Next for Afghanistan, the Curse of Plenty?
By DONALD G. McNEIL Jr.
Published: June 18, 2010
http://www.nytimes.com/2010/06/20/weekinreview/20mcneil.html
Let’s suppose there is $1 trillion worth of minerals under Afghanistan, as senior American officials and a confidential Pentagon memo said last week.
Is that a good thing — for either Afghanistan or the United States?
Some experts in mining and in Third World resource politics argue that it is not.
Because it takes up to 20 years for a mine to start earning profits and Afghanistan has been a battleground for 31 years, “no mining company in its right mind would go into Afghanistan now,” said Murray W. Hitzman, a professor of economic geology at the Colorado School of Mines.
The country’s underground treasure “will be good for the warlords and good for China, but not good for Afghans or the United States,” predicted Michael T. Klare, a professor of peace and world security studies at Hampshire College in Massachusetts and the author of “Resource Wars” and “Blood and Oil.”
History tends to second such skepticism. The great empires of the world were built thanks to gold mines, not atop them. It’s the little mercantile nations with their cohesive political systems and fierce navies that have looted the big feudal ones paved with rubies.
Arid Spain and Portugal siphoned off South America’s gold; tiny Holland dominated vast Indonesia. Britain, barren except for coal, built an imperial swap shop of grain, lumber, cotton, tea, tobacco, opium, gems, silver and slaves. Japan, less than a century out of its bamboo-armor era, conquered much of China for its iron and coal. The post-colonial era hasn’t been easier on the resource-rich have-nots.
“Countries with a history of conflict have perverse effects from mineral wealth — more war, more corruption, less democracy and more inequality,” said Terry Lynn Karl, a political science professor at Stanford and the author of “The Paradox of Plenty,” which shows how the populations of poor countries like Nigeria often get poorer after oil is discovered and a tiny elite benefits.
It has long been known, geologists said, that Afghanistan has huge deposits of copper, iron, gold, cobalt and many other minerals, including lithium, an element vital to modern batteries. An internal Pentagon memo suggested that Afghanistan could become “the Saudi Arabia of lithium.”
But some experts suggested that the lithium prediction was optimistic and that Saudi Arabia was not the best example of what sudden wealth does in a poor country. That kingdom and its neighboring emirates have tiny populations ruled over by powerful, cohesive families. And the Arabian peninsula is flat, open and easy to police in a crisis, as the war to drive Saddam Hussein out of Kuwait proved.
Afghanistan, said Dr. Klare, is more like eastern Congo: home to diamonds and coltan — another element vital to modern electronics. Both are full of warring tribes, illiterate populations, corrupt governments and brutal warlords. And both are rugged and remote, far from coastlines and with few roads or railroads, making it hard to get minerals out and policing forces in.
Rich as eastern Congo is, the lot of its population for the last 15 years has been disease, starvation and massacres at the hands of local militias and invaders from Rwanda, Angola and Zimbabwe.
Mozambique and Angola also illustrate the “resource curse,” said William S. K. Reno, a political science professor at Northwestern University and the author of “Warlord Politics and African States.”
Both were Portuguese colonies that fell into civil war after being freed in 1975. There was less to fight over in Mozambique, which had only cashews and shrimp to export, so the war was shorter and less intense. But in Angola, with the rebels holding the diamond mines and the government owning the oil, profits were squandered on tanks and jet fighters. The war lasted a decade longer.
Compared with those countries, Afghanistan is at disadvantage, mining experts said. Even for $1 trillion, its riches may not be worth digging up.
Compared with oil drilling, minerals mining is extraordinarily expensive and time-consuming. As everyone from Jed Clampett to BP has discovered, a bubblin’ crude can emerge under its own pressure as soon as the earth’s surface is pricked.
Diamond mining is also comparatively cheap — diamonds are formed in pipes of softer kimberlite pushed up by volcanoes and usually mined in open pits or dug out of the beds of rivers that washed the volcanoes away. After that, they are simply sorted out of the gravel.
But gold, silver, copper and other minerals are usually locked in ore that must be tunneled down to, blasted out by the ton, carried to the surface, and ground into powder for processing. Digging the shafts and building elevators, processing plants, railroads and tarmac roads “can cost hundreds of millions to billions for a single mining operation,” said Roderick Eggert, director of the economics division at the Colorado School of Mines. “Even a small gold mine is $100 million.”
And while an oil well can go from discovery to production in two or three years, “it would take 5 to 15 years to go from where most of Afghanistan is now to an operating mine,” he said.
After that, added his colleague Dr. Hitzman, “even with a good mine, it takes 5 to 10 years to recoup your investment. What’s Afghanistan going to be like in five years?”
Also, someone must provide security, and 20 years of security by the United States military would cost hundreds of billions of dollars.
England, Holland, Spain, Portugal and Japan all discovered that the costs of policing empires outweighed the financial gains and that it was more practical to let private companies shoulder the risks. Mineral prices fluctuate wildly, and $1 trillion today may soon be much less. Gold broke the $1,000-an-ounce barrier for the first time last year. But it had hit $873 in 1980 — the equivalent of $2,300 today — and then languished under $500 for years.
The biggest force driving most mineral prices up today, experts said, is China. (Gold is the exception, driven up by fears about economic instability.)
China is not invading the way old empires did. Its state companies bid for concessions all over the Third World. “But,” Professor Klare added, “they don’t care about bribery, transparency or the rule of law and they don’t mind dealing with warlords, while the Western countries are more constrained.” Also, as state-owned companies, they can take risks that private ones dare not.
Which does not immunize them, he added. China is facing criticism in Zambia after workers died in its copper mines there or were shot dead protesting working conditions.
And, experts said, while Afghanistan does have lithium deposits, so do many other countries, including the United States. Whether it pays to extract it depends on the price of lithium. Recently, South Korea said it would build a plant to extract it from seawater that, if world prices rise, can supply far more than Korea needs.
Which could leave Afghanistan as the Saudi Arabia of sand.
