Geopium - Jane's Intelligence Review - The dangers of opium eradication in Asia

The dangers of opium eradication in Asia

Pierre-Arnaud Chouvy

Jane's Intelligence Review
January 1, 2005

Campaigns to eradicate opium in Afghanistan, Myanmar and Laos risk being counterproductive in the mid-term as prices are driven up and rural poverty is exacerbated, leading to displacement of production rather than eradication. Pierre-Arnaud Chouvy examines the results of recent programmes.

In Asia, the failure to provide economic alternatives to opium production before eradicating poppy crops is having a devastating impact on the impoverished rural people who depend on the illicit opium economy for their livelihood.

Opium farming in Southeast Asia is mostly undertaken by highland tribes who rely mainly on rice grown on hillsides under regimes of slash-and-burn and rain-fed agriculture. The main cash crop for these populations has long been, and still is, opium, the production of which appears to be their only viable means of achieving food security.

In 2004 the world geography of opium production changed as Southeast Asia showed a sharp decline in production for the second consecutive year.

Although Afghanistan (4,200 tonnes) remains the world’s primary illicit opium producer and Myanmar (370 tonnes) still ranks second, Laos (43 tonnes) has most likely been surpassed by Mexico (80 tonnes in 2003) and maybe even by Colombia (50 tonnes in 2003).

However, the sharp fall in production in Myanmar and Laos, where opium production was halved during 2002-03 and again during 2003-04, was achieved by forced reductions through opium bans and eradication, and these measures are already having a detrimental impact on farmers, because no viable alternative livelihoods have been promoted.

The forced reduction of opium production during 2003-04 in Myanmar (down 54 per cent) and in Laos (down 64 per cent) could well have perverse effects such as shifting production to other areas. This was the case in 2002-03 when a 50 per cent drop in production in the Kokang area of Myanmar's northern Shan state caused opium farming and production to shift to the northern end of the Myanmar's Wa Special Region Number 2. But eradication and interdiction also have another major perverse effect: they drive prices up. In 2004 the 342 per cent increase in areas eradicated in Myanmar resulted in an 82 per cent increase in the farm-gate prices of opium. In Laos, opium prices went up by 42 per cent.

Human costs are also to be considered as these reductions of the main cash crop in such a short time in areas where rice shortages are severe have had dire consequences for the local populations, who have no other way of coping with such shortages than the opium economy.

While the World Food Programme provided the Kokang area with emergency assistance last year, in Laos, the government chose over the last few years to relocate some 25,000 hill-tribe people (Hmong, Akha, and others) from their rain-fed mountains to the valleys where irrigation offers higher rice production potential. However, the United Nations Office on Drugs and Crime has acknowledged that crop-substitution projects have been implemented only in a few areas and that they are too few to make up for these drastic changes. Moreover, having been moved from malaria-free hilltops to malaria-infested valleys, often without adequate developmental and health measures, many displaced communities have been ravaged by malaria and, also, by dysentery. Resettled villages now experience a four per cent annual mortality rate on average (as high as 20 per cent in one specific village) when the national rate is only 1.2 per cent.

In Myanmar’s Wa Special Region Number 2 and in Laos, complete opium suppression is due by 26 June 2005, the United Nations International Day against Drug Abuse and Illicit Trafficking, something that, if it happens, is likely to result in a humanitarian disaster.

Afghanistan
Although this crisis has already started in both Myanmar and Laos, it can still be avoided in Afghanistan, even though eradication is being widely considered.

The danger for Afghanistan is that a hastened eradication programme will, in the absence of alternative livelihoods being promoted, damage the fragile rural economy, prove counterproductive in the mid-term and impede sustainable solutions to the Afghan crisis.

In its first economic report on Afghanistan in a quarter century, the World Bank in 2004 described the opium economy “as the lynchpin of the vicious cycle – with adverse effects on security, political normalisation, regional relations, and state building” and that it is “Afghanistan’s leading economic activity, supporting powerful warlords and a drug industry which has a strong interest in preventing the emergence of an effective, accountable state”.

However, the same report argued that “limited success in past experience with fighting drugs does not give much ground for optimism, especially in view of the unique aspects of the opium economy in Afghanistan (most notably its sheer size)”. It stressed that “no single approach is likely to be effective and sustainable”, and that, on the contrary, “a combination of different measures, well-designed and well-sequenced, will be essential to have any hope of success”.

The report also noted that: “Eradication in the absence of alternative livelihoods being available does not work, and eradication followed by assistance does not seem to work well, yet eradication (and its threat) can help reinforce alternative livelihoods development if the former follows the latter”. Commenting on the “rich international experience with supply-side interventions to reduce drug production, primarily eradication of poppy fields” the World Bank criticised the blunt application of eradication measures for “resulting in perverse incentives for farmers to grow more drugs (e.g. in Colombia), displacement of production to more remote areas, and fuelling of violence and insecurity (Peru, Bolivia, Colombia), which in several cases forced the eradication policy to be reversed and led to adverse political outcomes”. The report concluded that, “without alternative livelihoods already in place, premature eradication damages the environment for rural development”.

Eradication or development
Eradication measures in Afghanistan would most likely have dramatic consequences, as the country is now stabilising and experiencing growth after more than two decades of conflict, when the opium economy and the war economy sustained and fuelled each other. Now, however, the opium economy clearly proceeds more from food insecurity and poverty.

Although Afghanistan’s 2004 opium production did not exceed 1999’s record high of 4,581 tonnes, had the weather conditions been more favourable and diseases and parasites less damaging, the crop would have surpassed the 1999 record. The lower than usual yields limited the 2004 harvest from 131,000 hectares, a much larger area than the 90,000 hectares of 1999. However, the bad weather conditions not only limited opium production but also cereal yields. After having first recovered during Taliban rule (1998), cereal production was sharply offset by the 2000-2001 drought, before a strong recovery happened again after 2002 with the return of normal precipitation and improved availability of seeds and fertilisers. Total cereal production (primarily wheat) increased by 82 per cent in 2002 and by a further 50 per cent in 2003, reaching 5.4 million tonnes, roughly enough for Afghanistan to meet its cereal consumption needs. But, in 2004, another drought and a decline in cereal cultivated areas by Afghan farmers, who favoured opium poppy cultivation, affected again the country’s total cereal production.

In 2004, opium poppy cultivation clearly benefited from the steep increase in the farm-gate price of opium between 2002 and 2003, when it had risen to 28 times that of wheat. In fact, farm-gate prices of opium remained low in the 1990s (US$30-40 per kilogram), before the Taliban imposed their 2000-2001 ban. Prices soared in 2000 and were maintained in 2002 and 2003, thus acting as a strong incentive to expand poppy cultivation across the country. Factors in the micro-level economics of opium production in Afghanistan (role of opium in granting access to land, loans, and credit) have clearly made the Taliban opium ban counterproductive in the medium term.

In a recent interview , Doris Buddenberg, the head of UNODC in Afghanistan, said: “Eradication usually does not bring about a sustainable reduction of poppy crop, it is a one-time short-term effort. Also eradication usually pushes the prices up. As we have seen from the Taliban period, the one-year ban on opium poppy cultivation increased prices enormously the following year and it became extremely attractive for farmers to cultivate poppy.”

However, in 2004, after three years of expanding opium poppy cultivation, farm-gate prices of opium declined sharply to an average of $90 per kilogram. Opium production should then be less attractive for farmers, especially if the growing Afghan economy (the International Monetary Fund estimates 7.5 per cent economic growth during 2004-05) drives up the price of hired labour, something that will in turn make opium harvests increasingly expensive and opium farming economically less attractive.

It is in this context that a hastened eradication would again be counterproductive in Afghanistan. Also, as observed by the World Bank, “A reduction in opium production would have very significant macroeconomic implications, and a reduction of poppy prices to their pre-2000 level would represent something like a $1 billion shock for the economy. What is really needed is generalized economic growth and rural development – “alternative livelihoods for Afghanistan as a whole” – which can only be accomplished through reforms, policies, and substantial programs implemented nationwide”.

Opium production clearly proceeds from poverty and food insecurity, from Afghanistan to Myanmar and Laos, where it is a coping mechanism and livelihood strategy. Thus, eradication is likely to be counterproductive as it threatens highly fragile livelihoods, increases poverty, and raises opium prices. Be it in Afghanistan, Myanmar or Laos, the World Bank advice should be carefully considered: “With most of the country’s poor living in rural areas, many of whom depend either directly or indirectly on agriculture, improved agricultural performance could have major impacts on poverty reduction through direct effects on producer incomes, indirect effects on consumer welfare through changes in food prices, employment and wage effects, and growth-induced effects throughout the economy”.

As history has shown, reducing opium production at the world level will not happen through eradication. Opium suppression will take time and will only occur through poverty reduction, improving agricultural performance and offering alternative livelihoods to opium farmers. Sustainable and integrated development is also the best way to achieve security and stability and, unlike eradication, is not counterproductive.

Dr. Pierre-Arnaud Chouvy is a geographer and research fellow at the CNRS, France. He studies the geopolitics of illicit drugs in Asia and produces www.geopium.org. His most recent book is Yaa Baa. Production, Traffic, and Consumption of Methamphetamine in Mainland Southeast Asia (2004, Singapore University Press).