Afghanistan: The Throbbing Heart of the Energy World 


INSIGHT


  • AFGHANISTAN IS THE CENTRAL HUB LINKING THE DIFFERENT REGIONS OF THE VAST EURO-ASIAN SUPERCONTINENT. AFGHANISTAN BORDERS CENTRAL ASIAN COUNTRIES TO THE NORTH, WEST ASIA AND IRAN TO THE WEST, PAKISTAN AND SOUTH ASIA TO THE SOUTH, AND CHINA TO THE EAST. 

  • AFGHANISTAN’S GEOGRAPHIC POSITIONING ON THE EURASIAN SUPERCONTINENT MEANS THAT IT CAN BUILD RELATIONSHIPS WITH PARTNERS IN ALL DIRECTIONS. IT IS FLEXIBLE AND CAN ACT QUICKLY, EVEN IF IT HAS NO ACCESS TO THE SEA. 

  • AFGHANISTAN HAS GOOD ACCESS TO ENERGY RESOURCES. AFGHANISTAN CAN ACCESS THESE RESOURCES FROM ITS NEIGHBORS. AFGHANISTAN’S ENERGY-RICH NEIGHBORS INCLUDE IRAN AND THE CENTRAL ASIAN COUNTRIES TO THE NORTH. THROUGH PAKISTAN, AFGHANISTAN IS CONNECTED TO THE NEW SILK ROAD. AFGHANISTAN HAS LEVERAGE. 



1. Afghanistan has access to many of the world’s best energy and mineral resources.


Mineral resources are very abundant in the surrounding region. Afghanistan itself has the industrial resources the country needs to build a full-fledged renewable energy industry. This will benefit Afghanistan in the future as it builds an industrial infrastructure. Although Afghanistan needs to gain a foothold in the industrial sector, there are many areas where Afghanistan could become a significant player in the region.

This is especially true for the supply of hydrocarbons. Such hydrocarbon resources are sent from hydrocarbon exporters such as Iran and the Central Asian states to hydrocarbon importers such as China and, to some extend, Vietnam. For fossil fuel supplies, Afghanistan can become an important transit point and middleman. Supplies could be sent from north to south and from west to east. 


2. Afghanistan is situated between the geopolitical poles of the energy world.


Both Turkey and China will play an increasingly important role in the energy world. Often underestimated, land transport routes could become as important as sea routes. Land transport is likely to become an alternative to expensive sea transport in the future. The risk premium for sea transport is likely to increase in the future, reflecting the increased risk of sea transport. For many logistics companies, diversification is the key to managing rising costs. 


3. New Silk Road: Afghanistan lies at the heart of Eurasia.


History always follows our footsteps. Afghanistan has long played an important role as a transit country for all kinds of goods and products. There is a historical antecedent for this. The new Silk Road is something of a reversal of the older historical norm. Afghanistan has been an important node in the international trade system. Why is this the case? Afghanistan can pool a lot of the resources from different places of the Eurasian supercontinent. It helps that China is Afghanistan’s neighbor and a major consumer of hydrocarbons. This can allow for economies of scale, even though Afghanistan is very mountainous.

The role of China cannot be underestimated. China has long been a major contributor to the Silk Road Initiative, being the initiator. In the energy sector, China has played a central role in the integration of Eurasian power grids. Other countries are expected to join in due course. It has also been China that has invested the most capital in the spread and expansion of projects along the ancient arteries of the older Silk Road.  While it is true that China would be one of the main beneficiaries of the new Silk Road, other nations along the corridor would also have much to gain from improved transportation networks.


4. Afghanistan’s future energy policy after the change of government.


It is difficult to say what the future energy policy of Afghanistan will be. This will depend to some extent on how closely Afghanistan will be embedded in the regional architecture and supply chain networks that have emerged in Eurasia. Afghanistan’s future energy policy will also depend on how deeply Afghanistan will be embedded in the new Silk Road as the 21st century vision for Eurasian countries.

The current situation may point to ever closer ties between Russia, China, and Afghanistan. Most likely, Iran will also play an important role in the development of the regional energy infrastructure in Afghanistan. For China and Russia, Afghanistan is an important player in Central Asia. We may see increased investment in energy infrastructure to spur economic growth in the region.


5. Conclusion


  • Afghan companies can serve the various regions on the Asian continent. There are countless growth opportunities in every direction in the natural resources sector and logistics. This should stimulate industrial growth. Building new partnerships with companies and associations in Central Asia and along the Silk Road corridor can be critical to driving economic growth and attracting investment in electricity distribution, generation, and distributed energy solutions in Afghanistan.
  • The new Silk Road can be an opportunity to promote economic growth in Afghanistan. China could play a key role in this, just as China has played an important role in development in other Central Asian countries. The growth of the Turkish economy can be a boon to the Afghan energy sector and help Afghanistan become a central hub between the West and East Asian economies.
  • Afghan businesses may take advantage of the enormous wealth of natural resources. Natural resources can be of great importance for the development of the country and play a crucial role in attracting foreign industry.
  • Integration into Eurasian energy supply chains will be an important factor after the change of government. Integration into the Eurasian energy supply chains might help to boost economic growth in the region.

Many thanks for the shared interest in the energy world!



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