Amity Shlaes warns us in the latest Bloomberg Business Week that Afghanistan?s estimated $1 trillion in untapped natural resources won?t be worth much if the country lacks a proper legal framework.
In case after case, the presence of natural resource wealth in a country has fostered political instability and, paradoxically, slower economic growth. Russia’s revenue from oil gave Vladimir Putin the power he needed to take the country halfway back to Stalinism. Zimbabwe’s farmland, platinum, gold, coal, and cotton enabled Robert Mugabe to tyrannize that land for decades. In Nigeria, the impact of $1.6 trillion in oil cash over time has been pollution and poverty, along with the black-hooded Movement for the Emancipation of the Niger River Delta (MEND), the creepy guerrilla group that patrols the delta, kidnapping and sabotaging. Diamonds buried in Sierra Leone’s hills didn’t exactly bring it peaceful prosperity in the 1990s. ?
Some countries escape the resource dilemma. One way is where the rule of law generally, and property rights specifically, are already well established when large deposits of natural resources are discovered.
Shlaes? research leads to some interesting conclusions:
The takeaways for Afghanistan are controversial. The first is that a functioning and representative government is necessary. To skip town after overseeing the establishment of a loose federation of tribes, which is the U.S. impulse, is to guarantee that any “backbone” becomes a bone of contention instead.
Rule of law and good leadership at the outset (right now) are likewise crucial. Property rights are primary, not secondary. It matters less who owns something than that the rights of ownership are clear. Lastly, citizens must know they may claim a share of some form in the mineral wealth, currently or in the future.
