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The Atacama Desert Dispute Over Resources and Its Consequences

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The Atacama Desert Dispute Over Resources and Its Consequences The Atacama Desert Dispute Over Resources and Its Consequences Thesis By Jared Farnik Submitted in Partial Fulfillment of the Requirements for the Degree of Bachelor of Arts in International Relations and Economics State University of New York Empire State College 2014 Reader: Professor Max Hilaire Abstract In a world where there is only a finite amount of resources sustaining billions of people, countries are willing to go to great lengths to attain resources. Even renewable resources, such as fisheries and forests, are in places being depleted faster than they can recover. Adding to the pressure is that new deposits of certain mineral resources are becoming harder to locate and extract. Oil and natural gas, critical to economic development, are in short supply. In addition to their traditional value, diamonds and other important metals have industrial purposes and are vital to many economies. In areas where borders are not clearly defined, countries often try to profit from wealth that resources offer at the expense of other countries. Every continent in the world has ongoing disputes over resources. In light of the current situation, the focus of this paper will be one of the greatest resource disputes in South America. The Atacama Desert Dispute shows just how far countries are willing to go in order to gain a particular resource. From 1879 to 1883, Chile, Peru and Bolivia were at war because they wanted to profit from the sodium nitrate trade by gaining control of the Atacama Desert. Before the dispute, Chile gained permission to mine nitrate rich zones in the region, organized settlements, developed facilities to extract nitrates, pursued diplomacy with Bolivia to establish distinct borders, and sought financial backing from the British private sector. This ultimately led to their victory when war ensued. In this paper, I begin with a general historical and resource overview of Chile, Peru and Bolivia in order to understand the context of the Atacama Desert Dispute. I explain where resource demand originated and how turmoil developed between the three new nation states. I then direct my attention towards the Atacama Desert, which was the main focus of interest for Peru, Chile and Bolivia. Nitrates will be identified as the primary reason why each of these countries made claim to the Atacama resources, having recently observed how huge profits were gained through the export of another significant resource - guano. I then systematically argue that Chile was successful in the nitrates related land dispute because of its calculated approach to achieving a nitrates monopoly in the Atacama Desert. I explain how political stability and popular support to go to war, rather than economic or military preparedness, were the defining characteristics that enabled Chile to be victorious in the War of the Pacific that ultimately settled the nitrates dispute. Both Chile and its foreign supporters then reaped the benefits of their labor and effort, taking in massive profits. This resource boom from nitrates was finite in its duration, lasting a mere 35 years. The conflict over resources in this region, however, had and continues to have far reaching consequences. New alliances were formed after the dispute was resolved. The balance of power shifted away from the former confederation of Peru and Bolivia. Chile remained a strong military power in this region. However, in the 21st century, diplomatic discussions rather than war should be initiated to maintain peace in this region and accommodate the interests of all countries involved. Chile, Peru and Bolivia should pursue peace through economic integration. This has been effective in the European Union because of democracy and economic cooperation between member states. If stronger economic ties were to exist between the countries, the danger of a resource war erupting again would be greatly diminished. Territorial disputes have persisted in recent years, and Bolivia and Peru have both requested international arbitration. It is positive that all three of these Latin American countries recognize the authority of the International Court of Justice, but direct conflict resolution rather than international arbitration is preferable. Peru’s and Chile’s commitment to the Treaty of Lima of 1929 is an indication that these countries can conclude negotiations successfully. If direct talks between Chile, Peru and Bolivia lead to the return of a Bolivian coastal corridor, then the chapter on the Atacama Desert dispute can be closed. Table of Contents I. Introduction II. Historical and Resource Overview A. Resource Demand 1. Conquest 2. Industrialization 3. Raw material B. Independence 1. Empire Collapses 2. War of Confederation C. Atacama Desert 1. Climate 2. Early Inhabitants 3. Unsettled Borders D. Guano 1. Rediscovery 2. Economic Bonanza 3. Chincha Island War III. The Atacama Desert Dispute A. Regional Rivalries 1. Arms Race 2. Diplomacy 3. Renegotiation 4. Talks Breakdown B. Importance of Nitrates 1. Nitrogen 2. Extraction and Fertilizers 3. Lifestyle Enabler 4. Gunpowder C. Lack of Economic Readiness 1. Peruvian Economy 2. Bolivian Economy 3. Chilean Economy 4 IV. War of the Pacific A. Navy B. Land Invasion C. Guerrilla Warfare D. Outcome of the War 1. Treaty of Ancon 2. Treaty of Lima 3. Missed Opportunity 4. New Military Power E. Foreign Involvement 1. Britain supports Chile 2. USA Backs Peru 3. Foreign Labor Force V. Chilean Monopoly of the Nitrate Market A. International Popularity of Nitrates B. Profits C. Market Volatility D. Development of Synthetic Nitrates E. Discovery of Additional Resources VI. Ramifications of the Atacama Desert Dispute A. Blame Game B. Balance of Power Shifted C. Chileans Rallied Behind a Common Cause to Victory D. Economic and International Relations Shortsightedness VII. Renewed Talks A. Regional Negotiations 1. 1975 Proposal 2. ICJ Maritime Arbitration B. Economic Integration to Pave Way for Peace 1. Economic Integration 2. Prosperity Relieves Tensions C. Direct Negotiations Preferable, ICJ Secondary Choice VIII. Conclusion 5 Chapter I Introduction Overall, it is important to understand that resources can be a major source of conflict. Disputes can arise over finite resources, such as oil, gas, diamonds, and lesser known resources, such as cobalt. Renewable resources, such as timber or water, are also a potential object of disagreement. Today the most significant commodities in the world are oil, natural gas and diamonds. Oil discoveries, or even the possibility of finding oil, have led countries to make competing claims. In the South China Sea, China has been disputing the boundary of its maritime boundaries, primarily with Vietnam, Malaysia and the Philippines over island groupings known as the Paracels, Spratlys and Scarborough Shoal. The sea beds surrounding these islands are believed to contain natural gas and oil. This speculation is driven by the fact that both Malaysia and Brunei have found large deposits of natural gas and oil, and this is enough of a reason for China, Vietnam and the Philippines to seek to lay hold of these islands. The South China Sea is not the only place where countries seek the redefinition of borders because they may hold mineral resources. For instance, as the Arctic continues to melt, opening up seas and continental shelves, Denmark (via Greenland), Russia, Norway and Canada are in disagreement over claims submitted under the Law of Sea of Convention over parts of the Lomonosov Ridge. The U.S. and Canada have also not agreed on conclusive maritime boundaries in Beaufort Sea, which is a target of keen interest to oil drill interest. Previously inaccessible waterways and land is now causing a resource rush, as countries make their claims. 6 Oil, natural gas, diamonds, and other resources could also lead to renewed civil war and rekindle old hostilities. A fragile peace agreement is currently threatened in the new country of South Sudan because of domestic turmoil in oil drilling regions, the bloodshed could escalate in the Congo (Zaire) over a multitude of resources including diamonds, and Britain and Argentina have rehashed their rivalry concerning the Falkland Islands, over natural gas and oil deposits. All four of these countries have already gone to war before, so the possibility of future conflict must be taken seriously. What underpins this pursuit of resources is scarcity. Resources that are in heavy demand by people and in limited supply can drive countries to make territorial counter claims and bring them to the brink of war in order to attain a particular resource or set of resources. If not resolved diplomatically, it can then spill into an international war. In light of the existence of so many disputes globally over resources, attention will be focused in this paper on a particular case study regarding the conflict over nitrates in the Atacama Desert. In 19th century Latin America, nitrates were a major source of conflict. At that time, the three nations of Bolivia, Peru and Chile sought control of a barren piece of land, called the Atacama Desert. Their dispute changed the power dynamic in the region, giving other countries the perception that Chile was a strong military presence and causing Peru and Bolivia to decrease in status after the War of the Pacific. Bolivia lost access to the coast, tarnishing its sense of national pride and eliminating one of their significant sources of income. The primary reason for the Atacama Desert dispute was the fertilizer trade. Chile gained a monopoly on the South American nitrates market because of its systematic and strategic quest to acquire nitrates for trade primarily with North America and Europe. Chile, Bolivia 7 and Peru all wanted control over the nitrate fields of modern day northern Chile. Chilean mining companies that developed the nitrate deposits were backed by the Chilean government so that they could maintain their holdings. Peru saw an opportunity in nitrates to transition from its shrinking guano fertilizer trade to a new resource and wanted to prevent competition from Chile.
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