28 November 2006

Drug Industry Threatens to Derail Afghanistan's State Building

Counter-narcotics efforts have deepened corruption and hurt the poorest, says new report

(Reissued as received)

WASHINGTON, November 28, 2006 -- Efforts to combat opium production in Afghanistan have been marred by corruption and have failed to prevent the consolidation of the drugs trade in the hands of fewer powerful players with strong political connections, says a report released today by the United Nations Office on Drugs and Crime (UNODC) and the World Bank.

According to the report, entitled Afghanistan's Drug Industry: Structure, Functioning, Dynamics, and Implications for Counter-Narcotics Policy, efforts to combat opium have achieved only limited success and have lacked sustainability.

Strong enforcement efforts against farmers are often ineffective in remote areas with limited resources, assets, and markets.  The impact of eradication of opium poppy fields, and of reductions in cultivation resulting from the threat of eradication, tends to be felt most by poor farmers and rural wage labourers, who lack political support, are unable to pay bribes and cannot otherwise protect themselves.

The report says that, far from leading to sustained declines in total national cultivation, success in reducing cultivation in one province often leads to increases elsewhere, or cultivation in the province itself rebounds in the following year (as occurred in Helmand province after 2003).

Corruption in the eradication process has also had negative side-effects.  Wealthier opium producers pay bribes to avoid having their crops eradicated, greatly reducing the effectiveness of counter-narcotics measures and  gravely undermining the credibility of the government and its local representatives.

"History teaches us that it will take a generation to render Afghanistan opium-free," said Antonio Maria Costa, Executive Director of UNODC.  "But we need concrete results now, for example by doubling the number of opium-free provinces from the current six in 2007.  I therefore propose that development support to farmers, the arrest of corrupt officials and eradication measures be concentrated in half a dozen provinces with low cultivation in 2006 so as to free them from the scourge of opium.  Those driving the drug industry must be brought to justice and officials who support it sacked."

The latest UNODC report on opium production in Afghanistan is discouraging.  There was a record opium harvest, with total cultivation increasing by 59 percent and production by 49 percent in 2006.  Afghanistan accounts for more than 90 percent of global illegal opium output.  The bulk of opium growth this year has been concentrated in Helmand and a few other highly insecure and insurgency-ridden provinces in the south. 

Elsewhere in the country patterns have been much more mixed, with increases in some provinces and reductions in others.

Yet, even in this record year, opium takes up less than 4 percent of the total cultivated area in Afghanistan. An estimated 13 percent of the population was involved in opium poppy cultivation.  Most districts and localities do not grow opium.  And although the opium economy accounts for around one-third of total economic activity in the country, most Afghans are not part of the drug industry.  The report says that although both better-off and poorer households cultivate opium poppy, the latter are much more dependent on opium for their livelihoods.

"Efforts to discourage farmers from planting opium poppy should be concentrated in localities where land, water, and access to markets are such that alternative livelihoods are already available." said Alastair McKechnie, World Bank Country Director for Afghanistan.  "Rural development programs are needed throughout the country and should not be focused primarily on opium areas, to help prevent cultivation from further spreading."

Developing alternative livelihoods takes time, and expectations of what can be achieved in the short term need to be realistic.  The report argues that there is a strong case for focusing initially on interdiction efforts against drug traffickers and their sponsors (the biggest threat to state-building) as well as opium-refining facilities, while alternative livelihoods are progressively developed.  Interdiction efforts especially need to target high-level profiteers whose wealth magnifies their potential for corrupting the state.

The report says there are no easy answers and short-term strategies can do more harm than good.  Aerial eradication, for instance, which has already been ruled out by the Afghan leadership, poses particular risks since opium poppy is interspersed with other crops and next to areas used for human settlement and livestock. This could easily fuel discontent and strengthen the insurgency in the volatile south of the country.

Furthermore, the hawala (informal financial transfer) system, which serves as a vehicle for drug money laundering as well as much more benign purposes such as transferring money to poor Afghans from relatives abroad, poses particular challenges, the report says.  Imposing anti-money laundering provisions too quickly risks discouraging the Afghan people from using the formal financial sector.  In the meantime, anti-money laundering provisions need to be more strictly enforced on banks in neighbouring countries as well.

"Development aid organizations need to be more diligent in their use of the hawala system to prevent their funds from becoming intermingled with illicit transfers," said Doris Buddenberg, UNODC Country Representative for Afghanistan and co-editor of the report.  "Evidence suggests that banks in industrialized countries as well as in the region play an important role in transferring money used to purchase illicit drugs."

Corruption should be fully taken into account in designing and implementing counter-narcotics measures.  Experience shows that implementation of eradication programs - especially if they are partial or limited to certain areas  - is inevitably distorted by corruption, so they disproportionately affect the poor and those without local political connections.  This underlines the importance of increased efforts to strengthen and reform key institutions such as the police in order to reduce their vulnerability to drug-related corruption and rebuild trust in government.

"The critical adverse development impact of actions against drugs is on poor farmers and rural wage labourers," said William Byrd, World Bank Economist and co-editor of the report.  "Any counter-narcotics strategy needs to keep short-run expectations modest, avoid worsening the situation of the poor, and adequately focus on longer term rural development."

Finally, the report argues that phasing out drug production will take decades rather than months or years, and that there is a need for an equally smart and effective strategy to curtail demand for opiates in the consuming countries.  Most of all, the Afghan Government, with international support, needs to combat the high-level drug trafficking network and its protectors.

To read the report and for more information on the World Bank's work in Afghanistan, please visit http://www.worldbank.org.af

To read the report and for information about UNODC work in Afghanistan and globally, go to http://www.unodc.org

* *** *

For further information, contact:

Elisabeth Bayer
UNAMA Liaison Officer
UNODC Afghanistan
Telephone: +93 79 12 9286
E-mail: elisabeth.bayer@unodc.org

Richard Murphy
Spokesman, UNODC
Telephone: +43 1 260 60 5761 Mobile +43 699 1459 5761
E-mail: richard.murphy@unodc.org