Occupying strategically a very crucial position, Afghanistan could have been a major player in world politics. It is a land- locked country, situated in Southwestern Asia on the Iranian Plateau is enveloped by the Hindu Kush Mountains. Afghanistan shares its borders with Pakistan, China, Iran, Turkmenistan, Uzbekistan and Tajikistan. In the north it is bordered by Turkmenistan, Uzbekistan and Tajikistan; in the east by China and a part of territory lying in Pakistan-occupied in Kashmir; in the west by Iran and in south by Pakistan. And yet, this country could not utilize its strategic power. Landlocked and mountainous, Afghanistan has suffered from such chronic instability and conflict during its modern history that its economy and infrastructure are in ruins, and many of its people are refugees.
Historically, this country was at the centre of the so-called "Great Game" in the 19th century when Imperial Russia and the British Empire in India vied for influence. And it became a key Cold War battleground after thousands of Soviet troops intervened in 1979 to prop up a pro-communist regime, leading to a major confrontation that drew in the US and Afghanistan's neighbors. But the outside world eventually lost interest after the withdrawal of Soviet forces, while the country's protracted civil war dragged on.
Coupled with fact, that this country is a resource rich country, yet is among the most impoverished ones, it has capability to grow and become a major player. And yet it is no player. A look at its history could provide a key to the contradictory situation. Possibly West and Afghanistan, itself, could learn from the history.
If there's one thing that really gets me worked up, it is this: the western media keeps peddling the fairy tale that no power – from Alexander 2300 years ago to Britain in the 19th century and Russia 30 years ago – was able to conquer Afghanistan. To me it reeks of ignorance, and reporters in western countries
have exhibited a lot of that. Remember, this is the same bunch that devoted reams of newsprint to the lie that al-Qaeda was getting help from Iraq, when in reality Iraq under Saddam Hussein was the most secular in West Asia.

But how could experienced and Pulitzer Prize winning writers ignore facts? Don't they have armies of researchers at their beck and call? Also, newspapers like the NYT and The Guardian have excellent research departments that can dig out the region's history!
The truth is that just 180 years ago Maharajah Ranjit Singh (1799-1839) and his commander Hari Singh Nalwa defeated the tribes of the Khyber Pass area, in the process securing India's north west border. Had it not been for Ranjit Singh, Peshawar and the north-west frontier provinces of India (now in Pakistan) would have been part of Afghanistan today.

But first a flashback: Afghanistan had once been a part of India; it was called Gandhar, from which the modern Kandahar originates. It was a vibrant province that gave us excellent art, architecture, literature and scientific knowledge – a world far removed from today's Taliban infested badlands.

It was an Indian province until 1735 when Nadir Shah of Iran emboldened by the weakness of the later Mughals ransacked Delhi and everything on the way. India and Iran had respected each other's borders, and though always a bit nervous of each other, the two empires never tried to subvert each other. But because of his greed Nadir Shah changed the equation. He annexed Afghanistan and asked the Indians to forget about ever getting it back.
But the situation changed. The defeat of British in Afghan wars made the fiery Afghans still more independent minded. Today, the US is reluctant to do all the fighting; the British forces are simply not up to the task of taking on the fierce Afghans and rely on bribes to keep away the Taliban fighters. Which Afghan will show his opponent respect if they bribe them not to shoot? The Ukrainians, Poles, Australians, New Zealanders, Czechs, and who knows how many more nationalities, are present in Afghanistan clearly to curry favour with America and wrap up their respective free trade agreements.

Around 30 years ago, the Russian general Nikolai Ogarkov advised Leonid Brezhnev's cabinet not to invade Afghanistan, saying that the country was unconquerable; today NATO generals are asking Barack Obama to get out of the place or else the Americans will have to leave in the same state as they left
Vietnam – in their underpants.
While Iran has enormous influence on Afghanistan, events in Afghanistan are mistakenly viewed almost exclusively through Western-American lenses. At a recent INSS conference, Michele Flournoy, former US Undersecretary of Defense for Policy, called on Israel and the United States to reexamine their priorities in order to strengthen their interests in the changing Middle East and help stabilize it; to be much more involved in discussions with civilian leaders and those who are shaping public opinion on social networking sites; to discuss agendas with civilian leaders, their aspirations to govern, and how they intend to govern; to restrain the extremists; and in general, to try to find common ground. She suggested opening channels of communication with civilian figures in tandem with communication with the authorities
The majority of United States transactions in the area are with Pakistan, in preparation for the withdrawal of US forces in 2014. Pakistan has interests in China, Iran, and Russia, and its loyalty after the withdrawal of US forces is highly questionable. Even today, the United States and Pakistan are sharply divided over the issue of drone strikes in the mountainous tribal areas. Pakistan has strongly criticized the US policy that has led to the deaths of civilians in these strikes. Islamabad claims that in addition to killing members of al-Qaeda, the United States is killing members of Afghan militias cultivated by the Pakistani government.
A great deal of money has been sent to Afghanistan from Islamic countries, most of which is used to build mosques and purchase weapons and ammunition, or “Quranic shipping containers,” as dubbed by exiled Afghan leaders. Indeed, the Islamist axis is steadily growing stronger.
Three circles of power operate in Afghanistan: the religious groups, the tribal groups, and the civic-national groups. It is often claimed that investing in the religious groups strengthens the connection to Pakistan; investing in the civic-national groups strengthens the connection to India and will provide the (sole) basis for building a civil society with a good future foundation for the growth of the democratic model; and investing in tribal groups will strengthen the connection to Iran. However, there are some tribal leaders who are distinguished precisely by their civic work for their communities and tribes, and even for the national interest as they understand
Afghanistan has a tribal society, and its tribal structure is thousands of years old. The Afghan population is mostly rural and lacks a young, intellectual middle class. Most of the information on events in Afghanistan comes from foreign correspondents, diplomats, human rights activists, and foreign soldiers who report from the major cities through blogs, or else from people who have been exiled from Afghanistan and report from abroad. The most popular and accessible communications medium in the country is radio. Only in the large cities is there television While the discourse on social networking sites is perhaps not representative of Afghani society, it appears that what is posted on these sites is authentic and credible. They shed light on trends in Afghanistan, and especially the attitude toward NATO and US activity; Pakistan’s influence on events in Afghanistan; the change in the internal Afghan dynamic; the security-political situation in Pakistan; the peace talks and the dialogue between the West and the Taliban and the West and the Afghan government; and the Taliban’s and the Afghans’ attitude toward the Karzai government.
Afghanistan’s borders with Iran and Pakistan are porous. The border with Pakistan can be penetrated by al-Qaeda and the Taliban. Afghanistan’s neighbors are successfully taking advantage of the conflicts in the periphery and the inter-tribal rivalry. Ajmal Khan Zazai, a leader of the Pashtun tribe – which sees itself as the descendant of the lost tribes and even calls itself “sons of Moses” – is from a province in the southeast of the country with a population of 2.5 million, one of thirty-four Afghan provinces. Forty-two years old, Zazai is a reformist whose father was murdered when he opposed the Taliban. Zazai seeks a connection with Israel and the West through agricultural and economic projects, and his supporters hope that his movement, UAT (United Afghan Tribes), will be the main axis for changing the government and uniting the tribes. Indeed, some in Afghanistan and outside the country say that he is the only person capable of uniting the warring tribes into a political and security force. He also suggests that the tribes be armed in order to thwart the Taliban and secure hundreds of kilometers of border with Iran and Pakistan. He is seeking humanitarian aid in order to improve infrastructures, employment, education, and sanitation, and he has called for a government without corruption.
The Future: Civil War or an Afghan-Pakistani War?
In the past, Pakistan was the base for the training, instruction, and funding of Afghan mujahidin forces in their war against the Soviet occupation. Most bloggers anticipate two possible scenarios for the day after the withdrawal:
a. Taliban forces will fight national security forces, local police forces, and the Afghan army, which will lead to renewed civil war within Afghanistan; or alternatively
b. Taliban forces will continue to cross over into Pakistan, endangering governmental stability and security and leading to a war between the two countries.
Until recently, serious talk about an Afghan economy based on natural resources seemed premature. But as Kabul has just inked two major deals and NATO continues its drawdown, the risk is rising that Afghanistan will squander its most promising prospect for development.
Until just a few weeks ago, serious talk about an Afghan economy based on natural resources seemed premature. But as Kabul inks more mining deals with international investors -- it awarded two major tenders at the end of 2011 -- and as NATO continues its drawdown of international troops, natural resources are shaping up to serve as the cornerstone of sustainable development there. This raises an unavoidable and possibly tragic question: Considering the country's lack of infrastructure and its rampant corruption, will Afghanistan become yet another data point in the literature on underdeveloped countries that fall victim to the resource curse?
The possibility is real. Officials in both Washington and Kabul claim that the country's mineral wealth is worth as much as $3 trillion. Experts have suspected Afghanistan's resource potential for decades, and U.S. Geological Survey fieldwork conducted between 2009 and 2011 confirmed the existence of significant copper, iron ore, gold, lithium, rare earths, and mineral fuel resources such as coal, oil, and gas, and possibly even uranium
During the international donors’ meeting in Tokyo to discuss the next round of aid for Afghanistan and the news item that “Exxon Mobil weighs bidding for Afghan oil” (July 7) show rising concern about weaning Afghanistan from foreign aid and the future of that country after the NATO combat mission ends in 2014.
If today’s worry is that, as the Exxon Mobil article says, “China will be reaping the gains of a war fought and paid for largely by the United States” — a situation similar to that of the American liberation of Kuwait, where very few U.S. companies benefited — then a successful experience in a neighboring country should be considered. The establishment of a clearing body, the Saudi-American joint royal commission, at the initiative of the U.S. Treasury and not the U.S. State Department, secured the successful bidding of several American companies competing in Saudi Arabia with others from Europe and Asia.
Afghanistan is in the heart of Asia and remains the key to regional stability. Speaking at the recent “Heart of Asia” conference in Kabul, U.S. Deputy Secretary Bill Burns said, “It will be through deeper regional cooperation that Afghanistan can achieve increasing stability, security, and prosperity. And so along with many of our allies and partners, the United States is here to support the success of this process.”
Economy - overview:
Afghanistan's economy is recovering from decades of conflict. The economy has improved significantly since the fall of the Taliban regime in 2001 largely because of the infusion of international assistance, the recovery of the agricultural sector, and service sector growth. Despite the progress of the past few years, Afghanistan is extremely poor, landlocked, and highly dependent on foreign aid, agriculture, and trade with neighboring countries. Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs. Criminality, insecurity, weak governance, and the Afghan Government's inability to extend rule of law to all parts of the country pose challenges to future economic growth. Afghanistan's living standards are among the lowest in the world. While the international community remains committed to Afghanistan's development, pledging over $67 billion at four donors' conferences since 2002, the Government of Afghanistan will need to overcome a number of challenges, including low revenue collection, anemic job creation, high levels of corruption, weak government capacity, and poor public infrastructure Afghanistan’s Economic potential, particularly mineral deposits estimated at as much as $3 billion. Dr. Zakhilwal talked about Fiscal regimes for companies in Afghanistan and Incentives for investment in mining and other sectors As Afghanistan opens the doors to its first national park, the fate of its rich array of natural resources remains unclear. After three decades of conflict and civil war, the country is desperate to use its mineral wealth to get back on its feet. The Afghan government, meanwhile, is occupied with the difficult task of transitioning from foreign control to complete independence. Given the fact that two-thirds of Afghanistan’s national budget is derived from external funds, the extractive industries could prove to be a crucial source of independent revenue.
Afghanistan contains approximately 20 billion tons of iron, 11.3 million tons of copper and numerous chromite, gold, lithium, hydrocarbon and gem deposits. The Ministry of Mines (MOM) estimates that 30% of Afghanistan’s surveyed mines are worth approximately 3 trillion dollars, with 70% of the resources yet to be evaluated. Despite unprecedented amounts of foreign aid and technical assistance, however, production capacity and institutional infrastructure have been severely limited due to ongoing strife.
As the constitutional custodian of Afghanistan’s natural resources, the MOM is charged with the task of approving mineral extraction projects. Thus far it has issued 106 large, medium and small licenses to various private and public companies. Among larger concessions is the Aynak Copper Contract, which was awarded to the MCC consortium, a Chinese group composed of the China Metallurgical Group Corporation (MCG) and Jiangxi Copper Company Limited (JCCL). MCC has committed to investing $2.9 billion in the project and aims to extract copper in the next five years. The consortium has also has built a railway line connecting Afghanistan to its neighbors in the north and east.
Another important contract, which has yet to be awarded, is for the extraction of Hajigak iron ore mines, located in northern Afghanistan and currently estimated to contain 1.8 billion tons of iron ore. As one of the largest iron mines in the world, Hajigak has attracted six major international investors. A good contract might provide employment, infrastructure development and revenues for the government. MOM is also accepting bids for medium-sized contracts that provide licenses for gold, coal, chromites, and salt mines in the Hajigak
Potential Development of the Private Sector
Investment in the mining industry offers opportunities for numerous other associated businesses to generate revenue from large mining projects. For instance, the Aynak Copper Project and the soon to be awarded iron mine contract at Hajigak, will require a number of goods and services for their operations, such as heavy machinery, explosives, construction and maintenance services. Since Afghanistan is still extremely reliant on agriculture and lacks developed industries, its private sector cannot provide these special goods and services.
Furthermore, Afghanistan’s import-dependent economy could benefit greatly from an expansion of the private sector, which will not only create employment and increase cash flow, but also generate income for the state. The challenges are nevertheless significant as there is very little engineering and technical expertise in the country. Moreover, according to the Chief Operating Officer of Afghan International Chamber of Commerce (AICC), Atiqullah Nusratin, industrial sectors such as hard manufacturing remain underdeveloped due to low local demand. Foreign entities operating in Afghanistan have little trust in local businesses, thereby increasing dependence on imports.
In the past, the MOM has organized a number of expositions in Europe, the United States and Asia to attract investment in Afghanistan’s mining sector. The MOM has also enacted a five-year business plan with the aim of creating an investment-friendly environment, encouraging investment and increasing revenues from the mining sector. Meanwhile, the World Bank has been working on a resource corridor to connect big mines and has been building the necessary infrastructure to connect Afghanistan with sea-routes in order to export minerals to outside market
Conclusion
The economic potential of Afghanistan’s mineral resources is a source of hope for the country’s future. But in order to reap the benefits, the government must manage the mining sector in a responsible manner, particularly when it comes to financial, social and environmental policies.
Although Afghanistan’s natural resources are substantial, the institutional capacity of the Afghan state is limited. Private investment in the Afghan mining sector is, therefore, crucial. Collaboration could certainly benefit both the nation and international investors, but only if there is serious commitment to transparency and accountability. Unfortunately, however, the government’s current track record suggests that Afghanistan’s road to prosperity will be a long, chaotic ride.
Still there is light at the end of Tunnel. Given the Afghan tenacity, their heritage, their resources, they have the capability to become a vital and powerful player. But they need a proper strategy and will to do so- and that includes bidding goodbye to Talibanism, and going back to the enlightened days of King Zahir Shah.
Dr. Bikram Lamba, is a political and business strategist. He can be contacted at 905 848 4205. Email:torconsult@rogers.com