We are a people who don’t have money, food or clothes. But we are sleeping on gold. ~ Mohammad Ibrahim Adel, former Afghan minister of mines.
Afghanistan is the second most corrupt nation in the world and its people are the poorest outside of Africa. Developing a legitimate economy, effective government, and safety for its citizens has been and will continue to be an arduous journey. A violent insurrection in much of the country definitely makes this situation much more challenging.
The future of Afghanistan largely depends on President Karzai’s ability to enforce security and reform the way business is conducted in the country. There is real value for the Afghan economy in natural resources and inter-Asian trade that will continue to be exploited by powerful, corrupt officials unless changes are made.
Resources
A USGS report in 2007 describes Afghanistan’s rich deposits of copper, gemstones, gold, iron, marble, and a wide variety of other minerals. Large reserves of oil and gas have been discovered in the Afghan portion of the Amu Darya and Afghan-Tajik basins. While not as extensive as the reserves of its energy-rich neighbors, these deposits hold over 150 million barrels of oil and 4,500 million cubic feet of gas. There are also about 12.3 million tons of copper in Aynak in southern Afghanistian, and 1.8 billion tons of iron in the world-class Hajigak deposits—both worth tens of billions of dollars. These resources are not being actively exploited because of a lack of security and energy shortages. Regardless, competition over extraction rights will be fierce. China bid $3.4 billion ($1 billion more than any of its competitors) for the right to mine copper in Aynak in 2007 and plans to extract 11 million tons over the next 25 years. These kinds of lucrative contracts will create thousands of jobs but will also generate huge profits for the Afghan government and private interests.
Much work must be done to develop Afghanistan’s energy infrastructure. The USGS report states, “In Afghanistan, the earth sciences infrastructure must be almost completely recreated beginning with the organizations; organizational mission, structure, culture, and management; facilities; and revitalizing and retraining of the remaining technical staff.” Serious challenges face the development of Afghanistan’s private sector including security, government corruption, and a widespread lack of electricity. As former U.S. Ambassador to Afghanistan Zalmay Khalilzad notes, “sustained, long-term economic growth and political stability are impossible without the development of a robust private sector and the institutional framework for a free market.” While the security situation and electricity deficiencies are likely to slowly improve, corruption has become entrenched in the business culture and is a huge hurdle for future economic development.
Trade
Afghanistan is also perfectly placed to facilitate the movement of goods and resources across central Asia. China and India both require imported oil and gas to power thirsty economies while Pakistan continues to battle chronic energy shortages. Chinese and Pakistani cooperation on the development of the port of Gwadar in Baluchistan is equaled by a joint venture between India and Iran in the Gulf port of Chabahar. Roads to both of these ports travel through Afghanistan. Also, Chinese companies have been seeking ways to transport Russian and Asian energy resources to western China for years, and they are interested in developing Afghanistan’s northern gas fields, railroads, and highways. Afghanistan, as the geographic middleman, stands to gather a nice profit.
Corruption
Which brings us back to corruption. Karzai’s government, powerful tribal elders, and warlords already control the distribution of lucrative military and transportation contracts. Corruption permeates the police force, even the new Afghan National Civil Order Police, created with Afghanistan’s “best and brightest” and which was supposed to play a central role in the upcoming offensive in Kandahar. Unfortunately, more than 25% of the officers in one ANCOP battalion in Helmand were dismissed for drug use while the rest were sent for “urgent retraining.” American officials are struggling to decide on how to deal with Ahmed Wali Karzai, half-brother of the president and chief of the Kandahar tribal council, who has amassed enormous wealth and power through the distribution of foreign aid contracts and, many allege, extortion and the drug trade. “This is our way of doing business,” said Kabul real estate broker Haji Asadullah Safi back in November. “It’s frustrating.”
Corruption can only get worse as foreign investment flows into Afghanistan’s natural resources and transportation infrastructure. Legal help is desperately required for international investment, business cooperation, and government accountability. Numerous countries in Africa and elsewhere have already shown the difficulty in dealing with a conflict-torn country ruled by corrupt officials but endowed with vast mineral wealth. Afghanistan will surely travel the route pioneered by Mobutu Sese Seko and the Congo if international forces abandon Afghanistan in its current state.
