First of all thanks to ICOS. It is is a great honour and opportunity for me to present some rough ideas. My presentation will not be very systematic or comprehenseive, but I will present some ideas, principles and lessons we’ve learned working in Afghanistan.

First, a brief information on GTZ. GTZ is a government-owned company which works mainly for the German government, and besides that we do work for other institutions as well, such as the EC.

In Afghanistan, we are working on a number of development projects related to drug issues, especially supply reduction and alternative livelihood programmes in Nangahar in Eastern Afghanistan. We are also working in Badakshan and Kunduz on a food security project, and on a demand reduction programme as well as a police drug awareness programme.

Recent trends in the opium economy, as shown in a recent survey by the UNODC, show a 64% jump in opium cultivation. Preliminary UNODC figures for 2005 show a general reduction. On the slide, the dark red areas represent major production areas. As you can see, Nangarhar province is the lead producer. Of the 4 provinces with the highest cultivation in 2004 (above 10,000 hectares), 3 of them – Hilmand, Uruzgan, and Nangarhar – expect a decrease, while in one of them, Badakshan, there is expected to be no change. However, we do expect a decrease in cultivation in general.

The reasons that farmers have decided not to plant are the fear of eradication and the respect for the ban. In certain areas farmers decided not to plant because of a low yield as a result of mono-cropping. Where production and cultivation is increasing, farmers are aware of the ban but believe the government won’t enforce it, based on their experience from 2004.

The UNODC Rapid Assessment Survey 2005 reported very limited eradication in 2004. Only in 9% of the surveyed villages of a total of 225 was there some eradication. The two provinces with active eradication expected a decrease in cultivation, mostly due to farmers restraint.

Why is there such significant reduction ?

There are many reasons. An information campaign led by the government and various carrots and sticks addressed to politicians such as governors as well as farmers. The information campaign includes also - sorry to say so – initimidation measures, but they are combined with a lot of promises for comprehensive development assistance. Another reason is rather simple: due to mono-cropping, massive plant diseases have reduced the cultivation yield.

I would like now to talk about the importance of opium for the overall economy. In Afghanistan, only 2.9% of the land is cultivated with opium, and only 10% of the population is related to opium production. In 2003, farmers received 44% of the turnover from drug cultivation, traffickers received 56%. However, in 2004 the share of the 2.8 billion dollars in profits allocated to farmers fell to 21%, the traffickers received 79%. The per capita income of Afghan families fell from 600 dollars in 2003 to 260 dollars in 2004.

Who are the major actors in the opium economy?

The first group are the poor farmers, receiving loans based on their opium crops, and who can only obtain credit through promising to continue their opium production.

The second group is the land owners and traders who provide land, store opium and sell it later.

The third group is what I call the ‘protectors’. These are officials, warlords, commanders, and terror groups who trade opium and export it abroad. They get the biggest share of the revenue.

In some provinces, the drug economy is so vast that it has become the actual economy. 600 million dollars goes to the poor farmers, 2.2 billion dollars goes to the traffickers and protectors and pays for local armies, construction work, import of consumer goods, and is used to corrupt the state. The opium poppy economy finances a parallel statehood and eventually destroys the state.

The present counter-narcotics strategy is a combination of law enforcement and development-oriented measures. From an economic point of view, the problem with this strategy is that it is focused on eradication which takes away farmers’ livelihood and makes things even worse by increasing their debts. The same thing happened during the Taliban ban.

Among the Afghan population, the only group that can support this measure is the drug traffickers. They are gaining from higher opium prices. After the eradication campaign was announced 3 months ago, prices mounted from 90 dollars to 300 dollars per kg and are expected to further rise, and traders expect 1000 dollars per kilogram in April. For them, it’s like playing futures on the stock market. So eradication will make poppy growing even more profitable.

There is also a political risk to conducting the information campaign with an inadequate amount and timing of assistace, as announcements have resulted in farmers having higher expectations. When promises are not delivered, eradication is understood as an attack on the farmers.

Now I’d like to turn to some of the recommmendations, principles and experiences that we’ve gained from working Afghanistan.

First, rural communities need intensive assistance for viable alternatives. This is much more than crop substitution. It includes sound economic programmes, both agricultural and non-agricultural, rural credit programmes which do not rely on the opium poppy economy, a physical infrastructure, a social infrastructure including health and education, institutional development, and capacity building at the village and higher levels.

We must also allow for a transition period to build up alternative livelihoods gradually. Development can’t be done in few weeks or months; it needs much more time.

As for law enforcement, it must be focused on interdiction through the destruction of stocks, labs and the drugs trade at all levels. Law Enforcement is a necessary part of the drug control strategy but it has to be sequenced in a proper way – it is important that interdiction against the drug trade is directed against the higher levels – the so-called ‘big fishes’.

This means carrying out eradication only if viable alternatives are in place. Eradiction should only be directed at those who have alternatives but insist upon illicit practices, maybe at a later stage when farmers have alternatives but still maintain their poppy crops. Finally, it is important to integrate counter narcotic objectives into development and community work, and there must be a significant increase in the donor basis. This is the only way to ensure a broad-based impact.

Thank you.