Project for Alternative Livelihoods in Jalalabad, Berlin August 2005 Eastern Afghanistan (PAL) PAL Internal Document No. 5 Abridged Version Conflict Processing and the Opium Poppy Economy in Afghanistan Jan Koehler and Christoph Zürcher The Opium Economy in Afghanistan Afghanistan is by far the 2004 OPE Total value of Opium Poppy Economy (OPE) world’s largest producer of Distribution of in 2004: $2.8 billion or 40% of GDP (2003) P A L opium and in 2004 the country Profit IS A PROJECT Farmers’ produced an estimated 4200 share FUNDEDED BY THE $ 0.6 billion Threat: tons. Profits from the drug (21%) The Opium Poppy Economy domi- EUROPEAN UNION, Drug dealers’ & PARTNERED BY THE economy generated about 40% protectors’ share nates emerging state institutions $ 2.2 billion MINISTRY OF RURAL of the country’s GDP, and (79%) RECONSTRUCTION were equivalent to five times AND DEVELOPMENT the annual budget of the AND MANAGED BY 1 billion USD Afghan state. Clearly, the Corrupting the GTZ IS state Afghan drug economy is cause Amount X This document is an for great concern. Fostering anti-state abridged version of the forces PAL Internal Document According to the Minister of No. 5 Rural Reconstruction and could dominate political institu- interview with the author, "Conflict Processing and Development “the Opium Poppy tions like the parliament and sack 16.02.2005). the Opium Economy in Economy generates 2.8 billion Afghanistan" reformers and pro-western forces The two objectives of combat- by Jan Koehler, Dollars revenue within in the government. Gradual ing the drug economy and pro- May 2005. Afghanistan. 600 million dollars approaches to opium poppy eradi- moting state-building need to The field work was stay with the farmers; 2.2 billion cation that worked in Thailand or implemented in coopera- be carefully balanced. Wider dollars are generated from farm Pakistan, where robust state insti- tion with Coordination for gate to border. Roughly one billion state-building in Afghanistan is Afghan Relief (CoAR). tutions are in place, will not work Dollars of this profit already in Afghanistan; only a shock ther- endangered by the drug econ- finances corrupt government like apy will save the state-building omy and by badly designed and Contents security forces, governors, minis- endeavour”. (Paraphrased from poorly executed measures ters. In a short time drug barons against it. The Opium Economy in 1 Afghanistan The Research 1 The Research Why Farmers Get into 2 the Drug Economy Field research was carried out in two provinces: Why Farmers Stay in 3 Laghman and Nangarhar but the findings the Drug Economy probably apply to other poppy producing Why Farmers Should 4 regions of Afghanistan. Nangarhar is a tradi- Get out of the Drug Economy tional poppy growing province and Laghman is Conflicts in Rural 5 a relative newcomer. Afghanistan 359 household interviews and 121 ‘key infor- Conflict, State Building 14 and the Fight against mant’ interviews were conducted with repre- the Drug Economy sentatives of different social groups who are Conclusions 18 directly or indirectly involved in the drug Conflict Processing and the Opium Poppy Economy in Afghanistan economy or who had knowl- makers and experts in Kabul social issues (about cultural edge about the drug business. and the provincial centres. norms and social, ethnic or Those interviewed included gender discrimination). The impact of the drug econ- teachers, traditional village omy on conflicts and on the representatives, spiritual lead- existing conflict processing ers, doctors, civil servants and mechanisms was also exam- representatives of law enforce- ined. Apart from conflict ment bodies. 25 conflict case caused by the drug economy, studies were also analysed; there are also conflicts over these case studies provide natural resources, over the Local currencies and information about the social, process of state-building, measurements used: political and economic causes conflicts related to the distri- of conflict. Only a few of In this remote village in Alingar bution of resources by inter- 1 ha 5 jrib these cases were directly district of Laghman province national donors and the rules 1 $ 60 Pakistani Rupees the petrol station is a leftover related to the drug economy. and procedures advocated by from the time when a major Lastly, 45 in-depth interviews 1 seer 1.250 kg them, as well as conflicts over opium poppy bazaar was at- were conducted with policy tracting inter-regional traders with a demand for fuel Why Farmers Get into the Drug Economy The wider project of Afghanistan is an agrarian country which suffers from the ratio was even higher, state-building in country. 78% of the popu- a scarcity of irrigated land. 44% or 1.2 billion USD, Afghanistan is lation live in rural settle- according to UNODC esti- The crop also has a number endangered not only ments. The overwhelming mates. These revenues are of significant benefits for the by the drug economy, majority of Afghan farmers therefore a crucial lifeline whole economy: It guaran- but also by badly are, for the most part, pre- for many farmers. However, tees a cash injection into designed and poorly occupied with food security it would be wrong to various levels of the national executed measures and with ensuring survival. assume that the revenues economy, it has a stabilising against it. There are strong incentives from the drug economy are effect on the currency by for farmers to engage in the a panacea for rural poverty improving the balance of cultivation of opium poppy. in Afghanistan. The growth payments, and it is labour The crop has a number of in the opium poppy econ- intensive which means that striking advantages over omy after 2001 has without the work force is kept in the other crops. Opium poppy doubt helped many farmers regions, thus preventing is very marketable and the to recover and to repay their potentially disruptive migra- crop is durable and well debts which accumulated tion to urban centres or suited for storage, which during the preceding years neighbouring countries. gives the farmer a much of drought. Nevertheless, needed reserve currency in It has been estimated that widespread poverty among kind. The modest water 21% of the income gener- the rural population still Valley in Laghman; this year requirement of the crop also ated by the opium poppy affects nearly all farmers, wheat is the dominant crop economy (roughly 0.6 bil- cultivated makes it well suited for a including those involved in lion USD) stayed with the the cultivation of the opium farmers in 2004. For 2003 Page 2 Project for Alternative Livelihoods in Eastern Afghanistan (PAL) poppy. There is a wide gap Annual credits in 2004 in income and power Annual credit acquired in 2004 by households The diagram shows the high categorised by land owned between the farmers on the number of seasonal credits 100,0 Columns one hand and the landlords (salaam) taken in 2004, no % indicating even access to yes % d e involved in large scale r credit for farmers irrespec- i 75,0 u q opium poppy cultivation, tive of their landholdings. c a t This reflects a situation in i the traffickers and traders, d e which access to credit was r 50,0 c the professionals running widely available because of : e c the undisturbed involve- n refining labs and the politi- e d ment of most farmers in i c 25,0 n cal patrons who provide opium cultivation in 2004. I security services in return The expectation is that this situation will change signifi- for shares, bribes or infor- 0,0 cantly in 2005, with re- none <0,1 jrib 0,1-0,5 jrib 0,5-1 jrib >1 jrib mal taxes on the other hand. source poor farmers having Land owned per household member less access to annual credits than resource rich farmers. Why Farmers Stay in the Drug Economy The inherent logic of the salaam-system encourages credit-takers to plant the cash Cash incomes are undoubt- the credit agreement. culture credits promotes the crop with the highest expected edly a great incentive to Salaam is also used as a cultivation of opium poppy. return on investment. Credit- cultivate opium poppy. credit scheme for leasing givers, in turn, are maximizing Opium poppy is a crop well their profits by lending credits However, there are other land. Farmers with little suited to a country which to those farmers who will plant factors which also seriously land can lease land in return has a large rural workforce crops with the highest expected restrict farmers’ alternatives. for an amount of the future and a dramatic scarcity of profits. As a consequence, this harvest or the money system of agriculture credits The most important factor irrigated land. Land short- equivalent. While this is an promotes the cultivation of is what could be called the age is primarily a natural established credit system for opium poppy. salaam-trap. Many farmers given, however, there are a range of agricultural prod- are obliged to take seasonal social and political factors ucts, the inherent logic of credits in order to bring which exacerbate existing the salaam-system encour- their families through the land shortages: ages credit-takers to plant winter or to plant crops for the cash crop with the high- Traditional rules of inheri- the coming year. An estab- est expected return on tance foresee that every son lished traditional credit sys- investment. Credit-givers, in should receive an equal plot tem exists, which is referred turn, are maximizing their of land. This fosters from to as salaam. It is a payment profits by lending credits to generation to genera- received in advance for a those farmers who will plant tion increasing land- crop yet to be planted and crops with the highest fragmentation.