DRUGS 38
4-2ce History of the Golden Crescent Drug trade
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.
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).
The Afghan narcotics economy was a carefully designed project of the CIA, supported by US foreign
policy.
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:
“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.)
Researcher Alfred McCoy’s study confirms that within two years of the onslaught of the CIA’s covert
operation in Afghanistan in 1979,
“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.”
“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.
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)
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.
(See UNODC http://www.unodc.org/pdf/publications/afg_opium_economy_www.pdf
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.
(See UNODC http://www.unodc.org/pdf/publications/afg_opium_economy_www.pdf
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, http://globalresearch.ca/globaloutlook/truth911.html )
4-2cf Narcotics: Second to Oil and the Arms Trade
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.
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.
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).
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.
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.
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.
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.
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.
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.
Where does the money go? Who benefits from the Afghan opium trade?
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.
This hierarchy of prices is acknowledged by the US administration:
“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).
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.”
Consistent with these UNODC estimates, the average price for fresh opium was $350 a kg. (2002); the 2002
production was 3400 tons. (http://www.poppies.org/news/104267739031389.shtml ).
The UNDOC estimate, based on local farmgate and wholesale prices constitutes, however, a very small
percentage of the total turnover of the multibillion dollar Afghan drug trade. The UNODC, estimates “the total
annual turn-over of international trade” in Afghan opiates at US$ 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.
4-2cg Wholesale Prices of Heroin in Western Countries
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,
http://www.usdoj.gov/ndic/pubs/648/ny_econ.htm ).
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.
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).
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.
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