CAP en Español
Small CAP Banner

The High Costs of Afghanistan’s Opium Economy

Why the World Needs to Pay Attention to This Growing Crisis

SOURCE: AP/Abdul Khaleq

An Afghan police officer walks across the field as his fellow uses a tractor to destroy poppy crops in Lashkargah, Afghanistan's Helmand province, during poppy eradication operations.

    PRINT:
  • print icon
  • SHARE:
  • Facebook icon
  • Twitter icon
  • Share on Google+
  • Email icon

As the international community begins to realign its military and financial investments in Afghanistan and to press the Afghan government to take a greater responsibility for the country’s future, the country’s leadership and its international partners will continue to face multiple challenges. After a decade of growth driven by war and aid spending, the country’s economic health will be of particular concern to Afghanistan’s future stability—especially its large illicit opium economy. The high cost of the Afghan drug trade for both Afghanistan and the broader international community means that U.S. and Afghan policymakers cannot afford to ignore this problem.

A report released by the U.N. Office of Drugs and Crime this past month raises concerns that Afghanistan’s opium economy is growing and warns that cultivation is returning in northern and eastern Afghan provinces that were previously judged to be “poppy free.” The total value of the Afghan opiate economy is estimated at roughly $2.4 billion (in U.S. dollars), equivalent to 15 percent of the country’s licit GDP.

The illicit cultivation, production, and transportation of opium creates powerful economic and political interests on both local and national levels. Moreover, these interests present a fundamental challenge to the sustainability of any formal political settlement that excludes them. Profits from opium help fuel the Taliban-led insurgency and heighten Afghan instability as a result. Officials are increasingly concerned that the economic downturn associated with a reduction in international financial assistance may drive more Afghans into the opium economy.

But it is not just Afghans who need to pay attention to this growing crisis—Afghanistan’s widespread drug cultivation has vast global impacts as well. The U.N. Office of Drugs and Crime estimates that there were between 12 million and 21 million opiate users worldwide in 2009, who generated an estimated $68 billion in revenue for traffickers—$60 billion of this total came from opiates grown in Afghanistan. It is estimated that more than 100,000 people die annually as a result of Afghan opium, causing more deaths than any other drug in the world.

We need to realistically assess Afghanistan’s deeply entrenched opium economy in order to develop effective solutions. The current approach of seizures and eradication is not working—prices continue to rise, and participation in the drug economy is expanding. Drug profits and trafficking networks permeate all levels of Afghan society, and tackling the systemic roots of the problem and its challenges for the future of Afghan stability will require sustained action on the part of both Afghan and international leaders.

Market forces keep cultivation entrenched

Jean-Luc Lemahieu, director of the U.N. Office of Drugs and Crime in Afghanistan, recently cautioned that the price of opium paid to farmers rose to more than $320 per kilogram in May—50 percent higher than it was in April. Moreover, recent reports indicate that this year’s crop is suffering “devastating failure” due to blight, driving prices further upward.

Even as poppy yields have been reduced, the relatively high price of opium makes growing it an attractive economic option. In a 2012 poll by the U.N. Office of Drugs and Crime, 71 percent of Afghan opium growers surveyed cited “high prices” as the prime reason for entering the trade. In 2011 farmers made 11 times more in gross income from cultivating poppy than they did from growing wheat. Even day-laborers are financially incentivized to support the trade—the average day wage for lancing and gum collection in Afghanistan in 2011 was the equivalent of $12.60 in U.S. dollars, as opposed to $5.60 for general manual labor and $6.60 for wheat harvesting.

Most poppy cultivation remains concentrated in the southern and western provinces of Afghanistan, which collectively grow 95 percent of Afghanistan’s opium, but production is increasingly taking place in geographically disparate parts of the country. Healthier plants helped yields increase by 52 percent in 2011, and an extra three northeastern provinces that had previously been poppy free began to cultivate opium—bringing the total of poppy-growing provinces to 19, or more than half of all Afghan provinces.

Eradication and seizures

Drug seizure and “knee-jerk” eradication policies have failed to keep pace with increased cultivation. In 2011 only 4 percent of opiates cultivated in Afghanistan were seized, and less than 3 percent of Afghan poppy was eradicated. Government-led eradication missions have been drastically stepped up in 2012. These are dangerous missions for both farmers and officials—resistance to annual eradication efforts had, as of May 2012, cost 99 lives this year.

Eradication is not having a sizable impact on the trade as a whole but instead is punishing small-scale farmers on its margins, costing them their livelihoods and sometimes their families. Many Afghan farmers take out loans from local sources, often traffickers, to fund crop growth. When this crop is destroyed by eradication, farmers often are forced to use female children as a form of debt collateral—the “opium brides” phenomenon.

The costs of opium addiction

Opiate production also has high costs for Afghan society, where the opiate addiction rate has tripled over the past five years. Currently 2.65 percent of the Afghan population—roughly 800,000 people—use opiates, a problem far beyond the scope of government treatment. Rehabilitation centers are few and far between, with demand for them increasing.

To make the situation worse, lack of health education is leading to an increase in HIV transmission. The World Bank, UNAIDS, and the U.N. Office of Drugs and Crime have all highlighted the lack of preventive education among injecting-drug users, who are at risk through the shared use of contaminated needles. While opiates are more expensive abroad, they cost much less within Afghanistan, and with education at such a poor standard and the limited provision of addiction support, the situation is likely to worsen in the near future.

Opium profits and how they benefit political actors

The opiate trade permeates many different levels of Afghan society. Trading roles vary from kamishankars—very small-scale village traders—up to main market traders with international links, who organize trafficking across borders and often have connections to processing labs. The very complex opium trade structure means that there are a “broad range of profiteers” from Afghan opiates, “some with black turbans and others with white collars.”

In addition to direct profits from the trade, corrupt political and military figures such as police chiefs and border patrols on trafficking routes commonly receive bribes to turn a blind eye to the trafficking to bolster their official income. As international aid channels to Afghanistan diminish in coming years, the economic importance of control over the opium industry for these officials may increase.

The Taliban are also believed to derive significant income from opium production. The U.N. Office of Drugs and Crime estimated that between 2005 and 2008 the Taliban accrued $350 million to $650 million from the trade. Taliban profits generally come from traditional taxes collected from Taliban-held areas and from transit and trade levies charged to drug traffickers. These levies have been systematically imposed in southern and western provinces since 2005. Furthermore, the U.N. Office of Drugs and Crime’s Kabul field office found that larger trafficking and production networks have been consolidating within Afghanistan, as the Taliban have been helping provide steady and powerful trade routes.

International trafficking networks, however, gain the overwhelming majority of opium profits. The United Nations estimates that Afghanistan produced 82 percent of the world’s opium in 2011, and international consumers in Europe and Russia consume the majority of Afghan opiates. A kilogram of pure heroin in Europe is worth 30 times to 50 times its price on the Afghanistan-Pakistan border, as prices are marked up at each stage of the transport from Afghanistan. The profits from this transport predominantly end up in the hands of international criminal trafficking groups rather than Afghan producers.

“Heroin prices in western Europe do not show a clear response to opiate prices in Afghanistan,” the U.N. Office of Drugs and Crime observes, as the price paid to Afghan farmers only makes up 1 percent to 2 percent of the final street price in Europe. When opium supply increases, the street purity of heroin typically increases, rather than the price dropping, as traffickers and dealers prefer to reinforce customers’ dependence.

Stopping the export of drugs is akin to plugging one hole only to see the trafficking flow through another. Traditional shipping routes through Iran have declined as the country has increased its interdiction efforts. Up to 30,000 law enforcement personnel are now regularly deployed on the Iranian-Afghan border, and Iran was responsible for 41 percent of total global heroin seizures and 89 percent of global opium seizures in 2009. Pakistan has instead become a favored shipping route; in 2006 an estimated 44 percent of heroin from Afghanistan was trafficked through Pakistan, up from only 12 percent the year prior, and the amount trafficked has remained steady in following years.

No silver bullet

The global nature of this trade shows that tackling the problem cannot just be Afghanistan’s task, but any attempt to combat the opiate trade in Afghanistan will be a long process. As U.S. Deputy Secretary of State William J. Burns has acknowledged, “were the drug trade easy to dislodge from Afghanistan, we would have done it already.”

The problem is exacerbated by a lack of easy alternatives. Despite $541 million that the U.S. Agency for International Development has spent over the past three years in alternative livelihoods assistance to subsidize prices and lower the cost of production through the donation of agricultural tools or fertilizers, wheat is still nowhere near as profitable as poppy. Moreover, stability is a precursor to delivering agricultural assistance, and the escalation of violence over protecting poppy cultivation illustrates the difficulties inherent in achieving stability.

Dr. Philip Robins, a professor at Oxford University specializing in the Middle East and the drug trade, argues that the successful reduction of illicit drug cultivation in any country requires strong political will and international support. The unstable political situation in Afghanistan, geographical divisions, poor economy, and institutional weakness all mean that political will and capabilities are sorely lacking. Opiate cultivation in Afghanistan appears set to continue, fuelling factional divides and jeopardizing the country’s future.

There are no simple answers to the problem of Afghan opiate cultivation and trafficking, especially so long as drug demand remains high in Europe and the Western world and Afghanistan’s broader economy remains weak and underdeveloped. Afghanistan will face many challenges as international forces transition out of the country, and local leaders assume responsibility for its future. But the opium economy’s impacts on the country’s politics, security, and health, and on the broader international community means a solution must be a priority through the 2014 transition and beyond.

Jennifer Quigley-Jones is an Intern with the National Security team at the Center for American Progress.

To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund, women's issues)
202.741.6285 or kpeters@americanprogress.org

Print: Tom Caiazza (foreign policy, health care, LGBT issues, gun-violence prevention, the National Security Agency)
202.481.7141 or tcaiazza@americanprogress.org

Print: Chelsea Kiene (energy and environment, Legal Progress, higher education)
202.478.5328 or ckiene@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Rachel Rosen
202.483.2675 or rrosen@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org