What the Resource Curse Means for Afghanistan

Afghanistan's post-war government has an opportunity to transform its economy, but security risks continue to pose a threat.

Feb 27, 2014 at 10:04AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out these recent articles:

Three years ago, the U.S. Geological Survey said some of the resources in Afghanistan could transform an economy normally dependent on illicit narcotics. With this year's pivotal drawdown of international forces, how a post-war government handles those reserves could determine its future.

The U.N. Office on Drugs and Crime said opium, a heroin precursor, represents the equivalent of roughly half of Afghanistan's gross domestic product. A 2011 study by the USGS, however, found natural resources could "completely" transform the nation's economy. 

USGS studied two dozen reserve formations in Afghanistan and found "giant" deposits of copper and cobalt near Kabul, gold in the south of the country and rare-earth elements in parts of Helmand province.

Last year, the Afghan Ministry of Mines launched a seismic survey in Herat and Badghis provinces. Working alongside Canadian energy company Terraseis Trading Ltd. and the U.S. Defense Department, the ministry said it was examining the reserve potential in the region's Kushka basin, near the border with gas-rich Turkmenistan.

In Jawzan province in northern Afghanistan, the government solicited bids for drilling four natural gas wells in the Juma and Bashikurd fields, first discovered in the 1980s.

Global Witness, along with its partners at Integrity Watch Afghanistan, said in a report it was time for the Afghan government to commit to greater measures to ensure any resource extraction was shielded from corruption. With provincial council and presidential elections set for April, it's time to get serious on transparency as the Ministry of Mines starts drafting new resource management plans, they said.

Stephen Carter, director of the Afghan program at Global Witness, said Kabul has taken a few steps in the right direction in the last few years.

"That should be priority for the next administration whoever wins the election because otherwise there is a serious risk that any benefit from extraction will be lost," he said.

Afghanistan's security future, meanwhile, is in serious doubt because Afghan President Hamid Karzai hasn't signed the necessary security arrangements with U.S. and international partners for a post-2014 mission. NATO Secretary-General Anders Fogh Rasmussen said that without those agreements, there will be no international troops in Afghanistan after 2014.

International forces are looking to retool their mission to advise Afghan forces taking on more responsibility for national security. In its report on 2013 casualties, the U.N. Assistance Mission in Afghanistan said insurgent violence in the country was "unrelenting," suggesting national forces might not be up to the task.

Despite the risks, Afghanistan is drawing in energy investors. In October, Dragon Oil, a Dubai-based company, said it signed exploration and production sharing contracts with the Afghan government for reserve areas near the borders with Uzbekistan and Turkmenistan. Without the proper safeguards in place, however, Global Witness warns the extractive industries in Afghanistan can "easily" lead to more conflict in the country.

Bad news for OPEC could be good news for investors
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!


Written by Daniel J. Graeber at Oilprice.com.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information