The US has announced the discovery of minerals apparently worth $1 trillion in Afghanistan – the IIPM Think Tank believes much of this made up value is balderdash and pure hogwash forwarded by the US
There’re three reasons for the June 2010 re-branding of old news. First: when it comes to fragile governance, the Afghan government is already a top contender. It is today standing on legs largely because of foreign aid, which is over 70% of its budget. Undoubtedly, the announcement of this discovery will give Karzai – who has recently mended fences on his own terms with Obama – a new lifeline in his fragile political career, as he would be able to wishfully promise the mineral rich regions to tribal chiefs and Taliban representatives. Second: the announcement will give an excuse to the US to postpone their decision of withdrawing troops out of the country. Third: the US has been trying hard to figure out ways to attract foreign investment into the region. The announcement will jump start the proceedings. One can easily visualise deals being signed under pure promises and conjectures than on realistic data – leading to future litigation.
There is a huge downside for Afghanistan due to this announcement. Mineral and oil discovery announcements have led to social unrest in various countries; and Afghanistan is a country that is still struggling to come out of a war like condition. African nations like Ghana, Sierra Leone, Uganda, Nigeria and Sudan saw a decade long violence and civil unrest after similar discoveries. An analysis of the top oil rich countries would show that around 10-12 nations in the top 50 list are unstable. For Afghanistan, the announcement would exacerbate the ongoing power politics. If on one hand the local clans, Taliban, Al-Qaeda and the likes will fight a bloodying conflict to tap these supposed resources to fund their anti-social missions, then on the other, China, which last year grabbed the Aynak copper mine in Logar, would leave no stone unturned to expand its influence over the region and country in particular.
All this is not to say that there are no reserves – of course, there are. But in all probability, only around 1/5th of what has been announced – which anyway would be exploited by US firms. It’ll take decades for other investing companies to realise they’ve been had. By then, Obama will be out of power, and Afghanistan will no more be a priority.
Sray Agarwal
There’re three reasons for the June 2010 re-branding of old news. First: when it comes to fragile governance, the Afghan government is already a top contender. It is today standing on legs largely because of foreign aid, which is over 70% of its budget. Undoubtedly, the announcement of this discovery will give Karzai – who has recently mended fences on his own terms with Obama – a new lifeline in his fragile political career, as he would be able to wishfully promise the mineral rich regions to tribal chiefs and Taliban representatives. Second: the announcement will give an excuse to the US to postpone their decision of withdrawing troops out of the country. Third: the US has been trying hard to figure out ways to attract foreign investment into the region. The announcement will jump start the proceedings. One can easily visualise deals being signed under pure promises and conjectures than on realistic data – leading to future litigation.
There is a huge downside for Afghanistan due to this announcement. Mineral and oil discovery announcements have led to social unrest in various countries; and Afghanistan is a country that is still struggling to come out of a war like condition. African nations like Ghana, Sierra Leone, Uganda, Nigeria and Sudan saw a decade long violence and civil unrest after similar discoveries. An analysis of the top oil rich countries would show that around 10-12 nations in the top 50 list are unstable. For Afghanistan, the announcement would exacerbate the ongoing power politics. If on one hand the local clans, Taliban, Al-Qaeda and the likes will fight a bloodying conflict to tap these supposed resources to fund their anti-social missions, then on the other, China, which last year grabbed the Aynak copper mine in Logar, would leave no stone unturned to expand its influence over the region and country in particular.
All this is not to say that there are no reserves – of course, there are. But in all probability, only around 1/5th of what has been announced – which anyway would be exploited by US firms. It’ll take decades for other investing companies to realise they’ve been had. By then, Obama will be out of power, and Afghanistan will no more be a priority.
Sray Agarwal
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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