Ana's Home - Afghanistan: Creation of a Warlord Democracy

Chapter 2 - Violence and Profit

Militant entrepreneurship in Afghanistan is present in two forms: chapter 1 described militancy as a means to political power; chapter 2 will describe militancy as a means of financial sustainability. The following part will show the link between Afghan warlords and opium trade to measure their economic predominance in comparison to potential licit and state-generated incentives. We shall assess the monetary value of the Afghan opium market and examine the economic link between warlords and the wider population.

2.1. The Situation

Afghan warlords draw most of their income from controlling the opium trade in the world’s largest opium-producing region. The opium business provides a relatively stable source of profit, which is used to sustain warlords’ patronage networks and to maintain their military power. This income gives them economic predominance incomparably higher than any licit entrepreneurship can offer. Violence is used as a means to sustain illicit economic networks, to compete for control of trade routes, and to guarantee fulfilment of transaction contracts within the opium network.

However, we shall see in this chapter that poverty and opium business are interlinked. The opium network provides major employment opportunities to a society continually on the verge of famine. The economy of this country is largely dependent on its opium sector. Entire impoverished areas enter warlords’ opium networks and become dependent on militant figures who secure their sources of income.

2.1.1. Resource Dependence

The explanation is as follows: during the Cold War, various militant factions were sponsored by the two super-powers to conduct a proxy-war on Afghan territory. The external financial and military aid (advanced military technology) significantly raised the stakes of this war: Afghan factions had to compete with each other’s military competence and seek external sources of income to buy weapons. The sponsored factions became dependent on stable sources of high-level income.

After the end of the Cold War, the two super-powers withdrew their financial and military aid. The formerly sponsored factions needed to maintain the level of internal military competition and hence had to find an alternative source of income. The lucrative opium trade provided sufficient funds. An exclusive relation between violence and profit was formed. The economic self-sufficiency based on control of the opium market rendered warlords relatively independent from their traditional communities and from alternative sources of income.

2.1.2. New Commanders

Barnett Rubin points out to the Taliban period (1995-2001) as the time of “consolidation of a number of phenomena that had been developing previously, namely the emergence of transnational trade networks of the Afghan regional diaspora, linked to smuggling and drug trading groups in the surrounding countries as well as to political parties, religious groups, and elements of the administration…” The economic independence based on control of the opium market distinguished a historically new type of commanders emerging in the post-Cold War period. “Within Afghanistan itself, the main economic actors were the commanders. Contrary to some stereotypes, these commanders were by and large not the ‘traditional’ (i.e. tribal or landowning) elites… but a group of new elites that benefited from U.S., Pakistani, and Saudi policies of supporting only Islamist parties rather than the nationalist former elite.” (Rubin n.d.).

According to Rubin, these commanders sought to gain economic independence from their political-religious parties, and subsequently loosened their reciprocative bonds with the local communities. Nonetheless, it is as late as in 2004 that this author (Rubin 2004b:1) discerns indubitable symptoms of integration (permanent economic relations and vertical hierarchical organization) in the global market.

The present day warlords in the Afghan government come from these economically independent commanders. They gained economic predominance in the post-Taliban phase, consolidating opium networks by means of military and, later, political predominance. We shall next estimate the market value of the opium trade in Afghanistan and examine its ascending tendency. With the opium economic trump added to the warlords’ military trump, we shall complete the definition militant entrepreneurs given in chapter 1.

2.2. Nexus

The UN Office of Drugs and Crime (ODC), in the “Afghanistan Opium Survey 2005,“ estimates that Afghan production supplies more than three-quarters of the heroin sold in Europe, and all heroin in Russia. The ODC Report confirms that “there is a clear nexus between drug trafficking and warlordism,” where provinces controlled by warlords are especially suitable for trafficking, who tax it in exchange for protection and free flow of licit and illicit goods and people. The link between resurgent security incident and drug cultivation is apparent, the Report affirms. The Head of UNODC concludes that "traffickers, warlords and insurgents in Afghanistan control quasi-military operations and run military-type operations” (ODC 2005).

Warlords derive income from growing poppy on their land, from private “security” taxation of farmers and traffickers, and from their own trafficking networks which export opium and import arms. This income serves military entrepreneurs to maintain their networks, pay their armed forces (if not already paid by the government), purchase technologically advanced weapons, buy peace with other such entrepreneurs, buy tolerance from public officers, and form zones of impunity around their persons, networks and activities.

2.2.1. Growing Poppy

The main commodity which made Afghanistan a participant in the global economic system was opium poppy, later chemically produced opium and opium derivates (mainly heroin). Historically, a major turn toward the global opium market can be traced to the end of the Cold War, when foreign powers lost their interest in fighting each other by sponsoring Afghan combatants through proxy-wars. The foreign financial and military support ceased, and warlords were driven to develop self-sustainable economic bases in order to maintain their already costly networks of organized violence. Hence, increase in poppy growing, opium production and related cross-border trafficking since the 1980s.

Figure 4 - Afghanistan opium production, 1980-2005. Source: ODC Statistical Annex to “The Opium Situation in Afghanistan 2005,” (2005): 1.

2.2.2. Income, Bans and Prices

The UN Office of Drugs and Crime (ODC), in the “Afghanistan Opium Survey 2005,“ estimates that, in the Taliban period (1996 to 1999), production doubled and peaked at over 4600 tons. In 2000 the Taliban banned opium cultivation, but not trade; In 2001 following the Taliban ban, prices of raw opium increased tenfold; prior to September 11 prices increased about twenty-fold ($700 kg). In January 2002, the Karzai Interim Administration banned it; in effect, opium prices amounted to around $350 at harvest time in 2002, and were about $450 at the end of the year. The following chart from the same report presents the estimate of income from opium production in Afghanistan:

Figure 5 - Gross income of poppy cultivation per hectare in U.S.$, Source: ODC Afghanistan Opium Survey 2005, (2005): 7.

Over the 1994-2000 period, gross income from opium was about $150 million/year ($750/family). In 2002, gross income rose to $1.2 billion ($6,500/family). Part of the income is shared with traders and/or taxed by warlords. The income from illicit substances trafficking into neighbouring countries (Pakistan, Iran, Uzbekistan, Tajikistan, and Azerbaijan) amounted to at least $720 million in 2000.

Figure 5. shows that the prices of commodity sky-rocketed in the harvesting season following each ban on opium production and trade: the Taliban ban in 2000 and Karzai’s ban in early 2002 (prior to the 2002 harvest). This chart tests positive the thesis that criminalization of a commodity, and consequent higher risk in production and transport, generates higher prices of the commodity at the market, and may further motivate engagement in the criminalized activities.

Figure 6 – Income from Opium Compared to International Aid to Afghanistan (2002-2003). Source: Barnett Rubin,“Road to Ruin”(2004b): 12.

Figure 6. compares the level of drug income to the level of international aid delivered to Afghanistan in the period 2002-2003. However, in the 2002-2004 period, the total income from poppy cultivation and drug trafficking shows ascending trajectory, estimated at $7 billion (Rubin 2004a), while in the same period the total international aid remains at $3.3 billion.

2.3. Poverty and Illicit Economy

Afghanistan ranks as 173^rd of the 178 countries compared in the UNDP Human Development Index (HDI). Opium sale and poppy growing are a response to relentless circumstances of pending poverty and hunger. The following section will examine the relation between (non-military) civilian population and the opium trade, with militant entrepreneurs playing a mediatory role in this relationship.

The ODH report observes that Afghan farmers grow opium poppy for several reasons: it was not strictly illegal until the official bans in 2000 and in 2002. It is produced with cheap labour (women, children, old people, landless returnees and refugees). The soil and the climate are benevolent for poppy growing, and there is a know-how in the specific agriculture among Afghan farmers. Poppy yields up to three harvests per year, and the income from opium poppy is abundant. As a commodity, opium is a low-maintenance product: light, easy to pack and store, it lasts long without decaying or losing in quality, it does not need marketing and, of course, the demand is high. In absence of banks, stable currencies and creditors, opium has become “a form of saving, a source of liquidity and a collateral for credit,” (ODC 2005).

The ODC conducted a survey among local farmers in 2005 to assess the intensity of the reasons for poppy growing; the survey shows a clear relation between opium production (high sale price: 30.5%) and poverty (31.4%). The (violent) “external pressure to grow” and “landowners who want their tenants to cultivate it on their land” are rather low (only 1.9% and 0.1%, respectively), which means that is generally a free-choice activity; however, poverty is not a matter of free choice, and its coercive power is stronger than that of guns. Additionally, the survey shows the specific way of cooperation between farmers and warlords, a symbiotic interdependence on unequal terms, offered or imposed on the population , where extreme poverty and extreme profit may virtually be indistinguishable. Rubin (2004a) explains how different professions are involved in the drug networks:

“Drugs provide livelihoods for poor farmers as well as employment for laborers during the harvest. Teachers and bureaucrats earn extra money as small-time traders. Merchants and money lenders earn profits as financiers and middlemen. Militia commanders, including members of Karzai's cabinet and the commanders of the country's principal military garrisons, have enriched themselves protecting the trade.”

2.4. Poppy-eradication Programme

The unintended effects of the international efforts to reduce poppy growing is illustrated by a series of interviews conducted by the BBC correspondent Andrew North, who accompanied the ODC Head, Antonio Maria Costa, on a field trip to the poppy growing regions of Afghanistan. Firstly, his resources report, the British troops offered farmers money if they destroyed their crops. Farmers then started growing it deliberately, expecting cash from the British. When the money did not come, they sold the poppy to opium producers. The governmental poppy eradication programme announced that 25% of the crop should be destroyed. The farmers concluded that the remaining 75% can be grown legally.

The Islamic authorities in the country forbid consuming opium; however, producing it for export to infidels is an undecided issue, permitted by some, banned by other clerics. Farmers and clerics, according to North’s report, require the West to reduce its demand for drugs, if they want the problem solved.

2.5. Addicted Economy

The OCD Report re-names opium as an "economic narcotic" for whole segments of Afghan society. Opium is an income generator, a means of exchange, a payment mechanism; it stores value, funds transactions and provides economic security as a guarantee of contracts and loans. Moreover, the Report observes that, “in some regions, traffickers gain respect from the local community when they recycle part of their income for the benefit of poor villages.” However, the main beneficiaries from opium production in Afghanistan are the traffickers, who collect about 79% of the total income from the opium economy, distribute a part of it through the informal security and mediatory network, while 21% goes to the farmers, according to the same ODC Report. A part from the overall drug income is invested into licit economy. Prof. Ali Jalali estimates: “Much of the progress [economic growth, note added] is attributed to foreign assistance and the illegal drug economy.”

This chapter presented the economic enabling condition for creation of warlordism. Militant entrepreneurs command much higher resources than the state can provide, and simultaneously they offer an alternative exit from poverty to a significant part of the population. Warlords may thus be perceived locally as legitimate community leaders due to their provision of economic networks for opium sale.

Rubin’s observation (Sec. 2.1.2.) on the formation of a new type of commanders, characterized by severance from their communities, leads us to examine the previous, traditional type of commanders, which was embedded in the Afghan social tissue. The next chapter will outline the cultural model of Afghanistan, a type of societal organization wherefrom militants stemmed and which had, until the emergence of warlordism, managed and tamed violence.

“As the [civil] war intensified, however, commanders increasingly depended on foreign aid relayed by the parties, and subsequently they too became more autonomous from local society,” (Rubin n.d.).

Rubin (ibid.) shows that the establishment of security in this period, under Taliban’s effective measures, suppressed local tolls, banditry, tributes, it reduced the cost of long-distance trade, and opened routes to favourable markets for both wheat and opium.

The novelty of this type of militant figures lies in their previous historical dependence on the indigenous communities and their full observance of customary laws, as we shall see in chapter 3.

During the Cold War, and even earlier, Afghanistan has been Used for a history of proxy wars, the earliest one being the “Great Game” between RU.S.sia and the British Empire in 19^th/20^th c., and as such subject to limited international economic, military and political influences. However, this cannot be considered as being a part of the global economic market, as there has been no permanent economic relationship provided by the proxy wars, barely any economic autonomy (aeconomia) of the local units, and barely any competitive products or services for sale abroad to multiple demand-sources. The latter are characteristic for the globalization period.

“With the decline of suprapower patronage in the early 1990s, controls on nonstate entities have declines and such groups have increasingly had to generate their own resources to support their military activities and patronage networks.” (Atmar/Goodhand, 2002:114)

Barnett R. Rubin: “Road to Ruin: Afghanistan’s booming opium industry”(7 October 2004b).

“With an estimated HDI value of 0.346, Afghanistan falls at the bottom of the 177 countries ranked by the global Human Development Report of 2004, just above Burundi, Mali, Burkina Faso, Niger and Sierra Leone .... The HPI [Human Poverty Index, note by author] places Afghanistan just above Niger and Burkina Faso, and far below its two neighbouring countries, Iran and Pakistan,” (UNDP: “Afghanistan National Human Development Report: Security with a human face,” 2005:4).

“Cultivators don't create traffickers, traffickers create cultivators. Many peasants who grow opium are bound to the cycle of opium production by debt bondage. […]Yet some in the Bush administration are now pushing for aerial spraying of drug crops with herbicides, which would damage other farm products and injure the people's health. Eradicating part of the crop — the most that could be accomplished — would drive up the price, creating incentives to grow opium in more inaccessible areas. The deeply indebted farmers, who owe opium to wholesalers on futures contracts for cash they received at planting time, will face a grim choice: give their daughters to the traffickers, flee the country or grow more opium. That was what they did when the Taliban banned the crop without alternative livelihoods.” (Rubin 2004a)

Andrew North :“Following the Afghan Drugs Trail” (BBC News Reports, 18 November, 2004).

Further examples of Afghan humour are presented in the same BBC report. When asked why he is growing opium for the first time, even when it is illegal, a 78-year old farmer responds plaintively: “"There's freedom now, it's a democracy isn't it?" The same farmer, when asked not to grow poppy the following year, says: "Okay, next year, I will only grow it with your permission." (North 2004).

Ali A. Jalali: “The Future of Afghanistan.” REF (2006):14.