New Contest Coming for Afghan Resources

Although the debate on Afghanistan's post-2014 future centers on the question of emphasis on the question of negotiating with the Taliban, or on the possible strength of the residual force the US is planning to leave, the economic dimension of Afghanistan’s future seems out of the picture.

The issue is not merely who would rule Afghanistan but also how the government, however formed, would sustain the system to prevent its breakdown to forestall potential control of resources, especially once the force withdraws and foreign aid is cut. The fact is that for an impoverished nation, which ranks 216th in the world for personal wealth, Afghanistan is acknowledged as a strategic hub in Central Asia, bordering on the former Soviet Union, China and Iran, at the crossroads of pipeline routes and major oil and gas reserves, its huge mineral wealth as well as its untapped natural gas reserves have remained, until June 2010, totally unknown to the American public.

It is obvious that no economy can sustain itself by relying on aid alone and in Afghanistan’s case the time is approaching fast to replace aid with large scale investment. Perhaps it is for this reason that the US government has already started ‘advising’ the Afghans on how to properly craft contracts for exploration/exploitation of mineral resources. It is of utmost importance that of this natural wealth is translated into monetary wealth for national development.

But countries largely dependent upon natural resources as the major source of wealth often do not happen to be so democratic and developed as others. The most often-cited example for such cases is Saudi Arabia, which is heavily dependent upon oil and is as such vulnerable to oil prices based on global demand and supply. In other words, the hope that Afghanistan can and would become the “Saudi Arabia of lithium”, as reported by the NY Times, is, however, as much a sign of internal prosperity as of vulnerability to external markets.

Besides, if Afghanistan remains too dependent upon its natural wealth alone, it will probably have to rely heavily on imports for meeting other needs and necessities. This would have the effect of drying up its natural wealth in exchange for costly imports.

Reliance solely on natural resources causes other problems in less diversified economies. Natural resources are mostly used as one of the many sectors of a diversified economy, and so it must be in Afghanistan, especially because it is a landlocked state. As a report by the Center for a New American Security has pointed out, many other sectors of Afghanistan's economy hold economic potential, from high-value agriculture and construction to light manufacturing and telecommunications. Afghanistan has a rapidly growing base of mobile phone subscriptions and such phones could –as they have elsewhere—serve as the platform for various businesses that neither NATO nor Washington nor Kabul can predict or efficiently design.

Two other related factors have also to be taken into account: 1) Afghanistan does not have any indigenous economic base, given the13-year war; 2) the current state of the economy is very shallow: 40 percent of its economy is based upon foreign aid and a major portion of GDP comes from opium production. According to a UNODC report of 2013, opium production contributes 7-8 percent of GDP. However, the actual contribution seems much higher because the foreign exchange earned from opium exports is not included in the balance of payments, which diminishes the Central Bank’s monetary control, according to an April 2013 World Bank report. In addition, the UNODC report has predicted an increase in opium production and by default, its increased and unreported contribution to the economy.

These two factors put a big question mark on the popular thinking that exploitation of Afghanistan’s natural resources would suffice to unleash forces of development. The question of drug trafficking assumes even more importance when we take into account another factor, that is the role this war has played in generating cash earnings through the drug trade in Western markets -- in excess of $200 billion a year, according to Michel Chossudovsky, in an October 2013 article in Global Research.

How is then the ‘opium trade’ going to be replaced by ‘resource trade’ is yet not clear, nor is the question of broadening the base of Afghanistan’s economy across other sectors.

Besides, who is really going to exploit these resources of Afghanistan? It is going to be the ‘multi-national companies based in ‘the West’ and in the ‘East.’ And, as a matter of fact, it is again those very countries which had previously occupied Afghanistan and are now advising the Afghan government on drawing up mining contracts in order to ‘ensure protection of local communities and the environment.’

Even the necessary legislation for regulating mining industry is being enacted under the shadow of ‘foreign powers.’ The United Kingdom government has expressed its support for the law which has been stranded in the Parliament for months now. This law is, again, very controversial.

According to a recently published report of Global Witness, A Shaky Foundation, this law does not include safeguards against corruption and imposes no ban on the usage of the mineral wealth either by independent militias or the Afghan National Army. The report also mentions that some militias have already been benefiting from chromite and other resources. The law also provides no procedure for publishing the details of small contracts, thereby allowing the government to manipulate the mining sector through small contracts and thus divert its potential benefits away from public sector development.

This law also seems to allow, the report mentions, the mining firms’ unlimited use of water, which again is likely to sow seeds of conflict in an arid country where even small streams of water are zealously guarded. It is perhaps because of these flaws within the Afghan administrative framework that even before the start of mining, reports of conflict and corruption have already surfaced. Integrity Watch Afghanistan recently reported that local police commanders in eastern Kunar have been extracting chromite without licenses, but with foreign help.

However, even if some of this wealth is somehow translated into a source of Afghanistan’s national development, and it is of crucial significance that it happens, this seems to be insufficient for boosting the war-, economy, especially without first establishing the much hoped for political reconciliation not only between the US and the Taliban but also among Afghan themselves.

But is this peace an achievable phenomenon, given the well-known fact that the US and its allies have themselves been funding anti-Taliban militias in Afghanistan? What do the US and its allies aim to get out of this strategy—civil war or an excuse for staying in Afghanistan even after 2014?

And perhaps it is also because of the lurking danger that other states, such as China, Russia and Iran would reap the benefits of the natural resources once the NATO forces withdraw.

Besides these crucial ‘external factors’, there are other political aspects, essentially internal to Afghanistan, which have to be considered. It is an often observed fact that economic power is an essential aspect of political power; and, in Afghanistan’s case, this proposition seems to hold more relevance especially under current circumstances.

Given the extremely fragile politico-economic conditions, it would not be wrong to reason that a political and power tussle between the Taliban and anti-Taliban groups can, at any stage turn into a resource tussle---an altogether new reason for civil war—as a means of capturing central power.

There can be no doubt in that exploitation of minerals is essential for triggering forces of economic activity; and, perhaps it is for this very reason that the Afghan Taliban, realizing the importance of this factor, did ‘inform’ the UK minister Greening through some undeclared sources of their willingness to support the development of the mining sector as a means of wrangling Afghans from the "tentacles of poverty.”

As such, the possibility of the Taliban taking control of resource rich areas after the withdrawal of NATO forces, and of the consequent internal conflict forces cannot be ruled out.

It is becoming increasingly clear that the geopolitics of the Afghan war are gradually turning into geo-economics. Not only have countries started making heavy investments in the mining sector, but also have started influencing the making of laws for regulating this sector, thereby paving the way for influencing politics.

One can only wonder what the Afghans will reap out of this ‘new’ form of influence being deliberately installed both at the central/national and sub-national/regional levels, either through the central government or through militias.

Realizing the complexities of the Afghan conflict, it would thus be an oversimplication to state that the conflict is coming to a halt; rather, it is assuming a new form in the Afghan context.

(Salman Rafi Sheikh is a Pakistan-based academic.)