China taps huge copper reserves in Afghanistan
By RICHARD LARDNER, Associated Press Writer Richard Lardner, Associated Press Writer Sat Oct 31, 7:13 pm ET
WASHINGTON – At a former al-Qaida stronghold southeast of the Afghan capital, a state-owned Chinese company is at work on a $3 billion mine project to tap one of the world's largest unexploited copper reserves, a potential financial boon for an impoverished country mired in war.
The promise of a bright future at Aynak, however, cannot conceal the troubling reality of how business is often done in Afghanistan, according to critics of the Kabul government's decision to reject bids from competitors in the U.S., Canada and other countries.
The bidding process unfairly favored China, they allege, and epitomized the back-room deals and abuse of power that has turned Afghans against their government and undercut the U.S. military effort there.
Corruption and graft long have been ingrained in Afghanistan's public institutions. Yet the extent of this corrosion has taken on new significance as the White House considers expanding the U.S. commitment to a war unsupported by a growing number of Americans.
Widespread fraud in Afghanistan's presidential election in August has raised doubts about how quickly a stable and credible government can be installed. A U.N.-backed commission threw out nearly one-third of President Hamid Karzai's votes, setting the stage for a Nov. 7 runoff.
In his recent assessment of the situation in Afghanistan, the top U.S. commander warned that unchecked corruption has led alienated Afghans to support the Taliban-led insurgency.
Afghan officials insist the Aynak bidding was handled openly and honestly, and will create thousands of jobs. But several U.S. geologists and Western businessmen who watched the process closely disagree.
James Yeager, an American geologist who advised Afghanistan's minister of mines, says a few Afghan officials dominated a secretive selection process that gave the winner, China Metallurgical Group Corp., improbably high marks over its foreign competitors.
Said Tayeb Jawad, Afghanistan's ambassador to the United States, said the bidding process was above board. He said he pushed for the U.S. bidder, Phelps Dodge, to be awarded the Aynak rights, but that China offered to start work right away while Phelps wanted to wait until the country was safer.
"We can't afford to give the mining rights to a company that will sit on them for the next 10 or 15 years," Jawad said.
China Metallurgical, better known as MCC, has a poor track record with mining projects in other countries, according to Yeager and other critics. In neighboring Pakistan, for example, where MCC operates a copper mine, there's been little benefit to the local economy. But that information was ignored during the deliberations, they say.
MCC did not immediately respond to questions submitted by e-mail, as the company requested, about whether MCC received special treatment from the Afghan government on the Aynak bidding process; whether it was allowed to see copies of other bids, as at least one competitor alleges; or whether the Pakistan mine has failed to help the local economy.
The Aynak deal was awarded to the Chinese late 2007, but the project is only now getting under way. Before copper can be hauled from the ground, China must make a substantial investment to build a power-generating station, roads and a railway to move the metal.
Yeager and Larry Snee, a former U.S. Geological Survey official who also has worked in Afghanistan, contend that MCC probably will steer most of the jobs to Chinese workers.
"Of course, the Afghans are going to benefit," Snee said. "But will they get all they deserve?"
China needs huge quantities of raw materials to feed its rapid economic growth and energy demands. It is well positioned to become the dominant force in Afghanistan's potentially lucrative minerals sector, said Don Ritter, president of the Afghan-American Chamber of Commerce in McLean, Va.
"In what direction do (Afghanistan's) mines and minerals develop?" Ritter said. "Do they go the Eastern model, where everything is done behind a closed door? Or, is there an open, transparent competition, where the money is laid on the table without undue influence?"
Yeager has distributed a 78-page report on the Aynak contract in which he contends that M. Ibrahim Adel, Afghanistan's minister of mines, and his associates shut out legal, financial and technical experts who could have helped them on the decision.
Yeager doesn't accuse Adel or anyone else from benefiting personally by awarding the work to MCC. But the final decision, Yeager says, was dictated by bureaucrats concerned with dollar amounts and personal preferences.
One of the losing competitors for the contract was Hunter Dickinson, a global mining company based in Vancouver, Canada. Robert Schafer, Hunter Dickinson's chief of business development, said an Afghan official told him that its bid had been shown to the Chinese while the proposals were being evaluated.
Schafer said he "wasn't surprised at all" to learn that MCC won.
Wang Baodong, a spokesman for the Chinese Embassy in Washington, did not address the allegations. He said China is committed to pursuing economic, trade and investment projects in Afghanistan that benefit both countries.
China has contributed little to improving security in Afghanistan, yet with the Aynak deal, stands to gain from the sacrifices made by the U.S. and NATO in troops and money.
"The world isn't fair," said Robert Kaplan, a senior fellow at the Center for a New American Security in Washington. "A worse outcome to staying and helping the Chinese would be withdrawing and losing a great battle in the war against radical Islam."
___
On the Net:
Afghanistan's Ministry of Mines: http://us.rd.yahoo.com/dailynews/ap/ap_on_bi_ge/storytext/us_afghanistan_copper_mine/33926340/SIG=10kdbm3g1;_ylt=AgTtkTXzc1Z7cobsKeoL6Z9v24cA;_ylu=X3oDMTFodDlkazUyBHBvcwM0BHNlYwN5bl9zdG9yeV9wcmludF9jb250ZW50BHNsawNodHRwbW9tZ292YWY-/*http://mom.gov.af/
Afghan-American Chamber of Commerce: http://www.a-acc.org/
By RICHARD LARDNER, Associated Press Writer Richard Lardner, Associated Press Writer Sat Oct 31, 7:13 pm ET
WASHINGTON – At a former al-Qaida stronghold southeast of the Afghan capital, a state-owned Chinese company is at work on a $3 billion mine project to tap one of the world's largest unexploited copper reserves, a potential financial boon for an impoverished country mired in war.
The promise of a bright future at Aynak, however, cannot conceal the troubling reality of how business is often done in Afghanistan, according to critics of the Kabul government's decision to reject bids from competitors in the U.S., Canada and other countries.
The bidding process unfairly favored China, they allege, and epitomized the back-room deals and abuse of power that has turned Afghans against their government and undercut the U.S. military effort there.
Corruption and graft long have been ingrained in Afghanistan's public institutions. Yet the extent of this corrosion has taken on new significance as the White House considers expanding the U.S. commitment to a war unsupported by a growing number of Americans.
Widespread fraud in Afghanistan's presidential election in August has raised doubts about how quickly a stable and credible government can be installed. A U.N.-backed commission threw out nearly one-third of President Hamid Karzai's votes, setting the stage for a Nov. 7 runoff.
In his recent assessment of the situation in Afghanistan, the top U.S. commander warned that unchecked corruption has led alienated Afghans to support the Taliban-led insurgency.
Afghan officials insist the Aynak bidding was handled openly and honestly, and will create thousands of jobs. But several U.S. geologists and Western businessmen who watched the process closely disagree.
James Yeager, an American geologist who advised Afghanistan's minister of mines, says a few Afghan officials dominated a secretive selection process that gave the winner, China Metallurgical Group Corp., improbably high marks over its foreign competitors.
Said Tayeb Jawad, Afghanistan's ambassador to the United States, said the bidding process was above board. He said he pushed for the U.S. bidder, Phelps Dodge, to be awarded the Aynak rights, but that China offered to start work right away while Phelps wanted to wait until the country was safer.
"We can't afford to give the mining rights to a company that will sit on them for the next 10 or 15 years," Jawad said.
China Metallurgical, better known as MCC, has a poor track record with mining projects in other countries, according to Yeager and other critics. In neighboring Pakistan, for example, where MCC operates a copper mine, there's been little benefit to the local economy. But that information was ignored during the deliberations, they say.
MCC did not immediately respond to questions submitted by e-mail, as the company requested, about whether MCC received special treatment from the Afghan government on the Aynak bidding process; whether it was allowed to see copies of other bids, as at least one competitor alleges; or whether the Pakistan mine has failed to help the local economy.
The Aynak deal was awarded to the Chinese late 2007, but the project is only now getting under way. Before copper can be hauled from the ground, China must make a substantial investment to build a power-generating station, roads and a railway to move the metal.
Yeager and Larry Snee, a former U.S. Geological Survey official who also has worked in Afghanistan, contend that MCC probably will steer most of the jobs to Chinese workers.
"Of course, the Afghans are going to benefit," Snee said. "But will they get all they deserve?"
China needs huge quantities of raw materials to feed its rapid economic growth and energy demands. It is well positioned to become the dominant force in Afghanistan's potentially lucrative minerals sector, said Don Ritter, president of the Afghan-American Chamber of Commerce in McLean, Va.
"In what direction do (Afghanistan's) mines and minerals develop?" Ritter said. "Do they go the Eastern model, where everything is done behind a closed door? Or, is there an open, transparent competition, where the money is laid on the table without undue influence?"
Yeager has distributed a 78-page report on the Aynak contract in which he contends that M. Ibrahim Adel, Afghanistan's minister of mines, and his associates shut out legal, financial and technical experts who could have helped them on the decision.
Yeager doesn't accuse Adel or anyone else from benefiting personally by awarding the work to MCC. But the final decision, Yeager says, was dictated by bureaucrats concerned with dollar amounts and personal preferences.
One of the losing competitors for the contract was Hunter Dickinson, a global mining company based in Vancouver, Canada. Robert Schafer, Hunter Dickinson's chief of business development, said an Afghan official told him that its bid had been shown to the Chinese while the proposals were being evaluated.
Schafer said he "wasn't surprised at all" to learn that MCC won.
Wang Baodong, a spokesman for the Chinese Embassy in Washington, did not address the allegations. He said China is committed to pursuing economic, trade and investment projects in Afghanistan that benefit both countries.
China has contributed little to improving security in Afghanistan, yet with the Aynak deal, stands to gain from the sacrifices made by the U.S. and NATO in troops and money.
"The world isn't fair," said Robert Kaplan, a senior fellow at the Center for a New American Security in Washington. "A worse outcome to staying and helping the Chinese would be withdrawing and losing a great battle in the war against radical Islam."
___
On the Net:
Afghanistan's Ministry of Mines: http://us.rd.yahoo.com/dailynews/ap/ap_on_bi_ge/storytext/us_afghanistan_copper_mine/33926340/SIG=10kdbm3g1;_ylt=AgTtkTXzc1Z7cobsKeoL6Z9v24cA;_ylu=X3oDMTFodDlkazUyBHBvcwM0BHNlYwN5bl9zdG9yeV9wcmludF9jb250ZW50BHNsawNodHRwbW9tZ292YWY-/*http://mom.gov.af/
Afghan-American Chamber of Commerce: http://www.a-acc.org/
I wrote an article about China’s strategic and economic engagement in Afghanistan. You can read it here on page 5 of this PDF. That’s my Centre on the front page and those are my new best friends standing in front of the Centre. You may also want to read the articles in the Bulletin about micro-societies and the state in Afghanistan by Amin Saikal and about Russian-Chinese security cooperation in Central Asia by Kirill Nourzhanov. As a disclaimer, both of them are are my dissertation committee.
“China’s Entry into Central Asia’s Southern Tier” by Christian BleuerCentre for Arab and Islamic Studies Bulletin, Vol. 15, No.1 (2008) Download PDF.
“China’s Entry into Central Asia’s Southern Tier” by Christian BleuerCentre for Arab and Islamic Studies Bulletin, Vol. 15, No.1 (2008) Download PDF.
Here’s the intro:
Over the past few years Chinese interests in Afghanistan and Central Asia have steadily increased. While China’s push to secure energy resources in the region, especially with regards to Kazakhstan, has been given much attention, its efforts in the southern tier have only become highly visible recently. The recent $3 billion winning bid by the China Metallurgical Group Corporation to develop the Aynak copper deposits in Afghanistan and the Chinese-financed expansion of the port of Gwadar in Pakistani Baluchistan are the most obvious examples of China’s recent economic expansion into Central Asia from the south. However, the potential rewards for Chinese investment may be exaggerated. Though probably not to the same degree as the earlier hype over the Caspian Sea basin’s potential energy reserves has proven to be. And the risks to Chinese long term investments due to the chronic instability in Afghanistan, although very real, are also likely being exaggerated.
Over the past few years Chinese interests in Afghanistan and Central Asia have steadily increased. While China’s push to secure energy resources in the region, especially with regards to Kazakhstan, has been given much attention, its efforts in the southern tier have only become highly visible recently. The recent $3 billion winning bid by the China Metallurgical Group Corporation to develop the Aynak copper deposits in Afghanistan and the Chinese-financed expansion of the port of Gwadar in Pakistani Baluchistan are the most obvious examples of China’s recent economic expansion into Central Asia from the south. However, the potential rewards for Chinese investment may be exaggerated. Though probably not to the same degree as the earlier hype over the Caspian Sea basin’s potential energy reserves has proven to be. And the risks to Chinese long term investments due to the chronic instability in Afghanistan, although very real, are also likely being exaggerated.
And here’s an excerpt:
An obvious obstacle to China’s entry into Central Asia via the southern approach is the security environment. China has, with the investments in Gwadar and Aynak, expressed its further confidence in the government of Pakistan and the ongoing American-led efforts in Afghanistan. It has not, however, put too much confidence in future security in the region. This is just one part of China’s many diverse investments and relationships throughout the world. And China was not the only bidder for the Aynak deposit, and in fact not even the highest bidder. Other companies from Canada, the US and the UK also tendered bids, showing that other corporations foresee a reasonable risk environment. Speculation as to why the Chinese firm was awarded the bid mostly centres on Afghanistan’s desire to diversify its international friendships and specifically to engage with a partner that arguably has the most influence with the government of Pakistan. Pakistan values its relationship with China to the highest degree and perhaps, speculation goes, China may bring in significant transportation, industrial and resource extraction infrastructure that will not be attacked by the Taliban. Though this theory may give too much credence to the idea that the current government of Pakistan can actually control the Taliban, or even what is loosely referred to as the “neo-Taliban,” a “group” with many diverse agendas and with loosely affiliated members operating at various levels of independence from the Pakistani-based and supported/tolerated Taliban.
An obvious obstacle to China’s entry into Central Asia via the southern approach is the security environment. China has, with the investments in Gwadar and Aynak, expressed its further confidence in the government of Pakistan and the ongoing American-led efforts in Afghanistan. It has not, however, put too much confidence in future security in the region. This is just one part of China’s many diverse investments and relationships throughout the world. And China was not the only bidder for the Aynak deposit, and in fact not even the highest bidder. Other companies from Canada, the US and the UK also tendered bids, showing that other corporations foresee a reasonable risk environment. Speculation as to why the Chinese firm was awarded the bid mostly centres on Afghanistan’s desire to diversify its international friendships and specifically to engage with a partner that arguably has the most influence with the government of Pakistan. Pakistan values its relationship with China to the highest degree and perhaps, speculation goes, China may bring in significant transportation, industrial and resource extraction infrastructure that will not be attacked by the Taliban. Though this theory may give too much credence to the idea that the current government of Pakistan can actually control the Taliban, or even what is loosely referred to as the “neo-Taliban,” a “group” with many diverse agendas and with loosely affiliated members operating at various levels of independence from the Pakistani-based and supported/tolerated Taliban.
Map: The Chinese financed port of Gwadar is at the bottom left in Pakistani Baluchistan and the Aynak mine is just southwest of Kabul.
And some speculation:
The Pakistan-China relationship brings up another possibility: could Chinese investments in Afghanistan survive the disintegration of the current international intervention in Afghanistan? Would a Taliban takeover of the Pashtun-dominated area around the Aynak mine and southwards to Baluchistan include the preservation of China’s economic deals? Whoever may potentially take control of the area around Aynak in the future, be they Pakistani-supported or merely a local strongman, would likely have China and Pakistan as the only countries willing to do business here. But beyond this being conjecture, China would probably much rather do business with a stable western-backed Afghan government than with any potential obscurantist Islamist militia or unpredictable local commander that could possibly come to power in Afghanistan’s Pashtun-dominated southeast.
The Pakistan-China relationship brings up another possibility: could Chinese investments in Afghanistan survive the disintegration of the current international intervention in Afghanistan? Would a Taliban takeover of the Pashtun-dominated area around the Aynak mine and southwards to Baluchistan include the preservation of China’s economic deals? Whoever may potentially take control of the area around Aynak in the future, be they Pakistani-supported or merely a local strongman, would likely have China and Pakistan as the only countries willing to do business here. But beyond this being conjecture, China would probably much rather do business with a stable western-backed Afghan government than with any potential obscurantist Islamist militia or unpredictable local commander that could possibly come to power in Afghanistan’s Pashtun-dominated southeast.
And who will provide the security for the mine and the facilities? The ANA? The ANP? Coalition forces? A private security firm? Local tough guys? A combination of the preceding? I’m sure “they” have a plan for security.
So are we going to expand military operations and continue "Vietnam-Redux" or get the hell home and use these resources to take care of the people here in the US? What are we really going to accomplish by expanding military operations there anyway that we have not accomplished there in 9 years?
No! to the war machine and the corporate protectors - the US military!
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