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$1 Trillion in Minerals May Change Afghanistan’s Future

CAS prof says investment could stabilize war-ravaged country

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Thomas Barfield, a CAS professor of anthropology and president of the American Institute of Afghanistan Studies, says development of its vast mineral wealth could help stabilize impoverished, war-ravaged Afghanistan. Photo by Fred Sway

Last week, the New York Times reported that more than $1 trillion worth of mineral deposits (some experts put the figure as high as $3 trillion) had been found in Afghanistan, including deposits of iron, copper, gold, and most notably, lithium, a key component in the batteries that power laptops and cell phones. According to the Times, an internal Pentagon memo describes Afghanistan as “The Saudi Arabia of lithium.”

Yet Afghanistan is also one of the world’s poorest and most undeveloped countries, with a gross domestic product of around $12 billion and an agriculture-based economy that is dependent on opium production; it is also dependent on international aid, including from the United States. Massive mineral exploitation could upend all that, and the jockeying and power-playing has already begun. On June 21, Afghan President Hamid Karzai (Hon.’05) promised priority mining rights to Japan, snubbing the United States. Thomas Barfield, a College of Arts & Sciences professor of anthropology and president of the American Institute of Afghanistan Studies, says Karzai’s move was “just an example of his fickleness. He has no such power to deliver.”

Still, there is no guarantee that U.S. mining concerns will get what they want. China secured copper mining rights in Afghanistan 18 months ago.

Are the mineral riches really good for Afghanistan? And what does publicizing their existence mean for the war effort? BU Today asked Barfield to put things in perspective.

BU Today: Were you aware of this vast mineral wealth before it was reported on the front page of the New York Times?
Barfield: The lithium seems to be a new discovery, but certainly the iron and copper are very well known. The U.S. government did have the old maps, and it appears it conducted its own more intensive survey; when it finished hasn’t been exactly clear. About a year and a half ago, the Chinese plunked down $3 billion to develop the copper mines. Even in the 1960s and ’70s, it was well-known that iron and copper and a few other minerals, as well as precious and semiprecious stones, were in Afghanistan. The Afghan government at the end of the 19th century had surveys done to see what was there, but then they made sure not to allow the British to build railways, and without railways there’s no way to get the minerals out. It was a deliberate policy of not exploiting mineral wealth on the grounds that if the country didn’t have anything, then foreigners wouldn’t want the place. It was shortsighted, even then.

How significant is the lithium find?
In the 19th century, people weren’t looking for lithium; they were looking for copper and iron. If it’s as big as people say it is — that it’s the second biggest around, although that needs to be confirmed — that’s incredibly significant in that you’re serving the world. So it’s not just one or two minerals, and the Afghans could start playing off different countries by spreading a bunch of opportunities among many nations. Historically, Afghanistan has tended to play world powers off one another. That’s how they maintained their independence between British India and the Tsarist empire; during the Cold War, the Soviet Union and the United States competed with development projects. The Afghans do understand that it’s a good idea to distribute your resources to different and often-competing powers.

Can you characterize what this development means for Afghanistan’s economy and overall quality of life?
It could really go in a lot of different directions. I’ve read stories that have talked about how diamonds ruined Africa. But you can’t just walk in, collect this stuff, and walk out. There are some gemstone deposits in Afghanistan that people have been exploiting for a long time, like emeralds and lapis lazuli, but potentially a trillion dollars worth of minerals could absolutely transform Afghanistan’s economy.

On the other hand, you have to have the infrastructure to be able to take it out, and that requires a huge amount of capital investment. That investment is not going to go into Afghanistan until there is some kind of security, so you know you can get your infrastructure built and get your profits out.

So could this calm the military conflict?
People have said this war will not be won on the battlefield. Some of the things are how can you change Afghanistan so that it doesn’t go back to civil war or managing to trump the Taliban by saying, “We can offer you something the Taliban can’t.” The Taliban certainly have no policy for developing the country. They didn’t do anything when they were in charge, and they certainly wouldn’t do anything if they came back. One of the things that’s perceived as a game changer in terms of stabilization is bringing other countries into Afghanistan. China could play a big role in this. They’ve already invested in the copper mines, and they promised to build a railway to get it out. Of course, if they build a railway to China, then all the stuff goes to China.

That probably wouldn’t please the United States.
Not necessarily. China’s buying up minerals all over the world. Since China is one of the few allies of Pakistan, along with the United States, that gives another bit of leverage over Pakistan’s support of the Taliban. Because if the Taliban started shooting up Chinese engineers or interfering with Chinese investment, I’m sure there would be some calls from Beijing to Islamabad asking, whose side are you on?

Will all this potential international intervention have an effect on Afghan traditions and culture?
Afghanistan was never colonized. Consequently these aren’t people who are easy to push around. The parts of the culture that could change are the things that happen in any rapidly changing economic development, but the Afghans have a better sense of themselves than other peoples, partially because of their history.

What are the implications for the environment?
They need to be very careful. The Afghans have no experience with preventing the poisoning of rivers or what you do with the waste. This is where the international community could play a large role — in insisting that all these operations meet international standards and get this started in a way that in 10 or 15 years we aren’t asking, well, how did this happen?

Will Afghanistan’s inexperience in large-scale mineral extraction make them too vulnerable to unscrupulous developers?
We’ve seen with oil that for 50 years, the oil companies dominated the contracts. Today, it’s the countries that own the resources that get the lion’s share of what comes out. Same thing with minerals. I don’t care what kind of contract you sign, particularly after you put in the investment in the railroads. If the government says this is an unfair contract and we’re not going to let these minerals go out, you’re kind of screwed. They’re as much holding you hostage as vice versa. That’s one reason I’m not as concerned that Afghanistan could be a big loser in this. No matter how these contracts get started, you have to look to the long term. I don’t think the Afghans would have any hesitation abrogating a contract that they felt was not written in their interests. This is the land of the ancient Silk Route. These people are not unfamiliar with the intricacies of bargaining.

Do you feel confident the wealth will trickle down to the people?

The idea that a central government would abuse the regions, which we see with oil in Nigeria, where the government takes the oil out and the people who live in the region don’t get anything — that’s far less likely in Afghanistan because the Karzai government doesn’t have that type of power. They need the cooperation of the local people to get the development in.

As far as corruption, you’re dealing with more international players, and they have the capacity to push back on corruption. And sure, you could buy a sweetheart deal, but could you get it delivered five years down the line when the Karzai government is no longer there? As long as the international community is there, and particularly the United States, there’s going to be an awful lot of scrutiny of these deals.

But even leaving the revenue aside, because that’s 10 years down the line, the work needed to put in the infrastructure and the side effects — better transportation systems, electricity, jobs for people — that’s going to have an enormous impact well before we get to the question of payment of royalties.

Caleb Daniloff can be reached at cdanilof@bu.edu.

1 Comments

One Comment on $1 Trillion in Minerals May Change Afghanistan’s Future

  • Oliver Walton on 07.01.2010 at 8:17 am

    Afghanistan and the resource curse

    Most scholars now warn against making the case that natural resources increase the likelihood of conflict per se, focussing instead on a range of variables and contextual conditions that determine whether or not the resource curse occurs. Some of the linkages between resource management and conflict can be glimpsed by looking at cases where conflict has been averted. Botswana’s success in managing diamond wealth can partly be explained by good macro-economic policy decisions, but it is important to recognise that these decisions were underpinned by a stable political settlement, unusually favourable world market conditions and effective private property institutions. Zambia, in contrast, managed a sharp influx of wealth quite badly yet did not succumb to violent conflict, largely as a result of its resilient central state. Resource management strategies alone do not explain the onset or recurrence of violent conflict. In each case, conflict is driven by a complex array of institutional, historical and political factors. http://iddbirmingham.wordpress.com/2010/07/01/afghanistan-and-the-resource-curse/

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