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Armenia's Mining Quandary: Developing a Diaspora-linked Economy

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  • Armenia's Mining Quandary: Developing a Diaspora-linked Economy

    Armenia's Mining Quandary: Developing a Diaspora-linked Economy

    http://hetq.am/eng/articles/21762/armenia%E2%80%99s-mining-quandary-developing-a-diaspora-linked-economy.html
    16:27, December 21, 2012

    By Saleem Ali

    Among the various states that emerged from the demise of the Soviet
    Union, Armenia had the most well-established diaspora.

    Owing to a history of marginalization and oppression from various
    neighboring powers, particularly in the earlier part of the twentieth
    century, Armenians fled their ethnic homeland in alarming numbers.

    The mass-killings of more than a million Armenians between 1915 to
    1923 by Turks is recognized by notable scholarly organizations and
    twenty countries as `genocide,' and led to rapid migration during this
    period.

    Out of an estimated 11 million ethnic Armenians worldwide, only 3.7
    million actually reside in Armenia (about one-third of whom reside
    within the capital Yerevan), while the rest are distributed primarily
    across Russia, the United States, France, Argentina, Lebanon, Syria,
    Iran, Canada, Ukraine, Greece, and Australia.

    The influence of the diaspora in terms of demographic and economic
    clout is considerably higher than for most post-Soviet countries. Like
    nearby Lebanon, the diaspora has contributed enormously to investment
    in the country and to infrastructure development. Unlike, Lebanon,
    however, Armenia benefits from a much more homogenous religious
    profile and far less internal strife.

    The diaspora's strength has recently been displayed in challenging the
    government's economic investment decisions, particularly in the
    context of extractive industries. During his recent visit to the
    United States, Armenian prime minister, Tigran Sargsyan, was greeted
    with protests from numerous Armenian-Americans concerned about a
    copper-molybdenum mining project in the northern region near the town
    of Teghut.

    Striking a conciliatory tone, Prime Minister Sargasyan invited the
    Teghut protesters in the diaspora to come back to Armenia and he would
    listen to their concerns `with great love.' The activists dismissed
    this gesture as `unserious' given the track record of the Armenian
    government in giving lenient contracting terms to various companies,
    including Vallex corporation, a Liechtenstein-registered company which
    is developing the Teghut project.

    Given this trust deficit between the government and the environmental
    activists in the diaspora as well as in the capital city of Yerevan,
    the American University of Armenia organized a conference on November
    30, 2012 to discuss the role of mining in development, supported by
    the United Nations Development Programme (UNDP).

    I was invited as a keynote speaker to provide comparative examples
    from around the world that could inform this debate. In addition to
    the Teghut project, Armenia is seeing a considerable rise in mining
    activity across the country with a wide range of minerals.

    The sector is a dominant source of export revenues and the government
    sees this as potentially a leading sector in developing some of the
    rural parts of the country. However, Teghut remains the most
    contentious of these projects leading environmentalists to make a wide
    range of appeals to United Nations bodies, domestic litigation
    strategies, and invoking trans-boundary pollution linkages of riparian
    pollution flows to neighboring Georgia. This is partly due to the
    forest ecosystem where the mine is planned and the high level of
    biodiversity in this region.

    Environmentalists argue that there are alternative development paths
    for Teghut such as tourism or harvesting honey. Yet as the activists
    accompanying me on a field visit admitted themselves, local community
    interviews in Teghut reveal that a majority of the population supports
    the mine.

    In the nearby town of Alaverdi, where the ore would be smelted, there
    is a history of mining and mineral processing ,dating back to the
    eighteenth century. The persistent image of the pseudo-volcanic plume
    emanating from the Alaverdi smelter, perched atop a steep rocky
    mountain captures the looming anxiety that many urban Armenians feel
    about mining.

    Public health studies of this region have shown high levels of heavy
    metals in the soil and some signs of health impacts as well on the
    local population. However, many in Teghut, consider these outcomes
    to be a calculated risk, while the activists from Yerevan and the
    diaspora feel the local community is being exploited.

    The capital is bustling with young diaspora returnees who are
    sincerely trying to invest in their ethnic homeland. A hallmark of
    such investment is the multi-million dollar Tumo Center for Creative
    Technologies, funded by Armenian-American philanthropist Sam Simonian.
    Yet the rural hinterland is far-removed from such development paths
    and the diaspora struggles to connect with distant parts of the
    country.

    Driving through the countryside en route to Teghut, one can see the
    stark difference between relative urban affluence and the continuing
    levels of poverty that still make Armenia eligible for multilateral
    development assistance from the World Bank and the UNDP.

    Environmentalists argue that it is incumbent upon such multilateral
    donors to ensure that support for the government's development plans
    be linked to appropriate regulatory structures that allow for
    environmental monitoring and liability for mining investment. Their
    analysis of the current legislation reveals several stark inadequacies
    pertaining to liability for tailings dams and the implementation of
    the environmental impact assessment process, particularly in a
    seismically active region such as Armenia.

    The concerns and distrust stem from a legacy of mining with impunity
    during past booms. There are also concerns about the flow of revenues
    and incipient corruption. International programs such as the
    Extractive Industries Transparency Initiative (EITI) are still
    considered with suspicion by many of the Yerevan activists.

    The fact that Armenia's neighbouring adversary Azerbaijan (with whom
    the country is still at war over the territory of Nagorno-Karabakh)
    was the first country to be officially validated under the EITI
    system, also seems to resonate a degree of incredulity about such
    mechanisms. However, it is partly because of the ongoing hostilities
    with Azerbaijan and Turkey which make mining more attractive as a
    development path.

    Tourism and other service sectors are often vulnerable in states with
    tense geopolitical trajectories. Armenia is also a landlocked country
    and thus relies a lot on its two other neighbours Iran and Georgia for
    trade access. The country continues to maintain strong ties with Iran
    but is also inextricably linked to the United States because of the
    large diaspora there. Armenia `s development trajectory and the
    consequential role it can play as a bridge-builder in major
    geopolitical struggles between Iran and the United States deserves
    greater attention.

    Resource extraction and foreign investment that is carefully managed
    on environmental and social terms has the potential to enhance the
    country's economy and regional standing rather than lead to internal
    strife and social unrest.

    The involvement of academic institutions in providing a science-based
    approach to such decisions is heartening. At the conclusion of the
    conference and through media engagement, I sensed greater willingness
    to consider an issue-based path to considering the role of mining,
    rather than uncompromising opposition on the part of the campaigners.

    As the race for scarce mineral resources accelerates worldwide, the
    small but strategically significant nation of Armenia may provide us
    with important lessons on constructive confrontation between
    environmental conservation and pragmatic economic development.

    (National Geographic; December 21, 2012)

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