Monday, June 14, 2010

Just What It Needs

The New York Times leads with a story today detailing the discovery of vast amounts of mineral wealth in Afghanistan. According to the article, the United States "has discovered nearly $1 trillion in untapped mineral resources in Afghanistan." The deposits include iron, copper, gold, lithium, and cobalt—minerals necessary for everything from heavy industry to high technology. A Pentagon source reportedly describes Afghanistan as the "Saudi Arabia of lithium."

The Times article highlights the possibility the mineral wealth has to transform the Afghan economy. That is certainly so. Unfortunately they also have the possibility of transforming the Afghan conflict—a political one—into a rent-seeking conflict and exacerbating the already outrageous amounts of graft and corruption retarding that country's development.

Even without the mineral wealth, Afghanistan suffers from epidemic corruption. Already, the heroin trade adds a degree of complexity to counterinsurgency that has proven extraordinarily difficult to surmount. Warlords, Taliban, civilian farmers, and members of the Afghan government all profit or draw their livelihoods from the cultivation of poppies for heroin delivery. Interdicting the trade has the possibility of alienating or impoverishing the local populace, undermining COIN's overall efforts. The common profiting from the trade gives elements of the Afghan government or warlords who nominally support ISAF reason to cooperate in a limited way with the Taliban.

The difficulty of extracting minerals from the ground—as compared to harvesting poppies—may make mineral wealth an unlikely complicating factor to the Afghan war. However, the experience of blood diamonds in Africa should teach us that complicated extractive resources can be tapped by seemingly unsophisticated armed bands and used to fuel already entrenched conflicts.

Vast mineral wealth also raises the strategic importance of Afghanistan. Afghanistan already held substantial strategic import due both to its location geographically and untapped petroleum and natural gas reserves. Copper, gold, and lithium—ores necessary for high tech devices—will have only increasing value and importance. The scale of the deposits hinted at by the New York Times articles suggest that Afghanistan will be of increasing interest to Iran, Pakistan, Russia, the United States, and China. This has the potential of increasing the number of spoilers involved in any conflict-resolution or accommodation process. It also may open doors to the Karzai government otherwise foreclosed to it; giving it alternatives to dealing with the United States—an already fraught relationship.

12 comments:

Jessica said...
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Jessica said...

I'd love to hear someone comment on the fact that deposits of minerals in the U.S. isn't making us any richer--all thanks to the General Mining Law of 1872. The law lets mining companies remove gold, copper and other minerals from public lands without having to pay federal royalties.

A great story on the subject can be found at http://motherjones.com/environment/2009/02/harry-reid-gold-member

Colin said...

The law lets mining companies remove gold, copper and other minerals from public lands without having to pay federal royalties.

According to the Mother Jones
article:

In contrast, coal, oil, and gas companies operating on federal land must kick back 8 to 17 percent of their take to the government. If those same royalty rates were applied to hard rock minerals, Washington would get an annual cut estimated at $100 to $200 million.

To put that in perspective, $200 million dollars is literally what the federal government spends in 30 minutes. Seriously, do the math based on last year's budget of $3.552 trillion and I'm pretty sure that's the figure you will arrive at.

In any case, I think the preferred outcome in Afghanistan is that companies are able to extract the resources without paying royalties. Developing countries and royalties from natural resource wealth do not tend to mix well.

As for the poppy/heroin trade, the US needs to decide if it is more interested in pursuing the war against the Taliban or the war on drugs. They can't successfully wage both.

Gels said...

Here is a similar article from NPR's Planet Money blog: http://www.npr.org/blogs/money/2010/06/14/127834173/will-afghanistan-fall-victim-to-the-resource-curse

Colin said...

http://www.wired.com/dangerroom/2010/06/no-the-military-didnt-just-discover-an-afghan-mineral-motherlode/

Ben said...

Colin, I'm afraid that the Wired story is something of a 'concern troll' type story. I don't think anyone--myself included--was astounded to hear about resource wealth in Afghanistan. Steve Coll noted that Afghanistan's resource wealth drew Unocal (later its Central Asian interests were bought out by CNOOC, if I recall correctly) to Afghanistan in the 1990s. The dollar figure--dubious though it may be--is what I think most observers are excited by. I was moved to post due to the forum in which the story was reported, the sizable dollar amount widely unreported before, and the bizarrely optimistic tone struck by the New York Times article itself.

For a more substantive critique than Wired's article, largely inline with my post, please see the Af/Pak channel's daily brief for Tuesday, June 15, 2010.

Ben said...

*Steve Coll noted the resource wealth of Afghanistan in Ghost Wars published in 2004.

Colin said...
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Colin said...

Well, I cited the Wired thing mostly as an FYI -- I don't really have a dog in this fight. I have to say, however, I wasn't that surprised by the dollar figure cited. I was at a CSIS conference a few weeks back in which Richard Cohen estimated Afghanistan's mineral wealth in the range of $1-3 trillion if I recall correctly. I assume he didn't pull that out of thin air.

I have read Ghost Wars, which is excellent.

Colin said...

FYI this was just released by the Eurasia Group:

AFGHANISTAN: Media reports about Afghanistan's mineral potential politically motivated and understate risks

16 June 2010 01:53 PM EDT



13 June media reports suggesting a "major discovery" of mineral deposits in Afghanistan contain little new information and vastly understate the obstacles to investment in these sectors. The timing of the report was likely a function of Pentagon efforts to rally support at a time when political opposition to the war is building. The US may also have sought to reassure donors that Afghanistan has viable long-term economic alternatives to its present dependence on foreign assistance. Afghanistan is known to have large underdeveloped mineral resources--including sizable copper deposits. But there are major obstacles to the development of these resources. Continuing political instability, a volatile security situation, and weak infrastructure are deterrents to foreign investors, who have both the capital and expertise to engage in large-scale mining projects in Afghanistan. China's involvement in Afghanistan's mining sector further limits opportunities for US and Western companies.


Make of it what you will/

Ben said...

Thanks for the heads up, Colin. I'd say that that makes quite a bit of sense and could explain the incredible tone of the NYTimes article.

Adam said...

http://www.thedailyshow.com/watch/tue-june-15-2010/ore-on-terror