The following is cross-posted at The Jacksonian Party.
In the midst of the economic recession in the West and the deepening debt and banking problems leading to the insolvency of Nations, there is one, small, bright spot now coming to light. It is not in the West nor Middle East but central Asia. The place is the war torn Nation of Afghanistan.
The mineral riches, if reports are accurate, are phenomenal.
Although this is the NYT (13 JUN 2010, James Risen) reporting this, so take it with a grain of salt, but the DoD has confirmed the survey results and analysis:
The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.
An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and BlackBerrys.
Yes, all those Lithium Ion batteries for devices need good, old fashioned lithium. Apparently Afghanistan has that in abundance.
The importance of iron and copper, which is in so much of our equipment, buildings, electronics, vehicles... indeed the industrial revolution was built on iron then steel, and the electronics industry built on copper... that vast resources of minerals bearing these two in abundance could spur a major change in pricing downwards for much of daily life over a decade or two. What happens if the bottom falls out from the lithium, iron and copper markets? We just might find out.
How big is this discovery? It is truly phenomenal:
While it could take many years to develop a mining industry, the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.
“There is stunning potential here,” Gen. David H. Petraeus, commander of the United States Central Command, said in an interview on Saturday. “There are a lot of ifs, of course, but I think potentially it is hugely significant.”
The value of the newly discovered mineral deposits dwarfs the size of Afghanistan’s existing war-bedraggled economy, which is based largely on opium production and narcotics trafficking as well as aid from the United States and other industrialized countries. Afghanistan’s gross domestic product is only about $12 billion.
“This will become the backbone of the Afghan economy,” said Jalil Jumriany, an adviser to the Afghan minister of mines.
Will every investment work out? No, of course not.
Will the net influx of mining capital transform Afghanistan in profound ways? Yes.
Mind you that $12 billion figure for GDP may not count the drug trade for another billion or two. Even with that, no amount of opium traffic can equal what happens when modern mining concerns roll into action, and the money that will flow through Afghanistan will be tremendous. Even with no local firms, the country will make money on a transactional basis and most likely have some minor amount put into the Nation's coffers. That is a double edged sword, as the government may think of that as government money while it is, in actuality, the money of the people who have the sovereignty over their land via government.
Afghanistan had, at one time before the Soviet invasion, a relatively ethical government. Reading Michael Yon and others, there was even some evidence of that going through to today: that government functionaries at the low levels understood that they must do their job. Thus the question of how far and how deep the corruption of the current government is worrying:
Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.
The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.
The question on the replacement is: was this done only because of US power or done due to US complaint. The first is no safe harbor for the Afghan people, the latter is a demonstration that some accountability exists within the system to deal with corruption.
China, of course, is involved seeking mineral deposits to fuel their economy, which has such structural bad debt that anything that can be grasped as helping to mitigate that is seen as essential. The mineral deposits, however, will take a decade or two to see full utilization and that is of no help to China in the present.
And Afghanistan is not ready for the 'big league's of being a top international player in anything, especially vital mineral ore:
The mineral deposits are scattered throughout the country, including in the southern and eastern regions along the border with Pakistan that have had some of the most intense combat in the American-led war against the Taliban insurgency.
The Pentagon task force has already started trying to help the Afghans set up a system to deal with mineral development. International accounting firms that have expertise in mining contracts have been hired to consult with the Afghan Ministry of Mines, and technical data is being prepared to turn over to multinational mining companies and other potential foreign investors. The Pentagon is helping Afghan officials arrange to start seeking bids on mineral rights by next fall, officials said.
“The Ministry of Mines is not ready to handle this,” Mr. Brinkley said. “We are trying to help them get ready.”
This started with a USGS and Afghan Geological Survey group that pulled out the old British and Soviet era maps for the country and then stage an initial fly-over of promising sites. That led to indications of much larger than expected deposits and a wider and more comprehensive survey in those areas in 2007. The results sat in files until recently as US officials were looking for some way, any way, of getting Afghanistan on its feet economically. When they got a better look at the results and compiled them, the extent of what was there became apparent, and the need for skilled hands to help in this was paramount:
The handful of American geologists who pored over the new data said the results were astonishing.
But the results gathered dust for two more years, ignored by officials in both the American and Afghan governments. In 2009, a Pentagon task force that had created business development programs in Iraq was transferred to Afghanistan, and came upon the geological data. Until then, no one besides the geologists had bothered to look at the information — and no one had sought to translate the technical data to measure the potential economic value of the mineral deposits.
Soon, the Pentagon business development task force brought in teams of American mining experts to validate the survey’s findings, and then briefed Defense Secretary Robert M. Gates and Mr. Karzai.
Yes, experience in Iraq counts and now offers an asymmetrical way to approach the Afghanistan conflict.
Asymmetrical? In what way?
Whenever you find mineral deposits in strata there is a very good likelihood that much of the surrounding strata has similar deposits as they may have been put down by similar environments. Over time with folding, thrusting and erosion the exact linear extent of such deposits may be warped, but the wider they were to start with means that it is unlikely that the resources sit just within the original finding areas. That means that in the NWFP of Pakistan and other 'tribal' border regions, there may be mineral wealth beyond what has been found there to-date... which is nothing. But then no one was looking that hard, were they, what with all the tribal and Islamic unpleasantness going on there. So into the middle of an active, ethnic war zone comes some of the largest mineral discoveries seen in modern times.
Pakistan now has a great and deep incentive to push hard for surveys in its territory from the air based on the nearby deposits in Afghanistan and see what it can find. I don't expect such finds to actually make things 'better' for Afghanistan or Pakistan, but then we are in the age where the lone prospector with a shotgun to defend himself has been replaced by multi-ton trucks the size of houses.
And those will come, war or no war.
If there was any wisdom going into this, an amenable peace could be arranged for the final turning in of private war groups and a multi-ethnic, multi-Nation agreement to end hostilities and allow the local people to go to work which would enrich both Nations and all peoples of those Nations. That would take a master statesman to do.
We are out of those, at present. So is the rest of the world.
If you thought the fight for natural resources by the old Great Empires prior to WWI was a nasty business, then you ain't seen nothing yet. That was orderly exploitation that built up local infrastructure which, though meager, has been lost after decolonialization in many Nations. There are no high-minded, grand visionaries to see that giving people a job and a leg up in the world is a path to freedom and liberty for those involved.
America has a chance to help and do it right.
I am deeply afraid that we are about to screw things up royally for the next few decades and a resource that could lead to ending current hostilities and enriching the poor through hard work will, instead, plunge that region into chaos. The last time that happened we got 9/11. That was done on a shoestring. Now imagine tens of millions of dollars going into Islamic terrorism not per year, but per month over the next decade. Say an extended al Qaeda and Hezb-i-Islami doing about ten times their current income from narcotics, gem and gold smuggling and antiquities looting... every month perhaps every week. As things stand they will get their terrorist 'share' of the pie and impoverish the people around them unless something is done very, very soon to end them.
You tell me what that looks like to you.
Because I do not like the look of it at all.