Now that the last of the foreign occupying troops are seen leaving Afghanistan it is time to put an end to the 40-year-long war and explore the country’s economic potential so as to get rid of the menace of dole dependence, at the earliest.
Speaking of Afghanistan’s economy, it is poppy cultivation that takes the front seat, currently. Last year, Afghanistan produced at least 6,300 tons of opium, according to the United Nations Office on Drugs and Crime — enough to make some 900 tons of heroin — and accounting for around 85% of the world supply. If this was a legal business, it could win awards for innovation and resilience.
To be sure, on the face of it poppy appears to be the only identifiable economic wealth of the country which perhaps may not be available if and when it rejoins the law-abiding world order.
America alone is said to have plowed nearly $9 billion into fighting the Afghan drugs trade over the past 20 years, but production and trafficking has only increased.
Had the US and other NATO countries invested even half of this amount in developing the country’s mineral wealth or perhaps the so-called elected governments in Kabul had done with the free dollars in billions they had received since around 2002, today the occupying forces would have been leaving a relatively more self- reliant Afghanistan, if at all.
Afghanistan’s rich mineral resources, if exploited effectively, could prove to be the best substitutes for foreign aid and could decrease the country’s dependence on donor countries and foreign support. These resources, if properly managed, provide an opportunity for Afghanistan to write its own story of economic success. Robust policies and strong institutional arrangements together with clear policy direction will help attract both domestic and foreign investors. Better management of mineral resources could result in sustainable economic growth paving the way for lasting peace.
In the north and south, there are several hydrocarbon sites. The country also has massive deposits of dimension stone. The deposits of copper and iron ore are some of the largest in the world, ranging from 60 to 2,200 million tons, respectively. The US Department of Defense’s Task Force for Business and Stability Operations (TFBSO) estimated that the reserves of oil and natural gas “could be worth more than $220 billion.”
Afghanistan may hold 60 million metric tons of copper, 2,200 million metric tons of iron ore, 1.4 million tons of rare earth elements such as lanthanum, cerium and neodymium, and lodes of aluminum, gold, silver, zinc, mercury and lithium. For example, the Khanneshin carbonite deposit in Afghanistan’s Helmand province is valued at $89 billion.
According to the World Bank, revenue from mines in two sites—the Aynak copper deposit and the Hajigak iron deposit could “generate an average of $900 million per year until 2031.” These resources, if properly managed, provide an opportunity for Afghanistan to write its own story of economic success.
In particular, gemstones and marble are said to be plundered openly. Due to insecurity and limited presence of the government in some parts of the country, warlords, insurgents and politicians are involved in illegal exploitation of minerals. There are said to be an estimated 1,400 illegal mines in the country.
There are numerous Soviet developed charts in the government files in Kabul which document a vast amount of iron, copper, gold, cobalt, rare earth metals, and lithium reserves.
An internal Pentagon memo claims that Afghanistan could develop into the “Saudi Arabia of lithium,” referring to the mineral that is an integral component of laptop and smartphone batteries.
Washington was ecstatic about the findings and in 2010 claimed that at least $1 trillion in resources was up for grabs. US officials had claimed that the deposits could sustain the Afghan economy and generate thousands of jobs, reducing corruption and reliance on foreign aid.
Being a mountainous country, it is certain to be endowed with, as mountains do, huge amounts of minerals and other natural resources.
What Afghanistan lacks is technical knowledge and the capital needed to exploit the mineral riches. This technical knowledge and the required finances can be supplied by the US, China and other technically and financially endowed foreign countries, helping Afghanistan to develop rapidly.
This will benefit the countries extending the needed technical financial hand, including the immediate neighbours too, because with their higher incomes the Afghans will not only be able to buy goods from these countries but also export the minerals badly needed by them.
According to Antony Loewenstein (Natural Resources Were Supposed to Make Afghanistan Rich. Here’s What’s Happening to Them, published in The Nation on Dec. 14, 2015) acknowledging the inability of the Afghan Ministry of Mines and Petroleum to handle a burgeoning resource industry, the US government had once pledged to help implement a sustained programme.
“However, regulations like the mining law—revised in 2014 to bring greater transparency—have had little effect on illegal mining and the non-payment of royalties.”
Logar province is home to one of the world’s largest untapped copper deposits, at Mes Aynak. The Chinese company China Metallurgical Group Corp. (MCC) controls the $3 billion mine, having obtained rights to the area in 2007, but operations haven’t commenced because of security concerns.
When President Ghani visited Beijing in October 2014, he was asked by the Chinese government to cut the royalty rate from 19.5 percent to roughly 10 percent, which would cost the Afghan government an estimated $114 million annually. Chinese frustrations with the project, especially regarding the lack of security, were said to be behind the demands.
MCC purchased the rights to the copper for 30 years, and the Afghan government has few if any other companies willing to take over the contract in such a volatile region. There’s no reliable transportation route for taking the metal out of the landlocked country; and MCC withdrew its workers from the site in 2014. The firm claims that tens of thousands of jobs could be indirectly created if operations commenced.
In April 2015, the Special Inspector General for Afghanistan Reconstruction (SIGAR), a US government body, released a report noting that Washington “did not have a unified strategy for the development of Afghanistan’s extractive industries.” Since 2009, the US Agency for International Development (USAID) and the Defense Department’s Task Force for Business and Stability Operations (TFBSO) have provided $488 million toward the nation’s extractive industries, supporting a variety of corporations like the accounting firm Price Waterhouse Coopers and the US-based contractors Expertech Solutions and Hickory Ground Solutions.
This money, SIGAR explained, did nothing to build a viable and well-regulated mining industry in Afghanistan. Instead, the Ministry of Mines and Petroleum lacked “the technical capacity to research, award, and manage new contracts without external support,” while the US government—including USAID and the Defense Department—had failed in its mission to help create “self-sustaining Afghan extractive industries,” which “still seems a very distant goal.”
A SIGAR official pointed out to Loewenstein that US assistance in this area “does not appear to have [made] much of a difference, and the sector shows virtually no signs of measurably improving in the immediate future.”
Illegal mining is also said to be rampant throughout Afghanistan, raising money for warlords and the insurgency.
Historically, Pakistan is said to have been a major recipient of these illicitly obtained minerals. A SIGAR report found that illegal mining has been costing the state up to $300 million annually. Insecurity in eastern Nangarhar Province and elsewhere prompted interested parties to warn Afghan lawmakers in 2015 that monitoring the thousands of mines around the country was impossible and that the complete and unrestrained looting of local resources could continue to happen in the absence of lasting peace in the country.
China is waiting in the wings, with many transport corridors and investment options [contingent on] improved Afghan security. They take a longer view and will be players in time, but for now they’ve been burned over copper [at Aynak], so they’ve stepped back.”
There is no evidence that the Ghani government is willing or able to eradicate the massive mineral theft or to institute a regulated resource sector.
Whether Afghanistan should actively pursue a mining industry or ignore its vast mineral wealth is also a contentious issue. Many Afghans believe that mineral resources should stay in the ground until laws and accountability in the country are stronger.” Arguably, the risks incurred by leaving resources in the ground are both fewer and less severe than those posed by rampant exploitation.
Copyright Business Recorder, 2021
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