*EPF315 02/26/2003
Illicit Drugs Damage Economic Growth
(International narcotics report: trafficking hurts developing countries) (1150)

By Judy Aita
Washington File Staff Writer

United Nations -- Involvement in the illicit drug trade does not help legitimate national economies and, in the long-term, prevents economic growth, especially in developing countries, according to a new report released February 26 by the International Narcotics Control Board (INCB).

Focusing its 2003 annual report on the relationship between the cultivation, manufacturing and trafficking of illicit drugs and a country's sustainable economic growth, the INCB says that analysis of drug production data and economic growth rates in the main drug producing countries shows a negative impact.

INCB President Philip Emafo said, "The drug problem is often seen primarily as a social problem, but our report shows that it also has serious economic consequences which impact on the overall development of a country. While social problems of drug abuse are felt in the developed countries, the major economic impact of the illicit drug trade is in the developing world."

At a United Nations press conference releasing the report, Emafo said the INCB categorically dispels the myth that drug trafficking may be a route to prosperity. "Drug trafficking does not contribute to economic growth and prosperity." He continued, "We urge countries to rid themselves of illicit drug production because it will benefit them in the long-term, even if there are short-term costs."

Further, the report finds that long-term economic development is simply not feasible if a country has failed to implement an effective system of controlling drugs. Emafo said the INCB is urging the international community to help developing countries in their drug control efforts.

The INCB is an independent body established to monitor implementation of the United Nations international drug control treaties, and to encourage governments to comply. In keeping with that responsibility, the INCB conducted a comparative analysis of drug production data and economic growth rates in the main drug coca and poppy cultivating countries. It shows a negative correlation between illicit drug production and economic development. An actual decline in economic growth results when illicit drug production increases, the report says.

In 1998 and 1999 in the Andean sub-region, for example, coca bush cultivation in Bolivia and Peru decreased while in Colombia it increased. During that period Bolivia and Peru witnessed economic growth that was above the Latin American average while Colombia experienced a decline in economic growth, according to the analysis.

A similar pattern was observed in countries in Asia, the report says. Afghanistan had negative economic growth and instability beginning in the early 1990s with massive increases in large-scale opium poppy cultivation. In the neighboring countries of Pakistan and Iraq, opium poppy cultivation was significantly reduced or eliminated and there was positive economic growth in both countries in the 1980s and the 1990s.

The bulk of the profits of illicit drug trafficking is earned outside countries where drugs are cultivated and manufactured, the report also says.

"Only one percent of the earnings of illicit drug trade is earned by the farmers in developing countries," Emafo said. "It has been estimated that 50 to 66 percent of drug trafficking profit is made in developed countries where most of the illicit drugs are consumed," he said.

Nevertheless, the economic impact of illicit drug money is proportionally greater in developing countries, the report says. For example, illicit drugs are estimated to account for between 10 and 15 percent of gross domestic product (GDP) for Afghanistan and Myanmar and between 2 and 3 percent in Colombia and Laos. In the United States, which has more drug abusers than in any other country, the profits from illicit drugs amount to 0.4 percent of GDP, the report says.

The illicit drug trade "destabilizes the state, the economy, and civil society apart from the damage to long-term economic development," Emafo said. "The illicit drug industry undermines political systems through promoting conflicts, insurgencies and compromising the rule of law."

Although illegal drug trafficking offers employment opportunities to some of the disadvantaged members of the society, it jeopardizes their human development and compromises economic development, according to the INCB president.

"Any benefits are ephemeral," Emafo added. "Those who are cultivating the plants are getting some revenue, but in the long-term they are destroying their environment; in the long-term they do not have economic development because ... cultivation is in areas that are inaccessible and in areas of conflict, and governments are not encouraged to promote economic development in such areas."

"There are really no benefits the people in the areas cultivating the illicit plants can gain," Emafo said.

The illicit drug industry also destabilizes the economy through inflow of large illicit profits that foster overvalued exchange rates and income inequality, he said.

"Furthermore, the illicit drug industry undermines civil society through promoting drug abuse and disrupting the official fabric of society involving the family and community. It contributes to the rising levels of crime and violence," Emafo said.

Emafo also said that after visiting Afghanistan in 2002, board members were convinced that the Afghan government was serious about drug control, but ill-equipped to stop widespread opium poppy cultivation. Afghanistan is the world's largest producer of illicit opium.

The board's 2003 report also discusses the illicit drug situation in each region, reports on the production of licit drug production, and discusses the alarming growth in synthetic drugs such as ecstasy, amphetamine, and methamphetamine.

The INCB also warns there is a danger that the worldwide legal market in opiates for pain relief may be getting out of control with supply currently exceeding demand. The board says that cultivation and production levels are far in excess of medical consumption and a risk increases that stocks could be diverted into the illegal drug market.

On regional issues the report says that:

Cocaine abuse is rising in almost all countries in southern and western Africa, particularly in Nigeria and South Africa. Increasing numbers of clandestine labs making synthetic drugs have been raided by law enforcement agencies in Africa. In July 2002 South African authorities seized manufacturing equipment and more than 100 tons of chemicals that would have produced 90 million methaqualone tablets.

In Colombia and Peru the drug problem is increasingly being linked to political and national security issues as guerrilla and paramilitary groups in Colombia exchange illicit drugs for firearms. "Plan Colombia," supported by the United States, continues to be the single most significant effort aimed at reducing illicit drug supply in South America, according to the INCB findings.

China has become the main destination and transit area for heroin consignments. Opium production levels in Myanmar, the world's second largest producer of illicit opium, have fallen by half since 1996 and the government reduced the area under cultivation by 7 percent in 2002.

The INCB 2002 report can be found in full at http://www.incb.org/e/ind_ar.htm

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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