Perhaps out of spite or out of anger at what appeared to be an ignominious defeat at the hands of the dilapidated Taliban, the United States froze the nearly $ 9.5 billion in assets owned by the Afghan central bank. The Biden administration would also block the Taliban’s access to Afghan government accounts run by the Federal Reserve and other banks, and deny them access to foreign exchange reserves held at the International Monetary Fund.
This will seriously disrupt the ongoing process in Kabul (since August 15) of building an inclusive and universally acceptable government that would rule the war-torn country in the meantime. A common code of governance is also sought as various Afghan factions and Taliban representatives engaged in the process attempt to come to an agreement on what can be said to be the irreducible minimum acceptable to all.
In the event that the United States follows through on its threat and genuinely denies the resources already in the pipeline, that will only push Afghanistan back into the 1996-2001 black hole, turning it once again into fertile ground for terror.
Afghanistan urgently needs a lot of resources to fund the establishment of civilian government, police, educational institutions, hospitals, trained health personnel, people with disabilities. man of civic works like roads and bridges, importing fuel, arranging for agro-inputs and storage of his production and marketing. And of course, well-trained and motivated defense services.
The Afghan economy, which depends solely on the poppy, is too fragile to save the process and finance these activities. In fact, it is the cultivation of the poppy which occupies the center of the economic scene of the country. Last year, Afghanistan produced at least 6,300 tonnes of opium, according to the United Nations Office on Drugs and Crime – enough to manufacture some 900 tonnes of heroin – and accounting for about 85% of the global supply. If it was a legal business, it could win awards for innovation and resilience.
Certainly, at first glance, the poppy appears to be the country’s only identifiable economic wealth that may not be available if and when it joins the “law-abiding” world order.
The other known riches, precious stones and marble, would be openly plundered. Due to insecurity and the limited government presence in parts of the country, warlords, insurgents and politicians are believed to be involved in the illegal exploitation of minerals. There are believed to be around 1,400 illegal mines in the country.
If exploited efficiently, Afghanistan’s rich mineral resources, it is believed, could prove to be the best substitutes for foreign aid and could reduce the country’s dependence on donor countries and foreign aid. These resources, if properly managed, provide Afghanistan with the opportunity to write its own economic success story. Robust policies and institutional arrangements as well as a clear political direction will help attract domestic and foreign investors. Better management of mineral resources could translate into sustainable economic growth.
There are numerous maps developed by the Soviets in government records in Kabul that document a large amount of reserves of iron, copper, gold, cobalt, rare earth metals, and lithium.
An internal Pentagon memo claims Afghanistan could become “Saudi Arabia of lithium,” referring to the mineral that is an integral part of laptop and smartphone batteries.
Washington was thrilled with the results and in 2010 claimed that at least $ 1 trillion in resources was up for grabs. US officials had said the deposits could support the Afghan economy and generate thousands of jobs, reducing corruption and reliance on foreign aid.
Afghanistan can hold 60 million metric tons of copper, 2,200 million metric tons of iron ore, 1.4 million tons of rare earth elements such as lanthanum, cerium and neodymium, and veins aluminum, gold, silver, zinc, mercury and lithium. For example, the Khanneshin carbonite deposit in the Afghan province of Helmand is valued at $ 89 billion.
According to the World Bank, mining revenues at two sites – the Aynak copper deposit and the Hajigak iron deposit – could “generate an average of $ 900 million per year until 2031”.
What Afghanistan lacks are the technical knowledge and capital to exploit the mineral wealth. This technical knowledge and the necessary funding can be provided by the United States, China and other technically and financially endowed foreign countries, helping Afghanistan to develop rapidly.
This will benefit countries extending the necessary technical / financial hand, including immediate neighbors as well, as with their higher incomes, Afghans will not only be able to buy goods from these countries, but also export much-needed minerals.
According to Antony Loewenstein (Natural Resources Were Supposed to Make Afghanistan Rich. Here’s What’s Happening to Them, published in The Nation on December 14, 2015), acknowledging the inability of the Afghan Ministry of Mines and Petroleum to manage a burgeoning resource industry The US government had already pledged to help implement a sustained program.
“However, regulations like the Mining Law – revised in 2014 to provide greater transparency – have had little effect on illegal mining and non-payment of royalties.”
Logar Province is home to one of the largest untapped copper deposits in the world, at Mes Aynak. The Chinese company, China Metallurgical Group Corp. (MCC), controls the $ 3 billion mine, having obtained the rights to the area in 2007, but operations have not started due to security concerns.
When President Ghani visited Beijing in October 2014, the Chinese government asked him to reduce the royalty rate from 19.5% to around 10%, which would cost the Afghan government around $ 114 million per year. Chinese frustrations with the project, especially with regard to the lack of security, are believed to be at the root of the demand.
MCC bought the rights to the copper for 30 years, and the Afghan government has little or no other companies willing to take over the contract in such a volatile region. There is no reliable transportation route to get the metal out of the landlocked country; and MCC removed its workers from the site in 2014. The company says tens of thousands of jobs could be indirectly created if operations begin.
An American study found that illegal mining costs the state up to $ 300 million a year. Insecurity in eastern Nangarhar province and elsewhere prompted interested parties to warn Afghan lawmakers in 2015 that it was impossible to monitor the thousands of mines across the country and that total and rampant looting of resources communities could continue in the absence of lasting peace in the country. .
Historically, Pakistan would have been one of the main recipients of minerals illegally obtained in Afghanistan.
As a landlocked country, Afghanistan has remained dependent on Pakistan for its transit trade while the two countries are also immediate markets for each other. Unfortunately, trade relations between Afghanistan and Pakistan have remained difficult.
In light of international conventions, agreements such as the Afghanistan Transit Trade Agreement (ATTA) 1965 and the Afghanistan-Pakistan Transit Trade Agreement (ATTA) 2010 have provided legal frameworks for bilateral trade and transit relations, but the reality has never lived up to the red tape. Even major changes like the end of the Cold War, the collapse of the Soviet Union in 1991 and later the emergence of a new Afghan regime following the September 11 attacks could not influence relations. chaotic trade between the two neighbors.
Many attempts have been made to identify the difficulties and respond to the grievances of both parties, but to no avail. The obstacles identified in various studies relate to issues of trade facilitation, transit and transport, en route security, customs procedures, illegal trade, tariffs, banking and payments services, competitiveness and infrastructure.
Still, it seems too absurd for a country of over 220 million people with a GDP of over $ 300 billion to protect itself against “threats to its economy” from one of the poorest countries (more (54% of the population lives below the poverty line) of the world with a population of only 35 million and a GDP of only 23 billion dollars. Indeed, most Afghans see poverty, unemployment and government corruption as the causes of war and not the Taliban.
It is therefore imperative that strategic policy planners in Pakistan urgently reconsider their current approach to Afghanistan and consider other options to improve the bilateral trade and economic relations of the two countries while generating a significant geo-economic dividend for au benefit of the two neighbors.
One of these options could be the creation of a free trade area (FTA) in the region which until now has remained a free terrorism zone – the KP plus the southern part of Afghanistan. In this regard, we could also get the Americans to dust off their forgotten Reconstruction Opportunity Zones (ROZ) project that they had proposed to set up along the Durand Line in mid-2000. The idea was to establish joint Afghan-Pakistani manufacturing units with US funding to manufacture items for the US market.
Copyright Business Recorder, 2021