Thursday, March 23, 2023

China’s delayed investment a cause of concern for Taliban

By A. Rafat

Afghanistan’s economy is collapsing without any foreign aid. With the freezing of its overseas assets, the hope of Chinese investment is also not fructifying. Chinese undeclared ‘go slow’ on promised investment was apparently irking Taliban officials and business community.

Afghanistan is at risk of acute hunger and there are no development activities. Though Beijing promised to fill the vacuum created by the US withdrawal through investments, economic activity has not yet started. Many Chinese companies visited Kabul and held discussions with the business communities including Afghan Chamber of Commerce and Investment, but nothing seemed forthcoming.

Beijing had signalled earlier that it would help Kabul by activating joint ventures that were stalled and invest in new projects. However, Chinese promises remain unfulfilled.

China launched a new railroad line connecting Afghanistan with China through Central Asian countries with the first containers departing from China on September 13. The launch was promoted as opening economic trade routes for the Taliban-led government in Afghanistan. It had already announced a tariff waiver on 98% for Afghan goods. However, these measures were unlikely to bring any relief for Afghanistan, which was primarily a natural resources country with its exports potential limited for want of industrialization.

China’s engagement with Afghanistan has intensified over the last decade. Afghanistan is key to China’s Belt and Road Initiative (BRI) because it lies at the crossroads connecting Central Asia and the Middle East. Beijing’s long-term strategic objectives cannot be met unless Afghanistan is stable and peaceful which is possible only with economic development. China’s strategic interest in Afghanistan focuses on protecting Kabul from geopolitical competition, preventing the country from falling back into the orbit of the West and promoting stability in the country and preventing it from becoming a safe haven for extremists.

China’s main apprehension is Afghanistan’s potential to become a haven for extremist groups with ties to the Xinjiang Uyghur Autonomous Region, especially the East Turkistan Islamic Movement (ETIM). Beijing foresees Afghanistan’s narrow, 90 km long Wakhan corridor between Pakistan and Tajikistan, providing passage into Xinjiang, making it vulnerable to influence by ETIM. Besides, historical linkages between ETIM and the Taliban are also a matter of concern for Beijing.

Observers point out that while the Taliban is trying to restrain the movement of ETIM militants in Afghanistan to satisfy China with measures such as pressing them back from the border with Xinjiang, the Taliban officials are restrained by the fact that if they come down too hard against ETIM, many of their members could end up defecting’ to the Islamic State group, one of the Taliban’s biggest threats.

However, the security threat emanating from Afghanistan is not limited to the ETIM. Al-Qaeda and Tehrik-e-Taliban Pakistan (TTP) also pose a visible threat to China, including in neighboring Pakistan, which has heavy Chinese investments. The Islamic State Khorasan Province (ISKP) has added to the complexity. ISKP has accused the Taliban of “selling out” to China. China is also alarmed by ISKP’s latest propaganda campaigns that rake up the Uyghur issue.

China seeks to use the BRI format to invest heavily in infrastructure and design a network of partner countries around the globe. Hinting at support for Afghanistan’s participation in Beijing’s BRI, Chinese Minister of Foreign Affairs Wang Yi earlier stated “China hopes that the Afghan side will earnestly fulfill its commitment and take effective measures to resolutely crack down on all terrorist forces, including the ETIM.”

Beijing is holding billions in promised and future investment, including USD 3 billion deal with state-owned Metallurgical Corp of China, which in 2007 was awarded a contract to mine a copper deposit in the Mes Aynak in Logar Province for 30 years. The Taliban had expected to earn hundreds of millions of dollars per year from the long-stalled project.

There are other Chinese projects that are also of interest to Kabul. China National Petroleum Corp’s oil from the Amu Darya basin in northern Afghanistan is either not fully operational or making little progress in extracting.

But, it is frustrating for Beijing that the Taliban want to renegotiate the terms of some of the previously agreed upon investments from China, including raising the royalty rate for copper mining at the Mes Aynak. China has previously sought to lower the 19.5% rate.

It is difficult for Beijing to move its companies to a country with very little managerial experience and limited capability to deliver on the local government side.

China is looking at exploitation of Afghanistan’s USD 1-3 trillion worth of mineral deposits, including highly coveted rare earth elements (REE). According to US Geological Survey, Afghanistan has 16 trillion cubic feet of gas, 500 billion barrels of liquified natural gas, and 1.6 trillion barrels of crude oil. Access to resource-rich Afghanistan would serve China’s economic ambitions and help secure itself as a reliable and stable economic partner for Central and South Asian nations. However, the continuing standoff means that Afghanistan’s mineral treasures are to remain underground even longer.

But China has been cautious toward Afghanistan due to concerns that insecurity there could spill over into Xinjiang, which has a large ethnic minority Muslim population. Beijing has displayed a degree of caution in handling the Taliban government and has refrained from providing any economic aid to Taliban-ruled Afghanistan. The much-awaited Chinese investment may be held up as security concerns are rising with the passing of each day.

Note: The contents of the article are of sole responsibility of the author. Afghan Diaspora Network will not be responsible for any inaccurate or incorrect statement in the articles.

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