August 01, 2011

This Weekend’s News: Ironing Out Corruption in Afghanistan’s Mining Sector

Resource challenges continue to play a role in shaping the
security environment in Afghanistan. Yesterday, Reuters reported that Afghan warlords could exacerbate violence
near the central provinces of Bamiyan, Parwan and Wardak where a 2 billion ton
iron deposit worth 350 billion dollars remains vulnerable to exploitation. The
iron deposit, known as the Hajigak project, is
said to be “Asia’s largest unmined iron deposit,”
and “may
provide hope for the prosperity of the country
,” according to Reuters.

Yet the government’s struggle to
combat corruption threatens to undermine efforts to sustainably manage the iron
deposit.  “Integrity Watch Afghanistan
[IWA], a Kabul-based group that aims to spotlight corruption, said while [Mines
Minister Wahidullah] Shahrani and Finance Minister Omar Zakhilwal were
committed to a transparent mining sector, the
government lacked the capacity to stamp out ‘reported endemic corruption’
Reuters reported. “The
Afghan government will not be able to ensure that Hajigak is well managed and,
ultimately, beneficial for the future of the country
,” IWA said in a report
cited by Reuters.

Meanwhile, Afghan warlords could exploit the government’s inability to
manage the Hajigak project, potentially undermining stability gains. “Integrity
Watch Afghanistan said there was serious concern that warlords
-- military
commanders who built up private armies and fortunes during years of civil war
who still command the loyalties of their supporters -- could spark further
violence in a bid to profit from the country's minerals,” according to Reuters. “Warlords
will certainly be tempted to become active in Hajigak and in the sector, and this
will be a sure trigger for violent conflicts over resources
,” the IAW report
said. “People familiar with the status of contracts in the natural resources
sector have been airing the fear that warlords may seek to invest in the sector
as a means to legalize their activities and enjoy their ill-gotten wealth,” the
report added.

Afghanistan’s mining sector has experienced setbacks in recent years, with
accusations of corruption reaching ministerial-level officials. As the country
prepares to start production on the Aynak copper mine in 2014, its largest
resources contract to date, officials in Kabul will have to strengthen their oversight
of the nation’s mining sector to provide the foundation for transparent
economic development that the country needs in order to stand up after 10-years
of war and decades of internal conflict. Indeed, how well the Afghan government
is able to manage it resources in the coming years could be a telling indicator of the nation’s long-term stability.    

This Week's Events

Today at 10:00 AM, Brookings will host an event on Famine
in Somalia: An Expected Turn for the Worse
which will take a look at the
effects of the current drought and the challenges with international

On Wednesday at 8:30 AM, the Bipartisan Policy Center will
have a discussion on Evolving
Nuclear Technology and Regulations: Lessons from Fukushima.
Then at noon on
Wednesday, there will be a lunch briefing at the Rayburn House Office Building on
Biodiversity Conservation in Afghanistan Advances U.S. Security Interests hosted
by the Wildlife Conservation Society.