Afghanistan’s New Mineral Wealth

June 17, 2010     
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Geological surveys conducted recently in Afghanistan show that the impoverished country has enormous potential mineral wealth. Investigators sent to the region by the U.S. Defense Department estimate that as much as $1 trillion worth of copper, cobalt, gold, and lithium exist under the ground. The New York Times reported that one Pentagon document predicted Afghanistan could become the “Saudi Arabia of lithium,” a crucial material for computer batteries. Older Soviet geological surveys, apparently hidden from the Taliban by Afghan officials in the past, confirm these findings.

Afghanistan’s new mineral wealth is a potential blessing or a potential curse. The uses of this desperately needed capital will be determined by the structures of governance that are constructed for the country in the next months and years. This is a topic that numerous scholars have investigated in depth, and there are a series of insights that are very valuable moving forward.

First, scholars of the so-called “resource course” have shown that vast quantities of concentrated raw material wealth are, quite often, debilitating for governing structures. Powerful individuals and families hoard the raw materials for their personal uses and they underinvest in institutions and processes that would spread the wealth to others. The owners of the wealth become “renters” and they stand in the way of economic and political development that would democratize society and diffuse their concentrated wealth for broad social purposes. This is the story of almost all the oil-rich countries (especially Saudi Arabia), dominated by autocratic billionaire families, amidst poverty and underdevelopment.

Second, scholars have shown a parallel dynamic between raw material “renters” and foreign aid “renters.” Those who receive large quantities of foreign aid also have a tendency to hoard and under-invest in their society at large. Access to foreign aid becomes a source of personal capital and sustained political authority. Families, like the Karzai family in Afghanistan, use aid money to debilitate reidstributive and democratic institutions.

Third, amidst this discouraging evidence scholars have found a positive alternative. Raw material wealth can, in fact, contribute to broad social and political development if it is immediately integrated into representative and redistributive governing institutions. New institutions, and new mechanisms for policing those institutions in the public interest, must be constructed simultaneously with the acquisition of raw material wealth. The institutions cannot wait. Political management and rigorous public accountability must accompany the wealth. In this sense, democracy and development do indeed go hand-in-hand. Norway, with its vast discovery of oil reserves in the 1950s and 1960s, is the model. Canada and the United States are also models, at least in part.

How can we use the new raw material wealth of Afghanistan to follow the path of Norway, and not Saudi Arabia:

1. The international community, led by NATO and the United Nations, must articulate a set of broad principles for the good governance and productive uses of Afghanistan’s new mineral wealth. These principles should be made into an international covenant, obligating all foreign actors to follow them.

2. The international covenant should be used to negotiate procedures for managing raw material extraction and distribution with local Afghan actors. Local tribal leaders, not just the Karzai family, must see an incentive for good governance. They must develop trust with international actors as investors and policemen encouraging this process.

3. The Afghan public throughout the country, particularly poor farmers, must be mobilized to claim this raw material wealth for their own development. They should know the capital exists, they should recognize its potential, and they should be mobilized to demand its uses for broad social purposes. This is the only way to convince farmers to stop growing poppy for their livelihood, and invest in better lives through legitimate industry and agriculture. A mobilized Afghan public, with voice through domestic and international institutions, is the best source of accountability for raw material wealth. Norway had a strong public voice in these decisions when the country discovered oil; Saudi Arabia did not.

These are only some initial steps. They will not solve all problems, but they will begin a productive process. The discovery of Afghan mineral wealth raises great potential. The international community and the Afghan people must now begin the hard work of turning potential to broad benefit through good governance. The new mineral wealth could have its most enduring effect in spurring the social and political investment that Afghanistan has lacked for so long.

The opinions expressed in this blog are personal and do not necessarily reflect the views of either Global Brief or the Glendon School of Public and International Affairs

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6 Responses to “Afghanistan’s New Mineral Wealth”

  1. Tweets that mention Afghanistan’s New Mineral Wealth : Jeremi Suri -- Topsy.com on June 17th, 2010 8:56 am

    [...] This post was mentioned on Twitter by Jeremi Suri, Jeremi Suri. Jeremi Suri said: Check out my blog post on Afghanistan New Mineral Wealth: http://globalbrief.ca/jeremisuri/2010/06/17/afghanistans-new-mineral-wealth/ [...]

  2. Nick Cukierski on June 18th, 2010 8:16 am

    I was just wondering if you could elaborate on how the United States and Canada are also models in your third point?

    Also, how do you propose that the people of Afghanistan are thoroughly informed of this new capital and these new resources. How would the poor farmer come to learn of the potential and capital they stand above?

  3. T. Gary on June 18th, 2010 11:41 am

    Having raw mineral weath means little if: 1) communities do not have the physical, economic, commercial infrastructure to convert it into either a wholesale or finished product; and 2) cannot (or will not) re-invest the royalties and payments into further developing their most important resource–their people.

    When you use Norway, Canada, or the US as examples, all took new-found resource wealth and improved both the physical infrastructure to speed product access to market and improved education and health of their workers and societies. The governments did not view their native populations as burdens that must be carried; they were an important factor in converting raw materials into finished products.

    NPR discussed an interesting proposition to deal with the “resource curse”: as a variation of the Alaska model, just write checks to everybody; the idea being popular accountability of the government might be easier with a reason (future royalty payments) to care what Kabul is doing.

  4. kyle mulle on June 18th, 2010 1:22 pm

    I think that the mineral discoveries are a timely development considering some of the recent events in afghanistan. The proposed ways in which to move forward on this issue are all relevant, and i think it is especially important that NATO take a leading role in the effort to utilize these resources responsibly. Multinationals and countries that have not contributed to securing Afghanistan should not be able to reap the benefits of these potentially lucrative mining operations without contributing aid to the Afghan govenment or aiding the ISAF effort on the ground. Without strong government institutions or general oversight from NATO, the UN or otherwise this situation will turn chaotic, .with the afghan people suffering the most.

  5. LTannenbaum on June 21st, 2010 4:27 pm

    Just from my experience in 2008 this will be a monumental task. The points that much is Kabul centric is valid since our PRT was trying to figure out where waste was occuring and how to get the money into the right hands. An effort the Dept of Agriculture was working to improve was “grape trellising”. DOA was trying to implement a training and production process to improve the grape production in Ghazni province. I do not know the outcome but will try to research in my spare time (OH I don’t have any) the outcome.

    It may take a program similar to Alaska but will it work, is the for the new decade? Only if the PRT’s are given to examining where all their monies are going and evaluating what is not working.

  6. Brian Moriarty on June 22nd, 2010 2:01 am

    One trillion is a ton of cash, but I strongly doubt it will be distributed when it finally is mined. The government makeup must be inclusive and the infrastructure must be broad meaning all over the country.

    Countries like Saudi Arabia have infrastructure only in the places they need it and the profits from their resources only travel to relatively few individuals. This is the same problem in Africa with its vast resources either being pilfered or benefiting a select few.

    The failures and the successes of resource-driven economies are clearly tied to the types of governments that manage (and not the outside governments who reap from them.) To unify a bunch of loosely-related tribes will take centuries.





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