The War in Afghanistan: Drugs, Money Laundering and the Banking System
“The iron law of the market is that demand breeds supply.” -The Economist
The landlocked state of Afghanistan sits at the crossroads of Central Asia, the Indian sub-continent, and the Middle East. It is geo-strategically and economically important for a number of reasons.
Firstly, Afghanistan is a major geo-strategic hub that conveniently flanks Iran, the former Soviet Union, and China. Afghanistan’s location has always been significant. For most of its history, the geographic area has been a frontier between Iran, India, and China. Later, since its Independence from Iran, it has acted as a buffer state between Iran, Tsarist Russia succeeded by the Soviet Union, and India under British colonial rule—later succeeded by the Republic of India and Pakistan. Afghanistan is an ideal place to create a wedge between the major Eurasian powers and to establish a permanent military presence for future operations in Eurasia.
Secondly, Afghanistan also constitutes a doorstep into energy-rich Central Asia, which bypasses the territories of Iran, the Russian Federation, and China. This is an important factor because external forces from outside the region such as the United States or Britain can use Afghanistan to circumvent these rival regional powers. A pipeline corridor running through Pakistan and Afghanistan from the oil and gas fields of Turkmenistan and Central Asia has been a major project for the United States and its oil corporations for years.
NATO combat missions, under the auspices of the International Security Assistance Force (ISAF) are concentrated in Southwest and Northwest Afghanistan where the strategic oil and gaz pipeline corridor from Central Asia to the Indian Ocean is to be located.
Prior to September 11, 2001, Washington had been involved in negotiations with the Taliban government with a view to securing this oil and gas route.
U.S. oil and gas interests in Afghanistan have a direct incidence on the post-Taliban political setup. The Afghan President Hamid Karzai was initially selected (December 22, 2001) by the U.S. government and the “international community”. This choice, however, was the result of the lobbying by Union Oil Company of California (UNOCAL). Karzai was not only a former employee of UNOCAL, he had also been collaborating with the Taliban government, in negotiations pertaining to the construction and royalties of the prprosed trans-Afghan pipeline. In fact, several UNOCAL officials, such as Zalmay Khalilzad1, were appointed as U.S. special envoys in both Afghanistan and Anglo-American occupied Iraq.
The NATO offensives in the western half of Afghanistan can be seen as a means to securing the territory needed for the building of a geo-strategic pipeline from Central Asia to Pakistan through Afghanistan.
There even seem to be plans in reconfiguring both the boundaries of Afghanistan and Pakistan to facilitate the flow of oil and gas from Central Asia to the shores of the Indian Ocean. Once built, the pipeline corridor and the terminal on the Indian Ocean coastline would be a major victory over competing Russian, Chinese, and Iranian energy interests in the Caspian Basin and Central Asia. This would be the United States’ second geo-strategic victory after the opening of the Baku-Tbilisi-Ceyhan (BTC) Oil Terminal, another terminal that circumvents around Russia, Iran, and China.
Control of Afghanistan is vital in deciding the future balance of power in Central Asia and Eurasia, thus whosoever controls Afghanistan has great leverage in the resource-rich Eurasian landmass.
Thirdly, Afghanistan constitutes a major area of production of opium, which feeds the illicit narcotics trade out of Afghanistan. This is significant since illicit trade in narcotics is classified third in terms of World trade turnover, after oil and the trade in weapons.
The Half-forgotten Opium Wars
Opium and illicit narcotics have played a relatively unknown, yet historic and central, role in world economics and international relations. There were major wars launched because of opium. Britain and British companies had shared interests in the trade and trafficking of narcotics. One of these companies was the British East India Company (BEIC). India was administered and governed by the British East India Company. Essentially corporate interests and government interests in British-ruled India and British colonies were unified and overlapping.
Whole cultures and nations have historically been warped and changed to appease latent or unseen economic interests. British commercial interests have coerced change in many societies and places. For example, the British coerced Iran into replacing coffee with British tea. Iranian society gave up their national drink, coffee, for tea from India simply because of British commercial interests and demands. To this day, Iranian bistros are called “coffee houses,” but they primarily serve tea.
In the Far East and Southeast Asia, opium was an integral part of European trade. At its peak in the mid 1880s, opium was one of the most valuable commodities circulating in international trade.2 British exports of opium out of India had systematically helped weaken Chinese resistance to foreign or colonial powers and also helped balance the enormous trade deficit Britain had with China.
The British corporations managing India not only coerced the Chinese government into letting drug-addiction run rampant for mere economic interests, but also coerced Indian farmers into growing opium. In fact growing opium was an irregular practice amongst farmers in India. The British effectively forced many Indian farmers into becoming dependent on opium cultivation for a living. The local economies of many communities of India were systematically driven away from food farming into the cultivation of cash crops for British merchants. Subsistence crops gave farmers some form of autonomy from market forces and guaranteed survival while cash crops made farmers dependent on the British and the opium market for survival. Thus India was also entrenched deeper into British control and exploitation from British companies.3
One of the causes of the collapse of Imperial China or the Chinese Empire was the British-sponsored drug-addiction in Asia. Drug addiction was skyrocketing in China and soon the Chinese were forced to ban opium consumption by their population due to its damaging and destructive effects on their society, health, productivity, economy, and culture.
Opium was very important to Britain. Opium addiction was also used to exploit Asian nations, populations, and economies. The profits of opium were so significant and lucrative that the British went so far as to declare war on China for encraoching upon the trade in opium. Basically an unjust war was declared by Britain on China.4
The Chinese Empire reaffirmed its ban on opium imports in 1799, but British companies and merchants merely ignored the ban and continued to import opium into China. The criminalization of opium in China helped raise the market price of opium.
The situation in China was comparable to the prohibition of alcohol in the United States from 1920-1933, except that opium had a deep impact on Chinese society and was draining capital from the Chinese economy. By the 1830s, the value of opium exports had outstripped that of international tea exports for the British. In 1838 the death penalty was legally imposed on all drug dealers, traffickers, or smugglers of Chinese citizenship by the Chinese authorities. Even then, the British were exempted from the penalties of the law because the Chinese government did not want to create problems with Britain. By 1838-1839 the Chinese authorities had no choice, but to enforce the law prohibiting opium imports spearheaded by British companies and merchants with the full support of the British government. China was slipping towards economic disaster as China’s gold and silver reserves were being used to pay for opium imports, leading to a massive outflow of capital from China to Britain. The Chinese could no longer afford to tolerate the British narcotics industry in Asia. The Chinese refused to allow anymore illicit imports of narcotics into China which the British government and European companies had blatantly ignoring and violated.5
The British declared war in 1839 on China and sent a naval force and British troops from India into China. China was defeated and forced to sign an unjust treaty, the Treaty of Nanjing (1842). This led to further economic exploitation of the Chinese and another war. The Second Opium War was fought with the Treaty of Nanjing as its justification and led to further subjection of China by foreign and colonial powers, including the stationing of foreign troops in the Chinese capital, the ceding of Hong Kong and Macau, and the loss of Chinese territory.
Lord Palmerston, the British Prime Minister, made an important statement in reference to the signing of the Treaty of Nanjing to end the First Opium War that confirms the importance of the narco-economy for Britain:
“There is no doubt that this event [the ending of the Opium Wars with the Treaty of Nanjing], which will form an epoch in the progress of the civilization of the human races, must be attended with the most important advantages to the commercial interests of England [meaning Britain]“6
The Legacy of the Opium Wars on Modern Afghanistan
Historically, the lucrative opium trade sponsored by the British in the 19th Century created the foundations for the opium and heroin industry in modern-day Afghanistan, which today produces 92 percent of the World’s supply of heroin.7
Opium cultivation was introduced in the Golden Triangle Region (Laos, Myanmar, and Thailand) in Southeast Asia as well as in other areas. The legacy of opium in Afghanistan is a result of the both the historic drug trade sponsored by the British and the devastation of Afghanistan during the American-Pakistani initiated Soviet-Afghan War.8 It is during the Soviet-Afghan war that the large scale commercial cultivation of opium was launch in Afghanistan, supported and protected by Pakistani and U.S. intelligence. This supply was directed towards the Western heroin market.
The International Drug Trade: The Narcotics Market
If, in the course of their past history, Britain, the Netherlands and Portugal had been actively supporting the drug trade, what is preventing it from occurring today, especially with the mammoth profit yields and hard currency earnings that the illegal drug industry generates.
The economic principles guarded by the British government during the Opium Wars are still the same in modern times. Illicit drugs or narcotics are still a major commodity and an important component of international trade. Opium from Afghanistan constitutes a large portion of the world’s narcotics market, which was estimated by the U.N. to be approximately $400-500 billion.9
Narcotics are an instrument of U.S. foreign policy, which also support Western financial interests. The CIA in collaboration with other intelligence agencies, such as the Pakistani ISI working in Afghanistan, has set up covert operations which support the drug trade:
“Our conclusion remains that the first target of an effective drug strategy should be Washington itself, and specifically its own connections with corrupt, drug-linked forces in other parts of the world. We argued that Washington’s covert operations overseas had been a major factor in generating changes in the overall pattern of drug flows into the United States, and cited the Vietnam-generated heroin epidemic of the 1960s and the Afghan-generated heroin epidemic of the 1980s as analogues of the central concern of this book: the explosion of cocaine trafficking through Central America in the Reagan years, made possible by the administration’s covert operation to overthrow the Nicaraguan Sandinistas [vis-à-vis Iran-Contra].(Cocaine Politics: Drugs, Armies, and the CIA in Central America, Jonathan Marshall and Peter Dale Scott, April 1998)
Michel Chossudovsky has also clarified the economic mechanisms behind the illicit narcotics trade:
Based on 2003 figures, drug trafficking constitutes ‘the third biggest global commodity in cash terms after oil and the arms trade.’
Afghanistan and Colombia are the largest drug producing economies in the world, which feed a flourishing criminal economy. These countries are heavily militarized. The drug trade is protected. Amply documented the CIA has played a central role in the development of both the Latin American and Asian drug triangles.
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.
(Who benefits from the Afghan Opium Trade?, Global Research September 21, 2006)
The Rise of Opium under the presence of NATO in Afghanistan
In economic terms, demand is what creates supply. The supply of opium and heroin has been rising. This is happening right under NATO’s nose. NATO claims that it has been tolerating some growth of opium so as not to incite violence against NATO troops.
Afghanistan must be demilitarized. To do so does not take a standing army but the rooting out of weapons and an end to the flow of illicit narcotics. It is this outward flow of narcotics that creates an inverse, inward flow of weapons into Afghanistan.
The multi-billion dollar (U.S.) heroin industry of Afghanistan must be addressed. Instead of eliminating the drug trade, foreign military presence has assisted in restoring it.
NATO, as an entity, has become an accessory to major narcotics proliferation and criminal activity. Opium is not truly being reduced: in fact all the figures show that it is on the rise. This is happening under the eyes of NATO as confirmed by several media reports.
Pledges to Eliminate Opium and Heroin not kept, but “Grossly Violated”
Afghanistan is central to the international narcotics market and the production of heroin. According to the U.K. Guardian (October 3, 2001) Tony Blair, the British Prime Minister, presented the Anglo-American invasion of Taliban-controlled Afghanistan as a means to erradicate the illicit durg trade. “The arms the Taliban are buying today are paid for with the lives of young British people buying their [Afghan] drugs on British streets,” said Tony Blair. “That is another part of their [the Taliban’s] regime that we should seek to destroy.”
The British Prime Minister’s justifications for war as a matter of public record have proven to be rhetoric, in an attempt to gain public support. Tony Blair’s statement is ironic because British and NATO troops have allowed the cultivation of opium to go unchecked in NATO-garrisoned Afghanistan.
By the virtue of the British Prime Minister’s own statements and pledges, he is guilty of negligence and the sacrificing of British lives. Stopping the cultivation of opium to save British lives was used as a justification in 2001 for the invasion of Taliban-controlled Afghanistan. The invasion did not contribute to curtailing the cultivation of opium, quite the opposite.
Money Laundering and International Banks
The International Monetary Fund (IMF) has report that “the aggregate size of money laundering in the world could be somewhere between 2-5% of the world’s Gross Domestic Product (GDP). Using 1996 statistics, these percentages would indicate that money laundering ranged between U.S. $ 590 billion and U.S. $ 1.5 trillion [in 2003].”10
American money laundering in the United States and internationally is a key issue. Ninety-one percent (91%) of the billions of U.S. dollars spent on cocaine in the United States stays in the United States. It is deposited in the US and Canadian banking system. The narcotics trade helps accumulate hard currency into the American and Canadian economies.11
The extent of money laundering in the United States can be grasped when it is realized that practically every American dollar in circulation in the United States contains “microscopic traces” of cocaine. This is no mere urban legend, but a verified fact supported by scientists, forensics experts and the FBI. Traces of cocaine on American paper money signifies the extensive use of cash as a means of payment in drug deals.12
Most money laundering is done through the international commercial banking system. American domestic banks launder an estimated $100 billion (U.S.) of drug money annually. This includes several of America’s largest financial institutions. 13
The banking systems in North America and Western Europe seem to be serving as points of currency accumulation from the rest of the world that are siphoning hard capital or currency (cash).
César Gaviria Trujillo, the former President of Colombia and the former Secretary-General of the Organization of American States (OAS), has said, “If Colombians are the big fish of the drug trade then Americans are the whale,” and demanded that the United States stop money laundering activities inside U.S. borders and devote more resources to lowering domestic drug consumption in the United States.
The Pakistani military and its military oligarchs also benefit from the international narcotics economy. According to journalist Rahul Bedi, “Other than ruling Pakistan directly and indirectly since [Pakistani] independence [from India] and controlling its [Pakistan’s] nuclear, defense and foreign policies, the military remains the country’s largest and most profitable business conglomerate.”14
Raoolf Ali Khan, the Pakistani representative to the U.N. Commission on Narcotics had said in 1993 that “there is no branch of government [in Pakistan] where drug corruption does not pervade,” and the CIA, itself a notorious force behind international narcotics proliferation, reported to the U.S. Congress in 1994 that heroin had become “the life-blood of the Pakistani economy and political system.”15
The Link between Kosovo and NATO-garrisoned Afghanistan
Money laundering, drug trafficking, and illegal weapons purchases are closely aligned and form an international trinity. In the Balkans this started with the criminalization of the Albanian Republic (Republika e Shqipërisë) and later Kosovo (Kosovo i Metohija in Serbo-Croatian /Kosovë in Albanian).
Kosovo and Albania play an important role in the Eurasian Drug Corridor. The virtually independent Serbian province of Kosovo, primarily inhabited by ethnic Albanians, has a strong link with NATO-garrisoned Afghanistan. Kosovo is where part of the opium and heroin is forwarded from Afghanistan for entry into European markets and North America. Both Afghanistan and Kosovo are under Anglo-American domination, “democratization,” undergoing “the process of nation-building,” with U.S. military bases on their respective territories and in the orbit of NATO.
The Former Yugoslavian Republic of Macedonia and Albania which are saturated with illicit drugs and weapons are also part of the Eurasian Drug Corridor. The Eurasian Drug Corridor is also where the flow of drugs and arms are facilitated.
The drug and weapons streams also run in opposite directions. Weapons flow inwards into the Eurasian Drug Corridor, while illicit drugs or narcotics flow outwards.
The Kosovo-centred illicit narcotics industry is worth billions of dollars a year in transport and exchange fees.
The Kosovo Liberation Army (KLA) and its affiliates or extensions in Macedonia and Albania, and to some extent in Italy, Greece, and Turkey, play an important role in drug trafficking and smuggling. The KLA are middlemen in the narcotics industry. They in turn use part of the proceeds of the illegal narco-economy to arm themselves and to cement their control over numerous aspects of commerce and life in Kosovo, the Albanian-inhabited areas of western Macedonia, and Albania.
Criminalization in the Balkans: How the Narcotics Economy was Launched
According to Chossudovsky (The Globalization of Poverty and the New World Order), Albania and Kosovo became, as of the early 1990s, an important staging point for Afghan opium and heroin trade into Western Europe.
A triangular trade in oil arms and narcotics had developed largely as a result of the embargo imposed by the international community [namely the United States, the E.U., and NATO members] on Serbia and Montenegro [the last two states of the Yugoslav Federation] and the blockade enforced by Greece against Macedonia. In turn, the collapse of industry and agriculture had created a vacuum in the economic system which boosted the further expansion of illicit trade. The latter [illicit trade, i.e. smuggling and drug trafficking] had become a “leading sector,” an important source of foreign exchange and a fertile ground for the criminal mafias.
The trade in narcotics and weapons was allowed to [deliberately] prosper despite the presence, since 1993, of more than 800 American troops at the Albanian-Macedonian border with a mandate to enforce the embargo. (…) The revenues from oil and narcotics were used to finance the purchase of arms (often in terms of direct barter): “Deliveries of oil to Macedonia (skirting the Greek embargo [in 1993-1994]) can be used to cover heroin, as do deliveries of kalashnikov rifles (…) in Kosovo.”
These extensive deliveries of weapons were tacitly accepted by the Western powers on geo-political grounds; both Washington and Bonn [Germany] had favoured the idea of a “Greater Albania” [controlled by the Anglo-American alliance and Franco-German interests] encompassing Albania, Kosovo, and parts of [western] Macedonia. Not surprisingly, there was a “deafening silence” of the international media regarding Kosovo arms-drugs trade: “the trafficking [of drugs and arms] is basically being judged on its geo-political implications (…) In Kosovo, drugs and weapons trafficking is fuelling geo-political hopes and fears.”
Disinformation from NATO-garrisoned Afghanistan
Eric Margolis, a self-professed conservative journalist has said:
“Do not believe what OUR media and politicians are telling us about Afghanistan. Nearly all the information we get about the five-year-old war in Afghanistan comes from U.S. and NATO public relations officers or ‘embedded’ journalists who merely parrot military handouts. Ask yourself, when did you last read a report from a journalist covering Taliban and other Afghan resistance forces?” (September 19, 2006)16
The Canadian government, amongst others, has started a program of training military personnel to become journalists—something that goes beyond the controlled information of embedded reporting.17
It must also be recognized that the insurgency is also in part a resistance movement in many regions of Afghanistan. The media “erroneously” calls this movement the “Taliban”. On the ground in Afghanistan, however, NATO troops identify the Afghan insurgents as Anti-Coalition Militias (ACMs). This title reflects the fact that NATO is fighting a diverse multi-ethnic movement in Afghanistan that sees NATO as an occupation forces. The issue of human rights abuses by NATO troops and security contractors (mercenaries) has also incited violence amongst the inhabitants of Afghanistan.
In addition to media misinformation there are many misleading or distorted reports. There are also individuals claiming to represent the Afghan people and championing human rights such as the Afghani President and members of the unelected Loya Jirga (Afghani pseudo-Parliament). Many in the international anti-war movement have been deceived by members of the Loya Jirga who have pretended to champion human rights and women’s rights against the United States and the warlords, while in fact they are also supported being by the U.S.
This is a form of “manufactured dissent”, an opposition (“counter-discourse”) which creates the illusion that there is a real political opposition within Afghanistan; it is also used to mislead the anti-war movement.
The Taliban: Creation of the U.S. Intelligence Apparatus
The Taliban are a creation of the CIA and Pakistan’s Inter-Service Intelligence (ISI). The Taliban government was set up in 1996 as an Anglo-American client government.
A fallacy is the premise that the Soviet invasion of Afghanistan was the antecedent of extremism and militarism in Afghanistan. In reality, the creation of extremism in Afghanistan was the joint collaboration of U.S. intelligence and the Pakistani ISI, in the largest CIA operation in history. The construction of a war in Afghanistan was engineered by the United States, which gave birth to the Afghan Mujahideen and eventually the Taliban. According to Zbigniew Brezinski, the United States started operations to create a civil war in Afghanistan vis-à-vis Pakistani links before Soviet intervention on December 24, 1979.
Former U.S. National Security Advisor Zbigniew Brezinski, during an interview with the Nouvel Observateur disclosed, that the official directive for the covert support of creating a civil war and opposition to the pro-Soviet Afghan government by the United States started on July 3, 1979.18 This was six months before Soviet troops even entered Afghanistan. There are indications that U.S. intelligence operations in Afghanistan in support of the Mujahideen and other groups predate 1979.
The Return of the Taliban, the manipulation of the Anti-War Movement, and the Demonization of the Northern Alliance
The United States and NATO appear to be preparing for the reinstatement of the Taliban into the Afghan political arena, to the detriment of the Northern alliance.
U.S. Senator Bill Frist of Tennessee (Republican) has called for the inclusion of the Taliban into the Afghan government.19 This is significant because Pakistan has made agreements with the Pakistani based proxies of the Taliban in Waziristan,20 Bill Frist is both Majority Leader in the U.S. Senate and a leading Republican. NATO is also involved in dialogues with the Taliban, most probably through Pakistani channels and President Hamid Karzai.
The Taliban did serve U.S. interests and there seems to be a new role emerging for the Taliban as the potential stewards of U.S. interests in Afghanistan once again. The Taliban for the most part were reliable allies of the United States—more so than the present groups in NATO-garrisoned Afghanistan who were allies of Moscow, Tehran, and Beijing and could still return to their old camps. The Taliban could also prove more cooperative in relation to the United States, as in the past.
The Northern Alliance, although not angelic, has been heavily discredited and demonized. This seems to be the ground work for further operations and duplicity in Afghanistan.
There are also attempts to manipulate the anti-war movement(s) into facilitating these objectives. The United States and the mainstream media have portrayed the Northern Alliance as an ally of the US, when in fact the Northern Alliance leadership prior to 9/11 was opposed to US interventionism. In this regard, there are indications that Pakistani intelligence (ISI) in collaboration with individuals within the Northern Alliance, was involved in the assassination of the leader of the Northern alliance Ahmad Shah Massoud. Shah Massoud was the object of a kamikaze assassination two days before the tragic events of 9/11.
Ironically, the United States is using anti-U.S. foreign policy feelings emanating from the anti-war movement(s) and the general public to actually further U.S. foreign policy objectives.
Global Research Contributing Editor Mahdi Darius Nazemroaya is an independent writer and analyst of the Middle East, based in Ottawa.
Readers are welcome to cross-post this article with a view to spreading the word and warning people of the dangers of further conflict in NATO-garrisoned Afghanistan and further militarization of foreign policy in North America. Please indicate the source and copyright note.
1 Zalmay Khalilzhad is the Afghan-born U.S. Ambassador to Iraq and both a member of the PNAC (Project for the New American Century); he also attended the American University of Beirut in Lebanon and helped created sectarian tensions and division between Muslims, the Druze, and Christians during the Lebanese Civil War. Zalmay Khalilzhad was also one of the middle men between the militias who killed Palestinian civilians in Lebanon and the Israeli government.
Note: Pages 27-28 have a detailed and reader friendly directory of suggested readings, research material, and sources in regards to the Opium Wars and the British involvement in the narcotics (opium) industry in regards to the exploitation of China.
Bergen, Bob; Military Censorship Hiding in Plain Sight, The Hamilton Spectator, October 13, 2006
18 The CIA’s Intervention in Afghanistan, Interview with Zbigniew Brezinski, Le Nouvel Observateur, January 15-21 Issue, 1998, p. 76.
Also analyzed in Michel Chossudovsky, America’s “War on Terrorism“, Op. cit.
Include Taliban in government, says U.S. senator, The Associated Press, October 3, 2006.
Featured by the Canadian Broadcasting Corporation (CBC),
Related articles on Afghanistan and/or Kosovo and the International Narcotics Trade from the Centre for Research on Globalization (CRG):
Who benefits from the Afghan Opium Trade?
The U.S.-NATO Military Intervention in Kosovo
The Spoils of War: Afghanistan’s Multibillion Dollar Heroin Trade
Drugs, the CIA and Faustian Alliances
Washington Behind Terrorist Assaults In Macedonia
CIA- MI6 Interference in Domestic Politics in the Balkans