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ECONOMIC GROWTH AND COUNTERNARCOTICSAgainst this somber background, Afghanistan has experienced an economic recovery.The IMF estimates that real, nondrug GDP has averaged annual growth of nearly 17percent from 2001–2002 through 2005–2006. The government has sought to set itsdevelopment agenda, rather than ceding it to aid organizations. At the London conferenceit presented its I-ANDS, which international financial institutions hailed as one of thebest they have received from any developing country.Nevertheless, the postwar economic boom is coming to an end. The IMF warnsthat the sources of the rebound “will be insufficient over the long term to sustain growthand alleviate poverty.” Additionally, counternarcotics policies, if implemented wrongly,risk reversing the economic recovery that has helped stabilize the country. An as yetunpublished macroeconomic simulation by an international financial institutiondemonstrates that different types of counternarcotics policies have differentmacroeconomic impacts and that a strategy including eradication at early stages can leadto a contraction of total GDP by nearly 6 percent. A change from recent rapid GDPgrowth of nearly 20 percent per year to a significant contraction is likely to provokeinstability and violence. The provision of “alternative livelihoods” to farmers alonewould not fully compensate for the effect of such an economic contraction on poverty,nutrition, health, employment, investment, the balance of payments, the exchange rate,and the price level. Donor countries are threatening to limit their aid if narcoticsproduction is not curbed quickly, regardless of its economic effects. The U.S. Congress“fenced” part of this year’s aid disbursement, pending certification by President Bush thatAfghanistan was cooperating with U.S. counternarcotics policies.Recommendations:• The main counternarcotics goal should be reducing the absolute and relativeeconomic size of the opium economy while maintaining positive growth thatfavors the poor in the overall economy. 2525 The “poor” in Afghanistan are defined as either: (1) those without enough food to meet basic caloricneeds consistently (about 40 percent of the rural population); or (2) those living on less than one U.S. dollar32
• Counternarcotics development strategies must be comprehensive, not make-workprograms. “Alternative livelihoods” need to include comprehensive ruraldevelopment, including electric power, water, roads, credit, debt relief, agriculturalextension, and non-farm employment, particularly in rural industries.Counternarcotics policy must also address the macroeconomic measures neededto minimize the negative effect of this sector’s contraction on the whole economy.Such policies need over a decade to become fully effective.This goal focuses on reducing the harm to the stability of Afghanistan, rather thanfollowing the illusory course of trying to solve the problem of drug consumption—whichdeveloped countries have not been able to solve with all the resources available to them—in the world’s weakest state. Hence, the I-ANDS and the Afghan government’s newDrugs Control Policy propose a “pro-poor” counternarcotics policy that focuses initiallyon interdiction, law enforcement, institution building, and building licit livelihoods, whileinvesting in infrastructure, protection of rights, and an enabling framework for privatesector growth that will make it possible to raise welfare while phasing out dependence oncriminal activity. Crop eradication, which the U.S. Congress in particular views ascritical, despite massive evidence to the contrary, raises the farm price of opium, createsincentives for production in remote high-cost areas, and raises the value of traffickers’inventories. Eradication in Afghanistan has led to abuses such as the sale of daughters byopium farmers to pay debts owed to traffickers. 26Recommendations:• To assure that counternarcotics and economic development both contribute tostabilizing Afghanistan, the United States and other donors must support theintegrated approach of the I-ANDS.• The U.S. government should support the Afghan government’s National DrugsControl Policy. Congress should not undermine these efforts by insisting on U.S.contracting, earmarking for particular projects or causes, such as aerial eradicationper day (for which data are not yet available). Pro-poor growth is important because the few rich willotherwise monopolize most of the benefits of investment.26 Farah Stockman, “Afghan Women Pay the Price for War on Drugs,” Boston Globe, September 29, 2005.33
Page 1 and 2: THE CENTER FOR PREVENTIVE ACTIONAfg
Page 3: CONTENTSForewordvAcknowledgmentsvii
Page 7 and 8: ACKNOWLEDGMENTSI would like to than
Page 9: Source: Map graphic provided by map
Page 13 and 14: INTRODUCTION:THE AFGHANISTAN COMPAC
Page 15 and 16: • An exchange rate inflated by ai
Page 17 and 18: SECURITYThere are two international
Page 19 and 20: expand coverage by PRTs, help disba
Page 21 and 22: Yet more than four years after the
Page 23 and 24: presidential visit to the region, w
Page 25 and 26: without active engagement and assis
Page 27 and 28: enforcement services. The inhabitan
Page 29 and 30: manage its water resources, connect
Page 31 and 32: efforts.” 18 In response to Afgha
Page 33 and 34: Using pressure to hold such leaders
Page 35 and 36: • The central police force also m
Page 37 and 38: Afghans also have shown that they w
Page 39 and 40: presence, as it has done through re
Page 41 and 42: development budgets. Currently, the
Page 43: ECONOMIC AND SOCIAL DEVELOPMENTBasi
Page 47 and 48: military operations of the Coalitio
Page 49 and 50: Figure 3: U.S. Assistance to Afghan
Page 51 and 52: This will require both national bud
Page 53 and 54: ABOUT THE AUTHORBarnett R. Rubin is
Page 55 and 56: CENTER FOR PREVENTIVE ACTION ADVISO

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