Washington targeted ‘corrupt’ mines. Workers paid the greatest price.
Treasury Department sanctions on far-off nickel mines in central America were supposed to protect vulnerable workers and ward against government corruption. Instead, they triggered an economic crisis with fatal consequences
EL ESTOR, GUATEMALAJosé Trabaninos and his uncle Edi Alarcón were arguing again. Sitting by the wire fence that cuts through the dirt between their shacks, surrounded by children’s toys and stray dogs and chickens ambling through the yard, the younger man pressed his desperate desire to travel north.It was spring 2023. About six months earlier, American sanctions had shuttered the town’s nickel mines, costing both men their jobs. Trabaninos, 33, was struggling to buy bread and milk for his 8-year-old daughter and worried about anti-seizure medication for his epileptic wife. If he made it to the United States, he believed he could find work and send money home.“I told him not to go,” recalled Alarcón, 42. “I told him it was too dangerous.”U.S. Treasury Department sanctions imposed on Guatemala’s nickel mines in November 2022 were meant to help workers like Trabaninos and Alarcón. For decades, mining operations in Guatemala have been accused of abusing employees, polluting the environment, violently evicting Indigenous groups from their lands and bribing government officials to escape the consequences. Many activists in Guatemala long wanted the mines closed, and a Treasury official said the sanctions would help bring consequences to “corrupt profiteers.”But the economic penalties did not alleviate the workers’ plight. Instead, it cost thousands of them a stable paycheck and plunged thousands more across an entire region into hardship. The people of El Estor became collateral damage in a widening gyre of economic warfare waged by the U.S. government against foreign corporations, fueling an out-migration that ultimately cost some of them their lives.Treasury has dramatically increased its use of financial sanctions against businesses in recent years. The United States has imposed sanctions on technology companies in China, automobile and gas producers in Russia, cement factories in Uzbekistan, an engineering firm and wholesaler in Bosnia. This year, two-thirds of sanctions have been imposed on “organizations,” including businesses — a big increase from 2017, when only a third of sanctions were of that type, according to a Washington Post analysis of sanctions data collected by Enigma Technologies.The U.S. government is putting more sanctions on foreign governments, companies and people than ever. But these powerful tools of economic warfare can have unintended consequences, hurting civilian populations and undermining U.S. foreign policy interests. The Money War investigates the proliferation of U.S. financial sanctions and the dangers of overuse.These efforts are often defended on moral grounds. Washington frames sanctions on Russian businesses as a necessary response to President Vladimir Putin’s illegal invasion of Ukraine, for example, and has justified sanctions on African gold mines by saying they help fund the Wagner Group, which has been accused of child abductions and mass executions.But whatever their benefits, these actions also cause untold collateral damage. Globally, U.S. sanctions have cost hundreds of thousands of workers their jobs over the past decade, The Post found in a review of a handful of the measures. Gold sanctions on Africa alone have affected roughly 400,000 workers, said Akpan Hogan Ekpo, professor of economics and public policy at the University of Uyo in Nigeria — either through layoffs or by pushing their jobs underground.In Guatemala, more than 2,000 mine workers were laid off after U.S. sanctions shut down the nickel mines. The companies soon stopped making annual payments to the local government, leading dozens of teachers and sanitation workers to be laid off as well. Projects to bring water to Indigenous groups and repair decrepit bridges were put on hold. Business activity cratered. Unemployment, poverty and hunger rose.As the mine closures stretched from weeks to months, another unintended consequence emerged: Migration out of El Estor spiked.Yadira Cisneros and José Trabaninos with their daughter in Asunción Mita, Guatemala. (Family photo)The Treasury Department said sanctions on Guatemala’s mines were imposed in part to “counter corruption as one of the root causes of migration from northern Central America.” They came as the Biden administration, in an initiative led by Vice President Kamala Harris, was spending hundreds of millions of dollars to stem migration from Guatemala, Honduras and El Salvador to the United States. But according to Guatemalan government records and interviews with local officials, as many as a third of mine workers attempted to move north after losing their jobs. At least four died trying to reach the United States, according to Guatemalan officials and the local mining union.As they argued that day in May 2023, Alarcón said, he gave Trabaninos several reasons to be wary of making the trip. The coyotes, or smugglers, could not be trusted. Drug traffickers roamed the border and were known to kidnap migrants. And then there was the desert heat, a mortal threat to those journeying on foot, who might go days without access to fresh water.Alarcón thought it seemed possible the United States might lift the sanctions. Why not wait, he asked his nephew, and see if the work returns?Fishermen on Lake Izabal, Guatemala’s largest lake.‘We made our little house’Leaving El Estor was not an easy decision for Trabaninos. Once, the town had provided not just work but also a rare chance to aspire to — and even achieve — a comparatively comfortable life.Trabaninos had moved from the southern Guatemalan town of Asunción Mita, where he had no job and no money. At 22, he still lived with his parents and had only briefly attended school.So he leaped at the opportunity in 2013 when Alarcón, his mother’s brother, said he was taking a 12-hour bus ride north to El Estor on rumors there might be work in the nickel mines. Alarcón’s wife, Brianda, joined them the next year.El Estor sits on low plains near the country’s biggest lake, Lake Izabal. Its 20,000 residents live mainly in single-story shacks with corrugated metal roofs, which sprawl along dirt roads with no stoplights or signs. In the central square, a ramshackle market offers canned goods and “natural medicines” from open wooden stalls.Towering to the west of the town is the Sierra de las Minas, the Mountain Range of the Mines, a geological treasure trove that has attracted international capital to this otherwise remote backwater. The mountains hold deposits of jadeite, marble and, most importantly, nickel, which is critical to the global electric vehicle revolution. The mountains are also home to Indigenous people who are even poorer than the residents of El Estor. They tend to speak one of the Mayan languages that predate the arrival of Europeans in Central America; many know only a few words of Spanish.The region has been marked by bloody clashes between the Indigenous communities and international mining corporations. A Canadian mining firm began work in the region in the 1960s, when a civil war was raging between Guatemala’s business-friendly elite and Mayan peasant groups. Tensions erupted here almost immediately. The Canadian firm’s subsidiaries were accused of forcibly evicting the Q’eqchi’ people from their lands, intimidating officials and hiring private security to carry out violent reprisals against locals.“If the mine had not been closed down, he would be with us today.” Edi Alarcón, with wife Brianda at their home, of nephew José Trabaninos“I absolutely don’t want ... that company here. These lands here are soaked full of blood, the blood of my husband.” Angélica Choc, at her home in El EstorIn 2007, 11 Q’eqchi’ women said they were raped by a group of military personnel and the mine’s private security guards. In 2009, the mine’s security forces responded to protests by Indigenous groups who said they had been evicted from the mountainside. They shot and killed Adolfo Ich Chamán, a teacher, and reportedly paralyzed another Q’eqchi’ man. (The firm’s owners at the time have contested the accusations.)In 2011, the mining firm was acquired by the international conglomerate Solway, which is headquartered in Switzerland. But allegations of Indigenous mistreatment and environmental contamination persisted.“From the bottom of my heart, I absolutely don’t want — I don’t want; I don’t; I absolutely don’t want — that company here,” said Angélica Choc, 57, Ich’s widow, as she dabbed away tears. To Choc, who said her brother had been jailed for protesting the mine and her son had been forced to flee El Estor, U.S. sanctions were an answer to her prayers. “These lands here are soaked full of blood, the blood of my husband.”And yet even as Indigenous activists struggled against the mines, they made life better for many employees.After arriving in El Estor, Trabaninos found a job at one of Solway’s subsidiaries cleaning the floor of the mine’s administrative building, its workshops and other facilities. He was soon promoted to operating the power plant’s fuel supply, then became a supervisor, and eventually secured a position as a technician overseeing the ventilation and air management equipment, contributing to the production of the alloy used around the world in cellphones, kitchen appliances, medical devices and more.When the mine closed, Trabaninos was making 6,500 quetzales a month — roughly $840 — significantly above the median income in Guatemala and more than he could have hoped to make in Asunción Mita, his uncle said. Alarcón, who had also moved up at the mine, bought a stove — the first for either family — and they enjoyed cooking together.Vendors at El Estor’s main market have reported sharp declines in business since the mines closed.Trabaninos also fell in love with a young woman, Yadira Cisneros. They bought a plot of land next to Alarcón’s and started building their home. In 2016, the couple had a girl. They affectionately referred to her sometimes as “cachetona bella,” which roughly translates to “cute baby with big cheeks.” Her birthday parties featured Peppa Pig cartoon decorations.The year after their daughter was born, a stretch of Lake Izabal’s coastline near the mine turned a strange red. Local fishermen and some independent experts blamed pollution from the mine, a charge Solway denied. Protesters blocked the mine’s trucks from passing through the streets, and the mine responded by calling in security forces. Amid one of many confrontations, the police shot and killed protester and fisherman Carlos Maaz, according to other fishermen and media accounts from the time.In a statement, Solway said it called police after four of its employees were kidnapped by mining opponents and to clear the roads in part to ensure passage of food and medicine to families living in a residential employee complex near the mine. Asked about the rape allegations during the mine’s Canadian ownership, Solway said it has “no knowledge about what occurred under the previous mine operator.”Still, calls were beginning to mount for the United States to punish the mine. In 2022, a leak of internal company documents revealed a budget line for “compra de líderes,” or “buying leaders.”Several months later, Treasury imposed sanctions, saying Solway executive Dmitry Kudryakov, a Russian national who is no longer with the company, “allegedly led multiple bribery schemes over several years involving politicians, judges, and government officials.” (Solway’s statement said an independent investigation led by former FBI officials found payments had been made “to local officials for purposes such as providing security, but no evidence of bribery payments to federal officials” by its employees.)Cisneros and Trabaninos didn’t worry right away. Their lives, she recalled in an interview, were improving.“We started from nothing. We had absolutely nothing. But then we bought some land. We made our little house,” Cisneros said. “And little by little, we made things.”Soil extracted by the Mayaniquel mine lies on a mine property, covered to avoid erosion. The Treasury Department has not produced evidence to support its justification for putting this mine under sanctions.‘They would have found this out instantly’Trabaninos and other workers understood, of course, that they were out of a job. The mines were no longer open. But there were confusing and contradictory rumors about how long it would last.The mines promised to appeal, but people could only speculate about what that might mean for them. Few workers had ever heard of the Treasury Department more than 1,700 miles away, much less the Office of Foreign Assets Control that manages sanctions or its byzantine appeals process.As Trabaninos began to express concern to his uncle about his family’s future, company officials raced to get the penalties rescinded. But the U.S. review stretched on for months, to the particular shock of one of the sanctioned parties.Treasury sanctions targeted two entities: the El Estor-based subsidiaries of Solway, which gather and process nickel, and Mayaniquel, a local company that collects unprocessed nickel. In its announcement, Treasury said Mayaniquel was also in “function” a subsidiary of Solway, which the government said had “exploited” Guatemala’s mines since 2011.Documents related to legal proceedings against Julio Anselmo Toc, a leader of a fishermen’s union in El Estor who protested the mining operations. Tensions between the community and the mining operations remain high even after U.S. sanctions shuttered the mines. Many mining properties were covered in red graffiti telling the operators to leave the area. Mayaniquel and its Swiss parent company, Telf AG, immediately contested Treasury’s claim. The mining firms shared some joint costs on the only road to the ports of eastern Guatemala, but they have different ownership structures, and no evidence has emerged to suggest Solway controlled the smaller mine, Mayaniquel argued in hundreds of pages of documents provided to Treasury and reviewed by The Post. Solway also denied exercising any control over the Mayaniquel mine.Had the mines faced criminal corruption charges, the United States would have had to justify the action in public documents in federal court. But because sanctions are imposed outside the judicial process, the government has no obligation to disclose supporting evidence.And no evidence has emerged, said Jonathan Schiller, a U.S. lawyer representing Mayaniquel.“There is no relationship between Mayaniquel and Solway whatsoever, beyond Russian names being in the management and ownership of the separate companies. That is uncontroverted,” Schiller said. “If Treasury had picked up the phone and called, they would have found this out instantly.”The sanctioning of Mayaniquel — which employed several hundred people — reflects a degree of imprecision that has become inevitable given the scale and pace of U.S. sanctions, according to three former U.S. officials who spoke on the condition of anonymity to discuss the matter candidly. Treasury has imposed more than 9,000 sanctions since President Joe Biden took office in 2021. A relatively small staff at Treasury fields a torrent of requests, they said, and officials may simply have too little time to think through the potential consequences — or even be sure they’re hitting the right companies.In the end, Solway terminated Kudryakov’s contract and implemented extensive new human rights and anti-corruption measures, including hiring an independent Washington law firm to conduct an investigation into its conduct, the company said in a statement. Louis J. Freeh, the former director of the FBI, was brought in for a review. And it relocated the headquarters of the company that owns the subsidiaries to New York City, under U.S. jurisdiction.Solway “is making its best efforts” to adhere to “global best practices in transparency, responsiveness, and community engagement,” said Lanny Davis, who served as an aide to President Bill Clinton and is now an attorney for Solway. “Our focus is firmly on environmental stewardship, respecting human rights, and supporting the rights of Indigenous people.”Following an extended battle with the mines’ attorneys, the Treasury Department lifted the sanctions after about 14 months.In August, Guatemala’s government reactivated the export licenses for Solway’s subsidiaries; the company is now trying to raise international capital to restart operations. But Mayaniquel has yet to have its export license renewed.A photo of Candida Caal’s mother, who the family said died because Caal’s husband could no longer buy diabetes medicine for her after he was laid off from his mining job.‘It is their fault we are out of work’The consequences of the penalties, meanwhile, have ripped through El Estor. As the closures dragged on, laid-off workers such as Trabaninos decided they could no longer wait for the mines to reopen.One group of 25 agreed to go together in October 2023, about a year after the sanctions were imposed. They joined a WhatsApp group, paid a bribe to a smuggler and prepared to leave El Estor on the same day. Some of those who went showed The Post photos from the trip, sleeping on buses in Mexico and joking with Chinese tourists they met along the way.Then everything went wrong. At a warehouse near the U.S.-Mexico border, their smuggler was attacked by a group of drug traffickers, who executed the smuggler with a gunshot to the back, said Tereso Cacheo Ruiz, one of the laid-off miners, who said he watched the killing in horror. The traffickers then beat the migrants and demanded they carry backpacks filled with cocaine across the border. They were kept in the warehouse for 12 days before they managed to escape and make it back to El Estor, Ruiz said.“Until the sanctions shut down the mine, I never could have imagined that any of this would happen to me,” said Ruiz, 36, who operated an excavator at the Solway plant. Ruiz said his wife left him and took their two children, 9 and 6, after he was laid off and could no longer provide for them.“It is their fault we are out of work,” Ruiz said of the sanctions. “The United States was the reason all this happened.”It’s unclear how thoroughly the U.S. government considered the possibility that Guatemalan mine workers would try to emigrate. Sanctions on the mines — pushed by the U.S. Embassy in Guatemala — faced internal resistance from Treasury Department officials who feared the potential humanitarian consequences, according to two people familiar with the matter who spoke on the condition of anonymity to describe internal deliberations. A State Department spokesman declined to comment.A Treasury spokesman declined to say what, if any, economic assessments were produced before or after the United States put one of the most significant employers in El Estor under sanctions. The spokesman also declined to provide estimates on the number of layoffs worldwide caused by U.S. sanctions. Last year, Treasury launched an office to analyze the economic impact of sanctions, but that came after the Guatemalan mines had closed.Human rights groups and some former U.S. officials defend the sanctions as part of a broader warning to Guatemala’s private sector. After a 2023 election, they say, the sanctions put pressure on the country’s business elite and others to abandon former president Alejandro Giammattei, who was widely feared to be trying to pull off a coup after losing the election.“Sanctions absolutely made it possible for Guatemala to have a democratic option and to protect the electoral process,” said Stephen G. McFarland, who served as ambassador to Guatemala from 2008 to 2011. “I won’t say sanctions were the most important action, but they were essential.”“It is their fault we are out of work. The United States was the reason all this happened.” Tereso Cacheo Ruiz, who almost died on one of his attempts to migrate to the United States after losing his job because of sanctions“When the mine was here, business was magnificent. And now there’s nothing.” Julia Jesus Caal, a chicken vendor who now struggles to buy her arthritis medicineThe collateral damage, however, went far beyond the workers who lost their jobs.The unemployment rate in El Estor rose by more than 10 percentage points and requests for food rations soared, said Carlos Tenas Martinez, the governor of the Izabal Department, which includes El Estor. A Guatemalan government report attributed a spike in child malnutrition in the area to the closure of the mines, though other factors — including a recent drought, the pandemic and two devastating storms — probably contributed as well. The city has since laid off roughly 35 percent of its workforce, according to a rough estimate by former mayor Rony Méndez.“The wrong the U.S. did for the people is at every level, from the manager in Guatemala City who got laid off to the peasant who has no alternative who migrated to the U.S., putting his or her life in danger in the process,” said Antonio Malouf, who served as the economic minister of Guatemala before resigning and becoming a Giammattei critic. Malouf added that there was never any evidence that Mayaniquel functioned as a subsidiary of Solway.In the town market, vendors bemoaned the loss of business. Julia Jesus Caal, 53, said she once routinely sold more than 100 pounds of chicken a day — often to Russian mining executives, who no longer come by. Now she struggles to sell even 25 pounds. The steep drop-off means she often can’t afford to buy medicine for her chronic arthritis.“When the mine was here, business was magnificent,” Caal said. “And now there’s nothing.”Mario Augusto Cac Caal, 29, worked as a flagger at the Mayaniquel mine. Without work, he said, he has been unable to afford vitamins and other supplements for his 8- and 6-year-old daughters, who have severe anemia. And the mother of another Mayaniquel flag-waver sobbed as she recalled how her 20-year-old son migrated to Phoenix.“I tried to convince him not to leave but the need was greater,” said Clara Itz Cuc, 45. She worries about him being alone in a giant American city and wishes she could make him dinner. “There is so much pain in my heart,” she said. “I don’t know if I’ll ever see him again.”Laid-off miner Henry Quim, 29, said he has been left helpless to watch his father succumb to cancer because their family can no longer afford to pay an oncologist in the Guatemalan capital. Quim, who paid smugglers to take him to the United States but returned to El Estor after the journey failed, said: “What can I buy now? Nothing.”After arguing with his uncle, Trabaninos tried migrating to the United States with several other former miners in May 2023. The trip failed and he wound up back in El Estor.Three days later he was gone again, traveling this time with someone from El Salvador.Yadira Cisneros waited, hearing little for about four months. Then came a call from the Guatemalan government.Trabaninos’s body had been found in or near Arizona, Alarcón said. The suspected cause of death was heat stroke. Cisneros received his body, along with his wallet, shoes, shirt and pants. He was buried in Asunción Mita, the town he had left so long ago.“If the mine had not been closed down, he would be with us today,” Alarcón said. “That is the reason he died.”Last month, Alarcón said he’d heard a rumor that two more former workers from El Estor had taken off for the United States. The men had not been heard from in weeks. Nobody knew their fates.About this storyFederica Cocco and Mariana Alfaro contributed to this report. Design and development by Stephanie Hays. Photo editing by Haley Hamblin. Design editing by Betty Chavarria. Visual editing by Karly Domb Sadof.Editing by Mike Madden and Lori Montgomery. Copy editing by Kim Chapman.Project editing by Ana Carano. Additional production and support from Jordan Melendrez, Sarah Murray, Megan Bridgeman, Kathleen Floyd, Jenna Lief and Alisa Vasquez.
