Narco-Insecurity, Inc. The Convergence of the Narcotics Underworld and Extremists in Afghanistan and Pakistan and Its Global Proliferation

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By David R. Winston

Editors: Victoria Jones, Marcus Andreopoulos and Thomas Hader.



Narco-Insecurity, Inc.

The Convergence of the Narcotics Underworld and Extremists in Afghanistan and Pakistan and Its Global Proliferation By David R. Winston

Editors: Victoria Jones, Marcus Andreopoulos and Thomas Hader All rights reserved Published in 2022 by:

This publication is a part of the Defence Education Enhancement Programme (DEEP) series inspired during various scientific conferences organised with DEEP-support.

The content of this publication does not reflect the official opinion of the North Atlantic Treaty Organization.

Responsibility for the information and views expressed in this book lies entirely with the author and the editors.

NATO ISBN: 978-92-845-0221-9 1


1.Author

David Winston is an international security analyst and researcher specialising in international security, countering violent extremism, Central Asian, Middle East and United States politics. He has worked for several think tanks, including The Institute for Strategic Dialogue and The Institute for National Security Studies, and has served as a Senior Research Fellow for the Asia-Pacific Foundation for six years.

David has worked with NATO as a lecturer and TTX facilitator, leading several workshops in MENA and Europe. He created the TTX for NATO School Oberammergau’s Defence Against Terrorism Course for two consecutive years for over 100 NATO and PfP military officers.

This training simulated a threat from returning FTFs that tasked participants with assessing security vulnerabilities and threat response preparedness, specifically military facility defences, standard operating procedures in response to a threat, intelligence sharing domestically and internationally, border security, and improving holistic intelligence analysis.

These courses culminated in after-action reports that document the threats and responses identified through the training for dissemination to defence agencies. David has lectured at several NATO Center for Excellence-Defence Against Terrorism (COE-DAT) courses, most recently presenting at their 2021 DAT course discussing Foreign Terrorist Fighters in the Age of COVID-19 and another 2021 Border Security course discussing the global narcotics trafficking route and the recent Taliban takeover in Afghanistan.

David has consulted for the Partnership for Peace Consortium (PfPC) since 2017, helping create the 2020 Counter Terrorism Reference Curriculum to be utilised in security institutions around the world. With PfPC, David has developed and facilitated panel discussions, table-top exercises (TTXs), and policy/project development workshops. David is a member of the Organization for Security and Cooperation in Europe’s Mobile Training Team of experts, giving lectures on border security and foreign terrorist fighters.

He has worked with border agencies throughout Central Asia and Eastern Europe, learning about their security vulnerabilities and discussing solutions to help secure their borders against criminal activity. He created and facilitated a TTX on internet policy in Uzbekistan, assessing online extremism vulnerabilities and building a roadmap for policy prescriptions. He has also worked with the OSCE Border Management Staff College in Dushanbe, Tajikistan, specifically taking part in a roundtable event “Transnational Organized Crime-Terror Nexus: Comprehensive Approach to Regional Security” that discussed the crime-terror nexus relating to their neighbouring country Afghanistan.

David has a Master of Science degree in History of International Relations from the London School of Economics where he studied the history of conflicts in Sub-Saharan Africa and MENA. He graduated Cum Laude with a Bachelor of Arts degree in Political Science from California State University.

David has contributed articles to The Huffington Post, the Defence Review and others on counter-messaging, Central Asian extremism, political trends, and ISIS.

2.Editors

Victoria Jones is the co-founder and chief editor of INTERZINE, a digital magazine that uses history to contextualise current events. She conducts research on far-right extremism, including for the Investigations team at Everytown for Gun Safety, a nonprofit organisation that advocates against gun violence.

She is also a Senior Research Fellow at the Asia-Pacific Foundation and a member of NATO’s Defence Education Enhancement Programme’s (DEEP) Global Threats Advisory Group (GTAG).

Victoria is a producer and researcher for NATO DEEP’s podcast series DEEP Dive, which interviews experts on the topics of international security and counter-terrorism. She has led training sessions as part of NATO DEEP’s online distance learning initiative with the Ukrainian military and helped develop NATO’s Counter-Terrorism Reference Curriculum (CTRC) for use in defence academies worldwide.

She has presented research on women in ISIS for the Partnership for Peace Consortium’s (PfPC) Combating Terrorism Working Group (CTWG) at the Polish Naval Academy and returning foreign terrorist fighters for a border security training event with the Organization for Security and Co-operation in Europe (OSCE) in Istanbul.

Victoria has written articles on Afghanistan for Foreign Policy, the Eastern Eye, and INTERZINE.She graduated with a Master of Science in History of International Relations from the London School of Economics and a Bachelor of Arts in Political Science and Philosophy from the University of Chicago.

She is interested in the movement of narcotics across borders and how the trade fuels terrorism, as well as how actors in both the public and private sectors factor into drug trafficking. Her other research interests include surveillance technology, women’s empowerment to combat extremism, the roles of media and ideology in terrorism, and how states use history and propaganda to create national narratives.

Marcus Andreopoulos

Is a Senior Research Fellow at the Asia-Pacific Foundation as well as a member of the production and research team for DEEP Dive, a podcast series by NATO’s Defence Education Enhancement Programme (DEEP).

He is also a member of the organisation’s Global Threats Advisory Group (GTAG). Marcus has a Master of Science Degree from the International History department at the London School of Economics. His research interests include the origins, ideologies, and financing of terrorist organisations in the Middle East, South Asia, and Africa, with a particular focus on Egypt and Pakistan. Marcus wrote his Master’s thesis on Britain’s relationship with Islam in Egypt in the period surrounding the 1919 Revolution.

With the Asia-Pacific Foundation, Marcus produces periodical assessments of the security threats emanating from South, Central, and East Asia. His most recent work includes an examination of the Haqqani network and its relationship with the Taliban and global terrorism.

Marcus’ research into the Haqqani network also investigated the group’s ties to the Pakistani Inter-Services Intelligence (ISI) agency and the narcotics trade in Afghanistan. Other groups that Marcus has produced reports on include al-Qaeda, the Islamic State, and the Tehreek-e-Labbaik Pakistan (TLP).

Marcus has worked with NATO’s Defence Education Enhancement Programme (DEEP) since 2020. He has edited and contributed to the development of NATO DEEP’s Counter-Terrorism Reference Curriculum (CTRC) and implemented it as part of Professional Military Education (PME) and Defence Capacity Building (DCB). Marcus has delivered presentations to various international institutions and military organisations including leading a lecture to the National Defence University of Ukraine regarding international and regional counter-terrorism strategies.



5.Thomas Hader

is currently supporting Joint Task Force North’s counter cartel and drug interdiction operations with Homeland Security Investigations as a Marine-Air-Ground Task Force (MAGTF) Intelligence Officer.

Tom was a key contributor to the CTRC and led the development of Themes Three and Four. Tom’s focus is in cybersecurity, counter-terrorism, and criminal network exploitation. Moreover, he provides operational support for counter-narcotics, domestic terrorism, and cyber-crime investigations to include cryptocurrency tracing. Additionally, in 2021, Tom organised a cybersecurity and counterterrorism table-top exercise for the Jordanian military in Amman, Jordan.

He has published research articles and lectured on topics including terrorist online recruitment and radicalisation, foreign fighter networks, and electronic warfare threats from state and non-state actors. He is fluent in Polish, Spanish, Russian, and Ukrainian.

6 Introduction.

The central aim of this book is to analyse the growth of the narcotics industry stemming from Afghanistan and the nexus that has formed between narcotics trafficking and terrorism/extremism. With the West’s withdrawal from Afghanistan precipitating the Taliban takeover of the country, the future for Afghanistan, and the Afghan narcotics industry, is uncertain.

The Taliban have long used narcotics as their main source of revenue. Without the poppy crop, they may never have grown to be the massive organisation that they are today that was capable of toppling the Ghani government.

Through examining the history of narcotics and its connection to terrorist groups, this book identifies how the world fell down this perilous path, and offers possible solutions to deal with this new dynamic.

Narcotics have been increasingly used to fund extremist organisations, and the two industries have developed a symbiotic relationship where both benefit from the other’s activity. This book will explore the development of the opiate industry in Afghanistan, from the 18th century when the British East India Company began cultivating opium in Afghanistan, to the modern day where Afghan heroin is being exported across the world in the largest drug market in history.

Opium is central to the story of extremism in Afghanistan, beginning with the mujahidin trafficking through South Asia and the Middle East to fund weapons to fight the Soviets, which later evolved into the Taliban and al-Qaeda expanding the path laid down by the mujahidin to Europe and soon the rest of the world. While the Afghan narcotics trade began with opium, it has evolved to include a slew of natural and synthetic drugs, and the pathways created for opium are now tread by every drug imaginable.

To illustrate the inner workings of this complex industry, this book examines every aspect of narcotics trafficking: from poppy farmers, to low-level drug smugglers, drug trafficking organisations, hawala dealers, money launderers and the banks they frequent, licit front operators, darknet marketplaces, and cryptocurrency exchanges.

Beyond tracing the growth of the trafficking route, this book offers a detailed exploration of the global trafficking routes that exist today, describing the common pathways and methods of smuggling narcotics from Afghanistan to every corner of the globe, and the likely future routes that will emerge.

This includes unique maps based on numerous case studies and trends that give a clearer picture of the specific steps traffickers are taking along three distinct routes:

the northern route, Balkan route, and southern route. Each route displays the numerous branches traffickers are likely to take, ports they are likely to travel through, and the methods of travel.

The growth of the narcotics industry in Afghanistan must be viewed from a global lens to see how the interests and actions of international actors over the years have shaped the industry. This book looks at the impact that other states’ interests have had on the narcotics industry in Afghanistan.

This includes the proxy war between the United States and Soviet Union, the Pakistani ISI using the extremist groups and narcotics trafficking to gain regional power and Saudi Arabia funding the mujahidin and housing banks that al-Qaeda laundered money through.

The narcotics trade is rapidly evolving, and traffickers are finding new ways to hide their illicit earnings.

Many traffickers in South Asia and the South Asian diaspora have resorted to the ancient trade of hawala to launder their drug money, while advances in blockchain technology are offering drug dealers around the world new ways to sell their illicit products anonymously and conceal their drug money earnings.

These methods have gained the attention of terrorist organisations, who have adopted the techniques of drug trafficking organisations to conceal their money flow to evade detection. 7 Narcotics became the currency of non-state actors who wanted a way to boost their organising power quickly and effectively. In the fallout of the Cold War, it became the method for militias to garner resources in the rapidly shifting political environment.

As the activity of terrorist groups flourished in the 1970s and 1980s, they quickly shifted their fundraising methods from kidnappings and petty theft, which involved significant risk with little reward, to the safer and more profitable avenue of narcotics trafficking.

They would soon discover that not only did narcotics trafficking help them fund operations, but those operations led to increased insecurity, paving the way for easier trafficking.

With the opportunities created by insecure environments, drug trafficking organisations (DTOs) also benefited from extremist group activity, and the two industries began to collaborate and formed a resilient nexus. This nexus enabled DTOs to gain the protection of militant groups and rely on their networks for smuggling, while extremist groups profited from DTOs’ narcotics sales.

It is clear that the narcotics industry is vital to extremist organisations, while extremist activity creates an environment that promotes narcotics trafficking. As the nexus between terrorist organisations and drug trafficking organisations have grown, the lines have blurred between the two, giving rise to hybrid organisations.

These hybrid crime-terror organisations began as drug traffickers but eventually started using their earnings to fund their ideological goals. The hope of this book is to call on readers to rethink their assumptions about the solutions to the narcotics epidemic. After approaching the problem in much the same way over the course of a century, the industry has grown to unseen heights. The continued boom of the narcotics industry is not a foregone conclusion.

This book will challenge the orthodoxy of counternarcotics, counterterrorism, border security, and geopolitical strategies, while offering alternative approaches using case studies, quantitative data, qualitative data, and expert interviews.

8 Chapter Outlines

Chapter One:

Planting the Seed: Opium’s Origins in Afghanistan sets the stage for the book by tracing the origin of opium in Afghanistan back to the time of Alexander the Great and follows the growth of the drug in China in the 17th century which caused a ripple effect through the region. It then picks up a century later to the activity of the British East India Company, which first brought large-scale opium production to Afghanistan and neighbouring Pakistan.

World powers soon introduced the first international resolutions on drugs through the Shanghai Opium Commission, which brought about the beginning of illicit opium trafficking in South Asia.

This had a major impact on Afghan farmers who were able to profit from the ban on opium trade in India and made Afghanistan the biggest opium producer in the region. Once Afghanistan gained independence, Amir Amanullah, the first independent ruler of the country, embraced opium as a major source of revenue for the struggling country.

The outbreak of World War II hit Afghanistan’s economy hard while creating an opportunity to meet the demand for opium, forging brand new smuggling routes towards Europe which the Afghan government took advantage of. Afghanistan found itself at the heart of a Cold War showdown, which led to disastrous results that irreparably damaged Afghanistan’s agriculture.

The Soviet Union responded by offering infrastructure and military aid, with the Soviets ultimately invading in 1979.

This spurred the West, Saudi Arabia, and Pakistan to begin their covert support for the burgeoning mujahidin to topple the Soviet-backed government. This covert operation involved aiding the mujahidin in smuggling weapons into Afghanistan and drugs out to help fund their militia.

This formed the smuggling pipeline that would be expanded upon over decades and is the root of the global narcotics trafficking route emanating from Afghanistan to this day.

Chapter Two: The Puppet Masters and the Trafficking Pipeline picks up with the withdrawal of Soviet troops from Afghanistan and the scramble for power that took place in the aftermath. Afghanistan’s warlords and tribes fought to fill the power vacuum, each relying on opium to fund their militias. For the first time in history, Afghanistan’s opium business rivalled Burma’s as the largest in the world.

By 1995, the Afghan capital was razed to the ground, and the faction that rose to the top with the backing of the ISI was the newfound Taliban. After an initial ban on opium, the Taliban quickly shifted their policy to raise revenue from the crops.

They soon instituted opium regulations, taxing poppy farmers and monopolising the drug market in their regions of influence.

The Taliban expanded the drug pipeline, dominating Central Asia and extending trade into South Asia, the Gulf, the Balkans, and the Caucasus. This was made possible with the help of Pakistan’s ISI, who launched several covert operations with sympathetic jihadist groups all of whom relied heavily on narcotics trafficking to fund their operations, expanding the trafficking route even further through their regions, launching the Balkan, northern, and southern routes of the global narcotics trafficking pipeline.

This formed a complex relationship of trading arms and narcotics between insurgent groups, Islamist groups, and organised crime syndicates, birthing the crime-terror nexus.

The most substantial of these was the Haqqani network, a criminal enterprise situated along the Afghanistan/Pakistan border that was founded on smuggling.

The ISI saw the Haqqani network as a key ally, given their location and alliances with numerous jihadist groups, and began investing in their bases while using them as a proxy for engagement with other nonstate actors.

Chapter Three: Birth of the Narco-State opens with the Taliban’s 2000 opium ban, which ended up boosting the price of opium and incentivised increased production in regions outside of the Taliban’s control.

Once the Taliban were removed from power post 9/11, they relied on their narcotics connections to help them slowly rebuild from neighbouring Pakistan. When some Western countries shifted their focus to Iraq, the Taliban used the opportunity to grow their power in rural 9 regions throughout Afghanistan.

This boosted Afghanistan’s opium output to historic levels. The Karzai administration introduced a number of alternative livelihood programs to combat narcotics proliferation but these efforts were hampered by limited infrastructure.

This period also saw the growth in the power of tribal strongmen who created organisations engaged in illicit activity including the narcotics industry, providing security to narco-traffickers for profit. The Taliban rebuilt their network through coordination with other terror outfits and drug trafficking organisations to provide security for poppy fields, heroin labs, and smuggling routes.

Through the 2000s, the Taliban continued to have strong support from the Pakistani ISI, who placated Western demands with half-hearted public gestures while privately sabotaging all efforts to disrupt the Taliban and its allies. Pakistan’s ISI and the Musharraf administration grew even more powerful, pushing out any moderate elements through intimidation or bribery.

The Musharraf years saw the resurgence of poppy cultivation, which grew into one of the largest hubs for international trafficking in the world.

The 2000s marked an evolution in the industry to something the world had never seen before: a resilient, worldwide industry shaped and protected by governments, businesses, criminal organisations, and terrorist organisations. The further this industry grew, the more entrenched it became in society, anchoring itself to poverty, corruption, conflict, and insecurity.

Chapter Four: The Terror Racket assesses the multitude of innovative methods terrorist organisations have utilised to launder their illicit earnings. With the growth of the narcotics industry, terror groups are finding new ways to protect their organisations from economic collapse.

They are becoming more and more like mafia organisations, with investments in various licit enterprises like real estate, shipping businesses, and construction companies to conceal and protect their illicit profits. They are also utilising both ancient and cutting-edge methods for obfuscating transactions and moving finances and illicit products around the world.

The chapter begins with the original money laundering operation in Afghanistan with the ISI funneling funds for the mujahidin through banking institutions which became the main vehicles for terrorist organisations like al-Qaeda to traffic funds through a complex network of subsidiaries meant to obfuscate transactions.

This chapter delves further into crime-terror hybrid organisations, which fund terror operations through criminal enterprise, by investigating the infamous crime-terror organisation D-Company and its founder Dawood Ibrahim as a framework for understanding how most similar organisations launder their funds. D-Company utilises front companies, real estate, and the stock market to conceal their illicit assets and to safely fund allied terrorist organisations.

Another significant method for terrorist organisations to hide their funds is through the hawala system, a traditional remittance system which is important to understand. This chapter also explores the origin of blockchain technology and bitcoin, as well as the slew of cryptocurrencies and cryptomarkets that have emerged.

Not only do narco-terrorist organisations use cryptocurrency to receive donations and conceal transactions, but they also profit from selling drugs on the darknet marketplace. This chapter also examines emerging obfuscation software to further hide illicit earnings.

Chapter Five: Blazing a Trail: The Afghan Drug Trafficking Pipeline details the development of the drug trafficking pipeline that begins in Afghanistan and now reaches 84% of the world, while exploring the ways in which this pipeline will grow and change in the future.

The trafficking route can be broken down into three main pathways: the northern route, Balkan route, and southern route.

This chapter examines each main pathway, the secondary pathways within them, and the most common method of trafficking for each. Each step of the trafficking journey is described to walk the readers through exactly how traffickers are crossing each country starting in Afghanistan and ending in several destination countries around the world.

Through land, sea, mail, and/ or air travel to reach its many destinations. This chapter includes numerous case studies of drug seizures throughout the three routes and assesses the various methods traffickers employ to conceal drugs.

Geographic, political, and security factors are also analysed across each border to understand how traffickers are manoeuvring from state to state. Various recommendations are 10 offered on specific states’ border policies to help secure borders against trafficking.

This chapter also includes detailed maps of the trafficking routes based on individual government and IGO data as well as case studies. The maps were developed with ArcMap, an industry-leading geospatial processing programme used to make official maps across the world.

Each map shows likely trafficking paths, methods, and border crossings. Chapter Six: The Modern Narcotics Economy discusses the current state of the narcotics economy, what has enabled it to expand to its current level, and what measures have the potential to disrupt the industry.

This chapter delves into all of the stakeholders in the narcotics economy and how they are connected to the industry, such as farmers and labourers, warlords, drug trafficking organisations, wholesale buyers, traffickers and smugglers, international buyers, and insurgent groups.

The agricultural economy is central to opium trafficking in Afghanistan, and understanding the factors that lead farmers to engage in poppy cultivation, like economic security, environmental viability, and level of insecurity, are key to knowing what drives the industry.

Attempts to break this cycle, like wheat subsidies, poppy eradication, and irrigation expansion have thus far failed to disrupt this industry, either from the resiliency of the industry, poor implementation of the measures, or under-resourced initiatives.

This chapter offers potential solutions to reverse the increasing degradation of Afghanistan’s soil health. A vicious cycle has formed between insecurity and the opium economy. Insecure regions are fertile territory for poppy farming due to the lack of government oversight and a lack of alternative livelihoods.

They both attract insurgent groups, who profit off of the opium industry at multiple levels of the supply chain, and are created by insurgent groups. This chapter additionally looks at developments in the narcotics economy beyond Afghanistan, specifically the growth of synthetic drug markets being propagated by Pakistani and Southeast Asian drug syndicates.

As the volatility of agriculture will increase with the worsening effects of climate change and the likely reduced access to water across the globe, there will be a rise in synthetic drugs Chapter Seven: Afghanistan ’s Collapse and the Future of Counternarcotics looks at the recent Taliban takeover of Afghanistan and assesses the steps that led to this calamity and the likely future for Afghanistan’s narcotics industry.

It then looks at the knock-on effect for the global narcotics industry and how counter narcotics efforts will need to shift to operate under a new paradigm where direct counternarcotics efforts in Afghanistan are unlikely to continue.

The chapter starts with examining the security vulnerabilities in the Western withdrawal that precipitated the swift takeover by the Taliban, and places them in the context of the long-term shortcomings in the strategy for Afghanistan.

This is followed by an assessment of the current situation in Afghanistan and the factors that could lead to increasing instability and lead to further growth of narcotics trafficking, such as internal conflict within the Taliban, local opposition to the Taliban, schisms from the Taliban, economic sanctions, and climate change.

Given the rising prominence of the Haqqani network within the Taliban, this chapter dives into the uncertain leadership of this group and the numerous figures who may succeed Sirajuddin Haqqani in the coming years.

While the Taliban publicly states they will not traffic narcotics, that depends on whether or not they would make enough from other revenue sources to sustain the country, and whether they believe trafficking will impact their international standing enough to threaten their control of the country.

This chapter discusses the Taliban’s revenue streams prior to gaining total control of Afghanistan and how this will likely change after their takeover.

The chapter ends with an overview of the proliferation of narcotics, the methods used to combat the industry, and the prescription for the best way forward under a new global narcotics paradigm.

11 Literature Review While there are many resources covering either the narcotics industry or terrorism, there is a gap in materials that focus on the symbiotic nature of the two.

There is also a lack of attention placed on how the international actors’ actions have impacted the Afghan heroin trade. Afghanistan is often discussed in the context of the United States and the Soviet Union’s proxy war; however, the focus of these sources is the Cold War and not how the actions of these countries impacted Afghanistan and its poppy industry. Due to the novelty of blockchain technology, there has been limited literature on how this technology is being used by terrorist organisations and narcotics traffickers.

In addition, the secretive nature of the darknet has evaded major public attention, and few have done extensive dives into how these marketplaces operate and how drugs and other illicit materials are purchased.

Where the vast majority of books on the Afghan narcotics industry focuses on opium, this book will explore the recent growth of synthetic drugs being introduced to the pipeline. Due to climate change and a shift in consumer demand, synthetic drugs are likely to become a much larger component of the Afghan drug trafficking pipeline, and this book will discuss how it is being incorporated into this market and how it is likely to impact global trafficking in the future.

In James T. Bradford’s “Poppies, Politics and Power – Afghanistan and the Global History of Drugs and Diplomacy,” he looks at the initial introduction to commercial production of opium in Afghanistan through the British East India Company, and the various state policies around its production in the early decades of Afghanistan’s independence.

Bradford shows how while Afghanistan had little control over the birth of their opium industry, several rulers utilised opium revenue to decrease their reliance on foreign aid. He also discusses how World War II pushed Afghanistan further into reliance on opium production due to their export industry suffering and the severing of established opium trade routes opening up an opportunity for Afghanistan to supply European demand.

While this book gives insight into how the poppy industry began in Afghanistan, it does not cover the opium boom that came from the mujahidin’s smuggling pipeline. Without the pipeline that the mujahidin used to smuggle weapons and drugs through the help of the United States, Pakistan, and Saudi Arabia, Afghanistan would not likely have become the heroin hegemon of the world.

Bradford also focused mostly on the history of opium in Afghanistan, rather than the wider impact of the Afghan opium economy on the globe, which this book will explore in detail.

This book was greatly benefitted by the declassification of United States foreign relations documents from 1977-1980 in 2018, which covers the beginning of Western covert aid to the mujahidin. While many have covered this period, literature released before 2018 lacks the internal perspective of US agencies, which this book investigates deeply.

Internal discussions involving Vice President Mondale, US Ambassador to Afghanistan Theodore L. Eliot Jr., Deputy Director of CIA Frank C. Carlucci, National Security Advisor Zbigniew Brzezinski, and Director of Intelligence Admiral Stansfield Turner, among others, helps elucidate the motivation for aiding the mujahidin, including why they continued support after US agencies no longer believed the mujahidin could defeat the Soviets.

In “Pak-Afghan Drug Trade in Historical Perspective,” Ikramul Haq explored the nexus between Pakistan’s ISI, and the mujahidin through the drug pipeline. Haq details how the Pakistani government became further embroiled in the heroin industry after the Soviet Afghan War, enumerating cases of government, military, and intelligence officials engaging in the drug pipeline while giving the mujahidin free rein to cross over the Durand line through the North-West Frontier Province (NWFP).

Throughout this book, Haq shows how the heroin industry became entrenched in Pakistan through the growing power of the ISI, the tribal areas’ reliance on poppy farming, and corruption within the civilian government.

12 Steve Coll’s “Directorate S: The C.I.A. and America’s Secret Wars in Afghanistan and Pakistan, 2001-2016” gives an in-depth view into the corruption and criminality of the ISI. It delves into the strong relationship formed between the ISI and the Haqqani network and gives detailed background on how the Haqqani family came to power.

He explains how the network is the product of a wealthy family that owned land on both sides of the Afghanistan/Pakistan border, from Loya Paktia in Pakistan to North Waziristan in Afghanistan, and had been profiting off of smuggling since before World War II.

They used this position to become key figures in Soviet Afghan War, forming alliances with jihadist groups, political parties, and criminal organisations who used their territory to smuggle drugs and weapons across the border to Afghanistan.

He outlines how they fostered relationships with the Taliban, al-Qaeda, and other militant groups while maintaining their independence throughout Coll highlights the utility that the Haqqani network offers the ISI, who use them as a proxy for dealing with other extremist groups and engaging in the narcotics industry while maintaining plausible deniability.

Coll also covers the Taliban’s resurgence in the mid 2000s and notes how they capitalised on the government’s opium ban by encouraging poppy farmers to cultivate in their territory, leading to a massive spike in poppy production and a major boost to Taliban revenue.

The ISI, Haqqani network, and the Taliban’s involvement in the narcotics industry is a central aspect of the nexus between drug trafficking and terrorism. However, this book synthesises these factors into a wider view of the global narcotics industry, looking into drug trafficking organisations and terrorist groups connected to the Afghan drug pipeline around the world.

This book will also expand on the ideas presented in Directorate S to show how this nexus launders their funding, how trafficking cells are decentralised to protect the larger industry, and the wider economic and environmental factors that pushed farmers into the poppy industry.

In “Terror Incorporated: Tracing the Dollars behind the Terror Networks,” Loretta Napoleoni examines the development of financing and laundering methods of terrorist organisations, starting with the activity of Pakistani bank BCCI from which the ISI, and Saudi Arabia funded the mujahidin during the Soviet-Afghan War.

BCCI created the roadmap for obfuscating illicit financial transactions to terrorist organisations, with two Saudi banks DMI and DAB taking up the baton and aiding terrorist outfits like al-Qaeda in laundering their funds through a series of shell companies and charity fronts.

This book picks up from Napoleoni’s analysis and does a deep dive into the opaque makeup of DAB and DMI’s subsidiaries to see exactly how the banks obfuscate their clientele and invest in the global financial market using terrorist organisation funds.

This includes a shocking discovery of how al-Qaeda used the American stock exchange to terror operations against the United States. Napoleoni also follows the ISI’s proxy wars in funding militant groups in the Caucasus and Central Asia to divert Russian attention and resources away from Northern Afghanistan.

Through grooming Chechen and Central Asian militant leaders and granting them access to the narcotics pipeline, the ISI successfully distracted the Russians to enable the Taliban to contain the Northern Alliance.

This had a knock-on effect of expanding the drug pipeline through the Balkans and Central Asia, which today are the first and third-largest drug trafficking routes in the world, respectively. This book will follow the path both trafficking routes take today, discussing the precise way traffickers traverse them and their likely future developments based on numerous case studies and border agency seizure data collected. It will also expand on the growth of Central Asian extremist organisations drawing on the author’s travels to the region, reports from the UNODC, and engagement with multiple states’ border agencies.

In Ch.8 of Innocent Bystanders: Developing Countries and the War on Drugs, titled “Responding to the Challenge of Afghanistan’s Opium Economy: Development Lessons and Policy Implications,” William A. Byrd discusses the environmental and economic factors in Afghanistan that have made opium such a resilient market.

Byrd notes the positive relationship that unemployment levels have with opium production, showing how integral the job market is to dismantling the opium 13 industry. He also outlines the interaction of poppy farming with licit agriculture, where Afghanistan’s overreliance on opium has increasingly made other agricultural activity unaffordable.

Byrd further analyses Afghan government policy aimed at combating the opium industry and breaks down the shortcomings in the policies and the factors that have made opium resilient to most attempts at prohibition and eradication.

This book will look at specific policies of eradication to see where they failed and why. It will also look at the alternative livelihood policies that were implemented and identify positive and negative cases in a wider examination of the agricultural economy of Afghanistan. This book will also go more in depth into how climate change has impacted the soil health in Afghanistan and make predictions on the future agricultural challenges the country will undergo at its current trajectory and how that would likely impact the narcotics industry.

In a report for the Combating Terrorism Center, titled, “Haqqani Network Financing: The Evolution of an Industry,” author Gretchen Peters gives a thorough look into the financial activity of the Haqqani network and their increasingly diversified revenue streams that has made them a powerful actor in Afghanistan and Pakistan.

She discusses how once Sirajuddin took over from his father, the founder of the network, he moved the network away from reliance on donations by amassing a conglomerate of licit and illicit businesses under their control.

This includes an extortion racket where they claimed a tax on infrastructure developed in their sphere of influence, offering safe passage for drug traffickers in their region, kidnapping for ransom, importing precursor chemicals for the refining of opium, and investing in a diversity of front businesses to launder their illicit funds, predominantly real estate and import/export companies.

Peters relates the Haqqani networks activity with another crime-terror hybrid organisation, the D-Company, which uses many of the same strategies of hiding their illicit earnings through a slew of licit holdings around the world.

This book uses the activity of the Haqqani network and D-Company as a framing device to see how other terror outfits have utilised the same methods. It also looks at how terror financing has evolved from the era of DMI and DAB, and the recent trends in terror financing that may become more prevalent in the future, like gem mining.

Peters also goes into the hawala system as a means for terror groups to launder their illicit earnings and more easily conduct narcotics transactions across borders. This book does a deep dive into the hawala system, discussing its origins along the silk road, how and why its use proliferated throughout South Asia, and how it has developed using modern technology.

The book will provide several case studies of hawala exchanges linked to terror finance, and look at the policies introduced in the region to curtail use of hawala and why they have mostly failed. It will also look at the prevalence of hawala among the South Asian diaspora and examine what regulations have been implemented to address its connection with criminal finance. Paul Vigna and Michael Casey’s Cryptocurrency: The Future of Money offers an origin story to the burgeoning cryptocurrency industry.

This book traces the impetus of cryptocurrency to the 2008 global financial crisis, which led to wide distrust in traditional banks and spurred Satoshi Nakamoto to create bitcoin using his newly developed blockchain technology. Vigna and Casey’s book give a detailed account of the birth and explosion of bitcoin and the ripple effects it created in global finance.

They also discuss the first major cryptomarket, “Silk Road,” and how it created a new marketplace for buying and selling narcotics anonymously. While this gives great insight into the birth and growth of cryptocurrency and cryptomarkets, it does not focus on how these technologies impact terrorist financing.

This book will analyse crypto in the context of the crime-terror nexus, sharing case studies where terrorist organisations have used cryptocurrency to solicit donations, and lay out how cryptomarkets fit into the wider context of the global narcotics pipeline.

Through the author’s own investigation into cryptomarkets and interviews with experts on criminal finance using cryptocurrency, this book offers a comprehensive look into the present and future impact of cryptocurrency and cryptomarkets on terror and criminal finance. 14 Chapter One Planting the Seed: Opium’s Origins in Afghanistan 15 Opium’s presence in Afghanistan dates back to the time of Alexander the Great, who is said to have introduced the crop to locals during his travels.

However, it was not until much later that it became commonly cultivated in the region.1 In the eighth century, Arab traders brought poppies and their knowledge of its medicinal uses to Iran, India and China, eventually spreading throughout Asia.2 In the 16th century, the Mogul empire, which included modern day Afghanistan, saw the crop’s economic potential and nationalised production and distribution of the opium poppy. By the end of the 17th century, it became so popular in China that the government became concerned.

The first recorded incidence of widespread addiction was reported in the port of Amoy, Formosa in 1683.3 For the next hundred years, China would implement a series of policies attempting to ban importation and consumption to varying degrees of effectiveness.

In the 18th century, the British East India Company created an epidemic in China. The company was given exclusive trading rights in Asia on behalf of the British government from 1600. The British had been struggling with a trade deficit to China for years. They purchased tea, silk, and porcelain, but had nothing to offer that China wanted.4 Exploiting the opium dependence of China would give Great Britain the upper hand.

The British East India Company quickly began producing opium in British India, also known as the British Raj, for export to China. By 1773, they were granted an official monopoly on opium trade in a growing number of ports throughout Asia, seeking to use the profits to conquer the region.5 The British East India Company tightly controlled production levels of opium, maintaining high prices by limiting supply. However, by the start of the 19th century, they faced new competition from Turkey and Persia for the Chinese market, still the biggest opium market in the world.

To corner that market, Britain quickly ramped up production, more than doubling its cultivation in Bengal from 36,400 hectares in 1830 to 71,200 in 1840.6 To meet the ever-increasing demand for opium, Britain began expanding cultivation efforts to neighbouring countries, including Afghanistan. At the time, Afghanistan’s economy was struggling, with low levels of exportation out of the country and heavy reliance on foreign aid. Emir Abdur Rahman Khan, who ruled Afghanistan from 1880-1901, saw an opportunity to build the state and increase centralised power in Afghanistan. The Mahaban Mountains along the Afghanistan-Pakistan border was a prime area for large scale cultivation, with steep hills to allow sufficient drainage and a good balance of sunshine and rainfall7 . Khan’s government was the first in Afghanistan to engage in formal opium trade, which it conducted with the colonial authorities in the British Raj.8 During Abdur Rahman’s rule, most of the opium produced was shipped abroad to China, India, and Russia. Opium was especially popular in British India’s North-West Frontier Province (NWFP), the area now known as Khyber Pakhtunkhwa, Pakistan, where it is still heavily involved in the opium trade today. The Abdur Rahman government never expanded opium production in Afghanistan beyond the Mahaban Mountains.9 As the United States pushed into Asia through colonising the Philippines, they injected themselves in the issue of opium trade.

As American missionaries became a more influential constituency, 1 Christian Parenti, “Flower of War: An Environmental History of Opium Poppy in Afghanistan,” SAIS Review of International Affairs 35, no. 1 (Winter-Spring 2015): 186.

2 James T. Bradford, Poppies, Politics, and Power: Afghanistan and the Global History of Drugs and Diplomacy, (New York: Cornell University Press, 2019), 19. 3 UNODC (United Nations Office on Drugs and Crime), World Drug Report 2008, (Vienna, AT: UNODC). 2008, 173. 4 Ibid., 175. 5 Ibid., 174. 6 Ibid., 174. 7 Martin Booth, Opium—A History (London: St. Martin’s Griffin, 2013), 251. 8 James T. Bradford, Poppies, Politics, and Power: Afghanistan and the Global History of Drugs and Diplomacy (New York: Cornell University Press, 2019), 17. 9 Booth, Opium—A History, 251. 16 American foreign policy called for prohibition of all drug trade and production.10 Incentivised by America’s growing prominence in international commerce, major countries agreed to address the growing problem of opium addiction by joining the Shanghai Opium Commission in February 1909.

The Shanghai Opium Commission passed multiple resolutions calling for a gradual decline in opium exportation and consumption.

11 Great Britain begrudgingly complied, demanding that British India decrease its opium cultivation and increased taxation on opium imports. It did not have a plan for the growing number of Indians addicted to opium, and many looked to the illicit market.

The Indian government as well had become reliant on the tax revenue of opium for their budget.12 This presented an opportunity for Afghan opium farmers, recently faced with losing a major consumer, to engage in the increasingly lucrative illicit route and smuggle the opium to India.

When British authorities became aware of the smuggling, they doubled down and banned opium imports all together. This only further increased the price of illicit opium, and more Afghan farmers joined the trade.13 Afghanistan’s takeover of the Indian opium market in many ways laid the groundwork for the drug trade that would consume Afghanistan a half century later.

British India impacted Afghanistan in further ways during the interwar period. The ripple effect from their fight for independence resonated with Afghans who had already struggled for autonomy from the British. Afghans saw the strain that the uprising in India was putting on Great Britain and exploited the chance to launch their own rebellion.

This rebellion, the third Anglo-Afghan War, brought independence to Afghanistan in 1919.14 Notably, the USSR was the first state to officially recognise independent Afghanistan, and formed the Russo-Afghan Friendship Treaty of 1919.15 16 Afghan Independence and the Dependence on Opium The early years of Afghan independence presented many challenges.

After surviving three wars against the British, the Afghan people began turning on each other. The first ruler of newly independent Afghanistan, Amir Amanullah, implemented sweeping reforms, creating new secular courts, opening up schools to women, abolishing subsidies for tribal chiefs, and banning religious clothing.

17 Like the Abdur Rahman government before, the Amanullah government saw the economic benefit of opium trade. The country produced an estimated 25,900 pounds of opium in 1922. Production was expanded in the north, mostly in Herat and Badakhshan.

18 This government expanded opium exports to Europe, notably trading licit opium to Germany.

19 The Amanullah government also ended the monopoly on opium production, acknowledging the difficulties in taxing and regulating rural areas like Badakhshan, Herat, and Jalalabad.

20 However, Amanullah was fiercely against local consumption. In the Penal Code of 1924-25, the consumption of drugs such as opium and cannabis were strictly prohibited, despite low levels of opium addiction in the country at the time.

21 The prohibition of drugs was not seen as radical, however, demanding that the punishments for breaking the prohibition law be administered by government officials instead of the Ulama (religious leaders) was seen as a slight on the Ulama, who had traditionally handled all societal judgements.22 10 Bradford, Poppies, Politics, and Power,

22. 11 UNODC (United Nations Office on Drugs and Crime). “The Shanghai Opium Commission.” Jan. 1, 1951, 45. 12 Bradford, Poppies, Politics, and Power, 36. 13 Ibid., 18. 14 UNODC, The Opium Economy in Afghanistan: An International Problem (Vienna: United Nations, 2003), 85. 15 Larry P. Goodson, Afghanistan’s Endless War State Failure, Regional Politics, and the Rise of the Taliban (Seattle, WA: University of Washington Press, 2001), 41. 16 Bradford, Poppies, Politics, and Power, 31. 17 Antonio Giustozzi, “Afghanistan: Transition Without End – An Analytical Narrative on State-Making,” Crisis States Research Centre, London School of Economics, Crisis States Working Papers Series, no. 2 (November 2008): 6. 18 Bradford, Poppies, Politics, and Power, 34. 19 Ibid., 38. 20 Ibid., 39. 21 Ibid., 17. 22 Ibid., 33. 17 The Amanullah government’s radical policies faced fierce backlash, resulting in a series of tribal rebellions and power grabs keeping the country in a state of disarray.

23 A Tajik warlord named Habibullah Kalakani unseated Amanullah in 1928, only to get usurped himself a year later.24 The Pashtun tribes found a leader in Nadir Khan (later known as Nadir Shah), from the influential Musahiban family, who was elected Amir of Afghanistan in 1931 and led a more moderate government than Amanullah.

In his short tenure as ruler, Nadir focused his efforts on advancing the healthcare system in Afghanistan. He built hospitals and medical centres throughout the country and invested in increased access to medications. Part of this agenda was establishing relations with the United States, the leading manufacturer of pharmaceutical narcotics.

While Afghanistan had plenty of raw opium that went into the production of pharmaceutical narcotics, it did not have the infrastructure to produce them. Nadir’s government paid for these initiatives largely through increasing the exportation of raw opium to the global market, including Russia, Great Britain, France, Japan, and Germany.

25 Two years later, Nadir’s 19-year-old son, Zahir, took over when he was assassinated over a personal vendetta.

26 Due to his young age, Zahir Shah’s government was effectively run by a number of prime ministers, beginning with his uncle, Hashim Khan. This new era attempted to provide stability to the country by maintaining neutrality on the world stage and engaging in international organisations, like the League of Nations and later the United Nations.

Feeling the pressure from the competing superpowers of the USSR and Great Britain, Zahir and Hashim balanced alliances with both to stay out of the fray of conflict. Hashim was able to expertly navigate these competing interests to his country’s advantage. To export opium to Japan, for instance, it had to first be shipped through British India.

While Great Britain would be breaking the Geneva Opium Convention of 1925 by trading with a non-participating country, they agreed, fearing Afghanistan would opt to go through Russia as an alternative.

27 While this method often worked for Afghanistan, it faced ongoing pressure to join the international drug control system. To comply with international pressures, Hashim’s government created the Shirkat-i-Taryak (Afghan Opium Company), a regulatory body that would have a monopoly on opium production and distribution in the country.

It created a fairly robust system: poppy farmers were required to obtain a licence through the National Department of Agriculture within the government. Government representatives, known as alaqadars, would regulate the production levels and purchase opium from the farmers for exportation.

The Shirkat-i-Taryak would sell the licit opium to Germany, the United Kingdom, Japan, and Russia to be used for pharmaceutical medication.

28 This new system helped reduce Afghanistan’s reliance on foreign aid, as this had been used as a means of influence which could offset Afghanistan’s perceived neutrality. Hashim saw the regulation and exportation of raw opium among other crops as a means of growing Afghanistan’s economy without aid.

29 Afghanistan’s Shift to an Opium Economy While Afghanistan stayed neutral during World War II, the conflict greatly impacted the country. Before the war, German aid was invaluable to Afghanistan. When Germany halted aid during the war, Afghanistan had to cut much of its development programs.

Exports were also hit hard, and the 23 UNODC, The Opium Economy in Afghanistan: An International Problem (Vienna: United Nations, 2003), 86. 24 Goodson, Afghanistan’s Endless War, 43. 25 Bradford, Poppies, Politics, and Power, 45-46. 26 UNODC, The Opium Economy, 86. 27 Bradford, Poppies, Politics, and Power, 58. 28 Ibid., 59. 29 Ibid., 28. 18 karakul sheep trade that was a major source of revenue for Afghanistan all but halted.

30 Prior to the war, there was relatively limited production of opium in Afghanistan. The first official data available on opium production in Afghanistan began in 1932, with a reported 75 tons of opium produced. This, compared with China’s 6,000 tons at the time, was negligible.

31 Exportation from Afghanistan was insignificant as well, reaching only 100 tons a year by the late 1930s. In the years leading up to the war, Turkey had become the leading exporter of opium.

32 The outbreak of World War II severed much of the established trade routes through Turkey, as well as the next leading producer, Iran. This created an opportunity in South and Southeast Asia to meet the demand for opium, creating brand new smuggling routes towards Europe which the Afghan government took advantage of.

33 In an Afghan trade journal published by the Afghanistan Chamber of Commerce, the Iqtesad Journal, it stated, “Opium is one of the important natural products of the country and as it is greatly in demand, more especially in wartime, in many countries steps have been taken to develop its production. It is hoped that, during the current year, good results shall be achieved.”

34 With little alternative to raise the needed revenue from traditional sources, the opium exports became the anchor of the Afghan economy. Afghanistan began rapidly increasing opium production. From 1942-1943, the Opium Exporting Company increased opium output in Badakhshan from 7,772.6 kg to 13,001.4 kg. Afghanistan also greatly expanded the agricultural land devoted to poppy cultivation.

From 1942-1943, Afghanistan increased their poppy fields from 1,500 acres to 6,870.35 To fill the growing demand, the Afghan government opened up the licit opium export business to private industry.

Companies like Shirkat-e-Sahami-e-Taryak (the Opium Joint-Stock Company) competed with the Opium Exporting Company and the Afghan Opium Company to buy opium from independent farmers.

36 Opening up the industry led to raised wages for farmers and created more incentive to join the opium trade.

The high demand for opium also led many to engage in the trade outside of the regulated system. One estimate during the wartime production indicates roughly 80% of opium exports from Afghanistan were produced outside of government regulation.

37 The global demand for opium increased not only because the usual high-production states ceased production, but the war created high demand for medicine for wounded soldiers. As a neutral country, Afghanistan was able to provide raw opium for all states involved in the conflict on either side. World War II broke the 1912 Hague Opium Convention treaty, which had set restrictions on opium trade for high-import states like China and the US. Afghanistan, which was not part of the agreement, could now trade with all parties to that treaty without limitation.

However, Afghanistan also failed to comply with the provisions of the 1931 Convention for Limiting the Manufacture and Regulating the Distribution of Narcotic Drugs, which was also a requirement for all signatories, the US being one.

While the US had previously traded with Afghanistan during Nadir Khan’s government, this was prior to the 1931 convention.

38 As the main proponent of prohibition policies, the US had enormous pressure to honour this agreement. However, the pressures from the war and the need for vast quantities of raw opium for their growing pharmaceutical needs caused them to reconsider. They also saw the burgeoning relationship with Afghanistan as strategically beneficial against the influence of German and Japanese interests.

39 They overlooked Afghanistan’s lack of sufficient regulations, and engaged in trade. Hashim Khan for his part continued Nadir’s push to 30 Ibid., 61. 31 UNODC (United Nations Office on Drugs and Crime), “Afghanistan – How Did Afghanistan Become a Major Supplier of Illicit Opium?,” in Global Illicit Drug Trends 2001, (Vienna, AT: UNODC, 2001), 30. 32 James Windle, “A Very Gradual Suppression: A History of Turkish Opium Controls, 1933-1974,” European Journal of Criminology 11, no. 2 (2014): 197. 33 Parenti, “Flower of War,” 186. 34 Afghanistan Chamber of Commerce. Iqtesad Journal. August-September 1944. U.S. Library of Congress. 35 Bradford, Poppies, Politics, and Power, 62. 36 Ibid. 37 Ibid. 38 Ibid., 60. 39 Ibid., 46. 19 gain access to western pharmaceuticals, and was able to secure much needed pharmaceutical medication for the Afghan population.

40 When arranging the first transaction, the US was put off by what it deemed unprofessional behaviour from the Afghan traders: requesting additional fees like transport be covered by the US, not having consistent morphine percentages in opium shipments, variance in the weight of each case, and a delay in the shipment process.

These inconsistencies gave pause to American pharmaceutical companies who were used to strict regulations of the product. The US State Department was also concerned with the reports that the Afghan opium production greatly exceeded government figures, alerting them to the growing state of the illicit opium market. However, the US did not want to break off trade with Afghanistan, both to maintain their morphine production and to keep Afghanistan away from an alliance with the Axis powers. The State Department instead responded by launching an investigation into the Afghan opium trade.

41 Early Signs of the Illicit Narcotics Market in Afghanistan Despite the detailed regulatory system that the Afghan government set up, it was being severely undermined. State Department officials observed that the alaqadars took bribes from farmers, a majority of the opium exported was not accounted for by the government, and there was a prominent opium addiction problem in Afghanistan, despite the government’s assurances that the locals did not have access to the opium.

Black markets cropped up in towns near cultivation sites, like Badakhshan. The United States saw that the Afghan government was trying to prevent illicit production and distribution, but it lacked the resources and ability to effectively combat the growing issue. The Afghan state was still very weak and had little control over the outer rural areas where production was highest.

It also had to consider the risk of suppressing these areas too much, after experiencing tribal rebellions in recent years that ended with multiple coups.

42 When the war ended and the Americans had less need for Afghanistan’s opium supply, it reignited its global drug prohibition policy. The United States did not want Afghanistan to completely stop production, as it valued the high morphine content in Afghan opium, it preferred a well-regulated system that eliminated illicit production and distribution. But if well-regulated opium was untenable in Afghanistan, the US saw more risk than reward.

43 They tried to exploit Afghanistan’s dependence on their pharmaceuticals to pressure them to regulate opium production. Afghanistan could have potentially used their raw opium supplies to manufacture their own pharmaceuticals, but that would have made them a pariah to the international community and they feared would lead to losing international aid and investment.

Additionally, while the Afghan government was economically reliant on opium export revenue, it saw a strong relationship with the emerging global power of the United States as politically advantageous. Joining other countries in a narcotic regulatory system would also give Afghanistan international legitimacy, which it could use for economic and political benefit.