Opium: Avicious circle

Currently Afghanistan produces an estimated 87% of the world’s illicit opium. It has become Afghanistan’s leading economic activity, having spread to all 34 of the country’s provinces; estimated to account for half of the national income of the country. The main reason for the thrive of this industry has been the ineffective, weak and corrupt central government at the top, inefficient local army and police forces who have come to benefit largely from it, through bribing and custom duties at the bottom. It is believed that senior figures within the government and even the president’s close circle are involved in this business.
In the short run, Afghanistan’s drug industry provides significant macroeconomic benefits for the country. Since it is comprised of half of the economic activity; it has become the main source of income for large numbers of people. Last year the Afghan farmers received 2.6 billion dollars annually from opium production, with another several hundred million dollars probably created from wage labourers. This means an enormous injection of income into Afghanistan’s ruined rural economy. The drug industry supports Afghanistan’s balance of payments as it is accounted for most of the country’s exports. This has a positive impact in facilitating macroeconomic management and supporting the currency. Furthermore, although the drug industry as an illegal activity does not provide tax revenues directly to the government, imports from drug profits do generate significant amounts of customs revenue. Moreover, in terms of poverty eradication it plays a positive role as opium cultivation accounts for the only source of livelihood for the rural poor. Plus, as a highly labour intensive activity, opium production generates large demand for labour, which raises the income for the poor.
However, opium economy has got long-term negative consequences for the economy. Relying on a single source of economic growth is the most unhealthy and dangerous path to economic development. Because it makes the rest of the economy less competitive and discourages other agricultural and manufacture sectors to grow. Now that illicit opium production has taken hold, it is very hard to eradicate it. A sudden eradication means a catastrophic shock of at least (as estimated by the Asian Development Bank) two billion dollars to the rural economy. In addition, illicit opium production has social consequences. Poor farmers often rent lands or borrow for their cultivation. Since, Afghan agriculture is depended on non-controllable factors like water, a bad harvest means debt to landlords. In recent years a large number of farmers have either lost their lands or assets because they could not provide the demand of the wealthy drug-traffickers.
Probably the most serious impact of illicit opium production is on governance, with profound negative implications for security, politics and state-building of Afghanistan. It has created a “vicious circle” whereby the drug industry financially supports warlords and their militias, who in turn undermines the central government. This linkage is shown below. The main reason for the insecurity in the south is the fact that local warlords have substituted from the traditional ways of income to a much more beneficial source of income, drug-trafficking. In the south warlords, drug interests and terrorism all have helped to promote insecurity and therefore, weakened the influence of the central government. An insecure environment is a heaven for promotion of drug production and effective and easy way of exporting the opium abroad. Moreover, drug has created a mass scale criminalized activity in the country. Through bribe, the drug industry has engaged in a process of corruption and criminalization of the local government, undermining good governance. It has generally corrupted the society too, as there is greater number of addiction of opiates within the country, who are causing further social problems, feeding into criminality. Finally, counter-narcotics measures are costly and time consuming, as government needs to allocate a greater budget to provide security and counter-attack them. As mentioned earlier, an eradication program would cost the rural area billions of dollars, which the Afghan government is in no position to compensate the farmers. In the end, as Afghanistan’s reconstruction is heavily dependent on foreign aid, the opium industry can discourage the international donors to continue in their aids. Because aids creates expectations like efficient use of construction budgets; with the current ineffectiveness of this government, those expectations are no where to be achieved. Consequently, less international aid and therefore, less money in constructing the necessary infrastructures for the development of the country.
The future of freedom in Afghanistan seems to be very bleak. It appears that the country is being hostage to the drug industry, that has created a “vicious circle” which would keep the country insecure, politically fragmented, weakly governed and poor for a the next decades or so.