Tuesday, June 15, 2010

On Monday, the New York Times reported on a Defense Department memo claiming that under Afghanistan's hard terrain lays nearly a $1 trillion in mineral deposits. These minerals include large veins of iron, copper, cobalt, gold and lithium a vital component of computer batteries. But the reality of this story is that it is more of a propaganda campaign or "information operation" than it is real news. Yes it is true that these minerals do exist in Afghanistan but it is by no means news. The U.S. Geological survey made the discovery back in 2007. However, the U.S. government is pushing the story now because the coalition here has been rocked by some particularly bad press here the past week (Ironically from the New York Times. This causes me to wonder if the Times is attempting to buy its way back into the good graces of the Embassy in Kabul.) The most damaging of this press was comments attributed to President Karzai about the West not being able to win in Afghanistan. This story is similar to ones that preceded the Iraq War when the Bush administration claimed that Iraq's oil wealth would pay for all the costs of reconstruction.

The reason why news of these vasts deposits is no need to celebrate is simple. The minerals are worthless unless you can actually get private companies to come in here and mine them. And with the security situation what it is that is not likely to happen any time soon. Afghanistan for instance would be a great country to run oil pipeline through, stretching from Kazakhstan and Uzbekistan through Afghanistan to Pakistan and then on to China as well. However, despite a great deal of effort on the part of a U.S. company called Unocal they were never able to negotiate enough treaties with all the tribes and Taliban to agree not to blow up the lines or siphon oil from them. The one country with a mining contract in Afghanistan right now is China which now owns the largest copper mine here. They don't care about their people dying so it works out well for them.

The Taliban can't really mine anything so we don't really have to worry about them getting this revenue as they simply arent organized enough not to mention the lliterate enough. Furthermore, from this map you can tell that the majority of the deposits are located in Northern, Western and Central Afghanistan, all areas where the Taliban is not strong. The Taliban makes the majority of their money through taxes, which they are pretty good at collecting. They front farmers the money to buy opium poppy seed. They then take a percentage of the farmers cut when he sells his product to the local drug lord. They then also tax the drug lord for the right to move his product through areas they control. It is very mafia like here both in the government and the black market.

The other really bad thing about all these mineral deposits being discovered is that its really just one more thing for the government here to exploit for bribes. The Chinese got their copper mine for a song simply by paying a few million to the right ministers. The mine itself is worth billions.


Beau said...

Jeremy, great analysis. I'd add one thing: transportation costs. Sure, the security situtation is a significant factor in the cost of moving any mined minerals, but figuring out a way to get them to the nearest port is maybe more difficult. Afghanistan's highways are nowhere close to a Western conception of the word "highway" (see this picture of Khojak pass linking Afghanistan and Pakistan - http://www.daylife.com/photo/07rL1pSfRQ8Ms) and a railroad network is non-existent.

Even given an improved security situation and non-corrupt government officials, you'd still have to drive the Lithium deposits hundreds, if not thousands, of miles through one of the world's worst transportation networks, which would likely make them too expensive to be economically efficient.

Also, Thomas Ricks provides some excellent background on the initial discovery of these minerals way back in the 1960's - http://ricks.foreignpolicy.com/posts/2010/06/14/minerals_in_afghanistan_mais_oui

So, with a few additions on the margins, I agree with Jeremy - this is more of an NYT "information operation" than real news.

Homelesseus said...

Great analysis, especially the quip about Afgani stupidity. That the Chinese don't mind their people dying and seem to be quite good at the old imperial game of ripping off the locals was an astute observation. The way you characterized the pipeline: a great country for a pipeline (as long as it's not coming from Iran). Why do you guys bother (except for future employment opportunity)? There's nothing in here you could call analysis. It's obvious that you have no real info on whether it was NYTimes or Pentagon that orchestrated the scoop on Afgani minerals. Let's ask that question. What does the Pentagon, looking at a 2011 withdrawal (transitioning a la Gates), get from such information--old or new is irrelevant (though not for motive) seeing how no one seems to have commented on the issue when the 2007 info came online--being part of the public debate? I think that's where you're likely to mine anything relevant. The military can hardly take another dfeat, so they are shaking in their boots after Marjah and now Kandahar's looking a bit beyond their possibilites. Anyway, to Beau: what is this, a mutual admiration society?

Homelesseus said...

Have you guys had the opportunity of reading any of the fine literature--diaries, memoirs--of the Brits stationed in India in the mid-1800's? I'm sure you'd love them. They have as palpable a disregard for the natives as I always encounter here, as if India were an extension of British territory unjustly inhabited by non Brits. Of course, they were brilliant!

homelesseus said...

and then there was silence:


here's something worth reading!

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