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bne September 2021 Afghanistan falls to the Taliban I 31
funding. As Kabul fell on August 15 the Biden administration froze billions of dollars of Afghan government reserves held in US bank accounts on the same day, cutting the Taliban off from the former government’s money.
Strapped for cash and without any viable industry, the temptation for the Taliban is to simply concentrate on the narcotics business that generates $1bn a year in earnings from opium production and export. The Taliban explicitly addressed the issue of drugs in its first press conference with the international press on August 17 and promised to make Afghanistan a “narcotics free” country, but observers remain sceptical.
“But from now on, nobody’s going to get involved, nobody can be involved in drug smuggling. Today, when we entered Kabul, we saw a large number of our youth who were sitting under the bridges or next to the walls and they were using narcotics. This was
so unfortunate. I was saddened to see these young people without any faith in the future. From now on, Afghanistan will be a narcotics-free country but it needs international assistance. The international community should help us so that we can have alternative crops. We can provide alternative crops. Then, of course, very soon,
we can bring it to an end,” Taliban spokesman Zabihullah Mujahid said in the press conference in Kabul.
Investing heavily
China has been investing heavily in the countries of Central Asia, and further afield, as part of its Belt and Road project to build a land trade
and investment corridor with modern infrastructure between Asia and Europe. It is already well positioned
to expand that investment into Afghanistan and hook the country up to the growing regional infrastructure, as bne IntelliNews reported in the article “As Taliban regime takes
shape, Central Asia and Iran assess fate of Afghanistan investments.”
The fear of China moving into Afghanistan and taking control of its mineral resources has become a growing security concern in the past few years.
If China gains control of Afghanistan’s pristine lithium and rare earths reserves, it will be a key victory in the battle for resources with Europe and the US, which imported 80% of its rare earth metals from China in 2019, while the European Union imported 98% of its minerals from China the same year.
In addition to direct economic motives, China may also be tempted to develop mineral production in another country as the processing to produce both copper – another burgeoning metal
on the market thanks to its extensive use in electric vehicles – and lithium is extremely harmful for the environment.
Moving production to a country that has never even heard of carbon credits has a lot of appeal, especially since China itself has already committed to achieving carbon neutrality in 2060.
Although China has always enjoyed relatively warm relations with previous Afghan governments, so far the entire two-decade history of Chinese projects in the country has ended in failure. Singapore-based economist Rafaello Pantucci, in a column for the Nikkei, recalls that the September 11, 2001 attacks happened as the Taliban minister of natural resources was in talks with
a Chinese delegation in Kabul.
The biggest project is the Mes Aynak copper mining site, the largest investment project of Chinese state- owned companies in Afghanistan. In the noughties the expectation was that the mine could produce marketable minerals worth $350mn a year within five years, but the development of the mine has been frozen ever since. It turned out that the natural resources minister of Afghanistan demanded
a bribe of $30mn from the Chinese for permission to work in an area completely controlled by the Taliban.
The last big project that Chinese foreign trade specialists in Kabul were engaged in was merely establishing an air corridor for exporting pine nuts to China.
As Taliban regime takes shape, Central Asia and Iran assess fate of Afghanistan investments
Muzaffar Ismailov in Tashkent & Kanat Shaku in Almaty, Will Conroy in Prague
The new hard reality in Afghani- stan, with the country back under Taliban rule after 20 years, will prompt neighbouring nations including Turkmenistan, Uzbekistan, Tajikistan and Iran to rapidly reas-
sess the prospects of investment projects that essentially depend on Kabul’s support and cooperation.
There are relatively few such projects but some of those that do exist are quite sizeable and strategic. Below, bne IntelliNews takes a look at some of the investments concerned and
at whether or not they are likely to survive under the Taliban regime, a regime that, sometimes described as the world’s biggest drug cartel, won’t be in
too much of a hurry to diversify away from Afghanistan’s heroin economy.
Turkmenistan
In February, a Taliban delegation paid a surprise visit to Turkmenistan to restate support for the planned Turkmenistan-Afghanistan-Paki- stan-India (TAPI) gas pipeline.
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