Afghanistan: On resource wealth and resource curses

Under Afghanistan’s mountains may be one of the largest untapped hoards of mineral deposits in the world, the New York Times reports, potentially transforming the country’s place in the world economy from poppy field to gold mine. The cited estimate of the size of deposits goes up to $1 trillion, which pales into comparison with the country’s existing GDP at $12 billion; the deposits revealed by geological surveys include not just gold, copper and cobalt, but rare earth minerals like lithium.

The deep involvement of the West in Afghanistan probably helps the reporting to tease out the more troubling consequence of what the transformation of the Afghan economy could mean: what happens when a poor, fragmented and ill-governed country with a history of ethnic divison is confronted by the prospect of wealth that at one stroke pushes everything else off the table. The prospects for democratic governance and economic stability, as a litany of examples around the world show, go haywire when an economy comes to depend on natural resource exports, and government no longer needs taxation to raise revenue and can pay off/buy in enemies and friends.

Throw in counter-extremist efforts against the Taliban (there’s some raised eyebrows at these revelations at their potential use to justify a continuing American presence in the country), the interests of Chinese patronage into the mix, and if these deposits prove to be anywhere near these initial estimates, things could get very messy indeed. Apparent blessings, all too easily, turn into curses.

For so long, Afghanistan’s poppies have been its most famous export. But while the narcotics that are its end product send individuals on a high, its newfound bounty could put the whole country on a far more distorting one.

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2 thoughts on “Afghanistan: On resource wealth and resource curses

  1. Nick L says:

    As lots of others have pointed out, the timing of this story is suspect, especially as a lot of the info in it was already widely available. Most likely, it is an attempt to provide the public in NATO countries with another potential rationale for being in Afghanistan.

    On the resource curse, one silver lining is that at least it isn’t diamonds or anything similarly low-weight, high value. At least mining copper and so on requires capital investment and a long-term commitment. But the problems of a primary commodity-based, resource extractive economy are legion as you say.

  2. Nick Chan says:

    Doesn’t say too much about the state of journalism that it wasn’t previously picked up on!

    Good point about how the characteristics of the resource in question can affect the propensity for predatory investment. On a related note, an interesting thing about the political implications of renewable energy such as solar power (see previous post on Desertec) is that it can’t be easily stored and stockpiled in the same way that oil, or other mined resources can.

    The suggestion made is that sunlight-rich countries that seek to export their solar energy (via a grid) don’t have the kind of supply power that oil/gas exporters do, where they can simply ride out the shocks of supply restrictions by sitting on their own barrels of oil, which remain intact for future sale and revenue. If you can’t store solar energy in bulk as a producer, then any supply restrictions that producers impose (i.e. Russia and natural gas) will affect themselves to a much greater degree than has been previously the case with oil/gas.

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