SANTA ISABEL, Colombia An American mining company hoped to strike gold in a mist-shrouded mountainside but instead has bored straight into a paralyzing standoff with Colombian guerrillas.
Just when New Hampshire-based Sector Resources was about to start production after three years of testing, rebels shut the $5 million mine with threats to blow it up and kill all its workers unless it paid extortion demands.
Pay up or pack up: U.S. and other multinational companies are confronted more than ever with that choice in this resource-rich South American country, where insurgents rely on extortion and sabotage to finance a widening guerrilla war.
The harassment has yet to cause a mass exodus of foreign capital. However, the threats and violence have stalled big international projects and caused other companies to weigh pulling out of the country.
“Security is the biggest single constraint to American foreign investment in Colombia,” U.S. Ambassador Anne Patterson said.
In the big cities, investment is generally safe, but by scaring it away from the countryside, the violence is depriving poor rural areas of jobs and federal and local governments of tax revenues.
The estimated $9 billion a year in U.S. direct investment is about one-tenth of Colombia’s economy. It employs 150,000 people and an additional 600,000 indirectly, according to the U.S. Embassy.
Colombia’s security forces are stretched paper-thin by the war and a vast and rugged country nearly three times the size of California. Large swaths of countryside are controlled by two guerrilla factions and a rival right-wing paramilitary that has also gone into the extortion business.
The government’s inability to provide security has led some international firms to try to buy it themselves by paying off the illegal armed groups. Others refuse to do so, often incurring the rebels’ wrath.
Still others including Los Angeles-based oil giant Occidental Petroleum and the Drummond coal mining company of Birmingham, Ala. pay to have Colombian soldiers protect their projects. But even that doesn’t guarantee peace.
A pipeline from an Occidental-run oil field near the Venezuelan border has been dynamited by rebels more than 140 times this year. The pipe is holed by night, repaired by day, holed again, and so on. Officials say the sabotage has cost the company and the government more than $400 million.
Drummond appears squeezed from left and right. Its rail line to the Caribbean has been bombed five times by guerrillas this year, while three of its union leaders have been assassinated, reportedly by paramilitaries.
U.S.-owned Panamco, the main Coca-Cola bottler and distributor in Colombia, says that 48 company vehicles have been torched over the past two years, and that it cannot work in 82 rural towns because it refuses to meet extortion demands from guerrillas, nationalist militias and common criminal gangs.
In a U.S. lawsuit filed by a Colombian union with the backing of the United Steelworkers of America, Panamco has also been accused of sponsoring paramilitary death squads to control its left-leaning union members. The company denies the charges.
Housed next to a dank mine shaft in central Tolima state, Sector Resources’ huge ore-crushers have been silent since May, when a half-dozen armed guerrillas from the Revolutionary Armed Forces of Colombia (FARC) showed up with its extortion demand reportedly 10 percent of the profits.
“They waited until we had something to lose,” sighed the project supervisor, a Canadian geologist who did not want his name used for security reasons.
The company has refused even to talk with the rebels. Its president, William Dell’Orfano, said that would be unethical and also foolhardy in the midst of a worldwide war against terrorism.
“That game is over,” Mr. Dell’Orfano said by phone from Manchester, N.H. “Any U.S. company that gets itself involved in a foreign country and is affiliated in any way, shape or form with a subversive group is going to have a price to pay.”
Sector Resources says it has also shunned an offer of protection from a militia.
Instead, it is offering to subsidize an army base in town from the taxes it pays. But the government has yet to respond, and Santa Isabel’s mayor, Jorge Castellanos, says he worries it would make the village a bigger guerrilla target.
Rebel attacks elsewhere in Tolima have wrecked dozens of towns. In places like Santa Isabel where jobs have been lost, disillusionment with the FARC is growing.
“They lost their ideals a long time ago,” said the Rev. Juan Carlos Arce, the town’s Roman Catholic priest. “They want money to sustain their war and their people. They don’t care about development or social progress.”
The mine shutdown threw 70 miners out of work in the poor farming community, whose only other growth industry is illegal poppies used to make heroin. Stores, restaurants and hotels are all feeling the hit.
Reynaldo Tovar, a laid-off miner, had for the first time been getting health, Social Security and pension benefits working for the U.S. company. Now, he’s angry at the rebels.
“They say it’s a free society, but clearly it’s not,” he said. “We should be allowed to work.”
The FARC and other factions have been extorting money from Colombian and international businesses for decades. The practice is growing as the guerrillas expand.
Establishments from corner groceries to long-distance trucking companies pay under-the-table protection money known colloquially as “vacunas” vaccinations against reprisals. The government has never cracked down on the illegal payments.
Last year, saying it needed to counter growing U.S. aid to the Colombian military, the FARC formalized the policy. It issued “Law 002,” a rebel edict whereby anyone with assets of more than $1 million must contribute to the cause or risk being kidnapped.
The FARC has accused the multinationals it targets of plundering Colombia’s resources.
But Sector Resources was promising to be a socially responsible investor. Besides jobs, the company had pledged to improve the town’s roads and electrical system, and finance small business loans and health projects that Mr. Dell’Orfano says he had assumed the FARC would appreciate.
“We felt the guerrillas had a more altruistic value to them,” he said. “It turns out they don’t. Bottom line, they are not much different than the Mafia in the 1930s.”