High-Value Resource Contracts, Conflict, and Peace in Afghanistan
Competition for access to, and control of, abundant natural resources often triggers and sustains violent conflict. In Afghanistan, the award of the lucrative Aynak copper mines to the Metallurgical Corporation of China (MCC) in 2007 has raised a number of eyebrows. How could Afghanistan ensure that mining does not foster or fuel conflict? The panel explored these questions.
Event Summary
Reports that Afghanistan is sitting on a “gold mine” of mineral deposits, more than $1 trillion of it according to some estimates, could foster competition for access and control, fuel new conflicts and make peace harder to forge, according to a panel of experts at a July 14 United States Institute of Peace symposium titled "High-Value Resource Contracts, Conflict and Peace in Afghanistan."
But cashing in on this new-found mineral wealth, which includes huge deposits of iron, copper, cobalt, gold and critical industrial metals such as lithium used to power computers and smartphones, won’t be easy, according to USIP’s Raymond Gilpin, associate vice president for sustainable economies at the Centers of Innovation, who moderated the discussion.
Gilpin cited the current military conflict, fears of instability in Afghanistan’s government, corruption and other forces that could conspire to make this a difficult enterprise. It would take years to develop a large-scale mining industry, he said, stressing that unless there is peace, it would be even hard to attract investors, guarantee their safety and capitalize on this abundance of riches.
Geologist James Yeager, a former adviser to the Afghanistan Ministry of Mines, and author of The Aynak Copper Tender: Implications for Afghanistan and the West, agreed with Gilpin. He said it is now too risky for most western companies to invest in the mine field because of uncertainties in regulation, environmental rules, no published royalty rates, political instability, an untrained labor force, rampant corruption and an untrained workforce.
"They don't have the infrastructure - road, rail and water – and they don't have basic laws and regulations that will attract investment," he said, adding, “how the west can help is to make an investment framework.”
USIP’s Scott Worden, a senior rule of law adviser, expanded on the issue of corruption, noting that the present Afghan legal system is not well equipped to handle contracts for the resources.
Dr. Graciana del Castillo, a senior research scholar at Columbia University and author of Rebuilding War-Torn States, said though she does not condone corruption, she is realistic that it sometimes does exist. “We should try to fight corruption but you can’t ask a country like Afghanistan not to have corruption. It’s out of the question. Billions disappeared from Iran. The U.S. government couldn’t stop them and can’t stop Afghanistan.”
Worden, who has lived in Afghanistan, said there will be a need to make the process of awarding mining contracts more competitive, but noted that there is not a strong middle class in Afghanistan. If and when mining for the resources comes to fruition with a possible $200 million in annual revenues, certain safeguards must be in place. They include the need to eliminate opaque contracts, implement transparent oversight, enforce company registration laws, train the media to help scrutinize the contractors, and use banking systems to track finances instead of dealing with suitcases full with cash.
Dr. Castillo said that the Chinese may be attractive business partners to Afghanistan because of China’s use of technology and its successful standing in the world economy.
For mining to be successful, local labor must be used in the mines, she urged. She added that 1.3 million students graduated from schools in Afghanistan last year and they do not have jobs. Because of a lack of opportunity, many graduates often join the drug trade, the insurgency, or leave the country.
“I would tell President Obama to make it more attractive for U.S. companies to compete (to do business) in Afghanistan,” she said.
Speakers
- Scott Worden
Senior Rule of Law Adviser, U.S. Institute of Peace - Dr. Graciana del Castillo
Senior Research Scholar, Columbia University and author of "Rebuilding War-Torn States" - James Yeager
Former Adviser to Afghanistan Ministry of Mines and author of "The Aynak Copper Tender: Implications for Afghanistan and the West" - Dr. Raymond Gilpin, Moderator
Associate Vice President, Sustainable Economies Centers of Innovation, U.S. Institute of Peace
