Afghanistan and Opium: Ground Realities

Abstract: The article aims to highlight the alarming rates of opium and heroin production in Afghanistan and their sale proceeds funding the operational activities of Taliban, further distorting incentives and weakening governance in the region.

As the International Security Assistance Forces (ISAF) reduce their military footprint, Afghanistan faces a threat from illicit narcotics trade that is likely to affect the long-term reconstruction and state building efforts. In the midst of political transition and an unstable security environment, Afghanistan is likely to descend into further chaos due to the illicit activity that funds insurgents, fuels corruption and undermines governance.

Corruption and insecurity in the region have created an environment that is ideal for illegitimate poppy production to expand and fund the insurgent activity (particularly Taliban) in the region. According to Transparency International’s 2014 Corruption Perceptions Index, Afghanistan is the fourth most corrupt country in the world (rank 172^nd among 175 countries) marginally ahead of Sudan, North Korea and Somalia, while in World Bank’s 2015 Doing Business Report, it ranks a poor 182^nd out of 189 countries. For the past 12 years, Afghan economy has been practically dependent on foreign aid. According to the Ministry of Finance, almost 100 percent of its development budget and 45 percent of its operating budget is externally financed, with the U.S. being the major donor.[i]

Afghanistan is the largest producer of illicit opium in the world, responsible for over 90 percent of the global total. According to the Afghan opium survey 2014, conducted by the Ministry of Counternarcotics (MCN) of Afghanistan and United Nations Office on Drugs and Crime (UNODC), the total area under opium poppy cultivation in the country was estimated at 224,000 hectares in 2014, up 7.18% from the previous record high of 209,000 hectares in 2013 and the trend is likely to continue. It is a perverse interpretation of Say’s Law [ii] (supply creating demand) as the heroin produced from opium is trafficked to all parts of the world while bankrolling Taliban’s coffers.

The majority (89%) of opium cultivation took place in nine provinces in Afghanistan’s southern and western regions, which include the country’s most insecure provinces with a security risk classified as “high” or “extreme" by the United Nations Department of Safety and Security (UNDSS) where Taliban’s presence is strong and state structures are weak. Helmand remained Afghanistan’s principal opium-cultivating province, with an estimated 103,240 hectares under cultivation, accounting for 46% of total opium cultivation and the unfortunate claim of being the poppy capital of the world, followed by Kandahar (33,713 hectares) and Farah (27,513 hectares).

Potential opium production was estimated at 6,400 tons in 2014, an increase of 17% from its 2013 level (5,500 tons). Accounting for 69% of national production, the Southern region produces the majority of opium in Afghanistan. With 16% of national production, the Western region is the country’s second most important opium-producing region in 2014. The farm-gate value of opium production stood at $0.85 billion, or the equivalent of roughly 4% of Afghanistan’s estimated GDP.[iii] The value of opium and its heroin and morphine derivatives was equivalent to 15 percent of Afghanistan’s gross domestic product in 2013.

Opium Poppy Cultivation in Afghanistan 1997-2014

Apart from a minor dip in cultivation in 2004-05 and 2007-09 (because of weather conditions and counter-narcotics efforts being successful for a brief period), the cultivation of opium has continued unabated at an alarming rate. 

Taliban

When Taliban came to power, it faced an awkward task to manage the apparent disconnect between their Islamic ideology and the illicit drug trade since the Koran forbids Muslims from producing or imbibing intoxicants.[iv] The political imperatives and fiscal concerns subdued ideology as Taliban gave an Islamic sanction to farmers and allowed the poppy trade to flourish.[v]

In 2001 Mullah Omar, the reclusive Taliban leader, banned opium cultivation in order to manipulate prices (by restricting supply) and as a bargaining chip for international recognition amidst pressure from the United Nations.

According to the Financial Action Task Force, Taliban runs an intricate protection racket for opium farmers and drug traffickers. The system includes a 10-20 % percent agriculture tithe (tax) on farmers, transit charges on truckers, and protection money from clandestine heroin labs to Taliban, where each middleman gets its cut. [vi]The Congressional Research Service (CRS) has estimated Taliban profits from the drug trade at $70 million to $100 million annually, while counter-narcotics officials put the insurgents' profit as high as $400 million.[vii] There are already reports of elevated levels of Taliban violence as the organisation plans its annual spring offensive attacks. The recent Taliban monitoring report on the evidence of record cultivation levels warned that the income from illegal trade in narcotics has been critical in generating assets for the group.[viii]

Reasons for cultivation

The argument that poverty or tradition is the reason for expansion of opium cultivation in Afghanistan in recent years is not backed by evidence. According to the Afghanistan Opium Risk Assessment 2013, ‘High sales price of opium’ was the predominant reason (66%) given for growing opium (71% in 2012) in the survey, substantiating that opium is the most lucrative cash crop and a financially viable option for farmers. 10% of respondents mentioned the lack of government support and slightly fewer cited ‘poverty’ and ‘high income from little land’ as the most dominant reason.[ix] One of the central principles of economics mentioned by Gregory Mankiw in his book Principles of Economics states “people respond to incentives”. The farmers can earn about $133 for one kilogram of dry opium, compared to 48 cents for one kilogram of wheat, thus they have no incentive to substitute it for other crops.[x]

Counter-narcotics

In last 12 years, the United States has spent $7.6 billion on combating Afghanistan’s opium production with disastrous consequences. In 2014, only 2692 hectares of poppy cultivation was eradicated. Political will and vested interests are impediments to eradicate a crop that is lucrative for farmers and funds insurgents, traffickers, middlemen, drug lords and corrupt government officials.

In a TED talk in 2006 on the topic “How to rebuild a broken state”, Ashraf Ghani, the incumbent President of Afghanistan, lamented the failure of economic theories to be applicable in his home country and acknowledged the existence of a drug mafia in Afghanistan. He said “Economics taught in most of the elite universities are practically useless in my context. My country is dominated by drug economy and a mafia-  Textbook economics does not work in my context…”[xi] In the same conference, he seemed pessimistic about the success of drug eradication programs and instead mentioned two solutions to combat the drug problem: jobs (creating alternative employment/income for people involved in drug business) and trade (not aid). He added “countries that have a legal average income per capita of 1,000 dollars don't produce drugs.”[xii]

In the 1980’s, the term “narco-terrorism” was used to describe the terrorist acts perpetrated by drug trafficking organizations, especially the Medellin Cartel in Colombia. In the contemporary situation, the term applies perfectly to Afghanistan.

The author is Research Assistant at CLAWS. Views expressed are personal.