In the Large-Scale Mining Sector in Kyrgyzstan

POLICY BRIEF #60, MAY 2020 Regulating Corporate Social Responsibility (CSR) in the Large-Scale Mining Sector of Kyrgyzstan by Asel Doolotkeldieva EXECUTIVE SUMMARY Asel Doolotkeldieva is an Associate The recent regulation of CSR in large-scale mining Research Fellow at the OSCE Academy. in Kyrgyzstan – despite its many positive effects – She has obtained her PhD from the presents an elusive framework of action for the mining University of Exeter (UK, Department of companies. While mining entities across the world tend Politics) where she wrote her thesis on to apply CSR within the prism of ‘risk management’ post-revolutionary social mobilizations rather than altruistic concerns, in Kyrgyzstan this is, in Kyrgyzstan. She holds her Master in addition, linked to obscure legislation and weak of Research in Comparative Political enforcement. The new legislative framework does Sociology from Sciences Po (Paris) not provide specific guidelines as to how to define and her Bachelor from AUCA (Bishkek). the scope, content, and extent of social corporate Her research interests are connected responsibility. Applied differently to each individual to social movements and civil society, mining project in the absence of a general principle, global capitalism and extraction, post- CSR becomes a source of contention between the socialism, and decolonization. She co- mining entities, local communities, and the central authored “State as Resource, Mediator, government. Often such ad hoc corporate programs and Performer: Understanding the Local are accompanied by adverse effects since they lead and Global Politics of Gold Mining in to a distorted development on the ground and further Kyrgyzstan” (Central Asian Survey 34, conflicts with communities. However, compliance to and no. 1 (2015) and IGF Mining Policy engagement with social responsibility still offers the Framework Assessment. Kyrgyzstan, companies a chance to secure access to land and to 2018. continue operations amidst local protests and a volatile political and institutional environment. Email address: [email protected]. © 2020 OSCE Academy in Bishkek. All rights reserved. The views expressed and the conclusions reached in this brief are exclusively those of the author and are not necessarily shared or endorsed by the OSCE Academy in Bishkek and the Norwegian Institute of International Affairs. Extracts of this Policy Brief may be quoted or reprinted without special permission for academic purposes provided that a standard source credit line is included. Academy Policy Briefs and submission guidelines are available on-line at http://www.osce-academy.net/ en/research/publication/policy-briefs/ The OSCE Academy’s Policy Briefs became possible with financial support from the Norwegian Ministry of Foreign Affairs via the Academy’s Cooperation with the Norwegian Institute of International Affairs. Regulating Corporate Social Responsibility (CSR) in the Large-Scale Mining Sector of Kyrgyzstan List of Abbreviations CSR activities as the central strategic response to them. I then use the fieldwork data to CSR – Corporate Social Responsibility explore preliminary thoughts of the risk and SDG – Sustainable Development Goals CSR nexus on local development. SCIESU – State Committee for Industry, Energy and Subsoil Use EIA - Environmental Impact Assessment Methodology CRD – Community Relations Development CSC – Case Study Company The present research project was carried SIETS - State Inspection for Ecological and out using existing data as well as novel data Technical Safety produced via ethnographic research. The existing data includes a politico-legal analysis of national laws and policy documents Introduction governing the mining industry, and reports produced and made publicly available by mining companies and local communities. Since the early years of independence, the Ethnographic study involved five site visits, Kyrgyz government, under the advice of semi-structured interviews with residents international financial organizations, has affected by mining, observations of mining- defined gold mining as the driving force of related local events, and interviews with the economy in the post-independence era. government officials, mining companies and The Kyrgyz government depends on Kumtor, experts. Company anonymity was granted as the country’s largest and long-serving gold a condition of access. mine, for over 8.6% of its revenues (Beril et al. 2020).1 However, the industry has also attracted social criticism from local residents and non-governmental organizations. In their CSR practices as ‘risk management’ opposition to mining, local residents have in emergent economies raised different concerns, ranging from fears related to environmental risks (Wooden 2013, Following severe violations of human rights 2017) to distrust towards the government’s and environmental degradation in mining ability to oversee foreign companies sites around the world, large-scale mining (Doolotkeldieva 2016), fair distribution of became subjected to heavy criticism in the income from extraction (Eurasia Foundation of 1980s as an industry causing destruction Central Asia 2017), and lack of transparency and dispossession in the poor South so that in the sector (Oxus 2013; Gullette 2013, 2014; lifestyles can be sustained in wealthy North Furstenberg 2015). In 2012, the combination (Bridge 2004; Moody 2007). The growing of political instability and growing anti-mining awareness of multifold impacts produced opposition resulted in changes to corporate by the industry gave rise to several global social responsibility (CSR) approaches in large initiatives directed towards incorporating scale mining. In this policy brief, I analyze how ethical conduct in their work (McBarnet 2009). the government and gold mining companies International financial organizations and large framed a range of socio-political pressures as corporations tried to rethink and re-brand various types of risks and positioned formal the industry in terms of ‘sustainable mining’ along the lines of sustainable development 1 Aside from Kumtor, there are eight gold mines goals (Dashwood 2012). A central element of medium and large sizes in production (NRGI, to these initiatives is the corporate social 1 2017). The country has an estimated 1,349 active extractive licenses (IGF 2018). responsibility practices (CSR) of mining Asel Doolotkeldieva Regulating Corporate Social Responsibility (CSR) in the Large-Scale Mining Sector of Kyrgyzstan companies. The World Business Council for developing countries might entail additional Sustainable Development qualifies CSR as operational and reputational risks (Frederiksen “the continuing commitment by business to 2018; O’Faircheallaigh 2010; Owen and Kemp contribute to economic development while 2013; Trebeck 2008). In Kyrgyzstan, there is a improving the quality of life of the workforce dearth of literature exploring this issue. In their and their families as well as of the community study of a mining conflict in Batken province, and society at large.”2 Guided by such a broad Nogoibaeva et al. found that the social license conceptual framework, corporations choose to operate has a local equivalent under the to emphasize different aspects of their CSR term ‘bata beruu’, which can be translated as on the ground: environmental and human ‘giving someone a blessing’. They revealed the rights stewardship, championship in labor importance of the bata beruu process for the conditions, ethical business, promotion of local communities as it would mean that the poverty alleviation, community welfare, etc.3 In miners take the community seriously.5 the mining industry, they prioritize community relations and development (CRD) functions ‘Seeing’ CSR through the prism of risk under the rubric of ‘social license to operate.’ management bears concrete implications not only for the national mining governance but also However, many critics have demonstrated how for sustainable development. By sustainable CSR became a hypocritical mechanism allowing development in extractive industry, the authors transnational corporations to reduce costs by imply not only the well-being of populations, superficially meeting some of the communities’ usually identified in non-material and socio- needs, silence their grievances, and depoliticize economic conditions (Tianen et al 2014), but opponents (Madeley 1999; Coleman 2018; also inclusive participatory processes (Newell Walker-Said 2015; Christian Aid 2004). 2005) and strong accountability (Kemp et Another point of contention in the literature is al., 2010). As critics point, the association that CSR may not be associated so much with of social responsibility with risk management ethical and moral stands but rather with the orients corporate activities along a short- core business interests. In other words, CSR term perspective and can therefore harm the makes a business case “because without this sustainable development goals. Owen and function, mining companies would be unable Kemp (2012) and Constanza (2016) note that to acquire or maintain access to land and guided by the motivation to minimize risks and other key resources.”4 This later consideration maximize benefit, mining entities may want leads some firms to associate CSR with ‘risk to prioritize negotiations with power holders management’ rather than commitment to instead of promoting participatory decision- vulnerable communities, as operations in making processes and access of information to all. Murrey (2018) observes that

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