[Senate Prints 111-29]
[From the U.S. Government Publishing Office]
111th Congress
1st Session COMMITTEE PRINT S. Prt.
111-29
_______________________________________________________________________
[TITLE] deg.AFGHANISTAN'S NARCO WAR:
BREAKING THE LINK BETWEEN
DRUG TRAFFICKERS AND INSURGENTS
__________
A REPORT
TO THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
One Hundred Eleventh Congress
First Session
August 10, 2009
U.S. GOVERNMENT PRINTING OFFICE
51-521 WASHINGTON : 2009
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COMMITTEE ON FOREIGN RELATIONS
JOHN F. KERRY, Massachusetts, Chairman
CHRISTOPHER J. DODD, Connecticut RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin BOB CORKER, Tennessee
BARBARA BOXER, California JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania JOHN BARRASSO, Wyoming
JIM WEBB, Virginia ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
David McKean, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
(ii)
?
C O N T E N T S
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Page
Letter of Transmittal............................................ v
Executive Summary................................................ 1
1. The Fruits of Neglect--Recent Rise of the Drug Trade.......... 3
Unintended Consequences of the Invasion..................... 4
See No Evil.................................................. 5
2. Why Eradication Failed--2001 to 2008.......................... 6
Grounding Eradication........................................ 6
Gone Today, Here Tomorrow.................................... 7
A Dramatic Change of Strategy................................ 8
3. How the Taliban Exploits the Drug Trade....................... 9
Where Does the Money Go?.................................... 10
The Scope of Corruption...................................... 11
New Tactics in the Field..................................... 12
4. Implementing New Strategies for Afghanistan................... 13
``Remove Them from the Battlefield''......................... 15
Responding to the Stalemate.................................. 16
The Regional Spillover--Problems in Pakistan................. 17
Beyond the Pakistan Border................................... 17
5. A Metaphor for War--The Battle of Marjah...................... 18
A Surprise Attack............................................ 19
The Pluses and Minuses of Marjah............................. 20
6. The Missing Civilian Component................................ 21
A Verdict on Kabul and Washington............................ 21
Two Bright Spots............................................. 22
7. Recommendations for Afghanistan............................... 23
Appendix
1. A Discussion of Alternative Crops--Poppy v. Wheat............. 25
2. The Intricacies of Hawala--The Road to Nowhere................ 27
Close Knit and Close Mouthed................................. 28
A Regional Perspective on the Money Flow..................... 29
(iii)
LETTER OF TRANSMITTAL
----------
United States Senate,
Committee on Foreign Relations,
Washington, DC, August 10, 2009.
Dear colleague: The administration is several months into
its ambitious new strategy in Afghanistan, and we are seeing
the first effects of the increases in military and civilian
resources. One of the emerging changes is on counter-narcotics
policy. In the past, our emphasis was on eradication. Today, we
are focused for the first time on breaking the link between the
narcotics trade and the Taliban and other militant groups. To
accomplish that important goal, the administration and our
military commanders have made targeting major drug traffickers
who help finance the Taliban a priority for U.S. troops. In
addition, a new intelligence center to analyze the flow of drug
money to the Taliban and corrupt Afghan officials is beginning
operations and plans are under way to create an interagency
task force to pursue drug networks. The attached report
represents the findings of research conducted by the committee
staff in Afghanistan, the United Arab Emirates and the United
States. The report describes the implementation of the new
counter-narcotics strategy and offers recommendations. We also
hope that the report will provide new impetus for a national
debate on the risks and rewards associated with our increasing
commitment to the war in Afghanistan.
Sincerely,
John F. Kerry,
Chairman.
AFGHANISTAN'S NARCO WAR:
BREAKING THE LINK BETWEEN
DRUG TRAFFICKERS AND INSURGENTS
----------
Executive Summary
At the end of March when President Obama fulfilled his
pledge to make the war in Afghanistan a higher priority, he
cast the U.S. mission more narrowly than the previous
administration: Defeat Al Qaeda and eliminate its safe havens
in Afghanistan and Pakistan. To accomplish these twin tasks,
however, the President is making a practical commitment to
Afghanistan that is far greater than that of his predecessor--
more troops, more civilians, and more money. As the American
footprint grows, so do the costs. July was the deadliest month
yet for American and coalition troops in Afghanistan, and
military experts predict more of the same sad trajectory in the
coming months.
As part of the military expansion, the administration has
assigned U.S. troops a lead role in trying to stop the flow of
illicit drug profits that are bankrolling the Taliban and
fueling the corruption that undermines the Afghan Government.
Tens of millions of drug dollars are helping the Taliban and
other insurgent groups buy arms, build deadlier roadside bombs
and pay fighters. The emerging consensus among senior military
and civilian officials from the United States, Britain, Canada
and other countries operating in Afghanistan is that the broad
new counter-insurgency mission is tied inextricably with the
new counter-narcotics strategy. Simply put, they believe the
Taliban cannot be defeated and good government cannot be
established without cutting off the money generated by
Afghanistan's opium industry, which supplies more than 90
percent of the world's heroin and generates an estimated $3
billion a year in profits.
The change is dramatic for a military that once ignored the
drug trade flourishing in front of its eyes. No longer are U.S.
commanders arguing that going after the drug lords is not part
of their mandate. In a dramatic illustration of the new policy,
major drug traffickers who help finance the insurgency are
likely to find themselves in the crosshairs of the military.
Some 50 of them are now officially on the target list to be
killed or captured. Simultaneously, the U.S. has set up an
intelligence center to analyze the flow of drug money to the
Taliban and corrupt Afghan officials, and a task force
combining military, intelligence and law enforcement resources
from several countries to pursue drug networks linked to the
Taliban in southern Afghanistan awaits formal approval.
An equally fundamental change is under way on the civilian
side of the counter-narcotics equation. The administration has
declared that eradication of poppies, the mainstay of the
former administration, is a failure and that the emphasis will
shift to promoting alternative crops and building a legal
agricultural economy in a country without one for 30 years.
This marks the first time the United States has had an
agriculture strategy for Afghanistan.
The attempt to cut off the drug money represents a central
pillar of counter-insurgency strategy--deny financing to the
enemy. This shift is an overdue move that recognizes the
central role played by drug traffickers and drug money in the
deteriorating situation in Afghanistan. While it is too early
to judge whether this will be a watershed, it is not too early
to raise questions about whether the goals of the counter-
narcotics strategy can be achieved. Is it possible to slow the
flow of drug money to the insurgency, particularly in a country
where most transactions are conducted in cash and hidden behind
an ancient and secretive money transfer system? Does the U.S.
Government have the capacity and the will to provide the
hundreds more civilians required to carry out the second step
in the counter-narcotics program and transform a poppy-
dominated economy into one where legitimate agriculture can
thrive? Can our NATO allies be counted on to step up their
contributions on the military and civilian sides at a time when
support for the war is waning in most European countries and
Canada?
The ability to stop--or at least slow--the money going to
the insurgency will play a critical role in determining whether
we can carve out the space required to provide the security and
economic development necessary to bring a level of stability to
Afghanistan that will prevent it from once again being a safe
haven for those who plot attacks against the United States and
our allies. But counter-narcotics alone will not win the war.
The new strategy is one aspect, albeit an important one, of the
administration's decision to move troops into Afghan villages
and shift more resources to building a functioning and legal
economy.
The scope of development needed to create jobs, promote
alternatives to growing poppy and train Afghan security forces
is enormous. Unlike Iraq, Afghanistan is not a reconstruction
project--it is a construction project, starting almost from
scratch in a country that will probably remain poverty-stricken
no matter how much the U.S. and the international community
accomplish in the coming years.
The administration has raised the stakes by transforming
the Afghan war from a limited intervention into a more
ambitious and potentially risky counter-insurgency. This
transformation raises its own set of questions. How much can
any amount of effort by the United States and its allies
transform the politics and society of Afghanistan? Why is the
United States becoming more deeply involved in Afghanistan
nearly eight years after the invasion? Does the American public
understand and support the sacrifices that will be required to
finish the job? Even defining success remains elusive: Is it to
build a nation or just to keep the jihadists from using a
nation as a sanctuary?
These core questions about commitment and sacrifice can be
answered only through a rigorous and informed national debate,
sparked by Congress with the support of the administration. The
American people need to understand the extent of our country's
involvement in Afghanistan and neighboring Pakistan and try to
reach a consensus to help guide policymakers and the President
and his team.
The Senate Foreign Relations Committee has held a series of
public hearings in recent months focusing on the evolving
policies toward Afghanistan and Pakistan. In an effort to
stimulate a larger debate, the committee plans another round of
hearings, beginning soon after Congress returns from the Labor
Day recess. As part of that effort, the committee staff
prepared this report examining the new counter-narcotics
strategy as a way of evaluating the overall policy being put in
place by the administration in Afghanistan. The report examines
the counter-narcotics policy and addresses these questions in
six chapters, followed by a set of recommendations.
1. The Fruits of Neglect--Recent Rise of the Drug Trade
2. Why Eradication Failed--2001 to 2008
3. How the Taliban Exploits the Drug Trade
4. Implementing New Strategies for Afghanistan
5. A Metaphor for War--the Battle of Marjah
6. The Missing Civilian Component
7. Recommendations for Afghanistan
----------
1. The Fruits of Neglect--Recent Rise of the Drug Trade
Beyond the tragic fact that Afghan opium is flooding
Europe, the real problem for U.S. and coalition forces
is the amount of drug profits being paid in taxes and
protection money to the Taliban and other insurgents.
Stemming this flow requires an understanding of the
evolution of the drug trade in Afghanistan over the past three
decades. It also requires the overdue acknowledgement that the
drug situation has deteriorated sharply under the stewardship
of the Government of President Hamid Karzai, the United States
and NATO-led International Security Assistance Force (ISAF).
Opium poppies have been grown in Afghanistan throughout its
history. Hearty plants that thrive even under harsh conditions,
they are cultivated for their gummy sap, which is converted
into opium paste. Some paste is processed into heroin at dozens
of crude labs in Afghanistan and the rest is smuggled out along
with the processed heroin via three principal routes: Pakistan
in the west, Iran in the east and Tajikistan in the north.
The United Nations Office on Drugs and Crime (UNODC)
estimates that Afghanistan now produces more than 90 percent of
the world's opium. While the agency says that acreage under
cultivation dropped this year and more provinces are ``poppy
free,'' opium yield and the resulting profits in 2009 are
expected to remain about the same as in the last two years.
While opium poppies have a long history in Afghanistan, the
country was not always the world's biggest opium supplier. At
the time of Afghanistan's pro-Communist coup in 1978, Afghan
farmers were producing an estimated 300 tons of opium annually.
It was enough to satisfy local and regional demand and supply a
handful of heroin production labs that sold their product to
Western Europe. Most of the poppies were grown in the less
fertile areas of the northern part of the country because the
productive land in Helmand and other southern provinces was the
country's bread basket, producing enough wheat, fruit and
vegetables to make Afghanistan self-sufficient and account for
some exports.
In the period that followed the Soviet invasion of 1979,
Afghanistan was dragged through a decade of brutal warfare.
Livestock was killed, American-built irrigation systems from
the 1950s and 1960s were destroyed and roads were ruined. The
country's ability to grow food and get it to market plunged.
Desperate to earn money to pay for imported food, Afghan
farmers turned to the one product that grew with little water
and was relatively easy to transport--opium. Like a seesaw,
opium production rose as food production dropped.
Poppy remained the crop of choice under the warlords who
replaced the Soviets and the Taliban who took power in 1995.
Afghanistan produced 4,500 tons of opium in 1999, roughly 15
times the output of 20 years earlier. The huge increase sent
heroin cascading across Europe and the former Soviet Union,
leading to pressure on the Taliban to reduce production. Eager
to end its virtual isolation by the international community and
profit from its own stockpiles of opium, the Taliban announced
a ban on poppy cultivation in late 2000. The fundamentalists in
their black turbans enforced the fragile ban through a complex
process of persuasion, negotiation and coercion, resulting in a
sharp reduction in output to 185 tons in 2001. The shift was
praised by the United States and other countries, but it was
soon undone.
Unintended Consequences of the Invasion
Events in the fall of 2001 changed the equation, laying the
groundwork for the nexus between the drug trade, the insurgency
and government corruption that defines Afghanistan today. The
U.S. ouster of the Taliban had the unintended consequence of
eliminating the ban on cultivation. Poppy farmers were eager to
plant more crops to recoup losses incurred when the Taliban
stopped most production. According to the UNODC, production
jumped more than 16 fold to 3,400 tons for the harvest in the
fall of 2002. Afghanistan was back in the opium business. The
dramatic rebound in just a year demonstrated the resilience of
poppy farmers who had few other ways to feed their families.
Another factor influenced the escalation of opium
production. After the invasion, the Central Intelligence Agency
and U.S. Special Forces put regional and local warlords and
militia commanders on their payroll to undermine the Taliban
regime and go after Al Qaeda operatives. Despite alliances with
the opium trade, many of these warlords later traded on their
stature as U.S. allies to take senior positions in the new
Afghan Government, laying the groundwork for the corrupt nexus
between drugs and authority that pervades the power structure
today.
Barnett R. Rubin, a scholar of Afghanistan at New York
University and now a senior advisor to Ambassador Richard C.
Holbrooke, the administration's envoy to Afghanistan and
Pakistan, saw this transition as a defining moment in the
evolution of the drug trade and governance in Afghanistan.
``The empowerment and enrichment of the warlords who allied
with the United States in the anti-Taliban efforts, and whose
weapons and authority now enabled them to tax and protect opium
traffickers, provided the trade with powerful new protectors,''
he wrote in a 2004 paper, Road to Ruin: Afghanistan's Booming
Opium Industry. ``Opium production immediately resumed the
growth path it was on before the Taliban ban.''
Total income from producing, processing and trafficking in
opium in 2003 had soared to $2.3 billion, roughly half of the
country's legal and illegal gross domestic product. By the
following year, some U.S. leaders recognized that drugs were
propelling the country down the wrong path. Zalmay Khalilzad,
the previous administration's special envoy and ambassador to
Afghanistan, acknowledged at the time that ``rather than
getting better, it's gotten worse. There is a potential for
drugs overwhelming the institutions--a sort of narco-state.''
Despite the warning signals, the U.S. military and CIA did
not consider counter-narcotics part of their mission and failed
to recognize the early signs linking the drug traffickers to
the insurgents. Little Afghan heroin makes it to the United
States, but Afghan heroin floods British streets, so the
British took the lead on developing a counter-narcotics
strategy for Afghanistan. But their effort suffered from
chronic personnel shortages and contradictory policies among
ISAF members. For example, some countries prohibited their
troops from carrying out operations against the drug trade.
See No Evil
American troops had the option of destroying drug shipments
and supplies encountered in the larger context of patrols and
fighting, but there were no direct orders compelling them to do
so--and it is clear that many commanders and others saw drugs
as a distraction. In the best-selling book State of War, author
James Risen described an Army Green Beret who said he was
``specifically ordered to ignore heroin and opium when he and
his unit discovered them on patrol.'' On a broader level,
congressional committees received reports that U.S. forces were
refusing to disrupt drug sales and shipments and rebuffing
requests from the Drug Enforcement Administration for
reinforcements to go after major drug kingpins.
Efforts by officials outside the military to move narcotics
up the priority list fell on deaf ears. In late 2004, Assistant
Secretary of State Bobby Charles, who ran the department's
Bureau for International Narcotics and Law Enforcement, was
growing increasingly concerned over the worsening drug crisis
in Afghanistan. ``We needed to be pro-active,'' he recalled in
an interview with the committee staff. ``If we let it go for
even one year, I knew we would lose it.''
At one point, Charles argued to Secretary of Defense Donald
Rumsfeld that stopping the drug trade should be made an
explicit part of the military mission in Afghanistan. Charles
remembers that Rumsfeld initially seemed to agree, but the
Pentagon's senior generals, already suffering from a drain on
resources for the Iraq war, resisted strongly. Charles said
Rumsfeld turned him down. It was, Charles says, a monumental
error that opened the door for the steadily rising opium
production and deepening ties between the drug traffickers and
the insurgency.
The difficulty of persuading the U.S. military to play a
role in counter-narcotics persisted throughout the previous
administration. Even after NATO agreed that drug labs could be
attacked in late 2008, the Pentagon resisted and no effort was
approved until early 2009, according to a former senior U.S.
general involved in the discussion. Instead the focus was on
eradicating poppy cultivation, a half-step that had little
chance of success from the outset in part because of
circumstances unique to Afghanistan and in part because of a
lack of resources.
----------
2. Why Eradication Failed--2001 to 2008
The resurgence of Afghanistan's poppy culture in the
years after the U.S. invasion forced U.S. civilian
agencies to get more deeply involved in the counter-
narcotics effort even as the military ignored the
problem. The effort failed and has been rejected by the
new administration.
Eradication in particular was seen as a silver bullet or at
least the centerpiece of counter-narcotics efforts by many in
the previous administration, including former U.S. Ambassador
to Afghanistan William Wood, who largely based his assessment
on U.S. success in Colombia where he was ambassador from 2003
to 2007.
The State Department's counter-narcotics strategy for
Afghanistan, which was developed in 2004 and retooled in 2007,
focused on five pillars: Poppy elimination and eradication;
interdiction and law enforcement; justice reform and
prosecution; public information; and alternative crop
development. Each pillar, however, was not weighted equally in
terms of attention and resources, with alternative livelihoods
receiving the short end of the stick and eradication becoming
the primary focus. Perhaps more important, success was measured
primarily on levels of cultivation in a given year and few
resources were devoted to incorporating a counter-narcotics
strategy into a broader state-building and economic development
policy.
Early signs of progress were misunderstood. Eradication's
supporters argued that they were winning the war against drugs
when the 2005 poppy harvest turned out to be smaller than the
previous year. Unfortunately, the reduction was primarily
because of poor weather and the harvest was back up the
following year. The fact is that U.S. counter-narcotics
efforts--with eradication in the driver's seat--were
artificially separated from broader efforts to defeat the
insurgency and even drove some farmers and landowners into the
arms of the Taliban because it failed to provide alternative
livelihood options.
Grounding Eradication
The Afghan Government agreed to the concept of eradication,
but it insisted that eradication be delivered only by manual or
mechanical ground-based means. The effect was to reduce efforts
to men dragging metal bars across poppy fields behind all-
terrain vehicles to knock down plants. It was inefficient, slow
and dangerous. Crews often came under fire from the Taliban and
gunmen working directly for the traffickers and growers. In
2007, the latest year for complete statistics, the UNODC
reported that 15 Afghan police officers were killed and 31 were
injured during eradication campaigns.
The most effective method for widespread eradication is
widely understood to be aerial spraying, the technique used to
eliminate huge portions of Colombia's coca crop. Crop dusters
can drop herbicides on vast fields in a short time, outside the
range of insurgent fire. But the Afghan Government, Britain and
other countries opposed aerial spraying for a variety of
reasons. Explaining the benefits and safety of spraying would
be difficult in a country with a literacy rate of only 28
percent. More significantly, the tactic would give the Taliban
a dynamic propaganda victory. ``If we began aerial spraying of
poppy crops, every birth defect in Afghanistan would be blamed
on the United States,'' said Ronald Neumann, a former U.S.
ambassador to Afghanistan. ``Afghans also still remember that
the Russians dropped small bombs disguised as toys. Every time
a child picked one up, death and destruction resulted. The
general belief is that bad things come from planes.''
Others offer a more sinister interpretation of the refusal
of Afghan officials to allow aerial spraying. In 2004 and 2005,
Charles and other State Department counter-narcotics officials
thought that they had reached an agreement among a large number
of influential clerics and tribal leaders in southern
Afghanistan to support aerial spraying. President Karzai agreed
tentatively to a pilot project. But the Aghan cabinet rejected
the idea outright, banning all forms of aerial spraying. ``Some
of them were protecting the source of their own wealth,'' said
Charles in the recent interview.
Gone Today, Here Tomorrow
Without access to aerial spraying, eradication does not
work without the sort of massive show of force and persuasion
demonstrated by the Taliban in 2000. Research shows that
without alternative crops, farmers invariably return to poppy
once the eradication teams are gone. Half the villages where
the U.S. eradicated poppy in 2007 simply planted the crop again
in the fall of 2008. In some cases, farmers increased the land
under poppy cultivation to make up for losses from crops
destroyed the previous year. Eradication also has the added
disadvantage of imposing the hardship on the people at the
bottom of the pyramid--farmers who have to harvest crops to
feed their families and pay debts--rather than targeting the
traffickers and their protectors.
Conventional wisdom holds that most opium farmers likely
would stop opium poppy cultivation if they had access to an
alternate livelihood, but few have realistic substitutes
available to test the theory. Moreover, the lack of roads,
irrigation systems, and storage facilities makes growing wheat,
fruits, vegetables and other perishables extremely difficult.
Many peasant farmers find themselves trapped by debt and feel
they are left with no alternative but to grow opium poppy,
which can be stored for long periods and is more easily
transported. Others grow poppy simply because it pays well (see
Appendix 1).
The Taliban and its associates in the drug trade make the
poppy business as easy as possible by offering ``one-stop
shopping.'' At the start of planting season in the fall, they
provide farmers with loans to buy poppy seeds and feed their
families over the winter. When the growers cultivate and
harvest the poppy in the spring, the Taliban provides security
and workers to help in the fields. At the end of the harvest,
the traffickers return to collect the poppy and pay the farmers
the remainder of their money. The Taliban and traffickers
conduct all of their business at the farm gate, so the farmers
never have to worry about transporting or selling their crop.
There has been some success. The number of poppy-free
provinces has dramatically increased from 0 in 2004 to 18 in
2008 to an expected 22 or 23 later this year. But David
Mansfield and Adam Pain, counter-narcotics and rural livelihood
experts with the Afghanistan Research and Evaluation Unit,
argue that measuring success based on the number of poppy-free
provinces confuses correlation with causality and ``reflects a
fundamental failure to understand the different determinants of
cultivation and how these vary by location and socioeconomic
group.''
Officials with the UNODC in Kabul and American experts said
the opium yield for 2008 was about the same as the previous
year because farmers had been using high-quality fertilizer
smuggled in from Pakistan to produce more poppies per acre.
They predict a similar high yield this year once the harvest
estimate is completed, particularly in the volatile south. In a
report issued in June, the UNODC highlighted the link between
drug-producing areas and the insurgency, saying: ``Opium poppy
cultivation continued to be associated with insecurity. Almost
the entire opium poppy-cultivating area was located in regions
characterized by high levels of insecurity.''
A Dramatic Change of Strategy
In late June, Ambassador Holbrooke announced that the
administration was abandoning wide-scale eradication at the G-8
conference in Trieste, Italy. He said that the United States
would shift from its strategy from destroying poppy fields to
interdicting drug supplies, destroying processing labs that
turn opium into heroin, and promoting alternative crops. He
also said the State Department would phase out funding for
eradication, transferring the money to agriculture assistance
efforts.
Eradication has proven an expensive failure. DynCorp
International, a major U.S. Government contractor, has been
paid $35 million to $45 million a year to supervise manual
eradication efforts most often carried out by Afghans paid a
few dollars a day. In addition, the State Department has been
spending around $100 million annually on aircraft used in
eradication and counter-narcotics programs.
But complete elimination of eradication programs is
regarded by most military commanders and civilian officials as
a step too far. They said that Afghan governors should retain
the authority to continue to conduct poppy eradication. Ample
evidence shows that the credible threat of eradication can
persuade farmers to cultivate legal crops in areas where there
is good security and at least fair governance.
``Eradication should be part of a comprehensive counter-
narcotics strategy,'' said a senior U.S. military officer who
works in Helmand Province, the biggest poppy-producing part of
Afghanistan and the place where the governor has used the
threat effectively in his campaign to replace poppies with
legitimate crops.
----------
3. How the Taliban Exploits the Drug Trade
As it reconstituted from a defeated government to an
insurgency force, the Taliban developed a sophisticated
multi-pronged scheme for raising money from the opium
trade. The money has played a critical role in
financing the resurgence of the militants.
The adoption of the new financing strategy coincided
roughly with the increase in attacks on U.S. and coalition
forces in 2006. Some, like journalist Gretchen Peters, the
author of the recent book Seeds of Terror, say the Taliban has
transformed itself into something closer to the Mafia than a
traditional insurgency, particularly in its stronghold of
southern Afghanistan. ``The Sopranos are the real model for the
Taliban,'' Peters told the committee staff. ``They are driven
by economic factors. Remember, the Mafia started out as an
insurgency in Sicily.''
Like the Mafia, the Taliban is not a monolith, but a
collection of insurgent groups--``families'' in mob parlance--
operating with varying degrees of autonomy in Afghanistan and
Pakistan. Central figures in the fallen Taliban government like
Mullah Omar control the insurgency in Pashtun-dominated
southern Afghanistan and pockets in the north and east.
Factions like the network of warlord Jalaluddin Haqqani operate
in eastern Afghanistan and western Pakistan. These insurgent
groups formed alliances with drug traffickers that are
opportunistic and tactical, rather than strategic. For the
insurgents, the cooperation with the traffickers is chiefly to
raise money to finance operations, though there are reports
that insurgent leaders have grown rich off the drug trade. For
the traffickers, they pay for protection and intimidation if it
is required.
To raise money, the Taliban runs a sophisticated protection
racket for poppy farmers and drug traffickers, collecting taxes
from the farmers and payoffs from the traffickers for
transporting the drugs through insurgent-controlled areas. They
also demand large payments to the group's exiled leadership.
The payment system can be broken down this way:
Taliban commanders charge poppy farmers a 10 percent tax,
called an ushr, on the product at the farm gate.
Taliban fighters augment their pay by working in the poppy
fields during harvest.
Small traders who collect opium paste from the farmers pay
the Taliban a tax, and truckers pay them a transit
tariff for each kilo of opium paste or heroin smuggled
out of the country.
The Taliban is paid for protecting the labs where the paste
is turned into heroin.
Finally, the biggest source of drug money for the Taliban
is the regular payments made by large drug trafficking
organizations to the Quetta shura, the governing body
of the Taliban whose leaders live in Quetta, the
Pakistani border city.
Where Does the Money Go?
No one knows how much money the Taliban collects from the
drug trade. The UNODC estimates that the total value of Afghan
drugs last year was in the range of $3 billion, which would be
the equivalent of 25 percent of the country's current gross
domestic product if all the money returned to Afghanistan. But
there is no effective mechanism for monitoring how much of that
money finds its way back, how much goes to the Taliban and how
much is siphoned off by corrupt officials and stashed outside
the country. Afghanistan is a still a predominantly cash
economy in which most transactions are executed by hawala
dealers, who operate an age-old informal money transfer system
that moves money around the country and throughout the world
cheaply and quickly, leaving little paper trail (see Appendix
2).
The result is that estimates of drug money going to the
insurgency vary wildly. U.S. officials in Afghanistan said the
CIA and the Pentagon's Defense Intelligence Agency estimate
annual Taliban revenue from drugs at about $70 million a year.
Outsiders like Peters have put the figure as high as $500
million a year. In 2008, the UNODC estimated that the Taliban
and militant offshoots collected $400 million in taxes and
protection payments from the drug trade.
But doubts crept in among senior UNODC analysts, so this
year they revised the way they calculated the drug proceeds.
Later this summer, the agency plans to release a new estimate
that will put the amount of drug payments in taxes and
protection money to the Taliban at around $125 million. In
explaining the sharp disparity, officials at the agency's Kabul
office said they had miscalculated by extrapolating figures
from the opium-producing, Taliban-controlled provinces of
Kandahar and Helmand to cover the entire country.
The insurgency is a relatively cheap war for the Taliban to
fight, and $125 million a year buys a lot of rifles, explosives
and rocket-propelled grenade launchers and pays a lot of foot
soldiers. American commanders dub the fighters ``$10 Taliban''
because that is what they are paid for a day's fighting--more
than most policemen earn. They can collect double or triple pay
for planting an improvised explosive device.
Surprisingly, there is no evidence that any significant
amount of the drug proceeds go to Al Qaeda. Contrary to
conventional wisdom, numerous money laundering and counter-
narcotics experts with the United States Government in
Afghanistan and Washington said flatly that they have seen no
indication of the Taliban or traffickers paying off Al Qaeda
forces left inside the country. ``A lot of people have been
looking for an Al Qaeda role in drug trafficking and it's not
really there,'' said a senior State Department official
involved in the region.
Instead, officials in Afghanistan and Washington said the
remnants of Osama bin Laden's organization in Afghanistan, like
the elements of the terrorist group inside Pakistan, are
financed primarily by contributions from wealthy individuals
and charities from the Persian Gulf countries and some
nongovernmental organizations working inside Afghanistan.
The Scope of Corruption
Just as getting a handle on the amount of drug money
flowing to insurgents is proving difficult, so is building
cases against major traffickers and corrupt government
officials. The United States and the United Kingdom have
trained specially vetted Afghans to prosecute and preside over
trials in a special drug court. In the year that ended in
March, the court convicted 259 people on drug charges, which
carry a minimum sentence of 10 years in prison. But those
convicted were low-level to medium-level figures; no major
traffickers have even been arrested in Afghanistan since 2006.
The court itself ran into some trouble recently when the chief
judge was dismissed after he failed the polygraph test
administered every 90 days to the vetted personnel.
Afghanistan has long had a reputation for low-level
corruption, what many people call ``functional corruption.''
Local political leaders required small payments for services,
but people tended to benefit because the locals returned
something of greater value to them. In recent years, however,
corruption has become more systematic and greedy leaders at the
district, provincial and national levels have taken payoffs
without returning anything to the people.
American officials told committee staff about several
Afghan officials suspected of corruption--a governor who is
expected to be fired after the August 20 election, two police
chiefs on whom the U.S. military has accumulated extensive
dossiers outlining collaboration with drug traffickers and a
handful of senior officials at ministries in Kabul. A senior
State Department official involved in Afghanistan told the
committee staff that police chiefs in poppy-dominated districts
pay as much as $100,000 to get appointed to a job that pays
$150 a month, with the knowledge that they will recoup far more
in bribes and kickbacks. Yet efforts to track down illicit
assets have gone nowhere, according to U.S. and United Nations
officials.
Nowhere is the corruption worse than in the huge payoffs
from drug traffickers. In a country where the drug business is
so pervasive and laws so difficult to enforce, accusing someone
of drug dealing is easy--proving or disproving the charges is
tough. A frequent target of such accusations is Ahmed Wali
Karzai, the powerful head of the Kandahar Provincial Council
and one of the President's brothers. Stories about him are
legendary--how Afghan police and military commanders who seize
drugs in southern Afghanistan are told by Ahmed Wali to return
them to the traffickers, how he arranged the imprisonment of a
DEA informant who had tipped the Americans to a drug-laden
truck near Kabul, how his accusers often turn up dead. No proof
has surfaced, and he and President Karzai have denied the
accusations.
Ahmed Wali Karzai's reputation came up not long ago when a
senior U.S. diplomat, his British counterpart and the country
chiefs of their two intelligence services met with President
Karzai. The U.S. diplomat told the committee staff that he
suggested to the President that his brother was involved in
drugs and that perhaps he should be sent out of the country as
an ambassador.
``Is there hard evidence that my brother has drug links?''
asked President Karzai, according to the diplomat.
``There is no evidence in a judicial sense,'' said the
diplomat. ``There is rumor and circumstantial evidence.''
Last year, the Afghan President offered a sweeping denial
to the German magazine Der Spiegel. ``This is really a lot of
rubbish,'' he said. ``I have thoroughly investigated all of
these allegations and of course none of them are true.''
Questions have been raised in the past about whether the
United States has the political will to go after influential
members of the Government. Officials in Afghanistan said they
have adopted a tougher line and expressed a willingness to
pursue senior government officials, provided the evidence is
available. At a recent interagency meeting to discuss the new
initiative, a British official asked at what level the
investigators would stop. ``We said, if you have evidence, it
doesn't matter,'' a U.S. official told the committee staff.
``The new political leadership in the U.S. embassy has told us
there is no red line on anybody for corruption.''
New Tactics in the Field
The new consensus among U.S. military commanders in
Afghanistan that the war cannot be won without severing the
links between the drug traffickers, insurgents and corrupt
government officials began to get traction as the
administration increased resources for the war. When U.S.
Marines descended upon the volatile Helmand River Valley in
early July, the operation represented the first major test of
the new counter-insurgency strategy and counter-narcotics
efforts.
The 4,000 troops from the 2nd Marine Expeditionary Brigade,
part of the first wave of 21,000 additional troops arriving
this year, have pushed into areas where the U.S. and NATO have
had little presence in the previous 8 years. Rather than
killing Taliban fighters, the Marines are focused on
implementing a counter-insurgency strategy by protecting
civilians from the Taliban and staying long enough to restore
government services and promote alternatives to poppy
production. They will be, in effect, sitting amidst the most
fertile poppy fields and hoping to hold their ground and force
the growers into marginal areas where it is harder to cultivate
poppies and riskier to get the opium to market.
In a more dramatic example of the new counter-narcotics
strategy in Helmand, the U.S. military bombed an estimated 300
tons of poppy seeds in a dusty field in late July. The aircraft
dropped a series of 1,000-pound bombs on the mounds of seeds
and followed with strikes from helicopters, according to a CNN
reporter who watched the destruction.
The Taliban has retreated and regrouped in response to the
increase in U.S. troops, but it is not on the run. By providing
a sustained presence in pockets that have been controlled by
the Taliban and adopting a tough approach on narcotics,
however, the Marines will open the door to civilian workers who
can concentrate on developing alternatives to poppy. The new
security should also permit the first permanent DEA presence in
Helmand Province. Up until now, security conditions have kept
the drug agency from maintaining a post within the province
that produces half the country's opium. DEA officials say they
hope to get four or five agents up and running in Helmand
Province as part of a major increase in resources. By the end
of 2009, DEA officials said the number of investigators in
Afghanistan will rise to 55 from 5 in addition to rotating DEA
paramilitary teams already at work in the country.
If the operation in Helmand Province displaces the Taliban
and disconnects the insurgency from one of its prime sources of
drugs, it will represent a critical step in implementing the
broad counter-insurgency strategy advocated by the
administration. But it is only a start. The United States and
its allies must develop lasting alternatives to poppy
cultivation that will provide an income to farmers, a challenge
that requires a big increase in agricultural assistance, road
building and water for irrigation--and the people to oversee
those projects.
``If we're going to bleed this summer to secure these
areas, if soldiers and Marines are going to die, we need a plan
to come in behind and build long-term security through
development,'' said Army Brig. Gen. John W. Nicholson Jr., the
deputy commander for the six tough provinces that comprise
Regional Command South.
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4. Implementing New Strategies for Afghanistan
Fighting the drug traffickers who help finance the
Taliban and similar groups is one of the priorities of
the new strategy in Afghanistan. Military officers now
regard it as part of the mission.
It was not too long ago that American commanders were
convinced that the drug problem in Afghanistan was not a
military issue. With limited resources, they were
understandably worried about what they called ``mission
creep.'' Current U.S. Ambassador to Afghanistan Karl
Eikenberry, a retired lieutenant general, was wary of engaging
troops in counter-narcotics efforts when he was the top
military commander in Afghanistan as recently as 2007. Now he
says the strategy has evolved, and he embraces the plan to
break the links between traffickers and the insurgency. ``The
narcotics trade is not only a significant source of funding for
the insurgency, but also undermines legitimate political and
economic development by promoting a culture of corruption and
squeezing out licit agricultural growth,'' Eikenberry said in
an email to the committee staff.
Commanders on the ground and the Pentagon now view the war
on Afghan drugs as an integral part of the mission, and it is
being played out at several locations.
Bagram Air Base lies between mountains and desert 25 miles
northeast of Kabul. During the 1980s, it was the main staging
area for the Soviets. After the U.S. invasion, Bagram was
updated with new buildings, runways and barracks to serve as
the bustling U.S. operations center. Tucked away in one of the
nondescript buildings is the Afghan Threat Finance Cell (ATFC),
a key weapon in the new phase of the war.
The ATFC is modeled after an operation set up in 2005 in
Iraq to choke off funds going to Al Qaeda and militias like the
Mahdi army of anti-American cleric Moqtada al-Sadr. The Afghan
version was established with a skeleton crew earlier this year
with the dual mission of disrupting the trafficking networks
supporting the insurgents and collecting information on senior
Afghan Government officials suspected of corruption. So far,
only about 15 people are in place, but the eventual staff of 60
is expected to reflect an interagency approach--they will come
from the Treasury Department, DEA, the FBI and the Defense
Intelligence Agency. By the end of 2009, the unit expects to
have analysts and investigators poring over evidence gathered
by the military, Afghan police and U.S. and international law
enforcement and intelligence agencies.
``There is a growing realization that the way to attack the
Taliban is to go at the financial network behind the
insurgency,'' one of the financial experts setting up the ATFC
told the committee staff. ``This is largely a self-financed
insurgency, and the number one source of money is drug money.''
The unit is part of ramping up to gather intelligence on
the nexus between the drug traffickers and insurgents. Another
element operates inside an Afghan army compound in Kabul, where
the DEA and private contractors have spent months vetting and
training Afghan police to join the counter-narcotics police.
Training the Afghan army and police is a core goal for the
United States and its NATO allies. A key part of the program is
developing enough counter-narcotics officers to station the
specialized units within police departments in every district
across the country. So far 2,000 policemen have passed through
the training and been dispatched.
In addition, DEA has worked with the Afghan Ministry of
Interior to select and train members of three elite forces--the
special investigative unit, which so far has 56 officers who
have submitted to polygraphs and trained at the DEA academy in
Quantico, Virginia, to investigate drug networks; the national
interdiction unit, which is comprised of about 300 paramilitary
police officers who mount raids by air and ground on suspected
drug centers and traffickers; and the technical investigative
unit, whose members are trained to intercept telephone calls
involving suspected illicit transactions.
``The top priority is the drug trafficking organizations
linked to the insurgency,'' said Michael Marsac, the DEA
country attache as he guided the committee staff through the
training facilities in late June. ``There are two types of drug
organizations. There are drug traffickers who are supporting
the insurgency and there are insurgents who use drugs to fund
their operations. We are targeting both.''
Gathering hard evidence is difficult in Afghanistan. The
police are only beginning to develop the skills for the
painstaking investigations required to collect and analyze
information. Bribes and intimidation of police, from commanders
on down to rank and file cops, are stock in trade for drug
traffickers and their protectors. Still, Marsac said he is
optimistic and pointed to the new telephone monitoring
capability as an important tool.
Last December 18, the switch was flipped to allow the
monitoring of cellular phones, the preferred method of
communication in a country where landlines are rare. The
eavesdropping is sanctioned under Afghan law so long as it is
approved by a special court. By mid-summer, 100 Afghan
nationals fluent in the many languages and dialects used in the
country were monitoring telephone calls involving suspected
drug and insurgent activity. The start has been rocky, with the
eavesdropping going fairly well in Kabul but suffering from
equipment difficulties and lack of electricity in other major
cities like Heart, Kandahar and Jalalabad.
Marsac described one notable success. Last February,
Taliban suicide bombers and gunmen attacked government
buildings at three sites in Kabul, killing 20 people and
wounding nearly 60. The attack was a complex and well-
coordinated operation that symbolized the country's
deteriorating security situation on the eve of a visit from
Ambassador Holbrooke.
A few days later, a special Afghan police unit working with
British troops to monitor cell phones in southern Afghanistan
picked up chatter about a second attack. The information was
relayed to the DEA-trained investigators in Kabul who tracked
the phone calls to an apartment in Kabul. Police kicked down
the door and arrested six additional suicide bombers.
``Remove Them from the Battlefield''
Soon a new task force targeting drug traffickers,
insurgents and corrupt officials is expected to begin formal
operations out of Kandahar Air Field in southern Afghanistan.
The unit will link the U.S. and British military with the DEA,
Britain's Serious Organized Crime Agency (SOCA) and police and
intelligence agencies from other countries. While the ATFC at
Bagram will primarily gather intelligence and build legal
cases, the Joint Interagency Task Force (JIATF) will go after
drug networks linked to the insurgency, interdict drug
shipments, destroy heroin labs and identify and arrest their
protectors in government.
The JIATF is awaiting formal approval in Washington and
London, but operations have been coordinated informally through
what officers involved call ``goodwill'' among British, U.S.
and Australian personnel. An investigator with SOCA involved in
the JIATF described the approach as a critical opportunity to
blend military and law enforcement expertise. ``In the past,
the military would have hit and evidence would not have been
collected,'' he explained. ``Now, with law enforcement present,
we are seizing the ledgers and other information to develop an
intelligence profile of the networks and the drug kingpins.''
An American military officer with the project was blunter,
telling the committee staff, ``Our long-term approach is to
identify the regional drug figures and corrupt government
officials and persuade them to choose legitimacy or remove them
from the battlefield.''
The Rules of Engagement, known as ROE, govern the conduct
of the U.S. military in Afghanistan, spelling out when and how
much force can be used on the battlefield. The precise rules
are classified, but two U.S. generals in Afghanistan said that
the ROE and the internationally recognized Law of War have been
interpreted to allow them to put drug traffickers with proven
links to the insurgency on a kill list, called the joint
integrated prioritized target list. The military places no
restrictions on the use of force with these selected targets,
which means they can be killed or captured on the battlefield;
it does not, however, authorize targeted assassinations away
from the battlefield. The generals said standards for getting
on the list require two verifiable human sources and
substantial additional evidence. Currently, there are roughly
50 major traffickers who contribute funds to the insurgency on
the target list.
``We have a list of 367 `kill or capture' targets,
including 50 nexus targets who link drugs and insurgency,'' one
of the officers explained to the committee staff.
The authorization for using lethal force on traffickers
caused a stir at NATO earlier this year when some countries
questioned whether the killing traffickers and destroying drug
labs complied with international law. Jaap de Hoop Scheffer,
secretary general of NATO at the time, said filters had been
put in place to make sure the alliance remains within the
bounds of the law.
Not every investigation will land someone on the hit list.
More often, information will be used to develop cases for
prosecution. American officials would like to put Afghanistan's
drug kingpins on trial in the United States, where they have
more confidence in the judicial system. But those efforts have
been largely blocked by the absence of an extradition treaty
that would allow Afghans to be transferred to the U.S., a
technique employed effectively against Colombian and Mexican
cartel bosses. Treaty negotiations have been stalled by
Afghanistan's insistence on reciprocity, which would allow
Kabul to seek extradition of Americans.
Responding to the Stalemate
The inaction has led to some creative responses by U.S. law
enforcement. In October 2008, agents from the DEA and Britain's
SOCA tricked Haji Juma Khan, a major kingpin linked to the
Taliban who ran his empire out of Quetta, into flying to
Indonesia. He was arrested upon arrival in Jakarta and, by
prearrangement, deported the next day to New York City, where
he is awaiting trial on charges of conspiracy to distribute
narcotics and supporting a terrorist organization. American
prosecutors say that he moved up to $1 billion worth of opium a
year, paying protection to the Taliban and bribes to officials
in Afghanistan, Pakistan and Iran. In a similar ruse, Haji
Bashi Noorzai, a big-time trafficker with ties to fugitive
Taliban leader Mullah Mohammad Omar, was lured to New York and
arrested on the pretense of meeting with U.S. officials to
discuss curbing poppy cultivation. Noorzai was convicted of
heroin smuggling and sentenced to life in prison on April 30.
Had either man been arrested in Afghanistan, they would
have wound up in a narcotics court system that is still being
developed, under the guidance of prosecutors and other advisers
from the U.S. and Britain. So far, the special drug court has
convicted low-level and mid-level dealers, but it has not
handled any cases against major figures because none has been
arrested. In addition to continuing to improve the court's
Afghan personnel, officials at the U.S. embassy said they need
a team of 10 to 15 experienced prosecutors and investigators to
build financial and drug cases against big traffickers.
No one from ATFC or JIATF said disrupting the drug networks
and their allies would be fast or easy. Along with the normal
difficulties of building a solid case, the investigators and
troops face the added obstacles of working in a place where the
courts are suspect, witnesses can be killed with impunity and
investigators face the threats associated with working in a war
zone.
Though the CIA has hundreds of employees in Afghanistan,
the new interagency groups are working to fill a gap left by
the absence of any concerted effort on the part of the
intelligence agency to monitor the money movement between
traffickers and insurgents, according to U.S. officials. ``I
have to ring their neck to get anything out of them,'' said a
senior official at the U.S. embassy in Kabul. ``If we don't get
a handle on the money, we will lose this war to corruption.''
The Regional Spillover--Problems in Pakistan
Afghanistan and Pakistan are separated by a 1,600-mile
border known as the Durand Line. The border is isolated, rugged
and crisscrossed by thousands of trails; it is well known that
militants cross with ease. Less publicized is the freedom of
movement enjoyed by drug smugglers, particularly along the 745-
mile stretch in the south. Afghanistan's virtually invisible
border with the Pakistani province of Baluchistan runs through
some of the most desolate and rugged wastelands on the planet,
making it ideal for transporting drugs out of Afghanistan and
bringing in the precursor chemicals used to process opium paste
into heroin. UN officials estimate that about a third of
Afghanistan's drug production exits through Pakistan, with most
moving from Helmand and Kandahar provinces via land to the
Makran Coast on the Arabian Sea for shipment throughout the
region by boat.
A recent Defense Department assessment found that the
Pakistani Government has a limited capability to conduct
counter-narcotics operations on the Makran Coast and in
Baluchistan because of the inhospitable terrain, limited
resources and lack of political will. The June 18 report was
sharply critical of Pakistan's primary Anti-Narcotics Force
(ANF), which is under the Ministry of Narcotics Control. ``Even
though the ANF is the premier counter-narcotics agency in
Pakistan, it currently does not have the manpower, nor willing
leadership, to effectively counteract the enormity of the
narcotics issues throughout the country,'' said the report.
``At this time, Pakistan counter-narcotics capabilities are
weak.''
A senior U.S. law enforcement official in the region told
the committee staff that cooperation between the United States
and the ANF is poor. He said major traffickers cross the border
from Afghanistan and operate with impunity in Quetta and other
Pakistani cities. ``They pick up the low-lying fruit,'' said
the official in describing the ANF tactics. ``We give them
leads on targets. We give them phone numbers of traffickers
that they should be interested in. We are constantly doing
that. We get smiles, a decent cup of tea, occasional reheated
sandwiches and assertions of progress, and we all leave with
smiles on our faces.''
The lack of cooperation is one reason that the leadership
of the exiled Taliban government resides safely in Quetta, the
capital of Baluchistan, outside the reach of U.S. forces and
flush with cash from the major drug traffickers in Kandahar and
Helmand provinces.
Beyond the Pakistan Border
The American focus on the southern border dates back to the
mujahedeen connections and it is now reinforced by the arrival
of 4,000 new troops. But the border on the north with
Tajikistan and Turkmenistan is equally porous and United
Nations and American officials estimate that another third of
Afghanistan's opium and heroin production goes out through the
northern route.
In Tajikistan, the biggest exit point, the United States
and the European Union have divided responsibility for working
with local authorities to train police and patrol the 835-mile
border with Afghanistan. But the mountainous terrain and
network of established smuggling trails makes stopping more
than a fraction of the drugs impossible, according to U.S.
officials in the region.
Poverty also encourages smuggling in Tajikistan, the
poorest of the former Soviet states, and it underscores the
need for economic development to avoid a failed state on the
northern border of Afghanistan. ``The current counter-narcotics
programs aren't well geared to tackle questions of development,
governance and corruption,'' said a senior U.S. official in
Tajikistan.
On Afghanistan's western border lies Iran, which the UNODC
says suffers from the highest per capita drug use in the world.
The UN agency estimates that another third or so of
Afghanistan's drug production is smuggled into Iran on its way
to Turkey and on to Europe, despite a lengthy wall extending
along part of the 945-mile border and efforts by the Iranian
army to stop the smugglers. The drugs enter Iran along trails
used by smugglers for centuries, carried by truck, car,
motorbikes, on foot and in caravans of camels. Iran has lost an
estimated 4,000 soldiers in battles with smugglers in the last
decade and its jails are filled with buyers, sellers and users
of opium, hashish and heroin.
----------
5. A Metaphor for War--The Battle of Marjah
A war is neither won nor lost in a single battle. But
three days of intense fighting in mid-May can be seen
as a demonstration of the new counter-narcotics
strategy and a metaphor for the larger war in
Afghanistan.
An analysis of the battle of Marjah early this summer
crystallizes the dilemma embodied in the administration's new
strategy: The operational tactics were extremely effective in
disrupting both the Taliban and drug traffickers, but the
results demonstrated that the U.S. and ISAF forces face a
formidable enemy that will not be defeated without a
substantial increase in military and civilian resources.
The village of Marjah in southern Afghanistan has long been
an insurgent stronghold and bustling hub of drug smuggling
about 15 miles southwest of Lashkar Gah, the capital of poppy-
rich Helmand Province. The Taliban felt safe gathering and
training there, and they often stored weapons and explosives in
the village bazaars.
In late April 2009, U.S. military intelligence picked up
information that a spectacular attack on Lashkar Gah had been
ordered by the Taliban's leadership in exile, safely ensconced
across the border in Quetta, Pakistan. The target appeared to
be Gulab Mangal, the new governor who was having some success
persuading farmers to turn away from poppy to other crops.
Marjah was designated by the Taliban leadership as the
staging ground for the attack, and fighters from across
Afghanistan and as far away as Waziristan in Pakistan began
filtering into the village. Along with the usual arsenal of AK-
47s, grenade launchers and explosives, they towed in four
Soviet-era anti-aircraft guns, a sign the operation was going
to be big.
As the contingent grew, the Taliban bosses in Quetta
pressed to launch the attack. But the local commanders insisted
on delaying because many of their fighters were working in the
fields, harvesting the last of the poppy crop. ``We still have
poppies in the field,'' one commander said in a conversation
picked up by military intelligence. ``We do it when we come
out.''
A Surprise Attack
As Afghan and U.S. troops prepared for their surprise
assault on Lashkar Gah, an opportune distraction occurred.
British forces killed a local tribal leader in an unrelated
skirmish, causing the Taliban to postpone the attack for three
days of funeral services for the leader, who had ties to the
insurgency. The Taliban fighters were in the midst of the
second night of mourning on May 19 when they heard the
prodigious thumping of a fleet of military helicopters
approaching. Within minutes, the night sky was ablaze with the
first shots in what would become a fierce three-day firefight
on a deadly piece of ground not far from the border with
Pakistan.
The composition of the coalition force that attacked Marjah
says a lot about how far we have come in Afghanistan. Eighty
percent of the 216 troops were American-trained commandos from
the Afghan National Army. They were augmented by U.S. Special
Forces and NATO soldiers. The presence of a 12-man DEA
paramilitary team also reflected a new level of cooperation
between the military and law enforcement; the DEA was there to
identify the drugs and processing chemicals that intelligence
had said were hidden in the local bazaars.
After three days of intense fighting, about 60 militants
lay dead and coalition forces had seized roughly 100 tons of
heroin, hashish, opium paste, poppy seeds and precursor
chemicals used to turn opium into heroin. The troops also
uncovered a cache of weapons, suicide belts and explosives as
well as sophisticated communications equipment inside the opium
bazaar, indicating that the Taliban had used it as a command
center.
The haul was dragged into a huge pile on the outskirts of
the town and plans were made to have a jet fly over and bomb
the material. But a senior U.S. military officer said a
targeting officer determined that the resulting explosion would
be the equivalent of an 80,000-pound bomb, which would have
wiped out everything in a wide swath. So the cache was divided
into smaller piles and blown up from the ground.
A potentially bigger prize eluded the troops. The Taliban
had defended a second bazaar deeper within Marjah with
ferocity. The American general who commanded the attack told
the committee staff that he sought air support and
reinforcements from coalition command in Kabul and the U.S.
military in Kandahar to go after the second bazaar, but he was
told that there was no help available. So the coalition troops
pulled back and their commanders watched the next day via
aerial surveillance as trucks left the untouched bazaar,
carrying away whatever weapons and drugs the Taliban had fought
so hard to defend.
The Pluses and Minuses of Marjah
There is much to praise in the battle of Marjah, not least
the performance of Afghan commandos. Creating a credible
national army and police force is central to any exit strategy.
In addition, the DEA agents helped identify vast quantities of
drugs and chemicals, an example of overdue cooperation between
the military and law enforcement. Finally, along with stopping
a Taliban attack, the outcome hit the insurgency in the pocket
book--the supply of opium and heroin dropped noticeably in the
weeks that followed, which meant less money for the militants.
``Marjah was a nexus target,'' said David Wright, a senior
European Union official training Afghan counter-narcotics
police in Helmand Province. ``A year ago, they wouldn't have
done that operation.''
There is reason for concern, too. The inability to muster
the resources to complete the attack is troubling, both with
regard to the specific battle and to the larger war. The
Taliban and its various offshoots have proven to be a
resourceful enemy, capable of retreating and regrouping. In
fact, a 700-strong contingent of British, Danish and Afghan
troops had executed a similar attack on Marjah just two months
earlier and the Taliban had returned almost overnight.
Plus, there is plenty more heroin in the pipeline--while
eradication efforts have reduced the planted acreage in the
poppy centers of southern Afghanistan, yields there are up
sharply because farmers have used fertilizer smuggled in from
Pakistan. Then there is the matter of who owns the drugs
destroyed in Marjah. In a different place, the DEA would be
unraveling a trail to the owner. But the DEA does not have a
single agent in Helmand Province and investigative efforts are
nonexistent so far, though U.S. military and law enforcement
officials say there is strong evidence the drugs belonged to a
former police chief now living in Kabul.
At least as serious in the long term, there are not enough
civilian resources yet in Helmand and Kandahar provinces to
come in behind the troops to provide the economic development
required to consolidate any future military gains and achieve
something resembling a lasting victory. Despite commitments,
the State Department and U.S. Agency for International
Development have not added the new staff that was promised
since the Marines arrived earlier this summer, according to
interviews and published accounts.
Similarly, while Canadian, Dutch and British soldiers have
shouldered a heavy burden and sustained substantial casualties
in southern Afghanistan, many European Union countries have
failed to fulfill pledges to provide staff for non-military
functions. For example, the EU committed to provide 400 people
to train Afghan police last year, but the actual number is
under 200, according to the European Council on Foreign
Relations. Now there are concerns that troops and civilians may
be reduced in the future because the war is unpopular in most
European countries as well as Canada.
----------
6. The Missing Civilian Component
The counter-insurgency doctrine laid out in the Army
and Marine Corps Counterinsurgency Field Manual
specifies that the military can provide 20 percent of
the solution, but the civilian side must provide the
remaining 80 percent.
President Obama implicitly recognized the importance of the
civilian contribution when he divided his plan for Afghanistan
into four tasks: (1) disrupt the insurgent networks capable of
planning attacks against the U.S. and its allies; (2) promote a
more accountable and effective Afghan Government; (3) build the
Afghan military and police to a level of self sufficiency; and
(4) persuade NATO allies and other countries to contribute
under the auspices of the United Nations. This course of action
recognizes that the surge in military force needs to be
synthesized with a strategic program that protects the Afghan
population and provides an alternative not just to poppy
cultivation but to the Taliban and its insurgent allies.
None of these tasks can be accomplished easily, and none
without the support of the Afghan people. Most Afghans welcomed
U.S. troops when they arrived and few want a return of the
Taliban's harsh rule. But polls show a sharp drop in support
for the United States as civilian casualties and violence have
increased, the foreigners have stayed longer than expected and
economic development has lagged. Similarly, the faith of
Afghans in their own government has plunged, primarily because
of what they see as its inability to provide security and the
unprecedented spread of corruption. A poll earlier this year by
ABC-TV and the BBC found that 85 percent of Afghans call
government corruption a problem; 63 percent say it is a big
problem.
A Verdict on Kabul and Washington
On August 20, Afghans will go to the polls for presidential
and provincial elections. Many people see the vote as a
referendum on the legitimacy of the Karzai Government, which
has been so thoroughly penetrated by the drug economy that
Secretary of State Hillary Clinton referred to Afghanistan as a
``narco-state'' in her confirmation testimony in January, a
tough assessment echoed by some and disputed by others. For
many voters, their decision to vote for Karzai will rest in
good part on whether they blame or credit Karzai and the
international community for levels of poppy cultivation.
But the vote is also a referendum on the failure of the
United States and its allies to provide the security and
economic development required to build a stable country. Only
now are the necessary resources being discussed in Washington
and other capitals of NATO nations--and the answers are not all
positive yet.
The administration is dramatically shifting gears on
counter-narcotics by phasing out eradication in favor of
promoting alternative crops and agriculture development. For
the first time, the United States will have an agriculture
strategy for Afghanistan. While this strategy is still being
finalized by Ambassador Holbrooke's team and Secretary of
Agriculture Tom Vilsack and his experts, it will focus on
increasing agricultural productivity, regenerating the
agribusiness sector, rehabilitating watersheds and irrigation
systems, and building capacity in the Afghan agriculture
ministry. The U.S. Department of Agriculture plans to increase
its staffing to 64 by early 2010, up from the 3 in 2003 and 14
in 2009.
The new agriculture officers will be part of an additional
450 civilians being deployed to Afghanistan in the coming
months. But already there are questions about whether the new
people will have the right skills to carry out the development
strategy and whether they will be dispatched to the often-
unsafe rural areas where the work must be done--and whether 450
more will be even close to enough. In late June, the U.S.
embassy in Kabul asked the State Department to authorize
another 350 civilian slots for Afghanistan. While there is
recognition among policymakers that the war effort in
Afghanistan has been under-resourced for years and will require
intensive resources over the next few years to achieve the
President's goals, scaling up the commitment without changing
the fundamentals of how the money is spent will achieve little
beyond expanding the U.S. presence and creating new
vulnerabilities.
``The mission is 20 percent military, 80 percent civilian,
and the civilian side is behind,'' said John Nagl, a retired
army lieutenant colonel and a co-author of the counter-
insurgency field manual who is now president of the Center for
New American Security in Washington, D.C.
Two Bright Spots
There are some bright spots on the development landscape.
In Helmand Province, Governor Mangal has proven to be among a
new breed of independent-minded governors, praised for his
efforts to eradicate poppy fields and persuade farmers to grow
other crops. Last planting season, he handed out free wheat
seeds to promote the kinds of alternative crops that once made
the province the bread basket of Afghanistan. This fall, he
plans to add more crops to his giveaway list.
Improving access to crops like wheat, grapes, pomegranates
and apples and developing a legitimate rural economy are part
of the civilian-led effort to push poppy farming out of the
prime growing area along the Helmand River Valley and similar
fertile areas across the country. Most experts said that poppy
cultivation will never be eradicated completely in Afghanistan.
A more realistic goal is to force poppy fields into the
marginal areas.
In another positive development, the Afghan Government's
National Solidarity Program has helped villages across the
country identify, plan and manage development projects, from
digging wells to educating farmers. Despite the poor security
environment, the program even operates in Helmand Province,
where its well-regarded leader, Mohammed Ehsan Zia, the
minister of Rural Rehabilitation and Development, said the
early success ``is testimony to the honesty and courage of the
rural people of Afghanistan.''
There are no easy answers to ridding Afghanistan of drug
trafficking, and none but the most optimistic believe the
country will ever be free of poppy cultivation. The goal is to
build an agricultural economy for the long term that will
weaken the power of the drug lords and halt or at least reduce
the flow of money to insurgents. Much work remains to integrate
these approaches into the broader security and development
framework so that counter-narcotics efforts and economic
development are not artificially separated. Fundamentally, this
means rethinking how we measure success on counter-narcotics
efforts, shifting away from the sole goal of reducing opium
poppy cultivation to avoid the risk of undermining longer-term
development and security in Afghanistan.
----------
7. Recommendations for Afghanistan
Accepting that Afghanistan requires a greater
commitment of U.S. troops and civilians means that the
public should understand the sacrifices that will be
required in the coming years.
The deterioration of the security situation in Afghanistan
is conspicuous. Forty-two American soldiers and Marines died in
July, the highest since the start of the war, and the
casualties were not just associated with the Marine push into
Helmand Province. Coalition troops from Britain, Canada and
other NATO allies also suffered their highest death toll since
2001. More powerful improvised explosive devices are appearing
and in some cases the Taliban has demonstrated a new ability to
launch complex attacks.
The coming months will test the administration's deepening
involvement, its new strategy on counter-narcotics specifically
and its counter-insurgency effort in general. Some observers
fear that the moment for reversing the tide in Afghanistan has
passed and even a narrow victory will remain out of reach,
despite the larger American footprint. Others see promise in
the commitment of additional resources and the recognition that
success requires providing Afghans with the security and
assistance that will allow them to find their own way to the
future. None of the civilian officials or military officers
interviewed in Afghanistan and elsewhere expected substantial
progress in the short term. They talked in terms of years--two,
five and 10.
Recommendations:
1. Congress and the administration should join in efforts to
promote a national debate that will provide the public
with a clear understanding of the commitment required
in Afghanistan and Pakistan. The debate should
articulate the administration's goals, the costs of
meeting these goals and the consequences for failing to
do so.
2. Given the significance of the new counter-narcotics
strategy, the administration should provide Congress
with a written description of that policy and a clear
road map for how it will be integrated with the other
components of the counter-insurgency, including the
development of alternative crops for Afghan farmers.
3. As requested by Congress two years ago, the administration
should develop a clear system of metrics to assess
progress in Afghanistan on counter-narcotics,
corruption, security and economic development. These
metrics should reflect both quantitative and
qualitative indicators and both near-term and long-term
goals.
4. The Department of State should pursue enhanced cooperation
with Afghanistan's neighbors to identify and support
regional counter-narcotics efforts and better
understand the important linkages and flows of drugs,
money, and people from Afghanistan to Pakistan,
Tajikistan, Kyrgyzstan, Uzbekistan, Turkmenistan, and
Iran. In particular, Ambassador Holbrooke should lead
efforts to travel to Central Asia to strengthen
cooperation on Afghanistan and better link U.S. policy
towards Central Asia with our strategy in Afghanistan.
5. Sending more civilians to Afghanistan should be part of
the national debate. But as the administration prepares
to deploy the additional 450 civilians already
committed to going, serious efforts should be made to
match civilian expertise in key districts across the
country and not just staff up Embassy Kabul or forward
operating bases. Efforts should be made to recruit
civilians with expertise in agriculture, development,
and other technical skills that can be adapted to needs
in Afghanistan, including recruiting civilian expertise
from Afghanistan's neighbors, which would be more cost-
effective and bring people who know the region,
climate, language, and soil.
APPENDIX
----------
1. A Discussion of Alternative Crops--Poppy v. Wheat
A realistic goal for the coalition and Afghan forces is to
push poppy cultivation out of the fertile areas along the
Helmand River into the periphery, into the desert. It won't
stop cultivation completely, but it will make the job much
harder and costlier because those who still want to grow
poppies will be restricted to arid areas where they will have
to dig wells 90 to 100 feet for water. The key here is not to
reduce cultivation levels in absolute terms, but to focus on
delivering security, governance, and development to major
population centers. But that policy will only work in the long
term if farmers have access to substitute crops and sufficient
security to grown them and get them to market. ``Farmers need
to earn a living,'' said a U.S. Army officer in Kandahar. ``We
don't want them putting out IEDs or shooting at us.''
One alternative that has not been widely used in
Afghanistan is the concept of cultivating various crops with
short growing seasons. For example, if a farmer rotates crops
with different harvest times on the same plot of land, the
farmer will make more money than he otherwise would have with
poppy, and he will not mortgage his future to the Taliban.
Onions, tomatoes, and cucumbers are examples of crops with
short growing seasons. Growing these crops while planting tree
fruits for the long term can produce current income to replace
poppy revenue.
Wheat, touted as the best way to transition poppy farmers
away from opium, is neither a panacea nor good predictor for
whether farmers will make a permanent shift. Wheat prices are
volatile and farmers are likely to switch back to poppy when
wheat prices fall or when prolonged droughts damage wheat
crops. With prices high, farmers cultivate wheat to eat and
sell. But when prices fall, farmers grow poppy and buy higher-
quality Pakistani wheat to eat, defeating the purpose of
transitioning to wheat. Furthermore, the lack of security on
Afghanistan's roads keeps transportation costs artificially
high, making wheat more expensive than poppy to get to market.
Despite the fact that the current balance is tipped in
favor of poppy, Afghanistan will be a net exporter of wheat in
2009 for the first time in 30 years. While Afghan and U.S.
officials justifiably tout the success, some experts caution
that it may be an anomaly more attributable to environmental
and economic factors than to eradication efforts. ``As soon as
wheat prices fall again--and they will--wheat farmers will
revert to poppy,'' said David Mansfield of the Afghanistan
Research and Evaluation Unit, who has spent 12 consecutive
years working in Afghanistan.
------------------------------------------------------------------------
-------------------------------------------------------------------------
Why Poppy?
Why would Afghan farmers risk legal consequences and eradication of
their crops by growing poppy?
Poppy is 40 percent more profitable than wheat, on average.
Poppy has a shorter cultivation time than wheat and is harvested
earlier in the season. The shorter growing time allows farmers to grow
maize after the poppy crop is finished.
Poppy is nearly weather-resistant. It can withstand drought and poor
soil, and few insects can destroy a season's harvest.
Once refined, opium does not need refrigeration, it does not expire,
it does not require safe handling or specialized transportation, and it
sells quickly.
The Taliban provide loans to farmers to buy poppy seeds in the
marketplace.
The Taliban provide capital for poppy farmers by pre-paying for a
portion of the crop. The Taliban also provides farmers with security to
guard their investment.
------------------------------------------------------------------------
That is precisely why alternative crops are so necessary.
Many tribal elders remember when Afghans could feed themselves.
To do so again, they need roads, power, and water. The first
step toward that goal, now that the Marines have taken up what
their commander says is long-term residence in Helmand
Province, is to bring in teams from the U.S. Department of
Agriculture to help identify what crops to grow and where. The
United States should be prepared to provide assistance to
farmers for several years until pomegranate orchards and
vineyards mature into cash-producing alternatives to poppy. In
addition, the administration needs to push hard to reach
agreement in negotiations between Pakistan and Afghanistan that
would open a route for Afghan farmers to get their products to
the growing middle-class market in India.
Faced with a dangerous and costly problem, it is human
nature to look for a panacea. Some have advocated using
Afghanistan's flourishing poppy fields to produce medicines
such as morphine and codeine, which are high-demand painkillers
in a growing global market. Legal opium production is permitted
under the United Nations Single Convention on Narcotic Drugs
and other international drug treaties. Turkey produces 50
percent of the world's legal opium and India produces another
30 percent. The governments process all opium into paste; the
paste is then either refined or sold to international
pharmaceutical companies. Violators who divert poppy to illegal
drugs face harsh penalties in both countries. But these two
legal opium poppy production regimes work only because they are
built on trust and on the rule of law, important tenets which
are missing in Afghanistan.
U.S. officials say that the Afghan opium industry would be
impossible to monitor because of the country's harsh landscape,
the absence of the rule of law, and pervasive corruption. In
addition, the country lacks the type of clean facilities
required to produce medical-grade opiates. Finally, any new
Afghan opium on the legal market would have a negative impact
on prices in an industry where there is already little profit.
Besides squeezing existing producers like Turkey and India,
the cultivation of medical opium in Afghanistan would have a
negative impact on prices of illicit opium, with opium farmers
competing against each other to produce enough opium poppy to
supply both the legal and illegal industries. The incentive
would be for farmers to grow as much poppy as possible on
whatever land was available.
----------
2. The Intricacies of Hawala--The Road to Nowhere
Following the money is a time-tested means of assembling
criminal cases against drug traffickers and corrupt government
officials, but that task is probably harder in Afghanistan than
anywhere in the world because of the ancient and secretive
system called hawala.
The Arabic term for ``transfer,'' hawala at its most basic
interpretation means transferring value and money from one
place to another through money exchangers known as hawaladars.
Typically, a hawaladar receives money, say $5,000, from a
customer who wants to transfer the funds to someone in another
location. The customer pays a small fee and receives a
numerical code written on a hawala slip. The hawaladar contacts
his counterpart in the other location and instructs him to pay
$5,000 to someone who will come in with the numerical code.
After receiving the code from the original customer, the
recipient goes to the hawaladar, presents the code and gets the
$5,000. The hawala dealer who took the initial $5,000 owes that
amount to his counterpart. Accounts are settled through
additional transactions, commodity exchanges and normal banking
services.
Hawala networks span countries and continents and are used
by millions of people for legitimate transactions. The most
common involve workers in foreign countries like Saudi Arabia
or the United Arab Emirates sending money home to families in
Afghanistan, India, Pakistan or the Philippines. Dealers charge
a small commission on each transaction and often profit from
currency exchange rates.
The system is most often associated in the Western public's
mind with more notorious customers like Osama bin Laden, who
used the hawala networks in Pakistan, Dubai and throughout the
Middle East to transfer funds and store money, according to the
9/11 Commission Report.
Afghanistan is a natural place for hawala. A majority of
business is conducted in cash and the State Department
estimates that 80 to 90 percent of all financial transfers are
made through hawala. In Kabul, the hawaladars congregate in a
specific neighborhood along the banks of the Kabul River, not
far from the gold and gem dealers. During the Soviet and
Taliban eras, the hawaladars fully replaced the formal banking
system. Today, the country has only 15 commercial banks and few
people have bank accounts because of illiteracy, the cost of
bank transactions and the small footprint of traditional
banking. As a result, hawaladars are still used by humanitarian
and development organizations to move money to rural areas
outside the reach of the country's fledgling banking system.
Convenience, security and secrecy make hawala the method of
choice for Afghanistan's drug traffickers to move and disguise
profits with little or no paper trail. In the basic
transaction, the traffickers receive payments for drugs from
middlemen and buyers in other countries and turnaround and
launder the money by transferring it to hawaladars in places
like Dubai, where the drug lords and their nominees use the
cash to buy real estate and commodities.
United Nations Office on Drugs and Crime (UNODC) officials
in Kabul said they have inspected records of drug-related
transactions involving $1 million and recently saw evidence of
a $15 million transfer using hawala. In some cases, the
officials described seeing major transactions in which heroin
or opium were used as collateral for payments.
The existence of the written records contradicts the
widespread misconception that hawala is paperless. While
recordkeeping is far from formalized, most hawaladars maintain
carefully coded logs of transactions as part of the settlement
process. Those handling dirty money tend to be more secretive,
destroying even rudimentary records once transactions are
completed or avoiding any record of the criminal deals. ``Not
surprisingly, transfers made on behalf of drug traffickers tend
to be kept more discreet, either by maintaining very simple
notes locked in a safe, or by not keeping a record at all,''
scholar Edwina A. Thompson wrote in her study, The Nexus of
Drug Trafficking and Hawala in Afghanistan. One dealer told
Thompson that he kept the records of his shop's drug-related
transfers on his son's computer at home.
Family and tribal ties guarantee that the process works
smoothly and provide another layer of secrecy. Intermarriages
among hawaladar families in Afghanistan are common because they
cement trust between dealers. Brothers and cousins also tend to
operate in the same system to provide broader coverage of
financial centers in the Mideast, Europe and the United States.
A report by Samuel Maimbo of the World Bank described a dealer
in the Afghan city of Jalalabad, which lies on a major
smuggling route for drugs, who operated with a brother in
Kabul, a cousin in the western Afghan commercial hub of Herat
and another brother who ran a hawala in Melbourne, Australia.
The Jalalabad hawaladar also worked with affiliated dealers in
Tokyo, London, Peshawar and Dubai.
Close Knit and Close Mouthed
The close-knit nature of the system, the absence of
effective regulation and the ingrained secrecy combine to make
transactions conducted through hawala almost impossible to
track. Officials in Afghanistan and the United Arab Emirates,
which include Dubai, repeatedly said they had no idea how much
money moves through the informal exchange system. A U.S.
intelligence official in the region said it was almost
impossible to penetrate hawala networks, explaining that the
family nature of the businesses made it difficult to get inside
cooperation. He said records seized from the occasional raid
were usually too fragmentary to provide clues to the
beneficiaries of transactions.
No one knows how many hawaladars exist in Afghanistan.
Thompson estimated in 2005 that there were 900 significant
hawaladars in the entire country and others have estimated that
50 or so dealers in Kabul and Kandahar account for the bulk of
the drug transactions. there are countless smaller operators in
cities and villages across the country and most of them mix
drug money with legitimate transactions.
The Afghan Government has registered about 125 of Kabul's
hawala dealers, but many in the capital are unregistered and
progress has been slow elsewhere. A diplomat described a
conversation in which he urged an official of the Afghan
Central Bank to register dealers outside Kabul. ``They're
everywhere,'' the official replied. ``I can't do that.''
The Central Bank official's attitude reflects the
difficulty in developing a system of banking supervision and
money controls in Afghanistan. An anti-money laundering law was
adopted in 2004 and followed with a statute allowing for the
seizure of assets in criminal cases. Prosecutors and bank
examiners have been trained by the U.S. and others to spot
suspicious transactions and investigate money laundering cases.
But efforts have been plagued by inadequate staffing and a
sense that drug lords and their accomplices are outside the
reach of the law, according to U.S. and foreign officials.
Statistics tell the sorry story: In a country awash with
drug money, no one was prosecuted for money laundering or
terrorist financing in 2008 in Afghanistan and no attempts were
made to seize or freeze assets. ``While efforts continue to
strengthen police and customs forces, there remain few
resources, limited capacity, little expertise and insufficient
political will to seriously combat financial crimes,'' the
State Department said in a blunt report issued in February.
A Regional Perspective on the Money Flow
The lack of progress has caused some financial-crimes
experts in the region to suggest focusing outside Afghanistan
to try to stop the flow of illicit proceeds both into and out
of the country. The first place mentioned by almost everyone in
the know is Dubai, the city-state on the Persian Gulf in the
United Arab Emirates, just a three-hour flight from Kabul.
``It's quite open among the disaspora of Afghans and
hawaladars that the favorite hidey hole for money is Dubai,''
said a senior UN official in Kabul. ``It would be better to
target Dubai because it cares more about its financial
system.''
Dubai has worked hard to polish its image as the Middle
East's leading financial center. Its star exhibit is the Dubai
International Finance Center, a free-trade zone open to
foreign-owned banks and financial firms. The center resembles
an offshore banking haven in the midst of a freewheeling city-
state. It sits on 110 acres amidst Dubai's seemingly endless
parade of skyscrapers and malls and runs its own regulatory and
judicial system. Most of the auditors and regulators are drawn
from the U.K., Australia and the United States and transactions
are governed by British and U.S. law. Some of the world's
biggest financial institutions, like HSBC and Goldman Sachs,
have set up shop in the zone to take advantage of its tax-free
status and ready access to the Middle East.
Outside the free-trade zone, however, regulations are more
haphazard and efforts to restrict the flow of drug money from
Afghanistan and elsewhere are hit and miss, according to
American and foreign officials. After the attacks of September
11, 2001, Dubai and others of the seven city-states that
comprise the UAE were criticized because terrorists had moved
money through the banks and hawala dealers. The Government
responded with new financial laws, including one in 2003
requiring hawala dealers to register, and its Central Bank
insists that the country has made great strides in instituting
tough controls on money and trade.
But there are signs that Dubai--and to a lesser extent the
city-state of Sharjah--remains a destination spot for hot
money. Earlier this year, the State Department said that
narcotics traffickers were increasingly attracted to Dubai and
other trade and financial centers in the UAE. The International
Monetary Fund also raised concerns, recommending that UAE laws
be amended to block loopholes and match international standards
and that it should increase the resources devoted to enforcing
financial laws.
In addition, the Financial Action Task Force, a Paris-based
inter-governmental body that develops and promotes policies to
combat money laundering and terrorist financing, criticized the
UAE for failing to exercise regulatory controls over hawala
dealers despite its law. Registration is voluntary and there
are no penalties for dealers who refuse to register.
Abdulrahim Moammed Al Awadi, the head of the anti-money
laundering at the Central Bank in Abu Dhabi, told the committee
staff that the UAE has instituted tough measures throughout its
financial sector. In a power-point presentation, he listed
dozens of international agreements and UAE laws implemented to
clean up the country's financial system.
One of the laws that Awadi touts was the first-ever law to
register and regulate hawala dealers. So far, he said, the
country has more than 300 licensed hawaladars who are required
to keep complete records, including official identification
documents for customers, and alert the authorities to
suspicious transactions. Hawala is particularly popular in
Dubai and other Gulf states because of the high percentage of
low-paid, foreign workers who use the system to send
remittances home; in Dubai, for instance, 85 percent of the
population is foreign workers.
Awadi said that registration and reporting are voluntary
for the dealers and he declined to provide the committee staff
with a list of registered hawaladars. He defending the
registration system and said the Central Bank had been stung by
the criticism by the Financial Action Task Force. As a result,
Awadi said the Government was debating whether to abandon its
efforts to regulate the informal sector.
Hawala is not the only way to move cash quietly to and from
Dubai. UAE law enforcement authorities have intercepted
couriers arriving at Dubai's huge international airport from
Afghanistan with millions of dollars in suitcases. But U.S.
officials said the general rule is that couriers are simply
required to declare the cash and allowed to move on, without
seizing suspected illicit cash or creating a database of
couriers for intelligence purposes. U.S. law enforcement
agencies proposed a training program to teach inspectors at
Dubai airport to spot suspicious couriers, but the effort was
blocked by the Central Bank.
``We don't know, once the money comes into Dubai, where it
goes,'' said an official at the U.S. embassy.
The United States has plans to increase its resources in
the UAE. The DEA is considering bumping up the number of agents
in Dubai from two to 10 as part of a new regional approach to
drug trafficking and money laundering. As in Afghanistan,
however, the CIA is not playing an active role investigating
the money trail. ``Ninety percent of our intelligence resources
are devoted to counter-terrorism, counter-intelligence and
counter-proliferation,'' complained an official at the U.S.
embassy in Abu Dhabi.
Regulating the movement of money throughout the region,
from Afghanistan and the UAE to Pakistan and Europe, should be
a critical element of the strategy to choke off the funds going
to the insurgency in Afghanistan and to corrupt officials there
who undermine the efforts of international agencies,
governments and good Afghans to build a stable and secure
country. The harder it is to make money from drugs in
Afghanistan, the more likely the ties can be broken to the
Taliban and other militant organizations.