The China-Pakistan Axis: Asia's New Geopolitics (25 page)

The evidence instead pointed to militants affiliated with Gulbuddin Hekmatyar’s organization, Hezb-e-Islami. Hekmatyar had once been Pakistan’s favourite son among the
mujahideen
, but his inability to build a national following in the 1990s saw him thrown overboard by his sponsors in favour of the Taliban, who were seen as better able to consolidate power in Afghanistan.
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Hekmatyar fled to Iran for several years, was expelled in 2002, and returned to Pakistan in an effort to work himself into a position of power in the new insurgency.
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Whatever his motives, being tied to the killing of Chinese workers would not be helpful to him as he sought to get himself into the ISI’s
good graces again. Hezb-e-Islami had even established direct contact with the Chinese soon after Hekmatyar’s return from Iran—during which time he “made concerted efforts to placate China, as well as to urge the Muslim leaders in Xinjiang to stop their separatist agitation”.
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In an interview conducted with him a couple of months after the killings, he denied involvement in the incident. The journalist, however, would not let him off the hook:

Question: Are you behind the recent killing of the Chinese?

[Hekmatyar:] I have no idea about it. The Taliban have split now. The other faction is led by Mullah Soban. It could be his brainchild. I have expelled some miscreants from my party. It could be their handiwork. I really have no idea.

Question: But the Afghan government strongly suspects that you have masterminded it. They have good reasons to believe this. In fact, you have admitted it off-the-record while talking to some journalists…

[Hekmatyar:] It is not true. I cannot accept the responsibility if some miscreants have masterminded it at the U.S.’ behest. I believe it is the handiwork of the Americans. They have used some greedy mujahideens for this inhuman act to defame the true mujahideens. I suspect that the Americans have also masterminded the killing of Chinese in Gwador, Baluchistan. The U.S. agenda is to malign jehad and jehadis.
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The lesson for China was that even with all of its political ducks seemingly in a row, its projects would still be exposed to serious security threats. Whether as a result of individual grievances, divisions within militant organizations, or simply commanders with their own agenda, investment in an all-out war zone carried high risks. Ultimately, Beijing’s relations with the Quetta Shura and the ISI could not provide a definitive guarantee against attacks. And nowhere would this be clearer than in China’s biggest investment.

Following the Aynak deal’s grand announcement in 2007, the most striking fact about the copper mine project was how little then happened. It started slowly as both sides appeared to make painful progress even with basic paperwork.
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As the project crawled forward and the scheduled date for the copper’s extraction moved further and further back, the question of the reasons for the delay grew more and more acute. Some members of the Afghan government raised the prospect of throwing the Chinese companies off the project and reopening the bids.
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Other accounts suggested that Chinese money was helping to
ensure that officials in the ministry of mines didn’t complain too much.
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But the Chinese companies involved had a long list of grievances of their own. In public, there were a couple of excuses they could point to that were less sensitive. Ostensibly the discovery of a major archaeological site—Mes Aynak—was the main cause of the hold-up.
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But this was not sufficient reason for the lack of progress on other infrastructure that was nowhere near the dig. “We’re just useful idiots for the MCC,” said one French archaeologist working on the project.
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Security problems were another reason cited. Yet while Logar was certainly insurgent territory, the group operating in the province was the Haqqani network, the militants tied most closely to the Pakistani government—once described by the top US military officer, Admiral Mullen, as a “veritable arm of the ISI”.
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If they had wanted to stage a major attack on the facility, they could have done so. They had been responsible for some of the most spectacular militant operations in Afghanistan in recent years,
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and it is unlikely that the ANA’s protection force at the mine and a few decommissioned Chinese People’s Armed Police who were based inside the facility would have been enough to stop them.
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Instead, whether they did so of their own volition or with Pakistan’s guidance, the Haqqanis kept well away from targeting the mine.

There were still security issues in the environment of the mine but, at least initially, the handful of stray rockets didn’t seem to go beyond the risks that MCC could reasonably have anticipated for an investment in such a location. Researchers from organizations such as Integrity Watch Afghanistan conducting interviews around the mine had a strong sense that they were not centrally directed insurgent attacks, but rather stemmed from local grievances that the national and regional government had still not addressed.
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Land claims from the surrounding villages remained unresolved, despite the Afghan government’s pledge to do so. Other issues piled up too—the lack of skilled workers, corruption among Afghan officials, and the unfeasibly high costs of the proposed railway project.
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And a vicious cycle was developing—the number of attacks in the vicinity of the mine was rising, MCC was growing increasingly nervous about its investment and withdrawing workers from the project, and the local people were growing less and less happy about the slow progress of an investment that was supposed to yield significant economic benefits for them.
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Political motives were also read into the delay—some officials in Kabul suggested that, while the Chinese company had the foothold it
needed, it lacked any rationale for moving expeditiously with the project.
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The main beneficiaries of royalty payments would be the current Afghan government, which might not survive, and the NATO coalition, which wanted economic projects like this one to succeed quickly. The fact that US officials were urging China to move forward with the investment was an
a priori
reason for a major state-owned company not to do so. At the very least, there was a strong case for waiting to see how the political and security situation in the country developed.

MCC was going through its own difficulties too: the company reported a loss of over a billion US dollars in 2012, with cost overruns, delays and the plummeting cost of iron ore hitting the company.
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By the end of the year, only a skeleton crew was left at the mine, and the Afghan government was struggling to persuade MCC to move ahead with operations. “We had meetings with them (the Chinese investors) and assured them these rocket attacks happen anywhere and they are not the direct targets. We had repeatedly meetings with them but could not make them confident,” said Sardar Mohammad Sultani, the Deputy Interior Minister. “The timing of those workers returning to Afghanistan will depend on conditions,” said an MCC spokesman.
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Even in a supposedly less complicated part of the country, China still found itself running into problems. For several years after the Aynak deal, there was virtually no Chinese economic activity in Afghanistan, as if China Inc. was collectively reserving judgement over the future of the country. Then, in December 2011, came the announcement that China National Petroleum Corporation, the largest Chinese oil and gas producer, had won the bidding process for Afghanistan’s first major oil contract.
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It did so with a local partner that seemed to have every political base covered, and a commercial relationship with China that went back a surprisingly long way. Watan Group had achieved a level of notoriety after being blacklisted by the US government following its controversial handling of a security contract for the Kandahar-Kabul road, a vital logistics route for coalition convoys.
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A US Congressional report exposing Watan’s payments to Taliban commanders followed press reports that as much as 10% of the $360 million contract may have been handed out as protection money to the insurgency.
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The episode cast a spotlight on the two men who ran Watan, Rashid Popal and his brother Ahmed Rateb Popal.

Rateb Popal had last been in the public eye immediately before the invasion of Afghanistan, during the final, chaotic press conference held
by the Taliban’s ambassador in Pakistan. Interpreting for the ambassador was a distinctive figure—a six-foot tall man with a black turban, big beard, eye-patch, damaged hand and prosthetic arm, who spoke with a New York accent.
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Born into a prominent Pashtun family, Popal had studied at Queens College, Flushing (New York), and had picked up his injuries while still a schoolboy in Kabul during the Soviet invasion. The bomb that blew up in his hands had been intended for the Russian embassy.
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After spending ten years in prison in the United States on heroin-smuggling charges, he returned to Taliban-run Afghanistan in 1998 seeking business opportunities. One of his first ventures was a steel factory, which he established with help from an outside source—China.
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Over the next few years, he would live between Pakistan and Afghanistan, acting as a broker for business deals between the Taliban and the Chinese, who provided one of the few commercial avenues available at the time.
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After the US invasion, however, his importance to China’s interests in Afghanistan grew considerably: Popal was a cousin of the new Afghan president, Hamid Karzai, and members of the Karzai family were believed to be major shareholders in Popal’s company.
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He was known to receive a lavishly generous level of hospitality in Beijing.
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Watan Group went into business with a couple of Chinese partners, working with Huawei to install digital networking equipment in government ministries and establishing Sino-Afghan Steel, the realization of Popal’s original joint venture of the late 1990s.
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But the CNPC deal was on a more serious scale.

In comparative terms, the investment itself was relatively small—there are believed to be only 87 million barrels at the Amu Darya field—and the terms, as with Aynak, were generous for the Afghan government: 15% royalties and 50–70% of the profits, as well as a promise to build the country’s first refinery.
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In theory though, it positioned CNPC well to win larger future tenders, and to connect its Afghanistan oilfields with the company’s growing energy infrastructure in Central Asia.
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Yet again, however, the project would be dogged with problems. The three oil blocks were in the northern province of Sar-e-Pol, up towards Afghanistan’s Central Asian borders, far from any serious insurgent threat, in territory controlled by the Uzbek warlord Rashid Dostum. Dostum was not happy about his cut. He had played a crucial role in Karzai’s presidential re-election campaign—returning to the country to help swing a major voting block behind him
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—and had
long treated this part of the country as a personal fiefdom. Just as Karzai was due to visit China for the SCO summit in June 2012, press stories appeared about men loyal to Dostum intimidating Chinese engineers and demanding a share in the proceeds.
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Posters of Dostum were hung around villages and towns near the Sar-e-Pol site. The Afghan national security council accused him of “undermining the national interest” and threatened to arrest him.
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Dostum retorted that “China is a trustworthy friend of Afghanistan. It has made the largest investment in the mineral resources of the country. I do not have any problem in that regard. However, I rightfully demand for the rights of the people of the Sar e Pul and Jawzjan, who have to be considered as a top priority as far as the selection of the workforce is concerned.”
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It was a poor omen. The problem was fixed, and the field started pumping oil within a few months, but in the eyes of Chinese diplomats it was the second occasion on which the Afghan government had failed to get the local politics squared. And a year later the project had stalled again, with drilling halted and most of the Chinese workers sent home, this time supposedly owing to a dispute over transit arrangements with Uzbekistan.
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In practice though, the more serious disagreement was between CNPC and Popal’s Watan Group over lucrative subcontracts.
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The stuttering progress of the oil project yet again cast a pall over the willingness of investors, Chinese or otherwise, to take a risk on Afghanistan. This was supposed to be the simple, successful project in a peaceful part of the country that should have been more akin to a venture in Central Asia than in the insurgency-racked regions in the East and South. When the Afghan government launched another oil tender in September 2013, it found “no important takers”.
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Aynak itself appeared to be close to unravelling completely. In 2013, MCC’s proposed renegotiation of the terms of the contract would absolve it of almost all the major infrastructure commitments that had made the deal so attractive to the Afghan government in the first place, and push back the proposed start date for mining to 2019.
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The ripple effects were significant. The other major investment in Afghanistan, the Hajigak iron ore mine, which was run by an Indian company, had been premised on the delivery of much of that same infrastructure—without it, that company too wanted a renegotiation of terms.
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Hamid Karzai flew to Beijing in September 2013 seeking a deal. The Afghan government had been split. One side proposed simply throwing the Chinese off the proj
ect altogether. The case against doing so was not commercial, it was political: “Others for strategic reasons want [renegotiation of the contract] to happen … so China remains committed to helping Afghanistan when the money dries up in this country.”
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