Silver Bullets and the Paradox of Plenty: Natural Resource Development in Afghanistan

Abstract

Post 9/11 USGS research on the prospectivity, or mineral potential mapping, of Afghanistan’s mineral wealth led commentators, governments and the US military to promote the mineral resources of Afghanistan as enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself. Afghanistan’s prospectivity however was of little surprise to economic geologists and is some of the most highly prospective ground in the world.

But a range of issues, the most obvious of which is the past 30 years of prolonged conflict, have made it unattractive for investment when there were lower risk opportunities elsewhere.

The development of a nation’s natural resources sector is not without its risks as they can in fact lead to instability and even conflict resurgence. The discovery of abundant natural resources in an emerging market can paradoxically lead to stagnant growth or even economic contraction. This is commonly referred to as the Paradox of Plenty or the Natural Resources Curse.

Despite the international donor community’s desire to exploit the utility of natural resources for the greater good of the Afghan state, the level of communication, cooperation and coordination between the donors, their agents and the Afghan stakeholders continues to fall short of what should be possible. Expenditures exceeding USD$ 586 million to the mineral industry have delivered little success, and Afghanistan’s natural resources are unlikely to make a significant contribution to the state’s economy for at least 5–10 years.