[Salon] China’s Got Afghan Fever, Again



https://foreignpolicy.com/2023/04/24/china-afghanistan-lithium-critical-minerals-taliban-energy-environment/

China’s Got Afghan Fever, Again

Nothing says forever like the promise of Afghanistan’s mineral riches.

ODonnell-Lynne-foreign-policy-columnist Lynne O’Donnell
By Lynne O’Donnell, a columnist at Foreign Policy and an Australian journalist and author.

China, once again, seems to be mucking about in Afghanistan’s mineral-rich playground. The latest move is a maybe, could-be deal worth billions to tap Afghanistan’s rich veins of lithium, the key input for the energy transition that powers everything from laptops to electric cars. It could mean that billions of dollars will be pouring into securing a prosperous future for one of the world’s poorest countries. It probably won’t. The deal, like so much else China has done with Afghanistan in the last several decades, is more about politics than economics.

On paper, at least, Beijing’s latest deal with the Taliban looks impressive: $10 billion for access to lithium deposits, creating 120,000 direct jobs, plus some infrastructure building and repairs thrown in for good measure. But rather than underpinning hope for economic revival, this contract is likely to join other Chinese ventures in Afghanistan that have been signed with great fanfare—for the republic and extremists alike—only to go out with a whimper rather than a bang. China famously signed a $3 billion deal to develop Afghanistan’s largest copper deposit, not far from Kabul, and then unceremoniously decamped once the shooting started.

Afghanistan is ostensibly an El Dorado, with mineral riches worth at least $1 trillion. But resources, in this case of lithium, are sketchily surveyed: The main geological assays were done when the Soviets invaded in the 1980s and when the Americans did the same two decades later. And resources—potential ore—are not the same as reserves, which are things that can be dug up profitably. Bolivia, for instance, is a big part of South America’s so-called lithium triangle, but Chile and Argentina’s reserves are infinitely more attractive. And then there’s the security issue, a problem that has plagued Afghanistan for the last few decades, or centuries, and which spooked the Chinese away from their big copper project. Even if mining could go on without bloodshed, who would sign the contracts? Few recognize the Taliban government, and a chunk of the cabinet is under international sanctions for terrorism. The legal and regulatory uncertainty almost renders the rest moot.

“The Chinese, at best, will get the contract and sit on it to keep control of the supply and prices of lithium,” said Javed Noorani, an expert on Afghanistan’s mining sector. China has already extended the tentacles of its signature Belt and Road Initiative (BRI) well into neighboring Pakistan, making it the centerpiece of an infrastructure orgy across Central and South Asia. Afghanistan could be next.

“They’ll extend their Belt and Road through Afghanistan, which will seriously jeopardize any regime in Kabul once it is integrated,” Noorani said.

The multibillion-dollar BRI is central to China’s foreign policy. Announced in 2013, it seeks to link Asia with Europe and Africa, overland and overseas. Until the fall of the republic in August 2021, Afghanistan hadn’t been folded into the BRI in any meaningful way. The showpiece for Beijing was Pakistan, where successive governments have gotten a few highways and power plants and become increasingly indebted to China as the country hurtles toward bankruptcy. Beijing has just extended Pakistan a new loan of $700 million to help it through its current economic woes; it comes on top of the $30 billion Islamabad already owes China.

Noorani fears Afghanistan will similarly become indebted to China, which often makes loans conditional on no-bid access, monopoly operation, and guaranteed high prices. As any punter knows, loan conditions can change when repayment looms, especially if late. “It starts at the weak end, with the infrastructure that every country needs. And then it creeps into the arteries of the state, especially the economy, and that’s where the control begins,” Noorani said.

As an essential component of rechargeable batteries and electronic devices, lithium is often referred to as “white gold.” While much of the hard-rock lithium comes from Australia and from brines in Chile and Argentina, China dominates lithium refining. Prices skyrocketed between 2020 and 2022 on projected demand for the finite resource. But lithium prices have plummeted in recent months, with one reason being the Chinese government’s decision to end subsidies for electric vehicles.

If there’s reason to be skeptical of Chinese ambitions toward Afghanistan’s lithium, it’s because we’ve seen this before. In 2007, China paid almost $3 billion for a 30-year lease at the massive copper deposit of Mes Aynak, promising to build mines, smelters, factories, schools, roads, and a railway; protect the remains of an ancient Buddhist city nearby; create jobs for Afghans; and generate revenue for the Afghan state. The Chinese contractor, MCC, allegedly paid a huge kickback to the then-minister of mines, built a fence at the site, took some potshots from insurgents, packed up, and left. Beijing refused to renegotiate the contract. The site remains untouched.

But that was then, perhaps. The Taliban’s victory over the U.S.-backed republic has made Afghanistan vulnerable to Chinese economic exploitation by opening the doors to a desperately impoverished country controlled by a group that has zero ability to run a modern state. For years, Beijing has winked and nodded at the Taliban, giving the leadership the red-carpet treatment even before they retook power, with a tacit understanding that investment would flow afterward. China’s then-foreign minister, Wang Yi, visited Kabul in March 2022 for discussions that the Taliban said included BRI projects. Luckily for them, the Kabul Zoo has no macaques.

For China, Afghanistan is not the mother lode of lithium; there are other, cheaper alternatives elsewhere, even if Chile is busy nationalizing its own lithium industry, potentially narrowing Beijing’s options in the good places. But China’s interest in Afghanistan goes beyond mines and minerals and looks more toward ministers.

China doesn’t need Afghanistan for what’s in the ground—not right now, anyway. Locking down future access to natural resources might be smart in the long term. In the short term, Beijing’s interests are purely political. For longer than Beijing has been supporting the Taliban, the Taliban have been supporting the anti-China East Turkestan Islamic Movement—Uyghurs who oppose the United States and NATO—and so are owed an eternal debt of gratitude. With the Taliban’s takeover, a number of terrorist outfits threatening regional security are safe in Afghanistan, including the ETIM, who dream of driving China out of Xinjiang, where millions of Chinese Muslims are incarcerated in “reeducation” facilities. The Taliban haven’t criticized China’s anti-Uyghur policies, which have been deemed a genocide by the United States, but neither have they complied with Beijing’s demands to deport Uyghurs.

It’s a classic clash: the gerontological atheists who rule China making impossible demands of religious fanatics whose survival depends on putting Islamism first. “There is a trust deficit between China and the Taliban,” said Ma Haiyun, an associate professor of history at Frostburg State University. Some senior Taliban figures don’t like the way the Chinese do business, Ma and other sources said, but publicly they’re happy to have at least one friend sign some contracts and make them look like they’re making some progress. More than 18 months after taking over, the Taliban have no economy, little government, and fewer prospects. Even poisoned chalices are welcome to a thirsty man.

For now, the Taliban are flattered by China’s flirtation, but they’ll be quickly overwhelmed when Beijing gets serious, said Noorani, the mining expert. “The Taliban will not be in a position to negotiate a great contract as they have no knowledge of how complicated contract negotiations can be, especially in the absence of clear legal frameworks and sound institutional arrangements,” he said. “Afghanistan may be a bit player for now: poor, hungry, exhausted by almost half a century of war. But its future is more likely to be defined by China’s ambitions than the retrogressive mullahs currently in charge.”

Lynne O’Donnell is a columnist at Foreign Policy and an Australian journalist and author. She was the Afghanistan bureau chief for Agence France-Presse and the Associated Press between 2009 and 2017.



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