Monday, 14 June 2010

Just when you thought things couldn't get worse for Afghans

Vast mineral deposits have just been located in Afghanistan - a discovery that looks set to prolong the destabilisation of the war-torn country for many years.

The New York Times says that the mineral reserves are worth more than $1 trillion and include cobalt, lithium, iron, gold and copper and were discovered by a small team of US researchers and geologists. By comparison, the economy of Afghanistan is currently worth just $12 billion a year.

If such deposits were found in a stable country, it would be cause for huge celebration. There would be new roads and hospitals, better security and energy supply. In a country where many boys aren't educated and virtually no girls receive any schooling, it could have meant a step change in education.

But this is Afghanistan.

To understand what is likely to happen next, look at the Democratic Republic of Congo. That country too has vast mineral reserves - reserves which have been known about (at least in part) for many decades - or even centuries. Different countries have sought control of the land to exploit the reserves for their own ends. Corruption is endemic and the populace has gained hardly anything. In the DRC, matters are reaching a crisis point as, although the remaining reserves are still enough to totally transform the country, the end is in sight and a final scramble is on to secure the last pickings. The country's aspiring politicians who have seen their older colleagues get rich on bribes and backhanders and were awaiting buggin's turn have now discovered that there might not be much left when it comes to their place at the front of the brown envelope queue. Matters are in danger of becoming even more corrupt, rather than less.

As for Afghanistan, the first stage of the battle will be international. Which countries can secure the bulk of the rights.

Key players in this battle are the Chinese. Their model involves paying huge amounts to develop the infrastructure of the nation. They build roads, water plants, bridges and railways using local workers and chinese managers - all in return for the promise of mineral rights. Unlike many western countries, they do not make any demands of good governance - they are happy to deal with any politician who fulfils the old maxim of once they have been bought, they stay bought.

The American model was best exemplified in Iraq. In return for stabilising the regime, US companies are granted the plum rights to anything of value. In Iraq under the Bush regime it was usually Halliburton which came out top in these rights auctions. The US model depends on stability at the top of the political tree and so the leaders in place at the time of the rights auctions tend to stay there - at least until the US decides that they are showing a little too much independence and need replacing from within.

Two other nations might also step up to the plate in Afghanistan. One is Russia whose own mineral sector was carved up by senior figures close to the Kremlin. These oligarchs bought huge sectors of the Russian economy through a series of bribes and promises to play by the, peculiarly Russian, rules. They are free to make their billions so long as they do nothing to upset the Kremlin. They must 'donate' money in the right ways and promise to stay out of politics. Those who don't find themselves exiled and cut off from their piggy banks.

The final player may be Saudi Arabia. The Saudi expertise might be limited to the extraction of oil, but they have a history in seeking to export their own brand of Islam around the world. Like the Chinese, the Saudis make huge investments in infrastructure of developing nations. But they also spend very large amounts building mosques. Could Afghanistan be the next target of Saudi largesse?

None of these models will make especially happy reading for those of us who would hope that it will be ordinary Afghan citizens who gain most from their newly found mineral rights. Whether it is their own oligarchs, foreign companies or other nations - you can be sure that the vast majority of the profits of these finds will be disappearing beyond the borders of Afghanistan.

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