Stopping the Afghan Opium Trade
This entry was posted on 7/22/2009 3:39 PM and is filed under uncategorized.
Governance is the product of law, the legal system. I wrote an entire book, Freedom, America’s Competitive Advantage in the Global Market (2007) on these systems. The concepts of the book are based in law and economics and game theory. These ideas were developed in my first book, Investing in China, 2002, about governance in China. The concepts are getting better with the use of behavioral economics.
As I pointed out in Freedom, these rules are consistent everywhere. To solve them you have to use a global approach. For example, let us say you want to attack the problem of drug money going to finance the Taliban. Until now the US government along with its allies has simply been destroying the poppies or replacing it with low value crops like wheat.
The result has hardly been a success. The program has to be designed from a perspective that involves many areas not just one. You have to take a global approach think about law, business, economics, agri business, marketing and even religion.
The opium, poppies, coca or marijuana are prohibited by laws in many countries all over the world as well as in the Koran. Stopping the growing of these plants has been seen as simply a problem of enforcement, but this has often created unanticipated results because solving the problem from a narrow perspective of legal enforcement simply did not work. The economic incentives to grow these plants and turn them into drugs are just too large. So the law gets ignored all over the world.
But it doesn’t stop there. Since the law is ignored, governance suffers. As in Mexico and Columbia powerful private armies with criminal connections like the Taliban use drug money to buy guns and destabilize the country. The violence and money help to corrupt the security forces, so rule of law suffers. In the midst of violence, no investor or business wants to start, so business suffers. There are no alternative crops or more importantly no way to market or distribute alternative crops, so the locals are more impoverished which hurts governance, because they would feel better off growing the drugs and they dislike a central government that attempts to enforce an unpopular law, in short a vicious cycle
To reverse this process will require a comprehensive approach. For example, in Haiti one way to prevent deforestation from using trees and charcoal a fuel is to grow mangos trees. Mango trees are far more valuable than other trees. They provide income, prevent deforestation and help development. Picking paper out of garbage provides jobs and creates brick of used paper that burns better than charcoal. The result is more jobs, less environmental damages, better business environment and more stability.
The problem in Afghanistan is not just to find a product that is legal, like wheat, but to find a product that is either high or can become value that you can market locally and ideally in other countries. This is a business problem. You have to be able to build a national brand like French wine or Italian olive oil. But it does not have to be high end goods or something that has to be sold on Fifth Avenue. In 1982, Nian Guanggjiu a poor farmer from Anhui providence in China, started selling “Idiot’s Sunflower Seeds”. These are salted and stir fried sunflower seeds that the Chinese eat as snacks. This brand took off in Shanghai and Beijing, turning a low value product into a high value product.
Afghanistan may be dirt poor, but it is located next to India and Pakistan, two of the most populist countries on earth. India at least is growing rapidly and will be one of the largest markets in the world. Marketing to India as well as growing products or understanding laws requires an in depth understanding of local conditions and a multi disciplinary approach. This is what I do.
It is not just agriculture, it is also ideas. In Iran, there is a debate going on about the violation of Islamic jurisprudence as a result of the crackdown of supporters of Moussavi. Like all religions there are many types of Islam and many ideas. Islam like many religions is also a moral code, or if you will, a law. To improve rule of law and governance, you have to use the religion to work for you, not against you. In the US we often see law as separate from religion. In Afghanistan and many other places, it is religion. The solution is first to understand this and make them work together for us not against us.
