Monday, June 14, 2010

Can Someone Do the Afghanistan Math?

I'm sure most of you have read the NY Times story U.S. Identifies Vast Mineral Riches in Afghanistan:

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials...

Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country...

The mineral deposits are scattered throughout the country, including in the southern and eastern regions along the border with Pakistan that have had some of the most intense combat in the American-led war against the Taliban insurgency.


I'd like to make two points.

First, I see dollars and a security problem. Can someone do the Afghanistan math? In other words, how much should be spent on security in Afghanistan in order to yield a worthwhile "return on investment"?

Second, this sounds like a "Road House" scenario, like I described four years ago in my post Return on Security Investment. I've always been troubled by these sorts of scenarios, meaning I'm not exactly sure how to think about them. I believe there are two general sorts of security scenarios to consider:

  1. An environment has transitioned from a "secure" state to a "nonsecure" state due to intruder activity, and the security team wants to promote a return to the "secure" state

  2. An environment suffers a "nonsecure" state, and the security team wants to promote a transition to a "secure" state


Most digital security work is Type 1, meaning an enterprise (presumably) begins intruder-free, transitions to a nonsecure state due to intruder activity, and the security team works to return to a secure state. That is a loss prevention exercise, where the security team seeks to preserve the value of the business activity but doesn't add to the value of the business activity.

Scenarios like Road House and Afghanistan's mineral wealth appear to me to be Type 2, meaning chaos reigns, and by spending resources a security team can produce a real "return on investment" by enabling a business activity that was previously not possible.

What do blog readers think?

12 comments:

Anonymous said...

Think bigger. The security situation involves a lot more than the surface headline. Take into account the following: 1) This is not new news. These mineral deposits have been known for quite some time. Why was this story released in all its glory now when it isn't new news at all? 2) How do the Chinese (and Russians) play into this - they are currently mining some areas for lithium; will there be some kind of bidding war for mining rights? 3) How does this change Afghanistan's opium focus? What are the costs in shifting the farming economy with a mineral-oriented one? To me, #1 and #3 are just mental fodder, but #2 has the biggest implications for security.

The Ubiquitous Mr. Lovegroove said...

On Afghanistan:
I recall a movie quote along the lines of: "We have diamonds and gold and look what misery it has brought us. I hope they never find any oil here". The good news is that extracting ore is much more complex than harvesting poppy, so Taliban can't directly use it to finance fighting activities.

On ROSI:

If an environment less less secure than risk appetite then there is a justifiable ROSI; both your examples given the above can produce a calculable ROSI.

However, in most cases, if environment is less secure than risk appetite, then risk appetite just increases.

As a provocative question: if security spending is spent to comply and compliance enabled business, is it ROSI?

gunnar said...

Tom Barnett did the math, big opportunity. Its 10 years out best case. Could be bigger opportunity for emerging powers

http://www.thomaspmbarnett.com/globlogization/2010/6/14/afghanistans-minerals-deposits-now-super-sized-by-us-geologi.html

Paul Poputa-Clean said...

It seems that the only party that will gain from this 'discovery' is indeed China. Even if this will crystallize their promises for aid in the Afghanistan security situation, they will only stand to win both more resources and more geopolitical influence.
In Afghanistan, what will likely happen is the same as what happens in the African and East-European countries: corruption will likely prevent the people from benefiting from the added wealth, causing disappointment and political instability. From the little I've seen in the world, I have come to realize that intrinsically created wealth through value added to resources is much more of a stabilizing force than the extrinsic wealth extracted from natural resources the country is unable to exploit by itself.
As for the original questions you posted, Richard, if Type 1 is left unmitigated enough, you end up with a Type 2 environment. (Taliban rise was the initial intruder activity and evolved into a increasingly insecure status quo). Regardless of the situation, I'm not sure how the US would be able to have any financial return on the investment it made in securing the country.

D. Dieterle said...

The problem that I see, and a lot of Americans don't understand is that many of the Afghanistan people are still living in the stone age.

You have tribes that one day are pro US and hate the Taliban, one day pro Taliban and hate the US, and the next day they hate each other.

They are fighting over opium fields now, we have even sent US troops in to guard them, what will happen there with trillions of dollars in minerals? Will anyone be able to keep order long enough to mine them?

Anonymous said...

In response to D.Dieterle you say "The problem that I see, and a lot of Americans don't understand is that many of the Afghanistan people are still living in the stone age.

You have tribes that one day are pro US and hate the Taliban, one day pro Taliban and hate the US, and the next day they hate each other."

So apart from not being able to distinguish between poverty and the stone age, you also fail to grasp the fact that a lot of the support for the Taliban is due to fear. If someone threatened to kill or torture those dear to you, wouldn't you profess support for them too?

Mining rights will not help the general levels of poverty in Afganistan, as set up costs are too high for anything but large corporations, and they have an excellent reputation for exploitation.

Eric said...

The previous poster mentions exploitation, is this not synonymous with nation building?

Anonymous said...

Ahh, security as a business enabler. That quickly raises my hackles!

I've always said 'security enabling business' is nonsense, except in one case: Your business is in security, or that is what helps define you.

But my underlying assumption is insecurity does not necessarily stop business. A website can still run without SSL, but you really should add the security. It's hard, to me, to equate the addition of security directly to the increase in business revenues. Sure, it reduces your risk and you can quantify that as we always have, but that is still a subtle difference to actually creating the business scenario.

Maybe my assumption holds fast when it comes to non-physical security. Physical security may change things?

If I want to open a business in 'the hood,' is that a smart idea? Will I get a return on improving my physical security? Let's say someone in 'the hood' produces these beautiful sculptures and I buy them off him and use my storefront to begin the distribution of them to other wealthier places. And assuming lack of a storefront in that location would prevent me from acquiring these sculptures at the cost I desire.

I think you're on an interesting track with Type 2 where an environment is inherently insecure (dangerous).

But that doesn't sit well with me and our whole view of the Internet being inherently hostile... I'm still inclined to say there is something different between physical security and non-physical security...

-LonerVamp

D. Dieterle said...

In Response to anonymous:
"So apart from not being able to distinguish between poverty and the stone age, you also fail to grasp the fact that a lot of the support for the Taliban is due to fear. If someone threatened to kill or torture those dear to you, wouldn't you profess support for them too?"

I guess I do fail to grasp the fact of some fanatical group trying to force my village to do something through fear, when many Afghans own weapons.

I feel the rapidly switching alliances of the tribes has little to do with fear and more to do with convenience, opportunity and the daily desires of the tribal leaders.

It is the lack of central government, not finances, that shows that they are in fact in the stone age. Well, they do have AK's, maybe it would be more politically correct to call it the AK Age....

Viola said...

Such a nice blog for those who are concerned about security both residentially and commercially. As I have got from Security Window Gates

gih said...

Wow! Afghanistan math? Well, that's cool, first time I've heard it.

Anonymous said...

Are you serious? These deposits have been known since the Russians were battling away for control.