Taliban turns to gemstones, minerals to revive Afghanistan's economy

Proceeding from its article, The New York Times unveils that the Taliban government in Afghanistan is increasingly turning to its rich mineral and gemstone resources to compensate for the significant loss of international aid since the US withdrawal. 

In a cold auditorium in Afghanistan, piles of freshly extracted green emeralds shimmered under bright table lamps as bearded gemstone dealers examined them for purity and quality. An auctioneer began calling for bids on the first lot, weighing 256 carats, marking the start of the Taliban's weekly gemstone auction. These auctions, held in the emerald-rich Panjshir Province in eastern Afghanistan, are part of the Taliban government's strategy to capitalize on the country's extensive mineral and gemstone resources.

Since taking control in August 2021, the Taliban claim to have secured agreements with numerous investors to mine valuable resources such as gemstones, gold, copper, iron, and chromite, among others. These untapped resources present a potential economic lifeline for the struggling nation. China has been at the forefront of investments through its Belt and Road Initiative, a strategy to extend China's global influence. Additionally, Russian and Iranian investors have also acquired mining licenses, filling the gap left by the chaotic US withdrawal in 2021. 

According to the US government, Afghanistan’s rugged terrain holds an estimated $1 trillion worth of mineral deposits. The country is rich in copper, gold, zinc, chromite, cobalt, lithium, and industrial minerals, along with precious and semiprecious gemstones like emeralds, rubies, sapphires, garnets, and lapis lazuli. Furthermore, Afghanistan possesses a significant reserve of rare earth elements, essential for modern technology, including mobile phones, laptops, and electric vehicles, as reported by the Office of the Special Inspector General for Afghanistan Reconstruction, a US agency set to close this year.

The Taliban are attempting to achieve what the United States was unable to during its 20-year occupation. Despite spending nearly a billion dollars on mining projects in Afghanistan, the US government saw "negligible and unsustained" progress, as noted in a report by the special inspector general in January 2023. Many of the challenges that plagued those efforts—such as insecurity, inadequate infrastructure, corruption, inconsistent policies, and high turnover of officials—still persist today.

However, the Taliban are pressing ahead with their own efforts, driven by the urgent need for revenue following Afghanistan's sharp decline in aid after the US withdrawal. During the war, the US provided approximately $143 billion in development and humanitarian aid to Afghanistan, supporting the US-backed government. Since the Taliban’s takeover, the US has provided $2.6 billion in aid, delivered in shrink-wrapped cash bundles via private contractors to Kabul, according to the special inspector general.

The World Bank reported in April that the Afghan economy has contracted by 26 per cent over the past two years. The significant drop in international aid, the bank concluded, has left Afghanistan "without any internal engines of growth."

In addition, the Taliban’s ban on opium production has cost farmers $1.3 billion in lost income, which represents 8 per cent of Afghanistan's GDP, according to the World Bank. The ban has resulted in 450,000 job losses and a 95 percent reduction in poppy cultivation, as reported by the UN Office on Drugs and Crime. Mining could potentially replace poppy farming as a consistent source of income. Investments have been made in iron, copper, gold, and cement mines by Turkey, Qatar, China, and Iran, while Uzbek companies have signed contracts to extract oil in northern Afghanistan, according to the Ministry of Mines and Petroleum.

The Taliban are already collecting taxes from emerald sales. Under the previous government, the emerald trade was rife with corruption, with warlords and politically connected dealers controlling it, and tax collection being sporadic at best. However, since the Taliban established weekly emerald auctions, they have gained control and implemented taxes on all sales. Dealers who purchase emeralds at these auctions must pay a 10 per cent levy before receiving the gems. The Taliban are also taxing other precious stones, including rubies and sapphires. 

By Naila Huseynova