GOXI

sharing in governance of extractive industries

By Pablo Valverde

First impressions from an assessment of Afghanistan progress against the EITI Standard

Legend says that sometime around 2000 BC, an oracle decreed that the next man to enter the city of Telmissus would become king of the Phrygians. Gordias, a farmer riding on an ox-cart, drove into the city and was summarily made king. Decades later, his son, the famous King Midas, commemorated this event by tying the cart to a pole in the town square with a devilishly intricate knot. According to prophesy, whoever was able to undo the impossible “Gordian knot” would rule Asia.

Fast forward four thousand years to our time, when reforming the extractive sector in Afghanistan has become the Gordian knot of our days. The EITI should be particularly well placed to help untie this particular knot, given its emphasis on national priorities and multi-stakeholder nature. The International Secretariat has just spent six days in Kabul assessing what progress is being made as part of Afghanistan’s ongoing Validation, the EITI’s quality assurance mechanism.

…and what an experience that has been.

Not your average Validation mission

Validation fact-finding missions are incredibly valuable for us at the International Secretariat because they provide a rare opportunity to really dive deep into the issues and understand why things work – or don’t work – the way they do. This is especially valuable in a complex environment like Afghanistan, where different power structures compete for political dominance behind the scenes. As the Standard covers the whole of the extractive industry value chain, stakeholder consultations also provide a valuable “snap-shot” of the sector, highlighting progress and identifying areas where additional work is needed.

Having had to postpone our mission on two occasions in 2017 due to the security situation, we were looking forward to being able to return to Kabul. Then the attack on the Intercontinental Hotel happened and 40 people lost their life.

Development yes, but security first

The terrorist attack took place on the day of our arrival and effectively grounded us in the more secure "Green Village" for the remainder of our mission. We were nevertheless able to meet with high-level representatives from the government and dozens of representatives from all constituencies.  This is a testament to Afghan stakeholders’ strong commitment to the EITI. It also shows how important it is for a small secretariat like ours to be able to count on the support of organisations like GIZ, who made sure that meetings could take place.

In a way, being on lock-down really brought home the reality in which Afghan stakeholders implement the EITI. For example, although hosted by GIZ we were unable to meet with a representative of the German Embassy because neither of us could go to the other’s compound. As one government representative put it “when development and security face off against each other, security always wins”.

Progress is possible

It would be easy to give up under these circumstances, and we did see examples of fatigue and desperation in our conversations with many stakeholders. Donors expressed frustration that attempts at establishing basic systems in the line ministries were at times scrapped when it came to the implementation phase. Government representatives were refreshingly frank with us about their problems working across ministries and with the donor community. Industry and civil society lamented the lack of progress on key reforms.

A tourmaline mine in Afghanistan Badakshan (Photo: Global Witness)

It is not difficult to see how this generalised frustration has led to a proliferation of strategies, road maps, concept notes and consultancies, some of which are not even begun before a new document comes along. Our impression is that this frustration is also leading to a concentration of decision-making power outside the line ministries, which in turn is helping to institutionalise alternative power structures… which leads donors and reformers to seek out these alternative decision-making structures in order to “get things done”… which leads to weaker institutions in the line ministries… which affects their accountability… which leads to more illegal activities… which leads to more frustration… and so it continues.

Not easy. And yet, in spite of the challenges, we left Kabul convinced that progress is possible. And importantly, that the EITI can help.

Alexander’s sword

Back to antiquity: Almost 2000 years after Gordias was crowned, Alexander the Great attempted to untie the ox-cart. Where others had failed, legend says that he pulled out his sword and cut through the knot. He then proceeded to fulfil the prophecy and rule over what was then known as Asia (present-day Turkey and beyond).

We are still in the initial stages of Validation, and although we have not found Alexander’s sword, our preliminary findings do provide some hints as to where stakeholders could start making real progress:

  • Statutory, de facto and reforms
    Afghanistan’s five EITI Reports to date have helped build a picture of the formal mining sector, but much more work is needed to a) explain the rules of extractive industry governance across the value chain, b) describe what is actually happening, c) analyse reforms that are under way and d) follow up on progress against planned reforms. Information exists, but it is not publicly available, nor explained. The EITI should be contributing to this, and it is not necessary to wait until the next EITI report for that to happen – that’s what websites are for.
     
  • Bring the cadastre and licensing process under control
    Time and time again we were told that the EITI had been helpful in demonstrating the need for better systems in the line ministries. AEITI Reports have shown that the Ministry of Mines and Petroleum (MoMP) does not know what companies are operating in the country. Attempts at addressing this are under way. Amidst the several unsuccessful attempts at building a robust cadastral system, the recent publication of 1,056 small-scale mining contracts (many of which are inactive) is an important first step.
     
  • Get a full picture of Afghanistan’s extractive revenues
    Triaging the roughly 200 active licenses and tracking companies’ compliance with their contractual obligations will be key to ensuring that the sector is managed in the interests of the country’s long-term development. So will ensuring the traceability of Afghanistan’s extractives revenues, both tax (collected by the Finance Ministry) and non-tax (by MOMP). As an illustration, the MOMP has recently agreed 110 individual extractives revenue codes with the Ministry of Finance to make sure that revenue streams are consistently classified.The vast majority of these are not reflected in AEITI reports.
     
  • Use the EITI to have the difficult conversations
    Two state-owned enterprises account for roughly three quarters of total revenues in the last AEITI report, but there is little publicly available information on them. According to stakeholders from all constituencies this is because “as long as they continue to bring in revenues we have not wanted to rock the boat”. Difficult conversations may be needed in the coming months. The EITI can help.

A tool, not a milestone

There is an emerging consensus that the extractive industries hold part of the solution to Afghanistan’s stability and long-term development prospects. Our initial findings strongly suggest that the EITI can help, but not if the EITI is viewed as a goal in and of itself or if the purpose of implementation is to “achieve compliance with the Standard”. Our suggestion would be to instead view EITI work plans as a platform for coordinating the plethora of reform efforts in the sector and aligning donor projects with national priorities.

As one senior government official put it, “the AEITI work plan and recommendations should be our roadmap for reforms”.

The knot won’t be undone overnight, but at least it would be a start.

Pablo Valverde and Alex Gordy from the EITI International Secretariat on mission in Afghanistan.

Views: 90

Add a Comment

You need to be a member of GOXI to add comments!

Join GOXI

Comment by EITI Ethiopia on February 13, 2018 at 13:34
thank you very much

Conveners

           GOXI Partners

Videos

  • Add Videos
  • View All

© 2018   Created by Kobina Aidoo.   Powered by

Badges  |  Report an Issue  |  Terms of Service