Aynak prospect fading

Afghanistan’s trillion dollar wealth is buried in the belly of her rough rocky terrain which requires serious capital intensive operation to unearth and sell it.  The country’s treasury finances the national budget largely from the donation contributed by foreign aid agencies. The external donation is decreasing as the year 2014 of large military withdrawal is approaching. Afghans are desperately looking for other sources of revenues to make the treasury budget fit.

Natural resources specifically the minerals and hydrocarbons are deemed as potential anchors to the economy post 2014.  The World Bank (2004) wrote its first report about the potential of the natural resources in 2004 which was subsequently complemented by translation of the Russian geological data of Afghanistan’s mineral wealth and further studies by the United States Geological Survey to identify potential sites for investment.

There are feasible ore bodies across the country which could bring lucre to Afghanistan. Among them is the Aynak Copper Mine which is 60 km from Kabul city. It has 11.3 pure copper reserves.It was won by the a Chinese joint venture promising to invest around 3 billion dollars in the site with additional promise of building a railway line to connect north to the east of country. The government would get around 300-400 million dollars annually from the export of copper produced, besides employment for Afghans. Mine operation in the area would see brisk urbanization, in-migration, economic expansion, infrastructure project and better security.

Investment in Aynak Copper mine offered window of opportunity for the Afghan government to get regular cash as well as keep a big regional power interested in Afghanistan. Work on the site in Aynak led to employment of many youth in the region which became an attraction for other youth who waited for an opportunity to work. Some of the youth felt a sense of pride in getting US$ 150 per month job with the Chinese. Conversations with some people showed a feeling of jubilation and economic security among them. One of the villager said “Iam working with the mining company and I am happy”. One of the merryold men said that he even stopped insurgents coming into the area to attack the mining site because he convinced themthat it was his source of livelihood. Other then the land issue there was no major stagnant issue. 

However, the Aynak prospects are fading now.  The removal of Atiqullah Ludin the former governor of Logar province who had major contracts from the mining company and the sudden emergence of insurgents in the region has disturbed the equations.  The number of insurgents has increased which have led to increase in attacks on the mining site. 

The land issue is a persisting dilemma for the government. This led to some disillusionment among local people.  The team authorized by the Ministry of Mines, which is largely funded by the World Bank did not see the opportunities to work towards stability and prepare ground for progress. The social development team of the Ministry of Mines failed to figure out the culture and structures of the communities and thus led to persistence of unresolved issues.  The policy team advocated for settling communities claims led to distrust of government.

Recently some rockets landed on the residential compound built for the Chinese workers prompting fear among the laborers unfamiliar with Afghanistan conditions. The laborers abandoned their work and discharged their Afghan employees on short notice.  Insurgent have asked for money from the Chinese or else they would threaten the project. The project has come to a crashing halt which led to conspiracy of foreign involvement.The closure of major activities in the Aynak has rendered many young men jobless and they may turn into easy recruits to insurgents.

By Javed Noorani

Private security is a threat to mining sector

The aid fatigue among the international donors in Afghanistan has led to overdrive to invite private investment in the mining sector. Mining sector in Afghanistan may attract private security companies to enter the realm.The international military intervention in Afghanistan led to massive inflow of easy money which lured many local and foreign companies to provide security services. The NATO withdrawal will leave these companies with huge assets that they will seek to employ for profit making. Among the most lucrative sectors is mining.

Members of a private Blackwater security force scan Bagdhad from the air… (Baghdad/Getty/AFP/Getty)

The efforts to reduce the presence of state from the economic activities and the extension of private investors to commercialize the social welfare activities of state have been the hallmark of the world in the past two decades.Private businesses have sufficiently been incentivized to successfully argue for withdrawal of state from its former spheres of monopoly. However, the quest to reduce state influence may work in developed and transparent states but not in countries like Afghanistan that has weak state institutions and weak regulatory and oversight capacity within those institutions.

Private security companies coming to the mining sector carries a major risk. Weeda Mehran an Afghan scholar pursuing PhD in Cambridge University says using these companies for the mining sector has serious repercussions. The private security companies may be associated with the mining companies and thus threaten the local citizens if they air their concerns. Secondly, they may hinder oversight of the mining operations by the state agencies.

There has been abuse of local communities by private security companies in Africa. There are also reports of rapes and other form of abuses in Gold mines.  There are numerous other instances of violation of rights of people across the developing countries.

The government of Afghanistan in general and the Ministry of Mines in particular must heed to this and define their parameters. Security must be provided through the state security agencies not through private security companies. Allowing private companies to provide protection to mining operations would mean we have not learnt our lessons from Africa. This can lead to serious consequences and resource curse if not checked at the very beginning.

Integrity Watch Afghanistan enters its fifth year of fighting corruption through local communities

Thursday, May 03, 2012: Integrity Watch Afghanistan entered fifth year of its Community Based Monitoring program which started in April 2008. The program is aimed at empowering local communities to monitor infrastructure projects in their localities. On the occasion of completing four successful years of community based monitoring in Afghanistan, Mr. Yama Torabi, Director of Integrity Watch said, “Community Based Monitoring is much more than mere monitoring; it gives people hope that they can do something about corruption. The scope is much larger because it gives people a sense of ownership.”

Community Based Monitoring is the first of its kind in Afghanistan implemented by Integrity Watch. The program has covered a total of 421 construction projects in 29 districts of seven provinces including Bamyan, Badakhshan, Balkh, Herat, Nangerhar, Parwan, and Panjshir. Mr. Mir Ahmad Abid, Director of Economy of Parwan province said that the directorate is faced with a shortage of technical and logistical capacity to monitor construction work which has resulted in low quality of construction projects. “However, the situation is different in areas where community monitoring exists” said Abid.  Abdul Manan, a local monitor who volunteered to monitor a road construction project in Sarak-e-Wazir area of Parwan province evaluated the program as very effective. “It is not a difficult job since I get a lot of technical support from Integrity Watch” said Abdul Manan.

Community Based Monitoring program is a collaboration between local communities and Integrity Watch in which local communities provide volunteers and Integrity Watch provides awareness and technical support to monitor construction projects. The program aims to empower citizens to participate in the lives of their communities, feel ownership of development aid, and combat corruption at the local level. The long term goal is to expand community monitoring to other areas to cover services such as education and health.

Integrity Watch Afghanistan is an Afghan civil society organization committed to increasing transparency, integrity and accountability in Afghanistan through the provision of policy-oriented research, development of training tools, and facilitation of policy dialogue.

For further information, please contact us, at +93(0)785431054 or info@iwaweb.org. Please visit our website at www.iwaweb.org to get more information about Integrity Watch Afghanistan. 

Mining contracts might lead to “resource curse”

Afghanistan has issued four more mine tenders to private investors so far this year. The nine blocks that are offered for sale include rich gold and copper deposits in north and west of the country. However, state institutions require deep knowledge and capacity to handle all aspects of the mining operations of such scale. Developing necessary capacity to dealing with social, environmental, economic, cultural and political impacts of extractive industry takes many years. In addition, a profound understanding of demography will make it easy for the government to negotiate deals that would spin out positive externalities for greater number of Afghans.

 

The Ministry of Mines which is the custodian of the natural resources of Afghanistan still has to develop the needed capacity to regulate and inspect current mining projects in an effective manner. The new contracts that will be inked by the end of 2012 will put additional strain on the existing capacity. The views about the critical gap in capacity of Ministry of Mines, despite positive developments in the recent years, are shared by many including some donor agencies.

Afghanistan certainly needs revenue and investment in the mining sector to cover its expenses and to develop a self-sustaining economy. However, the pace of investment in the mining sector must match the capacity of the regulatory bodies in order to support the economy and to benefit the citizens. Due to low capacity, the Afghan Government will certainly face serious challenges to re-invest the revenue from the mining sector in a sustainable manner. There is a risk that this lack of capacity may accentuate once the international support dwindles further.

The rush in opening up the mining sector in such a manner is subjugated to serious risks. The Afghan Government needs to exercise caution not to stretch the existing regulatory and oversight capacity beyond its limits. Otherwise, quality control will be compromised that would lead to disastrous situations with social, environmental, economic, cultural and political repercussions. The decision makers need to realize that stationary minerals are better and safer underground rather over ground that would leave the Afghan citizens worse off.

Critical pillar of Mine development

Afghanistan is set to open up its mining sector big time for foreign private investment. Time may be ripe for foreign investment to help the state generate revenues for its operations and obligations; however the current capacities of the ministry of mines remain dwarfed by bothersome margin. The Mining sector bears a huge potential for the development of Afghanistan provided it is developed well, properly inspected and audited

Afghanistan’s mining sector has been recipient of huge fund and technical assistance from the World Bank and other international donors to improve capacity at the ministry of mine. The major focus is on how to enhance tendering process and contract concession but there is so much more to mining then just that.

True Afghanistan is a baby among the mine rich countries and there is no doubt that Mr. Wahidullah Shahrani the minister of mines has initiated work for national mining policy, capacity development and five year business plan to encourage investment. Among the issues that require urgent attention are the Inspection, Audit, Labor Standards, Work Standards, and stricter Safety Standard.

Inspection of mining operation is very critical. Afghanistan has awarded about 110 small, medium and big contracts. The Qara Zaghan Gold Contract brings 26% royalty for the state which is very high rate. On paper the contract is very good but there is a need to upgrade current inspection capacity in the MoM in order to reduce the risk of manipulation of books and records as well as evasion of tax.

This can be done in different ways. The number of inspectors at the Ministry of Mines is currently insufficient and it can be easily increased. Further training will enhance existing skills. The country can ill-afford to see its mining sector develop at faster pace than the acquisition of appropriate capacity to ensure safety and Environment Standards, Labor Standards and Work Standards to name few. Good inspection capacity will ensure accurate revenue flow to the national treasury which is often quoted to be the raison d'être for opening the mining sector for private investors. If contract is not implemented and monitored as per the terms of the contract , reports not placed in public domain then the mining sector will not only fail to develop the responsible ways but it may also attract predators to invest in the sector and exploit mine in technically unprofessional manner and avoid lawful obligations. It is of immense importance that the inspection in the ministry of mine is developed adequately to measure up to its responsibility.

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Courtroom and Judges

Experts and people have two opinions and visions regarding the Courtroom and Judges in Afghanistan. First the overall procedures of the courtroom from the legitimacy point of view is observed, and secondly, based on the social effectiveness of the decisions taken by the courts.

The proceeding of the trials according to the view of the experts have been illicit, the rules of the proceedings with in term of fair judgment in the decisions have not been promising. Relationships, power, money (bribe) are the top priority and has special place as long as the decisions of the orders are concerned.

The civil and criminal files in contrast with the law have been kept for long time. Very few open trials in the courts take place due to either lack of integrity or weakness of the judges in conducting of the trials. It is tried that the trials and decisions take place in closed doors, and after the issue of the order, the finger print of the plaintiff is put on the document. Since the orders that have been taken are injustice, the cases and files are circulating in the three courts, and have been kept for unknown period.

The reflection of these illicit acts has declined the trust of the people towards the legitimacy of the trials, and that is the main reason that people solve their civil cases in the local communities.