Home > Economics, Foreign Policy > A Turning Point in Afghanistan?

A Turning Point in Afghanistan?

Last night the New York Times reported that the US Geological Survey discovered vast mineral resources in Afghanistan worth up to $1 trillion.  This is potentially an incredible break for the deeply impoverished war-torn country whose GDP is a mere $12 billion per year.  The US intervention in Afghanistan is now the longest war in America’s history, and despite these vast mineral discoveries, there remains no end in imminent site.  While this is an incredible breakthrough, it requires patience and a balanced approach in order to ensure that this new-found wealth ultimately ends up a positive development for the country.

Natural resources often are a double-edged sword for developing countries, particularly those divided by persistent ethnic strife and civil war.  Just look at a country like Sudan in which the Muslims in the north and Christians in the south continue to wage a never-ending battle with one of the contentious points being oil rights in a war that has plagued the country essentially since obtaining its independence from Great Britain.  Often times much of the wealth from mineral deposits ends up in the hands of foreign international corporations who benefit from discreet handshake deals for mineral rights with corrupt government officials.  Additionally, the pricing of resources are incredibly volatile, and a country with a volatile political landscape needs to ensure that it deploys these new economic resources in the most stable way possible.

Article Nine of the Afghan constitution declares that “Mines, underground resources are properties of the state.  Protection, use, management, and mode of utilization of the public properties shall be regulated by law.  Clearly the constitution grants ownership of such resources to the national government of Afghanistan; however, the country continues to be plagued by regional allegiances and alliances that trump the interests of national unity.  Pursuant to the constitution, the nation’s Ministry of Mines manages the “research, exploration, development, exploitation, and processing of minerals and hydrocarbons.”  On the Ministrky website, they proclaim that “The long term vision…is the creation of an effective administration, utilization of natural resources, creation of jobs, the encouragement of private investment in the mining…sectors, and increasing government revenue.”  The right idea is in place, but the execution needs to remain consistent with this mission.

It is essential that the government maintain an ownership interest in these mines and use it in order to build equity in the country.  Many will argue for the privatization of these resources, but it is incredibly important that the US and World Bank prevent this from happening.  Creating jobs is not nearly enough.  The people of Afghanistan need to believe that they have a stake in the success of this new wealth and that its benefits will be allocated for the good of the country. In order to do so, the country needs to build upon some of the developing world’s top success stories in order to bring these minerals to market.  Petronas in Malaysia is a prime example for how best to proceed with a development program.  From Joseph Stiglitz’, Making Globalization Work comes the following observation:

Malaysia did not just turn over its oil to foreign oil companies, but had them help it develop its resources, learning all the while; today its government-owned oil company, Petronas, is providing training for other developing countries.  By managing its own oil company, it was able to ensure that more of the value of resource stayed in Malaysia, rather than being sent abroad as profits….(pages 33-34).

Malaysia’s former prime minister…says his country receives a larger fraction of the value of its resources than countries elsewhere who have privatized, and a larger fraction than it would have received had it privatized (page 142).

Malaysia’s success sits in stark contrast to the failures of the Russian state to equitably expropriate their resources in the wake of the collapse of the Soviet Union.  We know the good, we know the bad.  It’s important to take these lessons to heart and pursue things the right way this time around.

All in all, this is an incredibly optimistic development for a country badly in need of something to rally around.  This can be a major generator of some sort of national cohesiveness and unity, but with the delicate situation in Afghanistan it is even more important that the nation itself reap the benefits of these discoveries.   This is a war in which one of the underlying issues has been and remains the fact that the country feels as though it has been exploited as a tool in the war of ideas between more significant global powers (and to a large extent, it has).  Even amongst the regions loyal to the US there is a sense that the country does not control its own destiny.  Some of these ideas stem from the sharing of ideas between the Taliban in Afghanistan and Al-Qaeda coming from oil rich Muslim nations in the Middle East.  Regardless, we must acknowledge this underlying tension and use it to our advantage in nation-building around these resources.

It will be impossible for the US to “win” our longest war ever without winning on the battleground of ideas.  This is not just an opportunity for Afghanistan, but also one for the US and other big international players to deploy a new model for pursuing development and equitable management of resources in an impoverished nation.  Successful execution on the expropriation of these minerals can go a long way towards building a unified civil society in the country.  This discovery provides that opportunity, let’s do it right.

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