Will Chinese Mining Venture Bring Wealth or Heartbreak to Afghanistan?

Security in Afghanistan hinges on a legitimate revenue stream -- rather than the drug trade -- to develop the war-torn country, and U.S and Afghan officials have pushed mineral investments as the backbone of a new Afghan economy. But China's stagnancy on its promises to the Afghans and controversy surrounding the 2007 Aynak deal have raised alarm that Chinese investments might create more instability and fuel Afghanistan's culture of corruption.

"The Chinese have a checkered record at best," said Tom Lynch, research fellow for South Asia at the National Defense University Institute for National Strategic Studies. "They don't deliver, and when they do, they've left a trail of heartbreak."

China's footprint in Afghanistan is growing, and its investments will help shape the Afghan mineral business. In addition to the Aynak Mine, the largest investment in Afghan history, China is pursuing a second mine near Kabul that is said to contain more than 60 billion tons of iron, according to Congressional Research Services, the nonpartisan research center for Congress.

Meanwhile, American troops, who provide security essentially for the whole country, carry the burden of protecting Chinese investments and quelling any conflict they may create.

Aynak is consistent with Chinese ventures in other parts of the world, said Lynch. China has proved an unreliable investor in natural resources, rarely contributing to local communities as it promises to do, and often leaving the land scarred with ecological devastation, he said.

The exception may be Africa, according to Deborah Brautigam, an expert on China-Africa relations at American University.

China is heavily invested in countries of conflict, including Sudan, Angola and Democratic Republic of Congo – all countries where armed conflict is funded in part by mineral reserves. Brautigam points out that China's investments in Africa have brought new infrastructure to countries that otherwise couldn't afford it, even if Chinese business practices aren't always up to U.S. standards.

The U.S. has pressured the Chinese to invest in Afghanistan, Lynch said. China's deep pockets and voracious pursuit of energy resources make it an ideal candidate to spur mineral development and generate a legitimate source of revenue for the Afghan government.

In the case of Aynak, the Chinese may have bid too much for the mining contract without really knowing if it could deliver the infrastructure Afghanistan needs so badly, some experts say. Its offer was "generous to the point where I might not be commercially profitable for China," according to the August Congressional Research Service report on Afghanistan.

Experts predicted the Aynak project would cost $2.2 billion, but state-owned Metallurgical Corporation of China made a deal Afghanistan couldn't refuse. China pushed the price to $3.4 billion with promises of two power plants, roads servicing Aynak and a railway for exporting minerals back to China, which is funded by the Asian Development Bank and is in the early stages of construction.

So far, though, the Chinese, "have done nothing to contribute to the local economy," Lynch said.

Allegations of bribery that mired the deal have concerned some experts that China's investments will set the precedent for of corruption in mining contracts, which could further destabilize Afghanistan. Former Afghan Minister of Mines Mohammad Ibrahim Adel was ousted after the deal, accused of taking bribes from the Chinese. The U.S. Institute of Peace called for more a transparent contracting process, warning that unfair contracts could fuel more conflict.

Kenneth Katzman, leading Afghanistan expert at Congressional Research Service, is more forgiving in his assessment of the Aynak deal: "This is Afghanistan. This is not Donald Trump going out to bid," he said.

With an estimated $1 trillion in untapped minerals, Afghanistan should be the new frontier for Chinese investment. While Aynak is not yet operating, officials have big hopes. Aynak, in Logar province in eastern Afghanistan, could add more than $200 million to the Afghan national revenue each year and create an estimated 30,000 new jobs, according to the U.S. Institute of Peace.

So far, the Chinese have relied on U.S. and international troops to keep their investors and mining projects safe. The Chinese are responsible for their own security at Aynak, but because they do not have their own troops Afghanistan, they hire Afghan National Police. U.S.-led ISAF (International Security Assistance Force, the coalition fighting in Afghanistan) troops are responsible for building and training the Afghan police force, and work side-by-side with them.

"Directly or indirectly, ISAF is in some way trying to secure Afghanistan for these projects," Katzman said.

China policies allow it to send military outside its borders only for United Nations peacekeeping missions. Although U.S. diplomats have asked for Chinese forces in Afghanistan, China has made no commitment to provide military even in a noncombat role, according to a Congressional Research Service report on Afghanistan released Monday.

"You could well have a situation where U.S .troops are guarding a Chinese mineral field," said Frederick Starr, chairman of the Central Asia-Caucuses Institute, a research and policy center affiliated with Johns Hopkins University.

China is competing with India for the Hajji Gak iron mine near Kabul. If the Chinese continue scooping up big-ticket contracts, other competitors like India would be pushed aside.

"It would produce intense frustration," Lynch said.

A little regional economic competition, though, isn't nearly the threat to Afghanistan security that the Taliban is, some experts argue. Chinese investment practices may have less oversight and transparency than the U.S. would like, but the two countries share the same security goals. China has grown increasingly concerned about the Taliban spilling over the small border the two countries share, according to Congressional Research Service.

"The Chinese have national interest in stability in Afghanistan," said Steve Coll, president of the New America Foundation and Pulitzer Prize-winning author on South Asia conflict. "The more active they are in promoting stability and being concerned about how to contribute to stability, the better off everyone will be."