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Blackwater USA – Daily Brief

Afghanistan

  • SIGAR released its latest quarterly report. Some tidbits:
    • The report noted that the ANSF lost 42,000 troops in the last year, but for a good reason: the ones that dropped were largely ghost soldiers whose names commanders had been using to collect extra pay, until U.S. pressure led to biometric verification of payroll.
    • As a result, the ANSF troop strength is now at its lowest level (at least on paper) since 2015.
    • The Afghan Anti-Corruption Justice Center is slacking off, and has recovered only 0.2% of the $185.2 million in penalties it imposed in corruption cases.
  • You can read the whole SIGAR quarterly report here.
  • Though we celebrated lower civilian casualties in the first half of 2019, July was apparently the deadliest month of the year for civilians—largely because of Taliban attacks (whereas in the first half of the year, more civilians had died because of ANSF mistakes or errant airstrikes than from insurgent activity).

Venezuela

  • Norway is still facilitating talks between the Venezuelan government and its opposition, as of yesterday. Pres. Maduro said the dialogue was making progress, but also said he would “meet even the devil,” so it’s hard to tell how it’s actually going.
  • Then Peru said it would host a summit to discuss Venezuela’s political crisis, and there’s speculation that U.S. NSA Bolton and Commerce Secretary Wilbur Ross will attend.
  • Apparently Ross plans to use the venue to outline the U.S. government’s plan to help rebuild Venezuela, post-Maduro. That’s bound to irk Maduro.
  • New reports say that former Maduro intelligence chief Hugo Carvajal is likely to be extradited from Spain to the U.S. on drug trafficking charges, though Carvajal is said to be participating in the process. It’s likely that he’s getting a sweet deal, in exchange for sharing what he learned during his time as Maduro’s #3.

China

  • Another weekend, another large protest in Hong Kong. Reuters reports that civil servants are now defying orders and joining the demonstrations, and also says that local authorities blocked its reporting in some cases.
  • The South China Morning Post had a good article on protesters’ use of the “Reddit-like” LIHKG forum to organize and call for supplies. It’s pasted below

DPRK

  • North Korea said that its latest test was of a series of rocket launchers, and apparently they performed to Kim Jong Un’s “great satisfaction.”

DRC

  • The Africa Report translated a great article on how DRC’s inability to offer clarity on its post-Kabila policy has caused mining companies to reduce both production and investment in the country. You can read the original article in French from Jeune Afrique here, or the English translation below.
  • DRC’s new Ebola coordinator Jean-Jacques Muyembe said that half of all Ebola cases in the country likely go unidentified (that’s consistent with prior estimates), and predicted that the outbreak could last 2-3 years, as a result.
  • There are now reports that the third Ebola case in Goma was a gold miner, and that his wife has now tested positive as the fourth case. One of his 10 children is reportedly also sick, and officials worry that he could have spread it to others both within and outside of his large family.
  • Angry Pygmies killed another ranger in Kahuzi-Biega Park—that’s the second time this year that clashes between guards and Pygmies have turned murderous.

U.S.

  • Pres. Trump said he was withdrawing his nomination of Rep. Ratcliffe for DNI, after seeing how Ratcliffe was “being treated very unfairly by the LameStream Media” (Trump’s words) over exaggerated claims on his resume and congressional website.

Other News

  • India accused a Pakistani-military-backed group of planning an attack on Hindu pilgrims in Kashmir, after finding a cache of weapons along the route and intelligence that suggested an imminent attack. The state government called off the pilgrimage.

DRC: Miners on hold while government stalls (The Africa Report)

Six months after the Democratic Republic of Congo (DRC) presidential elections, discussions on the extractive sector are still on the table. This has slowed down the implementation of the new mining code, which gave more power to the state. Faced with such uncertainty, investors have put a freeze on their projects.

The Congolese people are still waiting for the appointment of a government in Kinshasa six months after Félix Tshisekedi was elected. Despite the appointment of Sylvestre Ilunga Ilunkamba as prime minister on 23 May, negotiations are dragging on between the ruling alliance of the Cap pour le Changement (Cach, pro-Tshisekedi) and the Front Commun pour le Congo (FCC, pro-former president Joseph Kabila). The most intensively negotiated posts are, undoubtedly, those in the mining sector, the pillar of the Congolese economy, and which account for 80% to 95% of the country’s exports.

Martin Kabwelulu, who served as mines minister for 12 years, will be replaced, but also a new portfolio minister to manage the state’s holdings in mining companies must be named. Currently, finance minister Henri Yav Mulang is dealing with mining issues. Also, the heads of publicly owned extractive companies are still to be appointed. This includes Gécamines, which reigns supreme in the four provinces that formerly were Katanga.

Blocked appointments

Albert Yuma Mulimbi, a close ally of Joseph Kabila, who has been in charge of Gécamines since 2010, is expected to be re-elected as chairman of the board of directors. A new general manager, Sama Lukonde Kyenge, who is affiliated with Tshisekedi and oppositionist Moïse Katumbi, will work with Yuma. The former president and Tshisekedi approved this dual leadership, but portfolio minister Wivine Mumba blocked the appointments following objections by FCC MPs opposed to Katumbi.

In 2018, Yuma began contractual renegotiations with Gécamines’ 17 major international partners, and the outcome depends on the confirmation of these two men. However, Kyenge has crossed swords with the Swiss giant Glencore, the main shareholder of two of the country’s largest copper and cobalt mines.

Sensitive appointments are expected in other parastatals:

Société minière de Bakwanga (Miba, 80% state-owned), formerly the leader in the diamond industry in Kasai;

Société Minière de Kilo-Moto SA (Sokimo), which holds gold licences in the north-east of the country, primarily in partnership with Canada’s Barrick Gold in the Kibali mine, the main Congolese gold mining project.

Playing the waiting game

International and local mining investors, hoping for new opportunities after the political changes, are waiting on these appointments.

“After the election, some leaders of Western groups came to Kinshasa to position themselves on new mining projects, mainly in gold and cobalt. But they left without getting answers to their proposals. In the absence of a government, there is no one to talk to outside a few shadowy advisers who might not have any real influence,” says a North American lawyer familiar with the sector and the country.

He points out that there have been no major investment decisions in the DRC’s mines since 2017. The most recent was $250m by Canadian Alphamin Resources Corporation in North Kivu to industrialise tin production at its Bisie site.

Production slows this year

Companies whose mines are already in operation continued to operate at a good pace in 2018:

  • 1.2m tonnes of copper (+12.9%);
  • 106,439tn of cobalt (+43.8%);
  • and 28.5tn of gold (+22.6%)

But production has slowed since the beginning of 2019. Tenke Fungurume Mining, a subsidiary of China Molybdenum, one of the main players in the copper-cobalt sector in Katanga, currently mines between 10,000 and 13,000tn of copper per month, compared to about 18,000tn a year and a half ago. The nearby Kamoto mine, owned by Glencore, recently announced a temporary suspension of cobalt exports.

The mining sector’s reluctance to act was compounded by the fall in the price of cobalt — down 72% in one year. The DRC holds more than 70% of the mineral’s known reserves, essential for the manufacture of electric vehicle batteries. The collapse may be due to the major players in the sector rationalising their production of cobalt — mined at the same time as copper — until prices return to levels more in line with real supply and demand.

The mining code is imprecise

A major concern, however, is regulatory and political uncertainty in the sector. The mining code was promulgated in March 2018, but the terms of its application are imprecise.

“The tax on windfall profits is incomprehensible, as is the tax on capital gains on disposals and the calculation of authorised debt ratios,” says the lawyer, who claims to have employed several large audit firms to try to apply these new rules on behalf of a mining company without success.

“Without explanations, companies will not be in a hurry,” he warns. He considers, however, the obligation in the new code to pay local taxes directly to provincial or communal authorities — without going through Kinshasa — as a clear improvement in governance.

Because of the vagueness of the rules, large companies — with the largest legal and accounting teams — have stepped into the breach.

“We are negotiating with the various local and central governments to ensure that the previous rules from our mining convention apply in place of some of the measures in the new code until they are clarified,” says an executive of a major mining group active in the copper and cobalt sector in Katanga.

A senior mining official in Kinshasa acknowledged the wait-and-see attitude linked to the current political situation, but says, “the work of popularising the new rules has already begun”. He referred in particular to the discussions that had taken place on this subject during the last edition of the DRC Mining Week, held on 19-21 June, in Lubumbashi.

Difficulties of implementation

The same questioning arises with regard to the law on subcontracting, promulgated in March 2017, and reinforced by the mining code for extractive companies. It theoretically requires mining companies to work only with Congolese-majority-owned suppliers of goods and services.

“Most mining companies don’t see how to apply it in highly technical areas where there is no local expertise,” says the lawyer.

The lawyer argues that there is a risk in the creation of shell companies whose only beneficiaries would be Congolese intermediaries with no particular competence but who are politically connected.

“Things will be done gradually, since we were only appointed in December 2018,” says Ahmed Kalej Nkand, president of the Autorité de Régulation de la Sous-Traitance dans le Secteur Privé. “But, ultimately, the law will be applied to all private companies, including Chinese companies.”

Nkand confesses that he is still waiting to know about the means available to him to monitor the proper application of this subcontracting code.

Aggravating factors

The gap between the new laws and their implementation is further aggravated by the creation of 26 new provinces (up from 11), which is draining public funds. The Natural Resource Governance Institute (NRGI), an independent organisation specialising in mining governance issues, estimates that if the mining code were effectively enforced, the state and local authorities could receive between $348m and $1.2bn per annum solely from the copper and cobalt sectors.

To date, they have received less than $300m per year from the entire mining sector. But the projected windfall would only become a reality if the new funds provided for in the mining code — devolved to future generations and community development —the administrative services of the new provinces and the ad hoc financial control bodies, are put in place. This is far from being the case, according to NRGI.

Artisanal and clandestine mines

Each of the mining sectors – copper-cobalt, diamond, gold, coltan, and tin – require a long-term strategy. In copper and cobalt, the new mines minister and other key officials in the sector will try to address the issue of illegal mining. Artisanal diggers have invaded large mining sites such as Tenke Fungurume and Kamoto (where the collapse of tunnels has resulted in the deaths of 43 people).

About 30% of the cobalt mined in the country comes from artisanal sites. Most of it travels to China through a network of well-established traders in Katanga linked to major buyers in Beijing. Because of the importance of this mineral, the government will face the concerns of car manufacturers — including BMW, PSA, Renault and Nissan — about child labour and environmental protections. A traceability project has already begun for Kivu coltan – an ore used in the manufacture of smartphone microprocessors, 60% of whose known reserves are in the DRC. The new leaders in the mining sector will also study the potential of lithium and nickel deposits — also essential for battery production.

Finally, the diamond industry, mainly located in Kasai, the birthplace of the Tshisekedi family, needs a major recovery plan. Old veins have been exhausted, artisanal and clandestine mining is on the rise, and the inter-community unrest of 2018 has disrupted the functioning of mines.

“Miba, once the country’s mining jewel, is almost at a standstill,” admits a senior Kinshasa-based official. “The publicly owned company needs financing because it has to work on kimberlite [particularly hard diamond rock], which is more expensive. Without additional resources to restart exploration, which will make it possible to choose the areas to dig, it will have difficulty in returning to its former production levels,” he says.

There are some positive signs. For example, an increase in production from Anhui-Congo Mining Investment Corporation (Sacim), a joint venture between the state and Chinese investors. It produces about 400,000 carats per month. But its permits are adjacent to Miba’s, which could create tensions between the two companies.

Since his election, Tshisekedi has had discussions with stakeholders, notably at the Africa CEO Forum in Kigali in March, during which he met a delegation led by John Kanyoni, vice-president of the Chambre des Mines. While he has listened a lot, he has not yet said much on the subject.

The bottom line: Investors want to see if Tshisekedi will go along with the reforms — the mining code, subcontracting and renegotiations with Gécamines — launched under his predecessor’s mandate. It remains to be seen, however, whether the head of state will have the wherewithal to complete and implement them to improve public revenue.

Hong Kong protests: how the city’s Reddit-like forum LIHKG has become the leading platform for organising demonstrations(SCMP)

  • Protesters use LIHKG to call for backup or request supplies for those on the front lines of clashes with police
  • The forum used to maintain spirits among the protest camp also has a dark side and is fertile ground for exposing police officers’ personal information

A post on the popular Hong Kong forum LIHKG calls on residents to skip work and classes to support a strike by civil servants and MTR staff and put pressure on the city’s embattled leader Carrie Lam Cheng Yuet-ngor.

Written in Cantonese by an extradition bill protester last Monday, the post quickly garnered more than 11,000 upvotes from netizens supporting the movement that has been shaking Hong Kong for two months.

Another post appeared to call for a citywide strike on Monday.

“Skip work, you may lose your job. But if you don’t skip work, you will lose Hong Kong and your home! Freedom is not free, I beg you, let’s recover Hong Kong,” it read.

The forum, dubbed ‘Hong Kong Reddit’, has emerged as one of the virtual command centres of the apparently leaderless movement against the now-shelved bill that would have allowed the transfer of fugitives from Hong Kong to jurisdictions it lacks an existing arrangement with, including mainland China.

Ongoing discussions on the forum include where to buy equipment for protests and messages of encouragement to keep fighting.

What is LIHKG?

Established in 2016, LIHKG is a news forum site based in Hong Kong. The site was formed by the creators of the now-defunct forum HKG+, which used to be affiliated as a third-party application with another local forum site HKGolden.

After HKG+ was banned by HKGolden in the same year, LIHKG surged in popularity and replaced HKGolden as the go-to site for Hongkongers to discuss political content.

LIHKG is often compared to Reddit, an American forum site where users create threads and submit a variety of content through relevant subreddits that categorise the posts into different sections.

LIHKG has similar subforums with specific topics related to food, technology, dating and more.

Unlike Reddit, Hongkongers generally prefer to stick to LIHKG as posts are predominantly in their native tongue, Cantonese.

The city’s subreddit, r/HongKong consists of about 90,000 subscribers who are mainly expatriates, tourists or locals comfortable in English. Since the extradition bill crisis, the sub-reddit sometimes reposts translated information from LIHKG for non-Chinese speakers.

How did LIHKG become the main platform for the anti-extradition movement?

Protesters are able to use LIHKG to call more people to the streets and request supplies to aid those on the front lines.

“If I get there at 7pm, will it be too late?” asks one poster to the rallying call.

“No it won’t, we really need people on the streets,” another replies.

Threads can be voted up or down by other community members. They can potentially gain hundreds or thousands of upvotes and comments, making them more likely to appear on the forum’s front page.

Although LIHKG is mainly local, users may try to spread what they have shared through LIHKG to international audiences. A user once created a thread which urged others to translate memes and share them on popular Reddit meme channels. Some of these memes appeared on highly frequented subreddits such as r/dankmemes and r/funny.

The forum is also used for crowdfunding, such as backing a bid for world leaders to address the extradition bill crisis during the G20 Summit.

On June 25, open letters written by protesters were advertised in newspapers including the Financial Times and The New York Times. Thanks to the influence of LIHKG, almost HK$5.5 million was raised by 22,066 activists, 82 per cent more than the targeted amount.

How can users stay anonymous on LIHKG?

LIHKG is a safe haven for people who may fear speaking up in real life, but still want to call for freedoms and remain politically active.

An account can only be created with an email address provided by an internet service provider or higher education institution, meaning the user cannot hide their identity from LIHKG. However, the forum does not require users to reveal any personal information, including their names, so they can remain anonymous. The authorities could still try and get this information through a search warrant.

Many still feel this is a safer alternative to HKGolden, especially after its site administrators were forced to hand over the IP address of a 23-year-old user to the authorities. The user had made posts encouraging people to attack police and block MTR stations during the pro-democracy Occupy movement of 2014.

While HKGolden was the main forum used during Occupy, it has since limited political content on its site, causing users to gravitate to LIHKG.

Are there any risks to using LIHKG?

Many popular websites supported by Cloudflare, including LIHKG, shut down mysteriously on July 2, a day after Hong Kong’s legislature was stormed and trashed by protesters.

Cyberattacks from mainland China were initially thought to be behind the outages, but Cloudflare has since clarified they were due to an internal issue. Administrators created a Twitter account the day after as an alternative way for users to access LIHKG content.

More radical methods of protest can also divide LIHKG users. Before a 15-hour siege of police headquarters in Wan Chai on June 21, there were arguments against storming into the station.

“We could lose everything if we storm in. Let’s protect ourselves and not create rifts between us. Stay calm,” one post read.

Another said: “We need to minimise the impact on civilians to avoid losing public support.”

LIHKG is also fertile ground for doxxing people not supportive of the movement against the extradition bill. One police officer found himself a target of public mockery when his name and picture were leaked, along with private Tinder conversations requesting sexual favours in a police station.

Printouts of the conversations were later displayed on multiple so-called Lennon Walls, colourful collages of Post-it notes with messages that have sprung up all over Hong Kong.

LIHKG has also enhanced a sense of community among Hongkongers. For example, the phrase “Be water, my friend”, originally said by martial arts legend Bruce Lee, has become a mantra for protesters, who have taken a fluid approach to their rallies.

The phrase has been popularised on LIHKG as a way to provide encouragement and unite citizens.