Antonio Maria Costa on the Taliban's Drug Dealers

After spending hundreds of millions of dollars trying to eradicate the fields of poppies that produce opium in Afghanistan, the U.S. suddenly announced in June that, in the words of special AfPak envoy Richard Holbrooke, "eradication is a waste of money." Instead, NATO and Afghan forces are trying to focus on the nexus between the opium trade and Taliban financing. Nobody has watched these developments more closely than Antonio Maria Costa, head of the Vienna-based U.N. Office on Drugs and Crime. A frequent visitor to Afghanistan himself, he also has a staff of some 360 locals "crisscrossing the country," tracking the growth and sale of narcotics. In a series of interviews with NEWSWEEK's Christopher Dickey before the recent election in Afghanistan, Costa talked about the surprising drug story behind the war story there. Excerpts:

Why give up on poppy eradication?
Last year the Afghan government eradicated 5,000 hectares of about 159,000 that were cultivated. More than 70 military and militia men were killed, and a couple of hundred million dollars were spent—tens of thousands of dollars per hectare—to destroy 3 percent of the crop. Eradication is supposed to have a double function: first, to reduce cultivation; and, second, to deter farmers from planting. But nobody is deterred by a 3 percent risk. The money would be better spent on development assistance like hospitals and schools.

You've suggested Afghanistan produces much more opium than the world actually consumes.
Oh, yes. Since 2005 the Afghans have cultivated almost twice world demand. The bottom should have fallen out of the opium market. But it hasn't. Prices are back down to where they were a decade ago, but they should be much lower considering the amount of opium being produced. That suggests that a lot of opium is not reaching the market. We have been wondering where it is. Now, in a number of military operations in the southern provinces, NATO troops have found huge amounts, which is evidence that the Taliban have been sitting on huge stockpiles. I can report—and this is breaking news—that opium cultivation and production fell for the second year in a row in 2009. But again this year, supply exceeds demand. Someone is hoarding 10,000 tons of opium—enough to satisfy two years of world heroin addiction, or three years of morphine prescription. Where and why? We don't know. But it's strange and potentially dangerous.

Prices dropped last year to about half what they were in 2005, and there are signs the Taliban are hoarding to try to corner the market. at one point you suggested they might actually have tried to discourage poppy cultivation themselves to bolster the prices of their opium reserves.
Recent NATO military operations are showing us that the Taliban are much closer to running the business than we thought. NATO has been seizing precursors, seeds, opium, laboratory equipment, arms, pickup trucks—all sorts of insurgent equipment in drug markets and warehouses that have been attacked. All of this suggests the insurgents are very heavily involved in the trading itself. This is, in a sense, surprising. We had thought they were just taking a cut of about 10 percent. We believed that they were motivated, basically, by religious and political extremism. But it looks like they are actually doing it for the money. Whether it's for themselves, or whether it's to finance Taliban crime cartels or their cause around the world, this is very hard to say. But I think it deserves very close scrutiny. We may be witnessing the birth of Afghan narco-cartels.

How much money are we talking about?
Wholesale in Afghanistan alone was about $3 billion last year. Worldwide retail—what's sold on the streets of Naples or Marseilles or London—was about $52 billion.

Where's the biggest group of consumers?
Iran. It has a very high addiction rate: the Iranian government says a couple of million people; we say up to 3 million people—6 percent of the population. They do opiates in general, with a lot of morphine and heroin.