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Paranoid Posco

As of now the environmental clearance given by the Ministry of Environment and Forests (MoEF) stands suspended by the order of National Green Tribunal (NGT) on March 30 2012. The project does not even have a memorandum of understanding with the state government now, with one signed on July 22, 2005 having lapsed. So what is the basis on which the state is acquiring land for the project ? How a state government can grant green signal to a mega project that still has ambiguity looming over its expansion and a threat to the ethnicity of the eastern state.


page34As the dusky evening rode  down the sky and ushered into night, morning witnessed hue and cry, the day was Saturday of March 2nd , 2013 when a bomb blast killed three villagers and two were injured which exploded at their house in Jagatshinghpur district of Odisha.
Police were informed immediately. They did not respond for 15 hours. But in no time, without reaching the spot and investigating the facts SP Jagatshinghpur, Satabrata Bhoi disseminated the information in the local and national media that three (deceased) were probably making the bombs themselves when they went off accidently.
Nabin Mandal (30), Narahari Sahu (52), Manas Jena (32) among those who were killed, Lakhman Parmanik (who sustained severe injury) was laying on the hospital’s bed strongly refuted the police’s accusation as he said bomb were hurled at them.  “What gain I will make by lying when I am on the verge of death, “Parmanik added.
It is not even a month old when armed police force invaded Gobindpur to forcibly acquire land for POSCO (Pohang Steel Company). Since February 3, 2013 this area has been turned into an armed police camp. Excepting pro-posco goons no one can enter the village and no one can get out. Police patrolling continues for 24 hours. Even cats and dogs can’t enter without police approval.
In point of fact, South Korean steelmaker authorities of POSCO (Pohang Steel Company) had taken a step forward as land was taken over from farmers for the first time since 2011 for proposed $ 12 billion steel mill ambitious project in Odisha.
Those three were killed were prominent leaders of Posco Pratirodh Sangram Samiti (PPSS)- an anti-Posco agitator group, having a remarkable record of protest  against  the land acquisition by POSCO (land acquisition with the consent of Naveen Patnaik’s government.)
POSCO has constantly been in the news for various reasons ever since the Odisha government and the South Korean steel major signed an Memorandum of Understanding (MoU) in 2005. Of late, this Rs 51,000 crore project—representing the biggest FDI investment in India—has been in the news because of an alleged tussle between the Odisha
government and the central government over providing environmental clearances to the project.
Under the Forest Rights Act 2006, there can be no diversion of forest land without recognition of forest rights and without obtaining the informed consent of the Gram Sabhas of the concerned villages. Any diversion that does not comply would be a violation of the law.  In 2012, the Forest Advisory Committee (FAC) of the ministry decided to stick to the order in “letter and spirit”. The committee made recommendations to the ministry on projects that require forest diversion. Odisha government proposed fresh agreement to expedite POSCO steel plant.
Unfazed by the diplomatic criticisms and surmounting every hurdle, on January 31, 2011 Naveen Patnaik government finally bites the bullet to quell all murmurs of tribes living over proposed POSCO project. By the time the state government had got the environmental clearance from then Minister for Environment and Forests (MoEF) Jairam Ramesh for the proposed project that was hanging in limbo for past seven years amid environmental concerns and stiff protests by
locals. The conditional environmental clearance was granted by Mr. Ramesh for the first phase of 4 mtpa was for the diversion of 1,253 hectares of forest land in favour of POSCO’s plans to build a 12 million tone per annum (mtpa) steel plant at an investment of $12 billion or Rs 53,000 crore at Jagatsinghpur district.
As of now the environmental clearance given by the Ministry of Environment and Forests (MoEF) stands suspended by the order of National Green Tribunal (NGT) on March 30 2012. The project does not even have a memorandum of understanding with the state government now, with one signed on July 22, 2005 having lapsed. So what is the basis on which the state is acquiring land for the project ? How a state government can grant green signal to a mega project that still has ambiguity looming over its expansion and a threat to the ethnicity of the
eastern state.
When acquisition of land without a valid MoU has been criticised by many, diplomatic pressure is being built by Korean government on many occasions to make the Odisha project of POSCO move ahead. May be under pressure from diplomatic circles, the PMO has been taking keen interest in the early implementation of the project. But the question remains, why Korean government and the Prime Minister of India do not insist upon renewal of the MoU between POSCO and Odisha government before acquiring land for the project and pushing the project ahead..?
While the debate over whether POSCO’s steel investment is environmentally sustainable or whether this is a classic example of industrialisation at the cost of tribal rights goes on, this article wishes to highlight an important aspect that has so far gone unnoticed.
This is related to the fact that POSCO is a South Korean company and thus any action that India (whether at the central or the state level) takes with regard to this company has to be compatible with India’s obligations under the India-Korea Comprehensive Economic Cooperation Agreement (CECA). The India-Korea CECA is an international treaty aimed at regulating international economic matters such as trade and investment flows between the two countries. This treaty contains a chapter on foreign investment, which grants certain rights to foreign investors over their investments.
Although this treaty came into force on January 1, 2010, it also applies to investments already announced at that time. Thus, POSCO’s investment in Odisha is covered by the India-Korea CECA. The chapter on foreign investment, apart from granting rights to foreign investors, also states that any violation of these rights is challengeable under the investor-state investment treaty arbitration system.
Take an example from Chile, where one arm of the government had given the go-ahead to a Malaysian foreign investment project, which was later red-flagged by another government arm on the grounds that the project was not environmentally sustainable. This action was held, by an international arbitration tribunal, as frustrating the ‘legitimate expectations’ of the Malaysian investor and thus violating the right of the foreign investor to be treated ‘fairly and equitably’—a right which the Bilateral Investment Treaty (BIT) between Chile and Malaysia recognised. The above case has close resemblance to the POSCO situation in India. We have the Odisha government clearly pushing for this project, arguing that POSCO’s investment is legal and will bring enormous benefits to state.
The India-Korea CECA allows countries to adopt certain measures for environmental purposes that, depending on the facts and circumstances, would allow India a defense in case an international dispute with POSCO arises in the future. However, the majority of Indian BITs do not have much scope for adoption of environmental regulatory measures affecting foreign investment. For such foreign investments, a POSCO-type situation could be more problematic and might give rise to actionable claims by the foreign investors at the international level.
India needs to be careful about accepting restrictions on its sovereign ability—both at the Centre and at the state level—to regulate foreign investment each time it enters into a BIT or a CECA containing an investment chapter. For instance, according to some media reports, the Odisha government wants POSCO to reserve jobs for the local population at different levels like the semi-skilled and the managerial levels. This is a major issue in renewing the MoU with POSCO (the first MoU lapsed in June 2010). When the India-Korea CECA outlaws the imposition of any requirement on a foreign investor to reserve jobs at the senior managerial level, how will the Odisha government insist on such reservations? Even if the Odisha government is able to persuade Posco to reserve managerial jobs for the locals, other state governments may not be similarly successful when the adoption of such measures is outlawed—either by a BIT or by a CECA. So, India needs to carefully weigh the benefits of foreign investment against the compromise of regulatory oversight each time it enters into a BIT or a CECA.
The Erasama block of Jagatatsinghpur district in the Indian state of Odisha saw itself placed on the world map on the unfortunate day of October 29, 1999, when a super cyclone hit the east coast of India, devastating the area and killing almost 20,000 people. But as we move from one disaster to the next and memories of the old fade – so did those of this natural calamity. People were rehabilitated and recuperated. Little did they know they would face a devastation of a different kind within less than a decade.
The publication entitled striking while the iron is hot – a case study of the POSCO is part of a larger action research project undertaken by the National Centre for Advocacy Studies (NCAS) which interrogates the governance of land, water and forests in the central Indian adivasi belt spread across five states. The research project is an attempt to develop a holistic and systematic understanding of the processes of globalisation and its impact on poor, ordinary and marginalised people.
The POSCO steel project is one of many coming up in the Indian state of Odisha, which is going through a ‘steel revolution’ of sorts. Over the past seven years, the state government has signed more than 40 MoUs worth Rs.1,60,132 crores with iron and steel companies, both domestic and foreign, mortgaging the 20 billion tonnes of iron ore reserves that it’s supposed to be sitting on.
The proposed steel plant and port is expected to affect seven villages in three gram Panchayats, namely Dhinkia, Nuagaon and Gadakujang. Over the last three years a relentless struggle has emerged from the area as a result of which the project continues to be in limbo despite complete support from the state and central governments. Apart from these villages in the proposed plant and port area, communities in Sundergarh district will be affected by the mining of iron ore for the plant.
The steel market, growing at an annual rate of more than 4 percent, just before the recent meltdown, had been witnessing a global boom since the beginning of this decade. The BJD-led government in Orissa has been a willing participant, laying the tracks for this race. It gave the Korean company a deal which it had not even considered the big domestic players eligible for.
In the first week of April 2005, the Orissa government agreed to identify and earmark iron ore mines for POSCO. The Korean company sought mining rights for one billion tonnes of ore over 50 years. But state policy dictated that it was not entitled to more than 480 million tones for a 12-million tonne plant.
Furthermore, existing rules did not permit the state government to offer mining rights for more than 25 years. Yet, it reserved the Gandhamardan and Malangtuli mines, with nearly 400 million tonnes of high-grade iron ore deposits, for POSCO’s $12billion project. The state-owned Industrial Infrastructure Development Corporation directed the Jagatsinghpur district administration to reserve land at the Jatadhari river mouth near Paradeep port for the proposed plant. The Ministry of Commerce (MoC), Government of India, turned down POSCO’s proposal in the second week of April 2005, saying it was against any project-linked exports of iron ore and if POSCO desired a long-term contract, it could enter into a deal with state-owned trading companies like the Minerals and Metals Trading Corporation (MMTC). Following this, POSCO, called off the MoU signing programme scheduled for April 14, 2005. However, the Orissa government and POSCO officials continued to maintain that the project was not off.
Around the same time, the company finalised Paradeep in Orissa as the site for the proposed steel plant. Duburi and Dhamra were identified as possible alternatives. However, there was still no sign of progress on signing the MoU with the state government.
On May 16, 2005, the then Union Finance Minister P. Chidambaram convened a meeting with Orissa government officials and key POSCO executives to discuss the slow progress of the project. By now, POSCO had climbed down from its earlier position and was ready to set up the plant without exporting ore. The company had also scaled down its ore requirement.
The much-awaited MoU was finally signed on June 22, 2005. The Orissa government eagerly lapped up POSCO’s offer, which Brazil had rejected earlier on the grounds that the company was not ready to pick up ore at market prices. Even investor friendly China had given the POSCO deal the thumbs down, refusing to open up its vital ore reserves to foreign investment.
In order to understand and scrutinise the exact deal that took place between POSCO and the
Odisha government, excerpts of the MoU are as follow:

What the project is all about

  •   12 Million Tonne Steel Plant and Captive Port at Jagatsingpur district spread over an n Captive Mining facilities for iron ore and coal in the areas allocated by Government of Orissa/Government of India (the “Mining Project”). Proposal for prospecting the Khandadhar mines (Sundergarh) for iron ore spread over an area of 13000 acres. 600 million tonnes of ore to be sold at Rs.24/- per tonne (Royalty Rate) along with permission  for swapping of low grade ore by exporting and replacing with imported ore.
  •   Infrastructure – road, rail and port infrastructure (the “Transportation Project”), including the dedicated railway line from the mine-belt to Paradeep;
  •   Integrated township spread over an area of 2000 acres apart from 25 acres for office at Bhubaneshwar.
  •   Water supply infrastructure (the “Water Project”) – 12000 to 15000 crore liters from Jobra barrage river Mahanadi.
  •   Grant of ‘SEZ’ status for access to subsidies and tax holidays.

The magnitude of the project and the extent to which the state government will be supporting the multinational are clearly reflected in the various clauses that promise expeditious clearances and approvals under various mining, land acquisition and environmental legislations.
A summary of happenings so far
The company began its operations in India by registering POSCO-India, its Indian arm. The first attempt by the district administration to acquire land in the plant and port site was thwarted by strong local opposition starting early 2006. This was followed by the formation of the POSCO Pratirodh Sangram Samiti (PPSS) based at Dhinkia village spearheading the movement against POSCO. Movements against displacement from across Orissa and the country have shown solidarity with the local struggle.
The only consolations for POSCO have been the in-principle approval for an SEZ status given to the project by the Union Ministry of Commerce (MoC), and the Supreme Court directives for timely accordance of clearances for the various components of the project from the state government and Ministry of Environment and Forests.
Despite the issues of conflict in this project the role of the state government has been one of protecting and promoting the company’s interest. Short of exercising large scale force and violence as has been done in many other instances in Orissa over the years, the government has used several tactics to break the movement led by PPSS. The most prominent events being the use of local goons supported by the ruling BJD to divide local people, false propaganda and attacks on agitators, like the one on the demonstration on 29th November 2007, following which section 144 was declared in the area restricting mobility of local people.
Though in a show of strength on April 1 ‘08 a massive rally jointly organised by PPSS and movements across Orissa reclaimed the area under siege denouncing section 144, the state and company declared that they had no intention of backing out of the project. Through the arrest of Abhay Sahu, the leader of PPSS, and some other key activist, the state government reiterated this stance in October 2008.
The present situation is adequate to define the agony of villagers, atrocities being faced by people and lethargy of the state government. The area has already become an open house prison as some people claimed. A PPSS leader describes life become a constant struggle for the village dweller, “Our people can’t go out to nearest market for buying stuffs and to the hospital for availing medical treatment, the police have also clamped prohibitory orders under the section 144 of CrPC (Code of Criminal Procedure-1973) banning public gathering at Patana Haat village.”
Through a press release extended to me entailing minutiae and moan of the bomb blast of March 2nd , a   PPSS leader describes that how police refused to lodge an FIR of victim families and accepted the same against  the survivors like Abhay Sahu and Sura Das on false charges of conspiracy at Abhayachandrapur police station. “No other than Chief Minister Naveen Patnaik was behind giving a clear go ahead and his Chief Secetary Bijoy Patnaik was personally monitoring the repression in the area,” he had added.

Impact on Local Livelihoods and Environment
Before looking into the larger implications of the POSCO project, it would be relevant to study its likely impacts on local livelihoods, the economy and the environment. The local communities at the proposed plant site in Jagatsinghpur have been opposing the project tooth and nail for the past two years, objecting to the forced acquisition of their lands. The MoU shows that the project has several components, which means it would have diverse implications, both issue-wise and region-wise. The region involved covers the coastal area of Jagatsinghpur, where the plant and port is to be built, as well as the northern district of Sundergarh, where the mining lease is likely to be granted. At stake is the socio-economic and environmental future of this region, with its wider implications at the policy and developmental levels for the nation as a whole.

Flora and fauna site
Betel Vine is the main crop of the region. In his report ‘No to POSCO’, former SC/ST commissioner Dr B.D Sharma describes the people of  the area thus: “Paan, dhan, macch (beetle, paddy and fish) – the trinity is the essence of their life.”
The sand in this portion of the east coast has a special property – it is less saline. The people call it sweet sand. “If we dig three to four feet we get perfectly potable water with no trace of salt,” they say. Hence, agriculture is a viable livelihood option in the area. Apart from paddy cultivation, paan cultivation is the most widespread source of income The people aged 7 to 70 years are engaged in the upkeep of this perennial crop, the returns being enough to make ends meet.
There are around 5,000 vines in the three Panchayats tended by about 10,000 cultivators The standard investment for paan cultivation is Rs.15,000-20,000 per acre, which can be recovered within a month. The average annual income is Rs.1 lakh per acre, with another Rs.1 lakh of ancillary employment being generated. Many landless families depend on basket making (for packaging paan) or work as daily labourers on the betel vine farms for their livelihood. Around 30 lakh paan leaves are plucked, bundled and transported to Mumbai, Bangladesh, Pakistan and Saudi Arabia every year.
Ironically, at least 105 betel vines have been destroyed in Govindpur village in the process of land acquisition, since 4th February when the land acquisition process was resumed. This situation has also gravely affected the lives and livelihoods of the villagers. The situation of dalit landless labourers is very grave. Families those who depend on the betel vines keen and clear that the plant is most undesirable since it is the only source of livelihood.  Two persons shared how they have got no compensation after sale of land. Most others said how there are no provisions for compensations for the landless in the acquisition process. In fact, Laxman Pramanik, who has been gravely injured in the bomb blast is also a landless labourer, the sole breadwinner of a family of eight persons,  depending on the same. In short, the livelihood activities and mobility of the entire community is under threat. Any access to health care or medical treatment, however critical, is difficult to obtain as most of the community is under threat of arrest.
In summer, cashew cultivation is the main livelihood activity in the area. A family engaged in cashew cultivation earns about Rs.20,000 per season. An average cashew bush yields 100kg of nuts a year worth Rs.4,000. About 50 percent of the families are also engaged in pisiculture, mostly prawns. An acre of farm ponds yields prawns worth Rs.7 lakh a year. Many other families fish in the Jatadhari estuary – all 108 families in Nolia Sahi hamlet of Gadkujang village depend on estuarine fishing for a livelihood.

The mining area
The bigger threat, many feel, will be faced in the proposed mining sites in the districts of Sundergarh, which are already reeling under the social and environmental impacts of largescale mining activity. The Khandadhar Hill Range, little known to people outside Orissa, where it is located, is a part of the Eastern Ghats and extends from a place called Suakanthi in Keonjhar district to Bonai in Sundergarh district. The range is more popular, especially amongst the state’s tourists.

Grassroots protests and politics
While there were mixed reactions initially, the communities soon realized that they faced the threat of losing their land without gaining anything in return. The news of the MoU to be signed was already out in early April 2005. The MoU was signed in June and by July the three Panchayats under threat came together under an umbrella organisation called the POSCO Kshatigrasth Sangharsh Samiti (PKSS) to oppose the project. However, many Panchayat members were supporters of the Biju Janata Dal (BJD), the ruling party that had signed the MoU, so doubts began surfacing about the dependability of this forum in confronting the government.
At present year three separate groups are opposing the plant. The most prominent of them is the POSCO Pratirodh Sangarsh Samiti (PPSS), led by Abhay Sahoo of the Communist Party of India (CPI), with a stronghold in Dhinkia Panchayat, with most households there opposing the project. Bhita Mati Bachao Andolan has been another group with a political affiliation, dominated by the Congress which has been more or less inactive. The third group, Nav Nirman Samiti, is a voluntary effort spearheaded by the Rashtriya Yuva Sangathan, the youth wing of the Sarvodaya movement that follows Gandhian principles. The group used to be active around Nuagaon Panchayat.

Growth of mining based industry- The Trends
The political dynamics that have unfolded in the POSCO story narrated above are not necessarily unique in the history of mine based industrialization in India. The tales of social marginalisation and exclusion, environmental devastation and conflict of interest have dominated the mining scenario of the country from the pre-independence period. The establishment of the Tata Steel Plant in Jamshedpur of erstwhile Bihar in early 1900s met with tribal agitations and workers struggles – both crushed, often using violent means, a trend that continues to date (Jayaraman, N 2006). The most jarring recent example is of the police firing at adivasis opposing Tata Steel’s project in Kalinganagar, Orissa in 2006.
Barring a few private capitalists like the Tatas, the post independence mining sector remained was controlled largely by the State. But problems of displacement of indigenous populations or exploitation of mine workers continued to prevail. The establishment and running of NALCO, BALCO, NMDC, Mahanadi Coal fields – all Public Sector undertakings are also ridden with examples of gross human rights violations. However the most critical differences in the narrative around mining in the privatization scenario as opposed to the time, between 1950 and 1990 when mines and mine based industries were largely in the Public Sector, can be attributed to: massive growth in size and magnitude of the industry itself devolution of powers to state governments opening up of the market and industry to foreign capital. The world in the past few decades looked upon the growth of industries like steel and aluminum as an indicator of overall economic growth. Since more than 42 percent of the world’s steel is used for construction and infrastructure building, growth in the steel sector is considered to be directly proportional to the ‘development’ of any country.

Posco and Jairam
If you believe that Union environment minister Jairam Ramesh has made life difficult for industry and project promoters by making environmental clearances as a stumbling block, you may be in for a surprise. Projects during his tenure are getting cleared much faster and just a handful of them are rejected. Environmental clearance for just six projects was rejected during August 2009 and July 2010, compared to 14 projects rejected during 2006-07 to 2007-08. The conditional approval granted to the steel project of Korean giant POSCO and to several such high-profile projects including the Navi Mumbai airport show that projects continue to be approved with the same speed even after July 2010. The mining project of Vedanta is the only notable rejection. Eight river valley hydro-electric projects were submitted for environment clearance and all were approved in the one-year
period.
As many as 49 thermal power projects were approved with just one rejection during 2009-10. Of 120 projects under the category of ‘infrastructure and miscellaneous projects’ that came up for approval, 112 were approved and none was rejected. As many as 31 coal mining projects were approved with not a single one being rejected. Only two of ‘new construction and industrial estates’ projects were rejected.
In all, 769 projects were received and 535 were approved and six were rejected. The rest are pending for more information and queries. The rate of approving projects during the tenure of Ramesh remains unhealthy, says the EIA Resource and Response Centre which obtained the data under RTI.
“Despite the claim of greater scrutiny, projects continue to be approved and the rate of approval appears to be getting worse. If one compares with the data of approval from 2006 to 2008 it is clear that the rate of rejection and approval remains the same,” says Ritwick Dutta of  EIA centre.
While projects are being approved with alacrity, Ramesh has closed all avenues for those who want to appeal against such approvals. He has dismantled the only existing grievance redressal mechanism that existed in the form of the National Environment Appellate Authority. The authority was wound up in October 2010 even before the National Green Tribunal, which was supposed to replace it, came into being. The tribunal has not been set up despite Parliament approving the law for its establishment. As a result, persons aggrieved by the grant of clearance have no statutory forum for appeal.
Issues of concern
The fallouts of these trends in the global and national mining industry can be classified into two categories. First the direct socio-economic deprivation and environmental devastation as a result of unregulated growth of the sector. Second the political dynamics emerging from the  corporate-state nexus to facilitate this growth either using the law or violating it. The deadly combination of the two has meant a gradual erosion of the different pillars of democracy leading to conflict and severe human rights violations.
The POSCO case is just one illustration, amongst many, in this large country, of how governance and administrative structures, from the lowest units to the highest bodies, in the state and central government are being influenced and made to serve the interests of private corporations by corrupt governments, dispossessing communities of their resources, livelihoods and environmental rights.
If the people of Odisha (where the project has been proposed) is fighting for their rights, survival and the existence, the fights is more about safeguarding their golden ancestors’ wealth.  Let us hope that the POSCO project provides an opportunity, not only for the larger debate on industrialisation and tribal rights, but also for revisiting India’s investment treaty programme that is central to regulating foreign investments. It will be unfortunate if this issue is reduced to a petty political tussle between the Congress and the Biju Janta Dal or is used as an example to show how the Congress-ruled Centre is discriminating against the states ruled by the political parties in Opposition.

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