The Jadar project is certainly a huge environmental concern, but it is much more than that – it is a sad metaphor for a colonial, transitional Serbia. The problem with opening a mine is not only that the potential environmental and social damage is enormous. If lithium mining brings long-term and huge economic benefits, it brings them to Rio Tinto and not to Serbia. Insisting only on the environmental consequences of this project can come back like a boomerang when a study emerges that will “prove” how, the exploitation of lithium does not endanger the environment, or endangers it marginally. Is there any argument left against this project?
Let’s imagine for a moment that the will of the citizens can stop the opening of the mine. Let’s say that Rio Tinto, who has already invested a lot of money, forgot to protect himself from stopping the project on any basis through agreements with the government. Suppose that in the case of arbitration, the state will not have to pay astronomical damages to Rio Tinto (if the project is not realized through the fault of Serbia). Or in short, imagine that Rio Tinto is a naive and inexperienced company, and that on the other hand there are experienced and competent domestic wolves whose honesty and incorruptibility no one has reason to doubt.
If everything were as described, the Rio Tinto project would have to be approached seriously, impartially, through a meticulous economic analysis of benefits and costs – for Serbia. In that analysis, the environmental dimension of the project, however important, could not be the exclusive criterion that determines the fate of the investment. Environment may be the obsession of green activists, but states cannot afford too much green luxury.
Environmental pressure
Every mine is an ugly scar on the face of the earth, so it burns and rusts when it is dug where there are fertile fields or where beauty is disturbed or nature is polluted. Unfortunately, the world is not a pastoral Arcadia, nor are citizens willing to sacrifice comfort and their consumer habits to preserve nature. The Greens live in their romantic, simplified world, but except for words, they would not sacrifice much. No one wears banners at environmental protests that read: “we want to spend less”, “we don’t want lithium or mobile phones”, “ban all private cars and electric ones”, “ban the construction of big houses or apartments that use energy”.
Violence against nature is perpetrated today for commercial rather than existential reasons. Serious countries always weigh the economic effects in relation to the environmental and social damages that investments bring. The social damage is enormous because it implies a traumatic relocation of entire settlements or a drastic reduction in the quality of life of those settlements that remain next to the mines. By the way, the social damage is huge even when the mines close.
Coal mines in Serbia are a good example of such dilemmas. Although it is a matter of severe desecration of nature and pollution of the atmosphere, these mines provide some kind of energy security, ensure that citizens are heated and have electricity. At the same time, Serbia does not have to spend foreign currency on coal, which it earns hard and which has been its most scarce commodity for decades. Coal also ensures that you do not die from winter and hunger if the powerful get angry with you and deny you the import of energy. Serbia must not forget how life was when Western friends, for example, imposed an oil embargo on it in the 1990s.
Once again, the key question is whether the economic and strategic benefits of mines can compensate for the damage they do to people and nature – this applies to all investments, not just mines.
What are the economic benefits that Serbia expects from the opening of the lithium mine?
According to data recently published in a text published in the prestigious “Financial Times” (December 27, 2021), the production of lithium in Serbia should have miraculous economic effects. The figures are based on calculations by the Serbian government and according to them it was supposed to increase its gross domestic product by about 10 billion euros a year, or an incredible 22 percent of current GDP. This figure also includes all the future effects of this investment, because in addition to the mine, foreign investors could also appear who would open technological factories that use lithium. The GDP growth figures projected by Rio Tinto are much more modest, but the government knows something that Rio Tinto does not know and hence optimism.
If these projections are correct and if Serbia really “earns” 10 billion euros a year, there is no reason, not even environmental ones, not to invest. Serbia could offer households that have to relocate to relocate them to Tuscany or Provence, if another location in Serbia doesn’t suit them. The loss in food production due to the opening of the mine could be compensated by importing luxurious delicatessen products from all over the world, and the environmental one – “Tesla”. Protest leaders could even get one flying car each, which according to some announcements will be produced in Serbia. And after all these gallant costs, there would be more – 10 billion euros a year is a huge figure for a small country.
Let’s leave the irony aside and take another look at the data from the mentioned article. Even if the figures are accurate and do not serve to grossly deceive the public, the key illusion is contained in expressing the effects of investment on GDP growth. The illusions that the calculation of GDP creates are best seen when we move from Serbia to the west of Europe.
Statistical illusions
Today, Ireland has twice the GDP per capita of France and about 85 percent of GDP per capita of Germany. This should mean that the citizens of Ireland live much better and have much higher incomes than the mentioned countries do not have. It is a statistical illusion created by the calculation of GDP. When the triumphant effects of Irish GDP are translated into real life, the real incomes of Irish people are at the level of the French, and they lag behind the German, Austrian or Scandinavian ones, for example. How is it possible?
GDP includes all values ​​created in the national economy regardless of who is the “owner” of these effects. Irish GDP accounts for the bookkeeping revenues of a large number of Western technology companies using Ireland as a low-tax country and records revenues. They are in Ireland’s GDP but not in the lives of Irish people.
If Rio Tinto exploits and exports ore from Serbia tomorrow, export revenues will increase Serbian GDP, but those revenues belong to Rio Tinto and, as a rule, do not remain in Serbia. Serbia will have an ore rent from that, maybe Rio Tinto will pay some taxes, and some will even get a salary working for Rio Tinto. This is where the financial benefits for Serbia will end and they will be incomparably less than the statistical growth of GDP.
Indirect effects
Paid economists will explain that the indirect effects of the investment will be miraculous and much greater than the direct effects. Economists are very fond of indirect effects because they can estimate them, increase them and manipulate them as much as they want, or as much as they are paid. If battery factories open and their exports start, the value of exports will increase GDP. Here, too, Serbia may, if lucky, collect a church tax, and employees will even receive a salary church. If something more is asked from the church, or no subsidies are given, then there will be no factory. More precisely – there will be, but not in Serbia, but where the churches are even smaller than in Serbia and / or the subsidies are higher.
There is no doubt that well-paid and well-oiled expert analyzes will show that environmental damage is minimal. The new, miraculous technology is such that it actually greens the landscape, reduces existing pollution, prolongs life and increases birth rates. The government will wave that analysis, brag about grotesque figures of future GDP growth and thus justify what has (may be) signed a long time ago as a powerful argument when he sues Serbia for breach of contract and compensation for damages, if any.
But what if there is a change of government? Nothing, or more precisely: nothing at all. The new authorities will accuse the old authorities of leaving them hot potatoes, of being to blame for everything, of taking on contractual obligations such that, despite the protests, the mine must still be opened. As they say that, their mustaches will smile – there will be fervor for the new authorities as well.
The saga of the lithium mine goes far beyond the somewhat fashionable environmental agenda. The environmental effects here only more clearly show all the absurdity of the transitional development model. It is just another illustration or symbol of Serbia’s colonial status, its Africanization and insane obsession with foreign investment. Serbia became a colony without anyone noticing.
If it seems to someone that the story of the Africanization of Serbia is just empty, communist ingenuity, let him at least remember the part of the text that indicates the deceitfulness of GDP as a measure of economic success and profitability of foreign investments, RTS reports.
