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

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

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

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

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)