SERIES: DRUGS UNCOVERED: CRADLE OF A CASH CROP

Afghanistan's UKP 2.5 billion opium industry provides 90 per cent of
the world's supply. As the country edges closer to becoming a
narco-state, the international community is divided over a solution.

Zar Jan Adilkhel Shinwari is a tribal elder who lives in a small
village near the eastern Afghan city of Jalalabad. Last month, he was
worrying which crops he and the men of his tribe would plant on their
fields. The men of the village are not poor - in fact, in Afghan terms
they are relatively well-off - but the decision is difficult, none the
less. Nangarhar, the province in which Shinwari lives, is one of the
rare success stories in Afghanistan in recent years. It is fairly
stable and, apparently, 'opium-free'. Given Shinwari's reasoning, this
may not last long.

Shinwari lists the advantages of opium: the drug earns more money and
needs less water and labour than other crops; it can be stockpiled for
years; it can be sold from the front door of his semi-fortified,
mud-walled home (the village has no real road); demand is constant;
and you can sell it to buy other crops. The downside is that the crops
are illegal, the local cleric has said that they are un-Islamic and
they might be destroyed by the authorities before they are harvested.
Shinwari knows this because, as a tribal elder, he spent six weeks
earlier this year smashing down his own farmers' fields at the behest
of the local governor, even getting shot at for his pains. Every year
for a decade Shinwari has run through the same calculations: risk
versus profit, investment versus return, stick versus carrot.

And the decision this year? For obvious reasons Shinwari, lean and
gnarled and slowspeaking, chooses his words carefully.

'As I look around me, I think people are looking to plant poppies,' he says.
Translation: I am under heavy pressure from my tribesmen to allow
them to return to
opium. He scratches his head. 'The government has not kept its
promises,' he goes on.
Translation: if only they would help me as tribal leader by giving me
something to give
my people in return for putting my credibility on the line if I do
not opt for opium. A
long sigh and then: 'I think 70 per cent of people in this province
are going to be
planting opium this season.' Translation: there's a limit to how far
I can push things.
We are going to plant poppy in my village this season. Sorry, but
honestly, what can I
do?

Shinwari is far from an exception. There are tens of thousands of
village leaders across Afghanistan wrestling with the same issues. And
millions more affected by their decisions. No one knows how many
people are involved in the UKP 2.5bn industry in the country. There
are farmers, buyers, dealers, traffickers, the gunmen hired as
protection, chemists and their labourers; then there are transporters,
mechanics, the bribed police, the corrupt officials, the bent
politicians, and the traditional bankers who send the funds to the
Gulf or Pakistan or elsewhere without a trace.

And then, beyond all those in Afghanistan stretching like a stain
across Asia and eventually Europe, is everyone else involved in the
production, transit and marketing of opium grown in the war-wracked
south-west Asian state. How many in total? No one knows. How much is
the business worth worldwide? Again, no one knows. The figures are
astronomic.

It is a globalised industry in rapid evolution where the laws of
supply and demand, of cost of production and location, work better
than in anything designed by Harvard Business School. A few years ago,
Shinwari's opium left his front door and Afghanistan as raw balls of
black gum, carried in trucks or by mules and camels across into
Pakistan, Iran or central Asia to be refined into heroin there. These
days his opium is likely to be processed in one of the scores of labs
that have sprung up in recent years in Afghanistan itself, often
staffed by specialist chemists brought in from overseas, exploiting
the relative lawlessness of the country. Down on the Pakistani border
in the south, industrial-scale refining occurs in factories employing
hundreds of people and powered by banks of generators. According to an
American classified drugs briefing, heavily guarded convoys depart
daily from the villages of Girdi Jungal and Baramcha, across the
desert to Iran, carrying hundreds of kilos of their precious cargo.
There are of course local consumers - nearly four million addicts in
Iran, almost as many in Pakistan, and several hundred thousand in
Afghanistan - but that is not the main market. The cash lies in
London, Berlin, Warsaw, Moscow or Rome.

Policymakers insist that the strategy for countering drugs in
Afghanistan is multi-year or even 'multi-decade'. Senior British
diplomats in Kabul spoke last year of a 30-year campaign - that's how
long they think it will take to stabilise Afghanistan. But it is
difficult to claim much success so far. It may be the case that, as
one United Nations official interviewed this summer said, 'the night
is darkest before the dawn', but there are only a few glimmerings in
the gloom for the moment. For the first time since the invasion of
Afghanistan in 2001, the United Nations Office on Drugs and Crime
(UNODC) was able this year to report that total opium production in
Afghanistan had dropped by 19 per cent between 2007 and 2008 - in
part, the result of a drought and high global wheat prices - but the
figures none the less remain extraordinarily high. An estimated
157,000 hectares (606 square miles) in Afghanistan were given over to
growing poppies for the 2007-8 season. That expanse of land produced
7,700 tonnes of opium this year, more than twice the level of 2002.
Antonio Maria Costa, the director of the UNODC, claimed that 'the
flood waters of opium production in Afghanistan [are] receding'. If
so, they are leaving chaos, destruction, misery and a country halfway
to becoming a narco-state.

The capital of that narco-state lies in the south, in the dusty,
scrubby deserts and mountains where the British army is fighting a
gritty, unrewarding campaign. Ninety per cent of the world's opium
comes from Afghanistan (the bulk of the rest is grown in the Golden
Triangle of Burma), and half of Afghan opium comes from the single
province of Helmand. Much of the heaviest fighting involving British
troops is for locations that are as strategic for the drug trade as
for military purposes.

That should be no surprise. For, despite efforts to keep the two
distinct, the 'war on drugs' and the 'war on terror' in Afghanistan
are converging. Kajaki , the site of a strategic dam and reservoir in
northern Helmand, is also a key bottleneck on the drugs routes from
the growing fields north into central Asia.

In 2007, a young British officer told The Observer how his men were
finding opium and even syringes in quantity while searching buildings.
They had watched the long convoys of porters lugging what looked like
bundles of opium over the hills. In settlements such as Baramcha, over
the Pakistani border to the south of Helmand, Taliban insurgents
train, rest and plan. Though the traffickers and the insurgents tend
to be different people, the Taliban themselves raise traditional taxes
on agricultural produce in the areas they control, and that includes
opium. By some back-of-the-envelope estimates, they earn up to UKP
200m a year from the trade, enough for a lot of Kalashnikovs and
explosives. Intelligence suggests that links between key drugs barons
and the insurgents are getting progressively closer. Accounts ledgers
seized at the homes of drug dealers list transfers of huge sums of
money to senior Taliban individuals. 'There is evidence of greater and
greater integration,' said one UK official.

The situation has become so serious that Nato has been forced to
reassess its strict rules of engagement in Afghanistan. After a
meeting last month, the 73,000 foreign troops in the country will now
target heroin laboratories and senior traffickers for the first time.

Significantly, the international community is not alone in its bid to
regulate the burgeoning heroin industry. Intelligence reaching Western
services in recent months also reveals that the Taliban are worried
about the traffickers getting strong enough to contest their authority
in some areas they theoretically control. The question of regulating
the industry - even imposing temporary bans on production, possibly in
a bid to force up prices depressed by current over-production - has
been raised among Taliban leaders based in Pakistan during the summer,
the intelligence suggests. Between 1999 and 2000, when in power in
Afghanistan, the Taliban effectively managed to get opium production
suspended for a year - the 2001 harvest was a derisory 185 tonnes. It
is unlikely, however, that they could do so again.

And nor, at least in the next decade or so, can the West. All
officials involved in the counter-narcotics effort in Afghanistan
stress the complexity of the problem. Where do you start in the
fourth-poorest country on earth , where there is no functioning police
force, a deeply corrupt judiciary, few roads or civil infrastructure,
profound anti-Western sentiment, a violent and fanatical insurgency
and a President whose power relies in part on the support of the very
people the international community would like to see locked up for
drugs crimes? Only a handful of senior Afghan traffickers have ever
been punished. These included Haji Bashir Noorzai who was lured to
America in 2005 and then arrested, tried and found guilty last month:
he faces a minimum sentence of 10 years. But the Noorzai case merely
reveals the knottiness of the problem. An ally of the US in the
immediate aftermath of the invasion of 2001, Noorzai is also the head
of a tribe of several hundred thousand people who are unlikely to
react too positively to their leader's incarceration. A vast number of
the famous 'hearts and minds' have thus been lost.

Then there are the arguments between those tasked with the
counter-narcotics effort. The British formally 'lead' the campaign but
the Americans provide the financial muscle and this leads to some
tensions. Thomas Schweich, the controversial former US ambassador to
Afghanistan for counter-narcotics and justice reform, did not mince
his words on leaving Kabul earlier this year. Writing in the New York
Times, he blamed 'an odd cabal of timorous Europeans, myopic media
outlets, corrupt Afghans, blinkered Pentagon officers, politically
motivated [American] Democrats and the Taliban' for the failure to
ensure 'the implementation of an effective counter-drug program'.

Speaking last month in his first interview with a UK newspaper,
Schweich minimised the internecine rows, pointing out that no one is
realistically advocating mass legalisation nor buying up all Afghan
opium to turn it into medical morphiates. (The latter idea was a
nonstarter, he said, given the glut of legal opium on the world
market.) 'There was never any acrimony, we would have some pretty
heated discussions but always go to dinner together afterwards,' he
said of his British colleagues in Kabul and London. 'The differences
were about tactics, not strategy.'

One of the first spats came when Schweich discovered that British
troops deployed in Helmand were handing out leaflets assuring locals
that they were not going to be involved in antipoppy operations.
Aghast, he joined forces with the British Foreign Office, flew to
Brussels to see the Nato high command and forced a policy change, much
to the irritation of the Ministry of Defence.

Yet the key tactic splitting the international community was - and
continues to be - the question of eradicating drugs by spraying from
the air. The physical destruction of opium fields is, most agree, a
necessary evil, important to 'inject risk' all along the supply chain.
Last season, however, only 3.5 per cent of poppy fields were
eradicated by local authorities. To increase the risk 'injected', many
Americans, inspired by tactics used to fight cocaine production in
Colombia, wanted to use planes to drop weedkillers on fields, at least
in those areas where the opium growers are deemed 'greedy not needy'.
The Europeans are dead against it. 'It would hand the Taliban a public
relations victory and lose consent among the Afghan people, and there
are clear practical problems with low-flying planes in insurgent
territory,' says one Whitehall official. This is a 'myth', according
to Schweich, who maintains the trade has to be hit at all levels. 'The
policy of being nice to farmers has been a total failure,' he told The
Observer, though he emphasised that he saw aerial eradication as only
advisable in relatively wealthy zones, with due warning and when
alternative crops were available.

The row over aerial spraying, which is also adamantly opposed by the
Afghan government, touches on a broader ideological debate: who
exactly is responsible for the poppy cultivation? The poor? The rich?
Those in between?

Christina Oguz, the country director for the UNODC in Afghanistan, met
The Observer in the lobby of the luxury Serena Hotel in Kabul for
'security reasons', according to her assistant. Built somewhat
optimistically - some say insensitively - in the boom years that
succeeded the fall of the Taliban, the Serena was the target of a
suicide bombing earlier this year. Oguz's armed, flak-jacketed
bodyguard hovers throughout the interview. Though the hotel is
surrounded by blast walls and an exclusion zone, traffic noise from
the jammed streets still filters through the empty corridors.

'Some farmers in Afghanistan cultivate opium because they are poor.
They don't have access to land, so they need credit. They can lease
land on the condition that they also cultivate opium, or they can get
credit against the future harvest of opium,' she says. 'Then there are
farmers who have a lot of other assets as well. They may have good
irrigation, a lot of land, all sorts of assets. For them, it's simply
that they make a very good profit.'

Over the past seven years, opium production in the country has shifted
from the very poor but relatively stable north, to the less poor but
war-wracked south and south-east, Oguz explains. 'This year 18
provinces in the north and east have been declared poppy-free, three
times as many as in 2006. This indicates that where there is a degree
of legitimate government and political leadership, significant
progress can be made.'

There are some doubts about the 'poppyfree' status of the provinces.
The drugs may have gone from some but the drug business remains.
Equally, as tribal elder Shinwari says about Nangarhar province, there
are 'still the remote areas that have poppy fields where the foreign
monitors or government delegations cannot go'. Any progress is
fragile: the compact concluded with the local people is based on
development and aid swiftly following the end of poppy cultivation .
But there is a large gap between the expectations of the farmers - who
believe they will be getting a bridge, a road and a clinic in the
coming months - and the timescale and attention span of the
international community. In Nangarhar, Shinwari says, 'government
promises haven't been kept' and that is why the farmers are turning
back to opium. In the north, where drought has ravaged fields, Oguz
fears that having got the poppy stopped, the international community
will look elsewhere, the aid will not arrive, the agreement with the
farmers will fail, and the drugs will come back. The fears of neither
are entirely unjustified.

However, the broad lesson is clear and has now become the central
plank of the campaign against drugs: better security brings economic
opportunities. The only problem is that security in most of
Afghanistan is getting worse. There is one delicate question on which
everyone is in agreement: the need for political will. For Schweich,
this is the lesson that he has retained from Colombia. He has been
ferociously critical of Hamid Karzai, the Afghan President. European
diplomats are more judicious in their choice of words, but equally
cutting. They privately accused him of being soft on political allies
linked to trafficking, many of whom occupy influential positions. With
corruption riddling the country, from the top to the bottom, several
talk about the 'fish rotting from the head', though there is no
suggestion that Karzai himself is in any way corrupt. 'The problem of
Afghanistan is not necessarily the opium, it is the money that the
opium generates,' says Barnett Rubin, a respected Afghan expert at New
York University . And though the replacement of the interior minister
last month was widely welcomed, few expect any radical action until
the Afghan presidential elections are out of the way by the end of
next year. 'We appreciate that, to a degree, Karzai's hands are tied,
much as we would like firmer measures,' said one Kabul-based diplomat.

In the streets of the Afghan capital, beggars try to sell paper cones
full of sunflower seeds, wizened apples, old newspapers and gaudy,
badly printed maps. Lay one of these maps out on the greasy table of a
local kebab shop and it is very clear that the real solution to the
drug problems here lies well beyond the borders of this battered
country. Afghanistan is the centre of a global industry. Precursor
chemicals flow in from all over the world, drugs flow out. Cash is
transferred in both directions by traditional hawala bankers that link
the sub-continent, the Gulf, the Middle East, Europe and further
afield in a web of traceless multi-million-dollar transactions. On the
main trafficking routes through the north and west, which often follow
old caravan trails through the deserts, are the remains of old
caravanserai, the roadside inns that lay along the ancient silk routes.

'The drug market is a world market, not regional, national, nor in
this case Afghan,' says Barnett Rubin. 'The problem starts with demand
and an industry that supplies that demand and seeks locations for
production. And because it is illegal, it seeks places where the "cost
of illegality" is lowest, the most lawless parts of the world. That,
right now, means Afghanistan.'

And if it were not Afghanistan, it would just be somewhere
else.

Flowering of a poppy economy Opium cultivation and use has a long and
rich history in Afghanistan - but never on anything approaching the
scale of today.

The first serious moves to control production were in 1957, though the
drug has long been used for medical purposes. But cultivation exploded
during the war against the Soviet Union in the Eighties. Insecurity,
warlords enthusiastically exploiting the international narcotics
business, a local market among Soviet troops and growing global demand
all meant Afghan opium production rose from 400 tonnes in 1985 to
around 1,000 five years later.

Production boomed during the civil war of the early Nineties. Refugees
returned to a ravaged land where occupying armies had deliberately
destroyed the irrigation systems upon which local crops relied, and
turned to the poppy; warlords were happy to traffic their produce.
Globally, falling production in south-east Asia meant slack in the
market for Afghanistan to pick up.

The rise continued under the Taliban regime until, either hoping to
boost poppy prices to make more money, or gain international
credibility, or to complete their Islamic revolution - or all three -
the hardline militia successfully banned opium in their last year in
power.

Currently, Afghanistan produces 90 per cent of the world's illegal
opium and has a growing addiction problem itself. This year saw the
first drop in totals cultivated since the Anglo-American invasion
seven years ago.