Global Economy: A Mineral Fund for Afghanistan

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Foreign Policy | December 20, 2010

By Christopher Tucker and Parag Khanna

Afghanistan has long been thought of as more a natural wasteland than a natural resource treasure chest. But after a preliminary study by the US Geological Survey in 2007, Afghan Mines Minister Wahidullah Shahrani recently claimed that Afghanistan has $3 trillion worth of untapped mineral deposits. These untapped resources will have more transformational impacts on Afghan society than a century of military occupation and aid disbursements. The dynamics of industrial development and international trade, if properly managed within a sound administrative framework, will slowly but surely bring Afghanistan into the global economy through the same transnational commercial flows that were once known as the Silk Road. However, beyond leaving market forces to themselves, the establishment of an Afghan Mineral Fund that would collect and direct extractive revenues could serve as a powerful catalyzing force with the potential to reduce the strength and reach of the insurgency and put Afghanistan on its own feet. Modeled on similar funds established in countries like Norway, the Afghan Mineral Fund would be an independent agency run like a public-private investment fund. It is clear that providing Afghans with a very direct stake in this natural largesse offers the highest probability of long term stability, with a population that is literally invested in their nation's institutional fabric.

If International Security Assistance Force commander General Petraeus is serious about President Obama's withdrawal deadline-and wants an honorable exit after a decade of unsuccessful hostilities in the country-he would be wise to leverage this serendipitous array of mineral deposits as an opportunity to help Afghans build a suite of institutions that could sustain development and stability over the long term.

The United States and its NATO allies are now faced with fundamental questions: What is the proper institutional framework for governing the exploitation of these natural resources and the distribution of tax revenue? If an Afghan Mineral Fund is created, what is the national administration infrastructure needed to deal with the very difficult geographic footprint and extraction challenges that Afghan mineral reserves face? How can it contribute to the positive identification of all citizens who will become direct recipients of mineral revenue under such a Fund? And, what are the second order effects such a system would have on Afghan social and political dynamics?

In recent years, oil- and mineral-rich countries such as Kazakhstan and Mongolia have begun to successfully implement resource revenue funds drawing on inspiration from countries such as Norway. They have set aside substantial profits, invested in diversifying their industries, and established national policies for everything from medical care to micro-credit to mortgages. In short, they are winning the battle against the "resource curse."

General Petraeus' Afghanistan counter-insurgency strategy is premised upon protecting the population and ensuring that the Coalition bestows upon Afghanistan a sufficiently viable economy and an administrative infrastructure capable of effective law enforcement and essential government functions. These functions must empower law abiding citizens and reduce the influence of nefarious actors. The failure to establish such a strong administrative infrastructure will be amplified as mineral rights are parceled out to industrial interests. Without strong land administration and cadastral recordkeeping, which provides a public record and map of land titles and ownership, the regulation and taxation of their exploitation will be unmanageable, and likely undermine stability in Afghanistan.

In the haste to respond to the attacks of 9/11, the United States had no clear exit strategy for its military operations in Afghanistan. Now, due to this twist of fate, Mother Earth and the geologists who study her have dealt us the makings of such a way out. It is time to adapt the resource fund mechanism to the Afghan mineral reserves, along with the land parcel, infrastructure, and identity administration that it would require. Anything short of establishing such a strong and transparent architecture will have enormous, deleterious downstream effects as mineral rights are parceled out to American, Chinese, Indian, Iranian and other international industrial interests, ensuring that it is a tinderbox of insecurity far into the future-and far longer than America wishes to remain.

Dr. Christopher K. Tucker serves on private sector, government and non-profit Boards including the Board of Directors of the United States Geospatial Intelligence Foundation, and the Intelligence Task Force of the Defense Science Board. Parag Khanna is a senior research fellow at the New America Foundation and author of the forthcoming How to Run the World: Charting a Course to the Next Renaissance.

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