The paradox of illicit economies: survival, resilience, and the limits of development and drug policy orthodoxy


The illicit drug crops opium and coca are conventionally regarded as sources of instability, an ‘evil’ that breeds fragility and violence. Fragile states are supposed to be most vulnerable to their production and consequent harms. Yet by looking into the local contexts of the world’s leading opium and coca producers – Afghanistan, Myanmar, Colombia and Bolivia – these illicit crops are found to also be sources of stability, even drivers of economic growth. They enable marginalised communities and territories abandoned by the state to be reinserted into national and global markets. Within so-called ‘fragile’ and conflict-affected areas are displaced and dispossessed households adopting innovative and unorthodox strategies for coping and survival in changing and insecure environments. This paper maps out an approach, useful for examining the resilience that has emerged amidst violence and uncertainty in illicit-crop-producing territories, and which can hopefully tackle the continuing disconnect between drugs and development policy.

Citation: Eric Dante Gutierrez (2020) The paradox of illicit economies: survival, resilience, and the limits of development and drug policy orthodoxy, Globalizations, DOI: 10.1080/14747731.2020.1718825

Five reflections on Asia’s drug policies for the 2020s

By Jonathan Goodhand and Kaweh Kerami

This post is also published on the Afghanistan Research and Evaluation Unit blog.

2019 saw the 1st Asia Regional Meeting of the International Society for the Study of Drug Policy, and if there is one clear message to come out of it, it’s that illicit drug economies in Asia present a complex set of challenges for governments and societies – linked to drug consumption, public health, human rights, gender equity, state fragility and corruption, chronic poverty and inequitable development processes.

Here we present some thoughts on the changing role of drugs in Asia, and five reflections from the meeting on what this means for Asia’s drug policies in the 2020s.

Drugs are likely to play an increased role in Asia, here’s why:

Firstly, while overall there are declining levels of armed conflict at the national level, the region continues to be affected by longstanding peripheral conflicts in borderland regions. In these pockets of fragility, illicit economies – including drug production and trafficking – thrive.

Secondly, Asia is a region of rising prosperity; high growth rates, rapid urbanisation and a growing middle class with disposable incomes, have contributed to growing demand for drugs. Asian countries that used to be just transhipment points, have become major consumer markets for illicit drugs such as heroin, methamphetamine and crystal meth.

Thirdly, for the most part it is a region of strong states, and in some respects this is good, helping to drive forward economic growth and social welfare. But at the same time, many of these states have authoritarian, or at least strongly paternalistic, tendencies. In the field of drug policy, this translates into state centred approaches that fail to get to grips with the dynamic transnational dimensions of drug economies.

Top-down counter narcotics policies are often driven by concerns with state security, rather than human security. They tend to look like home grown versions of the wider international ‘war on drugs,’ involving the securitisation and militarisation of drugs issues and the violent targeting of drug users, as well as traffickers. This was exemplified by the counter narcotics efforts of the Duterte Government in the Philippines, or capital punishment meted out to drug traffickers by the Chinese and Indonesian Governments.

Although there is strong domestic ‘ownership’ of these policies, the human costs are immense in terms of livelihoods, rights, stigmatisation, physical and structural violence. And these costs are born overwhelmingly by those least powerful to resist – who metaphorically live on the margins of society, or literally on the physical margins of states.

In many respects, these ‘reactionary’ responses buck an international trend towards more human centred, ‘softer’ and developmental approaches to drug issues. 

But it is also important to recognise the diversity of drug policies within the region and the growing number of ‘reformist’ experiments, sometimes in unlikely places. See for example Ghiabi’s research on the relatively progressive/reformist approach of the Iranian Government to drug use in recent years. Another well-known (but perhaps overhyped) ‘success’ story is the Thai Government in addressing drug production in its north western borderlands, the lessons of which have been incorporated into ‘alternative development’ programmes throughout the region – though with mixed effects.

It is against this backdrop of ‘reaction’ and ‘reform’ within Asia that the 1st Asia Regional Meeting of the International Society for the Study of Drug Policy was held at the University of Hong Kong from 14 -15 October 2019. Academic researchers and practitioners from across Asia attended the event to engage in conversation and compare research and experiences about drug related issues in Asia.

Five reflections on what this means for Asia’s drug policies:

1. The notion of a universal consensus on ‘the war on drugs’ (frequently propagated by both its supporters and critics) is very much a mirage.

Drug polices between countries (and even within countries) are extremely varied, reflecting how drug issues manifest very differently in Asia’s diverse states and societies. As noted, the Philippines is currently at the ‘reactionary’ end of the spectrum with a brutal war on drugs.  While at the reformist end, there are multiple experiments in harm reduction (such as Iran) and alternative development (such as Thailand and Laos), in addition to the legal cultivation of drugs (such as India).

2. The impacts – positive and negative – of drug policies and programmes in Asia are contested and largely unproven.  

We still have a lot to learn about ‘what works’ – although there is a lot of (often anecdotal) evidence about what doesn’t work. And interventions often work at cross purposes or have perverse outcomes. For example, drug reduction ‘successes’ in Pakistan contribute to growth of production across the border in Afghanistan. Or the strengthening of border management in Tajikistan contributes to professionalisation of the drug industry by taking out the ‘small fish.’ 

Notwithstanding, there was consensus at the conference that harsh punitive policies, driven by the unrealistic goal of creating a ‘drug-free region,’ have led to the violation of human rights and had a negative impact on socio-economic development in drug affected regions.

3. Policies must consider the complex and mixed impacts of drug economies on development, conflict and state fragility, and how these impacts change over time.

It may be useful to think in terms of generational shifts – for example, an older man in rural Shan State may have experience of cultivating opium and its occasional use in cultural or recreational settings, compared to a university student living in the provincial town of Tangyyi who has become a regular user of yaba (the local name for methamphetamine) to the detriment of his or her studies, health and family and wider social networks.

This evolution of drug economies affects the distribution of costs and benefits associated with drugs. For example, Afghanistan, like Myanmar, has over many years developed a ‘comparative advantage’ in illicit drug production as a result of protracted conflict, contested governance, porous borders and chronic poverty. Yet drugs, as well as aggravating these problems, are in some ways a solution. Drugs provide social safety nets and bolster livelihoods, as well as generating income for traffickers, state officials and armed groups.  In addition to producing and trafficking, Afghanistan and Myanmar have increasingly been affected by growing levels of drug consumption within the country

4. We need to think more carefully about the political economy of policymaking and the distributional effects of both ‘reactionary’ and ‘reformist’ drugs and development policies. .

The world could once be divided into drug producer, consumer and transhipment countries. Today it is far more complex. Governments developing drug policies have to calculate how they impact different groups – some with more or less power, some with tremendous ‘disruptive potential’ and others who can be ‘safely’ ignored.

Policies that may be efficient or cost effective, may not be politically feasible.  Paradoxically, authoritarian states may have a freer hand to pursue more enlightened drug policies than democratic states where ‘hard’ drug policies win votes. And states like Afghanistan are beholden to donor and international agendas that are less attuned to the political costs of particular policies domestically.

5. There is a clear research and evidence gap.

It’s clear that we need to think more systematically and comparatively about the impacts and lessons of ‘reactionary’ and ‘reformist’ policies.  Research which generates longitudinal and comparative data, and which understands drug issues from the perspectives of those most affected (particularly in borderland sites which are difficult to access) is urgently needed.

In conclusion, the conference revealed a complex yet urgent situation in Asia. The goal to make Asia ‘drug-free region’ is seen as overly ambitious and the driver of many harsh policies that are causing harm and having negative impacts on economic development.

Linked to this, there was a growing call for alternative development and harm reduction policies. In Afghanistan, AREU advocated for a prioritsation of borderland regions, that are hubs for illicit economies and armed confict.

Finally, the conference participants emphasised the need for continud context-specific, as well as comparative cross-national research to help build a solid evidence-base to inform drug policies in Asia.

The historical role of opium and what it tells us about illicit economies today

Debates on drugs are often extremely parochial and ahistorical, yet our research is showing that historical and comparative perspectives are essential to better understand and engage more effectively with illicit drug economies.

Opium is a commodity that was deeply implicated in the growth and consolidation of empire and the extension of international trade, and a catalyst for the development of European and Asian capitalism. Two books provide different but fascinating insights into the historical role of opium, capturing important themes that are relevant to understanding illicit economies today.

Book one: Opium, Empire and Global Political Economy by Carl Trocki

In his superb book Opium, Empire and Global Political Economy, Trocki (1999) persuasively argues that the ‘super profits’ that came from monopolising the long-distance opium trade were of central importance to the development of European and Asian capitalism.

In the nineteenth century, opium produced in British ruled India was transported to China. This became the world’s largest market, to the extent that by 1900 there were estimated to be 13.5 million opium users in China (see McCoy’s 1971 book The Politics of Heroin in Southeast Asia).

The opium trade prepared the ground for capitalism by creating mass markets. For European merchants, opium created their first major accumulations of capital. And many British merchant houses, banks and insurance companies that had their roots in Asian trade, all had a start in opium.

The opium trade transformed agrarian relations in the eastern Indian state Bihar, the main site of large-scale production for the Chinese market. Even in years of famine, farmers were often made to give up their grain cultivation in favour of producing the drug. To produce a 1.6 kg. ball of raw opium required 387 man-hours, underlining the value of peasant labour in the opium industry in the 18th and early 19th centuries, as emphasised by Trocki:

‘Realising that the Chinese market had become far more elastic than they had previously imagined, the government decided to increase production in order to meet competition from foreign and Malwa opium. And rather than attempt to restrict the supply and maintain the price, they adopted the opposite strategy: producing as much as possible and hoping to drive the competition out of business by running down the price. Despite the usual blandishments about native welfare, increasing blocks of land were brought under opium cultivation, particularly in Bihar state, and more peasants were dragooned into the business of poppy cultivation.’

Trocki 1999

There are many other links between labour, opium and colonial regimes of power. For instance, European colonies all faced the same labour shortage and many turned to the same solution. Europeans facilitated the provision of opium to ethnic Chinese and indigenous Southeast Asians, usually in modest quantities – for example Chinese labourers, many of whom were fleeing internal crises within China at the time, could be induced to work long hours at physically demanding jobs in medically challenging environments for low pay. 

Opium also produced revenue crucial for the functioning and growth of the colonial state and its infrastructure. In Singapore, government-granted monopolies over the retail sale of opium brought in approximately half of the state revenue from the mid nineteenth century to the first decade of the twentieth century.

Whilst the lion’s share of the profits was made by European capitalists, opium also contributed to the emergence of a new Asian capitalist class. In China for example, Trocki points to the catalytic role played by opium in the commercialisation of agriculture and the creation of new sources of capital accumulation and new indigenous owners of capital. Other research also points to the role of local merchants and indigenous entrepreneurs in developing new markets as a response to the opportunities created by European trading.

Therefore, the imperial system in South and Southeast Asia rested on opium.  Colonial labour markets and state budgets would not have functioned without it. Southeast Asian nationalists in the 1920s came to believe that part of their struggle to gain independence was also to end the legal sale of opium. Colonial rule and opium consumption were seen to be entwined, and newly independent states were relatively successful in prohibiting opium during the early years.

Book two: Sea of Poppies by Amitav Ghosh

Amitav Ghosh’s novel Sea of Poppies (2008) provides a very different, but equally arresting set of insights about the opium trade. 

The book’s origins go back to Ghosh’s interest in why Bihar became such an important source of indentured labour in the nineteenth century and what drove this population to take the risk of crossing the ‘black water’ to make a new life elsewhere.  

He made the link between the rise of a monoculture in opium and the creation of indentured labour force, as peasant farmers became indebted first to the East India Company and then to other private companies once the East India companies’ monopoly ended.   

The novel which emerged from this discovery unfolds in north India and the Bay of Bengal in 1838, on the eve of the British attack on the Chinese ports known as the first opium war. He dramatises two great economic themes of the 19th century: the cultivation of opium as a cash crop in Bengal and Bihar for the Chinese market, and the transport of Indian indentured workers to cut sugar canes for the British on islands such as Mauritius, Fiji and Trinidad.

The novel begins in the fertile farms of the Ganges blooming with poppies, and with Deeti, the wife (but soon to be widow) of an addicted husband, who works at the British opium factory at Ghazipur.  The book (the first in Ghosh’s ‘Ibis triologu’) ends with her on an old converted slaving ship, the Ibis, taking indentured labourers to Mauritius.

A busy examining hall in the opium factory at Patna, India. Lithograph after W. S. Sherwill, c. 1850.
Photo courtesy of Wellcome Images.

As Ghosh writes, the official version of history glosses over the time when Britain was the ‘world’s biggest drugs pusher.’ One of the most arresting scenes in the book is his description of Deeti’s visit to the great Sudder opium factory at Ghazipur.

Deeti rushes in terror through every single shed of the factory in search of her dying husband. Poppy flowers, sap and trash are processed before Deeti’s terrified village eyes. She is affronted by the smell, ‘hot and fetid, like that of a closed kitchen.’ The smell was not of spices and oil, but of liquid opium mixed with the ‘dull stench of sweat’ and then the sight of ‘dark legless torsos,’ who turn out to be ‘bare-bodied men, sunk waist-deep in tanks of opium, tramping round and round … as slow as ants in honey, trampling, treading.’  The men, coloured dark as pitch, are urged on by white overseers ‘armed with fearsome instruments.’

What these books capture that are relevant to the contemporary dynamics of drug economies

In very different ways, these two books capture a number of the themes that we wish to explore in our research. Although the context and time period are different, the historical insights captured by these books are relevant to the contemporary dynamics of the drugs economies in fragile and conflict-affected states.  Both Trocki’s and Ghosh’s accounts highlight:

The interrelationship between, and inseparability of, violence and opium trade and production.

This includes structural violence (such as exploitative labour relations, the ‘slow violence’ of drug addiction, poverty induced migration) and direct physical violence (from the coercion of factory workers to the conduct of imperial wars).

Yet notwithstanding (and perhaps even because of) this violence, opium economies played a transformational role, both on peripheral rural economies (the creation of indentured labour, the commercialisation of agriculture, increased differentiation of the peasantry) as well as the metropolitan centres (growth of powerful of trading houses, tax base for colonial administration). 

Therefore, although extremely violent and bound up with exploitative relationships, the opium economy had – often unexpectedly – long term developmental effects. 

The transnational, or in fact global, dimensions of the drug economy.

This includes movement of people and commodities across huge distances.  European empires created the mercantile routes along which drugs (and other intoxicants) flowed. Sites of opium production, distribution and consumption spanned continents and empires.

Both of these books provide a ‘subaltern’ perspective – they seek to understand the opium economy from the perspectives of those living in the peripheries of empire, whilst at the same time not losing sight of the wider structures of power and sets of interests that drove this economy.

The transition to more licit forms of wealth creation enabled by wealth generated through opium.

Finally, what we might call processes of ‘graduation’ in which empires, countries, groups of people and individuals who had accumulated vast wealth as a result of the production and trade in opium, graduated into more ‘respectable’ forms of wealth creation (as with the American robber barons).

For example, historians have argued that money from the Chinese opium trade founded much of the modern US. Many of the antislavery schemes, hospitals, universities and railways that gave shape to nineteenth century America would not have been possible were it not for the drugs profits made in China.

Furthermore, counter narcotics policies and anti-opium discourses were and are frequently deployed to consolidate and legitimise earlier gains and unequal power relations. For example, some have argued that the US focus on controlling drug supply that still dominates today was in part born of a desire to undermine British power in Asia. Also, images of opium addicts as indolent, languid, feminised men, and opium dens as places of iniquity, created new justifications for a ‘civilising mission.’