Bulgan Batdorj, MASc candidate in Mining Engineering // Mar 6, 2015
Kyrgyzstan is not only beautiful but also rich with mineral resources. Development of the country through democracy and free market economics has faced many challenges since its independence in 1991. The economy is heavily dependent on gold mining, mainly from the production of the Kumtor Gold mine. However mining companies are confronted by violent protests from the local people on a regular basis and this is one of the key reasons why foreign investors draw back from investing in the country.
After adoption of a new constitution in 2010 the government promulgated aNational Sustainable Development Strategy to promote greater transparency in governance and especiallyresource governance. TheKyrgyz Republic became a compliant country of Extractive Industries Transparency Initiative (EITI) in 2011 (EITI Secretariat, Kyrgyz Republic 2014) with record of 95% extractive industry revenues covered. In 2012 the country legislated the EITI in its “Law on Subsoil”.
While it is easy to be comforted by the success of national reporting, unfortunately it does not reduce conflict between the local community and the companies. This is why many researchers and NGO leaders emphasize the importance of sub-national reporting of EITI. Mr. Nurlan Djoldoshev of the Soros Foundation in Kyrgyzstan has said that “Improved engagement between the EITI process and local communities is a very urgent issue for Kyrgyzstan. Explaining the EITI rules to local communities through building local MSGs would help to improve the interactions between local citizens and companies. This kind of approach will give opportunity to make EITI really useful and useable tool for people”. Explaining the reasons for protests, he continued that “local citizens strike against any operations of the extractive companies using as a main argument the problem of their ecology and environment protection. They say that their communities do not need revenues from extractive industry because they benefit almost nothing from such business and they believe that the companies will leave them only environmental destruction. So now both government and companies do not know how to improve dialogue with local communities” (EITI SWG 2010).
In many cases, local people are unaware of how the revenues from such mining operations can better their livelihoods. For example, the Kumtor Operating Company pays one percent of revenues to the development fund of Issyk-Kul province yet lack of transparent management and spending of the fund creates hostility among stakeholders. The national government is not active in resolving conflicts between companies and communities. Because of a highly centralized governance structure, it is hard to figure out what comes back to local people after mining revenue is sent to Bishkek.
The government has promised to make many changes with regards to extractive industry governance. As one localization effort the government proposed to establish a “Regional Development Fund” to promote the improvement and maintenance of infrastructure, fund social and economic development and support local events at provincial and district level areas with mining activity (David Gullette 2014). But many are critical of the fund’s progress so far in bringing the much needed consolation and change.
The constant social unrest in Kyrgyzstan is triggered by many causes. The Kyrgyz Republic ranks on 150th out of 177 in the corruption perception index issued by Transparency International and poverty affects almost 40% of the population (World Bank Data 2014). So it is important for the government to focus on subnational reporting and educating the public concerning the mining industry and its contributions to the country’s development.
There are many similarities between Mongolia and Kyrgyzstan. Both countries are landlocked, nomadic, high altitude, post-Soviet democracies. The people in both countries love horses, drink kumis and live in yurts. Theirvalues and cultures are interconnected with the mountains and waterways. So, I pray that both countries succeed in successfully overcoming the challenges of transition, beating corruption, strengthening institutions and improving governance.