by Paul Brammer (News & Opinion Editor)
The U.S. National Geographic Society, working in tandem with the Pentagon, has recently discovered up to $1 trillion of untapped mineral wealth in Afghanistan. The story, which was broke by the New York Times, outlined the different minerals that were discovered in the country, “iron, copper, cobalt, gold and critical industrial metals like lithium.”
Of particular importance are the reserves of lithium discovered, which is an integral component in the construction of electrical goods, and could see Afghanistan become one of the world leaders in the production of lithium.
The Pentagon has claimed that the Afghani Ministry of Mines is not yet ready to deal with the handling, sale and distribution of such large amounts of minerals. Paul A. Brinkley, deputy undersecretary of defense for business, said that the Pentagon is “trying to get [the Ministry of Mines] ready” to handle such resources.
Michael Maschek, political science professor at the University of the Fraser Valley, commented on how the situation will progress in the days and weeks ahead, “The rights to these minerals are held by the government of Afghanistan. At the moment, it is a little uncertain as to exactly how the government will react to this discovery, but we do know that it is their intent to open the reserves to international investors. They have already expressed this intent.”
“The manner in which this process is to occur is likely going to be a little ad hoc; two hundred mining investors from around the world have been invited to a meeting next week in London where they will offer suggestions for how to develop the deposits.”
Question marks remain over both the manner in which the resources will be developed and which nations and interests will be able to extract the resources. In terms of the prerequisites for extracting the resources, Maschek said, “possibilities include a requirement that the bidder develop both a steel plant and the iron ore mine since there are also nearly deposits of coal. The government intends on having expressions of interest by September and perhaps by December narrow these mining companies down to half a dozen that have the ability to undertake such a massive project.”
Also, despite the fact that Americans were in part responsible for the discovery, Maschek said that there is no guarantee that American interests will be more favoured than another when the bidding process begins, “There is no reason to assume Americans would be the only nationality represented by companies tendering these offers. In fact, it is expected that both China and India will show particular interest in the opportunity. A number of Indian firms have already explicitly expressed interest.”
“Non-governmental western mining experts will be helping the ministry develop the bidding process. The ministry has pledged to make the bidding and contracting of mining rights as transparent as possible in order to reduce the possibility of corruption. This transparency would include making copies of the contracts would be made available to members of Parliament and to members of civil society.”
However, Maschek cast doubts on the Afghani ability to handle these resources itself. Maschek referenced Mary Louise Vitelli, “a mining and energy lawyer who has advised the Afghan government” who claimed that the Afghanistan government’s handling of its mines and resources were “deplorable.” Vitelli also said, “Let’s treat this with proper scepticism. It’s OK to have an estimate of a trillion dollar resource or more, but let’s make sure the infrastructure is in place to make sure the Afghan people can benefit from this.”
Due to the instability that has marred Afghanistan since the American occupation, it remains uncertain whether Afghani people will benefit from the discovery of these resources. Maschek drew upon other recent examples to weigh the merits and demerits of such a discovery to Afghanistan. “Research pertaining to resource wealth such as this has suggested that it can be a curse, causing political instability and slower economic growth. Jeffrey Sachs’ economic research was some of the first to characterize such resources as a burden. Examples include Niger, Zimbabwe and Sierra Leone.”
On the other hand, a country such as Botswana offer an example of good handling of their vast resources of minerals, “Botswana represents a particularly striking example of a nation successfully taking advantage of such significant discovery of natural resources. Botswana, a nation exceptionally rich in diamonds, was very unstable when it gained its independence. It did not nationalize the resource; instead the country put concerted effort towards fighting corruption and enforcing the rule of law. It signed a profit-share agreement with the diamond company De Beers.”
Maschek referenced Daron Acemoglu, from the MIT department of economics, who said, “Botswana’s post-colonial leadership, particularly Seretse Khama and Quett Masire, and also its major economic elites, were committed to democracy, economic development, secure property rights, and fairly orthodox macroeconomic policies.”
Maschek said that Botswana’s example of opening up its resources to international interest whilst also protecting the rights of its citizens is a good example for Afghanistan to follow, “Afghanistan does not need to extract these resources themselves; nor could they even if they wanted to. But they don’t need to in order to benefit substantially from them. Botswana’s diamonds are extracted by private interests.”
“A functioning government representing the people of Afghanistan is crucial. This government must be committed to rule of law and enforcement of property rights. Citizens must know they claim some of the wealth associated with this discovery; but they need not control them directly.”