An Interview with Lorenzo Delesgues, Director of Integrity Watch Afghanistan (IWA), about the newly discovered Mineral Riches in Afghanistan



ECC: Did the news about vast mineral riches in Afghanistan that were discussed in June come as a surprise to you?


Lorenzo Delesques (LD): Absolutely not. There had been a lot of information circulating about this topic before this time. For example, three years ago our organization had already published a report about the potentials for Afghanistan’s natural resource wealth to serve in decreasing the country’s aid dependency. The only difference is that this time the information appeared in the New York Times causing a huge media attention. It is also worth mentioning that so far reports failed to address the important potentials linked to the country’s abundant Lithium reserves, a mineral used for the production of cell phones, batteries and other electronic devices. The new report speaks of considerable reserves.



ECC: The country’s history in mining is still very short. Maybe you can give us a brief overview of the most important developments.



LD: At the moment, the future for Afghanistan’s natural resource exploitation is indeed very unclear. So far, there is no large-scale extraction industry. This sector has been rather dominated by local groups doing small-scale artisan mining. A big iron mine is located in Bamyan province. However, the only large scale exploitation that is taking place at the moment is done in a Chinese copper mine located in Aynak. The contractual agreements signed between the State and the Chinese company actually give good examples of how exploitation in a fragile environment can be organized to minimize the potential for conflict. For example, it investigates how the economic spill overs of the mining industry could serve to benefit local businesses. The problem is that the contract is very technical and that it will be a challenge for the Afghan state to monitor its implementation. If you do not manage the natural wealth sustainably in the long run but for short-term profits you will definitely create an environment for conflict.



ECC: But how realistic is the vision that Afghanistan at one point will be able to exploit the resources to its own benefit? Is it not more likely that international companies will exploit the weakness of the Afghan state for their own profits?


LD: I agree to a certain point with you. To exploit these large reserves companies need to invest a lot of resources first. With the copper mine in Aynak, the Chinese company benefited from research that had already been done by the Russians. Most Afghan businesses lack this capacity but there are medium large enterprises that play a role in the exploitation. Already today, Afghan companies may actually have the potential to get engaged in joint ventures. And do not forget about the spill over effects of large-scale mining processes. There, Afghan companies may have good chances for business.



ECC: How does the geographical distribution of resources look like compared to the areas that still encounter ongoing conflict?



LD: There is a belt of natural resources running from the Northeast to the Southeast. The Aynak mine is actually very close to Kabul. Other big reserves are in Logar. The oil fields are in the North while there are numerous other locations where we expect important discoveries to be made.



ECC: But still, how relevant will be the weakness of the Afghan central state in relationship to local warlords, Taliban strongholds or other power brokers when it comes to the exploitation of resources in their area of influence?


LD: The large resource wealth is very concentrated but distributed across the country. In these very specific areas a large-scale exploitation would need to take place which could be well protected against potential disturbers. The problem arises much more with small-scale mining where it is easier for local strongmen to exploit the resources and therefore the incentive to make large profits is much higher. The more important question is whether the Afghan state is going to be able to hold the companies accountable to their obligations. Some developments are really promising. Let’s take the Aynak mine as an example again. Whether Chinese or Kazakh, allegations of bribery have been voiced against all competitors involved.. But the Chinese contract for the Aynak mine has really been the best proposition according to many international experts. A subcontractor of the World Bank that consulted the Afghan state brokered the negotiation. As a result, the contract entails a lot of social investments, strict socio-environmental precautions (Equator principles) and important royalties for the Afghan state.

ECC: Given these promising first steps, what would be the recipe for the Afghan state to actually benefit from its wealth in the long run?



LD: First, Afghanistan needs to move forward slowly. Do one large scale exploitation at a time and learn from the experiences before you go to the next one and improve the system continually. Second, increase transparency at each step of the contract and the financial flows to create the conditions for monitoring and accountability through independent actors from civil society, especially for people from that area. Third, it needs a good restructuration of the interlinkages between the Ministry of Mines and the other ministries. It is a big problem that the different sector departments so far fail to impose checks and balances on each other. Corruption in just one ministry is not the issue, but the overall governance system needs to be improved.



ECC: What is the role of Integrity Watch Afghanistan in this process?


LD: Three years ago, we did the first public study of Aynak concerning economic and social effects of the mining endeavor. Currently, we are preparing a baseline study in Aynak to create a sort of “time capsule” of the current environmental, social and economical conditions. In the future this may serve as a point of reference for all actors to measure the actual effects of the mine. Another major area of our work is training of the communities to teach them how to do basic environmental measurements. So that they can actually generate data that may hold the company and the government accountable. And we want to foster a constructive dialogue between government, companies and civil society.



ECC: Can you tell us a bit more about your work in the area of community mobilization?


LD: The communities in the mining areas will be key to increase accountability in a governance setting like Afghanistan. They are the first that can voice concerns should the social investments, that is schools, roads, and generators the Chinese promised to build in the area around the mine, not be implemented according to the contract. The experiences with monitoring of the social investments have been quite positive so far and we hope that we will be able to implement similar accountability mechanisms with regard to actual mining. Community mobilization is one of the best ways to fight corruption. You do not fight corruption by only targeting corruption but by supporting people in doing their job as citizens in holding accountable implementers of public goods - and this model is working.



ECC: How would a potential withdrawal of the ISAF troops affect your work and the accountability mechanisms you have just described?


LD: You need a certain level of security. But ISAF troops are just one part of the puzzle. You need to manage the relationship to the communities well. If you fail to do so, you create conflict. This is something the Afghan state but especially the donors have to learn.



ECC: How will the Afghan natural resource sector look like ten years in the future?


LD: There will be an increased presence of international players. The Chinese, certainly India, potentially in a joint venture, will continue to be important players. Also the Americans, Russians and Canadians have continually voiced their interest. Hopefully there will be relative peace and accountability for the money to actually benefit the Afghan people. There are many things that threaten this perspective. And among them you have how mines are managed at the moment. The World Bank currently plays a very constructive role in getting these things right. So, I cross fingers. Everything is possible.

The interview was conducted by Joeran Altenberg.



Integrity Watch Afghanistan was founded in May 2006 with the mission to increase transparency, integrity, and accountability in Afghanistan through policy-oriented research, the development of monitoring tools and trainings for the facilitation of policy dialogue. For further information, please see http://www.iwaweb.org/



The New York Times article on the mineral riches in Afghanistan is available at http://www.nytimes.com/2010/06/14/world/asia/14minerals.html?scp=2&sq=afghanistan&st=cse



More information on the Aynak copper mine can be found at http://www.iwaweb.org/reports/AssessmentofThreatsandOpportunitiesforDevelopment2008.html

Published in: ECC-Newsletter, August 2010