Reliable Security Information


Afghan drugs: The contrarian view


The Economist, In the current issue, features a bold cover; a setting sun; a U.S. military salute to flag-draped coffin and the stark title: Afghanistan: The growing threat of failure.


In the January 6, 2007 issue, The Economist wrote this about Afghanistan's opium crop in a story headlined "Much gain, less pain": "Here is an even bolder idea: an American security writer, Walton Cook, has argued that simply paying Afghan poppy farmers not to grow poppies would be cheap compared to the social cost of heroin use. "


The question for President Obama today is would it be moral for the economy to accept, if acquired from criminals; terrorists, drug traffickers, corrupt public officials, drug users and money launderers--$300 billion dollars every year?


Would an economist use that donation for 'global public goods', or just ignore the opportunity, claiming that the source somehow devalued the money?



If economics is purely a technical science, the source of money would not matter, only how to get it. But then, if economics is not a moral discipline, why would economists continue to be concerned about free trade, economic growth, poverty, development, human capital, finance or microeconomics, all of which have social or ethical value components? After all, if economists can debate whether the rich should be taxed to support the poor, it should not be off the table to discuss whether the criminal should be enabled to support the poor.


Even though many economics professionals would claim their discipline to be amoral, most all would say a criminal donor model is just a hypothetical series of questions, neither based on any real world economics nor moral reality. But, when someone shows exactly how this $300 billion model becomes real, then do the questions also become both real and moral -- and for whom?


Here are some of the features of the criminal donor economic model:


Just as U.S. or EU farmers receive financial incentives not to cultivate certain legal crops, short-term benefits not to cultivate illicit crops are now in order. Present U.S. and EU farm support far exceeds $100 billion annually. We can employ dollar incentives creatively, and at a huge profit.


How?


Capitalize price differentials! It is worth $300 billion annually. Poor nation farmers are paid pennies at the 'farm door' for drugs that create expensive world societal problems of great magnitude, particularly in richer, drug consuming nations, like OECD or G-8 members. Illicit drugs represent an average 1.5% of GDP 'societal' cost to user nations. Based on a world GDP of $66 trillion, the composite 'societal cost' is $990 billion annually. The OECD share of GDP is $33 trillion, so the societal cost illicit drugs to its economy is $495 billion annually -- just for the 30 richest nations.


Only two drug plants, the opium poppy and the coca shrub (cocaine) make up approximately 65% of that total, amounting to $300 billion every year. If those two drug plants are not cultivated, the OECD nations save that money!


Stripped down to the basics, this 'strategic economic diplomacy' offers to pay farmers the same 'farm door' prices they received to cultivate illicit plants, but now for not cultivating those same plants.


Since poor farmers suffer no economic loss, they are emotionally and financially prepared to support non-conflict diplomatic solutions. We propose that the subsidy will continue for a decade. This extended period permits former drug farmers to prepare for either new occupations or alternative cultivations. There is also no need to wait until alternate crops or occupations are already in place because there is no break or reduction in farmer income and future cultivation is officially criminalized.


Further funding is provided to build educational facilities, construct information resources, build health clinics, provide transportation infrastructures, improve water quality and supply, create local police forces and improve judicial systems and government services. This is what we call 'winning hearts and minds.


When we think of resources, we are likely to think of physical or human resources, assets such as oil or minerals in the ground or a well-educated populace. Some very poor nations have no such assets. It takes a more creative imagination to consider any illegal activity as a potential economic resource and, if even though temporarily--a usable asset.


But market states, whether North Korea, Iran, Bosnia, or Sudan, already pay large sums to curtail activities that are illegal. When you are poor, but also a world production leader of illicit resources expensive to rich nations, richer nations can realize the huge 'societal cost' savings only when the problem is solved. It's no different than a cure for any societal problem--the costs previously spent become savings--available now for alternate uses.


For example, if a cure to drug cultivation were considered in the same vein as a cure to cancer or diabetes or AIDS, the money previously spent on all aspects of those diseases, the 'societal cost,' would be saved, and thus available to address other societal needs. This is the essence of my proposal.


How much savings? According to official ONDCP figures (last covering 2002) of $120-130 billions annually, we can extrapolate 2008 U.S. social costs for just two drugs, opiates and cocaine/crack to be $150 billion annually. That money now represents potential savings. An added windfall of perhaps $160-$180 billion annually would benefit other rich OECD nations.


Contrasted against the potential savings, we have proposed an agricultural subsidy of $5.6 billion to Afghanistan and $5.4 billion to the Andean region. For all the OECD nations, including the U.S., this represents an approximate annual return of $300 billion on an $11 billion incentive investment. That's about 500 times better than a normal 5% annual return.


Because of the vast margin between 'farm door' prices and rich nation 'societal costs', a very poor nation, Afghanistan for example, or even only a rurally poor one like Colombia, can benefit from the cessation of its cultivation of drug producing plants, much more so than from actually producing them, because rich nations can now invest a portion of the savings gained through leveraging the cost differentials toward financing "Transformational Drug Diplomacy."


IWhat about landowners, those 'drug rent-seekers' who through ownership or control of lands can extract income, whether or not they are the actual farmers?


The ownership of land in a nation that allows drug cultivation on that land, no matter how poor the nation is otherwise, is positioning drug rent-seeking against rule-of-law. So long as terrorists, warlords, tribal rulers or other landlords control land upon which drugs can be cultivated, that represents a treasure vein that they do not want severed -- just like an oil well or a diamond mine. I'drug rent seeking' and democracy do not mix. Rent-seeking through an illicit resource must be eliminated.


Two developing nations: Colombia and Afghanistan, fit this description. Afghanistan is at the very bottom range of the bottom-billion in rural poverty, yet it produces 92-95% of one illicit resource--heroin. Rural Colombia is another impoverished area, also the world's largest supplier of cocaine and its derivatives. Colombia also produces the bulk of all heroin consumed in the United States. (Although Afghan heroin now represents 20% of all U.S. usage.)


We are trying to support democracy in both nations by capitalizing existing price differentials. The direct linkage between drugs and terrorism is becoming more manifest with each passing year and it is my hope that this diplomacy will offer a means to reduce the threat. Those concerned with potential nuclear terrorism against the U.S. are convinced that the likely source of funding would be from Afghan drug trade. Some of those I interview in Homeland Security regularly advance this fearful vision.


Here are some other advantages of such a policy:


...Reduction of military personnel needed

...More effective use of military and civilian personnel

...Reduction in loss of lives, military and civilian

...Reduction in costs related to NATO and U.S. military presence

...Reduction in conflict levels (Improved border controls)

...Reduction in terrorism levels

...Reduction in revenues (Taliban alone get over $400M) to finance terrorism and insurgencies

...Reduction in regional tensions (Afghanistan, Pakistan, Iraq)

...Reduction in terrorist abilities to recruit among disenchanted youth

...Reduction in terrorist ability to finance a nuclear event

...Increase of recipient 'budget-support,' better general economics.

...Increase of recipient nation education

...Increase of qualified expatriate returns to recipients

...Increase in nutrition, health care and life expectancy to recipients

...Increase in needed infrastructures for recipients

...Reductions in tensions between EU and U.S

...Improved relations with recipient nations

...Superior returns-on-investment to investor nations

...Reasons for hope, winning hearts and minds--for all of us


Walton Cook is the author of Buzzword, in which biocontrol organisms (mycoherbisides) are used to restrict the cultivation of drug plants through soil-inoculation. A study of biocontrols is now mandated by Public Law 109-469, Section 1111. waltoncook@yahoo.com

Comments (4)

Rhyne:

That is a fine idea. My immediate thoughts are, what kind of pressures would be brought to bear upon the farmers to plant anyway? I cannot imagine drug gangs simply giving up because we outbid them.

Not attacking the idea, I'd love to see that shut down. But I could not help playing Devil's Advocate.

Gaute:

There is one big flaw with this proposal: It gives people to much time to do something else, and that something else may be something we do not like. I like to see this proposal put to work with a little twist, a twist that keep the farmers ocupied with growing puppies. Pay top dollars for puppies without a scar. If you pay the farmers double price for perfect puppies compared to the price of the alternative opium, you will keep them occupied, have a foolproof way of knowing that you are not cheated, and deprive the Taliban for the arbitrage in global markets. The problem with paying people for not growing is that you do not have a land registry that are even close to what we have in the western world, and even if they had it, everyone with some experience with farm subsidies can tell you how easy it is to cheat a system of "pay for not growing".

A system of paying for the harvest wil stimulate to hard word and land cultivation, putting the cash in the hands of people who deliver. Paying for not growing looks too much like a bribe, and bears the risk of fostering and supporting the wrong way of thinking.

And I do see that my version of the plan carries a risk similar to the one Bernanke is facing in the years to come: When you first have stimulated that much, how do you pull back without causing a back lash.

Bill:

It's time to stop pussy-footing around with these "drug lords" and the havok we are allowing them to bring on our societies.

The civilized nations of the world know where the drugs are being cultivated, can pinpoint the locations of the fields, but don't have the balls to napalm them!

We wouldn't want to accidentally kill any of the poor starving farmers or their families, or their cohorts in crime.

We can win their hearts and minds at the end of a gun barrel.

Dead Poet:

The problem is that criminals will simply use that money accordingly and continue to grow the opium on the side. This article is great but anytime their is an easy solution to anything we should always take a step back and consider whether or not it will create more problems. The best cheapest solution would be to pull out of the region, reduce the size of the bureaucratic machine, and tend our own gardens before pre-emptively spinning the world into destruction.

Everybody should watch the documentary Rethink Afghanistan and then we can all worry about the heroine. Whatever the argument is, taking a quick glance at the impact caused on this culture will force any war hawk to bow his head in shame. The only thing that was won in Afghanistan was new generations of anti Americans. Afghanistan was impossible to control in the 19th century when the British were sitting on top, and 500,000 soldiers of the Red Army failed.

Any person would stand up against whoever, regardless of their plight in the name of Freedom, if the bombs they dropped killed family members. Rational thoughts must be at the forefront before the fervour of nationalism and the emotional reflexes that are spurred by the state consume us. History, if it is allowed to be recorded properly in the future, will not be gentle in the judgments of our actions. The foreign policy of a democracy is the voice of the nation. Failure to recognize that will condemn every citizen of any republic in the wrongful actions of the government. Citizens cannot wash their hands of this reality. Democracy around the world is on life support. Demand, question, and learn the laws that govern our societies. Fear is the weapon they are using against us, let us in our quest for the truth become fearless and able to see the world through other eyes than the government controlled press. Learn to learn people and this world will open up.

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