Afghanistan has massive mineral reserves, which has also fueled competitionover mines among pro-government “strongmen”.
*High up on Donald Trump’s 2018 wishlist seems to be Afghanistan’s hugemineral wealth. But the president is walking into a minefield. *
Without serious action to reduce the massive risk of conflict andcorruption, his push for new contracts is likely to do much more for theTaliban than America.
Afghanistan has massive mineral reserves, even if poor infrastructure makesthem less valuable than the top-line numbers suggest. But those riches havedone precious little to help the Afghan people, who have seen a fraction ofthe revenues that they should have — even as mining has been second only tonarcotics in funding the Taliban.
Competition over mines among “pro-government” strongmen has turned parts ofthe country that staunchly resisted the Taliban — like Badakhshan province— into hotbeds of the insurgency. Locals angry at exploitation which doeslittle to help them have backed the takeover of mines by illegal militias.
Meanwhile, major concessions like the Aynak copper mines have seenallegations of large-scale bribery, and both US and Afghan officials saythe Ministry of Mines lacks the capacity to manage new contracts.
Any new mining project in Afghanistan is at very grave risk of falling foulof one or more of these dangers. The main threat to the sector is not alack of investment, though that is certainly an issue: it is the lack ofgovernance.
This is the environment in which America is pushing for new contracts. Itis not clear exactly what is planned at this stage, and the desire todevelop mining is not wrong in itself. But a few things are triggeringalarm bells.
The first is the possibility that mines will be given cheaply to UScompanies, as compensation for America’s commitment in Afghanistan.
Erik Prince, founder of the deeply controversial Blackwater securitycompany, has set out a vision of a “strategic mineral resource extractionfunded effort” against the Taliban, according to a pitch obtained byBuzzFeedNews, echoing the colonial-era East India Company.
For Afghans, whose ancestors fought against imperialism just as Americansdid, that is a recipe for outrage.
Of course, Prince does not represent the US government, even if he hasclose ties to it, and the Pentagon is reportedly opposed to Prince’ssuggestion.
But Trump has secured agreement from the Afghan president that US companieswill “help … develop” Afghan resources. That implies something other thanopen allocation processes with the best bid winning.
The fear is an Afghan version of the idea that America should have “keptthe oil” in Iraq. That would appropriate resources from one of the world’spoorest countries to benefit a few American companies, not even America ingeneral, given the US would likely have to make up the resulting drop inAfghan revenue.
It would fit neatly into the Taliban narrative of America as an occupyingforce, extracting resources while leaving war in its wake. However unfairthat narrative is, it is not hard to see how it will resonate. America isnot here as a mercenary, but this would make it one.
The second is that contracts are being pursued without adequate regard tothe risks. Two copper and gold deals currently on the table areparticularly worrying. Currently a government minister, Sadat Naderireportedly has a stake in the companies named as the preferred bidder fortwo of the contracts — a breach of Afghan law if the deal is finalizedwithout this being addressed. The gold mine in the Badakhshan province,meanwhile, is largely in the hands of the Taliban.
Meanwhile, CENTAR, an investment company and key international partner inthe project, has declined to publicly respond to our questions on theseissues or comment on who will pay security costs, what benefits localcommunities will see, what guarantees there will be for transparency, andwhat happens if insecurity affects extraction.
Despite this, a “compact” of Afghan commitments negotiated with the USgovernment includes both the resolution of the contracts and the launch ofa new round of tenders in January 2018 — something which is bound to exertpressure on the Afghan government to close the deals.
This is the blind spot at the heart of American policy.
Realistic reforms like open bidding, automatic transparency mechanisms,security reforms, and giving communities a financial stake in legal miningare not silver bullets, but they could significantly reduce the scale ofabuses.
Given the obvious risks, the US and Afghan governments should be urgentlypushing these protections as a basic insurance policy, not just against thedamage abuses would do, but against the biggest threats to the commercialsuccess of the projects themselves.
Instead, while the Afghan government has made some very welcomecommitments, little has yet been put into practice.
We want Afghan mining to flourish, and don’t take a knee-jerk positionagainst any project. But at an absolute minimum, questions like those weraised need to be convincingly answered first, not just with blandassurances, but with concrete reforms and legal guarantees embedded incontracts and in the mining law.
And the Afghan government has to be ready to say no if a project is toorisky, or could be done more profitably once conditions improve. Even ifthere is some argument for one or two “loss leaders” to show Afghanistan isopen for business, they should not involve major assets.
If America wants to help develop Afghanistan’s resources in a way thatavoids clear dangers, gets the best price possible, and buildsinstitutional foundations for the future, they will be warmly welcomed. Ifthey do otherwise, they risk disaster not just for Afghans but for theirown interests, ironically while making even short-term commercial successless likely.
America is right to want Afghan mining to grow — but it needs to stoptreating it as a quick fix, and start building for the long term.