x Abu Dhabi, UAEThursday 27 July 2017

India, China battle over Afghan wealth

India is seeking to position itself as a rival to China in investment in Afghanistan and as an anti-Taliban force to help the government of President Hamid Karzai.

KABUL // An Indian security guard, cradling a Kalashnikov assault rifle, shadowed two Indian engineers as they inspected the concrete shell of the parliament building they are constructing - in the Afghan capital.

Erecting the new seat of government is part of a push by India to seek both profit and a greater strategic role in the nearby country, where Taliban guerrillas battle the government with support from within Pakistan, India's arch-rival.

India, having spent US$1.5 billion over a decade on Afghan roads, power lines, schools and the parliament, now is proposing what may become Afghanistan's biggest foreign investment: $11 billion (Dh5.51bn) to build an iron mine, steel mill and railway.

"India is showing its commitment to an unprecedented ambition and role in Afghanistan," said C Raja Mohan, a senior fellow at the independent Center for Policy Research in New Delhi. "Stabilising the north-west of the subcontinent, Afghanistan and Pakistan, is absolutely India's top foreign- policy priority, because most of our threats come from there."

India's planned Afghan iron mine would help companies such as Jindal Steel & Power and Rashtriya Ispat Nigam by giving them shares in an estimated 1.8bn tons of ore, for which global prices have more than doubled in the past three years. Afghanistan may see its geographic and economic isolation reduced as India follows China in promising money to build the country's first major railroads.

As Afghan anger over the shooting of 16 civilians by an American soldier last month increases calls for an accelerated US exit, India is seeking to position itself as a rival to China in investment in Afghanistan and as an anti-Taliban force to help the government of President Hamid Karzai.

"Instability and radicalism in Afghanistan pose a threat to our common security," Indian Foreign Minister SM Krishna said in a December speech at a conference in Bonn on Afghanistan's future.

"The Indian and Chinese investments will contribute to Afghanistan's stability" as the US withdraws its main combat forces between now and 2014, said Ali Jalali, a professor at the US National Defense University in Washington and a former Afghan interior minister.

"They not only will bring jobs and infrastructure, but these two powerful governments will have a greater direct interest in seeing that all actors in Afghanistan behave moderately," Mr Jalali said in an interview in New Delhi.

India's expanded role in Afghanistan is anchored in its plan to mine iron ore from mountain ridges at Hajigak, 100km north-west of Kabul. India's government backed a group of seven Indian state-owned and private companies that won three of four blocks.

The Indian group, the Afghan Iron & Steel Consortium, or Afisco, has offered to build a steel plant and railway, and in December asked for $7.8bn in government loans and guarantees, two people with direct knowledge said then.

Afisco's biggest owner, state-controlled Steel Authority of India, or Sail, hasn't said when iron production might begin, although the New Delhi-based company says full development of the mine and railway may take eight to 12 years. Hajigak would be Sail's first expansion beyond India.

India's mines ministry has assembled a second group of state companies to bid on licenses to mine copper or gold offered by the Afghan government, according to Mines Secretary Vishwapati Trivedi.

The parliament rising on the outskirts of Kabul is further evidence of the broad engagement envisioned by Mr Singh and Mr Karzai, who holds two degrees from Himachal Pradesh University in northern India. In October, the two leaders signed a strategic partnership that will increase the numbers of Afghan students at Indian universities and may let India train Afghan army troops.

For Pakistan's military, which dominates national security policy after having ruled the country for more than half the time since independence in 1947, India's growing role in Afghanistan appears as a threat, said Imtiaz Gul, executive director of the independent Center for Research and Security Studies in Islamabad.

"We have always this perception that India will use Afghanistan against us," he said in a phone interview.

Since the 1980s, Pakistan has backed Afghan guerrilla groups such as the Taliban's Haqqani network in attacking Afghan governments, including Mr Karzai's, Mr Gul said. The goal, he said, was to keep Afghanistan from aligning too closely with India and from reviving old Afghan sovereignty claims over ethnic Pashtun parts of western Pakistan.

Pakistani officials, including Interior Minister Rehman Malik, have said for years that Indian spies in Afghanistan foment insurgency by ethnic Baluch and Pashtun guerrillas near the Afghan border.

Mr Gul and other independent analysts, including Rustam Shah Mohmand, a former Pakistani ambassador in Kabul, say there is no evidence for Pakistan's claim of Indian subversion. "We say these things because of our India-centric policy," Mr Mohmand said by phone from Peshawar. "But we don't have any solid evidence to prove that."

Taliban or allied Islamic militant fighters killed at least 58 Indians and Afghans in two suicide bombings of India's embassy in Kabul in 2008 and 2009. India accused Pakistan's spy agency, the Inter-Services Intelligence Directorate, or ISI, of assisting the first attack, which Pakistan denied.


There's more at stake for India than a predictable neighbourhood. Its drive for Afghan iron and copper ore is key in Mr Singh's plan to create 100 million jobs by raising industrial production to 25 per cent of GDP by 2025, said Gopalaswami Parthasarathy, a retired Indian ambassador who serves on a government task force reviewing India's national security needs.

"An essential part of our long-term national security is expanding industry," Mr Parthasarathy said in an interview in New Delhi. "The pacing of this will depend on stability as the Americans manage their end game. But when the time comes we'll have streams of Indian construction crews, technicians and plant going in."