In one of the most important developments since the war in Afghanistan began in
late 2001, opium production has declined in the country. Over 20 of the
country's 34 provinces will be opium-free this year according to a report by
the United Nations that has now been corroborated by Afghanistan's
counter-narcotics minister, General Khodaidad.
Among the provinces with remaining opium cultivation, the Taliban-dominated
Helmand province ranks high, but even here it is being seen that the humble
wheat crop has replaced poppy. Some newspapers that sent reporters to Helmand
province, over the course of April and May this year, have independently
this assertion. A European television program on the subject was among the
most-forwarded news items on the Internet last week.
Interestingly, it is not the efforts of the Afghan government alone that have
caused the reduction in opium production but something much more mundane,
namely the increased price of wheat, that has pushed up production of the grain
in many parts of the country. Therein lies a tale of so-called market
manipulation that actually goes back to one of the central points about rural
poverty alleviation in the region, namely the strength of economics.
Regular readers of this column will recall my frequent diatribes against the
socialist-communist caucus of Asian politicians and media that tend to heap the
blame of society's ills on the vagaries of market forces. In their line of
thinking, market forces intent on making a quick profit too often subvert the
actions of farsighted and perspicacious socialist leaders. Ah the poor,
misunderstood old souls, having to grapple with these selfish traders instead
of quietly enjoying a cup of jasmine tea.
Well, here then is an example in the opposite direction, namely one of many
governments trying and failing repeatedly to cut opium production in
Afghanistan, only to step back and see market forces doing the job for it. The
invisible hand of the markets has proved itself to be more powerful than all
the carpet-bombing that the North Atlantic Treaty Organization (NATO) could
think of to eradicate opium production in Afghanistan.
High food prices, a result of increased consumption in emerging Asian
superpowers and other countries around the world, have helped to divert the
energies of Afghan farmers from poppy to wheat. A ban on wheat exports by
Pakistan this year only exacerbated the supply and price situation in
Afghanistan, in turn prompting farmers to focus on increased wheat cultivation.
That is exactly as it should be, when prices go up in the absence of any change
in marginal input costs; production (ie supply) should increase.
It is as yet unclear to me how much the Taliban have been hurt by the increased
wheat production in place of opium. At the very least though, they would need
to have vastly different infrastructure in place to make the same kind of money
by selling wheat as compared with opium from the provinces they control because
wheat is more bulky. Secondly, because farmers can eat their own produce, they
do not depend on the Taliban for money secured from delivering poppies
cultivated, in effect changing the power dynamic for the warlords. Over the
next few weeks and months, we will see how the changed economic dynamic of
Afghanistan affects the recruitment and military success of the Taliban.
My guess is that the effect of reduced opium production will be quite heavy on
the Taliban, seeing as it is their primary source of income. Religious war or
not, the Taliban need to pay their soldiers princely sums of money (by local
standards) to fight the war against NATO in the country. With their coffers
depleted and their own expenses on fuel and food going up, it is likely that
the Taliban would face greater pressure. In thinking about all the causes for
their troubles, it is possible that the Taliban wouldn't pay much attention to
the price of wheat but it very much here that their problems started.
I have argued in these pages before that the anti-market operations of the
European Union in defending and expanding its Common Agricultural Policy had
the pernicious effect of pushing down food production in various parts of
Africa and Asia. Over the past few years, as these countries started growing
richer on increased trade, the resulting increase in food consumption could not
be met with higher production thereby driving prices up sharply.
Even here, the actions of various socialist governments - for example Vietnam
banning the export of rice earlier this year - only served to exacerbate the
problem. Once the price of rice increased above a certain level, various
farmers in the US and elsewhere switched their summer crops to rice from corn,
ensuring that future supply would increase. This is how markets operate an
almost seamless self-correcting mechanism that governments are simply
ill-equipped to duplicate. Often enough, they produce the kind of jarring
change that the Taliban are witnessing, the same one that other nasty regimes
from North Korea to Myanmar are also facing.
From Taliban to tigers
The lessons of fighting the Taliban from the pits of commodity exchanges around
the world though can be expanded to other aspects of development. A key debate
across Asia focuses on how to preserve the varied fauna of the region from
extinction. Perhaps the most iconic of these would be the tiger, which now
faces extinction in the country of its most recent resurgence, India.
The main factor contributing to the tiger's potential extinction is the rampant
demand for its sexual organs (of the male) in Chinese medicine. One of the more
significant failures of the Chinese government in recent years has been its
inability to modernize the country's knowledge base when it comes to ancient
cures. Far from condemning the practice of using exotic animal parts for
unproved medicinal remedies, the Chinese government instead has sought
permission from wildlife bodies to slaughter its zoo population of tigers for
The potential impact of a tiger's sexual organs on one's libido is almost
surely mythical, which makes the extinction of the majestic animal a tragedy of
farcical proportions. Here though is a simple market problem, namely that a
dead tiger is worth more than a living one. That price disparity seems strange
when you consider that tourists are more likely to spend a few thousand dollars
on an Indian safari experience if there was a chance of actually seeing a tiger
in the wild.
Why then have locals in these wildlife reserves not helped to preserve the
tiger, instead of joining with the poachers? Simply put, it goes back to their
lack of ownership in the well-being of tigers. Their meager wages as waiters
and drum beaters proves insufficient, compared to the offer for killing a whole
tiger for the poachers.
India can certainly learn much from the successful experience of tourism in
various communities ranging from the Masai tribe in Kenya to the pristine
havens of Southeast Asia. In all these cases, it is not the addition of
hundreds of gun-toting rangers that has helped to preserve wildlife, but the
economic well-being of the local population that ensures that the wildlife
survives so that tourist dollars continue to flow.
It is not just in poor countries that such economic dynamics work. Australia
and New Zealand depend on tourists to supplement agrarian incomes in many
communities. As a result, they have spent enormous efforts in ensuring the
well-being of natural wonders like the Great Barrier Reef and various whale
species that dominate the waters around New Zealand. It is no accident that
these two countries have taken up the cudgels against Asian poachers who use
unsustainable fishing practices such as cyanide fishing that is common in the
Indonesian archipelago but seldom seen in the waters around Australia, or
indeed that they have helped set the pace in protests against Japanese whaling
In the latter case, the use of diplomatic and cultural protests against the
Japanese does mask the underlying economic conflict between high prices for
whale meat in Tokyo and tourist tickets for whale watching off the northern
coast of New Zealand. Therein lies a tale for resolving other environmental
issues across the region.