Afghanistan: super-rentier state

I suppose one should be happy that a poor country like Afghanistan discovers vast mineral wealth that could drag it out of under-development and help solve some of its problems. Except it seems to rarely happen that way for mineral-rich states with weak central governments (just look at Congo):

WASHINGTON — The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.

An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and BlackBerrys.

The vast scale of Afghanistan’s mineral wealth was discovered by a small team of Pentagon officials and American geologists. The Afghan government and President Hamid Karzai were recently briefed, American officials said.

[. . .]

“There is stunning potential here,” Gen. David H. Petraeus, commander of the United States Central Command, said in an interview on Saturday. “There are a lot of ifs, of course, but I think potentially it is hugely significant.”

The value of the newly discovered mineral deposits dwarfs the size of Afghanistan’s existing war-bedraggled economy, which is based largely on opium production and narcotics trafficking as well as aid from the United States and other industrialized countries. Afghanistan’s gross domestic product is only about $12 billion.

“This will become the backbone of the Afghan economy,” said Jalil Jumriany, an adviser to the Afghan minister of mines.

American and Afghan officials agreed to discuss the mineral discoveries at a difficult moment in the war in Afghanistan. The American-led offensive in Marja in southern Afghanistan has achieved only limited gains. Meanwhile, charges of corruption and favoritism continue to plague the Karzai government, and Mr. Karzai seems increasingly embittered toward the White House.

So the Obama administration is hungry for some positive news to come out of Afghanistan. Yet the American officials also recognize that the mineral discoveries will almost certainly have a double-edged impact.

Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

Endless fights could erupt between the central government in Kabul and provincial and tribal leaders in mineral-rich districts. Afghanistan has a national mining law, written with the help of advisers from the World Bank, but it has never faced a serious challenge.

“No one has tested that law; no one knows how it will stand up in a fight between the central government and the provinces,” observed Paul A. Brinkley, deputy undersecretary of defense for business and leader of the Pentagon team that discovered the deposits.

At the same time, American officials fear resource-hungry China will try to dominate the development of Afghanistan’s mineral wealth, which could upset the United States, given its heavy investment in the region. After winning the bid for its Aynak copper mine in Logar Province, China clearly wants more, American officials said.

One should take a moment to pause and consider:

1. The commander of Central Command speaks on economic/business issues.
2. The Pentagon has a business department.
3. The US military has staff prospecting for minerals in Afghanistan, even though it subcontracts many other services.
4. This news is placed in the NYT and announced by General Petraeus — not Afghan authorities or even the State Dept.

If you need any proof of the imperial mindset of Central Command, this is it. They're in it for the long haul. That's why they focus on open-ended military doctrines like COIN (i.e. populations need to be pacified), employ business development teams and carry out geological surveys. That's a nation-building job, which is inherently colonial. Who asked David Petraeus to start looking for rocks? 

As for poor Afghanistan, this means it's more fucked than we thought. The minerals are unlikely to replace opium and cannabis, they'll supplement them.

Blake Hounshell points out there's no hurry to start worrying, though:

Read a little more carefully, though, and you realize that there's less to this scoop than meets the eye. For one thing, the findings on which the story was based are online and have been since 2007, courtesy of the U.S. Geological Survey. More information is available on the Afghan mining ministry's website, including a report by the British Geological Survey (and there's more here). You can also take a look at the USGS's documentation of the airborne part of the survey here, including the full set of aerial photographs.

Nowhere have I found that $1 trillion figure mentioned, which Risen says was generated by a Pentagon task force looking to help the Afghan government develop its resources (looking at thechart accompanying the article, though, it appears to be a straightforward tabulation of the total reserve figures for each mineral times current the current market price). According to Risen, that task force has begun prepping the mining ministry to start soliciting bids for mineral rights in the fall.

Don't get me wrong. This could be a great thing for Afghanistan, which certainly deserves a lucky break after the hell it's been through over the last three decades.

But I'm (a) skeptical of that $1 trillion figure; (b) skeptical of the timing of this story, given the bad news cycle, and (c) skeptical that Afghanistan can really figure out a way to develop these resources in a useful way. It's also worth noting, as Risen does, that it will take years to get any of this stuff out of the ground, not to mention enormous capital investment.

Moreover, before we get too excited about lithium and rare-earth metals and all that, Afghanistan could probably use some help with a much simpler resource: cement.

According to an article in the journal Industrial Minerals, "Afghanistan has the lowest cement production in the world at 2kg per capita; in neighbouring Pakistan it is 92kg per capita and in the UK it is 200kg per capita."Afghanistan's cement plants were built by a Czech company in the 1950s, and nobody's invested in them since the 1970s. Most of Afghanistan's cement is imported today, mainly from Pakistan and Iran. Apparently the mining ministry has been working to set upfour new plants, but they are only expected to meet about half the country's cement needs.

Good point. I would still worry that the long-term strategic gains are going to be interesting to a lot of corporations and countries. 

Comments

[Prestwick]

All of that is true but we haven't factored several things such as the fact that the south and east of the country are raging warzones, the general incompetence of American and Britain to properly gain a commercial foothold required for any colonial-style adventures and the aggressive tactics being used by China and other countries to get involved in the rush for oil and the new markets opening in Afghanistan & Iraq, pushing various Anglo-American corporations aside in the process.

Iraq you could say is an interesting test case for the argument of America & Britain's neo-colonial tendencies. Despite expending vast sums of treasure and effort in Iraq they haven't created the Anglo-American monopoly required for such colonial dominance.

You can argue that America has been more successful in Korea, Japan & Taiwan (all three depend on America for support of the military, political and meterial variety) than they ever have in Iraq or Afghanistan so far.

Also in both Afghanistan and Iraq the fact remains that despite fielding large numbers of civilian NGOs & contractors and pouring untold trillions of dollars to perform "nation building" most of this is wasted as the contractors stay on big FOBs and the money is wasted in endless powerpoint presentations.

This is where many theories about American neo-colonialism in Afghanistan fall down by the way. I'm not saying their intentions are either genuine or hostile towards Afghanistan but what I am saying is that they will fail to either "save" or "colonise" a country if they just stay in the 21st century equivelent of cantonments 24/7 365 days a week endlessly regailing each other with useless powerpoint presentations and generally wasting money.

If anything then the only time and money the Americans appear to be wasting right now is their own. Unless NATO takes over the responsibility of taxing Afghans al la Clive of India and the East India Company then this is all being financed directly by American dollars financed by the taxpayer and irresponsible borrowing.

Afghanistan can rest easy and its no skin off of their nose if Gen David Patraeus galavants around Afghanistan wasting American taxpayers money and the man hours of various mining and engineering contractors in the process. What it should be worried about is the new "great game" being played by China, India, Iran and Pakistan with Afghanistan as the grand prize.