• Opportunities and risks: exploiting Afghanistan's mineral resources

Opportunities and risks: exploiting Afghanistan's mineral resources

24 December 2012

A new paper from the US Institute of Peace analyses the implications of Afghanistan’s huge untapped mineral reserves for economic growth and stability.

The paper "Political Economy and Conflict Dimensions of Afghanistan's Mineral Resources", says they are regarded as  "a potential leading economic growth driver and a source of government revenues".

However, it adds, they could also have an economic downside - the "resource curse" often associated with underground minerals in countries lacking strong institutions and effective rule of law.  This can sometimes lead to a series of problems, including environmental damage or conflict.

Meanwhile the success of the broader political transition in Afghanistan over the coming years, along with regional geopolitical factors, will have a major influence on their prospects.

The paper examines the steps taken by the Afghan government so far.  In the case of some "mega-resources" such as copper at Aynak or the Hajigak iron deposits, it says, Kabul has already conducted "credible tendering to ensure that contracts with foreign companies are on favourable terms for Afghanistan".

However, it warns that it will be a long time before the potential of these major projects will be realised.

Other large-ish to medium sized projects, it says, can be exploited relatively quickly with much less investment.  But it adds that these "may involve joint ventures with politically-connected Afghan firms and deals with local strongmen, or sometimes criminal networks with linkages to corrupt officials and insurgents".

The paper discusses different categories of resources and puts forward some basic recommendations to help guide policy, saying that "specific approaches need to be differentiated across different types and sizes of resources and different parts of the country".

The author, William Byrd, is a development economist and a former World Bank country manager in Afghanistan.

To read the full report, click here:

Listen to William Byrd's interview with BAAG about Afghanistan's economic prospects in the "featured" section of our website.