Monday, June 14, 2010

Afghanistan has a Trillion Dollars in Minerals, Why the Leak Now?

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials, NYT reports.

NYT goes on:
The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.

An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and Blackberries.

The vast scale of Afghanistan’s mineral wealth was discovered by a small team of Pentagon officials and American geologists. The Afghan government and President Hamid Karzai were recently briefed, American officials said.
As NYT notes, this could play out many ways:

...the American officials also recognize that the mineral discoveries will almost certainly have a double-edged impact.

Instead of bringing peace, the new found mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

Endless fights could erupt between the central government in Kabul and provincial and tribal leaders in mineral-rich districts. Afghanistan has a national mining law, written with the help of advisers from the World Bank, but it has never faced a serious challenge.

“No one has tested that law; no one knows how it will stand up in a fight between the central government and the provinces,” observed Paul A. Brinkley, undersecretary of defense and leader of the Pentagon team that discovered the deposits.

At the same time, American officials fear resource-hungry China will try to dominate the development of Afghanistan’s mineral wealth, which could upset the United States, given its heavy investment in the region. After winning the bid for its Aynak copper mine in Logar Province, China clearly wants more, American officials said.
 It is interesting that this is being leaked to NYT at this time. The NYT story puts heavy emphasis on this being a new discovery by the U.S., but in the same story explains that the Russians were geologically mapping the heavy mineral area, when they were in the region:
In 2004, American geologists, sent to Afghanistan as part of a broader reconstruction effort, stumbled across an intriguing series of old charts and data at the library of the Afghan Geological Survey in Kabul that hinted at major mineral deposits in the country. They soon learned that the data had been collected by Soviet mining experts during the Soviet occupation of Afghanistan in the 1980s, but cast aside when the Soviets withdrew in 1989.
Is this the real reason behind the U.S. going into Afghanistan?

One has to wonder, and this is pure speculation, that the U.S. is possibly trying to head off a dump by Wikileaks of cables which openly discuss the huge mineral deposits, since it appears Wikileaks is in possession of a lot of cables out of that region. Such a cable dump would be extremely embarrassing if it contained official cables discussing the vast resources without any public indication that such huge mineral resources existed in the region. Note that NYT also reports that the U.S. just recently briefed Afghan President Karzai. There is something driving this sudden transparency about the vast wealth in Afghanistan. My guess is that it is Julian Assange and his Wikileaks.


  1. This comment has been removed by the author.

  2. Good question.

    It seems the resources were discovered as part of a joint Soviet-Afghan exploration, at least according to this PDF report. So which Communist Party fat cats / post-communist fat cats had the inside track? And which of their western partners was let in on the know?

    Economist Paul Collier (mp3)has argued that for countries in "The Bottom Billion", the "natural resources trap" hinders both development and democracy. Collier's ideas are summarised here.

    Collier's ideas on natural resources, see here, strike me as tantalisingly close to the Austrian property rights analysis, at least, as far as his critique of how state ownership and concession systems work.