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Mineral wealth could hold key to Afghan prosperity
New York Times - September 10, 2012
Officials and industry experts say the potential resource boom seems increasingly imperiled by corruption, violence and intrigue, and has put the Afghan government's vulnerabilities on display.
It all comes at what is already a critically uncertain time here, with the impending departure of NATO troops in 2014 and old regional and ethnic rivalries resurfacing, raising concerns that the mineral wealth could become the fuel for civil conflict. Powerful regional warlords and militant leaders are jockeying to widen their turf to include areas with mineral wealth, and the Taliban have begun to make murderous incursions into territory where development is planned.
In the capital, Kabul, factional manoeuvring is in full swing, including disputes over lucrative side contracts awarded to relatives of the President, Hamid Karzai.
Further, a proposed mining law vital in attracting foreign investment is up in the air, with the delay threatening several projects. The cabinet rejected it this summer, saying it was too generous to Western commercial interests. But some Western officials fear other motives are at work, including an internal fight for spoils, and perhaps an effort by neighbouring countries to sway sympathetic officials to keep Indian and Chinese state mining companies out.
"If you were to pick a country that involves high risk in developing a new mining sector, Afghanistan is it," said Eleanor Nichol, a campaign leader at Global Witness, a group that tries to break the link between natural resources, corruption and conflict. "But the genie is out of the bottle."
In the Kalu Valley, villagers hope that Indian and Canadian mining operations can turn iron ore into new lives for struggling families, breaking a cycle of poverty.
When the digging begins, 30-year-old farmer Abbas Ali will have to give up the 1.6-hectare potato field his family has worked for generations. He is ready. "Our life will change 180 degrees," Mr Ali said. "We support any effort to make it happen quickly."
That hope, and the prospect of more self-sufficiency as international aid ebbs, is driving Afghan officials like the Minister for Mines, Wahidullah Shahrani, as he tries to get more projects going. The World Bank estimates that if things go well, mining and agriculture could raise annual growth rates by 3 to 4 percentage points between now and 2025.
But Mr Shahrani wants to strike the right balance between generating revenue for the Afghan government and drawing in international investors, saying that getting contracts wrong would jeopardise critical development timelines. "This is all about the credibility of the country," he said.
Some officials are also worried about a swathe of small mines – for gemstones, marble, chromite and other resources – that are out of the state's control and might be fuelling the insurgency.
A US Defence Department analysis said criminal mining syndicates were smuggling chromite over the border, paying protection money to the Pakistani Taliban and the Haqqani insurgent network. Beyond the concerns about security, there is the matter of creating the mines themselves.
Delays may also reflect an unwillingness – say officials who work close to the mining industry – by international investors to put in hundreds of millions of dollars they could lose if Afghanistan again descends into turmoil.
"Everyone is hesitant to plan beyond 2014," said a Western official who spoke on the condition of anonymity. "They have dragged their feet. The government might change and you have built your new roads and new power plants. It might all be gone."
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