Afghanistan’s Taliban government accepted a $10 billion investment in the country’s mines last year. The funds came from a Chinese company, part of a years-long effort by the world’s second-largest economy to get its hands on Afghanistan’s metals and minerals. Beijing wants lithium, a key input for the new economy of smartphones and EVs. Some experts estimate that Afghanistan’s lithium, as well as other metals, could be worth as much as $1 trillion, a lifeline for a country that for years has labored at the lowest end of the UN’s measures of human development.
It wouldn’t be the first time that natural resources have revived Afghanistan’s prospects. Not that long ago, Afghanistan was a booming trade hub. Its prosperity was primarily based on a single strategic commodity: the horse.
But when the world no longer needed horses, Afghanistan’s fortunes rapidly sank—and that should be a warning for economies that rely on today’s strategic commodity, oil.
For almost two millennia, Afghanistan was an exporter of quality horses to empires in India and China. Known as “arghamaks,” these steeds, raised on the excellent pastures in Afghanistan’s northern plains, often stood two to three hands (20 to 30 centimeters) taller than ordinary horses.
China and India depended on Central Asia for horses, then a key commodity for their armies and economies. Their warm and wet climates couldn’t produce the brawny horses needed for their cavalries. Indeed, upon learning that a new shipment of Afghan steeds had arrived, a Han emperor in the first century AD wrote ecstatically that “the heavenly horses have come…I will ride them up to heaven”.
Thus, Afghan horse breeders enjoyed a comparative advantage over their imperial neighbors, exporting as many as 100,000 horses a year. Afghanistan was, in effect, the Saudi Arabia of horses.
Then, like the oil trade today, the horse trade was hugely profitable. A horse might cost as little as 100 rupees (then worth about 11 grams of silver) in Afghanistan, but could go for as much as 500 rupees in export markets. And much like the Gulf ports of today, opulent communities of global traders set up shop in Kabul, giving the city a cosmopolitan touch.
Afghan kings knew the importance of the horse trade. King Ahmad Shah Durrani (1722-1772) sent his finest horses via a trade mission to China. The Chinese emperor received them at his hunting grounds, excusing the Afghans from the onerous protocols of Beijing’s Forbidden City. If the Chinese officials found the Afghans rude and uncouth, they kept those thoughts to themselves. The emperor had the giant arghamaks, 19 hands high, immortalized by his court painters. These paintings can be seen today at Taipei’s Palace Museum.
Fast forward to 1919, well into the Age of Oil, and Afghan horse power was dramatically ended with a failed invasion of British India. The airplane—powered by oil—ended the horse’s military advantage. The age of the horse was truly over, and Afghanistan became the impoverished backwater it is today.
The new horse
Oil has made countries like Saudi Arabia, and cities like Abu Dhabi and Houston fabulously wealthy. It’s given governments significant leverage on the world stage, beyond what normal metrics of power might suggest. Oil reserves allow some countries to defy the international community. The world has spent just over a century trading and fighting over oil.
But the history of the horse tells us that when technological change happens, it happens fast—and can upend who has wealth and power.
The energy transition is already underway. The International Energy Agency expects unabated fossil fuels to supply less than 40% of our energy needs by 2030. Even accepting recent backpedaling by some economies and companies on their green energy targets, MIT predicts the scale of stranded assets from fossil fuel production to be as high as $30 trillion—far higher than whatever was left behind by the end of the horse.
A world economy that relies just a little bit less on oil—let alone one that removes its importance entirely—will radically erode the power and influence of today’s petrostates, much in the same way the end of the horse ended the power of the Afghan kings.
Fortune’s wheel turns quickly. And for impoverished Afghanistan, it’s perhaps fitting that as one technological change took away the country’s prosperity, another—the rise of the electric car—might bring it back.
This story was originally featured on Fortune.com