A New Opium War

If you look at the changes in the political economy of Afghanistan, you may conclude that this is neither a "war on terror" that Washington says it is nor a pipeline war as some of its critics allege. It looks as if it is the latest Opium War, regardless of intentions of all parties (Afghans, Americans, Europeans, and others) involved.

According to the Afghanistan Opium Survey 2004 by the United Nations Office on Drugs and Crime (UNODC), opium cultivation has increased 64% since 2003. The opium industry now employs 2.3 million in Afghanistan (compared to 1.7 million in 2003), i.e., 10% of the Afghan population. The export value of Afghan opium is estimated to be $2.8 billion, a 22% increase since 2003. The opium export today accounts for more than 60% of Afghanistan's Gross Domestic Product.

Afghan farmers are not getting richer, though. The average farm price that fresh opium commands is only $92/kg in 2004, a decline of 67% since 2003, when fresh opium fetched $283/kg. Much of the profits goes to traffickers, who capture 78% of the opium export value: $2.2 billion (a 69% increase over $1.3 billion that went to traffickers in 2003). In contrast, opium farmers received only the total of $0.6 billion, a 41% decline compared to what they managed to get in 2003; each opium farming family's yearly income is now about $1,700 ($260 per capita), 56% lower than in 2003, when it was $3,900 ($600 per capita). Still it beats growing wheat: even though "bad weather and disease lowered the 2004 opium yield per hectare by almost 30 per cent" (United Nations Information Service, "United Nations Drugs Office Reports Major Increase in Opium Cultivation in Afghanistan," November 18, 2004), making opium production less productive and profitable than last year, the gross income from opium per hectare is $4,600, more than ten times the gross income from wheat per hectare of $390.

Eric Schmitt of the New York Times reports that "a new confidential American military assessment" by Lt. Gen. David W. Barno, the top American commander in Afghanistan, expects that "[p]oppy cultivation and opium production will continue to increase in Afghanistan, expanding the dangerous influence of drug lords at all levels of the government of President Hamid Karzai" ("Afghans' Gains Face Big Threat in Drug Traffic," December 11, 2004).

Afghanistan was not always the world's largest producer of opium. The first turning point was Washington's support for Afghan mujahideen fighting against the Soviet Union. Before the American intervention, Afghanistan had an economy largely based upon subsistence agriculture: "As late as 1972, economists estimated that the cash economy constituted slightly less than half of the total" (Barnett Rubin, "The Political Economy of War and Peace in Afghanistan," 1999). The war against the Soviets and Afghan Communists changed it. The mujahideen commanders -- a new elite whose rise in Afghanistan was underwritten by US, Pakistani, and Saudi monies -- "pressured the peasants to grow opium, a cash crop they could tax. It was also during this period that the production of opium started to increase" (Rubin, 1999).

The US intervention in Afghanistan was a chapter in the long history of opium and empire. Sugar, tea, coffee, tobacco, and opium -- "[t]hese first truly mass-produced, mass-marketed global commodities rearranged fundamental relations of power and authority all along the trajectories of their production, movement, and consumption" (James L. Hevia, "Opium, Empire, and Modern History," China Review International 10.2, Fall 2003, p. 312), fueling the growth of capitalism and the expansion of the British Empire:

By the early part of the nineteenth century, British Indian opium had stanched the flow of New World silver into China, replacing silver as the commodity that could be exchanged for Chinese tea and other goods. By the 1830s, silver was flowing out of China to India and beyond. As opium imports in China steadily increased, the political and economic results in India, Britain, and the greater empire were profound. . . . [T]ea and sugar duties helped to pay for the Royal Navy’s upkeep and development.20 Opium revenues in India not only kept the colonial administration afloat, but sent vast quantities of silver bullion back to Britain. The upshot was the global dominance of the British pound sterling until World War I.

In this respect, the figures compiled by John Richards in his study of opium revenue in India ["The Opium Industry in British India," The Indian Economic and Social History Review 39.2-3, 2002, pp.149–180] are instructive.21 Managed through the East India Company monopoly, opium, by 1839, accounted for around 11 percent of the total revenue of the British establishment in India, a figure that held for the next decade. After 1850, the opium produced 16–17 percent of revenues, peaking at 100 plus million rupees (10 million pounds sterling) annually by the early 1880s. Over this period of time, opium revenues equaled around 42 percent of the land tax, the other main source of monies of the British Raj. Although there was a drop-off after 1890, opium still generated around 8 percent of total revenue for the next two decades at an average of about 75 million rupees annually. The direct revenue generated by opium in India was supplemented by the inflow of silver from sales of the drug in China. In 1839, the figure was 22.6 million rupees, and it steadily increased to around 41 million rupees per year on average in the decade from 1865 to 1875. There was a reduction afterwards, but around 22 million rupees per year still entered India through the mid-1890s. In addition to these monies, there was also a movement of silver bullion from the British trading firms in China, such as Jardine and Matheson, to London banks.

As Carl Trocki has argued, and Richards' data supports, without opium the British global empire is virtually unimaginable. (Hevia, p. 313)

Today, it is said that the global illicit drug trade involves "US$500 billion annually of which US$300 billion is laundered" (United Nations Office on Drugs and Crime, "Money Laundering"). That's about 5% of the GDP of the United States ($10.99 trillion), but don't think it's chump change. Consider this: the cost of the US war on Iraq is $150 billion (and counting). Imagine how many insurgencies and counter-insurgencies (using narco dollars in the name of fighting against "narco terrorists") $500 billion can buy, given that military and paramilitary soldiers' labor power in Asia, Africa, Latin America, and the Middle East is incomparably cheaper than US soldiers'.

"Nervos belli, pecuniam infinitam [The sinews of war, unlimited money]." -- Cicero, "Phillipic against Marc Anthony," V.ii.5