Geographical realities
By Salman Shah | From the Newspaper
IN previous articles (Aug 7, Aug 21 and Sept 7) for Dawn, I have argued that apart from other factors, geography also plays a major role in the economic development of a country.
In this respect, Pakistan occupies a strategic location and can play a major role in being a regional trade, energy, logistics, trans-shipment and manufacturing hub.
Pakistan has at least six different regional clusters of countries that represent huge opportunities for us. These include Afghanistan and Central Asia; Iran and the Middle East; the East African coastline; Saarc countries to the east; the Asean countries in the east Indian Ocean region; and China to our northeast.
We need to develop a strategy of engagement with each of these sub-regions to maximise our mutual economic and commercial benefits. In this article, I will focus on Afghanistan and beyond — a region that is critical to our national existence. Geography demands that the foundation of our future relationship be based on mutual dependence, assured security and a shared prosperity on a sustainable basis.
The six Central Asian countries are linked with us through the Economic Cooperation Organisation (ECO) along with Afghanistan, Iran and Turkey. The combined GDP of the ECO countries is over $1.6tr that is larger than the GDP of India. At this stage, Afghanistan which has the smallest GDP in ECO happens to be the most important country as far as our future is concerned. Afghanistan is also the logistic lynchpin of the region. Therefore, stability, economic prosperity and the security of Afghanistan is a necessary condition for regional economic integration and the establishment of a free-trade area for the ECO.
When we look at our trade relationship, we see that Pakistan’s exports to Afghanistan are approaching $2bn a year and cover a large variety of food and consumer goods, cement and petroleum products. However, Pakistani imports from Afghanistan are less than $100m comprising a few fruit and food products, cotton from Central Asia and coal imported by our northern cement producers. This is an unsustainable trade relationship. As the drawdown of US forces in Afghanistan starts and the funds contributing to imports from Pakistan dwindle, our exports will evaporate.
Afghanistan is a landlocked country that needs Pakistan trade routes for reaching western and global markets. It also has northern routes through Central Asia to reach Russia and China. Its main problem, however, is the lack of exportable surpluses. It has limited capacity to produce agricultural or manufactured products. It is thus left with the only option of developing its mineral sector. This has recently been propagated by the Americans to potentially exceed $1tr in mineral wealth waiting to be exploited.
The United States Geological Survey (USGS) assessment has revealed that Afghanistan has vast mineral resources, including known deposits of copper, iron, barite, sulphur, talc, chromium, magnesium, salt, mica, marble, rubies, emeralds, lapis lazuli, asbestos, nickel, mercury, gold and silver, lead, zinc, fluorspar, bauxite, beryllium and lithium. Based on quantitative, probabilistic estimates, the country also appears to have significant undiscovered deposits of copper, mercury, rare earth elements, sulphur, chromite, asbestos, potash, graphite and sand and gravel. Many mineralised areas merit further study and may contain resources amenable to rapid development.
The huge mineral wealth of Afghanistan is likely to transform it into an arena of intense competition between international and regional powers. The Indian mines minister recently announced that India will take measures for training Afghans and establishing avenues for bilateral cooperation in the field of minerals. China, which also intends to dominate the development of Afghanistan’s mineral wealth, has already signed a $3bn deal to mine copper in Afghanistan’s Logar province. In addition, the US, Russia and Iran will also try to get involved.
The border area of Afghanistan and Pakistan is particularly rich in many mineral deposits. The Taliban dominate some of these areas. At the same time, there could be fierce competition among the various tribes in Afghanistan for control.
Pakistan is ideally placed to acquire a central position in the exploitation of these resources. Pakistan’s competitive advantage includes proximity and knowledge of the area, outlets to the sea, supply of miners, training for Afghans, processing facilities and a market for some minerals like iron ore for our steel industry. We should realise that without Pakistan’s cooperation many of these minerals would not see the light of day.
Therefore, Pakistan should be the core of an international consortium of finance and technology to compete for these
minerals with Afghan particpation. We should deny facilities to those players who do not involve Pakistan in these endeavours and use Pakistan only as a conduit for transporting minerals out of Afghanistan. This is an area where American and Pakistan interests may coincide.
What we lack is a focused strategy to develop the mining industry in Pakistan and then leverage it into Afghanistan.
As a first step we should quickly move to finalise the mining agreement with our Chilean and Canadian partners to develop the Reko Diq mineral deposits. We should ensure that the mined ores are refined and processed in Pakistan and that our people are fully trained in every aspect of mining, refining and processing these minerals.
Secondly, we should establish domestic private-sector players to partner western multinationals to exploit our other mineral-rich areas.
Thirdly, these partnerships should be encouraged to compete for mining concessions in Afghanistan.
If we play our cards right we should be able to lay the foundations of a vibrant mining industry in the country and also lay the foundation for a long-term, friendly and mutually beneficial relationship with Afghanistan. The Central Asian states are also rich in minerals, and our experience and success in Afgahanistan will determine whether we will be able to build an economic relationship with them.
The writer is a former finance minister.
Geographical realities | Opinion | DAWN.COM
Geographical realities
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