CAPÍTULO 1: FUNDAMENTOS TEÓRICOS DE LOS TIROS AL ARO EN EL
1.3. La efectividad de los tiros al aro Su importancia
relationship in the minerals sector, from a model of relatively strong state control to that of state-market complementarity. Formerly, the command economy and authoritarian political regime of the socialist period had designated the state as not only the owner of the minerals but the main organ of their exploitation. As explained in the previous section, the 1994 Minerals Law was still characterised by the presumption of a strong state. However, the 1997 Minerals Law established a complementary division of regulatory labour, with the central state limiting itself to the technical administration of licenses, the collation of geological data and the collection of rents, established at economically rather than politically competitive rates. For example, the tax regime did not reflect the state’s ownership of natural resources by establishing substantial, non-negotiable rates. Instead, tax rates were used as leverage to attract investors, established at competitive rates that could be changed, delayed or eliminated in the context of stability agreements. Additionally, the central government delegated significant social and environmental responsibilities to local administrations, thereby dispersing its authority as the central institution of regulation. The growth of investment interest in the Mongolian minerals sector and the ease with which exploration and exploitation
38There is a growing literature on the calculation of natural resource
dependence. Resource dependence is typically calculated based on the share of natural resources in GDP, national exports and/or government revenue (see Sachs and Warner, 1995; Baunsgaard, 2012). Over 20% in any category indicates significant mineral dependent (see Hailu and Kipgen, 2017, for an overview of different indices and introduction to the Extractives Dependence Index).
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licenses could be obtained tested this new division of labour in three distinct ways.
Firstly, the increase in mining activity from 1994 onwards produced extraordinary socio-environmental dislocation within a short space of time. The impact of opening Mongolian territory to mining investment had the unanticipated consequence of creating an informal mining economy, characterised by rudimentary extraction techniques and precarious living conditions. By 2001, up to 100,000 illegal gold miners were employed in the informal mining economy that had developed alongside the gold rush in the mid-1990s (World Bank, 2006: 8; Byambajav, 2012). The lack of strong environmental oversight meant that many small and medium-scale gold-mining operations had failed to rehabilitate the land, leaving it open to artisanal mining. Propelled both by rising poverty levels in the post-transition period as well as the lure of competing, albeit illicitly, in the booming gold market, the
phenomenon of illegal “ninja” miners became a sign to many
Mongolians of the abdication of effective state regulation of the mining economy.39
The sudden appearance of mobile and unregulated illegal miners in rural Mongolia challenged the socio-environmental expectations of a predominantly pastoral population. The administration of pastureland was already under pressure with a rapid increase in the number of herders following the economic collapse of the early 1990s.40 While these new herders had squeezed available land and water, the presence of illegal miners 39 The demographic of illegal miners is complex, despite their caricature as polluting criminals (High, 2008). Herders seeking to either supplement or find an alternative livelihood, ex-convicts and unemployed professionals from Ulaanbaatar found their way to the gold fields.
40The herding population grew from 18% to 50% of the working population in the 1990s (Mearns, 2004: 108; Rossabi, 2005: 121).
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created a new kind of tension over access to resources because of the conflicting approach to resources by pastoralists and miners. Illegal miners were often perceived as having no respect for the sustainability of the land, the health of the rivers or respect for the locality, despite many “ninja” miners being former herders. In particular, the use of mercury by gold miners in general and the pollution of rivers was a catalyst for growing dissatisfaction with the regulation of mining, as well as the social disruptions associated with temporary mining camps (i.e., child labour, sexual abuse and various forms of violence).
Secondly, the introduction of extractive land use created a hierarchy between the mining and herding economies. The 1997 Minerals Law introduced a new hierarchy of property rights in the rural economy as pastoral land-use regimes had to compete for the first time against centrally issued mining licenses. Pastoralist property rights were, and still are, uncodified in Mongolia (Tumenbayar, 2002). The presumption of state ownership of property during the socialist period meant that herders only had access to use-rights, administered initially through pre-socialist customary systems and gradually institutionalised through collectivisation. With the disintegration of the negdels in the late 1980s, customary norms again became the basis for regulating pastureland. This was a somewhat fraught
process, given that “customary norms” had been maintained to
some degree through the socialist period but nonetheless morphed and shifted significantly. The arrival of “new herders”
migrating from the city to the steppe looking for subsistence during the economic collapse of the early 1990s added another dimension. However, use-rights were negotiated between old and new herders in an informal and ad-hoc way. The arrival of mining companies in the mid to late 1990s interrupted the informal negotiation of property use-rights between herders, as
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companies’ codified rights to explore and exploit the minerals under the soil were formally guaranteed by the newly established Mineral Resources Authority and justiciable by national courts and/or international arbitration.
The issuance of mining licenses from the central government created an imbalance of power between herders and mining companies, due to conflicts between centrally issued mining
licenses and herders’ informal entitlements to land use
(Tumenbayar, 2002; Endicott, 2012: 143). By 2004, approximately 26% of Mongolian land was covered in mining licenses for exploration and extraction (Husband and Songwe, 2004: 7); 50% of these licenses were held by only seven companies, the four largest of which were foreign (ibid). By 2009, the number of licenses had almost doubled, to cover 45% of Mongolian territory (Suzuki, 2013: 277). The environmental inputs of mining in terms of land and water not only created an economic conflict of interest with herders, but threatened to
undermine the ‘material, environmental and cultural bases of the livelihood of local communities’ (Byambajav, 2012: 13). Small
groups of herders suffering from the pollution and drying up of rivers, displacement from precious cultural landmarks and customary grazing land began to organise themselves to resist these changes in the early 2000s. These movements expressed resistance in various ways initially, through short-term direct action protests, such as roadblocks, hunger strikes, and lobbying within the Citizens Councils of local government to block the approval of mining licenses (Byambajav, 2012, 2014; Upton, 2012).
Thirdly, the strong presence of foreign companies in the mining sector contributed to negative public sentiment about the use of national wealth for the gain of foreign “others.” This “insult”
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added to the general “injury” expressed in the ‘growing public
outrage over the country’s lack of socio-economic improvements,
despite the mining boom’ (Hatcher, 2014: 136). Additionally,
growing political unrest about environmental degradation, new social ills in rural localities and power imbalances in the distribution of land heightened public concern. It was further heightened in the case of Oyu Tolgoi, once the significance of the deposit was realised. In April 2006, protests erupted in Ulaanbaatar, fuelled by remarks of Robert Friedland, then CEO of Ivanhoe Mines, revelling in the huge profit margins that were to be made by the company out of the resources in the deposit.
Friedland’s comparison of Oyu Tolgoi to t-shirts being made ‘for
five bucks and selling them for a hundred dollars’ incensed a vocal part of the Mongolian public in 2005, leading to a three- week protest campaign and the burning of an effigy of Robert Friedland and several government ministers (New Internationalist, 2006; Reuters, 2010).
The global context of a commodity boom and the national context of an impending Oyu Tolgoi stability agreement were two important features of this period. The stakes were heightened for the Mongolian government because it had started negotiations with Ivanhoe Mines in 2004 for a stability agreement, the terms of which would likely affect the trajectory of national development for the 21st century. The global boom in commodity prices offered an opportunity to gain more control of the Oyu Tolgoi deposit, creating competition between national power-holders as to which party interests would be reflected in the investment agreement. The timely coincidence of a commodity boom with the Oyu Tolgoi stability agreement negotiations engendered political conflict between political parties at a time when the government was particularly fragile following the 2004 parliamentary election. While the MPRP had been expected to win the election
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(Schafferer, 2005; Sukhbaatar, 2012), they only received 49% of the vote and half of the seats in Parliament (thirty-six). Without a majority, the MPRP entered into a ‘grand coalition government’
(Schafferer, 2005: 746) with the Mongolian Democratic Coalition and other major parties.
Despite the rhetoric of unity, the cracks in this ‘grand coalition’
quickly became evident, with the MPRP dissolving the coalition government in January 2006. The political bickering of the parties reinforced citizen anxiety about the close relationship between the government and investors, particularly Ivanhoe Mines, which the opposition parties used to their advantage. For example, in May 2006, twenty-six opposition MPs staged a walk-out to
protest government corruption and support ‘calls for better terms in negotiations with foreign miners’ (White, 2013; Reuters, 2006). This display of nationalism from mainly Democratic Party MPs is somewhat ironic, as that party was the main architect and political force behind liberalising the mining investment framework in the 1997 Minerals Law. The internal conflict between the parties coincided with protest movements urging the
state to ‘protect the basic interests of the people’ and ‘provide a
legal environment with Mongolia to have an advantage in the
minerals sector’ (Sukhbaatar, 2012: 223).
To conclude this section, the sudden emergence of illegal mining,
the subordination of herders’ customary entitlements to miners’
property rights and the presence of foreigners in Mongol heartlands – and all the socio-environmental dislocation entailed by these phenomena – provoked major public concern about the influence of foreign investors on the state, as well as the state’s
capacity to address the socio-environmental impacts of mining. The subsequent push for national law reform reflected a strong sense on the part of voters and their representatives that the
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government could – and should – regain some regulatory power and political control of the mining sector. The visible disturbance to public life in Mongolia created a fertile political moment for the government to re-evaluate the regulatory balance that had been struck in the 1997 Minerals Law.