Investor-State Dispute Settlement: Arbitration Threat As the Backdoor for Neo-Colonial Exploitation of Natural Resources

Extant research on unequal ecological exchange generally, although not exclusively, focuses on the North-South political relationships, using the history of colonialism as a lens through which to explicate contemporary environmental inequality and injustice. However, as the locus of power has shifted from imperialist nations to transnational corporations, contemporary analyses of unequal ecological exchange need to consider the new global economic hierarchies and discuss the role of international trade instruments in not only furthering exploitative ecological exchanges, but also hindering community efforts towards environmental justice, with the cooperation of local and national-level government actors. To address this need, I analyze the case of Roșia Montană Romania, the site of almost two decades of contestation that succeeded in stopping the opening of a polluting gold mining project. The case of Roșia Montană was the object of an arbitration in front of the World Bank, filed by Canadian Corporation Gabriel Resources, that was eventually won by the Romanian state. Data come from a years-long study, drawing from in-depth interviews (n=45), and the analysis of arbitration and governmental documents. The results highlight the role of international treaties in furthering unequal ecological exchanges, namely the role of Investor-State Dispute Settlement (ISDS) system, used by transnational corporations in pressuring local communities in developing countries to choose between poverty and pollution. This study also explains how third-party funding (TPF) is instrumentalized in ISDS by financial speculators, and how such instruments are used to expand the power of transnational corporations, at the expense of the taxpayers in developing countries, continuing the colonial legacy of exploitation of nature, rural communities, and indigenous lands. Finally, I discuss the role of state recreancy in furthering unequal ecological exchange.