The case of Reko Diq

Confused messages have emerged from different officials in the Pakistan government about the Reko Diq fiasco. What is clear is that the World Bank tribunal on the case between the Tethyan Copper Company (TCC) and the Pakistan government has decided against Pakistan. The case was initiated in 2011 when the Supreme Court of Pakistan cancelled the licence granted to TCC as it did not fulfil the mining regulations in the country. The deal reeked of corruption but, six years on, no one has been held accountable and whatever investigation there was has ended without any outcome. Without a formal corruption case, Pakistan would never have been able to demonstrate to an international arbitration tribunal that the TCC had received the contract through problematic channels. Referring to the SC judgement would not have been enough to prove that the TCC itself was culpable in the botched mining project. The TCC has – by its own claim – successfully argued that it should be compensated for its financial losses. Pakistan’s failure to make a solid case to international arbitration forums is expected to cost it upwards of $350 million in payments to the TCC.

According to the Balochistan chief minister’s spokesperson, the Balochistan government has agreed to an out-of-court settlement with the company. This goes against the attorney general’s claim that no final judgement in the case had been given and Pakistan would contest any compensation amounts order in the tribunal. Why would the Balochistan government have agreed to an out-of-court settlement if there is no final order on the case? Once again, the entire Reko Diq affair is being dragged through the mud. Reported to host the world’s fourth largest reserves of gold, the Reko Diq mines could have brought Pakistan new financial wealth. More than Rs1 billion has already been spent to defend Pakistan before the international arbitrator. The tribunal has ruled that there is no demonstrable corruption in the affair, which reflects badly on how Pakistan has dealt with the case which can be said to have damaged the country’s ability to bring in international investment on a fair and equitable basis. First, it was the terms of the Reko Diq agreement themselves that were the problem. But the country’s inability to take the issue to its conclusion internally is what is marring its credibility internationally. Pakistan cannot point to international courts as being unjust without showing what it has done to uncover who was behind the malpractices in the Reko Diq agreement. Without doing so, Pakistan’s international case to terminate the Reko Diq mining agreement will continue to bleed the country’s financial exchequer needlessly.