6 April 2010

Afghanistan and Volvo - Ali Kulebi

Volvo is one of the most prestigious automakers in the world. An icon of the high quality steel mined along Swedish forests, its brand has been well known for 80 years. Geely, on the other hand, is an unknown Chinese automaker. What is the link between Afghanistan, Volvo and China? The answer to this question is not as simple as pointing out that China is a hungry investor because Geely, which produced its first car in 2002, when Afghanistan was occupied, is preparing to buy Volvo from Ford. This company grew rapidly in the domestic market, and is also exporting to former SSR nations, to the Middle East and Africa. With the capital its accumulated over the years and help from the Chinese government, it is buying Volvo. We need to recall that Geely established a strategic partnership with Goldman Sachs in producing spare parts for London taxis, and for this job it invested 250 million dollars. It is also necessary to point out that the Chinese government is closely observing these developments, even involved in them, since it is preparing to give one billion dollars to Geely.

Seeing these developments as China’s bid for technological advancement or Beijing’s indifferent development attack means missing the big picture because, with the opportunity created by 2,270 trillion dollar foreign currency reserves, investments are not directed only to safe regions, but also to the world’s most problematic, even war-ridden areas. Afghanistan, where the United States does the “heavy lifting,” is the most obvious example. Some have argued that the United States’ occupation of Afghanistan aimed to prevent China from acquiring raw material resources. This is still being debated. If this is really one of the reasons, the American strategy was unable to block China, even with war because, Beijing chose Afghanistan as the source for meeting Geely’s need for steel and copper, and it succeeded. The Metallurgical Company of China (MCC) bought the management rights of Afghanistan copper fields for twenty-five years. The worth of this investment is eleven million tons. This is equivalent to one-third of China’s known copper deposits.

Thus, Beijing both guaranteed its future and has become a business partner of the Afghan government. Moreover, this was accomplished in a situation where the American backed Afghan government was struggling even to get a confidence vote.

Without doubt, the roots of asymmetric warfare go back to the twentieth century. According to the founders of the twentieth century science of geopolitics, Turkestan is the heart of the world. We observe that this is still valid, given the occupations that Afghanistan has experienced over the last forty years. We know that first the former superpower, the Soviet Union and then the other superpower of the Cold War and today’s only superpower, the United States saw the importance of occupying Afghanistan despite heavy casualties and loss of prestige.

The United States, despite the failure of its Afghanistan adventure with NATO, continues to value being present in this country and made the decision to send an additional 30,000 soldiers in the coming days. In the same manner, it requests additional fighting forces from other NATO members, including Muslim Turkey. This development shows that the United States, which wants to get out of the Iraqi quagmire, is determined to show a stronger presence in Afghanistan and it may even employ a new strategy. On the other hand, while the United States increases its military presence, under the framework of the new strategy, it wants to develop this country economically and socially with its allies and reduce the influence of radical religious groups on the Afghan nation.

Underground Strategy

As the world population rapidly increases and countries’ living standards rise, the demand for natural resources also increases accordingly. Especially China and India’s rapid increase in production and consumption has increased the demand for agricultural products and especially industrial natural resources. As a result this trend increases the price of various natural resources. The demand for resources such as oil, iron, zinc, nickel, chrome and especially copper, which industry sorely needs, has increased geometrically.

Thus, the largest unexploited copper deposit in the world is highly important to industry, and it is located in Afghanistan. This deposit is located eighty kilometers from Kabul in the Aynak region. It is estimated that the worth of 700 million ton reserves of this precious metal reserve is 80 billion dollars. Doubtlessly, this asset is a godsend and even a harbinger of rebirth for a nation as poor as Afghanistan.

However, copper is not Afghanistan’s only asset. It has coal fields in the Baghlan region, natural gas in Sheberghan, oil in Mezar-e Sharif and iron in Badakhshan and Sar-e-Pol. It is estimated that these regions have significant reserves. In addition, various parts of the country have lead, zinc, gold, silver, sulphur, beryl and asbestos deposits.

Moreover, it is said that iron deposit in Hajigak, located one hundred and thirty kilometers west of Kabul, is the largest and most important in Asia. However, only small amounts of it have been extracted. In other words, these important reserves have made no contribution to Afghanistan. Continuous wars for many years and occupations by foreign powers have forced the nation’s people into a struggle for survival. Since mining management requires investment and has not been put into action, large numbers of people turn to opium production, which provides secure, easy and serious income. On the other hand, difficult terrain and the difficulty of transport to production sites have prevented the exploitation of these resources for the benefit of the people and to provide employment.

For example, the iron reserves in Hajigak, approximately 1.5 billion high grade tons, are located at an altitude of 3,500 meters. Since there is no railroad network that could transport the excavated ore, the nation also lacks an iron-steel factory that could process it. Currently landlocked Afghanistan has no way to transport it to the world market.

Would Economy Solve the Problem?

The Obama administration claims that its military will withdraw from Afghanistan in 2011. It is also known that this claim does not fit with the US’s political and strategic line. The US needs Afghanistan and the excuse of terrorism there to maintain its presence in Central Asia. In other words, a forward base like Afghanistan is indispensable to the United States’ strategy for controlling Russia on the Asian continent.

On the other hand, the sufferings of the Afghan nation are disturbing to world public opinion. For this reason, the US’s new Afghanistan strategy, while maintaining security to some extent, should provide the Afghan nation with economic opportunities surpass opium production. Thus, natural resources could become means for a US exit strategy. Management of natural resources, the construction of roads for transport to domestic and international markets could provide employment for hundreds of thousands of Afghans.

Consequently, the management project that’s been initiated for Hajigak’s iron fields is a significant step. It is argued that the steel factory planned for this region will provide employment to 80 thousand people. This also means billions of dollars of income for the country’s economy.

It is also known that steps have taken for the management of natural gas in Jowzjan and oil fields in Sar-e Pol and proposals are expected from foreign companies. Iron fields in Logar province have already begun to be managed by the Chinese.

But thousands of workers have already begun work under the protection of soldiers and guidance of Chinese engineers at the one of world’s important copper deposits, Aynak. Opening operations here means a new future for Afghanistan and its people.

Afghanistan’s government realistically evaluated this development opportunity and selected China from sixteen nations for the management rights of this mining field. They did so because China is the closest nation that can produce the machinery needed to run the mine, and because it has the highest demand for copper, you might say, it’s starving for copper. China also guaranteed the construction of a power plant, roads, housing, hospitals and schools, a three billion dollar investment, in accordance with the criteria set by Afghan government for the management of the field. This project is China’s biggest overseas investment, and while it reveals China’s efforts to acquire natural resources it underlines the significance and place of Afghanistan in this strategy.

Another plan, promoted by China in particular, for transporting Afghanistan’s natural resources to the open seas is the construction of a railroad that would run from Jeyretan on Uzbekistan’s border, to Kabul and extend east from there to Torkham on the Pakistani border. If this project were realized, it would be realize the stability and security in Afghanistan that American weapons were unable to provide.

Who knows, Volvos produced with Afghan steel and copper may one day cruise the streets of Kabul or Helmand.

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