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

Armenia’s Resource Routes from Saleem H Ali on Vimeo.

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 in part by the United Nations Development Programme (UNDP) and the United States Agency for International Development (USAID) via Counterpart International.  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-Karabach) 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 negotiating terms with mining projects, rather than uncompromising opposition. 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.

I would like to acknowledge the support offered by American University of Armenia, particularly Alen Amirkhanian the director of the  AUA Acopian Center for the Environment for observational research leading to this article. Sara Anjargolian, of the Tumo Center for Creative Technologies also provided three images for the slide montage

Comments

  1. Alen Amirkhanian
    Yerevan, Armenia
    December 23, 2012, 7:40 am

    Excerpt from Article 14 of the Armenian Mining Code. FYI, “industrial dumps” or “man-made mines” are the new terms introduced by this Code to refer to tailing dumps:

    “ARTICLE 14 – The ownership rights over man-made mines, extracted mineral and industrial dumps

    1. Man-made mines are the exclusive property of the Republic of Armenia and may be provided for the purpose of extraction of mineral resources in a manner prescribed in this Code

    3. The ownership right over the industrial dumps formed due the mining activity of the Mine Operator shall belong to that given Mine Operator for the validity period of his/her mining right.

    6. Upon termination of the mining right, the ownership over the industrial dump shall be transferred to the Republic of Armenia for free, which can be allocated for utilization as man-made mines.
    7. After the user’s right over the industrial dumps is transferred to the Republic of Armenia, they can be provided for use in the manner prescribed by the present Code.”

  2. Artur Grigoryan
    Yerevan, Armenia
    December 23, 2012, 7:30 am

    Thank you for the raising Teghut forest issue at the National Geographic level. I hope you do not mind to continue developing the issue of mining in Armenia and turn your attention to our legislation. As you know, mining wastes in Armenia are not taxed. Simultaneously, according to the Article 14 of RA Mining Code, the ownership rights of the tailing dumps are the transferred to the state after the mining is completed. It would be a very valuable and important input for us if you write an article analyzing this regulation in terms of best practice in regulating mining wastes management.

  3. Artur Grigoryan
    Yerevan, Armenia
    December 23, 2012, 7:02 am

    Thank you for the raising Teghut forest issue on the National Geographic level. I hope you do not mind to continue develop the issue of mining and turn to the legislation. As you know, mining wastes in Armenia are not taxed. Simultaneously, according to the Article 14 of RA Mining Code, polling dumps are the ownership of the state. It would be a very valuable and important input for us if write an article analyzing this regulation in terms of best practice of mining wastes management regulations.

  4. Jason Sohigian
    December 21, 2012, 10:10 am

    Thanks for your ongoing coverage of environmental issues in the Republic of Armenia! Armenia Tree Project NGO is part of a campaign with a number of other organizations regarding the mine in Teghut. Here’s a related story annotated w/links for more background on the key issues: http://ow.ly/gf9ZI