Risky Business: Linking Afghanistan’s Extractive Industry to Peacebuilding Efforts
Publisher: Canadian Defence and Foreign Affairs Institute (CDFAI)
Author(s): Adam Simpson
Date: 2014
Topics: Extractive Resources, Governance
Countries: Afghanistan
A British-Afghan team recently revived a 1970’s Soviet geological survey on Afghanistan that details an untapped “trillion-dollar” mineral play including copper and iron ore worth hundreds of billions of dollars, in addition to gold, silver, and other exotic materials. These reserves could be the key in a global jigsaw puzzle of critical resources essential to a sustainable development strategy for Afghanistan’s war-torn economy. However, mining valuable metals – particularly in a developing country – requires a degree of stability, stringent governance, and large amounts of supporting infrastructure.
As Afghanistan wrestles with democratic reform, weak legal and regulatory constructs pose significant risks to the sector’s growth. Mining revenues, if they materialize, will carry political and economic risks, particularly if they are poorly managed or suffer from transparency concerns or inadequate governance (Hogg, Nassif, Gomez, Byrd & Beath, 2013).
Development in Afghanistan remains plagued by corruption, patronage, poor governance, a complex narco-economy, fragile rule-of-law and rampant civil insecurity; all of which threaten attempts to effectively exploit natural resources. Failure to systematically overcome these constraints could lead to further destabilization in Afghanistan. The “Paradox of Plenty” theory claims that some countries with a history of conflict experience perverse effects from mineral wealth. China, the United States, India, Pakistan and Russia further complicate Afghanistan’s future as potential investors and players in the resurgence of Afghanistan’s “Great Game”, a popular narrative where the country’s long history of conflict is blamed, in part, on the relentless posturing of vested external powers.