OPIUM CROP CLOUDS AFGHAN RECOVERY

Opium growing is coming to dominate Afghanistan's economy, providing
roughly half the war-shattered country's wealth, the International Monetary
Fund (IMF) has warned.

"A dangerous potential exists for Afghanistan to progressively slide into a
'narco-state' where all legitimate institutions become penetrated by the
power and wealth of (drug) traffickers," the IMF said.

Afghanistan now provides about 75% of the world's opium crop, it added,
which is worth around $20bn

The IMF published its report on Afghanistan during its annual meeting,
which is taking place this year in Dubai in the Persian Gulf.

Meanwhile, on the sidelines of the meeting, the Afghan finance minister
Ashraf Ghani pleaded for more aid for his country from Western donors,
while warning that the deterioration of security in Afghanistan was dire
and that without an "infusion of urgency" into everyone's commitment, the
country could all too easily become a "narco-mafia state".

Progress Threatened

The IMF praised the Afghan government's reconstruction efforts, saying a
new currency, better banking system and improved tax collection had all
strengthened the economy.

But the production of opium is a "dark cloud over this scenario", said Adam
Bennet, IMF head of mission in Afghanistan.

Afghanistan's official, non-opium economy is growing sturdily, up 30% in
the 12 months to end-March 2003 The current year is expected to see 20% growth.

But if the opium trade were included in the official figures, the IMF
reckons it would make up between 40% and 60% of gross domestic product.

Rich Pickings

Afghan farmers can make 38 times as much growing opium as they can from wheat.

Mr Ghani told officials from G7 nations and international donors that that
the cost of rebuilding his country had been underestimated.

He said Afghanistan needed reconstruction aid of $30bn over the next five
years.

Mr Ghani said that the money would be well-spent, with the West already
spending $10bn each year on military and security costs.

And he warned that "the costs of failure in Afghanistan will hit budgets in
major Western countries...for years to come".

Mr Ghani also said his country received pledges for more than $1.2bn of
extra financial aid at the Dubai meeting.

The bulk of the money came from the United States, while the European Union
put up about $45m for help with security.

"The international community must not for a moment lose its focus on
Afghanistan," said James Wolfensohn, World Bank President.