USA comes prospecting

It is to be noted that the first firm to enter Pakistan after the imposition, suspension and re-imposition of tariffs by US President Donald Trump is a mining firm, not an oil exploration company as President Trump in his own wooly way suggested. A US firm is already in the mining industry, Barrick Gold, but as a partner with Argentinian firm Famagusta, in the Reko Diq project. This is an entry into an area where Pakistani potential coincides with a pressing high-tech need. Rare earths are the new oil, for their essentialness in virtually all high-tech manufacture is making them ever more desirable. Pakistan possesses these materials in exploitable quantities, but their demand has been absent. Now, it seems, things are different. It must be remembered that President Trump has tried to obtain guaranteed supplies of these rare earths even as China has established a lead in the market for them, forcing President Trump to back off on his more extravagant anti-China steps, to ensure that the USA continues to have access to supplies of rare earths. He did not mention Pakistan’s potential as a provider of rare earths, but spoke of its potential as an oil producer.

Pakistan will probably have to take into account the Chinese reaction to this US move. China cannot be pleased at the erosion of one of its tools of leverage in the complicated economic tango it is performing with the USA. However, Pakistan will have to pursue its national interest. It will have to ensure that it is not being exploited by the USA, which seems to be circling above it in ever tighter circles. From the days of the Baghdad Pact and the Cold War against communism, to the Afghan Jihad and then the War on Terror, it has been exploitative and transactional.

The government must realize that it is merely beginning something its successors will have to put up with. Pakistan is trying to get back into the USA’s good books, but this should not be at the cost of national sovereignty. As the history of Central and South America has shown repeatedly, US extractive firms quickly try to take over the country, and find backing from their government. Avoiding a repetition will be the responsibility of the Frontier Works Organization, the Pakistani partner in this deal. One of the main concerns should be how much employment is created where the mining takes place. Also important is whether Pakistan remains limited to being mined, or whether the local raw material can be used to give it a role in the downstream high-tech industries.