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Development & Aid

Government Financing for Mayan Train Violates Socio-environmental Standards

Carrying the Mayan flag, members of the Colibrí Collective lead a march against the Mayan Train in the city of Valladolid, in the southern Mexican state of Yucatán, in May 2023. The construction of the Mexican government’s most important megaproject has drawn criticism from affected communities due to its environmental, social and cultural effects. CREDIT: Arturo Contreras / Pie de Página - Mexico’s development banks have violated their own socio-environmental standards while granting loans for the construction of the Mayan Train (TM), the flagship project of the presidency of Andrés Manuel López Obrador

Carrying the Mayan flag, members of the Colibrí Collective lead a march against the Mayan Train in the city of Valladolid, in the southern Mexican state of Yucatán, in May 2023. The construction of the Mexican government’s most important megaproject has drawn criticism from affected communities due to its environmental, social and cultural effects. CREDIT: Arturo Contreras / Pie de Página

MEXICO CITY, May 18 2023 (IPS) - Mexico’s development banks have violated their own socio-environmental standards while granting loans for the construction of the Mayan Train (TM), the flagship project of the presidency of Andrés Manuel López Obrador.

The National Bank of Public Works and Services (Banobras), the Nacional Financiera (Nafin) bank and the Foreign Commerce Bank (Bancomext) allocated at least 564 million dollars to the railway line since 2021, according to the yearbooks and statements of the three state entities.

Banobras, which finances infrastructure and public services, granted 480.83 million dollars for the project in the Yucatan peninsula; Nafin, which extends loans and guarantees to public and private works, allocated 81 million; and Bancomext, which provides financing to export and import companies and other strategic sectors, granted 2.91 million.

Bancomext and Banobras did not evaluate the credit, while Nafin classified the information as “confidential”, even though it involves public funds, according to each institution’s response to IPS’ requests for public information.

“(The banks) are committing internal violations of their own provisions in the granting of credits, in order to give loans to projects that are not environmentally viable and that do not respect the local communities.” -- Gustavo Alanís

The three institutions have environmental and social risk management systems that include lists of activities that are to be excluded from financing.

In the case of Bancomext and Nafin, these rules are mandatory during the credit granting process, while Banobras explains that its objective is to verify that the loans evaluated are compatible with the bank’s environmental and social commitments.

Bancomext prohibits 19 types of financing; Banobras, 17; and Nafin, 18. The three institutions all veto “production or activities that place in jeopardy lands that are owned by indigenous peoples or have been claimed by adjudication, without the full documented consent of said peoples.”

Likewise, Banobras and Nafin must not support “projects that imply violations of national and international conventions and treaties regarding the indigenous population and native peoples.”

The three entities already had information to evaluate the railway project, since the Superior Audit of the Federation, the state comptroller, had already pointed to shortcomings in the indigenous consultation process and in the assessment of social risks, in the 2019 Report on the Results of the Superior Audit of the Public Account.

The total cost of the TM has already exceeded 15 billion dollars, 70 percent above what was initially planned, mostly borne by the government’s National Fund for Tourism Promotion (Fonatur), responsible for the megaproject.

 

Mexico’s three state development banks are partially financing the Mayan Train, for which they have failed to comply with the due process of the evaluation of socio-environmental risks that are part of their regulations. The photo shows the clearing of part of the route of one of the branches of the railway line in the municipality of Playa del Carmen, in the southeastern state of Quintana Roo, in March 2022. CREDIT: Emilio Godoy / IPS

Mexico’s three state development banks are partially financing the Mayan Train, for which they have failed to comply with the due process of the evaluation of socio-environmental risks that are part of their regulations. The photo shows the clearing of part of the route of one of the branches of the railway line in the municipality of Playa del Carmen, in the southeastern state of Quintana Roo, in March 2022. CREDIT: Emilio Godoy / IPS

 

Violations

Angel Sulub, a Mayan indigenous member of the U kúuchil k Ch’i’ibalo’on Community Center, criticized the policies applied and the disrespect for the safeguards regulated by the state financial entities themselves.

“This shows us, once again, that there is a violation of our right to life, and there has not been at any moment in the process, from planning to execution, a will to respect the rights of the peoples,” he told IPS from the Felipe Carrillo Port, in the southeastern state of Quintana Roo, where one of the TM stations will be located.

Sulub, who is also a poet, described the consultation as a “sham”. “Respect for the consultation was violated in all cases, an adequate consultation was not carried out. They did not comply with the minimum information, it was not a prior consultation, nor was it culturally appropriate,” he argued.

In December 2019, the government National Institute of Indigenous Peoples (INPI) organized a consultation with indigenous groups in the region that the Mexican office of the United Nations High Commissioner for Human Rights questioned for non-compliance with international standards.

Official data indicates that some 17 million native people live in Mexico, belonging to 69 different peoples and representing 13 percent of the total population.

INPI initially anticipated a population of 1.5 million indigenous people to consult about the TM in 1,331 communities. But that total was reduced to 1.32 million, with no official explanation for the 12 percent decrease. The population in the project’s area of ​​influence totaled 3.57 million in 2019, according to the Superior Audit report.

The conduct of the three financial institutions reflects the level of compliance with the president’s plans, as has happened with other state agencies that have refused to create hurdles for the railway, work on which began in 2020 and which will have seven routes.

The Mayan Train, run by Fonatur and backed by public funds, will stretch some 1,500 kilometers through 78 municipalities in the states of Campeche, Quintana Roo and Yucatán, within the peninsula, as well as the neighboring states of Chiapas and Tabasco. It will have 21 stations and 14 other stops.

The Yucatan peninsula is home to the second largest jungle in Latin America, after the Amazon, and is notable for its fragile biodiversity. In this territory, furthermore, to speak of the population is to speak of the Mayans, because in a high number of municipalities they are a majority and 44 percent of the total are Mayan-speaking.

The government promotes the megaproject, whose locomotives will transport thousands of tourists and cargo, such as transgenic soybeans, palm oil and pork – key economic activities in the area – as an engine for socioeconomic development in the southeast of the country.

It argues that it will create jobs, boost tourism beyond the traditional attractions and energize the regional economy, which has sparked polarizing controversies between its supporters and critics.

The railway faces complaints of deforestation, pollution, environmental damage and human rights violations, but these have not managed to stop the project from going forward.

In November 2022, López Obrador, who wants at all costs for the locomotives to start running in December of this year, classified the TM as a “priority project” through a presidential decree, which facilitates the issuing of environmental permits.

Gustavo Alanís, executive director of the non-governmental Mexican Center for Environmental Law, questioned the way the development banks are proceeding.

“They are committing internal violations of their own provisions in the granting of credits, in order to give loans to projects that are not environmentally viable and that do not respect the local communities. They are not complying with their own internal guidelines and requirements regarding the environment and indigenous peoples in the granting of credits,” he told IPS.

 

Groups opposed to the Mayan Train protest along a segment of the megaproject in the municipality of Carrillo Puerto, in the southeastern state of Quintana Roo, on May 3. CREDIT: Arturo Contreras / Pie de Página

Groups opposed to the Mayan Train protest along a segment of the megaproject in the municipality of Carrillo Puerto, in the southeastern state of Quintana Roo, on May 3. CREDIT: Arturo Contreras / Pie de Página

 

Trendy guidelines

In the last decade, socio-environmental standards have gained relevance for the promotion of sustainable works and their consequent financing that respects ecosystems and the rights of affected communities, such as those located along the railway.

Although the three Mexican development banks have such guidelines, they have not joined the largest global initiatives in this field.

None of them form part of the Equator Principles, a set of 10 criteria established in 2003 and adopted by 138 financial institutions from 38 countries, and which define their environmental, social and corporate governance.

Nor are they part of the Principles for Responsible Banking, of the United Nations Environment Program Finance Initiative, announced in 2019 and which have already been adopted by 324 financial and insurance institutions from more than 50 nations.

These standards address the impact of projects; sustainable client and user practices; consultation and participation of stakeholders; governance and institutional culture; as well as transparency and corporate responsibility.

Of the three Mexican development banks, only Banobras has a mechanism for complaints, which has not received any about its loans, including the railway project.

In this regard, Sulub questioned the different ways to guarantee indigenous rights in this and other large infrastructure projects.

“The legal fight against the railway and other megaprojects has shown us in recent years that, as peoples, we do not have effective access to justice either, even though we have clearly demonstrated violations of our rights. Although it is a good thing that companies and banks have these guidelines and that they comply with them, we do not have effective mechanisms for enforcement,” he complained.

In Sulub’s words, this leads to a breaching of the power of indigenous people to decide on their own ways of life, since the government does not abide by judicial decisions, which in his view is further evidence of an exclusionary political system.

For his part, Alanís warned of the banks’ complicity in the damage reported and the consequent risk of legal liability if the alleged irregularities are not resolved.

“If not, they must pay the consequences and hold accountable those who do not follow internal policies. The international banks have inspection panels, to receive complaints when the bank does not follow its own policies,” he stated.

 
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