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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Afghan Newspaper Lambasts China as Rapacious Exploiter

With the news that the U.S. is holding secret talks with the Taliban in the Persian Gulf state of Qatar, many Afghans are looking towards a future when military operations cease and the country can begin to recover from more than three decades of war.
Afghanistan’s infrastructure will require foreign aid in the billions, but the Pushtun-language independent Afghan newspaper Cheragh on 28 December published an editorial lambasting one of Afghanistan’s neighbors, which has the potential to inject billions of dollars in aid, but has so far contributed a miserly $150 million in reconstruction assistance while pursuing business deals worth billions.
The neighborly scofflaw?


China’s border with Afghanistan is only 47 miles long and is located in the remote and largely inaccessible Pamir Mountain range along the northern frontier of Afghanistan’s Wakhan Corridor. The frontier has its genesis in the “Great Game,” as in 1895 Britain and Russia agreed to extend Afghanistan’s northern boundary east into the Pamir Mountains to produce the Wakhan Corridor, a new buffer zone that separated their respective empires. In 1963, the People’s Republic of China formally accepted the existing border with Afghanistan.
Afghanistan has asked China on several occasions to open the Wakhan Corridor border for economic reasons, or as an alternative supply route for fighting the Taliban insurgency, but China has resisted, fearing increased unrest in its bordering far western Xinjiang province, which contains a largely Turkic Uyghur population. In December 2009 the United States reportedly asked China to open the Corridor but two years later the frontier remains shuttered.
The tone of the Cheragh editorial is evident from its title, "China, the country which seeks big profit and little loss," which appeared the same day that the Afghan government announced that it had signed an agreement with China's state-owned National Petroleum Corporation (CNPC), allowing it to become the first foreign company to develop or exploit, choose your verb, Afghanistan's oil and natural gas reserves. According to Afghanistan’s Ministry of Mines, the Afghan-CNPC contract is worth $700 million but the Ministry added that the total value of the agreement could be ten times greater if more reserves are found and developed, and if international oil prices remain at today's levels, producing a potential eye-watering $7 billion.
The editorial author writes, “Under this deal, China has won access to potentially millions of barrels of Afghan fuel, although it has played a small role in the reconstruction of Afghanistan by contributing a meager $150 million. This amount pales in comparison to the financial and technical assistance provided by Afghanistan's other neighbors like Iran and Pakistan. This is despite the fact that China can play a greater role in the construction and reconstruction of infrastructure in Afghanistan, which has been destroyed during the war and crisis due to interference by Afghanistan's neighbors and sale of Chinese weapons.”
Warming up to his topic the author continues, “Oil and fuel exploration is not the only area in which China wants to invest. China previously won an agreement to access Mes-e Aynak copper fields in Afghanistan. This shows that China has been exploiting and taking advantage of the developments and situation in our country for its own profit and that it is not acting as a sympathetic neighbor.”
In 2008 China Metallurgical Construction Co. concluded an agreement for a 30-year lease to invest $3 billion to develop and mine copper from the country’s massive Mes-e Aynak copper deposits in Logar province, worth an estimated $88 billion. In collateral projects to develop the reserves China also agreed to construct a 400-megawatt power plant for the project that would electrify much of Kabul. To transit the ore out of Afghanistan China also proposed to build the country’s first railroad north through the Hindu Kush Mountains to Xinjiang. Because Afghanistan’s total GDP in 2007 was an estimated $7.5 billion, the Mes-e Aynak investment dwarfed any previously proposed development projects.
And the oil contract?
According to Afghan Minister of Mines Wahidullah Shahrani, the contract, covering the northeastern provinces of Sari Pul and Faryab, is the first of several such blocks to be put on the market in 2012, with exploration blocs in Balkh province scheduled for bidding in February and for Herat province by the summer. Ironically, Soviet engineers in the 1960s first explored Sari Pul and Faryab in the Amu Darya River Basin and estimated the reserves at about 87 million barrels, but both the Afghan and Chinese partners believe they will prove to be much larger. Supporters of the lease, including Minister Shahrani, note that it provides for the Afghan government to receive 70 percent of the profits from the sale of the oil and natural gas and that CNPC will also pay 15 percent in royalties, as well as corporate taxes and rent for the land used for its operations.
So, will this infusion of investment be to Afghanistan’s benefit? Our author writes, “In view of China's inactive and even indifferent position on developments in our country in the past, China does not deserve to win such economic concessions. By sending its cheap military equipment to the warring parties in Afghanistan, China has not only been involved in the destruction of our country in the past four decades, it has also been a mere spectator of its most impoverished neighbor.”
The editorial concludes, “It is necessary that the government of Afghanistan, which is trying to strike a positive balance among countries involved in Afghanistan, should stop awarding economic concessions to a neighbor which seeks more profit and little loss in our war-battered country. If, Allah forbid, the bitter incidents of the past repeat themselves, this superpower will abandon us and it will not lend our people a helping hand.”
Shahrani said Afghanistan's army and police will set up special units to guard the CNPC Sari Pul and Faryab project. If the level of resentment and bitterness in the Cheragh editorial is an indication, they will have their hands full.

By. John C.K. Daly of Oilprice.com

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  • Fred Banks on January 06 2012 said:
    Three decades of war, John? I think that you mean a few hundred decades, because war has always been Afghanistan's business, and business has usually been good. Somebody should have explained that to Mr Bush before he decided to force feed that country a dose of freedom and democracy.As for the wording in the article you mentioned, if China is looking for a big profit while sustaining a small loss, Uncle Sam has shown a preference for a small profit with a very large loss.

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