Afghanistan - Drugs finance Taliban war machine, says UN drug tsar

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This from the UNODC site (link):

Drugs finance Taliban war machine, says UN drug tsar

But opium becoming less important to Afghan economy


LONDON, 27 November 2008. The Afghan Opium Survey 2008 released today by the United Nations Office on Drugs and Crime (UNODC) shows that opium has become less important to the Afghan economy due to a decrease in cultivation, production and prices. However, opium finances the Taliban war economy and is a major source of revenue for criminal groups and terrorists.
Opium cultivation in 2008 declined 19% to 157,000 hectares. Production was down by 6% to 7,700 tons. The Survey shows that prices are also down by around 20%. As a result, the value of opium to farmers dropped by more than a quarter between 2007 and 2008, from $1 billion to $730 million. The export value of opium, morphine and heroin (at border prices in neighbouring countries) for Afghan traffickers is also down, from $4 billion in 2007 to $3.4 billion this year.
The area of arable land in Afghanistan used to grow opium dropped from 2.5% to 2.1% between 2007 and 2008, and one million fewer people were involved in opium cultivation this year. The Afghan opium problem is therefore shrinking in size and becoming more concentrated in the south-west of the country where 98% of the opium is grown.
Despite the drop in opium cultivation, production and prices, the Taliban and other anti-government forces are making massive amounts of money from the drug business. In Afghanistan, authorities impose a charge (called ushr) on economic activity, traditionally set at 10% of income. Opium farming may have generated $50-$70 million of such income in 2008. Furthermore, levies imposed on opium processing and trafficking may have raised an additional $200-$400 million. "With so much drug-related revenue, it is not surprising that the insurgents' war machine has proven so resilient, despite the heavy pounding by Afghan and allied forces", said the Executive Director of UNODC, Antonio Maria Costa.
He also pointed to the danger of opium stocks held by the Taliban. "For a number of years, Afghan opium production has exceeded world demand. The bottom should have fallen out of the opium market, but it hasn't. So where is the missing opium?" said Mr. Costa. "Lack of price response in the opium market can only be the result of stock build-ups, and all evidence points to the Taliban".
The UN's top drug control official suggested that ongoing efforts by the Taliban to manipulate the opium market may result in less opium in 2009. "Since they are hoarding opium, they have the most to gain from lower cultivation. This would drive up prices, and result in a re-evaluation of their stocks", said Mr. Costa. News picked up by UNODC surveyors in a number of eastern and southern provinces confirms that the Taliban are taking a passive stance during opium planting this autumn, as opposed to past efforts to promote it.
Furthermore, alternative sources of income are becoming more attractive to farmers. The revenue from wheat has tripled since 2007. The gross income ratio of opium to wheat (per hectare) in 2007 was 10:1. This year it narrowed to 3:1. The net income ratio is down to 2:1. However, this is partly due to drought and may therefore be reversed. Mr. Costa therefore called for "greater and faster international development assistance - including food aid to urban centres - to prevent a humanitarian disaster and to consolidate gains that have resulted in 18 out of Afghanistan's 34 provinces becoming opium free".
Mr. Costa insisted on the importance of "keeping down both opium production and prices". "If the Taliban can disrupt the market, so can NATO: drug production and trafficking would be slowed by destroying high value targets like drug markets, labs and convoys - which the Afghan army, backed by NATO, are starting to do. International efforts have also been stepped up to reduce the inflow of precursor chemicals needed to produce heroin", he said. "These measures are meant to hit organized crime and insurgency in order to cut the Afghan drug economy's umbilical cord to the world, breaking the link between opium farmers in Afghanistan and heroin addicts in Europe", said Mr. Costa.
"The downward trend in Afghanistan's opium economy would gain speed with more honest government, more security, and more development assistance", said Mr. Costa.

The full report is in the archives here:
http://www.drugs-forum.com/forum/loc...6241&catid=137

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This take on it from the New York Times (article link):


U.N. Reports That Taliban Is Stockpiling Opium

By KIRK KRAEUTLER
Published: November 27, 2008

UNITED NATIONS — Afghanistan has produced so much opium in recent years that the Taliban are cutting poppy cultivation and stockpiling raw opium in an effort to support prices and preserve a major source of financing for the insurgency, Antonio Maria Costa, the executive director of the United Nations drug office, says.
Mr. Costa made his remarks to reporters last week as his office prepared to release its latest survey of Afghanistan’s opium crop. Issued Thursday, it showed that poppy cultivation had retreated in much of the country and was now overwhelmingly concentrated in the 7 of 34 provinces where the insurgency remains strong, most of those in the south.
The result was a 19 percent reduction in the amount of land devoted to opium in Afghanistan, the United Nations found, even though the total tonnage of opium produced dropped by just 6 percent.
The high output per acre was attributed to a good growing season in the south, a heavily irrigated area where the Taliban maintain a strong presence in five provinces and have for several years “systematically encouraged” opium cultivation as a way to finance their insurgency, the study said.
Last year, the insurgents made as much as $300 million from the opium trade, by United Nations estimates. “With two to three hundred million dollars a lot of war effort can be funded,” said Mr. Costa, an Italian diplomat who has served at the United Nations Office on Drugs and Crime for six years.
But after three years of bumper crops, including this one, the Taliban have succeeded almost too well, producing opium in amounts far in excess of world demand. The result, Mr. Costa said, was now a glut that was putting downward pressure on the price, which had dropped by about 20 percent.
The fact that prices had not collapsed already, he said, was evidence that the Taliban, drug lords and even some farmers have stockpiled the opium, more and more of which is also being processed in Afghanistan. “Insurgents have been holding significant amounts of opium,” Mr. Costa said.
The surplus — as much as 11,000 tons, or more than twice world demand in the last three years — now threatened to devalue even those stockpiles, Mr. Costa said. In 2008, Afghanistan produced 8,500 tons of opium, the United Nations found. World demand was estimated at about 4,400 tons a year.
This year, the Taliban are taking a “passive stance” toward cultivation, apparently putting less pressure on Afghan farmers to plant opium poppy. “They have called a moratorium of sorts as a way of keeping the stocks stable and supporting the price,” Mr. Costa said.
He said the information came from undercover surveyors in Afghanistan who closely observed the autumn planting season and the buzz around markets where opium is traded.
The dynamics of the opium market pointed up the problems American and NATO forces face as they try to tamp down the narcotics trade. Eradication itself can drive up the price and put more money into the hands of the Taliban, while alienating poor Afghans who depend on the crop for their livelihoods. “We’ve got to find a way to keep the prices down and the cultivation down,” Mr. Costa said.
He has suggested an emphasis not on eradication of poppy crops once they are planted, but on disrupting the trade by hitting the open-air markets where opium is bought and sold, the convoys that transport it and the labs where it is processed into more potent drugs, primarily heroin.
NATO countries agreed to the logic of such an approach at a meeting in Budapest in October, Mr. Costa said, but he added that for many years, “The international community has undervalued the role of narcotics in creating the conditions for insurgency in Afghanistan.”
Despite the still-high opium output, he was encouraged that an estimated one million fewer Afghans were involved in opium cultivation this year. The reasons varied and included drought in some provinces beyond the south.
But it also appeared to reflect some progress among provincial governors and shuras, or local councils, in persuading farmers not to plant poppy, Mr. Costa said.
Part of the incentive for farmers was the expectation of government assistance if they planted legal crops, he said. But higher prices for food crops also helped. The revenue from wheat, for instance, has tripled since 2007, the United Nations said.
But without better economic opportunities, poppy will remain an attractive alternative for many in Afghanistan, the source of more than 90 percent of the world’s opium. Growth has lagged so badly, Mr. Costa noted, that the drug trade still accounts for a third of the Afghan economy. Other estimates put it at as much as one-half.
Any progress this year remained vulnerable, he warned. The biggest threat was if insecurity continued to spread to previously stable parts of Afghanistan, as it has in recent months.
Could the United Nations, NATO and American forces keep up the declines in opium cultivation in the face of decreased security? “The answer is no,” Mr. Costa said. “I don’t think we can.”