January 31, 2025

Political Risk, Corruption and the ‘Resource Curse’ in Contemporary Afghanistan

By Nathaniel Ellis

The ‘Resource Curse’

Afghanistan possesses a substantial wealth of untapped natural resources, including precious minerals, rare earth metals, gold, iron, and copper. According to a former mines minister, these resources could be valued at up to $3 trillion (Reuters, 2021). For example, since the discovery of the first oil field in Afghanistan in 1959, over 150 million barrels of oil reserves and more than 4,500 billion cubic feet of gas reserves have been identified across 29 fields in the Afghan portions of the Amu Darya and Afghan-Tajik basins (Ministry of Mines and Petroleum, 2019:10). Despite this decades of political instability has impacted the full exploitation of these assets, and only a small fraction of these resources have been utilised. This situation has led academics to posit the existence of a ‘resource curse’ in Afghanistan. The resource curse refers to the phenomenon observed by economists where resource-rich nations, particularly in Africa, Latin America, and the Middle East, tend to experience slower economic growth compared to countries with fewer natural resources (Badeeb et al., 2017:123). Contrary to expectations of improved development outcomes following the discovery of natural resources, resource-rich nations frequently experience higher rates of conflict and lower levels of economic stability and growth compared to their resource-poor counterparts (National Resource Governance Institute, 2015:1). This issue is intricately linked to political risk, as the management of natural resources is closely associated with governance, economic stability, and political decision-making, particularly in fragile states like Afghanistan.

The Prominence of Corruption and its Impact on the Natural Resource Sector

An abundance of natural resources has the potential to exacerbate political instability, particularly where governance structures are weak and institutions lack the capacity to manage resource wealth effectively. This supports the notion that mineral-rich countries are only cursed if their institutions are of poor quality (Boschini et al., 2007, cited in Joarder and Ahmed, 2023:3). Consequently, while Afghanistan’s vast deposits of resources present enormous economic potential, this wealth can become a double-edged sword. Rather than driving development, resource wealth in a context of poor governance can foster political corruption, erode democratic accountability, incite armed conflict, and undermine inclusive and sustainable economic growth (Council on Foreign Relations, 2012). For instance, elites in natural resource-rich countries are less likely to invest in productive enterprises, such as job-creating industries, and instead engage in rent-seeking behaviours by vying for control of these resources (National Resource Governance Institute, 2015:4). In some instances, politicians or government officials have deliberately dismantled societal checks or established new regulations to gain access to these resources or to provide access to associates, a process referred to as rent-seizing (National Resource Governance Institute, 2015:4). Such practices are well-documented in Afghanistan. In fact, corruption was such a pervasive issue in Afghanistan that in June 2020, prior to the collapse of the Afghan government in August 2021, John Sopko, head of the Special Inspector General for Afghanistan Reconstruction (SIGAR), identified corruption as “the most insidious threat” facing the Afghan government at the time (The Diplomat, 2021).

Following the collapse of the Afghan government and the subsequent U.S. withdrawal, the Taliban has regained full control over the country. Despite the Taliban’s reputation for having little tolerance for corruption, they remain vulnerable to the issue. Addressing this corruption and governing effectively poses a greater challenge than achieving success on the battlefield, as endemic corruption has infiltrated every level of Afghan society (The Diplomat, 2021). This is evidenced by Afghanistan ranking 162nd out of 180 countries on the  Transparency International Corruption Perception Index (CPI), with a score of 20 out of 100 (Transparency International, 2023). While there has been some improvement over the last decade, as Figure 1 illustrates, Afghanistan’s score remains significantly below the global average CPI score of 43 (Transparency International, 2024).

Currently serving as the acting Afghan Interior Minister, Sirajuddin Haqqani, a sanctioned terrorist and leader of the eponymous terror network, is consolidating his power within the natural resource sector, with Haqqani already having an extensive knowledge of the country’s mineral wealth (Foreign Policy, 2022). Javed Noorani, an independent Afghan researcher and expert on Afghanistan’s mining sector, notes that Haqqani is tightening his grip on the sector, and that the Haqqani terror network is already retaining much of the revenue generated by the sector (Foreign Policy, 2022). While some of this revenue may eventually be funnelled into different enterprises, in the interim, this sort of corruption and poor governance within the sector will exacerbate divisions among the Taliban as they vie for control (Foreign Policy, 2022).

Addressing the Issue

The persistence of such corruption and political instability within the Afghan hierarchy has long deterred consistent foreign investment in the nation. The most recent foreign direct investment indicator shows a net inflow of only 0.2% of its GDP (World Bank, 2025), with China being one of the few notable powers showing significant interest in the nation’s resources. China has expressed interest in key Afghan resource sectors such as copper, gold, oil, and lithium (VOA, 2023; Foreign Policy, 2023), which are essential to its economy. Nonetheless, the absence of regulatory frameworks, transparency in resource management, the imposition of international sanctions, and poor institutional capacity intensify global concerns regarding the nation, thereby deterring significant international investment. This is detrimental considering that Afghanistan’s economy is characterised by turmoil and relies on foreign assistance. To address these challenges, the nation should strive to create an atmosphere that encourages investment, enabling enterprises to allocate resources efficiently and provide profitable goods and services. This includes collaborating with international agencies and neighbouring nations to construct the systems and market ties essential to successfully handle public finances, establish a market-based economy, and gain consistent access to global financial markets, and develop trade ties with regional and international markets (Shinwari et al., 2023:5197). Addressing political risks and systemic corruption in the nation is essential in ensuring that mineral wealth translates into sustainable development and improved livelihoods for the Afghan people.

Bibliography

Badeeb, R, A., Lean, H, H. and Clark, J. (2017). “The evolution of the natural resource curse thesis: A critical literature survey”. Science Direct, Vol.51, pp.123-134.

Boschini A, D, Pettersson J. and Roine, J. (2007) “Resource curse or not: a question of appropriability”. Scand J Econ, Vol.109, Iss.3, pp.593-617.

Council on Foreign Relations. (2012). “Beating the Resource Curse: Global Governance Strategies for Democracy and Economic Development”. Council on Foreign Relations. Published April, 2012. Available at: Beating the Resource Curse: Global Governance Strategies for Democracy and Economic Development | Council on Foreign Relations

Foreign Policy. (2022). “‘The Taliban Have Picked Up the Resource Curse’”. Foreign Policy. Published 11th July, 2022. Available at: Afghanistan’s Mineral Resources Are the Taliban’s Cash Cow

Foreign Policy. (2023). “China’s Got Afghan Fever, Again”. Foreign Policy. Published 24th April, 2023. Available at: Afghanistan: China Wants the Taliban’s Critical Mineral Mines

Joarder, M, A, M. and Ahmed, M, U. (2023). “Does natural resource abundance breed corruption? The role of political institutions”. SN Business and Economics, Vol.3, Art.178.

Ministry of Mines and Petroleum. (2019). “Mining Sector Roadmap”. Ministry of Mines and Petroleum, Islamic Republic of Afghanistan. Available at: 02 – MoMP Roadmap + Reform Strategy_reduce.pdf

National Resource Governance Institute. (2015). “The Resource Curse The Political and Economic Challenges of Natural Resource Wealth”. National Resource Governance Institute. Published March, 2015. Available at: nrgi_primer_resource-curse.pdf

Reuters. (2021). “What are Afghanistan’s untapped minerals and resources?”. Reuters. Published 19th August, 2021. Available at: What are Afghanistan’s untapped minerals and resources? | Reuters

Shinwari, R., Zakeria, I., Usman, M. and Sadiq, M. (2023). “Revisiting the Relationship Between FDI, Natural Resources, and Economic Growth in Afghanistan: Does Political (in) Stability Matter?”. Journal of the Knowledge Economy, Vol.15, pp.5174-5203.

The Diplomat. (2021). “How Corruption Played a Role in the Demise of the Afghan Government”. The Diplomat. Published 13th October, 2021. Available at: How Corruption Played a Role in the Demise of the Afghan Government  – The Diplomat

Transparency International. (2023). “Corruption Perception Index”. Transparency International, 2023. Available at: Transparency International – Transparency.org

Transparency International. (2024). “2023 Corruption Perceptions Index: Weakening justice systems leave corruption unchecked”. Transparency International, 2024. Available at: 2023 Corruption Perceptions Index: Weakening… – Transparency.org

VOA. (2023). “Taliban Sign Multibillion-Dollar Afghan Mining Deals”. VOA. Published 31st August, 2023. Available at: Taliban Sign Multibillion-Dollar Afghan Mining Deals

World Bank. (2025). “Foreign direct investment, net inflows (% of GDP) – Afghanistan”. World Bank. Accessed January, 2025. Available at: Foreign direct investment, net inflows (% of GDP) – Afghanistan | Data

 

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