The news that there is $1 trillion of Afghanistan mineral wealth hiding in the country's scarred and deserted landscape has global investors calculating how likely it would be for this incredibly poor country to transform itself into a major global exporter.
It has also spawned debates about which nations should be given a piece of this potential fortune.
At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's $12 billion economy. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.
All of that could change.
"The natural resources of Afghanistan will play a magnificent role in Afghanistan's economic growth," said Jawad Omar, from the country's ministry of mines.
But only if many challenges can be overcome. For one, Taliban leaders control some of the areas, and others are surrounded by rugged terrain; getting the minerals out of the country will be tough because of a lack of ocean access and other needed infrastructure.
Furthermore, the potential that the discovery will spawn corruption was seen during 2007 copper negotiations with China. The Afghan minister of mines was accused of accepting a $30 million bribe in return for awarding China the rights to the Aynak copper mine.
Given the challenges and concerns – not to mention the Taliban's presence – many observers worry that Afghanistan is headed down the same path as Nigeria or the Democratic Republic of Congo, countries that are afflicted by bribery and infighting and that have done virtually nothing to improve the lives of the average citizen.
"I highly doubt [the government] will be able to either properly manage these resources or use the riches to build a more peaceful and prosperous Afghanistan for all Afghans," said political analyst Janan Mosazai.
That brings us to next week's Money Morning Question of the Week: Is this mineral wealth good or bad news for Afghanistan? Does this remarkable discovery mark the beginning of a thriving, mineral-rich natural-resources powerhouse, or will greed and corruption short-circuit the transformation before it ever gets started? What role do you think such countries as the United States and China – each with an established presence in Afghanistan – should play? Given their involvement, should either or both of those countries be able to profit from this discovery?
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News and Related Story Links:
- Money Morning:
Will Afghanistan's Mineral Wealth Bring the Nation's Rebirth or a Commodities Curse?
- NY Times:
U.S. Identifies Vast Riches of Minerals in Afghanistan
Why all the talk about minerals now?
US discovers huge Afghan mineral wealth: report
- The Independent:
The curse of oil still stalks Nigeria delta
- The Economist:
Oh great, another Congo
- Money Morning News Archive:
Question of the Week Feature