News Stories

Afghanistan Mineral Wealth NOT

In the June 19th issue of the UK magazine "The Spectator," John C. Hulsman and Jaakko Kooroshy state their opinion that the "good news" of trillions in mineral wealth in Afghanistan is just part of the propaganda war of Obama and General Petraeus, as they try desperately to keep voters positive about a war that seems like a hopeless quagmire. The government is obviously not being straight with us.

The authors write: "The mineral gambit is a desperate closing salvo designed to convince a war-weary President and public that there is something worth fighting for in Afghanistan; that there is a viable economic basis for the western-led nation building exercise in the country." But if it's not, "Well hooray, then let's not pull out so hastily, people have begun to say. Perhaps all those lives weren't wasted; perhaps with the help of this newfound wealth, Kabul can secure democracy and keep the Taliban at bay. But before we all get too excited, we should ask: Is this really such an exciting discovery?"

But they write that "there's much less to the mineral strike than meets the eye" and remind us that "Mining is a dangerous business, requiring four key conditions to succeed. Afghanistan, which has no mining tradition, fails on all four counts."

The first condition is that opening a mine requires a huge monetary investment and many years of work before the lithium and other valuable materials can be extracted. "Who is going to take such risks in a country ravaged by 3 decades of conflict, with no end in sight?"

Mining also needs cheap water and energy for extracting and processing the ores. "This in a country where droughts are a regular occurrence and less than 10% of the population has access to electricity? Not likely."

Mining also needs good roads linked to ocean ports in order to move the ore and export it, but Afghanistan is a land locked country with poor infrastructure. Also, the valuable ore would have to pass through "unruly tribal areas." These are not "very attractive options for an investor."

The authors remind us that, "Successful mining requires a stable regulatory environment and strong business ties to the local community," but the Karzai government is "renowned for its corruption." And much of the wealth lies underneath land that is controlled by the Taliban. One example of these types of problems is "the vastly endowed and chronically screwed-up Democratic Republic of Congo."

Even if Western mining companies made a deal with the Taliban, they "would still have to live with the fear that their engineers and geologists might be kidnapped, killed (or injured), their contract renegotiated or their assets seized by future rulers. Mining requires a long term bet on the stability of the country where the process is taking place. To put it mildly, a quick look at the history books shows Afghanistan is simply not a good bet for western business."

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