Afghanistan's mineral wealth is closely tied to its future prospects.
If managed well, the theory goes, the mining sector could be the backbone of a sustainable economy, fund national security, and stabilize the government.
But the country's natural resources could just as easily undercut Kabul's efforts to stand on its own by exacerbating corruption, forcing a sell-off of prized assets to foreign investors, and becoming yet another source of violent conflict.
Based on its handling of the mining sector, observers say, it looks like Afghanistan is on course to join the raft of countries afflicted by the "resource curse."
The Mines and Petroleum Ministry estimates that Afghanistan boasts oil, gas, iron ore, copper, and gold deposits worth about $1 trillion. Kabul hopes to generate about $4 billion a year in mining and energy revenue over the next decade. Yet in 2012, the two sectors brought in less than $150 million combined.
Stephen Carter, the Afghanistan campaign leader at Global Witness, a London-based nongovernmental organization that investigates links between natural resources, conflict, and corruption, says the government has lacked control over its resource wealth.
"The sector, as a whole, is operating in a very uncontrolled way. There's no oversight," Carter says. "We fear that there is this sense that 'we must exploit, we must get this going as quickly as possible.' That's understandable, but if that comes at the expense of taking shortcuts in the control of the sector, I think it will be seen as a very poor decision in the future."
Cash Cow?
The Afghan government has made the development of its commercial mining sector a top priority. Kabul is counting on the extraction of natural resources to bring in cash and create jobs as the bulk of foreign combat troops leave at the end of 2014 and international assistance winds down.
But there are already worrying signs that the competition over natural resources could spill over into very real fighting between rival ethnic and political groups.
PHOTO GALLERY: A coal mine in a remote area of Afghanistan's Samangan Province caved in after a gas explosion on September 14, killing at least 28 miners. The accident has reinforced concerns about the dangerous working conditions in state-run mines across the country.
In the northern province of Badakhshan, disputes have been reported between local leaders over control of the gold and precious-stones trade. In Bamiyan Province, locals have clashed with security commanders over ownership rights to mines. In Paktia Province, local militias have fought over the control of coal mines.
Fights have also erupted between the central government and provincial and tribal leaders in resource-rich areas.
Last month, a landmark oil project in the Amu Darya basin was halted less than a year after production began after engineers working for the China National Petroleum Corporation (CNPC), which along with an Afghan entity has the right to extract oil from the site, came under attack from a local militia.
The government alleged that the militia was associated with General Abdul Rashid Dostum, a former Uzbek warlord who serves as chairman of the joint chiefs of staff of the Afghan National Army. Kabul has accused Dostum of putting pressure on the CNPC to make illegal payoffs.
Dostum has, in turn, rejected the allegations, accusing President Hamid Karzai of protecting the interests of the Watan Group, the Afghan company affiliated with his family that shares the drilling rights with the CNPC.
Powerful Effect
Carter says Afghanistan's natural resources are also being used by armed groups to fund conflict, much like the situation during the Soviet occupation and civil war, when various mujahedin factions smuggled precious stones, marble, and other minerals to Pakistan to raise funds.
"There's funding for insurgent groups through the smuggling of timber in eastern Afghanistan," Carter says. "There's also funding for insurgents, but also local militias, from the smuggling of chromite. We also shouldn't underestimate the potential for a large mining operation to create internal rivalries within communities that could spill over to violence."
The three largest operations in the country -- the Mes Aynak copper mine in eastern Logar Province, the Hajigak iron ore mine in Bamiyan Province, and the Amu Darya oil project in the country's north -- are all situated in relatively peaceful areas.
But these areas have witnessed growing instability because militants, seeking to disrupt sources of government revenue and discourage foreign involvement in key industries, have targeted the projects.
Potentially Disruptive
Even within the government itself, the internal battle for control over Afghanistan's mining and energy sectors has slowed efforts to put them under Kabul's authority.
Attempts to pass a new mining law that would regulate the industry and lure investors has been stuck in parliament for more than a year because of disputes between ministries vying to oversee the sector.
Javed Noorani of Integrity Watch Afghanistan, an Afghan nongovernmental organization, says greater transparency could help put an end to the graft that is behind many of the disputes.
"There are so many levels of corruption," Noorani says. "When the government is shortlisting companies for a contract there's room for corruption. Even when you implement a contract there is corruption. There are maybe 100 points at which there's space for corruption."
Noorani suggests that the government publicly reveal details of mining agreements, payments made by foreign mining companies to the government, and how revenues from the mineral wealth are used.
Only by taking such steps toward transparency, he says, can Afghanistan find a way to use its natural resources as a catalyst and not a curse.
If managed well, the theory goes, the mining sector could be the backbone of a sustainable economy, fund national security, and stabilize the government.
But the country's natural resources could just as easily undercut Kabul's efforts to stand on its own by exacerbating corruption, forcing a sell-off of prized assets to foreign investors, and becoming yet another source of violent conflict.
Based on its handling of the mining sector, observers say, it looks like Afghanistan is on course to join the raft of countries afflicted by the "resource curse."
The Mines and Petroleum Ministry estimates that Afghanistan boasts oil, gas, iron ore, copper, and gold deposits worth about $1 trillion. Kabul hopes to generate about $4 billion a year in mining and energy revenue over the next decade. Yet in 2012, the two sectors brought in less than $150 million combined.
Stephen Carter, the Afghanistan campaign leader at Global Witness, a London-based nongovernmental organization that investigates links between natural resources, conflict, and corruption, says the government has lacked control over its resource wealth.
"The sector, as a whole, is operating in a very uncontrolled way. There's no oversight," Carter says. "We fear that there is this sense that 'we must exploit, we must get this going as quickly as possible.' That's understandable, but if that comes at the expense of taking shortcuts in the control of the sector, I think it will be seen as a very poor decision in the future."
Cash Cow?
The Afghan government has made the development of its commercial mining sector a top priority. Kabul is counting on the extraction of natural resources to bring in cash and create jobs as the bulk of foreign combat troops leave at the end of 2014 and international assistance winds down.
But there are already worrying signs that the competition over natural resources could spill over into very real fighting between rival ethnic and political groups.
PHOTO GALLERY: A coal mine in a remote area of Afghanistan's Samangan Province caved in after a gas explosion on September 14, killing at least 28 miners. The accident has reinforced concerns about the dangerous working conditions in state-run mines across the country.
Afghanistan Coal Mine Accident
In the northern province of Badakhshan, disputes have been reported between local leaders over control of the gold and precious-stones trade. In Bamiyan Province, locals have clashed with security commanders over ownership rights to mines. In Paktia Province, local militias have fought over the control of coal mines.
Fights have also erupted between the central government and provincial and tribal leaders in resource-rich areas.
Last month, a landmark oil project in the Amu Darya basin was halted less than a year after production began after engineers working for the China National Petroleum Corporation (CNPC), which along with an Afghan entity has the right to extract oil from the site, came under attack from a local militia.
The government alleged that the militia was associated with General Abdul Rashid Dostum, a former Uzbek warlord who serves as chairman of the joint chiefs of staff of the Afghan National Army. Kabul has accused Dostum of putting pressure on the CNPC to make illegal payoffs.
Dostum has, in turn, rejected the allegations, accusing President Hamid Karzai of protecting the interests of the Watan Group, the Afghan company affiliated with his family that shares the drilling rights with the CNPC.
Powerful Effect
Carter says Afghanistan's natural resources are also being used by armed groups to fund conflict, much like the situation during the Soviet occupation and civil war, when various mujahedin factions smuggled precious stones, marble, and other minerals to Pakistan to raise funds.
"There's funding for insurgent groups through the smuggling of timber in eastern Afghanistan," Carter says. "There's also funding for insurgents, but also local militias, from the smuggling of chromite. We also shouldn't underestimate the potential for a large mining operation to create internal rivalries within communities that could spill over to violence."
The three largest operations in the country -- the Mes Aynak copper mine in eastern Logar Province, the Hajigak iron ore mine in Bamiyan Province, and the Amu Darya oil project in the country's north -- are all situated in relatively peaceful areas.
But these areas have witnessed growing instability because militants, seeking to disrupt sources of government revenue and discourage foreign involvement in key industries, have targeted the projects.
Potentially Disruptive
Even within the government itself, the internal battle for control over Afghanistan's mining and energy sectors has slowed efforts to put them under Kabul's authority.
Attempts to pass a new mining law that would regulate the industry and lure investors has been stuck in parliament for more than a year because of disputes between ministries vying to oversee the sector.
Javed Noorani of Integrity Watch Afghanistan, an Afghan nongovernmental organization, says greater transparency could help put an end to the graft that is behind many of the disputes.
"There are so many levels of corruption," Noorani says. "When the government is shortlisting companies for a contract there's room for corruption. Even when you implement a contract there is corruption. There are maybe 100 points at which there's space for corruption."
Noorani suggests that the government publicly reveal details of mining agreements, payments made by foreign mining companies to the government, and how revenues from the mineral wealth are used.
Only by taking such steps toward transparency, he says, can Afghanistan find a way to use its natural resources as a catalyst and not a curse.