipal building opened fire. When the shooting stopped, 100 lifeless bodies were quickly buried in a shallow mass grave.

Since the massacre in Panzos there have been hundreds of confrontations as foreign companies and members of the ruling oligarchy attempt to push campesinos off valuable land resources. In most cases the outsiders have emerged victorious. But displaced campesinos continue to express their resistance: the guerrilla movement has gained strength in the hills and mountains bordering the Transversal Strip.

For the urban critics of the Guatemalan government, the oil companies are an important symbol of foreign domination of their country and the theft of their natural resources. For the rural campesinos, the presence of strangers in their midst is a threat to their subsistence. While the 900,000 acre concession given to Basic Resources covered sparsely populated land, the new highway, a necessary adjunct to the oil fields, passes through more thickly settled areas and the newcomers who claim the land the campesinos have cultivated for years are the targets of campesino resistance. By late 1978 many indigenous residents of Alta Verapaz and neighboring Quiche province began disappearing into the mountains. In early 1979, 50 indigenous guerrillas, members of the Guerilla Army of the Poor, occupied the village of Nebaj, a major trading center for the region of the Transversal through which the highway runs. The guerrillas made increasingly frequent forays into the villages of Quiche throughout 1979. In these occupations the guerrillas would assemble the townspeople in the village square and encourage them to organize against the landowners in the towns. Some of the landowners were_ attacked and killed; the Guatemalan government responded swiftly. Army troops began occupying large regions of Quiche, and military personnel were a common sight throughout the Transversal area. Unable to tell a campesino from a guerrilla, the army embarked on an indiscriminate rampage, wiping out entire villages, such as Chajul, in Quiche province, which was destroyed in March 1980.

The oil prospectors, anxious to keep their operations free from guerrilla attacks, have attempted to distance themselves from landowners and the military. Despite guerrilla attacks within miles of the oil wells, including an attack on a military truck in August 1980 that left 12 soldiers dead, security at the Rubelsanto field is minimal. A local company official told this reporter that military guards would only provoke attacks because the military is considered the real enemy. He hoped the oil companies would be immune from attacks because, he believes, they are operating for the ultimate well-being of the Guatemalan people.

In fact, this well-being is accruing to only a handful of Guatemala's elite, in government and business, which believes that it must maintain strict control over the Guatemalan people to make the country safe for investment.

Considering the risks involved for a foreign business in a country like Guatemala which is widely perceived to be on the brink of a popular revolution, investors expect the returns to compensate the dangers. Basic Resources has invested over $175 million in the Guatemalan operation. As of March 1981, over one million barrels of oil had been exported fror Guatemala to the United States, bringing in close to $34,000,000 in revenue, the government's share of which has amounted to at least $17 million. The government has, however, maintained a tight control on the rate of flow of Guatemalan oil. After much negotiating, Basic-Elf has recently gained pemission to extract at the rate of 7,100 barrels a day, not enough, they claim - to make the pipeline commercially viable.

Guatemalan officials have lately become considerably more optimistic about the total oil reserves in the country. One government figure puts Guatemala's potential third in the region behind that of Mexico and. Venezuela. Estimates of potential reserves now range near 2.4 billion barrels. In the first quarter of 1980 Hispanoil, working on a contract area just east of Basic's, reported a commercially viable well, Yalpemech, was ready for operation. In April 1980, Texaco-Amoco reported a large oil strike on their 147,000 acre contract area on the northern tip of the Pete region.

Despite the fanfare accompanying the oil industry's successes in Guatemala, however, little of this has trickled down to the Guatemalan people. Guatemala still imports 30,000 bpd of oil, 8,500 of it from Mexico and the price of gasoline has risen from $1.88 in February 1980 to $2.09 in February 1981. The average daily pay for an urban worker in Guatemala is about $2.00.

FOOTNOTE:
1 In August 1980. Basic and its new partner. Elf-Aquitaine, were re-categorized under the 1975 law. Basic now holds a contract for a 500,000 acre area and is subject to 55 percent government participation.

Nancy Peckenham is a writer based in New York.