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The Challenges to Nation-Building
in Afghanistan
continues .....
Secondly, nature too added to the woes of an already war-ravaged economy, with protracted drought conditions that began in 1999 and lasted till 2001. Again according to estimates made by the international community, especially the World Bank, crop production was halved and livestock herds substantially depleted, making the situation in 2002 as desperate as it was. However two factors contributed to the magnitude of the unaccounted segments of the economy. To start with, Afghanistan, being a landlocked country, is also a hub for trade between some of its larger neighbours. Such trade flows occur through its porous borders with
Pakistan (2,450 km), Tajikistan (1,206 km), Iran (936 km), Turkmenistan (744 km), Uzbekistan (137 km) and China (76 km). Unfortunately, figures on Afghanistan’s domestically directed and reexport trade are not available.
The second reason why the magnitude of the unaccounted economy
is likely to be great is the historically important role of poppy cultivation
and opium production in the rural Afghan economy.
The most prominent branch of the Afghan war economy is the cultivation of opium. Although the profit of the opium business lies almost exclusively
in its trade, farmers gain a much more regular and higher profit from opium than from cultivating other crops. The cash proceeds from the opium trade fuel a much larger illegal economy.
The local profits derived from opium provide the needed ‘start up’ capital for an economy that is increasingly dominated by illegal entrepreneurs. According to an estimate by the United Nations Office for Drug Control and Crime Prevention (UNODC), land under poppy cultivation amounted to 82,171 hectares in 2000 and opium production in 2002 was 3,400 tons, which was similar to levels that prevailed in the mid-to-late 1990s.
With the Taleban having imposed a ban on opium production and the Karzai
government having declared a ban on poppy cultivation in 2002, it is
inevitable that a large part of this activity would occur in the underground
economy. The economy surrounding the cultivation of poppy, the production of opium and its trade would generate a significant income, which again will go unaccounted.
To be continued.......