http://www.nytimes.com/2012/02/09/business/global/germany-and-kazakhstan-sign-rare-earths-agreement.html?_r=1
BERLIN — Chancellor Angela Merkel of Germany and President Nursultan Nazarbayev of Kazakhstan agreed on Wednesday to a strategic partnership that guarantees German companies the right to search for and mine rare earths and other raw materials in Kazakhstan in exchange for technological and other investments.
The agreement, signed by the two countries’ ministers of industry and technology, involves about 50 separate accords involving a total of €3 billion, or nearly $4 billion.
Among them are deals aimed at ensuring future access for German companies to the 17 elements known as rare earths that are vital for the production of technology ranging from smartphones to solar panels and batteries used in hybrid automobiles. Most of the elements currently come from China.
But the agreement came under fire from human rights organizations, which warned that economic deals should only come bundled with demands for Mr. Nazarbayev’s government to respect human rights and press freedoms.
The groups cited recent crackdowns on the Kazakh media and clashes that broke out on the nation’s independence day in December between oil workers protesting working conditions and police. Fourteen people were killed in the clashes. Mr. Nazarbayev told reporters Wednesday that the police acted out of self-defense, and he promised an independent investigation.
“A country that violates fundamental human rights is not a good environment for economic investment,” said Hugh Williamson, the director for Europe and Central Asia at Human Rights Watch.
Although Germany’s trade with Kazakhstan grew by 20 percent last year to around €6.3 billion, France and other European partners have invested more in the Central Asian nation, which is eager for investments into its infrastructure and manufacturing sector.
Representatives of German business applauded the agreement. The Federation of German Industries, which helped facilitate the talks, welcomed the accord as a “milestone” in economic relations between the two countries.
“The companies in Kazakhstan have a strong interest in German technology, and German manufacturers seek to grow cooperation in the area of raw materials,” said Ulrich Grillo, who heads the federation’s committee for natural resources.
Germany signed a similar agreement in October with Mongolia, which like Kazakhstan holds vast untapped reserves of resources, including rare earths. The moves are a clear effort on the part of Germany to challenge China’s dominant position in production of the metals.
China currently mines and processes more than 90 percent of the world’s rare earths. It suspended exports of rare earths to Japan in 2010, driving up prices thirtyfold by last summer and sending shivers through industries across the globe that are dependent on the strategic minerals. A refinery in Malaysia received permission this month to begin refining the metals, which triggered a drop in prices.
Mrs. Merkel has visited Kazakhstan twice during her tenure as chancellor, including one trip during Kazakhstan’s presidency of the Organization for Security and Cooperation in Europe in December 2010. Even at that time, the former Soviet republic was under fire for failing to uphold the organization’s standards of press freedoms and the right to protest.
Yet observers say the situation in Kazakhstan has only deteriorated since then. Human Rights Watch cited concerns over the use of force against civilians during the protests last December, and the subsequent arrest of political activists.
Mrs. Merkel assured reporters that she had made it clear that Berlin expected Kazakhstan to carry out a full, independent investigation of the protests.
“Of course when we speak about economic interests, we also address human rights and the need to adhere to democratic principles,” Mrs. Merkel said.
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