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Report downplays communist threat to mining in the Philippines

By Gavin Greenwood

In late December 2010 a spokesman for the National Democratic Front (NDF), a confederation that encompasses many of the country’s leftist groups — including the Communist Party of the Philippines (CPP) and its New People’s Army (NPA) military wing — warned that it intended to increase the tempo of attacks against mining companies. The rationale for this threat was that mining companies damaged the environment, disturbed local communities, engaged in unfair labour practices and only benefited a narrow elite.

While the immediate threat appeared directed at mining operations in northeast Mindanao’s Caraga region —comprising the provinces of Agusan del Norte, Agusan del Sur, Surigao del Norte and Surigao del Sur — it is evident miners could also be targeted in most areas of the country where they are active.

Two obvious questions arise from the mining sector’s perspective: are such threats credible and, if so, what impact could they have on present and future operations?

The context of the threats offers some comfort. The NDF statement coincided with the 42nd anniversary of the start of the present communist insurgency, launched in December 1968. The NDF has declared mining as “detrimental to the interests of the people” in both 2007 and 2008, without markedly increasing the tempo of its attacks against mine sites or infrastructure.

The official view of the threat is that it simply represents the annual demand for so-called “revolutionary” or “war” taxes extorted by the CPP/NPA on wide range of business and commercial interests throughout the country. While the communists prefer the term “fines,” no one disputes that large sums of money are collected by the CPP/NPA in exchange for permitting companies to operate in areas where their interests can be readily disrupted by force if they fail to comply.

According to the Armed Forces of the Philippines (AFP) there were 4,000 active members of the NPA at the end of 2010, nearly 700 fewer than a year earlier. The military claims that in the first 11 months of 2010 the NPA extorted US $2.17 million from a wide variety of businesses, almost US$1 million less than 2009’s US$3.1 million. Such figures are indicative rather than definitive, however, given their source and because many companies fail to report whether and how much they have paid the communists.

The NPA has demonstrated a sustained capability to attack or otherwise disrupt mining operations in key regions of the Philippines, both through the use of force and “softer” options capitalizing on peaceful local opposition to projects and their related infrastructure.

These attacks demonstrate the NPA’s willingness to, on their own terms, directly confront the security forces. They also imply that the NPA’s motives for targeting mining and other commercial operations represent a calculated policy rather than military opportunism.

The CCP/NPA motives for targeting mining and other commercial ventures are varied. The NPA’s main defence against the state is the support it receives from within the communities its cadres operate. This determines the guerrillas’ tactics, if not strategy, and therefore tends to reflect the concerns of the often remote regions the NPA favours for its bases and operational “fronts”.

As many of the communities, notably those comprising tribal groups, oppose industrial development and are highly dependent on the environmental status quo, the NPA has a political motive for emphasizing its opposition to mining operations.

However, mining also provides employment opportunities valued by other sections of the community that the CPP/NPA do not wish to alienate, which leads them to also focus on the terms and conditions of employment offered by the mining and ancillary companies.

Further, and to many analysts most importantly, miners and their contractors are potentially lucrative source of income that would vanish if the NPA used excessive or frequent force. In addition, the threats against mines or other businesses have created a large private security presence. These individuals rarely offer a serious challenge to the NPA, but they do serve as a useful source of firearms, mobile telephones, radios and other equipment needed by the guerrillas.

Finally, the mines and other projects that require state security also serve to disperse the armed forces and police, to the strategic advantage of the NPA. Troops are often spread thinly and their capacity to concentrate their efforts against the NPA reduced, while their vulnerable supply and communications routes offer attractive and low-risk targets for the guerrillas.

By early 2011 very few foreign and domestic mining companies have been driven off their concessions in the Philippines by threats from the NPA. However, according to military sources in Caraga, by late December 2010 at least seven mining companies operating the region have complained of extortion attempts by the NPA and have implied they may have to leave the area, a prospect welcomed by at least one prominent Roman Catholic bishop.

Allan & Associates do not believe that the CPP/NPA’s most recent threats against mining companies are credible or differ materially from similar threats made in previous years.

As noted, the NPA relies on mining companies as reliable and lucrative sources of revenue, as well as a mechanism for mobilisation among many traditional communities and arsenals for their operational units.

A greater risk than the present situation could evolve if the government and mining companies decided to further “militarize” security by seeking to directly confront the communists through the use of greater force. Heightened tension and increased conflict would lead to an inevitable increase in civilian casualties, human rights abuses and the potential for corporate reputational harm.

The reality of the predicament facing many mining companies is that quietly paying off the NPA may be the only option open if projects are to go ahead or production maintained. In strictly economic terms the payments demanded by the communists can be treated as costs like any other expense — with the rising price of fuel probably a far greater burden on operations than extorted “taxes”.

* Gavin Greenwood is an Associate with Allan & Associates, a security risk management consultancy that provides  services to individuals, businesses and government agencies operating throughout the Asia-Pacific region.