Can economics help bring peace to Afghanistan?

A famous cartoon from Victorian Britain shows a nervous Afghan ruler standing between a lion and a bear, both of which are looking at him hungrily. The caption says, "Save me from my friends." The animals represent the British and Russian empires, both of which wanted to get their political paws on Kabul.

Afghanistan’s neighbors are a different set today, but the cartoon still depicts one underlying truth. Impoverished, landlocked Afghanistan remains deeply vulnerable to regional tensions, including those between India and Pakistan. Yet, in the time of empires, it managed those tensions to its own advantage.  It can do so again today, and in doing so help the United States’ exit strategy.  A political process is the key; but economics can make a contribution.

Afghanistan’s vast mineral deposits have never been more valuable. China’s top copper producer foresees a global shortage of the metal next year; in 2009 it consumed 60 percent of the world’s supply of iron ore.  How fortunate, then, that just to its west Afghanistan has plenty of both: one of the world’s largest unexploited copper mines at Aynak, and 1.8 billion tons of iron ore at Hajigak. China has already invested more than $3 billion in leasing and developing the Aynak mine.  

The fact that China, which is Pakistan’s closest ally, now has an investment in Afghanistan gives Pakistan a strong incentive to keep at least part of the country stable — a stronger incentive, perhaps, than even American pressure can provide. (Even the Afghan Taliban has, over the years, generally shown itself keen not to offend China.) This goes with the grain of the thinking in at least part of the Pakistani military establishment, who see that prolonged instability in Afghanistan would make Pakistan’s internal problems worse.

Iran has in the meantime discussed spending $2 billion to build a railway across northern Afghanistan, to link itself up with Tajikistan and even China. If the railway proves too ambitious, there is always the prospect of enhanced road links to do the same job.  Such a project would not be seen in Washington with unmixed feelings; but it would give Iran good reason to keep the peace in Afghanistan.

This gives some room for hope that Afghanistan’s neighbors, which supported rival sides in the Afghan civil war — relationships which continue to this day — might see an advantage in a peaceful settlement this time around. 

It is by no means guaranteed. The costs and benefits for each country are complicated and uncertain, and regional Governments may not necessarily approach them in wholly rational ways.  Win-win economic solutions that involve Afghanistan have not worked out in the past — the TAPI pipeline has been spoken of since the 1990s and remains… a pipe dream. An Iranian-Pakistani deal would not necessarily be respected by the Afghans on the ground, and might be viewed with suspicion by India (although Iran’s close relationship with India might just slightly sweeten the pill). And although Chinese investment might make both China and Pakistan more inclined to seek stability in Afghanistan, they might do so in ways that harm U.S. interests (buying off the Taliban, and/or helping Iran evade sanctions).

Nonetheless, there is a possibility that at least some regional powers might want to reach a peaceful settlement with each other, aimed at protecting their own interests in Afghanistan; and this has two implications.  First: by encouraging and facilitating regional investment instead of crowding it out with Western aid, the U.S. might do itself the double favor of saving money and helping create a better prospect for stability in Afghanistan.

Second: such a peace would have wide consequences in the region — for India, Iran, Pakistan and China — and may well happen, with or without the involvement of non-regional players like the U.N. or the United States. This is further evidence that a process aimed at achieving a political deal in Afghanistan, facilitated by the economics of investment, and involving regional players should be begun now, while the international community, and specifically the U.S., still have troops and influence in Afghanistan.

Gerard Russell was in charge of the British government’s outreach to the Muslim world from 2001 to 2003. He is now an Afghanistan/Pakistan fellow at the Harvard Kennedy School’s Carr Center for Human Rights.