Afghanistan has what China most prizes’: Beijing eyes access to $1 Trillion of untapped minerals

Afghanistan has what China most prizes': Beijing eyes access to $1 Trillion of untapped minerals
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When the US invaded Afghanistan in 2001, the worldwide economy looked tons different: Tesla Inc. wasn’t a corporation , the iPhone didn’t exist and AI was best referred to as a Spielberg film.

Now all three are at the leading edge of a contemporary economy driven by advancements in high-tech chips and large-capacity batteries that are made with a variety of minerals, including rare earths. And Afghanistan is sitting on deposits estimated to be worth $1 trillion or more, including what could also be the world’s largest lithium reserves — if anyone can get them out of the bottom .

Four decades of war — first with the Soviet Union , then between warring tribes, then with the US– prevented that from happening. That’s not expected to vary anytime soon, with the Taliban already showing signs they need to reimpose a theocracy that turns back the clock in women’s rights and other basic freedoms instead of lead Afghanistan to a prosperous future.

But there’s also an optimistic outlook, now being pushed by Beijing, that goes like this: The Taliban form an “inclusive” government with warlords of competing ethnic groups, allows a minimal level of basic human rights for ladies and minorities, and fights terrorist elements that want to strike the US, China, India or the other country.

“With the US withdrawal, Beijing offers what Kabul needs most: political impartiality and economic investment,” Zhou Bo, who was a senior colonel within the People’s Liberation Army from 2003 to 2020, wrote in an op-ed within the ny Times over the weekend. “Afghanistan successively has what China most prizes: opportunities in infrastructure and industry building — areas during which China’s capabilities are arguably unmatched — and access to $1 trillion in untapped mineral deposits.”

For that scenario to possess even a foreign possibility, much depends on what happens subsequent few weeks. Although the US is racing to evacuate thousands of usa citizens and vulnerable Afghans after a rushed troop withdrawal ending 20 years of war, President Joe Biden still has the facility to isolate any new Taliban-led government on the planet stage and stop most companies from doing business within the country.

In a statement on Tuesday, the Group of Seven nations said the legitimacy of any Afghan government hinges on its adherance to international obligations including ensuring human rights for ladies and minorities. “We will judge the Afghan parties by their actions, not words,” the group said after a virtual leaders meeting.

The US maintains sanctions on the Taliban as an entity, and it can veto any moves by China and Russia to ease United Nations Security Council restrictions on the militant group. Washington has already frozen nearly $9.5 billion in Afghanistan’s reserves and therefore the International fund has stop financing for Afghanistan, including nearly $500 million that was scheduled to be disbursed around when the Taliban took control.

To have any hope of accessing those funds, it’ll be crucial for the Taliban to facilitate a smooth evacuation of foreigners and vulnerable Afghans, negotiate with warlords to stop another war and halt a variety of human-rights abuses. Already tensions are growing over an Aug. 31 deadline for troops to withdraw, with the Taliban warning the US to not cross what it called a “red line.”

Still, the Taliban have several reasons to exercise restraint. Kabul faces a growing depression , with prices of staples like flour and oil surging, pharmacies running short on drugs and ATMs depleted of money . The militant group in the week appointed a replacement financial institution chief to deal with those problems, even as his exiled predecessor warned of shocks that would cause a weaker currency, faster inflation and capital controls.

Nothing Is Unchanged Forever’

The Taliban also want sanctions lifted, with spokesman Suhail Shahee telling China’s state-owned broadcaster CGTN in the week that financial penalties would hurt efforts to rebuild the economy. “The push for more sanctions are going to be a biased decision,” he said. “It are going to be against the desire of the people of Afghanistan.”

Leaders of the militant group have said they need good diplomacy , particularly with China. Officials and state-run media in Beijing have softened the bottom permanently relations, with the Communist Party-backed Global Times reporting that Chinese investment is probably going to be “widely accepted” in Afghanistan. Another report argued the “the US is in no position to poke into any potential cooperation between China and Afghanistan, including on rare earths.”

“Some people stress their distrust for the Afghan Taliban — we would like to mention that nothing is unchanged forever,” Hua Chunying, a Chinese Foreign Ministry spokeswoman, said last week. “We got to see the past and present. we’d like to concentrate to words and watch actions.”

For China, Afghanistan holds economic and strategic value. Leaders in Beijing have repeatedly called on the Taliban to stop terrorists from plotting attacks against China, and consider strong economic ties as key to making sure stability. They also see a chance to take a position within the country’s mineral sector, which may then be transported back on Chinese-financed infrastructure that has about $60 billion of projects in neighbouring Pakistan.

US officials estimated in 2010 that Afghanistan had $1 trillion of unexplored mineral deposits, and therefore the Afghan government has said they’re worth 3 times the maximum amount . They include vast reserves of lithium, rare earths and copper — materials critical to the worldwide green-energy transition. But flimsy infrastructure within the landlocked country, along side poor security, have hampered efforts to mine and profit off the reserves.

The Taliban takeover comes at a critical time for the battery-materials supply chain: Producers are looking to take a position in additional upstream assets to secure lithium supply before what Macquarie has called a “perpetual deficit.” The US, Japan and Europe are seeking to chop their dependence on China for rare earths, which are utilized in items like permanent magnets, though the moves are expected to require years and need many dollars of state support.

One major problem for the Taliban may be a lack of skilled policy makers, consistent with Nematullah Bizhan, a former economic adviser to the finance ministry.

“In the past they appointed unqualified people into key specialized positions, like the finance ministry and financial institution ,” said Bizhan, now a teacher publicly policy at the Australian National University. “If they are doing an equivalent , which will have negative implications for the economy and for growth in Afghanistan.”

China Burned

Officially, Afghanistan’s economy has seen rapid climb in recent years as billions in aid flooded the country. But that expansion has fluctuated with donor assistance, showing “how artificial and thus unsustainable the expansion has been,” consistent with a recent report from the US Special military officer for Afghanistan Reconstruction.

China has been burned before. within the mid-2000s, investors led by state-owned Metallurgical Corp. of China Ltd. won an almost $3 billion bid to mine copper at Mes Aynak, near Kabul. It still hasn’t seen any output thanks to a series of delays starting from security concerns to the invention of historical artifacts, and there’s still no rail or power station . MCC said in its 2020 annual report it had been negotiating with the Afghan government about the mining contract after earlier saying it had been economically unviable.

The Taliban try to point out the planet it’s changed from its oppressive rule out the 1990s, saying it welcomes foreign investment from all countries and won’t allow terrorists to use Afghanistan as a base. Janan Mosazai, a former Afghan ambassador to both Pakistan and China who joined the private sector in 2018, sees “tremendous opportunities for the Afghan economy to require off” if the Taliban prove they’re serious about “walking the talk.”

But not many are optimistic. Reports have emerged of targeted killings, a massacre of ethnic minorities, violent suppression of protests and Taliban soldiers demanding to marry local women.

“Everyone’s just in crisis mode,” said Sarah Wahedi, a 26-year-old tech entrepreneur from Afghanistan who recently fled the country. “I don’t see the entrepreneurs getting back to business unless there’s an enormous overhaul within the Taliban’s behavior. And there’s nothing I’ve seen that creates me think that’s getting to happen.”

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