With the Taliban’s swift takeover of Afghanistan after a chaotic and tragic US withdrawal, images of civilians fighting desperately to board planes leaving the airport raised questions about the future waiting for the Afghan people after the return of the radicals to rule the country.
The takeover of Afghanistan after twenty years of war with the US has deepened the humanitarian and economic crisis in the country. This leaves many Afghans profoundly concerned about their human rights, particularly women, ethnic, and religious communities. The return of the hardliners has also put the political and economic situation in the country at risk.
But many experts see that Afghans will not bear the pain alone, as the crisis will soon be felt on a wider scale. This remote, mountainous country with a GDP of $19 billion and 38 million people has proven time and again that it has an outsized impact on the world. The Afghanistan crisis has implications that are expected to affect global security from both political and economic perspectives. And although it has never been a significant energy producer, the new destiny of the country will play a decisive role in what may happen in future energy markets as many analysts have noted.
The Lithium Trove
The fact that Afghanistan is sitting on mineral deposits estimated to be worth $1 trillion or more can put it at the forefront of the future energy market as one its key players.
Supplies of iron, copper and gold are scattered across the country’s mountains. There we can also find rare earth minerals and, perhaps most importantly, one of the world’s biggest deposits of lithium — an essential but scarce component in rechargeable batteries and other technologies vital to tackling the climate crisis like electric vehicles and solar power.
Most experts insist that the demand for lithium will only increase. Afghanistan’s estimated reserves will easily help it become one of the richest countries in the area within a decade, if the metal can be extracted.
In the past, security challenges and lack of infrastructure have prevented the extraction of these valuable minerals. However, today there’s an interest from countries, including China, Pakistan, and India, which may try to engage despite the chaos.
There is also an interest from the Taliban itself to use the mineral wealth for achieving economic development and gaining international recognition. However, it is extremely difficult for the Taliban alone to successfully launch commercial lithium mining.
China, being the world’s second most powerful economy and a neighbor of Afghanistan, stands as the most capable runner in the contest for these minerals. The Chinese have also proven to be leader in mining rare earth metals and maintains its status as the largest producer of lithium cells.
In succeeding to align itself with the Taliban and brokering a productive relationship to tap into the nation’s mineral resources, China will gain a nearly undefeatable position in the global clean energy race. The opportunity to seize further control over these critical minerals can be seen as a determining factor in China’s warming relations with the Taliban.
China was one of the first countries that expressed willingness to engage diplomatically with the Taliban. Some experts have claimed that China may also be trying to protect itself from terror attacks by building a relationship with the Islamist group. However, Afghanistan’s staggering mineral wealth cannot be ignored by an economic powerhouse such as China.
Bringing the TAPI to Life
China also is seen as the potential financer for a mega project that can change the dynamics of natural gas trade. The Taliban’s officials have recently renewed discussions about the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. With new regime being quick to quench its thirst for cash, Taliban officials said that TAPI is a “long-term priority project”.
For more than three decades, energy companies have tried to think of routes to send natural gas from gas-abundant yet land-locked Turkmenistan to energy-poor Pakistan and India. As these efforts were proven unsuccessful due to political, security, and financial challenges, this dream fizzled down to an unrealizable fantasy.
Over a long period of time, the TAPI dream was impossible to realize, due to the regional volatility, with the worsening tensions between India and Pakistan as well as the deteriorating security situation in Afghanistan. In such an environment, finding the sufficient funds to finance the project with the billions of dollars was an impossibility.
However, the situation is different today as the Taliban is thirsty for funds needed for the current transitional period. A giant project such as TAPI could reassure the global business community that Afghanistan is now stable. It is for this reason that the Taliban is committed to protecting the pipeline from any attacks.
Other projects that the Taliban also have a keen interest in include the Turkmenistan-Afghanistan-Pakistan high-voltage power transmission lines (TAP) and railways from Turkmenistan to Afghanistan.
All these projects seem to fit well with China’s Belt and Road Initiative (BRI), a $900 billion program to open channels between China and its neighbors, mostly through infrastructure investments.
The “Belt” part of the Belt and Road Initiative, introduced by Chinese President Xi Jinping in 2013, refers to a network of overland roads, railways, and oil/ natural gas pipelines planned to run along the major Eurasian land bridges. Hence, comes expectations for China to give a hand to these projects, but many experts still have speculations about China’s ability to really engage with the radical militants in real business.
Many have noted that the relationship between China and an Islamist militant group such as the Taliban will be complicated, as Beijing targets what it calls “religious extremism” among ethnic Uyghur Muslims in Xinjiang. China is worried that Afghanistan will turn into a haven for Uyghur extremists, who could launch attacks in response to the repression of their people.
According to Chinese officials, they have maintained contact and communication with the Taliban on the basis of fully respecting the sovereignty of Afghanistan and the will of all factions in the country. The Taliban reassured Beijing that it would “never allow any force to use the Afghan territory to engage in acts harmful to China.”
Still, Beijing might wait to see real commitments that the Taliban is going to act like ‘a normal government’ rather than a militant Jihadist group, before formalizing its diplomatic recognition or pouring millions in investments.
Major Geopolitical Changes
The future behavior of the Taliban can lead to different scenarios. Turning the country into haven for extremists and terrorist groups, who normally make oil and gas facilities their prime targets will certainly put more pressure on oil-rich countries concerned about the security situation. The scenes of chaos in Afghanistan are bound to affect oil markets that primarily rely on stability and risk assessment.
The US withdrawal from Afghanistan has already caused a lot of geopolitical changes that may sooner or later have direct or indirect effects on energy markets.
Afghanistan’s situation will have a big impact on US politics and the Biden administration’s ability to get things done. It’s expected now to find Gulf countries, for example, reassessing about their old alliances and seeking to build new ones with countries, such as Russia and China.
The Afghan crisis could harden Iran’s stance in its nuclear negotiations with the US, which may push the Biden administration to impose more sanctions, potentially making Iranian oil more difficult to export.
Afghanistan also has the potential to destabilize neighboring countries and other places as far as Europe, which may revive fears of a refugee crisis and consequently extremist terrorism.
Still, no one knows how the developments in Afghanistan may unfold, but it’s clear that this landlocked mountainous country is likely to hold a major position in global affairs with an outsized impact far from its borders.
