Monday, June 01, 2009

UNODC mugged by reality

Sanho Tree, writing below for the Transform blog, responds to the Guardian report last week that 'UN wants 'flood of drugs' in Afghanistan to devalue opium':

United Nations officials in Afghanistan are attempting to create a "flood of drugs" in the country intended to destroy the value of opium and force poppy farmers to switch to legal crops such as wheat.

After the failure to destroy fields of the scarlet flowers in Afghanistan's volatile south, the United Nations Office on Drugs and Crime says the answer is to stop the drugs from leaving the country in the first place.

"Manual eradication is incompetent and inefficient," UNODC chief Antonio Maria Costa said during a visit to the western Afghan province of Herat. "So we want to see more efforts to stop the flow of drugs across Afghanistan's borders and the hitting of high-value targets to create a market disruption.

"We want to create a flood of drugs within Afghanistan. There will be so much opium inside Afghanistan unable to go out that the price will go down."

It looks like Costa has finally been mugged by reality.

When the Taliban allowed anyone to grow poppies in the late 1990s, the price of a kilo of opium fell to $30 on the streets of Kandahar because of the resulting glut. When Mullah Omar decreed it was no longer consistent with Islamic values to grow poppies in 2000, the prohibitionist price of opium shot up to $740/kilo just before the Sept. 11 attacks.

For the first time that I can recall, a prominent drug warrior has allowed the inconvenient truth of prohibition economics to intrude on his crusade.

Alas, Costa still clings to the idea that opium can still be stopped from leaking across the borders of Afghanistan. Still, the idea of allowing the natural devaluing of illicit crops by stopping eradication is more than a baby step -- it's a sea change in drug war thinking and it stops the counterproductive and inhuman "war" against peasant farmers. Now that he has admitted the futility of shoveling water, we can only hope he will abandon the idea of building a metaphorical wall around the country.

While I truly applaud Costa's belated arrival to the real world, it is still a fairly simplistic solution he has outlined. Since the days of the Silk Road Afghanistan has been been famous for trading by merchants, plundering by bandits, and smuggling by tax evaders. The latter two groups know the terrain better than any Westerner or Google map and I doubt NATO can seal the borders from these people any more than they can keep the Taliban from walking back and forth
to Pakistan. It's also one of the most corrupt countries in the world so a little cash can facilitate a lot of smuggling.

While the addiction rates in Afghanistan are still relatively low and rising, the neighboring countries have a huge addiction and HIV problem as a result of cheap Afghan heroin. The situation is dire and demands real solutions.

Still, I think his policy switch is important for five main reasons:

1) It's the first time a top drug warrior has allowed the law of supply and demand to rear its inconvenient head into policymaking. Will wonders never cease? Once they have acknowledged
this, it's hard to go back and pretend they can still make illicit crops disappear by making them astronomically more valuable in a world where HALF of the human race "subsists" on less than $2/day.

2) It's hard to eradicate in a region where illicit crops have taken root and the trade networks have been established. It's a lot easier to prevent a region from converting to illicit crops in the first place. If farmers transition back to legal crops, those networks could recede and then they might have a chance of preventing their return if there is sufficient aid for infrastructure and credit.

3) Adam Smith's "invisible hand" will be the culprit that motivates farmers to switch crops on their own. It doesn't make NATO forces and the UN into the hated "bad guys" who eradicated the fields of peasant farmers and drove them into the arms of the Taliban. The Taliban's fatal mistake in 2000 was in imposing total prohibition of poppy cultivation. While it made some Taliban commanders fabulously wealthy because they had cornered the market on warehoused opium at pre-prohibition prices, it turned farmers against them because they starved and suffered as a result so they were happy to help NATO forces.

4) When the opium prices fall, the Taliban will have a harder time funding their war and fewer lives should be lost. This could hasten the withdrawal of combat troops and the decreased violence should allow for more effective development assistance -- assuming Congress doesn't repeat the mistakes of the last Afghan war against the Soviets. To recall, we wiped our asses and left as soon as the Soviets retreated thus leaving a perfect vacuum for civil war and eventual Taliban victory.

5) They can now stop punishing the weakest of the weak and the poorest of the poor. Forced eradication without providing viable alternative livelihoods is not only counterproductive, but it is also monstrously cruel.

See previous blogs:


insanefountain said...

However Costas argument can be subverted by no less august a source than Antonio Maria Costa.
In a Washington post article from 2007 he wonders with the falling price of opium in 2007 we are not seeing heroin prices tumble. He admits that he thinks the cartels and not the farmers are stockpiling opium. He asks

“Are farmers stockpiling the drug? Unlikely. Opium, unlike cocaine, has a long shelf life and can be stored as a form of saving, a source of liquidity and as collateral for credit. But why would poor farmers sit on more than $1 billion worth of stock when they are struggling to make ends meet and common sense suggests that prices could easily fall?”
However this does point out one of the main reasons opium is THE crop par excellence in regions prey to political turmoil. It stores incredibly well I know from my previous research that in the pre 1970’s Afyon valley a boys bride price was made up of opium where typically 10 to 20 kg was put away per year and given to their sons on their reaching their majority. Typically it was sealed away under oil and there were stories of it being highly effective anything up to a century later. Therefore in a society without an effective banking system it represents a realisable asset. Thus with such a product the majority of mixed farmers would have the capability to ride out and speculative markets such as portrayed and also in the same article Costas admits that he thinks that it is the cartels who are stockpiling the product. Why should they stop. He admits the only factor that could regulate the market would be falling demand for heroin in the west. Thus he thinks everything he said 2 years ago is wrong and suddenly opium is a perishable crop or he believes the market economics he described 2 years ago have ceased to exist. Either way I think until we decide to pay top dollar for dried apricots and go from town to town collecting them in Afghanistan that the afghan farmers will keep growing this easily transportable product with an incredibly long shelf life.

As Afghanistan is such a poor country even if the price falls to a record low of $20 per kg a farmer will still earn $100 per acre and this is money in his hand rather than trying to get his fresh produce through to market in a very destabilised county.

Full text of Washington post article

cre8love said...

Steve, thanks for posting this. i had thought you had let it slip over the border!I figure that since they can stop the taleban slipping over the border, they should be able to stop a few drug mules!Yeah right! Cx

Steve Rolles said...

Sanho - One thought I have is that even if this plan worked in terms of reducing production and profits in Afghanistan - which would have localised benefits - surely the nature of a demand driven market would mean that it would have little or no impact on global production and supply to western markets in the long run? If production fell in one region it would just be picked up elsewhere as it become profitable to do so, or when production fell, prices would rise again and the growers would reenter the market.

the laws of supply and demand are, after all, the only ones that mean much in a completely unregulated market controlled by criminal profiteers.

Sanho Tree said...

Thanks, Steve. I think this is not a substitute for a sustainable global drug control policy in the long run. It's a one-off opportunity that could buy a window of time where the alternative livelihood programs could finally obtain some traction within Afghanistan.

Am I confident the US Congress and the international community would be ready to implement and coordinate the necessary level of assistance to take advantage of opening? Not if history is a guide. As soon as the immediate problem subsides, the US Congress looses interest -- just as we wiped our rear ends and left as soon as we finished using the mujahideen against the Soviets in the 1980s.

This approach is similar to the overly simplistic Senlis Council scheme to buy the opium for international medical use in that it's a temporary fix, but it fundamentally differs from it in that Costa's approach drives the price of opium down. The Senlis Council's idea would only encourage a bidding war between state purchasers and the illicit traffickers, thus driving prices up and encouraging more planting.

The important thing in terms of Afghan reconstruction and an eventual exit strategy for US and NATO forces is that the international community would not be seen as the poppy eradicating "bad guys" by the local farmers. It would be the "invisible hand" of market forces that would induce farmers to transition to legal crops voluntarily. The old model of forced eradication -- carried out at gunpoint -- only strengthened the Taliban and alienated farmers from the government. As we have seen in Colombia, the policy of aerial fumigation destroyed farmer's food security and helped the FARC and paramilitaries recruit alienated campesinos.

If there is to be any hope of a successful exit strategy from Afghanistan, I think the problem of a sustainable legal economy has to be addressed. The central government must be seen as an enabler of sustainable livelihoods, not a destroyer. Too many US politicians are only interested in fighting the Taliban. It won't be easy threading so many needles in the proper order and cleaning up local corruption at the same time. I don't know if Obama can coordinate all the governments involved and sequence the aid in an effective manner, but this is the only approach I can think of that offers a way out of the quagmire.