Monday, June 14, 2010

Geologists Estimate $1 Trillion In Mineral Riches Await In Afghanistan

Afghanistan's economy has never exactly been stellar. Even in good years, it struggled to make ends meet and relied heavily on the opium trade and emeralds. That's despite knowing that there were significant deposits of copper, emeralds, and other precious natural resources.

Now, a team of US geologists in conjunction with the US military have figured that Afghanistan is sitting on top of $1 trillion in mineral riches that could be a major source of income for decades to come.
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.

The vast scale of Afghanistan’s mineral wealth was discovered by a small team of Pentagon officials and American geologists. The Afghan government and President Hamid Karzai were recently briefed, American officials said.

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.

American and Afghan officials agreed to discuss the mineral discoveries at a difficult moment in the war in Afghanistan. The American-led offensive in Marja in southern Afghanistan has achieved only limited gains. Meanwhile, charges of corruption and favoritism continue to plague the Karzai government, and Mr. Karzai seems increasingly embittered toward the White House.
corruption is a huge problem in Afghanistan and mining for these materials could result in mass corruption and reduce the flow of wealth to the rest of the country. It also sets the stage for warlords to continue functioning and seeking to claim territories known to be rich in certain resources so as to exploit their presence.

If Afghanistan, after bringing the Taliban to an end, can somehow figure out how to protect property rights and reduce the amount of graft and corruption it would be a major boost to the nation.

Still, even those nations who rely heavily on natural resources like oil or other mineral wealth cannot solely base their economies on such things because all good things come to an end and it also fosters a complacency.

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