31 August 2010

GPPi fellow writes op-ed on natural resources discovered in Afghanistan

GPPi fellow Andreas Goldthau has published an op-ed in the Financial Times Deutschland on how natural resources discovered recently in Afghanistan could impact national politics.

The revenues from crude oil exploration promise to reduce Afghanistan’s dependency on drug exports and help the government finance political and economic stabilization. Goldthau cautions, however, that oil revenues are no guarantee of prosperity. If not managed properly, they could adversely affect national development. For example, an inflow of oil money often results in increased corruption and the disappearance of domestic industries due to a loss of international competitiveness.

Although the Afghan government faces no serious competitiveness issues, as it largely lacks domestic industry, it will still face a giant challenge to ensure that oil revenues benefit the Afghan people. Goldthau points out that the Afghan government is ill-equipped to face this challenge, and it will remain so in the foreseeable future. Consequently, resource-extracting multinational companies (MNCs) should be an integral part of governing oil revenues. They could be encouraged to prevent corruption by establishing a “code of conduct” that keeps oil revenue transfers transparent for the public. The implementation of, and compliance with, such a “code of conduct” depends largely on the support of MNCs’ home countries. Goldthau therefore concludes that Western governments – especially the German government – should take the lead in this initiative.

For more information, please contact Andreas Goldthau

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