Counter-Narcotics in Afghanistan III: The False Promise of Crop Eradication

In the first and second installments of this series (August 24 and 25), I took the release of the new “U.S. Counternarcotics Strategy for Afghanistan” as the occasion to analyze the US approach. On August 27, the United Nations Office on Drugs and Crime (UNODC) released its Afghan Opium Survey 2007 at a press conference in Kabul. On that occasion I posted a summary of my overall conclusions: Points on Counter-Narcotics in Afghanistan: A Critique and a Proposal.

In the first installment, "Defining the Problem," I argued that the U.S. Strategy defined the problem posed by drugs in Afghanistan correctly, as "drug money" that “weakens key institutions and strengthens the Taliban.” This drug money comes mainly from the 80 percent of the value of opiates in Afghanistan that, according to UNODC estimates, goes to traffickers and their protectors, not the 20 percent that goes to farmers. The second installment, "The Value Chain, the Corruption Chain," analyzed how Afghan farmers have for the first time marketed a cash crop (other than dried fruit and karakul lamb) to global markets through the creation of a value chain inside the country. Since the value chain depends on illegality, it requires a complementary chain of corruption to protect each link. The drug economy most threatens international and Afghan national goals where the value chain is linked to the corruption chain at the highest levels. Therefore breaking that link and reducing the value going into corruption and insurgency is the strategic goal of counter-narcotics in Afghanistan or any other conflict-torn narcotics-exporting country.

In this and the following post I analyze sanctions against different parts of the value chain: eradication, an intervention at the start of the value chain, which eliminates some raw material produced by cultivators, and interdiction, a term referring to all interventions higher up in the value chain such as arrests of traffickers, confiscation and destruction of drug contraband, interdiction of imports of precursor chemicals, destruction of heroin/morphine laboratories, removal from office or prosecution of officials corrupted by the trade, Security Council sanctions against travel and assets of traffickers under resolution 1735, and measures to detect, prevent, and punish money laundering.

Production and regulation of opiates

Opium is a gum harvested from the mature flower of the opium poppy or Papaver somniferum, by scraping the bulb with a specially designed knife. Opium has medicinal uses against pain and diarrhea, among other ailments, but it can also be ingested orally or smoked as an addictive narcotic.

Relatively simple chemical reactions can transform the active ingredient in opium gum into stronger narcotics such as morphine, codeine, or heroin. These reactions require precursor chemicals that act as reagents in the manufacture of organic compounds. The principal precursor for opium processing is acetic anhydride, which is also used in the manufacture of aspirin and photographic film.

Opium and its derivatives are controlled substances under the Single Convention on Narcotic Drugs, 1961, an international agreement administered by the International Narcotics Control Board in Vienna. This Convention was later supplemented by the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. The INCB delegates its day-to-day work of monitoring and supporting compliance to UNODC. The Convention supports controlled use of narcotics for scientific and medical purposes. Each state party to the convention is obligated to enact national legislation to outlaw:

Cultivation, production, manufacture, extraction, preparation, possession, offering, offering for sale, distribution, purchase, sale, delivery on any terms whatsoever, brokerage, dispatch, dispatch in transit, transport, importation and exportation of drugs contrary to the provisions of this Convention.

Conspiracy, preparation, or financial operations in connection with these acts must also be made criminal offenses. There is no provision in the Convention for derogation from any of its provisions in times of armed conflict or emergency, as there is, for instance, in many international human rights covenants. In a recent Washington Post article, Misha Glenny argues that this prohibitionist regime and the "War on Drugs" approach to enforcing it are damaging our security. In these posts, however, I consider strategies only within the framework of this regime, to which drug policy in Afghanistan will have to conform for the foreseeable future.

Eradication

The eradication of poppy crops is by far the most photogenic tool of counter-narcotics. Press coverage and political rhetoric feature this tactic so often, that I have developed a repertoire of one-liners to encourage journalists and others question their assumptions, such as "Counter-narcotics does not equal crop eradication," or "The international drug trade is not caused by Afghan farmers."

Eradication is the destruction of the poppy crop in the field before harvest. It can be carried out manually, by knocking over the poppy stalks; mechanically, by crushing the crop under machinery; or with herbicides sprayed from either the ground or the air. Research on eradication by genetic modification has not yet created usable technologies. Nearly all eradication in Afghanistan is done manually by Afghans, often supervised by U.S. private contractors. The Afghan government has rejected proposals by the U.S. to use herbicides, including aerial spraying, as has been done in Colombia, partly on the grounds that it will recall the alleged use of aerially delivered chemical weapons by the USSR in the early 1980s. Nonetheless, the U.S. Congress has for several years appropriated funds for the aerial eradication of opium poppy in Afghanistan. The U.S. Counternarcotics Strategy revives that proposal in careful language that nonetheless pressures the Afghan government to agree.

Superficial (i.e. nearly all) accounts of counter-narcotics policy assume that the purpose of counter-narcotics is to eliminate drugs, and that destroying crops that provide the raw materials for drugs is therefore essential to counter-narcotics. To foreigners it seems that Afghanistan is flooding the world with heroin, which has to be stopped. To Afghans it seems that the world is flooding a much weakened Afghanistan with demand for an illegal product, as well as weapons and political agendas over which Afghans have no control. Fairness requires that I mention that consuming countries are much better equipped to reduce demand and interdict trafficking than Afghanistan is to control supply. But the world is unfair, so back we go to counter-narcotics policy in Afghanistan.

Recall the point I made in the first installment, "Defining the Problem": counter-narcotics policy in Afghanistan should mainly be aimed at drug money, not drugs, and at the drug money that funds insurgency and corruption. In addition, it has to be integrated into the overall goals of the operation, of consolidating internationally recognized legitimate government with popular support. What effect does eradication have on those goals?

Eradication of the crop has "forward" effects on the opiate value chain and "backward" effects on the rural population. The aim of the policy is to have the forward effect of reducing drug money by reducing the amount of drugs, and the backward effect of introducing more risk into the lives of the excessively secure Afghan cultivators so that they will hesitate before planting opium poppy again. Alternative livelihoods, to be discussed in the last and final installment, are supposed to reinforce the message of eradication by providing incentives to grow other crops.

Trick question: In order to stop growing opium poppy, do Afghan farmers need to be: (a) less secure; or (b) more secure? Answer in the final installment of the series! Now back to the analysis.

Does crop eradication reduce the amount of drug revenue produced by the illicit value chain? I seem to recall from my introductory economics class 40 years ago that revenue is not just a function of the quantity produced: it is the product of price and quantity. Eradication, if successful, decreases the quantity supplied by farmers to traffickers. I have a dim memory of my freshman economics teacher (the late James Tobin, chairman of President Kennedy’s Council of Economic Advisers), saying that a decrease in supply leads to an increase in the price, though I don't think that is why he got the Nobel Memorial Prize in Economic Sciences in 1981. Eradication would, if successful, decrease the amount supplied by farmers to traffickers. Since the decrease in quantity would lead to an increase in price, the effect on total revenue depends on how elastically price changes in response to changes in quantity supplied. Does the price change so slowly that revenue decreases, or does the relatively inelastic demand for an addictive substance and the high risk premium that makes the cost of production irrelevant to the prices higher in the value chain mean that incremental eradication actually raises traders’ revenues?

Both theoretical reasoning and empirical evidence indicate that any attainable amount of eradication (the current goal is 25 percent of the crop) would increase drug revenue. Perhaps some economist can provide the diagram and mathematical demonstration. On a supply and demand chart, eradication shifts the supply curve to the left; less is supplied to the market at the given price at time of planting. The post-eradication supply curve crosses the demand curve at a higher price, raising the post-harvest farm-gate price. Given the elasticities (for the reasons given above), the total revenue is likely to be greater, and therefore the benefit from corruption greater, than it would have been without eradication. Other things being equal, we would therefore expect to see an increase in drug money, a rise in the cost of bribing eradicators, and a shift of income against those who cannot afford to bribe. In other words, we would expect to see what we are actually seeing in Afghanistan today. This effect could be offset by a sufficient increase in interdiction, which lowers the amount demanded at a given price. (In terms of the diagram, interdiction moves the demand curve to the left, lowering the market clearing price.)

Evidence from both the Taliban ban on cultivation in 2000-2001 and from some localized decreases since then (especially Nangarhar in 2004-2005) is consistent with this model. I reproduce here the chart from the previous installment, showing the tenfold increase in opium prices due to the Taliban ban. In 2001, when traders had little new product to resell or refine, their existing stocks increased in value, and sales continued. According to Omar Zakhilwal, President of the Afghanistan Investment Support Agency (who is both a Canadian trained economist and a native of the poppy producing Momand area of Nangarhar province), opium traffickers were the main lobbyists for the ban with the Taliban leadership, as they wanted to increase the value of their inventories. Seizures of trafficked opiates across the border from Afghanistan in 2001 dropped by only 40 percent compared to the previous year, implying that trafficking continued from stocks at 60 percent of the previous volume but at a price several multiples larger, so that the higher prices led to an increase in revenue to the traders. There was no sign that the cultivation ban hurt the finances of the Taliban, who, like other power holders, benefited from the opium economy mainly by taxing traders, not farmers. This example shows the effect of suppression of cultivation without interdiction of trafficking. I know of no analysis giving quantitative estimates of the effect of both eradication and interdiction on prices. Such an analysis would indicate what level of interdiction is necessary to assure that eradication does not increase the overall value of the opium economy.

Does eradication reduce cultivation sustainably? In the year following eradication (without sufficient interdiction or alternative livelihoods), poppy cultivation is likely to rebound and migrate in response to the higher prices. According to David Mansfield, the leading researcher on Afghanistan's opium economy, farmers in the remote province of Ghor for the first time found poppy farming profitable after the Taliban ban raised the price. More remote areas away from the traditional areas of production also incur a lower risk of eradication. The fall of 2001 and subsequent seasons saw not just a quantitative expansion of land planted in poppy, but a diversification of location, to the point that all provinces produced at least some opium in 2005. The near elimination of poppy cultivation in Nangarhar in 2004-5 led traffickers from Eastern Afghanistan to finance cultivation in other regions of the country, which helped spread production to non-traditional areas in the north. (Left -- what I was told was the last poppy in Nangarhar, April 2005. The government is now seeking the man who told me so as a trafficking suspect.) The failure to deliver alternative livelihoods in most of Nangarhar led to the current rebound in cultivation.
Another reason that eradication does not reduce cultivation sustainably is the role of credit in the opium market. Mansfield has demonstrated convincingly through his field research that farmers, especially those with fewer assets, include poppy cultivation in their livelihood strategies in order to manage risk, largely through futures contracts. Many farmers finance cultivation (with its high labor and other costs) and food consumption during the winter by selling opium to traders before planting on futures contracts called salaam. For most of the past decade traders advanced to farmers about half of the price at harvest time of the amount contracted. For example, a farmer who made a salaam contract for 10 kg in the fall planting season of 2000, when opium was selling at about $40/kg, would have been paid $200. If he produced more than 10 kg, he could sell the rest at the harvest price or keep it as inventory. If he produced less, he would owe the balance in cash at the harvest price, which he might pay, if he could, or roll over as debt to be paid off with opium from the next growing season.

Thus in the spring of 2001, the farmer who had contracted for 10 kg that he had not be able to produce because of the Taliban ban, would still owe the 10 kg of opium, but now at the new price of about $400/kg. So the farmer would owe $4,000 to pay back a $200 loan. It is no surprise that these heavily indebted farmers rushed to plant opium during the U.S. invasion in 2001, especially as the money lenders were flush with $100 bills that the CIA had supplied to commanders. Traders holding dollars needed to exchange them as fast as possible, since the dollar lost over half its value against the afghani in four months due to the rapid inflow of cash (IMF data on exchange rate above).

The salaam system shifts the risk of eradication to the farmers, especially the poor, and makes it more difficult for them to adjust to eradication by planting crops with which they cannot pay off their opium debt. According to Mansfield, in response to the risk of eradication traders and money-lenders are now advancing only about 30 rather than 50 percent of the market value at planting time for salaam contracts, shifting risk to the cultivator. Even when poppy is eradicated on land belonging to a large landowner, it is likely that the landowner has rented the land to sharecroppers to whom he has advanced salaam contracts. The sharecroppers’ debts stand even if the crop is eradicated, and they stand to lose more than the landowner, who retains his claim on their assets. U.S. officials who claim that aerial spraying would enable them to be more even-handed by eradicating crops of large landowners are ignoring how Afghan rural society actually works.

Does eradication encourage peasants to reduce risk by shifting to alternative crops? U.S. officials constantly return to the theme that it is necessary to increase the risk to the greedy, secure Afghan farmers by eradicating their crop, so that they will adopt the alternatives that U.S. assistance has made available to them. I am not sure if this argument is more despicable or ridiculous; it's a tough call. (Did I forget to mention that Afghanistan is the poorest country in the world except for a handful of sub-Saharan African states, and that surveys show that 40 percent of the rural population lacks sufficient food? As they used to say in Vietnam, sorry about that.)

Afghan poppy-farming communities do try to manage or reduce the risk posed to their livelihood by crop eradication. Thus far they have done so by adoption of alternative crops only in those few areas, such as the districts around Jalalabad, where the market is developed enough that they can sell other products, mainly fruits and vegetables, to traders on futures contracts. (More on how alternative livelihoods work when we come to that subject.) Since these conditions obtain in only a few areas, the main tools used to manage the risk are bribery or political influence to halt eradication or divert it elsewhere, emigration to Pakistan (the only available tactic during the Taliban ban until September 11), and armed resistance to prevent the government from establishing its authority or presence. Which tactic is more effective depends on the local situation.

The outcome of the Taliban’s ban on poppy cultivation illustrates the political danger of eradication. When the US attacked the Taliban after 9/11, throughout the Taliban’s former heartland, no one rose to defend them, and their regime collapsed rapidly. This was not due solely to the power of B-52s, big bags of C-notes, and the charisma of Hamid Karzai. The implementation of a harsh policy that attacked people’s livelihoods during a severe drought was another reason.

Afghan farmers in most areas will choose alternative livelihoods without eradication, when they are confident the alternatives will work. When they lack that confidence, they will choose evasion or resistance, and the more forcible the eradication, the more likely they are to turn to resistance. The risk-averse Afghan peasant and the foreign official under pressure from Congress or a parliament to show quick results have different definitions of when alternatives to poppy cultivation are available. Introducing eradication when foreigners believe alternatives are available, but when Afghans still perceive them as untried and risky, has already sparked armed resistance in some areas. Introducing eradication before farmers feel secure in the alternatives has led farmers in some areas to call upon the Taliban to protect them and take up arms to prevent eradication teams from entering their areas. Teams from the US-funded Alternative Livelihood Program, seen (rightly) as part of the same counter-narcotics package, also cannot obtain access to many communities. Road building teams are also attacked, for fear that they will improve access for crop eradication.

Since collective actions, including production, trade, politics, and war, are largely based on the mobilization of group identities (tribe, clan, family), those groups that are disadvantaged politically face a greater risk of eradication, which they counter by obtaining arms from the Taliban or other sources. This in turn enables the leaders of the groups in power to tell their Western interlocutors that their political competitors are terrorists.

More forcible eradication at this time, when both interdiction and alternative livelihoods are barely beginning, will increase the economic value of the opium economy, spread cultivation back to areas of the country that have eliminated or reduced it, and drive more communities into the arms of the Taliban.

Harjit Sajjan, a Vancouver police detective who served as an army major (reservist) in Canada's NATO contingent in the Panjwai district of Qandahar, has written me to recount his experience:

The current eradication program is pushing the farmers to the Taliban because there is no alternative livelihoods program [That is, despite the establishment of offices with signs saying, "Alternative Livelihood Program," the people do not believe that they actually have alternative ways to earn their livelihood.]. Then there is the corrupt ripple effect to the poppy eradication program where the Afghan National Police take bribes for not eradicating certain poppy fields. There were also unofficial Provincial Government poppy eradication programs that eradicate poppy fields of tribes that are part of the competition. The latter two examples pushed the local population faster towards the Taliban and helped increase the interdependency between the Drug Lords and Taliban.

Sajjan concludes:

Eradication impacts the farmers who are trying to feed their families but interdiction impacts the drug lords, or what the local Afghan’s call “Dhakoos” (Bandits). The emphasis should be against the drug labs and transportation routes. This interdiction method is more efficient and has greater impact on the drug lords. Plus, it does not disrupt the farmers. This will allow the International agencies, NGOs, and military time to work on alternative programs.

In the next posts, I will discuss interdiction and alternative livelihoods.