Afghan mining under spotlight as country suspended from key anti-corruption mechanism

Afghanistan’s suspension from the Extractive Industries Transparency Initiative (EITI) on January 18 is an urgent wake-up call for the government to fundamentally strengthen efforts to reform the mining sector, Afghan and international CSOs said today. 

EITI requires companies and the governments to publish and reconcile data on mining revenues. It is the most prominent international mechanism against abuses linked to natural resources, which are already doing much to fuel conflict and corruption in Afghanistan.   

The suspension reflects the failure of successive governments to fully implement EITI since Afghanistan joined the initiative in 2009. After a long period of stagnation, significant progress has been made in recent years but some serious gaps and weaknesses remain. After so many years of government inaction, suspension was a likely outcome.

Local and international civil society organisations warmly welcomed the Afghan government’s announcement that it intends to make the changes needed to reverse the decision within a matter of months.

Ikram Afzali, the Executive Director of Integrity Watch Afghanistan (IWA), said:

We understand the challenges of reforming the Afghan mining sector. But EITI provides a clear and accessible framework for governments and companies to publish and verify essential data – especially on revenues. This is basic information: if the government is incapable of providing it regularly and reliably, it fundamentally calls into question its capacity to administer the sector and avoid the massive corruption which has so catastrophically undermined its potential until now.

Key areas where the government’s efforts to reform the sector have fallen short include a long delay in appointing a new national coordinator for EITI and a major missed opportunity to use a new mining law to channel all extractive revenues through a single account, allowing for much simpler and more effective transparency.

CSOs have also raised serious concerns about the legality and ownership of two major contracts signed by the government in October 2018. Corruption, lack of administrative capacity, and predation means there is massive revenue loss from the sector, leaving international donors to make up the shortfall even as mining provides a major source of funding for the Taliban and illegal armed groups.

However, CSOs also acknowledged that the Afghan government had taken some significant positive steps in recent years, including moves to require publication of contracts and revenues, as well as disclosure of the real owners of mining companies. While more action is needed, these reforms should greatly help compliance with EITI, if they are fully implemented.

Stephen Carter, the Afghanistan Campaign Leader for Global Witness, said:

Suspension from EITI does not mean expulsion – it means a chance for Afghanistan to make the changes needed to get this right. We hope we can work with the government to make sure those changes are the ones needed to create transparency even beyond EITI, and to achieve validation as soon as possible. The government’s commitment to lift suspension by the summer is very encouraging, and we fully support it. Nevertheless, actions will speak louder than words – in the end the only test that matters is whether full transparency on revenues, production and ownership of contracts is actually put into practice.  

The developments around EITI come as the country is preparing for presidential elections due in July. CSOs are calling on all the candidates to make clear their support for complete transparency. Habib Nang, Executive Director of Free Election Transparency Watch Afghanistan (FETWA), said:

These natural resources are a treasure that belongs to all Afghans, but which is being looted by warlords and armed gangs. This national tragedy should be a major issue for the upcoming elections. Every candidate must set out strong and detailed commitments on exactly how they are going to stop the pillaging of our resources and ensure that they truly benefit the Afghan people.

• Integrity Watch Afghanistan is a leading anti-corruption CSO, based in Kabul. It is a member of the Multi-Stakeholder Group (MSG) of the Afghan Extractive Industries Transparency Initiative. For more details, see www.iwaweb.org
  
• Free Election Transparency Watch Afghanistan is an Afghan CSO working on governance and democracy. It is a member of the MSG of the Afghan EITI.
  
• Global Witness is an international research and campaigning organisation which has worked for more than 25 years on problems of corruption and conflict around natural resources. It is an observer member of the Multi-Stakeholder Group of the Afghan EITI. For more details, see www.globalwitness.org/afghanistan 
  
• In its official statement, the EITI Board “commended Afghanistan’s efforts to improve transparency in the management of the extractive industries and encouraged the Government of Afghanistan to continue making progress. While recognising the particularly challenging circumstances in which Afghanistan was implementing the EITI, the EITI Board concluded that Afghanistan made inadequate progress overall in implementing the EITI Standard. In accordance with the Standard, Afghanistan has been temporarily suspended until it demonstrates meaningful progress in a new Validation.” For the full statement, see  https://eiti.org/sites/default/files/documents/eiti_-_afghanistan_validation_1.pdf
• CSOs have previously suggested a range of reforms to help reduce the risks of corruption and conflict around mining. The key ones include:

- Creation of a single, transparent account for all extractive sector revenues
- Requiring publication of the beneficial ownership of existing contracts, and incorporating a similar                                 requirement in the new mining law and regulations
- Strengthening the powers of a planned mining ombudsman
- Mandatory, independent, annual public audits of larger mining companies
- Much stronger mechanisms for local community benefit from mining  

• Integrity Watch Afghanistan and Global Witness have carried out extensive research on links between armed groups, the insurgency, and corruption in Afghan mining. For more details, see https://iwaweb.org/publications/ and https://www.globalwitness.org/Afghanistan  
  
• For the CSO open letter setting out concerns around the Badakhshan and Balkhab contracts, see: https://www.globalwitness.org/en-gb/press-releases/civil-society-open-letter-president-ashraf-ghani-badakhshan-and-balkhab-mining-contracts/  
  
• For the CSO statement on weaknesses in the Afghan mining law, see https://iwaweb.org/afghanistans-new-mining-law-risks-failure-in-the-fight-against-corruption/
  
• This statement is endorsed by Mining Watch Afghanistan, a platform of three dozen of civil society organizations including Global Witness, Integrity Watch Afghanistan, Free Election Transparency Watch Afghanistan.