Upcoming Changes to the Drug-Insurgency Nexus in Afghanistan
Publication: Terrorism Monitor Volume: 7 Issue: 2
While there are many Taliban-controlled villages in Afghanistan that do not cultivate opium, there are few villages cultivating opium that are not under Taliban control. The concentration of opium production in a handful of southern provinces has placed Afghanistan’s opium economy almost completely under insurgent control. Insurgent commanders benefit from taxation in kind at the farm-gate, from direct involvement in trafficking and sales and from protection money paid by traffickers to smooth exports.
Concentration of Opium Production in the Southern Provinces
The concentration of production in the southern provinces has been driven by three factors. First, these provinces have a comparative advantage in agricultural productivity. Helmand, which produced 70 percent of Afghanistan’s opium in 2008, has the largest share of the best farmland, with high opium yields per hectare.  By contrast, low opium productivity discourages poppy cultivation in other hostile provinces, such as those in eastern Afghanistan.  In a broader context, the ample supply of workers across Afghanistan keeps costs relatively low for the labor-intensive opium harvest.
Second, opium cultivation is itself a strong indicator that an area is resistant to law enforcement. The drug-insurgency nexus protects areas of opium cultivation from government efforts to shape the opium economy. It is difficult to provide investment in the licit agricultural economy when government and international officials are considered targets. Eradication cannot occur if fields are protected by gunmen; even if the gunmen are not dedicated insurgents per se, the weakness of governmental authority gives them impunity to confront the law violently. Essentially, resistance to law enforcement creates a free-market context in which cultivators respond to economic incentives and can reap the benefits of comparative advantage in agricultural productivity. From the insurgents’ perspective, there is the bonus that resistance to eradication is blamed on the Taliban even when it is in many cases the work of local power-holders protecting their illicit incomes, thus contributing to the image of the Taliban as present and effective everywhere.
The third factor in this equation is the insurgency’s encouragement of opium cultivation. As every taxman knows, more valuable production generates stronger revenue, and there are few commodities more fungible and valuable for an insurgent taxman than opium. Taliban-controlled shuras (community councils) in southern Afghanistan have aimed for an expansion of the opium economy, and farmers have obliged. These decisions at least provide cover for villages to become or stay involved in the opium economy; at most they act as a political incentive to carry out insurgent orders and increase cultivation.
Disrupting the Opium Industry
These arrangements will be disrupted in 2009. Plans to increase international and Afghan troop numbers in southern provinces are aimed at breaking the insurgency’s hold, reflecting a belated response to the worsening situation there. A side effect of these plans will be interference in the drug-insurgency nexus.
Opiate processing activity will experience the most direct and immediate disruption. Labs in Helmand in particular seem to have been less mobile than in other provinces, where the drive for mobility has gone as far as truck-mounted facilities.  In 2008, some facilities in southern Helmand and Kandahar appear to have re-located quite quickly as a result of counter-insurgency operations. Even where labs are not targeted directly, their supply lines and physical security will become more vulnerable with increased military activity nearby. Trafficking will also face greater pressure, again not necessarily as a direct target of operations. With the (slightly) stronger emphasis given to counter-narcotics by NATO at the October informal meeting of Defence Ministers in Budapest, there is also more scope to act directly against traffickers. 
The effects on cultivation and production will take longer. The reduction of insurgent influence would remove a source of encouragement for farmers to cultivate opium. It will also facilitate interventions by government and international actors. In other words, a stronger troop presence would open an opportunity to shift the applicable opium economy policy from expansion to contraction.
However, to understand the trajectory of the drug-insurgency nexus in 2009 and beyond, it is crucial to note that reductions in opium cultivation will occur without any action by external forces. The plateau of cultivation in 2007 and 2008 reflected disequilibrium in the opium economy that has driven down the price of opium and built up stocks held by farmers, traders, traffickers and the insurgents themselves.  Just as manufacturers in the global recession are doing, participants in the 2009 opium economy will respond to over-supply by winding back production and running down inventories.
Monitoring by the United Nations Office on Drugs and Crime (UNODC) of planting for the 2009 harvest suggests a significant reduction in cultivation nationally, particularly in the south. There are also recent, credible reports that the insurgency has reversed its policy in these provinces and is discouraging cultivation during the present season.  This is a strong indication that the insurgency expects to benefit more from raising the price than from greater volumes.
Reducing the Attractiveness of Opium Production
Effects on the drug-insurgency nexus will become more interesting in 2010 and 2011. If government and international influence in the south increases, the 2010 harvest can be subject to non-economic pressures combining incentives and penalties. The psychological effect of eradication on farmers will grow if enforcement becomes more credible. A more secure environment for law enforcement will make it relatively easier to target higher-level traffickers. The decline in development spending in the south will become reversible, facilitating greater investment in rural economies and government services with a view to bolstering options other than opium cultivation while providing non-economic benefits to offset discontent from lower incomes. 
Such developments will reduce the relative attractiveness of the southern provinces for opium economy activity. In 2010 they will still be the most welcoming environments for opium cultivation, but a reduction in their comparative advantage can be expected to result in some displacement of the opium economy to other parts of Afghanistan. This is a significant difference between the drug-insurgency connection in Afghanistan and its counterparts in Colombia and Myanmar: government effectiveness in areas not presently cultivating opium will generally be too weak in Afghanistan to resist a degree of displacement of the opium industry from the south. A decline in the concentration of opium-related activity in southern provinces is already occurring – for example, some districts in Nangarhar that were poppy-free in 2008 are expected to harvest opium this year. However, the trend will become much more noticeable in 2010, if plans for attacking insurgent control in the south in 2009 have their intended impact.
The Taliban’s Relationship with the Opium Economy
For the Taliban and their associates, several changes to their relationship with the opium economy will follow a counter-insurgency offensive in the southern provinces:
· First, they will move to tax the non-opium economy more heavily. In the major opium cultivation areas, the insurgency has been in the enviable fiscal position of being able to ignore or reduce taxes on non-opium activity.  A reduction in cultivation and a contraction in areas under insurgent control will incline them to broaden their taxation base.
· Second, that base will become more reliant on payments for protection of trafficking, in effect an indirect tax on the opium economy. Even in best-case scenarios for international forces, the insurgency will continue to enjoy significant control of key trafficking territories on the Afghanistan-Pakistan border. 
· Third, there will be added incentive for insurgents to have even greater involvement in opiate trafficking. The line between criminal and insurgent is already quite blurry on the Afghanistan-Pakistan border (itself a blurry concept). Reduced control of revenues from cultivation will only increase the attractiveness of trafficking as a fundraising strategy. In this, insurgents hold some advantages as traffickers in a war-zone, since they can fight for control of routes and fight their way along those routes if necessary. 
· Fourth, foreign sources of funding for the insurgency will become more obvious and receive more attention. These are already sizeable but somewhat obscured by the focus on drug revenue. The latter is more important for the outer cells of the insurgency than for its core leadership, who will continue to draw on external funds.
These four changes imply a fragmentation – or at least a loosening – of the drug-insurgency nexus. The opium economy will remain a source of funds for insurgents but it will become more difficult for them to access cultivation directly. The relatively systematic and secure method of taxing cultivation will not be so easy to maintain, leading the insurgency to become more like a confederation of criminal groups in its relationship to the opium economy. A major challenge is that they will forego revenue to purely criminal organizations as a result of displacement of cultivation to areas outside of insurgent control.
In turn, this suggests that criminals’ protection of cultivation will become increasingly important to the functioning of the opium economy. Or, perhaps a more accurate description is that a recession in insurgent control will unmask the collusion between local power-holders, opium farmers, and, in many cases, government officials in Kabul.
Both this possibility and the likelihood of displacement of the opium economy out of the south in 2009 and 2010 raise the prospect of greater divergence between counter-insurgency and counter-narcotics efforts in 2010 and 2011. While NATO’s Budapest meeting gave international forces a slightly stronger mandate for counter-narcotics work, more opium-related activity in non-insurgent areas would be unlikely to draw much military support for a counter-narcotics response against local power-holders. Indeed, the growing importance of provinces such as Nimroz and Herat in processing and trafficking has occurred in part because they have received less international attention due to the relative absence of insurgent operations in these provinces.
Geographical divergence will be accompanied by a divergence of timeframes. Downward price and upward stock trends in the opium economy imply that reduced production in 2009 will not induce a major rebound in cultivation until at least 2010 and more probably 2011. International and Afghan politics demand that counter-insurgency operations show significant progress in the next two fighting seasons, but the opium price pressures for more widespread cultivation will not build until the end of that period.
International troop contributors hope to reduce their military commitment to Afghanistan significantly in 2011. The reliance of the present analysis on the effectiveness of military action against the insurgency in the south makes it clear that their subsequent withdrawal will allow the opium economy to re-establish itself as a more or less free market. If the predictions here are accurate, the best that can be hoped for is that the insurgency will have received such a blow that the opium economy becomes an all-criminal affair.
In effect, if the tide of insurgency is rolled back, it will reveal a lot of government banditry and criminal collusion – some actors presently labelled insurgents will be re-classified as drug lords. Alternatively, Afghanistan might aspire to contain the drug-insurgency nexus in a small enough corral – as in Colombia – that the national addiction to opium cultivation is demolished and the government’s focus can turn more forcefully to demand reduction, counter-trafficking, and anti-corruption.
Jacob Townsend is a consultant with the United Nations in Afghanistan. These are his personal views.
1. For visitors accustomed to small-scale farm-holdings in most parts of Afghanistan, Helmand’s large, developed and landscaped farms are a surprising sight, including the near-total mechanization of non-opium agriculture. For opium yields, see UNODC Afghanistan Opium Survey 2008, p.66.
2. There are also differences in social and religious attitudes towards the opium economy in the east when compared with the south – UNODC, Socio- Economic & Psychological Assessment of Fluctuations and Variations of Opium Poppy Cultivation in Key Provinces in Afghanistan: Balkh, Kandahar, Nangarhar and Central Provinces, Kabul, 2006.
3. Interviews with UNODC and ISAF personnel in Kabul, December 2008.
4. Specifically, ISAF “can act in concert with the Afghans against facilities and facilitators supporting the insurgency, in the context of counternarcotics, subject to authorization of respective nations” – quoted at https://www.nato-otan.org/docu/update/2008/10-october/e1010b.html
5. The highest monthly price recorded for farm-gate dry opium in 2008 was $108/kg, which was still lower than the lowest monthly price reported in 2006 ($125/kg) – UNODC and the Afghan Ministry of Counter Narcotics, Afghanistan Opium Price Monitoring, December 2008, p.1. For the stocks held by farmers and others, see UNODC Afghanistan Opium Survey 2008, p.71.
6. Interviews with UNODC and ISAF personnel in Kabul, January 2009.
7. All aid agencies have faced a challenge in spending money productively – or at all – in the southern region. To take one measure, as Helmand’s area of opium cultivation increased substantially from 2005 to 2007, the Afghan Ministry of Counter Narcotics records a decline in alternative livelihoods investment from $55.7m in 2005 to $18.3m in 2007.
8. Reports from Ministry of Counter Narcotics/UNODC surveyors in 2008.
9. Note that this allows for extortion of all traders, not just those in opium.
10. A comparison might be made to the Islamic Movement of Uzbekistan, which exploited these advantages in Tajikistan and Kyrgyzstan in the late 1990s to become a powerful trafficking organisation in Central Asia.