Editor in Chief: Moh. Reza Huwaida Thursday, April 25th, 2024

Afghanistan 2014: Starting up Mining Boom Crucial to Financial Survival of Army and Government

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Afghanistan 2014: Starting up Mining Boom Crucial to Financial Survival of Army and Government

In my article 'Afghanistan 2014: Risks of government collapse' published in Outlook Afghanistan on Nov 14, 2011, I identified financial shortfall to defence budget of Afghanistan beyond 2014 as one risk that could bring about total collapse of Afghan army and government. Owing to disrepute the Afghan government with aid contributing nations and ordinary citizens because of endemic corruption the article warned "it is unlikely the international community will forever continue to be generous towards paying for security of a corrupt government in Afghanistan."

That note of warning has materialized. The Guardian reported on Dec 1 that beyond 2014 America is only willing to pay $3 Billion out of $ 8 Billion it costs to maintain the Afghan army and police force. Titled 'Afghanistan faces $4 Billion defence funding shortfall' the report indicates the Obama Administration has asked foreign governments financially assisting Afghanistan to contribute $1 Billion in aid to financially sustain the Afghan National Security Forces (ANSF). Beyond 2014 on top of that contribution government of Afghanistan will fall short on its defence spending by $4 Billion a year.

Government of Afghanistan cannot fill the financial gap on its own yet due to its undeveloped economy. Quoting a World Bank report published last week The Guardian report says, "Even assuming ambitious targets for robust growth in domestic revenue are met …[in Afghanistan's defence budget] there will be an unmanageable fiscal gap." No army or government can survive without paying its employees.

Touching on implications of defence spending shortfall the Nov 14 Articleforesaw"without large outside financial support the revenue shortfall will culminate into disintegration of government and the ANA, the country will dive into chaos and civil war." The Guardian report contains statements expressing similar worries shared by Afghanistan's Minister of Defence. It quotes Mr. Rahim Wardak saying in interview in Kabul last week "…If Afghanistan is left by itself, it can become an ungoverned area or a failed state…"

Pointing to outcome of 2014 withdrawal dateline for NATO combat troops from Afghanistan the Nov 14 Article concluded "The Afghan government will have to … learn to survive on its own financially and militarily without …strategic security guarantee provided … military forces of a superpower while fighting a large and ruthless insurgency or perish".

Afghanistan's mineral wealth can save its army and government from collapsing under financial strain. Australian mining companies can kick start mining boom in Afghanistan.

Afghanistan's ambassador to Australia on Dec 18 was quoted in the Australian media saying he is on a mission to get Australian mining companies interested in exploiting Afghanistan's mineral resources. In a background briefing titled 'Afghanistan wants help to kick-start mining boom' published on ABC, the ambassador is quoted saying, "So far I have not got in touch with any of the major Australian investors - Australian companies like Rio Tinto, BHP and the others - but I'm going to ...to see if there is a possibility of getting those major companies interested".

A report produced by U.S Geological Survey last year put value of Afghanistan's mineral wealth between $1 Trillion to $3 Trillion. Australia has a significant mining industry. It makes up 5.6% of Australia's Gross Domestic Product and minerals represent 35% of its international exports. Australian companies can bring their advanced technology, expertise and experience to kick start Afghanistan's mining boom.

This can pay for maintenance, upgrading and expansion of the Afghan army if war circumstances require it. Only if Afghanistan pays bills of its soldiers out of its own money can the government sustain the army in the long term.

Next summit on how to address Afghanistan's defence budget shortcomings will be held in American city of Chicago this summer. Given high unemployment rate, low growth and high budget deficits America and Europe are struggling and given corruption problems of Karzai Administration in eye of aid-contribution nations, it is unlikely Karzai will secure major aid contributions to pay for maintenance of the afghan army. Even if he succeeds, no foreign nation will continue to pay bills of armed forces of another nation forever.

The Americans have already expressed their opposition to idea of paying soldiers of the Afghan army. A European official is quoted telling The Guardian in that article, "The Americans have told us that Congress is not prepared to give Afghanistan more military aid than Israel, which means no more than $3bn".

If the Afghan army collapses due to this financial shortcoming the Afghan Government will be overrun by the Taliban insurgency.

Afghanistan's ticket of survival is to pay for maintenance, upgrading and if necessary expansion of its army out of its mining revenue. The country has no alternative industry or revenue stream. International aid won't last forever.

Afghanistan's ambassador to Australia will have to work hard to succeed. He holds one key to survival of Government of Afghanistan beyond 2014 in his hands.

Latif Mohammadi is a Student of Economics and Law at University of Canberra, Australia. He can be reached at azadi232@gmail.com

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