Destabilizing speculation

Why major Belt and Road investments are not coming to Afghanistan

Jennifer Hillman and David Sacks are Co-Directors of the Sponsored CFR Report of the independent working group on a US response to China’s Belt and Road Initiative, co-chaired by Jacob J. Lew and Gary Roughead.

After the Taliban take control of Afghanistan and the US withdrawal, some analysts have argued that China will fill the vacuum in Afghanistan left by the United States. One of the main ways that China can strengthen its influence in Afghanistan is to expand its Belt and Road Initiative (BRI) projects in the country, according to this account. However, due to headwinds facing the BIS and questions over Afghanistan’s stability, the country is unlikely to become a major destination for BIS investments.

Safer:

China

Afghanistan

Belt and Road Initiative

Afghanistan is an official member of the BRI, and a high-level Afghan delegation attended the China Belt and Road Forum in 2017. China’s two largest projects in Afghanistan, however, predate the BRI, and the initiative did not unlock significant new investments. In 2008, a Chinese company won a $ 3 billion tender to develop the Mes Aynak copper mine, one of the largest in the world. In 2011, another Chinese company obtained the right to develop an oil field in Amou-Daria. Both projects failed, and Chinese promises of related infrastructure to support these investments never materialized.

Some now believe that the time has come for China to prioritize Afghanistan for BRI investments. China is a leader in rare earth metal mining, and Afghanistan is home to some of the largest rare earth deposits in the world. Prioritizing Afghanistan for BRI investments may also help China deal with some risks. In particular, Chinese policymakers believe that Afghanistan, which shares a border with China, could be used as a base from which terrorists will launch attacks against China. Beijing is also concerned that instability in Afghanistan could spread to Pakistan and Central Asia, destabilizing countries on China’s periphery and putting the BRI at risk.

Chinese authorities have repeatedly expressed interest in expanding the BRI’s flagship business, the China-Pakistan Economic Corridor (CPEC), into Afghanistan. CPEC encompasses $ 62 billion in commitments, covering everything from power plants to railways, roads and a major port facility. In June, Chinese State Councilor and Foreign Minister Wang Yi expressed support for the extension of the CPEC to Afghanistan. During this meeting between the foreign ministers of Afghanistan, China and Pakistan, the three countries agreed to “deepen high-quality Belt and Road cooperation … and improve connectivity between the three countries ”. Senior members of the Taliban have shared this interest, recently wishing China “to play a greater role in future reconstruction and economic development” and ensuring the safety of Chinese investors and workers in the country.

These statements of support aside, China will likely be deterred from investing large sums in Afghanistan given the country’s deteriorating security and Beijing’s concerns about their ability to protect Chinese investments in Afghanistan. Last week, a suicide bomber targeted Chinese engineers working on a highway supporting the port of Gwadar, the flagship of the CPEC. In July, a suicide bomber allegedly trained in Afghanistan attacked a bus carrying workers to a construction site in northern Pakistan, killing nine Chinese nationals. These are just the latest in a series of attacks against Chinese workers in Pakistan.

If China is unable to secure its projects in Pakistan, where the government supports the BRI and where China has strong influence, it will have even more difficulty in doing so in Afghanistan. China has benefited from the security of US forces in Afghanistan, and now that the US has withdrawn, it will have to devote significant resources to securing any future projects.

Safer:

China

Afghanistan

Belt and Road Initiative

Speculation that Afghanistan will become a BRI target also comes at a time when the initiative is shrinking and China’s risk tolerance is dwindling. In recent years, loans through the BIS have fallen. As our CFR Independent Task Force report concluded, the BIS has entered an era of small loans and its lenders are prioritizing projects where Chinese lenders are more likely to be repaid. While China seeks smaller, safer bets in BIS countries, Afghanistan does not come to mind as an attractive destination.

Even though Afghanistan will not become a BRI hub, by offering this prospect the Chinese government is likely hoping to advance a narrative of American decline and Chinese ancestry. China could attempt to draw a stark contrast between the chaos of the US withdrawal and what it called the “destructive” role of US power with the opportunities China brings to the table. While Afghanistan’s past and present may be tragic, the future may be one of economic development and hope, if the Taliban do what China wants.

By speaking publicly about the BIS, China can also hope to create leverage for future talks with the Taliban. In its interactions with the Afghan government and now the Taliban, China has consistently called for its support in the fight against the East Turkestan Islamic Movement (ETIM), which it says “poses a direct threat to national security and territorial integrity of China “. In particular, China believes that Afghanistan could be used as a training ground and preparation for terrorist attacks in China. China may be betting that the prospect of new BRI projects in Afghanistan will prompt the Taliban not to provide sanctuary to ETIM and respond to China’s other security concerns.

It would not be surprising for China to announce billions of dollars in new infrastructure commitments in Afghanistan in the coming months. It would reinforce the narrative China is trying to build that this is the best bet for economic prosperity, while the United States is a has-been power. It could also give the Taliban international legitimacy and help them build their support at the national level, as it can demonstrate that they are interested in ruling the country and ensuring the economic development of the Afghans.

Ultimately, however, one should not expect any significant new Chinese investment to materialize. At a time when the BIS is retreating, investing in Afghanistan is just too risky and does not have enough economic benefits. China is unlikely to spend significant resources connecting the CPEC to Afghanistan, and Afghanistan will not become a focal point for the BRI.


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