<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META content="text/html; charset=iso-8859-1" http-equiv=Content-Type>
<META name=GENERATOR content="MSHTML 8.00.6001.23562">
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><FONT size=2 face=Arial>
<DIV dir=ltr>
<DIV class=title>
<H2>The Spoils of War: Afghanistan’s Multibillion Dollar Heroin Trade</H2>
<H3 class=ecxsubtitle>Washington's Hidden Agenda: Restore the Drug
Trade</H3><BR><BR><A href=""
target=_blank>http://www.globalresearch.ca/the-spoils-of-war-afghanistan-s-multibillion-dollar-heroin-trade/91</A><BR><BR><BR>
<DIV class=meta>
<DIV class=ecxpost-info>
<DIV class=ecxauthor>By <A title="Posts by Prof Michel Chossudovsky" href=""
target=_blank>Prof Michel Chossudovsky</A></DIV>
<DIV class=ecxgrDate>Global Research, February 15, 2014</DIV>
<DIV class=ecxsourceDate>Global Research 14 June 2005</DIV></DIV>
<DIV class=ecxcatAndTag>
<DIV class=ecxcats>Region: <A href="" rel=tag target=_blank>Asia</A></DIV>
<DIV class=ecxcats>Theme: <A href="" rel=tag target=_blank>Global
Economy</A></DIV>
<DIV class=ecxcats>In-depth Report: <A href="" rel=tag
target=_blank>AFGHANISTAN</A></DIV></DIV></DIV>
<DIV class=ecxsharethis><SPAN class=ecxst_facebook_hcount><SPAN
style="DISPLAY: inline-block; COLOR: #000000; CURSOR: pointer; TEXT-DECORATION: none"
class=ecxstButton><SPAN><SPAN
class="ecxstMainServices ecxst-facebook-counter"><BR></SPAN></SPAN></SPAN></SPAN><SPAN
class=ecxst_sharethis_hcount><SPAN
style="DISPLAY: inline-block; COLOR: #000000; CURSOR: pointer; TEXT-DECORATION: none"
class=ecxstButton><SPAN><SPAN class=ecxstArrow><SPAN
style="DISPLAY: inline-block" class="ecxstButton_gradient ecxstHBubble"><SPAN
class=ecxstBubble_hcount></SPAN></SPAN></SPAN></SPAN></SPAN></SPAN></DIV></DIV>
<DIV style="WIDTH: 468px"><INS
style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; PADDING-BOTTOM: 0px; BACKGROUND-COLOR: transparent; PADDING-LEFT: 0px; WIDTH: 468px; PADDING-RIGHT: 0px; DISPLAY: inline-table; HEIGHT: 60px; VISIBILITY: visible; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0px"><INS
style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; PADDING-BOTTOM: 0px; BACKGROUND-COLOR: transparent; PADDING-LEFT: 0px; WIDTH: 468px; PADDING-RIGHT: 0px; DISPLAY: block; HEIGHT: 60px; VISIBILITY: visible; BORDER-TOP: medium none; BORDER-RIGHT: medium none; PADDING-TOP: 0px"
id=ecxaswift_0_anchor></INS></INS></DIV>
<DIV class=ecxpostThumbnail><IMG
class="ecxattachment-single-post-thumbnail ecxwp-post-image"
title="The Spoils of War: Afghanistan's Multibillion Dollar Heroin Trade"
alt="The Spoils of War: Afghanistan's Multibillion Dollar Heroin Trade" src=""
width=150 height=112> </DIV><STRONG>Author’s Note</STRONG><BR><EM>In the course
of the last four years, there has been a surge in Afghan opium production.
The Vienna based <SPAN><SPAN>UN Office on Drugs and Crime (UNODC) reveals that
poppy cultivation in 2012 extended over an area of more than 154,000
hectares, an increase of 18% over 2011. A UNODC spokesperson confirmed in
2013 that opium production is heading towards record levels.
</SPAN></SPAN></EM><BR><EM>According to the <A href="" target=_blank>2012
Afghanistan Opium Survey</A> released in November 2012 by the Ministry of
Counter Narcotics (MCN) and the United Nations Office on Drugs and Crime
(UNODC). potential opium production in 2012 was of the order of 3,700 tons, a
decline of 18 percent in relation to 2001, according to UNODC data.
</EM><BR><EM>There is reason to believe that this figure of 3700 tons is grossly
underestimated. Moreover, it contradicts the UNOCD’s own predictions of record
harvests over an extended area of cultivation.<BR></EM><BR><EM>While bad weather
and damaged crops may have played a role as suggested by the UNODC, based on
historical trends, the potential production for an area of cultivation of
154,000 hectares, should be well in excess of 6000 tons. With 80,000
hectares in cultivation in 2003, production was already of the order
of 3600 tons. </EM><BR><EM>It is worth noting that UNODC has modified the
concepts and figures on opium sales and heroin production, as outlined by
the European Monitoring Centre for Drugs and Drug Addiction
(EMCDDA). </EM><BR>
<P style="PADDING-LEFT: 30px"><EM>A change in UN methodology in 2010 resulted in
a sharp downward revision of Afghan heroin production estimates for 2004 to
2011. UNODC used to estimate that the entire global opium crop was processed
into heroin, and provided global heroin production estimates on that basis.
Before 2010, a global conversion rate of about 10 kg of opium to 1 kg of heroin
was used to estimate world heroin production (17). For instance, the estimated 4
620 tonnes of opium harvested worldwide in 2005 was thought to make it possible
to manufacture 472 tonnes of heroin (UNODC, 2009a). <STRONG>However, UNODC
now estimates that a large proportion of the Afghan opium harvest is not
processed into heroin or morphine but remains ‘available on the drug market as
opium’</STRONG> (UNODC, 2010a). …</EM><A href="" target=_blank>EU drug markets
report: a strategic analysis,</A> EMCDDA, Lisbon, January 2013 emphasis
added</P><EM>There is no evidence that a large percentage of opium production is
no longer processed into heroin as claimed by the UN. This revised UNODC
methodology has served, –through the outright manipulation of statistical
concepts– to artificially reduce the size of of the global trade in heroin.
</EM><BR><EM>According to the UNODC, quoted in the EMCDDA report:<BR></EM><BR>
<P style="PADDING-LEFT: 30px"><EM>“an estimated 3 400 tonnes of Afghan opium was
not transformed into heroin or morphine in 2011. Compared with previous years,
this is an exceptionally high proportion of the total crop, <STRONG>representing
nearly 60 % of the Afghan opium harvest and close to 50 % of the global harvest
in 2011.</STRONG> </EM></P><EM>What the UNODC, –whose mandate is to support the
prevention of organized criminal activity– has done is to obfuscate the size and
criminal nature of the Afghan drug trade, intimating –without evidence– that a
large part of the opium is no longer channeled towards the illegal heroin
market.</EM><BR><EM>In 2012 according to the UNODC, farmgate prices for
opium were of the order of 196 per kg. </EM><BR><EM>Each kg. of opium produces
100 grams of pure heroin. The US retail prices for heroin (with a low level of
purity) is, according to UNODC of the order of $172 a gram. The price per gram
of pure heroin is substantially higher.<BR></EM><BR><EM>The profits are largely
reaped at the level of the international wholesale and retail markets of heroin
as well as in the process of money laundering in Western banking
institutions. </EM><BR><EM>The revenues derived from the global trade in
heroin constitute a multibillion dollar bonanza for financial institutions and
organized crime.<BR></EM><BR><EM>The following article first published in May
2005 provides a background on the history of the Afghan opium trade which
continues to this date to be protected by US-NATO occupation forces on behalf of
powerful financial interests. </EM><BR><STRONG>Michel Chossudovsky,
January 2014 </STRONG><BR>
<HR>
<H2>The Spoils of War: Afghanistan’s Multibillion Dollar Heroin
Trade</H2><STRONG>by Michel Chossudovsky</STRONG><BR>Since the US led invasion
of Afghanistan in October 2001, the Golden Crescent opium trade has soared.
According to the US media, this lucrative contraband is protected by Osama, the
Taliban, not to mention, of course, the regional warlords, in defiance of the
“international community”.<BR>The heroin business is said to be “filling
the coffers of the Taliban”. In the words of the US State Department:<BR>
<P style="PADDING-LEFT: 30px">“Opium is a source of literally billions of
dollars to extremist and criminal groups… [C]utting down the opium supply is
central to establishing a secure and stable democracy, as well as winning the
global war on terrorism,” (Statement of Assistant Secretary of State Robert
Charles. Congressional Hearing, 1 April 2004)</P>According to the United Nations
Office on Drugs and Crime (UNODC), opium production in Afghanistan in 2003 is
estimated at 3,600 tons, with an estimated area under cultivation of the order
of 80,000 hectares. (UNODC at <A href=""
target=_blank>http://www.unodc.org/unodc/index.html</A> ).An even larger bumper
harvest is predicted for 2004.<BR>The State Department suggests that up to 120
000 hectares were under cultivation in 2004. (Congressional Hearing, op
cit):<BR>
<P style="PADDING-LEFT: 30px"> ”We could be on a path for a significant
surge. Some observers indicate perhaps as much as 50 percent to 100 percent
growth in the 2004 crop over the already troubling figures from last
year.”(Ibid)</P>
<H3>“Operation Containment<STRONG>“</STRONG></H3>In response to the post-Taliban
surge in opium production, the Bush administration has boosted its counter
terrorism activities, while allocating substantial amounts of public money to
the Drug Enforcement Administration’s West Asia initiative, dubbed “Operation
Containment.”<BR>The various reports and official statements are, of course,
blended in with the usual “balanced” self critique that “the international
community is not doing enough”, and that what we need is “transparency”.<BR>The
headlines are “Drugs, warlords and insecurity overshadow Afghanistan’s path to
democracy”. In chorus, the US media is accusing the defunct “hard-line Islamic
regime”, without even acknowledging that the Taliban –in collaboration
with the United Nations– had imposed a successful ban on poppy cultivation in
2000. Opium production declined by more than 90 per cent in 2001. In fact the
surge in opium cultivation production coincided with the onslaught of the US-led
military operation and the downfall of the Taliban regime. From October through
December 2001, farmers started to replant poppy on an extensive basis.<BR>The
success of Afghanistan’s 2000 drug eradication program under the Taliban had
been acknowledged at the October 2001 session of the UN General Assembly (which
took place barely a few days after the beginning of the 2001 bombing raids). No
other UNODC member country was able to implement a comparable
program:<BR>“Turning first to drug control, I had expected to concentrate my
remarks on the implications of the Taliban’s ban on opium poppy cultivation in
areas under their control… We now have the results of our annual ground survey
of poppy cultivation in Afghanistan. This year’s production [2001] is around 185
tons. This is down from the 3300 tons last year [2000], a decrease of over 94
per cent. Compared to the record harvest of 4700 tons two years ago, the
decrease is well over 97 per cent.<BR>Any decrease in illicit cultivation is
welcomed, especially in cases like this when no displacement, locally or in
other countries, took place to weaken the achievement” (Remarks on behalf of
UNODC Executive Director at the UN General Assembly, Oct 2001, <A href=""
target=_blank>http://www.unodc.org/unodc/en/speech_2001-10-12_1.html</A> )<BR>
<H3><STRONG>United Nations’ Coverup</STRONG></H3>In the wake of the US invasion,
shift in rhetoric. UNODC is now acting as if the 2000 opium ban had never
happened:<BR>“the battle against narcotics cultivation has been fought and won
in other countries and it [is] possible to do so here [in Afghanistan], with
strong, democratic governance, international assistance and improved security
and integrity.” ( Statement of the UNODC Representative in Afghanistan at the
:February 2004 International Counter Narcotics Conference, <A href=""
target=_blank>http://www.unodc.org/pdf/afg/afg_intl_counter_narcotics_conf_2004.pdf</A>
, p. 5).<BR>In fact, both Washington and the UNODC now claim that the objective
of the Taliban in 2000 was not really “drug eradication” but a devious scheme to
trigger “an artificial shortfall in supply”, which would drive up World prices
of heroin.<BR>Ironically, this twisted logic, which now forms part of a new “UN
consensus”, is refuted by a report of the UNODC office in Pakistan, which
confirmed, at the time, that there was no evidence of stockpiling by the
Taliban. (Deseret News, Salt Lake City, Utah. 5 October 2003)<BR>
<H3><STRONG>Washington’s Hidden Agenda: Restore the Drug Trade</STRONG></H3>In
the wake of the 2001 US bombing of Afghanistan, the British government of Tony
Blair was entrusted by the G-8 Group of leading industrial nations to carry out
a drug eradication program, which would, in theory, allow Afghan farmers to
switch out of poppy cultivation into alternative crops. The British were working
out of Kabul in close liaison with the US DEA’s “Operation Containment”.<BR>The
UK sponsored crop eradication program is an obvious smokescreen. Since October
2001, opium poppy cultivation has skyrocketed. The presence of
occupation forces in Afghanistan did not result in the eradication of poppy
cultivation. Quite the opposite.<BR>The Taliban prohibition had indeed caused
“the beginning of a heroin shortage in Europe by the end of 2001″, as
acknowledged by the UNODC.<BR>Heroin is a multibillion dollar business supported
by powerful interests, which requires a steady and secure commodity flow. One of
the “hidden” objectives of the war was precisely to restore the CIA sponsored
drug trade to its historical levels and exert direct control over the drug
routes.<BR>Immediately following the October 2001 invasion, opium markets were
restored. Opium prices spiraled. By early 2002, the opium price (in dollars/kg)
was almost 10 times higher than in 2000.<BR>In 2001, under the Taliban opiate
production stood at 185 tons, increasing to 3400 tons in 2002 under the US
sponsored puppet regime of President Hamid Karzai.<BR>While highlighting
Karzai’s patriotic struggle against the Taliban, the media fails to mention that
Karzai collaborated with the Taliban. He had also been on the payroll of a major
US oil company, UNOCAL. In fact, since the mid-1990s, Hamid Karzai had acted as
a consultant and lobbyist for UNOCAL in negotiations with the Taliban. According
to the Saudi newspaper Al-Watan:<BR>
<P style="PADDING-LEFT: 30px">“Karzai has been a Central Intelligence Agency
covert operator since the 1980s. He collaborated with the CIA in funneling U.S.
aid to the Taliban as of 1994 when the Americans had secretly and through the
Pakistanis [specifically the ISI] supported the Taliban’s assumption of power.”
(quoted in Karen Talbot, U.S. Energy Giant Unocal Appoints Interim Government in
Kabul, Global Outlook, No. 1, Spring 2002. p. 70. See also BBC Monitoring
Service, 15 December 2001)</P>
<H3><STRONG>History of the Golden Crescent Drug trade</STRONG></H3>It is worth
recalling the history of the Golden Crescent drug trade, which is
intimately related to the CIA’s covert operations in the region since the
onslaught of the Soviet-Afghan war and its aftermath.<BR>Prior to the
Soviet-Afghan war (1979-1989), opium production in Afghanistan and Pakistan was
directed to small regional markets. There was no local production of heroin.
(Alfred McCoy, Drug Fallout: the CIA’s Forty Year Complicity in the Narcotics
Trade. The Progressive, 1 August 1997).<BR>The Afghan narcotics economy was a
carefully designed project of the CIA, supported by US foreign policy.<BR>As
revealed in the Iran-Contra and Bank of Commerce and Credit International
(BCCI) scandals, CIA covert operations in support of the Afghan Mujahideen had
been funded through the laundering of drug money. “Dirty money” was
recycled –through a number of banking institutions (in the Middle East) as well
as through anonymous CIA shell companies–, into “covert money,” used to
finance various insurgent groups during the Soviet-Afghan war, and its
aftermath:<BR>“Because the US wanted to supply the Mujahideen rebels in
Afghanistan with stinger missiles and other military hardware it needed the full
cooperation of Pakistan. By the mid-1980s, the CIA operation in Islamabad was
one of the largest US intelligence stations in the World. `If BCCI is such an
embarrassment to the US that forthright investigations are not being pursued it
has a lot to do with the blind eye the US turned to the heroin trafficking in
Pakistan’, said a US intelligence officer. (“The Dirtiest Bank of All,” Time,
July 29, 1991, p. 22.)<BR>Researcher Alfred McCoy’s study confirms that within
two years of the onslaught of the CIA’s covert operation in Afghanistan in
1979,<BR>
<P style="PADDING-LEFT: 30px">“the Pakistan-Afghanistan borderlands became the
world’s top heroin producer, supplying 60 per cent of U.S. demand. In Pakistan,
the heroin-addict population went from near zero in 1979 to 1.2 million by
1985, a much steeper rise than in any other nation.”</P>“CIA assets again
controlled this heroin trade. As the Mujahideen guerrillas seized territory
inside Afghanistan, they ordered peasants to plant opium as a revolutionary tax.
Across the border in Pakistan, Afghan leaders and local syndicates under the
protection of Pakistan Intelligence operated hundreds of heroin laboratories.
During this decade of wide-open drug-dealing, the U.S. Drug Enforcement Agency
in Islamabad failed to instigate major seizures or arrests.<BR>U.S. officials
had refused to investigate charges of heroin dealing by its Afghan allies
because U.S. narcotics policy in Afghanistan has been subordinated to the war
against Soviet influence there. In 1995, the former CIA director of the
Afghan operation, Charles Cogan, admitted the CIA had indeed sacrificed the drug
war to fight the Cold War. ‘Our main mission was to do as much damage as
possible to the Soviets. We didn’t really have the resources or the time to
devote to an investigation of the drug trade,’ I don’t think that we need to
apologize for this. Every situation has its fallout. There was fallout in
terms of drugs, yes. But the main objective was accomplished. The Soviets left
Afghanistan.’”(McCoy, op cit)<BR>The role of the CIA, which is amply documented,
is not mentioned in official UNODC publications, which focus on internal social
and political factors. Needless to say, the historical roots of the opium trade
have been grossly distorted.<BR>(See UNODC <A href=""
target=_blank>http://www.unodc.org/pdf/publications/afg_opium_economy_www.pdf</A><BR>According
to the UNODC, Afghanistan’s opium production has increased, more than 15-fold
since 1979. In the wake of the Soviet-Afghan war, the growth of the narcotics
economy has continued unabated. The Taliban, which were supported by the US,
were initially instrumental in the further growth of opiate production until the
2000 opium ban.<BR>(See UNODC <A href=""
target=_blank>http://www.unodc.org/pdf/publications/afg_opium_economy_www.pdf</A><BR>This
recycling of drug money was used to finance the post-Cold War insurgencies in
Central Asia and the Balkans including Al Qaeda. (For details, see Michel
Chossudovsky, War and Globalization, The Truth behind September 11, Global
Outlook, 2002, <A href=""
target=_blank>http://globalresearch.ca/globaloutlook/truth911.html</A> )<BR>
<H3><STRONG>Narcotics: Second to Oil and the Arms Trade</STRONG></H3>The
revenues generated from the CIA sponsored Afghan drug trade are sizeable. The
Afghan trade in opiates constitutes a large share of the worldwide annual
turnover of narcotics, which was estimated by the United Nations to be of the
order of $400-500 billion. (Douglas Keh, Drug Money in a Changing World,
Technical document No. 4, 1998, Vienna UNDCP, p. 4. See also United Nations Drug
Control Program, Report of the International Narcotics Control Board for 1999,
E/INCB/1999/1 United Nations, Vienna 1999, p. 49-51, and Richard Lapper, UN
Fears Growth of Heroin Trade, Financial Times, 24 February 2000). At the time
these UN figures were first brought out (1994), the (estimated) global trade in
drugs was of the same order of magnitude as the global trade in oil.<BR>The IMF
estimated global money laundering to be between 590 billion and 1.5 trillion
dollars a year, representing 2-5 percent of global GDP. (Asian Banker, 15 August
2003). A large share of global money laundering as estimated by the IMF is
linked to the trade in narcotics.<BR>Based on recent figures (2003), drug
trafficking constitutes “the third biggest global commodity in cash terms
after oil and the arms trade.” (The Independent, 29 February 2004).<BR>Moreover,
the above figures including those on money laundering, confirm that the bulk of
the revenues associated with the global trade in narcotics are not appropriated
by terrorist groups and warlords, as suggested by the UNODC report.<BR>There are
powerful business and financial interests behind narcotics. From this
standpoint, geopolitical and military control over the drug routes is as
strategic as oil and oil pipelines.<BR>However, what distinguishes narcotics
from legal commodity trade is that narcotics constitutes a major source of
wealth formation not only for organised crime but also for the US intelligence
apparatus, which increasingly constitutes a powerful actor in the spheres of
finance and banking.<BR>In turn, the CIA, which protects the drug trade, has
developed complex business and undercover links to major criminal syndicates
involved in the drug trade.<BR>In other words, intelligence agencies and
powerful business syndicates allied with organized crime, are competing for the
strategic control over the heroin routes. The multi-billion dollar revenues of
narcotics are deposited in the Western banking system. Most of the large
international banks together with their affiliates in the offshore banking
havens launder large amounts of narco-dollars.<BR>This trade can only prosper if
the main actors involved in narcotics have “political friends in high
places.” Legal and illegal undertakings are increasingly intertwined, the
dividing line between “businesspeople” and criminals is blurred. In turn, the
relationship among criminals, politicians and members of the intelligence
establishment has tainted the structures of the state and the role of its
institutions.<BR>
<H3><STRONG>Where does the money go? Who benefits from the Afghan opium
trade?</STRONG></H3>This trade is characterized by a complex web of
intermediaries. There are various stages of the drug trade, several interlocked
markets, from the impoverished poppy farmer in Afghanistan to the wholesale and
retail heroin markets in Western countries. In other words, there is a
“hierarchy of prices” for opiates.<BR>This hierarchy of prices is acknowledged
by the US administration:<BR>
<P style="PADDING-LEFT: 30px">“Afghan heroin sells on the international
narcotics market for 100 times the price farmers get for their opium right out
of the field”.(US State Department quoted by the Voice of America (VOA), 27
February 2004).</P>According to the UNODC, opium in Afghanistan generated in
2003 “an income of one billion US dollars for farmers and US$ 1.3 billion for
traffickers, equivalent to over half of its national income.”<BR>Consistent with
these UNODC estimates, the average price for fresh opium was $350 a kg. (2002);
the 2002 production was 3400 tons. (<A href=""
target=_blank>http://www.poppies.org/news/104267739031389.shtml</A> ).<BR>The
UNDOC estimate, based on local farmgate and wholesale prices constitutes,
however, a very small percentage of the total turnover of the multibillion
dollar Afghan drug trade. The UNODC, estimates “the total annual turn-over of
international trade” in Afghan opiates at US$ 30 billion. An examination of the
wholesale and retail prices for heroin in the Western countries suggests,
however, that the total revenues generated, including those at the retail level,
are substantially higher.<BR>
<H3>Wholesale Prices of Heroin in Western Countries</H3>It is estimated that one
kilo of opium produces approximately 100 grams of (pure) heroin. The US DEA
confirms that “SWA [South West Asia meaning Afghanistan] heroin in New York City
was selling in the late 1990s for $85,000 to $190,000 per kilogram wholesale
with a 75 percent purity ratio (National Drug Intelligence Center, <A href=""
target=_blank>http://www.usdoj.gov/ndic/pubs/648/ny_econ.htm</A> ).<BR>According
to the US Drug Enforcement Administration (DEA) “the price of SEA [South East
Asian] heroin ranges from $70,000 to $100,000 per unit (700 grams) and the
purity of SEA heroin ranges from 85 to 90 percent” (ibid). The SEA unit of 700
gr (85-90 % purity) translates into a wholesale price per kg. for pure
heroin ranging between $115,000 and $163,000.<BR>The DEA figures quoted above,
while reflecting the situation in the 1990s, are broadly consistent with recent
British figures. According to a report published in the Guardian (11 August
2002), the wholesale price of (pure) heroin in London (UK) was of the order of
50,000 pounds sterling, approximately $80,000 (2002).<BR>Whereas as there is
competition between different sources of heroin supply, it should be emphasized
that Afghan heroin represents a rather small percentage of the US heroin market,
which is largely supplied out of Colombia.<BR>
<H3>Retail Prices</H3><STRONG>US</STRONG><BR>“The NYPD notes that retail heroin
prices are down and purity is relatively high. Heroin previously sold for about
$90 per gram but now sells for $65 to $70 per gram or less. Anecdotal
information from the NYPD indicates that purity for a bag of heroin commonly
ranges from 50 to 80 percent but can be as low as 30 percent. Information as of
June 2000 indicates that bundles (10 bags) purchased by Dominican buyers from
Dominican sellers in larger quantities (about 150 bundles) sold for as little as
$40 each, or $55 each in Central Park. DEA reports that an ounce of heroin
usually sells for $2,500 to $5,000, a gram for $70 to $95, a bundle for $80 to
$90, and a bag for $10. The DMP reports that the average heroin purity at the
street level in 1999 was about 62 percent.” (National Drug Intelligence
Center, <A href=""
target=_blank>http://www.usdoj.gov/ndic/pubs/648/ny_econ.htm</A> ).<BR>The NYPD
and DEA retail price figures seem consistent. The DEA price of $70-$95, with a
purity of 62 percent translates into $112 to $153 per gram of pure heroin. The
NYPD figures are roughly similar with perhaps lower estimates for purity.<BR>It
should be noted that when heroin is purchased in very small quantities,
the retail price tends to be much higher. In the US, purchase is often by “the
bag”; the typical bag according to Rocheleau and Boyum contains 25 milligrams of
pure heroin.(<A href=""
target=_blank>http://www.whitehousedrugpolicy.gov/publications/drugfact/american_users_spend/appc.html</A>
)<BR>A $10 dollar bag in NYC (according to the DEA figure quoted above) would
convert into a price of $400 per gram, each bag containing 0.025gr. of pure
heroin. (op cit). In other words, for very small purchases marketed by street
pushers, the retail margin tends to be significantly higher. In the case of the
$10 bag purchase, it is roughly 3 to 4 times the corresponding retail price per
gram.($112-$153)<BR><STRONG>UK</STRONG><BR>In Britain, the retail street price
per gram of heroin, according to British Police sources, “has fallen from £74 in
1997 to £61 [in 2004].” [i.e. from approximately $133 to $110, based on the 2004
rate of exchange] (Independent, 3 March 2004). In some cities it was as low as
£30-40 per gram with a low level of purity. (AAP News, 3 March 2004). According
to Drugscope (<A href="" target=_blank>http://www.drugscope.org.uk/</A> ), the
average price for a gram of heroin in Britain is between £40 and £90 ($72- $162
per gram) (The report does not mention purity). The street price of heroin was
£60 per gram in April 2002 according to the National Criminal Intelligence
Service.<BR>(See:<A href=""
target=_blank>http://www.drugscope.org.uk/druginfo/drugsearch/ds_results.asp?file=%5Cwip%5C11%5C1%5C1%5Cheroin_opiates.html</A>
)<BR>
<H3><STRONG>The Hierarchy of Prices</STRONG></H3>We are dealing with a
hierarchy of prices, from the farmgate price in the producing country,
upwards, to the final retail street price. The latter is often 80-100 times the
price paid to the farmer.<BR>In other words, the opiate product transits through
several markets from the producing country to the transshipment country(ies), to
the consuming countries. In the latter, there are wide margins between “the
landing price” at the point of entry, demanded by the drug cartels and the
wholesale prices and the retail street prices, protected by Western organized
crime.<BR>
<H3><STRONG>The Global Proceeds of the Afghan Narcotics Trade</STRONG></H3>In
Afghanistan, the reported production of 3600 tons of opium in 2003 would allow
for the production of approximately 360,000 kg of pure heroin. Gross revenues
accruing to Afghan farmers are roughly estimated by the UNODC to be of the order
of $1 billion, with 1.3 billion accruing to local traffickers.<BR>When sold in
Western markets at a heroin wholesale price of the order of $100,000 a kg (with
a 70 percent purity ratio), the global wholesale proceeds (corresponding to 3600
tons of Afghan opium) would be of the order of 51.4 billion dollars. The latter
constitutes a conservative estimate based on the various figures for wholesale
prices in the previous section.<BR>The total proceeds of the Afghan narcotics
trade (in terms of total value added) is estimated using the final heroin retail
price. In other words, the retail value of the trade is ultimately the criterion
for measuring the importance of the drug trade in terms of revenue generation
and wealth formation.<BR>A meaningful estimate of the retail value, however, is
almost impossible to ascertain due to the fact that retail prices vary
considerably within urban areas, from one city to another and between consuming
countries, not to mention variations in purity and quality (see above).<BR>The
evidence on retail margins, namely the difference between wholesale and retail
values in the consuming countries, nonetheless, suggests that a large share of
the total (money) proceeds of the drug trade are generated at the retail
level.<BR>In other words, a significant portion of the proceeds of the drug
trade accrues to criminal and business syndicates in Western countries involved
in the local wholesale and retail narcotics markets. And the various criminal
gangs involved in retail trade are invariably protected by the “corporate” crime
syndicates.<BR>90 percent of heroin consumed in the UK is from Afghanistan.
Using the British retail price figure from UK police sources of $110 a gram
(with an assumed 50 percent purity level), the total retail value of the Afghan
narcotics trade in 2003 (3600 tons of opium) would be the order of 79.2
billion dollars. The latter should be considered as a simulation rather than an
estimate.<BR>Under this assumption (simulation), a billion dollars gross revenue
to the farmers in Afghanistan (2003) would generate global narcotics earnings,
–accruing at various stages and in various markets– of the order of 79.2 billion
dollars. These global proceeds accrue to business syndicates, intelligence
agencies, organized crime, financial institutions, wholesalers, retailers, etc.
involved directly or indirectly in the drug trade.<BR>In turn, the proceeds of
this lucrative trade are deposited in Western banks, which constitute an
essential mechanism in the laundering of dirty money.<BR>A very small percentage
accrues to farmers and traders in the producing country. Bear in mind that the
net income accruing to Afghan farmers is but a fraction of the estimated 1
billion dollar amount. The latter does not include payments of farm inputs,
interest on loans to money lenders, political protection, etc. (See also UNODC,
The Opium Economy in Afghanistan, <A href=""
target=_blank>http://www.unodc.org/pdf/publications/afg_opium_economy_www.pdf</A>
, Vienna, 2003, p. 7-8)<BR>
<H3>The Share of the Afghan Heroin in the Global Drug Market</H3>Afghanistan
produces over 70 percent of the global supply of heroin and heroin represents a
sizeable fraction of the global narcotics market, estimated by the UN to be of
the order of $400-500 billion.<BR>There are no reliable estimates on the
distribution of the global narcotics trade between the main categories: Cocaine,
Opium/Heroin, Cannabis, Amphetamine Type Stimulants (ATS), Other Drugs.<BR>
<H3>The Laundering of Drug Money</H3>The proceeds of the drug trade are
deposited in the banking system. Drug money is laundered in the numerous
offshore banking havens in Switzerland, Luxembourg, the British Channel Islands,
the Cayman Islands and some 50 other locations around the globe. It is
here that the criminal syndicates involved in the drug trade and the
representatives of the world’s largest commercial banks interact. Dirty money is
deposited in these offshore havens, which are controlled by the major Western
commercial banks. The latter have a vested interest in maintaining and
sustaining the drug trade. (For further details, see Michel Chossudovsky, The
Crimes of Business and the Business of Crimes, Covert Action Quarterly, Fall
1996)<BR>Once the money has been laundered, it can be recycled into bona fide
investments not only in real estate, hotels, etc, but also in other areas such
as the services economy and manufacturing. Dirty and covert money is also
funneled into various financial instruments including the trade in derivatives,
primary commodities, stocks, and government bonds.<BR>
<H3>Concluding Remarks: Criminalization of US Foreign Policy</H3>US foreign
policy supports the workings of a thriving criminal economy in which the
demarcation between organized capital and organized crime has become
increasingly blurred.<BR>The heroin business is not “filling the coffers
of the Taliban” as claimed by US government and the international community:
quite the opposite! The proceeds of this illegal trade are the source of wealth
formation, largely reaped by powerful business/criminal interests within the
Western countries. These interests are sustained by US foreign
policy.<BR>Decision-making in the US State Department, the CIA and the Pentagon
is instrumental in supporting this highly profitable multibillion dollar trade,
third in commodity value after oil and the arms trade.<BR>The Afghan drug
economy is “protected”.<BR>The heroin trade was part of the war agenda. What
this war has achieved is to restore a compliant narco-State, headed by a US
appointed puppet.<BR>The powerful financial interests behind narcotics are
supported by the militarisation of the world’s major drug triangles (and
transshipment routes), including the Golden Crescent and the Andean region of
South America (under the so-called Andean Initiative).<BR><STRONG>Table
1</STRONG><BR><STRONG>Opium Poppy Cultivation in
Afghanistan</STRONG><BR>Year
Cultivation in
hectares
Production
(tons)<BR>1994
71,470
3,400<BR>1995
53,759
2,300<BR>1996
56,824
2,200<BR>1997
58,416
2,800<BR>1998
63,674
2,700<BR>1999
90,983
4,600<BR>2000
82,172
3,300<BR>2001
7,606
185<BR>2002
74
000
3400<BR>2003
80
000
3600<BR>So<STRONG>urce: UNDCP,</STRONG> <SPAN
style="FONT-SIZE: small">Afghanistan, Opium Poppy Survey, 2001, UNOCD, Opium
Poppy Survey, 2002. <A href=""
target=_blank>http://www.unodc.org/pdf/afg/afg_opium_survey_2002.pdf</A></SPAN><BR><SPAN
style="FONT-SIZE: small">See also Press Release: <A href=""
target=_blank>http://www.unodc.org/unodc/press_release_2004-03-31_1.html</A> ,
and 2003 Survey: <A href=""
target=_blank>http://www.unodc.org/pdf/afg/afghanistan_opium_survey_2003.pdf</A></SPAN><BR><SPAN
style="FONT-SIZE: small">Notice the dip in 2001</SPAN>
</DIV></FONT></DIV></BODY></HTML>