China’s oil gambit in Taliban’s Afghanistan

The oil deal could be a fundamental test for the future of Afghanistan-China cooperation

Updated - January 12, 2023 01:11 pm IST

Published - January 12, 2023 12:15 am IST

Afghanistan’s Acting Deputy Prime Minister Abdul Ghani Baradar and China’s Ambassador to Afghanistan Wang Yu attend a press conference to announce an oil extraction contract with a Chinese company in Kabul on January 5, 2023.

Afghanistan’s Acting Deputy Prime Minister Abdul Ghani Baradar and China’s Ambassador to Afghanistan Wang Yu attend a press conference to announce an oil extraction contract with a Chinese company in Kabul on January 5, 2023. | Photo Credit: AFP

The signing of a multi-million-dollar deal between Xinjiang Central Asia Petroleum and Gas Co and the Taliban in Kabul is being marketed by the latter as its first major economic win since the return of the Islamic Emirate in August 2021. The deal, estimated to be $540 million, gives Beijing access to the Amu Darya basin in northern Afghanistan.

Afghanistan has small and medium-sized mineral fields, most of which remain unexplored. While the deal has created a lot of noise, the basin had in fact been earmarked by the now-erstwhile Republic’s leadership more than a decade ago for China to develop. The Taliban-led interim government had been seeking a major economic victory, dangling the country’s mineral wealth largely in front of China while also trying to impress other countries.

China’s aims and challenges

Beyond the politics and posturing, the practicality of the deal and implementation of the deal is going to be key. For China, keeping Afghanistan and Central Asia out of reach of the West has been a critical strategic aim, but this was challenged when Russia invaded Ukraine last year. Many states in the region, barring Tajikistan, accepted the coming of the Taliban as they did not wish to stoke conflicts on their borders. Today, they openly discuss regional cooperation with the group. Russia’s invasion of Ukraine has also offered space for the U.S. to re-engage in Central Asia.

However, China has been receptive to the Taliban for some time now and has been the most visible power in Kabul since the Taliban took charge. Beijing has hosted multiple Taliban delegations. In 2021, in Tianjin, a few months before Kabul was captured by the Taliban, the then Chinese Foreign Minister Wang Yi hosted Abdul Ghani Baradar, who is now Acting Deputy Prime Minister of Afghanistan.

It is not as though Beijing does not have security concerns. It has pushed the Taliban to act against Uyghur-led militant groups operating inside Afghan territory, such as the Turkistan Islamic Party, which targets China’s actions in restive Xinjiang. How cooperative the Taliban has been with China on this point in the recent past remains contested.

Economically, China’s approach to Afghanistan would have Pakistan at the centre, so that both states are tied to larger projects such as the Belt and Road Initiative and the China-Pakistan Economic Corridor. However, the rapid deterioration of the security situation between the Taliban and Pakistan, specifically over the Tehrik-i-Taliban Pakistan, may throw a spanner in Beijing’s plans. Recent attacks against Chinese targets in Kabul and in Pakistan will test China’s poor record of dealing with Islam as a religion, society, and culture. The fact that Pakistan’s Afghanistan strategy is also imploding will not instil much confidence in Beijing’s power corridors.

The Taliban perspective

Meanwhile, the Taliban is aiming to establish a successful Islamic Emirate, one that is different from the previous version. To achieve this, they need a somewhat functional economy to fund not only the state, but also individual factions within the umbrella of the Taliban movement. Today, Afghans live in terrible economic and social conditions. The Taliban have implemented regressive policies, such as disallowing women’s education. A prolonged economic depression will challenge the authority of the current regime. The challenge may not come from the public, but from within the movement. This does not necessarily translate into a leadership challenge against the Supreme Leader Hibatullah Akhundzada, but it could lead to further alienation of the regime by the global community, which certain Taliban leaders are trying to avoid. The economic vision of some in the Taliban, including those who negotiated with the West as well as the Haqqanis, is different from the ideological nucleus of the Taliban, held by Akhundzada and his closely knit circle of advisers and confidants. It is unlikely that the Taliban would make ideological concessions only to facilitate certain economic gains after building a narrative of having defeated a superpower.

This reality, then, raises a question: is Beijing ready to economically lift the Taliban regime all by itself in exchange for natural resources? And does it see the cost of such a strategy as being affordable? China has a chequered record of running investments and businesses in politically volatile regions from afar. If Beijing was hoping to run its economic strategy in Afghanistan through a blank  chequebook and an economically unstable Pakistan which is facing severe political and strategic headwinds, it may now need a rethink.

The success or failure of the oil deal could determine the future of Afghanistan-China cooperation. Nonetheless, Beijing would be wary of not becoming another footnote in the ‘graveyard of empires’ story.

Kabir Taneja is Fellow, Strategic Studies Programme, Observer Research Foundation

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