Afghan mining deal could fund terror
December 16, 2012Taliban may tax supply routes
A business deal for copper mining rights at Aynak in Afghanistan by a Chinese consortium poses the risk of inadvertently funding local conflict and increasing the likelihood of extortion by armed groups, according to a November report from the human rights organization, Global Witness.
Excerpts from Witness’s report on the secret Aynak contract follow (with internal citations omitted):
The development of the mine and associated infrastructure brings with it a host of valuable supply and sub-contracts. The international aid experience over the past ten years has shown that, without appropriate safeguards, the management of such supply and sub-contract can end up inadvertently funding conflict. Aynak is a high-profile target for attacks which could be aimed at gaining attention or extorting money…
The risk of off-budget gains by, for example, security forces or powerbrokers controlling supply routes also needs to be guarded against. [In the Democratic Republic of Congo] they do this by imposing illegal taxes at mine sites and along transportation routes, or by confiscating and trading minerals directly. Companies sourcing minerals from the DRC are now required to carry out due diligence to ensure that their mineral purchases do not contribute to conflict or human rights abuses.
In the Afghan context, where conflict is ongoing and mines have traditionally played a role in providing financing to armed groups, supply chain due diligence by companies is an important step.
Indeed, given the Taliban’s history of profiting from flawed subcontracting measures and by levying taxes dictated by sharia law, including Taliban taxes on the mining sector (see here and here), the importance of forestalling Taliban infiltration in the Afghan-Chinese supply chain cannot be overstated.
Islamic law imposes a zakat tax of 20 percent (also known as khums) on rikaz, which Islamists regard as any source of wealth discovered underground, including oil, minerals, and buried treasure (Sahih Bukhari 2.24.575).
Money Jihad 
It’s up to the Chinese to put a stop to this. Only the Chinese have the manpower, weapons, and will to do a major housecleaning in Afghanistan. The sooner, the better.
Hey, 1389! I hope you’re right; at the same time, I’m afraid the Chinese will enter into a devil’s bargain with the Taliban the same way Saudi Arabia did with Osama Bin Laden: “Go ahead and do your terror, and as long as you don’t strike us, we’ll let you do what you want, and even pay you, too.”
zakat on mining is a fantastic alternative to transfer pricing, provided it’s used for community development
“Islamic law imposes a zakat tax of 20 percent (also known as khums) on rikaz, which Islamists regard as any source of wealth discovered underground, including oil, minerals, and buried treasure (Sahih Bukhari 2.24.575).”
I discovered that (contemporary?) Islamic legal interpretation acknowledges that mining activities incur (considerable) costs and capital outlays and therefore should rather be taxed as a business, at 10% of income. Also, apparently oil is analogous to “fire”, which along with “pasture and water” should be owned communally, and different rules (should) apply.