Issue Date: February 25, 2013
A bid by a Pakistani conglomerate to build a nitrogen fertilizer plant in Indiana has been put on hold. An Indiana state agency took this action because of concerns that the firm isn’t doing enough to prevent its calcium ammonium nitrate from being smuggled into its home country’s neighbor, Afghanistan.
The U.S. Department of Defense has told Congress that the common agricultural fertilizer, produced in factories owned by the Lahore, Pakistan-based Fatima Group, has been making its way into the deadly homemade bombs—called improvised explosive devices (IEDs)—that the Taliban and other terrorist elements have been using to inflict heavy casualties on American troops in Afghanistan.
Pakistan’s U.S. embassy in Washington, D.C., insists that Fatima Group has taken numerous steps to combat the diversion of its product and has been cooperating fully with both Pakistani and U.S. government officials. The company did not respond to C&EN’s request for comment.
Earlier this month, Indiana Gov. Mike Pence announced that he had instructed the Indiana Economic Development Corp., a state agency, to halt the project with Fatima Group until a thorough investigation can be completed.
In December, the state approved $1.27 billion in tax-exempt municipal bonds for Midwest Fertilizer, a start-up company of Fatima Group, to help finance the construction of a manufacturing facility in Mount Vernon, a small town near a port on the Ohio River in southwestern Indiana. Under the terms of the deal, Midwest Fertilizer would not have access to the bond proceeds until July 1 at the earliest.
Pence says he acted after learning that U.S. military officials considered Fatima Group less than cooperative with their efforts to stop the flow of explosive materials across the Afghanistan-Pakistan border.
“Economic development is important, but the safety and security of our troops in harm’s way is more important,” Pence says. “We’re in the process of making a careful evaluation of the appropriateness of Indiana’s involvement in this project with those priorities in mind.”
Eric Doden, head of Indiana’s development agency, notes that when Indiana began working with Fatima Group last summer, the Pentagon described the company as being supportive in efforts to prevent the diversion and illicit use of its product. Fatima Group is not on the government’s list of foreign entities banned from having business dealings with the U.S., and its executives are not prevented from traveling to the U.S.
“When Fatima initially approached us with its plans to create hundreds of new jobs and invest more than $1 billion in Indiana, we were thrilled,” Doden remarks. In its bond application, Midwest Fertilizer says the proposed plant would create 309 full-time positions with an average annual wage of $58,000 plus benefits. It would begin producing commercial fertilizers in 2016.
But in mid-January, Doden says, state officials learned that the Pentagon’s position on Fatima Group had changed dramatically. The project was suspended soon afterward.
Fatima Group’s conduct came up recently during a hearing before a panel of the Senate Foreign Relations Committee. At that December hearing, U.S. Army Lt. Gen. Michael D. Barbero sharply criticized the company in his testimony.
He explained that Afghanistan banned the production and importation of calcium ammonium nitrate early in 2010. Yet the fertilizer is still the main explosive component in IEDs, according to Barbero, director of the Pentagon’s Joint IED Defeat Organization. Last year, nearly 1,900 U.S. troops were killed or wounded by these explosives.
“We must address the continued uncontrolled flow of ammonium nitrate-based fertilizers and other IED materials from Pakistan into Afghanistan,” Barbero told the senators. “In Afghanistan we are playing defense.”
Ammonium nitrate can be converted into an explosive material that is as powerful as TNT when properly mixed with fuel. The U.S. witnessed firsthand just how deadly the fertilizer can be in the 1995 federal office bombing in Oklahoma City that killed 168 people. Ammonium nitrate has been used in terrorist attacks around the world, most recently in Mumbai and Oslo, Norway.
More than 85% of the IEDs used against U.S. forces in Afghanistan contain homemade explosives, Barbero noted. “And of those, about 70% are made with ammonium nitrate derived from calcium ammonium nitrate, produced in and transited through Pakistan.”
Virtually all of the ammonium nitrate used in the Taliban’s bombs comes from two large fertilizer plants in Pakistan, both owned by Fatima Group, Barbero testified. Although the fertilizer is produced elsewhere in the region, the lieutenant general said there was “no evidence to indicate the calcium ammonium nitrate used for IEDs in Afghanistan comes from any other country besides Pakistan in any significant amount.”
Barbero told lawmakers that he met with top Fatima Group executives in 2011 and urged them to institute rigorous control measures and to begin dyeing the product so it can be picked out at border crossings. Calcium ammonium nitrate, he explained, is milky white and can easily be disguised as detergent.
“Despite making minor packaging, tracking, and marketing changes, they have not implemented any effective product security or stewardship efforts,” Barbero said. “Pakistani-based producers can and must do more.”
Although dialogue between the U.S. and Pakistan on IED-related issues has been improving, Barbero stressed that practical actions on the ground are needed. “We must move from discussing cooperation to actual cooperation,” he said, asserting that Pakistan has passed legislation but has done little to implement the laws.
Sen. Robert P. Casey Jr. (D-Pa.), chairman of the Foreign Relations Subcommittee on Near Eastern & South & Central Asian Affairs, acknowledged that Pakistan has taken some steps to combat IEDs. But he said the flow of chemicals coming from across the border into Afghanistan has not diminished.
“Pakistan is doing more now than they were a few years ago but not nearly enough; that’s about as plainly as I can say it,” Casey remarked. “We need a renewed sense of urgency.”
Nadeem Hotiana, press attaché at Pakistan’s U.S. embassy, dismisses the criticism as unfair and damaging. “Pakistan is appalled at the suggestion that its government is not doing enough to stop the smuggling of calcium ammonium nitrate into Afghanistan,” he tells C&EN.
As ordered by the Pakistani government, Fatima Group “has initiated strict controls over its production, shipment, and sale through authorized dealers” to domestic farmers, Hotiana says. The company has also changed the design of the calcium ammonium nitrate bag for easy identification and stopped sales and distribution near the Afghanistan border, he adds.
The matter of dyeing the granules needs to be dealt with industry-wide, Hotiana says. “For any company to undertake dyeing while the rest of the industry does business as usual would leave it vulnerable to abuse by those inclined to malign the company or the country where it operates,” he remarks. “This would open the doors for anyone in the present politically charged environment in our region to sabotage Pakistan-U.S. relations and set back our counterterrorism cooperation.”
Hotiana also points out that in July 2012, the U.S. Government Accountability Office reported that less than 0.1% of the 1.3 million tons of calcium ammonium nitrate produced annually in Pakistan ends up in Afghanistan (GAO-12-907T). “This means that Pakistan is effectively monitoring 99.9%,” even though the country shares a 1,500-mile border with Afghanistan that is “porous and extremely inhospitable,” he says.
Furthermore, it is in Pakistan’s self-interest to halt misuse of the fertilizer, Hotiana argues. “Pakistan is the biggest sufferer of IEDs. Our armed forces are being targeted regularly with homemade explosives. Over the last few years, our forces have suffered 6,000 casualties,” he notes.
The Army’s Barbero says he stands by his recent Senate testimony. “We stand ready to partner with the government of Pakistan and industry to work together on this mutual IED threat,” he remarks.
Fatima Group is also on the radar in the House of Representatives. Rep. Duncan Hunter (R-Calif.), a member of the House Armed Services Committee, tells C&EN that the Indiana fertilizer project should not proceed unless Fatima Group agrees to U.S. demands. “The objective is to get the company to cooperate with our counter-IED efforts in Afghanistan,” he says.
“The idea that they would be allowed to open a plant here and be given special status, while existing as the source of material being used in IED attacks without doing a thing to help the situation, is completely unjustifiable,” says Hunter, a former Marine Corps officer who served in Iraq and Afghanistan.
Hotiana says it is “unfortunate that instead of recognition, efforts are being made to hurt Fatima Group’s commercial ventures. This matter needs to be considered purely from the business point of view.”
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