ERI is pleased to present two guest perspectives on recent reports of mineral wealth in Afghanistan from our legal interns.  Both address how valuable minerals might affect the conflict in Afghanistan, and whether it might lead to the “resource curse” scenario seen in other resource-rich developing countries.

The post below is from DOng Keun Lee, a second-year law student at Washington University in St. Louis. The companion post [2]is from Michelle Salomon, a second-year law student at the University of Maryland.

While the Times Square bomber reminded us of the fact that the US is still under the threat of terrorist attack, we are weary of the unrelenting bad news from the principal theater of the war on terror and thirst for signs of a better future in Afghanistan.  The release of a report on previously unknown mineral deposits - including huge veins of iron, copper and lithium – was timely and could point to a turning point for Afghanistan.  Yet we do not have to look far to see the dark side of natural resource wealth.  Before getting to the main point, I begin by touching on the issue of the interdependence between the stabilization of Afghanistan and the security of the US. 

Two systems of values encompassing a range of global issues permeate the discussion over terrorism: security and development.  Developed countries, which have by and large attained freedom from want, push forward counter-terrorism measures and mechanisms not only because they have primary responsibility for the maintenance of international security under the Charter of the U.N., but also because they have the ability to prioritize national security over development.  By contrast, developing countries, which are often trapped in cycles of poverty, struggle to bring to the table such agendas as foreign aid and debt relief.

The debate over the nexus between poverty and terrorism lies at the intersection of these two value systems.  Some argue that the nexus is not as clear-cut and downplay the causal link between economic conditions and terrorist activities. This perspective concludes that developing countries emphasize this nexus as a pretext for demanding economic aid; its proponents note that both Osama Bin Laden and the would-be Chistmas bomber are from wealthy families and were not driven by poverty into terrorism.  Others, who tend to represent the interests of the so-called “South-South,” argue that widespread poverty exacerbated by unequal distribution of wealth between nations is obviously a major factor which increases the susceptibility to violent extremism and creates a fertile environment for terrorism.

The debate also underlies US. policy decisions in the war on terror in Afghanistan.  The U.S. approach to the war on terror includes more than military action; it also weighs in on economic issues, recognizing that a military response is insufficient to suppress extremists in Afghanistan permanently. In recent years, reconstruction assistance to Iraq and Afghanistan has accounted for billions of dollars and has -- perhaps, disproportionately -- shaped the profile of the US. foreign aid program.  It is also a part of the emphasis on using foreign aid to combat terrorism.

Given this emphasis, the news that Afghanistan has nearly $1 trillion worth of untapped minerals deserves closer attention from Afghan people as well as the U.S.  As President Karzai’s credibility has been questioned and the cost of gaining support both at home and abroad has increased, the sudden prospect of mineral wealth could not come at a more opportune time both for the Afghan government and its supporters in the U.S.    

One major aim of the war in Afghanistan, where 90% of the world’s opium supply and the largest amount of cannabis resin are produced, has been to curb drug production and trafficking.  Despite convincing evidence that drug profits fuel the insurgency and support terrorist group financially, it would be very difficult to justify any attempt to force the Afghan people to switch over to legitimate crops or to conduct aerial-eradication without providing economically viable alternatives – an endeavor that could cost no less than a military operation.  The revelation of the nation’s extensive mineral reserves is therefore encouraging for the prospect of boosting legitimate industry and thereby removing a cornerstone of the conflict.

Resources, however, are not a silver bullet. As indigenous people in many developing countries have witnessed, the “resource curse” can blight the promise of mineral-based prosperity, and the fight against it can even cost lives.  Without rule of law, the potential wealth from abundant resources brings unintended but foreseeable consequences, such as mass atrocities in Sudan, corruption in Burma, and violation of the fundamental rights of indigenous people in Peru. 

The widespread violence in Sudan, for example, can perhaps be attributed as much to the struggle for control of oil fields as to the frictions between ethnic groups.  A portion of oil revenue which could have improved the quality of life in Darfur was spent in purchasing weapon used to kill the people there.  Considering the loss of lives, Sudan can by no means be said to be better off with the resources.  The huge amount of oil and natural gas exploited in Burma neither feeds the ordinary Burmese nor lights their houses.  The revenue from the resources principally enriches the military junta and their allies. ERI has shown that the vast majority of this revenue sits in private bank accounts in two of Singapore’s largest offshore banks.  And oil companies like Occidental Petroleum have contaminated the rivers and lands of indigenous communities in the Amazon, causing death, widespread poisoning and destruction of their way of life.

The examples of minerals development gone wrong cited above were perpetrated mostly by Western companies based in countries with strong civil societies and the potential to hold violators accountable.  The exploitation of minerals in Afghanistan, by contrast, could invite companies which are under less scrutiny.  While western private miners are hesitant to move into Afghanistan because security and enforcement of contract law are uncertain, a Chinese company to date is the only miner digging in Afghanistan as it can lower the risk by tying the agreement with government to arms deals. Though civil society has made efforts to develop various tools to make big corporations subject to judicial scrutiny for the actions abroad, Chinese extractive companies have proven more difficult to get on hook. For example, the Alien Tort Statute, which has been used so far in litigation against US- and Europe-based corporations, has not yet been able to reach Chinese industry.  That’s one of the reason why the ERI supports the Energy Security Through Transparency Act (ESTT), which would require all companies filing with the SEC (a list that includes China National Petroleum Corporation) to report the money they pay to foreign governments on resource development projects.

Mineral extraction will undoubtedly be a major contributor to the economy of Afghanistan.  But it will only bring a better future to the Afghan people if a number of key issues are addressed:

• Corruption.  The Afghan Minister of Mines is alleged to have accepted a $30 million bribe to award a Chinese mining firm the rights to develop a copper mine. The gravity of the issue led Mr. Obama to admonish Mr. Karzai and urge him to set up an anti-corruption commission.
• Remedies.  Local communities near resource extraction projects often face property rights violations in addition to the human rights violations that typically draw more attention.  From Colombia to Burma, examples abound of the confiscation of community property and displacement without compensation.  While the international community often puts a spotlight on host countries to address gross human rights abuses like torture or summary execution, property violations – which often affect many more people and interfere with their livelihoods – tend to be overshadowed by such injuries.
• Transparency.  Pursuant to the contracts between foreign corporations and host governments, the parties are able to keep from the public view information that would influence the living conditions of indigenous people, including, among others, social and human rights impact assessments.  This ability to insulate business decisions as if they had no real-world consequences is simply unacceptable.  Instead, such information should be exposed to public scrutiny for the protection of the communities that feel the impacts of extractive operations.

Considering the near-impenetrable wall of sovereignty and the political dynamics between companies and governments, the corporate world will always have plenty of space to negotiate profitable contracts.  It is civil society, therefore, that must be empowered to identify corruption, employ effective remedies, and educate communities about the potential impacts of extractive projects, thereby pushing corporations to respect the rights of the people in weak governance zones like Afghanistan.