Sunday, July 27, 2008

Taliban Insurgency Funded by Poppy and Marble

Funding is always a large part of any effective and sustained insurgency, in addition to other factors such as local population support, arms supply, depth of insurgents commitment, recruiting and training. Several recent reports indicated that the Taliban are doing very well on the funding front on both sides of the border. Of course, the funding from other enterprises pales in comparison to the poppy trade, that occurs in plain sight with active connivance, of the Afghan authorities. Below are recent media reports that capture the essence of what is going on in Afghanistan and Pakistan's FATA region.

An excerpt from the National Security Network(NSN) report:

In plain view of the United States and the international community, the opium trade is overwhelming Afghanistan’s legitimate government. The facts are stunning: in 2001, after a Taliban ban on poppy cultivation, Afghanistan only produced 11 percent of the world’s opium. Today it produces 93 percent of the global crop; the drug trade accounts for half of its GDP; and nearly one in seven Afghans is involved in the opium trade. In Afghanistan, more land is being used for poppy cultivation than for coca cultivation in all of Latin America. The trade strengthens the government’s enemies and – unless its large place in the Afghan economy is permanently curtailed by crop replacements and anti-poverty efforts – poses a potentially fatal obstacle to keeping the country stable and peaceful.

Afghanistan is caught in a vicious cycle. The fall of the Taliban brought the end of their highly coercive crop reduction program. A combination of U.S. inattention and widespread insecurity and poverty allowed poppy cultivation to explode. As the opium economy expanded, it spread corruption and empowered anti-government forces, undermining the Afghan state, leading to more poverty and instability, which in turn only served to further entrench the drug trade. Meanwhile the illicit activity has been a boon to the Taliban insurgency, which has traditionally used poppy cultivation as a lever to improve its own position. Today, the Taliban relies on opium revenues to purchase weapons, train its members, and buy support.

A recent New York Times report talked about how the Taliban took over a stone quarry in Pakistan's tribal belt to generate revenue. Here is an excerpt of the story:

A rare, unescorted visit to the region this month, during which the Taliban detained for two days a freelance reporter and a photographer working for The New York Times, revealed how the Taliban were taking over territory, using the income they exact to strengthen their hold and turn themselves into a self-sustaining fighting force. The quarry alone has already brought the Taliban tens of thousands of dollars, Mr. Zaman said.

The seizure of the quarry is a measure of how in recent months, as the Pakistani military has pulled back under a series of peace deals, the Pakistani Taliban have extended their reach through more of the rugged territory in northern Pakistan known as the Federally Administered Tribal Areas, or FATA.

Today the Taliban not only settle disputes in their consolidated domain but they also levy taxes, smuggle drugs and other contraband, and impose their own brand of rough justice, complete with courts and prisons.

An earlier New York Times report last year implicated the Afghan Police in the drug trade. Here's an excerpt: altogether different side of Afghanistan’s security forces was evident when a Dutch and Afghan patrol visited a police compound in Oruzgan Province. The police officers there were cultivating poppy within the compound’s walls, openly participating in the heroin trade. The Afghan Army squad that visited them, itself only partly equipped, did nothing.

Talking about the effectiveness of the Taliban as a fighting force, here are a couple of statements President Karazai of Afghanistan made to Der Spiegel recently:

"They did a lot wrong, but they also did a few things right. I wish I had the Taliban as my soldiers. I wish they were serving me and not people in Pakistan or others. When we came back to Afghanistan, the international community brought back all those people who had turned away from the Taliban ..."

"We wanted to arrest a really terrible warlord, but we couldn't do it because he is being protected by a particular country (Germany). We found out that he was being paid $30,000 a month to stay on his good side. They even used his soldiers as guards ....I don't want to name the country (Germany) because it will hurt a close friend and ally. But there are also many other countries who contract the Afghan militias and their leaders. So I can only work where I can act, and I must always calculate what will happen before doing anything."

There is plenty of blame to go around in allowing the Taliban to become powerful on both sides of the Pak-Afghan border. They have established themselves as an effective alternative to the age-old tribal elders jirga system. In fact, they have replaced the old system as defacto rulers capable of settling tribal disputes and managing the routine affairs normally reserved for the state. It is clear that the actions that enabled the Taliban to seize local tribal control and fund their insurgency are going to be recorded in history as the biggest mistake by US and NATO allies. Combine the strong funding with the extraordinary zeal of the Taliban and you have the most difficult situation that we see on the ground today. Just a "military surge" will not do the trick here. It'll require a multi-faceted carrots and sticks approach and tough decisions to change some of the bad choices made by the US, Pakistan, Afghanistan and NATO in Afghanistan.


Anonymous said...

Coalition forces are a lean and mean force for delivering "shock and awe" blows.The main problem is NATO countries sees the operation in Afghanistan as a counter-terrorism as opposed to re-construction of which counter-terror is a part.Their troops have no empathy for suffering of Afghan people and it is evident from large civilian Afghan causalities.Since there is a price rise problem and shortage of wheat etc.Afghan farmers could be induced to grow them.Many experts believe that a force of around 2,50,000 troops is bare minimum necessary for combating militants and at the same time holding places after driving insurgents out.On top of this mess, there is a steady surplus of terrorists and retired/serving intelligence personnel and soldiers in Pakistan that are sympathetic to the Taliban cause and provide expertise in conventional attacks like the one involved in storming combat outpost which killed 9 US troops.

Riaz Haq said...

A recent story in Newsweek claims that the Taliban are paying US$200 a month to their rookie fighters. This is twice as much as the Afghan government pays its policemen and soldiers. This again shows the Taliban are well funded, mainly by their "tax" on drug cultivation and trade. So, the biggest problem in Afghanistan is that it's become a narco-state, a la Colombia. Unless steps are taken to reduce this funding, it'll be impossible to defeat the Taliban.

Riaz Haq said...

According to a PBS news report, the UNODC estimates that the Taliban earned $90 million to $160 million per year from taxing the production and smuggling of opium and heroin between 2005 and 2009, as much as double the amount they earned while in power nearly a decade ago, reported the Agence France-Presse.

"The Taliban's direct involvement in the opium trade allows them to fund a war machine that is becoming technologically more complex and increasingly widespread," Antonio Maria Costa said.

He called the Afghanistan-Pakistan border "the world's largest free-trade zone in anything and everything that is illicit -- drugs of course, but also weapons, bomb-making equipment, chemical precursors, drug money, even people and migrants."

Less than 2 percent of the opium and heroin is seized by authorities before it leaves Afghanistan, with 40 percent of the heroin trafficked out of the country through Pakistan, 30 percent into Iran and about 25 percent through Central Asia, Reuters reported.

Central Asian nations intercept just 5 percent of the drugs flowing into their countries, as opposed to 20 percent in Iran and 17 percent in Pakistan, the report says, according to the AFP.

Worldwide, only 20 percent of Afghan opiates are intercepted before reaching addicts, while twice as much cocaine from South America is seized, the study said.

Of the 15.4 million opiate users worldwide, 11.3 million use heroin, while the rest use opium, the thick paste from poppies that is used to make heroin, reported Reuters.

Nearly half the world's heroin is consumed in Europe and Russia, and 42 percent of the world's opium users are in Iran.

Heroin and opium cause up to 100,000 deaths a year. Opiates are also helping spread HIV at an unprecedented rate through users sharing needles, the report said.

It should be recalled that the Taliban had completely eradicated poppy from Afghanistan when they ruled in 2000-2001.

Riaz Haq said...

Here's an interesting Guardian report with UN Drug Czar suggesting that drug money kept the financial system afloat during 2008 financial meltdown:

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

"That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was," he said.

Riaz Haq said...

Here are some excerpts from an interesting Friday Times Op Ed on Pakistan's undocumented (informal & illegal) economy:

The economy is in the doldrums, but that is not news any more. What is more interesting, and more difficult to investigate, is what is happening in the world beyond the survey operator and tax collector's ambit. Papers published by the Social Policy Development Center (SPDC) in Karachi and the State Bank place the informal economy in a range of 20 to 30 percent of GDP. But most of this undocumented economy does not include strictly illegal, or shall we say criminal, practice.
that militant groups are running their own businesses (during the TNSM's movement in Swat, emerald mines were reputed to be in the hands of Maulana Fazlullah's men); that militants and terrorists are even coming up with new ways to generate funds (kidnapping for ransom being a case in point).
According to data from the UN, Afghanistan produced about 90% of the global output of opium in 2007. This fell to just over 62% by 2010 (with Myanmar accounting for most of the rest). Three quarters of the poppy production was in the provinces of Helmand and Kandahar, which border Pakistan. Domestic consumption of opium in Afghanistan is next to nil. Also, the country does not legally import the chemicals needed to process opium into heroin, although these are imported in Pakistan for legitimate uses. Almost 7,000 metric tons of opium, both raw and processed, in the form of morphine and heroin, leaves Afghanistan and finds its way to the lucrative markets of Western Europe.
Given that the global trade in opiates is estimated to have a value of some $70 billion, even a small proportion of the proceeds can make life comfortable for a lot of people in Pakistan.
With close to 80 suicide attacks in 2010, about 400 rocket attacks, and about 350 bomb blasts in addition to target killings, use of improvised explosive devices etc, its not hard to deduce that there is a significant trade in arms and ammunition in Pakistan. The ISAF container scam case led to some interesting findings. There were the obvious conclusions - including that the abuse of the Afghan Transit Trade facility is massive. More tellingly, the Supreme Court's suo moto case found that 7,922 ISAF containers simply went missing. In addition to the packed meals, the alcohol and the camp supplies stamped with ISAF logos that appear in border markets, the possibility of pilferage of more dangerous items cannot be ruled out.

The smuggling masked by the Afghan Transit Trade is another story altogether, and according to some stakeholders extends to the illegal trade in timber, antiquities and gemstones stemming from that unfortunate nation. Being a neighbor to a land-locked, war-ravaged country with no semblance of law and order was never going to be easy. But Pakistan's governance failures have made a bad situation worse.

There's much more to Pakistan's economy than meets the eye, and many of the more interesting activities are practically impossible to investigate unless someone is prepared to take considerable personal risks. The few pieces of the jigsaw puzzle that are available from public data and information paint a tantalizing picture. If the downslide of the formal economy continues, things could get even more interesting.

Riaz Haq said...

Here's a Global Post story on NATO using smugglers to supply its troops in Afghanistan through Pakistan:

With few other options available to it since Pakistan closed its border crossings almost two months ago, NATO has at times resorted to paying local smugglers to get much-needed supplies to its troops fighting in Afghanistan, Pakistani officials say.

The Pakistani and Afghan smugglers, who must pay bribes to militants to travel safely through some areas, navigate treacherous routes over the 1,800-mile mountainous divide that separates the two countries to bring containers of oil, food and other essential items — all at a price — to soldiers on the other side.

“Borders mean nothing to us. We have been crossing in and out for centuries,” Sahib Khan, a smuggler who said NATO had hired him, told GlobalPost.

The hiring of illegal smugglers came after a failed attempt by NATO to pay private companies, which truck goods across the border under the Pakistan-Afghanistan Free Trade Agreement (PATA). These private companies, Pakistani officials said, were secretly swapping out their normal cargo for NATO supplies until Pakistani security forces caught wind of the scam.

A senior officer for the Frontier Corps, an elite military unit that is responsible for security along the border, told GlobalPost that a total ban on the movement of containers under PATA, which was signed in 2010 to promote bilateral trade, eventually foiled the strategy.

“We had concrete evidence that some of the containers being imported by private companies, under PATA, were being used to smuggle supplies for NATO troops under cover of commercial imports,” the official said.
Smuggling between Pakistan and Afghanistan has long been a profitable and vibrant business. Various trade agreements have been signed between the two neighbors in a bid to contain the practice, but high import and export taxes coupled with little government oversight, thwarted those attempts.

Mostly items like flour, edible oil, lentils, dried vegetables, contraband cigarettes, and animals for meat are smuggled into Afghanistan, while spare auto parts, electronics and unregistered vehicles are smuggled the other direction.

Smuggling is so widespread that it has become the backbone of the economy in towns and villages along the border, where locally it is treated simply as normal trade. The mountainous terrain provides an edge over security to smugglers who regularly trickle across the border without any trouble.

Sahib said that most of the food and oil supplies he has carried across the border for NATO originate from the southern port city of Karachi, and are moved through Peshawar and Quetta, and finally through Pakistan’s tribal areas, which are largely under the authority of various militant groups.

For those militants, the smugglers have been an important source of income. Smugglers are required to pay “rahdari,” or “passage,” an unofficial tax that allows them safe passage.

“Once we are onto the route, it’s the responsibility of those who receive rahdari to ensure we are able to safely enter into Afghanistan,” Sahib said.

Any smuggling that is done on behalf of NATO can in no way make up for the closed borders, however. Smugglers say they carry between 20 and 25 small containers a day while, when the border crossings were open, NATO shipped an average of 250 large containers a day — making the reopening of the borders essential to the war effort.