Heroin, Taliban & Pakistan

[Guest guest]

In this article,the expert on Pakistan, B Raman, Director, Institute

For Topical Studies, Chennai, provides ample evidence for his thesis

that,despite the worst predictions, Pakistan's economy has not

collapsed and FOR JUST ONE REASON - ITS HEROIN TRADE.

 

He estimates that more than US $ 11 billion per annum from the

Taliban/Pakistan heroin trade goes to Pakistan, that is, more than

Pakistani Rs. 715 billion at one US $ equal to 65 Pak rupees. During

2000-01, the Pakistani State had a total revenue of Rs.570.6 billion,

of which Rs.471.6 billion came from taxes. In other words, PAKISTAN'S

HEROIN ECONOMY IS 30 PERCENT LARGER THAN ITS LEGITIMATE STATE ECONOMY.

 

And whom does the Taliban/Pakistan heroin trade hurt most - the West,

including the United States, especially our young people.

 

There is enough information in this article to let Americans know the

dangers posed to our country by the Pakistani abetted heroin trade.

 

Ram Narayanan

 

HEROIN,TALIBAN & PAKISTAN

 

B.RAMAN

 

(To be read in continuation of the earlier article dated 30-4-00 and

titled "Heroinisation of The Pakistani Economy" at

www.saag.org/notes/note87.html )

 

Pakistan's illegal heroin economy has kept its legitimate State

economy sustained since 1990 and prevented its collapse. It has also

enabled it to maintain a high level of arms purchases from abroad and

to finance its proxy war against India through the jehadi

organisations.

 

While no estimate of the money spent by it on its proxy war is

available, it has been estimated by Pakistani analysts ("Friday

Times" March 9 to 15,2001) that about 80 per cent of its total

external debt of US $ 38 billion, that is, about US $ 30.4 billion,

was incurred on arms purchases since 1990. This includes its

purchases of aircraft and missiles from China, missiles from North

Korea, for which payment was made partly in cash and partly in

imported US and Australian wheat, Agosta class submarines from

France, reconditioned Mirage aircraft from France, Lebanon and

Australia and other items from countries such as Ukraine. The

clandestine procurement of nuclear technology and material from

Western countries and the Chinese-aided nuclear power station at

Chashma were also financed through external borrowing.

 

The use of the heroin dollars for such purposes started after the

withdrawal of the Soviet troops from Afghanistan in 1988. In the

1980s, at the instance of the Central Intelligence Agency (CIA) of

the US, the Internal Political Division of the Inter-Services

Intelligence (ISI), headed by Brig (retd).Imtiaz, who worked directly

under Lt.Gen.Hamid Gul, the DG of the ISI during the later years of

Zia-ul-Haq and during the first few months of Mrs.Benazir Bhutto's

first tenure as the Prime Minister (1988-90), started a special cell

for the use of heroin for covert actions.

 

This cell promoted the cultivation of opium and the extraction of

heroin in Pakistani territory as well as in the Afghan territory

under Mujahideen control for being smuggled into the Soviet

controlled areas in order to make the Soviet troops heroin addicts.

After the withdrawal of the Soviet troops, the ISI's heroin cell

started using its network of refineries and smugglers for smuggling

heroin to the Western countries and using the money as a supplement

to its legitimate economy. But for these heroin dollars, Pakistan's

legitimate economy must have collapsed many years ago.

 

Not only the legitimate State economy, but also many senior officers

of the Army and the ISI benefited from the heroin dollars.

Brig.Imtiaz was sacked by Mrs.Benazir on coming to power in 1988 for

interfering in internal politics, but was reinstated by Mr.Nawaz

Sharif on coming to power in 1990 and subsequently made Director of

the Intelligence Bureau (IB).

 

In fact, in Pakistan, Mr.Sharif is seen as the creation of Brig.

Imtiaz. It was he who, as head of the Internal Political Division of

the ISI in the 1980s, had persuaded Mr.Sharif, then a small

businessman in Dubai, to return to Pakistan and take over the

leadership of the Pakistan Muslim League (PML) in order to counter

Mrs.Benazir's Pakistan People's Party (PPP).

 

Mrs.Benazir again had him sacked on her return to power in 1993 and

arrested and prosecuted him on charges of indulging in illegal

activities, but he was acquitted.

 

After capturing power on October 12,1999, Gen.Pervez Musharraf,

Pakistan's self-reinstated Chief of the Army Staff (COAS), self-

styled Chief Executive and self-promoted President, had Brig.Imtiaz,

because of his proximity to Mr.Sharif, rearrested and prosecuted for

having assets disproportionate to his known sources of income as an

officer of the ISI and the IB.

 

He was convicted by a court on July 31,2001, and jailed for eight

years. According to evidence produced in the court by the National

Accountability Bureau (NAB), Brig.Imtiaz had foreign exchange bearer

certificates worth US $ 20.08 million, a Pakistani rupee account in

the Union Bank with a balance of Rs.2.13 billion, a US $ account in

the Deutsch Bank with a balance of US $ 19.1 million, five

residential houses, five commercial units and three shops. This huge

wealth was allegedly accumulated by him through heroin smuggling.

 

It is believed that there are at least 30 such Army and ISI officers,

serving and retired, who have accumulated similar wealth through

heroin smuggling.

 

The present estimate of Pakistan's annual earnings through heroin

dollars, including by this writer, is about US $ 1.5 billion. It is

difficult to come across precise, direct evidence for such estimates.

 

The estimate till now has been based on indirect evidence such as the

following:

 

1) The Government of Pakistan releases its foreign exchange reserves

position in two parts. The first part gives the figures of reserves

maintained by the State Bank of Pakistan (SBP). These are the amounts

earned through foreign trade, investment flows, foreign aid and loans

and remittances by overseas Pakistanis. The second part gives the

figures of reserves available with other banks. These are the

deposits of resident Pakistanis, who are allowed to maintain dollar

accounts with no questions asked about the origin of the money and

about its liability for income tax. Under Pakistan Government orders,

these amounts cannot be used by the Government for its purposes

though Mr.Sharif froze them temporarily after the Chagai nuclear

tests in 1998 in order to be able to use them if the economic

sanctions hit the State economy hard.

 

2) US dollars kept by private citizens in their possession without

being deposited in the banks. The SBP periodically purchases these

dollars to meet debt servicing and other governmental needs.

 

In any analysis, it would be reasonable to presume that the dollars

kept in the bank accounts of resident Pakistanis and the dollars in

private circulation must have been largely, if not totally, derived

from the heroin trade. There cannot be any other explanation for it

because Pakistan has been having a trade deficit for many years in

succession, there has been a 73 per cent decline in foreign direct

investments and a negative flow of portfolio investments and there

was no international assistance forthcoming from October,1999, till

November,2000, when the IMF resumed its stand-by credit facilities to

Pakistan.

 

Quoting SBP sources, the "Business Recorder" of Pakistan (August

1,2001) gave the following figures, which provide a fairly accurate

estimate of the US dollars available in private hands during the

financial year 2000-01:

 

1) The SBP had $ 1.7 billion, which was the official foreign exchange

reserve of the State. In addition, resident Pakistanis had deposits

in various commercial banks amounting to US $ 1.5 billion.

 

2) During the financial years 1999-2000 and 2000-01, despite the

suspension of credit facilities by the IMF and other multilateral

institutions after the military coup, the Government fulfilled debt

servicing (debt and interest payments) obligations amounting to US $

7.8 billion. Out of this, US $ 4 billion came from the Govt. coffers

and the balance of US $ 3.8 billion was purchased from resident

Pakistanis.

 

In other words, the total amount of US $ in private circulation since

the military regime came to power was almost equal to that in the

Govt. coffers, if not more.

 

The first direct piece of evidence about the total value of the

heroin money being pumped into the Pakistani economy every year has

come from an unexpected source---the Taliban. Before 1998, opium was

being grown in the North-West Frontier Province (NWFP) of Pakistan

and in the Nangarhar province in Taliban-controlled Afghan territory.

All the Pakistani-owned refineries for heroin extraction were located

in Taliban-controlled territory.

 

In 1998-2000, the Pakistani authorities stopped the cultivation of

opium in the NWFP. In 2000-01, the Taliban too, under international

pressure, ostensibly banned opium cultivation in its territory, but

did not dismantle the Pakistani-owned heroin refineries. It demanded

that international narcotics control agencies should reimburse to it

the money lost by its farmers due to this ban so that they can shift

to other crops.

 

US and other foreign narcotics control officials, who visited

Nangarhar, confirmed that opium cultivation has been stopped.

However, doubts remain on the following points:

 

1) Has the Taliban secretly shifted the opium cultivation from the

traditional areas in Nangarhar to which international experts had

access to other remote areas to which they did not have?

 

2) Due to a bumper crop and record heroin production in previous

years, the prices of heroin in the international heroin market had

been coming down. Pakistani smugglers, supported by the ISI, had

enough heroin stocks to meet at least two years' demand of the

market. Was the Taliban merely suspending cultivation during this

period to stabilise the prices?

 

Despite these misgivings, the US announced a contribution of US 1.5

million to international narcotics control programmes for

disbursement to the Afghan farmers who have stopped poppy

cultivation. The Taliban has been describing this as worse than

peanuts and demanding much more.

 

This was one of the subjects which figured during the discussions of

Mrs.Christina Rocca, US Assistant Secretary of State, with Mullah

Abdus Salam Zaeef , the Taliban Ambassador in Islamabad, and his No.

2, Mr. Sohail Shaheen, at Islamabad on August 2. According to

the "Frontier Post" of Peshawar (August 3,2001), while briefing

pressmen after the discussions, a spokesman of the Taliban said : "We

have told the US team that Afghanistan was earning 12 billion dollars

a year from the poppy cultivation and we have eliminated the poppy

from the country."

 

How much of this amount was going to the Taliban and how much to the

Pakistanis and the ISI, who owned all the refineries? No direct

evidence is available, but one can estimate roughly that out of this

at least US $ 11 billion per annum was going to Pakistan from the

following circumstantial evidence:

 

1) There are no reports of large amounts in US dollars circulating in

private hands in Taliban-controlled Afghanistan , whereas Pakistan is

awash with them.

 

2) There are no large-scale development and other activities in

Afghanistan which would indicate the availability of large funds in

cash. There is so much poverty due to lack of development that

thousands of Afghans have been migrating to Pakistan.

 

3) Since its capture of Kabul in September,1996, the Taliban had not

been publishing its budget figures. Some details are now available

for the first time. According to these figures, during the financial

year 2001-02, the Taliban would have an estimated expenditure of US $

82.53 million, of which US $ 43.53 million is shown as the

Discretionary Fund of Mulla Mohammad Omer, the Amir. The balance is

to be spent by various departments. Quoting a study of the New York

University Centre, the "Dawn" of Karachi (June 4,2001) estimates that

the Taliban gets US $ 45 million per annum from the heroin trade, an

amount nearly equal to the Amir's Discretionary Fund.

 

If this figure of what the Taliban gets is taken as reasonable, more

than US $ 11 billion per annum from the heroin trade goes to

Pakistan, that is, more than Pakistani Rs. 715 billion at one US $

equal to 65 Pak rupees. During 2000-01, the Pakistani State had a

total revenue of Rs.570.6 billion, of which Rs.471.6 billion came

from taxes. That is, Pakistan's heroin economy was 30 per cent larger

than its legitimate State economy.

 

Is it any wonder that its economy does not collapse despite the worst

predictions and that it is able to defy international pressure on its

sponsorship of terrorism against India and on its support to the

Taliban and Osama bin Laden? (8-5-01)

 

(The writer is Director, Institute For Topical Studies, Chennai.)