Recently, The World Bank gave Afghanistan’s Ministry of Mines and Petroleum (MoMP) $50 million to build its capacity and to gain the expertise to negotiate contracts proficiently.
This is not the first time MoMP has received financial support from donors. The first payment of US$30 million was made in mid 2006. The second payment of US$10 million arrived in September 2009, and in May 2011, MoMP received US$52 million.
As indicated, these payments were made for capacity building and to enable MoMP to “transparently and effectively” manage the process of large-scale foreign direct investments.
Despite this financial support and the deputation of foreign experts to advice and train local MoMP officials, this department has failed in its mission.
Early in June, the new MoMP minister, Mr. Daud Saba, informed the Afghan parliament that his ministry neither had the capacity to handle the evaluation of proposals nor the skill to negotiate equitable contracts.
Further, he added that the few sizeable contracts that MoMP has signed or wanted to sign are in shambles.
He specifically mentioned the US$2.8 billion contract that seven years ago MoMP had signed with China Metallurgical Group Corporation, a consortium of Chinese state-owned enterprises, for the rights to the Aynak copper mine. The only action the company has so far taken is to submit a feasibility study. None of the contract’s provisions have been fulfilled. The company hasn’t even opened an office in Kabul.
After the United States Geological Survey (USGS) determined that Afghanistan’s wealth resided in its natural resources, Washington hoped that the Kabul government would make an intensive effort to attract foreign private investors and create income so that the country would at last attain financial self-sufficiency.
That was also the reason why donors spent considerable resources to prepare MoMP to succeed in this essential task.
Minister Saba has inherited a ministry that in the past thirteen years has done nothing to create jobs, to contribute toward building the foundation for a functioning economy, and earn money so that Afghanistan could wean itself off from foreign financial backing.
After thirteen years of receiving massive financial and technical assistance from the donor community, the Afghan government continues to require foreign financial support to cover up to 80% of its expenses.
As is widely known, the Karzai regime was among the most corrupt in the world. Therefore, it might not be entirely out of place to wonder why the donors would continue throwing money at MoMP knowing it didn’t show the slightest interest in doing its job, a duty that is vital for Afghanistan’s economic survival and financial autonomy. Indeed, why did the foreign advisors not complain to their employers about what was transpiring within MoMP?
In addition to the botched contract for the Aynak copper mine, here are two other muddled-up examples: Several years ago, the representative of an American company visited Kabul to negotiate a contract for the rights to the Amu River oil basin and was ready to invest hundreds of millions of dollars. MoMP was not interested and sometime later signed a contract with an Afghan-Chinese company. The registered owner of the Afghan company is the then-President Karzai’s cousin who earlier had been caught selling heroin in the streets of New York and spent ten years in a U.S. prison.
On August 6, 2015, MoMP announced that the Afghan-Chinese company had violated the terms of its four-year-old contract, failing to make the investments the contract required and owing the government US$68 million.
The third incident is the bidding process for the rights to the Hajigak
iron ore mine, Afghanistan’s most valuable asset. After the first bidding for this property failed in 2008, the Obama administration prodded the Afghan government to put up the property for bidding again.
On June 14, 2009, speaking to reporters, Deputy Undersecretary of State Paul Brinkley said it was important to develop “this mineral resource to support the economic sovereignty of Afghanistan.”
MoMP again put the Hajigak mine out for bidding in January of 2011 and received six sealed bids on September 4 of the same year. In November 2011, MoMP named two companies winners and invited their representatives to Kabul for contract negotiations.
In a brave act, a honest Afghan official, disgusted with the corruption- driven process, leaked the details of the bids, and the international media published the information. Neither former Minister Shahrani nor his local or foreign advisors have been willing or able to explain the reasons behind those selections. After almost four years, this critically important matter for Afghanistan’s economy remains in abeyance.
As long as the donors pay the bills, time seems not to matter too much in Kabul. In fact, nothing seems to matter much in Kabul. Despite the information the new unity-government has about the astounding actions of the officials in this key ministry, none of the MoMP employees have been asked to answer for their misdeeds.
A joke that had once appeared on the comics pages of the Washington Post might perhaps have not been a joke after all. In the gag, A. says, “Rocket boosters will move an asteroid into the moon’s orbit so we can mine its precious metals.” B. asks, “Why don’t we mine for precious metals in Afghanistan? They have lots of them.” A. answers, “That only happens in science fictions.”
There might still be time to avoid this joke becoming reality. For that, however, Washington and its allies must make their financial support to the Afghan government conditional on integrity, legality, and timely action. Tough love worked in Greece. It might work in Afghanistan, too.
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