Monday, January 23, 2012

Afghanistan: Coffins for the U.S. & NATO; contracts for China

Some bitter ironies in Afghanistan these days: U.S. and French soldiers gunned down by the very Afghan troops they work with. America and its NATO allies, facing huge budget problems themselves, persist in squandering billions in Afghanistan, to defeat Islamic radicals and create a propitious climate for growth and investment. Right now, the largest investments so safe guarded are Chinese.  
Another paradox, it was American engineers who, in the summer of 2010, completed a survey concluding that Afghanistan sits atop one trillion dollars of untapped copper, iron and lithium deposits. If it could just get its act together, the country had a promising future. Skeptics immediately claimed that rosy estimate didn’t take account Afghanistan’s woeful infrastructure: it could cost more to mine those resources than they were worth.
But that’s not how the Chinese see it. A few weeks ago, China’s National Petroleum Corporation became the first foreign company to be allowed to explore Afghanistan’s oil and gas reserves in the Amu Darya Basin. The deal is estimated to be worth more than $700 million. Some speculate it could ultimately be worth ten times that amount to China.
Even before that deal, however, China was already the largest foreign investor in Afghanistan. In 2007 Beijing signed a $3 billion agreement to explore huge copper deposits in Mes Aynak, south of Kabul.
India is the only other country to go after Afghan minerals. Last November a deal was signed giving Indian firms the rights to 1.8 billion tons on iron-ore, one of the largest untapped deposits in Asia.
It’s very unlikely that the Chinese [and Indians] would be making such risky bets without the security provided by the U.S. and its allies. After the copper deal was inked,  2,000 U.S. troops were deployed to provide general security in Logar Province where the Mes Aynak mine is located. They also protected the projected routes of the road and railway which will service the huge development. Another 1,500 Afghan National Police, presumably paid and trained by the U.S. and its allies, were sent to guard the mine itself.

In addition, facing restless Muslim groups in their own country, the Chinese are not at all unhappy about the U.S. and Nato taking on Islamic militants in Afghanistan.

Yet, all the while, China has consistently refused to contribute to the joint Western military force. They even turned down a request to permit NATO to ship non-lethal supplies via China to Afghanistan. 

So why aren’t the U.S. and its allies screaming about the situation?  Because, if they are to have a face-saving way out of Afghanistan that doesn’t disintegrate into chaos, they desperately need China’s huge new investments to continue and prosper.
As things now stand, once the income from opium production is deducted, 97% of Afghanistan’s GNP comes from foreign aid.  A whole new economy is needed.
After China’s National Petroleum Council signed its recent oil agreement with Kabul, experts warned that success was far from a sure thing: it could take five to ten years of expensive exploration to see if the oil fields are really worth developing.
But the Chinese are after more than oil and copper. They see each deal as another foot in the door. The are also determined to reap huge potential profits to come from rebuilding Afghanistan’s shattered infrastructure and economy, among such projects, a high-speed rail system.  In this way, without massive military deployments, China has already become a major player throughout the region. [I’ve written about China’s activities in Pakistan, Iran, Iraq and the Gulf in other recent blogs]  

A particularly insightful comment on China’s tactics in Afghanistan followed an article in The Diplomat:
Achieving a peace agreement is always the number one preference for Chinese government. By nature Chinese are not interested in “beating” other group of people, but are interested in “gaining” concrete benefits. This is due to the Chinese culture and history. In Chinese culture, people believe in “harmony brings wealth”. Therefore, when dealing with a dispute, a Chinese normally do not set his goal as completely beating the others, but rather sequence his goals according to priority, and try to achieve the goal with the highest priority first, and so on. Each disputant may achieve some goal upon settlement of the dispute.”

Case in point: thanks to the Chinese, the Afghans may benefit from a real high-speed rail system before the United States.

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