Corporate Fairy Tales in Afghanistan

It’s a corporate fairy tale: working class boy joins the military, goes into banking, brings the joys of mineral exploitation to exotic locales.

From Congo to Colombia, from Iraq to Sierra Leone, [Ian] Hannam [the JP Morgan banker overseeing the development of a gold mine in Afghanistan] and his small team of soldiers-turned-bankers and advisers did business with oligarchs, gem dealers, and former mercenaries. He could be bracingly direct. When he landed in Baghdad for a meeting with Iraq’s oil minister, the minister asked, “What are you here for?”

“I’m here to make five new Iraqi billionaires every year for the next 10 years,” Hannam said with a twinkle in his eyes.

And it ends, I guess, as corporate fairy tales do: with the mineral riches finally being liberated from the oppressive soil.

But at least someone will have begun releasing the wealth trapped in Afghanistan’s stones.

It’s all the bits in between that raise eyebrows about the viability of our little project in Afghanistan and the structure of our empire. While the story focuses on Hannam, the JP Morgan banker, it’s as much a story about General Petraeus.

Then, in 2009, mining in Afghanistan got the push it needed — from the U.S. military. Petraeus had been appointed commander of U.S. Central Command, which had ultimate authority over Afghanistan. He realized that a U.S. exit from Afghanistan depended on getting the country’s economy running.


Realizing that conventional foreign-aid organizations weren’t getting the job done, Petraeus moved a crack economic stabilization team from Iraq into Afghanistan. That team quickly realized that mining would be key.

And Deputy Under Secretary for Defense Paul Brinkley.

Hannam was at the banquet hall for a reception thrown by the Trade Bank of Iraq to honor J.P. Morgan. Also at the reception was Paul Brinkley, a deputy under secretary of defense charged with jump-starting Iraq’s stalled economy. A former tech company executive, Brinkley served as a matchmaker of sorts between Iraqi entrepreneurs and foreign businessmen. With the blessing of Defense Secretary Robert Gates, he operated outside normal bureaucratic channels, eschewing the bulletproof vests and helmets his civilian colleagues wore in combat zones. In three years he had secured some $8 billion in private investment contracts for Iraq, helping start textile mills, cement factories, and electronics companies. Hannam and Brinkley had heard about each other’s work. J.P. Morgan had been one of the first Western companies to plant the flag in Iraq, overseeing the country’s currency and setting up a big oil project in Iraqi Kurdistan. Hannam and Brinkley fell into conversation about Afghanistan, which was to be Brinkley’s next posting.

These men, of course, were prominently seen last June pushing James Risen to report a breathless story on Afghanistan’s $1 trillion mineral riches the night before Petraeus would testify to Congress.

[Risen] explained that he based his report on the work of a Pentagon team led by Paul Brinkley, a deputy undersecretary of defense charged with rebuilding the Afghan economy. Using geological data from the Soviet era and USGS surveys conducted in 2006, Brinkley dispatched teams to Afghanistan last year to search for minerals on the ground. The data they’ve come back with, combined with internal Pentagon assessments that value the deposits at more than $900 billion, constitute news, according to Risen. (Those surveys are still under way, according to a briefing Brinkley gave yesterday.)


So was the story a Pentagon plant, designed to show the American public a shiny metallic light at the end of the long tunnel that is the Afghan war, as skeptics allege? Risen said he heard about the Pentagon’s efforts from Milt Bearden, a retired CIA officer who was active in Afghanistan in the 1980s. The men co-authored a book, “The Main Enemy,” in 2003, and Bearden is now a consultant working with Brinkley’s survey team.

“Several months ago, Milt started telling me about what they were finding,” Risen said. “At the beginning of the year, I said I wanted to do a story on it.” At first both Bearden and Brinkley resisted, Risen said, but he eventually wore them down. “Milt convinced Brinkley to talk to me,” he said, “and Brinkley convinced other Pentagon officials to go on the record. I think Milt realized that things were going so badly in Afghanistan that people would be willing to talk about this.” In other words, according to Risen, he wasn’t handed the story in a calculated leak. Calls and emails to Brinkley and to Eric Clark, a Pentagon public relations contractor who works with him, were not immediately returned.

All of which makes you wonder about the provenance of this story…

And of course, in addition to Hannam, Petraeus, and Brinkley, there is JP Morgan itself, which seems to be investing a lot of time in a project they don’t expect to be profitable and won’t put their own money into.

In late September, J.P. Morgan CEO Jamie Dimon, Brinkley, and Mining Minister Wahidullah Shahrani met at J.P. Morgan’s headquarters in Manhattan. Dimon pledged J.P. Morgan’s support. On the way down in the elevator, Dimon told Shahrani, “You’re in good hands with Ian. He’s eccentric, but he gets things done.”But soon Brinkley’s team was wondering. On the day the deal signing was to take place, Hannam’s team stopped acting like former warriors and began behaving like, well, nervous investment bankers. Hannam, after talking about how rich he was going to make his clients, suddenly began to complain that there was no way to make a profit. The 26% royalty rate for the mine, his team claimed, was way too high. Mining Minister Shahrani was bewildered — the rate had been agreed upon years before, when the Naderi family had first bid for the mine. Nothing had changed.

Brinkley’s Pentagon team was deeply frustrated. They felt the bankers had pulled a fast one. Had Hannam’s group not done its homework? Or were they just being bankers, trying to squeeze more money out of the deal with some 11th-hour brinkmanship?

Brinkley lit into the J.P. Morgan group: “When are you going to get this done? You’ve told people you’re going to do it!” The bankers, in turn, felt they were being unfairly pressured by the government, which seemed desperate to get the deal done even if it was uneconomical.


J.P. Morgan says it isn’t putting any of its own money into the project. Hannam secured $40 million from investors in the U.S., Asia, and Europe. They included Enso Capital founder Joshua Fink, son of BlackRock’s Larry Fink; British mining titan Peter Hambro; and Thai businessman Pairoj Piempongsant. Hannam created an investment vehicle, Central Asian Resources, to enter into a joint venture with Naderi’s new mining company, Afghan Gold.

Which in turn makes you wonder about the off-and-on relationship between the President and Jamie Dimon, particularly in the months leading up to JP Morgan playing hardball on the gold mine in Afghanistan. Have there been other considerations involved in the government’s relationship with JP Morgan? When Dimon boasts about JP Morgan being a good bank–in spite of the fact that they practice some of the same reprehensible policies as their rivals–is he saying something more?

Mind you, it’s not that Petraeus is wrong: Afghanistan needs something besides poppies if it’s ever going to become a viable nation-state.

I’d just like a bit more transparency about the public-private endeavors our government builds to make that happen. And I’d like a lot more information about all the favors being exchanged to make that happen.

  1. earlofhuntingdon says:

    I guess all the gold fields in Indonesia and South Africa were taken. So this is what “liberation” has come to mean in America.

  2. earlofhuntingdon says:

    I would venture a guess that the trickle down effects, the jobs, careers, infrastructure and education, that will result from the JP Morgans of the world orchestrating investments in gold mines in Afghanistan will be a little longer in coming than a decision by GM to put up a new factory in Saginaw rather than in Shanghai. Poppies will line the road to the Emerald City until long after the wicked witch meets that pail of water.

    The education Afghans will get from Morgan & Co. and their little army of mercenaries will be of a different sort altogether. And it will be one more rationale for why we will need to keep our own boots on the ground there.

    • Stephen says:

      Yeah, the grunts would be impressed with all the trickle down economics if they knew about them. Ah well, for God and country and JP.

      • earlofhuntingdon says:

        Unit, Corps, God, Country and JP, though I’m not sure that’s the correct order.

      • 1970cs says:

        The difference is that when Perkins was doing this the empire was hitting on all cylinders. The model was to have the NSA and it’s various arms coerce the countries into building/borrowing for the infrastructure, and if that didn’t work bring in the CIA to overthrow the government, and failing that as a last resort use the U.S. military and blunt force.

        Now it seems the last resort is the only course of action left for the empire with waining influence, and stronger competition from other emerging countries.

  3. Ironcomments says:

    J.P. Morgan will be one of Petraeus’ biggest contributors when he runs in 2016, probably as a Democrat.
    The fascism and cult of empire that has taken over the U.S. will result in more death for anyone living in areas of vast resources.

  4. jo6pac says:

    I can’t believe this, we’re there for the minerals? Who would thought the Soldiers/Citizens die to make ws rich. Nothing changed even with hopey/changey 0 in charge.

    Everything is on schedule, please move along

  5. onitgoes says:

    Now it seems the last resort is the only course of action left for the empire with waining influence, and stronger competition from other emerging countries.

    I would say that’s accurate. The competition for such resources anymore is pretty fierce, so the only way Team USA can take some is by brute force. And it costs a huge amount in the process… paid for by you & me, the “average” US taxpayer.

    Putting aside for one moment the morality and ethics of such policies, what the average US citizen is missing is exactly how their tax dollars are being (mis)spent in order to enrich the coffers of the insanely wealthy, like Dimon. But that’s old ground that’s been plowed around here for some time.

    Some citizens could give a crap about the morality & ethics of this, but even those who more-or-less “get” what’s going on (there are some), still seem to miss the bigger picture of the costs involved financially, not to mention that inconvenient truth: loss of life.

    • 1970cs says:

      As bad an actor as the U.S. is with it’s imperialism, it is difficult to see China , India, or Brazil etc… being any less greedy or stupid in their pursuit of wealth.

      • mzchief says:

        China has already helped create a hole in the ozone (2006) and

        Called the Earth’s Third Pole by scientists because only the North and South poles hold more glacially stored freshwater, the Tibetan Plateau is undergoing climate change twice as fast as the rest of the world. Glacier meltdown across Tibet is disrupting downstream water supplies, threatening the sustainable livelihoods of Tibetan nomads and villages, and putting at risk more than one billion downstream peoples and communities across south and east Asia.

        (excerpt from “Tibet Third Pole“)

        Mining operations meaning erosion and soil and water contamination. Micro-climate changes first then bigger, broader disruptions (Apr. 14, 2011).

        Riz Khan – Alice Walker – 15 Oct 07

      • onitgoes says:

        Oh you won’t get any argument from me on that score, but not to be rude, so what? Yes, other countries *may* have the potential to be even worse in their imperialism than Team USA, but… what’s your point? Perhaps I’m missing something?

        • 1970cs says:

          Genghis Kahn, the Romans, the British empire, Germany and Japan trying to become empires’, the Soviets. It is a brutal and barbaric history with millions losing their lives because of it. I’m not disagreeing with you either, I just don’t hold out a lot of hope.

          This is a period of transition of world power, the biggest in 70 years, every time there is a big shift, someone has a lot to lose or gain and there wil be conflict.

      • onitgoes says:

        Yeah, ain’t that a bitch? Well you can rest assured that those cuts are coming out of Main Street, not Wall Street or the MIC. And those who are hurt most will be the most vulnerable & the least able to protest.

        Fat Cats like Jamie Dimon? They get their cut off the top! (and then they tinkle down on Agent Orange).

        • mzchief says:

          The currency wars that heated up last year have a strong effect on that dynamic. I’m watching the PIIGs and BRICs with great interest.

      • mzchief says:

        Super cute kitty and the classical score is perfect for that!

        The point was once made to me of the illusion of most centralGs and the “democratic-ness” of the system (the system as a resultant of democratic participation). For example, there are whole swaths of India the government has simply ignored. So the people somehow get by on a super low Human Development Index (see “India: Country profile of human development indicators” as an introduction). I think closing the gap between reality and (which often leads) public perception is a good thing. Who cares if the middlemen hate it. It’s best that they are irrelevant in the equation.

  6. 1970cs says:

    Like the constitution is ‘just a goddamned piece of paper’, the idea of a sovereign nation has become a silly notion.

  7. TimWhite says:

    Then, in 2009, mining in Afghanistan got the push it needed… Petraeus… realized that a U.S. exit from Afghanistan depended on getting the country’s economy running

    I recall POTUS’ plan was issued in December 2009.

    So how did this go down? After Obomba and Jaime “I love my Afghan” Dimon were done whispering sweet nothings in each other’s ears, then POTUS let Petraeus know that America wasn’t leaving Afghanistan until the country’s economy was running? I don’t recall that being the plan set forth by Obama. Yet how else would Petraeus “realize” this, unless the Administration made that clear to him?

    And Emptywheel… great analysis.

  8. TimWhite says:

    I’m here to make five new Iraqi billionaires every year for the next 10 years,” Hannam said with a twinkle in his eyes

    This may be the most striking comment to me. Perhaps not consciously implied, but it sure sounds to me like a member of the world’s ruling class playing “Mr. Nice Guy” by “opening up” the Ruling Class to non-members.

    Of course at the same time, the middle class get buried and the serfs expand exponentially in number. Yay! Who wouldn’t take pride in such a wonderful idea!

    • emptywheel says:

      Most striking to me was the highlighting of the first meeting at the Baghdad Hunt Club.

      That’s where Chalabi hung out for the first month and a half he was back in Iraq, while he still thought we’d crown him king.

    • TimWhite says:

      I’m not sure Obomba gets it. Like LBJ and GWB, the incumbent’s real problem may be the failure to ask the right questions. Though frankly, with both LBJ and GWB I think they knew the right questions… but avoided them to provide plausible deniability. But that’s the execution of war.

  9. TimWhite says:

    I remember the big hoopla about the “riches of Afghanistan.” The cynic in me chuckled while reminiscing about the “riches of Iraq” paying for that war too.

    Empty’s post suggests that Obama’s plan was known for a while. It’s so disappointing. But I don’t trust any of them anyway.

    • earlofhuntingdon says:

      They wouldn’t be quite so profitable if the taxpayers weren’t fielding an army in country to help give them access to them. When is the government going to send these “private” corporation, “free” market guys a bill for their pro rata portion of what it costs to put that army in the field?

  10. TimWhite says:

    Here’s my dad doing a cameo in The Year of the Pig, discussing the actual events in the Gulf of Tonkin:

    Speaking truth to power is never easy. It can be scary. And it must be done. But I just look at Obomba and conclude that they all get the “Chief Executive Syndrome.” Once elected, they think they need to be Big Daddy or something. So disappointing.

  11. Liz Berry says:

    Well hell, they should put Pappy Bush on right the case. Now there is a political plutocrat with the know-how to get it done, plus he has mining management experience.

    At the end of the George H.W. Bush presidency, the Interior Department enabled Barrick Gold to secure the approval of a massive gold mining claim on Western Shoshone lands. The claim was for an estimated $10 billion in gold within the area of the Treaty of Ruby Valley. Because of the 1872 Mining Act, Barrick paid less than $10,000 for the claim, just about $5.00 an acre.

    Then, in May 1995, Barrick Gold Corporation announced a new international advisory board under the leadership of George H.W. Bush. The former president became Barrick’s chief lobbyist, a Barrick shareholder, and honorary senior advisor to the corporation’s international board.

  12. captjjyossarian says:

    “I’m here to make five new Iraqi billionaires every year for the next 10 years,”

    Reminds me of what the western(US&UK) financial experts did to Russia in the 1990’s.