Waging Peace, November 2010, Pages 58-59

Afghanistan's Untapped Riches Fueling Conflict?

(L-r) Dr. Raymond Gilpin, James Yeager, Dr. Graciana del Castillo and Scott Worden. (Staff photo I. Ali)

In light of the recently publicized findings that Afghanistan has an estimated $1 trillion in untapped mineral deposits, the United States Institute of Peace (USIP) in Washington, DC held a July 14 panel discussion titled "High-Value Resource Contracts, Conflict, and Peace in Afghanistan." Focusing on the link between mismanagement of resources and violent conflict, the panelists offered their advice on how to avoid an unfavorable outcome for the country. Moderator Dr. Raymond Gilpin, who directs USIP's Sustainable Economies Centers of Innovation, introduced the discussion by describing controversies surrounding the awarding of the lucrative Aynak copper mines to the Metallurgical Corporation of China in 2007.

Most critical of the Chinese (and non-Western) ambitions in Afghanistan was James Yeager, former adviser to Afghanistan's Ministry of Mines. He described the different standards of Eastern and Western companies and the almost "impossible" competition private companies face when bidding against state-owned enterprises. The Chinese include money for infrastructure development in their bid—what Yeager termed a "Chinese Marshall Plan"—and, since they do not have to deliver results to investors, their projects can operate at a loss. In addition, Afghan frameworks and conditions are not set. Western companies are thus discouraged from competing against Chinese companies and investing in Afghanistan. Praising Chile's late Western-leaning dictator Augusto Pinochet as a "strong leader," and Chile under him as a success story, Yeager concluded by arguing that development in Afghanistan must be Western, not Eastern.

Scott Worden, senior rule of law adviser at the USIP, also discussed the importance of improving governance and rule of law, particularly the implementation of a regulatory regime. Contract awarding and mining within the current nontransparent environment could potentially worsen the situation, he argued, with bribes strengthening Afghan warlords. He also criticized China for "free riding" on U.S. security, saying that the American military has to keep Chinese railroads and plants in the country safe.

Dr. Graciana del Castillo, senior research scholar at Columbia University, warned that U.S. interests are very different from the Afghan government's interests, and that previous success stories with mineral extraction and exploration included advisers with no interest, stake, or agenda in the project so as to guide the governments in the best way possible. There will be no peace in Afghanistan without development, she cautioned, stating that "[we] are not going to win the war militarily." Castillo opined that it may be necessary not to condone, but to realize, the existence of limited corruption in order to begin the exploitation of minerals and get revenues to build up the impoverished country. Citing Vietnam as a good model for Afghan development, with similar levels of corruption, income and development at the start of its development process, she underscored the importance of building and utilizing local human capital. China is doing very well in the world economy, and its technology is more adaptable to Afghanistan, Castillo concluded.

—Imaan Ali