OPIUM PRICE CRASHES ON AFGHAN-PAKISTAN BORDER

QUETTA/PESHAWAR, Pakistan, Oct 1 (Reuters) - In the Afghan drug trade, cash
is now king.

And that means opium prices are plummeting, supplies are soaring and drug
traffickers in Europe and North America could be in for a bonanza.

"We have relatives in this business, so we know," said one businessman with
interests in both Pakistan's Baluchistan province and, across the long and
porous frontier, in the Afghan province of Kandahar.

"The price has been falling dramatically since September 11," he said,
referring to the date of the suicide plane attacks on the World Trade
Center and the Pentagon in which Osama bin Laden -- hiding in Afghanistan's
rugged hills -- is the prime suspect.

Over 95 percent of the heroin on the streets of Europe originates in the
Golden Crescent, the poppy fields on the rugged borderlands of Pakistan,
Afghanistan and Iran.

It is smuggled through Turkey, the Balkans or Central Asia on its way to
West European cities.

"You people in Europe could face an unprecedented wave of heroin because
the producers and smugglers in Afghanistan have been unloading their stocks
of opium ever since the attacks on New York and Washington," the
businessman said.

The frontier people are experts.

Using clean running water, a large container and a fine-woven material like
cheesecloth as a filter -- as well as chemicals that can be bought at any
pharmacy -- opium can be reduced in bulk from 11 parts to one.

The beige-coloured morphine sulphate is further refined, ending with the
highly addictive fine powder that, together with cocaine, lies behind so
much violent, organised crime in the United States and Europe.

The "bathtub factories" are often mobile, hidden in the back of a truck and
moved from place to place in the almost inaccessible Hindu Kush mountains.

Another source in the border area said the frontier price had fallen from a
peak of $2,000 for four kg (8.8 lb) of opium to $300 nowadays.

Prices have also fallen in the drug bazaar in the Khyber Agency tribal area
just outside Peshawar, capital of Pakistan's North West Frontier Province.

One dealer, whose shop is just one in a row of similar drug stalls, said
prices had fallen to 35,000 rupees ($550) per 1.2 kg (2.64 lb) of opium.

"It was 50,000 rupees before the attack but people are worried and are
selling their stockpiles," said the dealer, operating in the tribal Khyber
Agency that is one of three major markets in the area where opium and
hashish are sold.

Cash Is King

"It's political uncertainty. The stock markets haven't been any different,"
he said. "They're prepared to sell for whatever they can. Cash is king
right now."

The threat of lawlessness, renewed conflict and the collapse of Taliban
rule in Afghanistan in the face of possible U.S. retaliation and a new
offensive by their Northern Alliance opponents have all fuelled the dumping
of opium on to local markets.

"The Taliban prohibit the use of drugs, but this hasn't stopped the
stockpiling of opium or the trade," said the businessman.

"Senior Taliban government officials are directly involved. We know them."

Last March, a Russian intelligence report sent to the U.N. Security Council
identified what it said were Taliban officials responsible for the export
of narcotics to neighbouring states.

In recent years, Iran and Pakistan have made enormous efforts to stem the
illegal traffic across Afghanistan's borders, but with the devastation of
the Afghan economy and with several million impoverished refugees living in
squalid border camps, it has been impossible to stamp out the illicit profit.

Huge profits are made by intermediaries and importers, with the high-grade,
almost pure heroin being "cut" or diluted at each step until it reaches
addicts on the streets.

"If the U.S. attacks, prices could fall even more as people will sell more
because they need the cash, and there could also be more planting of poppy
for the next growing season," said the Peshawar dealer, echoing the fears
of the United Nations that has been amazed and impressed by the Taliban
eradica tion of poppies from Afghan land in the last year.

($1 - 64 rupees)