Ro'Macro #8 : What's the situation in Afghanistan telling us for the future ?
I guess you are all well aware of what's happening in Afghanistan, but to understand we might need a little bit of history and there is some questions to raise for the future...
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Now let’s get to it, the goal in this article is to understand why this happened, how, and what it might implies for the future, because that’s what we need to know.
First, we need context and history because this situation didn’t happened overnight, it starts with the United-States declaring a war to Afghanistan because they accused the Talibans of helping Oussama Ben-Laden for the 9/11 attack. Since 2001, the US army has been in Afghanistan, chasing away Talibans to bring back peace and help the government to rule the country peacefully. Between 2001 and now, the USA always praised all the success against the Talibans that were almost non-existant at some point according to the government. The problem is the government lied and all the success weren’t true, in fact it was quite the opposite. Glenn Greenwald is saying it quite clearly in his article on the situation, Afghan army and police weren’t efficient at all. There is also a comment from a former US army soldier below is article, here is an extract :
In my deployments to Afghanistan, the uselessness of the Afghan National Army (ANA) and the Afghan National Police (ANP) was broadly known - it was an in the open secret. The ANA were buffoonish, more closely identified with Keystone Cops then as a classic military organization. Organizing them was like herding cats. Posting them on perimeter would have them watching out for about three minutes before they’d look inside to see what we were doing. And the ANP were corrupt as well, possibly more useless, if it’s possible, than the ANA.
There is quite big contrast between that and what this veteran says and what Jeffrey Schloesser, commander of the 101st Airborne Division said in 2008 :
“Are we losing this war ? Absolutely no way. Can the enemy win it? Absolutely no way.”
Or what General Milley said in 2013 :
“This army and this police force have been very, very effective in combat against the insurgents every single day”
The situation didn’t seems clear at all and the US government probably voluntarily said positive things only to justify the $2000 billions dollars cost of this war that is the longest war in the history of the US. That equal to almost 300 millions per day since the beginning, yes you read that right…
In 2018, Donald Trump say that he will retreat the US troops from Afghanistan, the negociations with the Talibans at this time includes basically securing the troops when they go back to the US and no attack on US territory during this period. Since then, the Talibans never stopped getting closer to control the country, then on August 15th 2021 when the president Ashraf Ghani flew the country, they entered in Kaboul. You can see their progression on the map from the FT below :
We’ve pictured the situation, now we need to talk about the potential consequences them:
1) Potential resurgence of terrorism
Talibans are different from Daech or Al Qaida, we must not confuse ourselves but still people who are taking over a country with guns and abusing people rights is not a good sign… In 1996 during the first time they controlled the country they said “we want to build the purest Islamic state in the world” which meant for them no education for women and execution were common. This time they invited women to work in the government and seems to be less extreme on their approach but we can still ask ourselves if it could be just a posture to gain support from others country at first… We also can’t forget the geographical situation of Afghanistan which is surrounded by countries that aren’t so stable on this matter.
2) Cold war between USA/China/Russia intensify
The war of this decade is not a military one, it’s a cold war between USA/China and Russia. China’s official already met with Talibans leader a few weeks ago showing their support and frontally criticized the politics of the US saying “China has throughout adhered to non-interference in Afghanistan’s internal affairs … Afghanistan belongs to the Afghan people,” contrasting with the “failure of US policy towards Afghanistan”. On the Media State of China, a representative also said :
“Taliban takeover war more smooth than the presidential transition in the USA”
Another sweet comment from China… And again:
“China has benefited from the irresponsible behaviour of [the US] which has deeply undermined the international image of the US and the relationship between Washington and its allies”
Russia must likely won’t get too much in the light but they are tied with Afghanistan for a long time because they helped them in the late seventies when the USA were supporting Pakistan against India. However, Russians are not the biggest fan of the USA either as you can see with this comment from Arkady Dubnov a political analyst and expert of Central Asia in Moscow:
“We can align our interests [with China] in opposing the US, What is good for us is bad for Americans, what’s bad for us is good for Americans. Today the situation is bad for Americans and so it is good for us.”
All those comments are not friendly and that could lead to great conflict between all of them.
3) Natural resources and innovation
Somehow we always stay connected to markets, how beautiful is this ? I have to say, before this week I knew very little about Afghanistan but after a few hours of reading that really enlighten me about the potential of the country.
During my reading I discovered that Afghanistan has a great potential in natural resources, specially in industrial metals. I think this is why China really look forward to investing and working with Afghanistan because that might be the thing they need to really put the USA behind in term of tech development. That’s the list of what can be found in Afghanistan : coal, copper, iron ore, lithium, uranium, rare earth elements, chromite, gold, zinc, talc, barite, sulfur, lead, marble, precious and semi-precious stones, natural gas, and petroleum. Quite an extensive list right ?
What I want to point out though is lithium. Afghanistan is the world’s first lithium reserve. Where do weed need lithium ? BATTERY. Which is a great part of a big theme in the world for the next decade which is electrification and energy storage. Elon Musk was complaining in July of the shortage of the semi-conductor which last since the start of the Covid crisis, it is really hard to get chip and all components needed from companies like Tesla or lots others in the tech sector. Where those components are from ? Mostly from Taiwan.. that China is not so far from controlling. We can also highlight transport cost, this is the freight index, which is up ten fold from 2019.
To sum up, it costs 10x what it costs last year to ship something from Asia to USA, China is getting involved in a country with the biggest reserve of lithium on the planet, and they might control the biggest manufacturer of semi-conductor. This is not good for the USA and that could have huge impact in the development of technology which can create a gap between China and USA.
3) Biden loosing support in the US before infrastructure plan and mid-terms
Another thing for the US, this retreat from Afghanistan is not liked at all by any american citizen as they just see a big political and military failure which cost 2$ Trillion and more than 4’000 lives.
Just at the moment where Joe Biden wants to pass is 3.5$Tn infrastructure plan and we are not too far from the Mid-term election, this is no good.
In conclusion, we just witnessed a potential huge driver in the macro landscape for the next decade. First thing is Talibans controlling the country is not a sign of nice management and I don’t think it will bring back peace anytime soon. With the comments from Russia and China, we can clearly understand that they have firm intention of taking advantage of the situation. In the context of a cold War between those three countries and supply chain trouble, that could lead to big impact in the tech development for a lot of country, USA being first.
That was my two cents on this, hope you liked it as much as I enjoyed writing it, as soon as you dive in a subject like that you can’t stop finding new thing and it gets really interesting. Maybe suggest in the comments the country you would like me to explore next time ?
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