Afghan Mineral Deposits Could Unearth Corruption

After a survey showed Afghanistan could be sitting on $1 trillion worth of minerals, competing visions have emerged for the nation's future. Evan Feigenbaum, director of Eurasia Group's Asia practice group and an adjunct senior fellow at the Council on Foreign Relations, tells Renee Montagne that avoiding corruption will be a big challenge.

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RENEE MONTAGNE, host:

News that Afghanistan is sitting on something like a trillion dollars worth of minerals adds to the competing visions of that country's future. Mining for iron, copper and lithium could bring jobs and industry, or it could simply bring more fighting and corruption.

China is one country that's already involved. It's invested in a giant copper mine there.

To find out more, we called Evan Feigenbaum. He's with the Council on Foreign Relations and also the Eurasia Group, which tracks political risks.

Mr. EVAN FEIGENBAUM (Council on Foreign Relations, Eurasia Group): Corruption's a big challenge. I mean, if you look at the mining project that the Chinese are doing, the Chinese got that project in part because they offered to build a lot of infrastructure, including a coal mine, a coal-fired power plant, a railroad. But it was also attractive, I think, that the Chinese offered a very, very large sum of money for that investment. They offered $2.9 billion for the exploration license, which some people in the industry thought was basically higher than market value.

There were a lot of allegations of corruption associated with the offering of that license. And so that could be very debilitating over time, as Afghanistan looks to international partners and as international companies from around the world look at the possibility of operating in that kind of an environment. It's a real deterrent.

MONTAGNE: Less so, though, as you suggested, for China.

Mr. FEIGENBAUM: You know, China's been pretty active in Afghanistan, but their interests in Afghanistan tend to be refracted through other interests that have nothing to do with Afghanistan, per se. They got involved there in a big way in part because they were looking to stabilize their western border.

The Chinese fear that one of the roots through which extremism could move up from the tribal areas on the border of Afghanistan and Pakistan would be up through Afghanistan, up through central Asia, and then in across the border. Their second interest, really, is a strategic partnership with Pakistan that goes back decades, and to bottle up India in South Asia in some ways, to foster a kind of balance where it's possible between India and Pakistan, because China and India are, in a sense, strategic rivals.

And then the third interest that they have is their own economic development, and they've gone all over the world, not just to Afghanistan, in search of resources that would help to fuel their economic growth. But I think, you know, the Afghans over the long term are looking for a diverse set of partners in the country. That's one reason, for instance, why they've been on a road show talking about their mineral potential. There was an Afghan minister that was in New Delhi trying to attract Indian companies to bid on some of this mineral potential over time.

MONTAGNE: Well, here's a last thought that might well strike any American hearing this or any member of the EU involved in the war and the reconstruction in Afghanistan, and that would be years of fighting and pouring billions of dollars into aid into Afghanistan, and now China and possibly India are looking to reap the rewards of Afghanistan's mineral resources.

Mr. FEIGENBAUM: I think for Afghanistan to stand on its own two feet economically, it's going to require a private economy that includes foreign investments - develop the potential that it has. It wouldn't shock me that China, India and many other countries - Japan is another one - would be interested in trying to be part of that process of development.

You know, if the United States has been operating under the illusion that as Afghanistan developed, that it wouldn't invite multinational companies from a wide variety of sources into the country, that was a mistake. I mean, I think the challenge in Afghanistan that American firms have, for instance, in competing with firms from countries like China is that American companies, generally speaking, are not willing to bear the same kind of risks.

And finally, that many of the competitors to American companies don't come from countries that have a Foreign Corrupt Practices Act. Unfortunately, other countries and companies from other countries have been able to spread money around.

MONTAGNE: Evan Feigenbaum is the head of the Asia Practice at the Eurasia Group, which tracks political risk.

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