Tag Archives: natural resources curse

Congo Uranium and the CIA

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America’s interest in the Congo—and, specifically, in the resource-rich south-eastern province of Katanga—was one of the best-kept secrets of the second world war. Beneath its verdant soil lay a prize that the Americans believed held the key to victory…The Germans, they feared, might be after it, too: uranium. Congo was by far the richest source of it in the world. As the architects of America’s nuclear programme (the “Manhattan Project”) knew, uranium was the atom bomb’s essential ingredient. But almost everybody else was kept entirely in the dark, including the spies sent to Africa to find out if the heavy metal was being smuggled out of the Congo into Nazi Germany.

The men—and one woman—charged with protecting America’s monopoly of Congolese uranium worked for the Office of Strategic Services (OSS), an organisation set up by President Franklin Roosevelt as the wartime intelligence agency, and the precursor to what in peacetime became the Central Intelligence Agency (CIA).

Shortly after the war ended the focus of America’s nuclear rivalry shifted. In 1949 the Soviet Union tested its own nuclear bomb, launching a new era for America, Congo and the rest of the African continent. Huge sums were pumped into Katanga to facilitate uranium export and to prop up Belgian defences. After Congo became independent in 1960 the CIA lingered there for decades to keep uranium and, later, other minerals out of Russian hands. Much of Congo’s tragic late-20th-century history is attributable to these machinations…. A little-known story, but one with a terribly familiar ring—and ultimately devastating consequences.

Excerpt from Congo’s uranium: Rich pickings, Economist, Aug. 27, 2016 (Book review of
Spies in the Congo: America’s Atomic Mission in World War II. By Susan Williams, 2017)

Tin, Tantalum and Tungsten: Congo

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Congo’s tin, tantalum and tungsten are used in electronics around the world. Although some of these minerals come from big industrial copper mines in Katanga, Congo’s south, and a gold mine in South Kivu, there is not yet a single modern mine in North Kivu.

Until now the province’s metal has been dug out almost entirely by hand. Yet Alphamin hopes to show that it can run a modern industrial mine in a part of the world that scares other modern miners away.

Alphamin says that the investment is attractive—even at a time of low commodity prices—because the ore that it plans to extract is richer than that found anywhere else in the world. Behind the company’s camp on the hill are stacks of carefully ordered cylinders of rock drilled out to map the riches beneath the mountain. (Like almost everything else in the camp, the drill rig had to be lifted in by helicopter.) The ore they contain is 4.5% grade. That means that for every 100 tonnes of ore extracted, the firm will be able to sell 3.25 tonnes of tin (not all the tin can be extracted from the rock). Most other mines would be happy to produce 0.7 tonnes…..

If the gamble pays off Alphamin’s investors will make juicy returns. But to do so they may have to convince locals that the project is in their interest. If not, they risk protests and sabotage  .In 2007 some 18,000 people lived at Bisie, working the site with pickaxes and shovels. They produced some 14,000 tonnes of tin that year—or perhaps 5% of world production. To get it to market people carried concentrated ore on their heads through the jungle to an airstrip where small planes could land to carry it out. It was back-breaking work but lucrative for many Congolese. That era began to come to an end in 2011, thanks in part to an American law.

Under the Dodd-Frank act, a law aimed mainly at tightening bank regulation, firms operating in the United States must be able to show where the minerals used in their products came from. The idea was to stop rebels in poor countries from selling gold and diamonds to fund wars. The law all but shut down artisanal mining in much of eastern Congo.

Elsewhere in eastern Congo artisanal mines have gradually reopened thanks to a verification scheme under which the UN and the government check mines and allow certified ones to “tag and bag” minerals. The site at Bisie has, however, never been certified. And although Alphamin will provide some well-paid jobs to locals, as well as pay taxes to the central government, its mechanised operations will never employ anything like the thousands of people who once toiled there with pick and shovel. Alphamin has promised to fund local projects, such as a new school, that are intended to benefit 44 villages.

Excerpts from Mining in the Democratic Republic of Congo: The richest, riskiest tin mine on Earth, Economist, Aug. 27, 2016

Scramble for Africa II – Secret Cables

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Africa emerges as the 21st century theatre of espionage, with South Africa as its gateway, in the cache of secret intelligence documents and cables seen by the Guardian. “Africa is now the El Dorado of espionage,” said one serving foreign intelligence officer.

The continent has increasingly become the focus of international spying as the battle for its resources has intensified, China’s economic role has grown dramatically, and the US and other western states have rapidly expanded their military presence and operations in a new international struggle for Africa…. The leaked documents obtained by al-Jazeera and shared with the Guardian contain the names of 78 foreign spies working in Pretoria, along with their photographs, addresses and mobile phone numbers – as well as 65 foreign intelligence agents identified by the South Africans as working undercover. Among the countries sending spies are the US, India, Britain and Senegal.

The United States, along with its French and British allies, is the major military and diplomatic power on the continent. South Africa spends a disproportionate amount of time focused on Iran and jihadi groups, in spite of internal documents showing its intelligence service does not regard either as a major threat to South Africa. “The Americans get what they want,” an intelligence source said…

Chinese intelligence is identified in one secret South African cable as the suspect in a nuclear break-in. A file dating from December 2009 on South Africa’s counter-intelligence effort says that foreign agencies had been “working frantically to influence” the country’s nuclear energy expansion programme, identifying US and French intelligence as the main players. But due to the “sophistication of their covert operations”, it had not been possible to “neutralise” their activities.

However, a 2007 break-in at the Pelindaba nuclear research centre – where apartheid South Africa developed nuclear weapons in the 1970s – by four armed and “technologically sophisticated criminals” was attributed by South African intelligence to an act of state espionage. At the time officials publicly dismissed the break-in as a burglary.

Several espionage agencies were reported to have shown interest in the progress of South Africa’s Pebble Bed Modular Reactor. According to the file, thefts and break-ins at the PBMR site were suspected to have been carried out to “advance China’s rival project”. It added that China was “now one year ahead … though they started several years after PBMR launch”.

In an October 2009 report by South Africa’s intelligence service, the National Intelligence Agency (NIA), on operations in Africa, Israel is said to be “working assiduously to encircle and isolate Sudan from the outside, and to fuel insurrection inside Sudan”. Israel “has long been keen to capitalise on Africa’s mineral wealth”, the South African spying agency says, and “plans to appropriate African diamonds and process them in Israel, which is already the world’s second largest processor of diamonds”.  The document reports that members of a delegation led by then foreign minister Avigdor Lieberman had been “facilitating contracts for Israelis to train various militias” in Africa…

[According to leaked documents]: “Foreign governments and their intelligence services strive to weaken the state and undermine South Africa’s sovereignty. Continuing lack of an acceptable standard of security … increases the risk.” It lists theft of laptop computers, insufficient lock-up facilities, limited vetting of senior officials in sensitive institutions, no approved encryption on landlines or mobiles, total disregard by foreign diplomats for existing regulations, ease of access to government departments allowed to foreign diplomats, and the lack of proper screening for foreigners applying for sensitive jobs.  According to one intelligence officer with extensive experience in South Africa, the NIA is politically factionalised and “totally penetrated” by foreign agencies: “Everyone is working for someone else.” The former head of the South African secret service, Mo Shaik, a close ally of the president, Jacob Zuma, was described as a US confidant and key source of information on “the Zuma camp” in a leaked 2008 Wikileaks cable from the American embassy in Pretoria.

Excerpts Seumas Milne and Ewen MacAskill Africa is new ‘El Dorado of espionage’, leaked intelligence files , Guardian, Feb. 23, 2015

Natural Resource Curse – Central African Republic

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Gold and diamond sales are being used to finance conflict in Central African Republic and United Nations peacekeepers should monitor mining sites to clamp down on illicit trade, a U.N. panel of experts * [pdf]said.In a report, the panel also said the peacekeeping mission (MINUSCA) should deploy troops to the remote north of the country and use drones to monitor the rebel-controlled region to put an end to simmering violence there.  The mission, which launched in September, is operating at only two-thirds of its planned 12,000-strong capacity.

Central African Republic was plunged into chaos when northern, mostly Muslim Seleka rebels seized control of the majority Christian country in March 2013, prompting a vicious backlash by the largely Christian ‘anti-balaka’ militia.  The panel said that some 3,000 people had been killed between December 2013 – when the U.N. Security Council imposed an arms embargo – and August 2014.  The Kimberley Process – a group of 81 countries, including all the major diamond producers, formed to prevent ‘blood diamonds’ from funding conflict – imposed an export ban on raw gems from Central African Republic in 2013.  But since then, an additional 140,000 carats of diamonds, valued at $24 million, had been smuggled out of the country, the panel estimated…..

In their northern enclave, the former Seleka fighters are imposing taxes on a wide range of goods from gold mining to coffee, livestock, and diamonds to fund their operations, the report found.  Former Seleka fighters were issuing mining licences to gold miners at the Ndassima mine near the rebels’ headquarters of Bambari, in the centre of the country, it said…

It suggested that interim President Catherine Panza’s decision to name representatives of the armed groups to cabinet roles may have fuelled conflict.”Competition among political representatives of armed groups for ministerial positions, as well as among military commanders for control of resources, accounts for of the recent infighting between former components of Seleka and rival factions of anti-balaka,” said the report, dated Oct. 29 but only made public this week.

Excerpts, Gold, diamonds fuelling conflict in Central African Republic, Reuters, Nov. 5, 2014

*Letter dated 28 October 2014 from the Panel of Experts on the  Central African Republic established pursuant to Security Council  resolution 2127 (2013) addressed to the President of the Security Council [S/2014/762]

Loans-for-Oil: China and Latin America

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China’s demand for commodities has entrenched Latin America’s position as a supplier of raw materials. The country guzzles oil from Venezuela and Ecuador, copper from Chile, soyabeans from Argentina, and iron ore from Brazil—with which it signed a corn-import deal on April 8th.   Chinese lending to the region also has a strong flavour of natural resources. Data are patchy, but according to new figures from the China-Latin America Finance Database, a joint effort between the Inter-American Dialogue, a think-tank, and Boston University, China committed almost $100 billion to Latin America between 2005 and 2013 (see chart). The biggest dollops by far have come from the China Development Bank (CDB). These sums are meaningful. Chinese lenders committed some $15 billion last year; the World Bank $5.2 billion in fiscal year 2013; foreign commercial banks lent an estimated $17 billion.

More than half of China’s lending to Latin America has been swallowed by Venezuela, which pays much of the loan back from the proceeds of long-term oil sales to China. Ecuador has struck similar deals, as has Petrobras, Brazil’s state-controlled oil firm, which negotiated a $10 billion credit line from CDB in 2009.

Such loan-for-oil arrangements suit the Chinese, and not simply because they help secure long-term energy supplies. They also reduce the risk of lending to less creditworthy countries like Venezuela and Argentina. Money from oil sales is deposited in the oil firm’s Chinese account, from where payments can be directly siphoned.  It is no surprise that Chinese money is welcome in places where financial markets are wary. Ecuador, which defaulted on its debts in 2008, has used Chinese loans both to fill in holes in its budget and to re-establish a record of repayment in advance of trying to tap bond markets again.

But Chinese credit has its attractions in other economies, too. It often makes sense for countries to diversify sources of lending. Loans can open the door to direct investment. And as Kevin Gallagher of Boston University points out, the Chinese banks operate in largely different sectors to the multilaterals. Of the money China has lent in the region since 2005, 85% has gone to infrastructure, energy and mining. Borrowers may have to spend a proportion of their loan on Chinese goods in return; some observers worry about the laxer environmental standards of Chinese banks. But the main thing is that money is available. Expect the loan figures to rise.

Chinese lending to Latin America: Flexible friends, Economist,  Apr. 12, 2014, at 27

Gated Rainforests: the militarization of conservation

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The  Epulu  village  in the Democratic Republic of Congo is situated inside a nature reserve in the Ituri rainforest, an area covering 5,000 square miles that is supposed to be off limits to hunters and gold prospectors. A militia, led by a former elephant poacher called Paul Sadala, has terrorised communities inside the reserve since 2012, employing methods brutal even by the grisly standards of this part of the world.

“The attacks were absolutely terrifying,” said Justin Oganda, a representative of the residents of Epulu who remain displaced in Mambasa, about 50 miles away. By the end of that day in June, the militiamen had murdered, raped, burned people alive and even eaten the flesh and heart of one of their victims. “To have killed so many people, to burn them alive, the cannibalism … Mentally they cannot be normal,” Oganda added.

As ever with Congo, it is not just a simple tale of victims and villains. Sadala, who goes by the nom de guerre Morgan, and his “Mai Mai Morgan” gunmen are thought to have powerful supporters in the security forces who enable their lucrative illegal trade in ivory and smuggled gold. Some local people with an eye on the gold in the ground beneath their feet tacitly support Morgan, who improbably also likes to be called Chuck Norris. “There is complicity between [Morgan] and certain elements within the army,” said Jefferson Abdallah Pene Mbaka, the MP for Mambasa. “With the support of certain army authorities [Mai Mai Morgan] have increased their poaching activities. The sale of ivory is organised by these figures in the army.” Many people in the region believe soldiers have orders not to arrest Morgan.

Morgan’s principal targets are those who operate and police the Unesco-recognised world heritage site known as the Okapi wildlife reserve, or by its French acronym, RFO. The laws of the reserve forbid the hunting of endangered species, especially elephants and okapi, and the exploitation of its gold reserves….The suspicion is that at least some of Morgan’s booty winds up 280 miles south-west of Epulu, in the hands of the Congolese army. At the end of 2012 the United Nations group of experts on Congo issued a report that accused Congolese general Jean Claude Kifwa in the provincial capital, Kisangani, of giving “arms, ammunition, uniforms and communication equipment to Mai Mai Morgan in exchange for ivory”….

Despite the brutality of the attacks, many reserve dwellers express sympathy for Morgan, with some even confessing to outright support for him. “I am behind Morgan,” said an 18-year-old in a small village not far from Epulu who refused to give his name. “Because Morgan is here the rangers cannot patrol and we are free to dig for gold. But I wouldn’t support him if he came here and burned our homes.”  Most people, however, have a more nuanced position, saying that although revolted by his methods, they support his stated desire to see the size of the reserve reduced and more rights given to locals to hunt and dig.  “The forest is where we find what we need to survive,” said Matope Mapilanga, the leader of a Pygmy community on the edge of the reserve. “[The park authorities] have cut our land, there is now a part we cannot access. It has worsened in the last few years, since the RFO got bigger. We would prefer that the people of the RFO weren’t in our forest. We feel like the big non-governmental organisations and the rangers have privileged the animals over the people.”

The conservationists remain unconvinced, though. “The people who say they support Morgan are just those people who want to dig gold and exploit timber,” said Robert Mwinyihali, the project leader for Wildlife Conservation Society’s (WCS) work in the Ituri rainforest. WCS has given financial backing to the park rangers and the Congolese Wildlife Authority’s work in the reserve. “There are laws in Congo about the exploitation of resources,” said Mwinyihali. “These people can either respect those laws, or they can ignore them and commit criminal acts.”  WCS and GIC’s support for the park rangers has led to accusations that they are partly responsible for the militarisation of the conflict. However, Mwinyihali said the biggest problem was the absence of effective intervention by the Congolese state, which meant NGOs and the park rangers had had to fulfil roles that should be the government’s responsibility: for example, bringing in armed guards to track Morgan. Bernard Iyomi Iyatshi, the director of park rangers, complained about a lack of government funds for his anti-poaching operations.

Mwinyihali also accused the Congolese government of doing little to reconcile the park authorities and local communities. As mutual resentment and misunderstanding grows, Morgan and other armed groups are able to exploit the toxic atmosphere and continue their poaching, digging and savage attacks.  “There are no job opportunities created by government investment here,” said Mwinyihali. “This has led to this crisis, where people have no option but to want to dig for gold. This leads to the conflict with the park authorities, and then it is only a small step to people taking up arms and joining militias.”  Despite being a member of the ruling party, Mbaka is an outspoken critic of the government’s policy, or lack of it, in the region. “Swaths of the park are inaccessible, there’s just no infrastructure,” he said. “It’s an absolute scandal, there’s potentially so much wealth here. It also means it is difficult to track and stop men like Morgan.”  Even if Morgan is caught, people fear that his powerful backers in the army will find another militia to continue poaching and stealing gold…

About 70% per cent of the ivory from slaughtered African elephants goes to China, another of the countries warned by Cites. The price of ivory has rocketed. Cites reported that the price more than doubled between 2004 and 2010, from about $300 to $700 (£198 to £462) a kilogramme. An Associated Press investigation in 2010 claimed ivory was being sold in China for $1,800 a kilogramme.

Excerpt, Pete Jones, Gold and poaching bring murder and misery to Congolese wildlife reserve, Guardian, Mar. 31, 2013