A curious case of unusual economic transformation

This post was first published by Christian Aid on 10 July 2019. Read original article.

Countries seek to grow their economies so that livelihoods, incomes and welfare services are secure and sustainable. But for countries beset by poverty and conflict, achieving this can be difficult. Instead, they often face serious economic crises.

In such situations, these countries usually turn to the lenders of last resort – the International Monetary Fund and the World Bank. In the 1980s, these lenders prescribed a standard solution, a formula called structural adjustment. In exchange for loans to prevent a country’s economy from collapse, it would need to commit to stabilise, liberalise and privatise; focus on trade and production; and democratise.

However, there is a country that for various historical reasons did not ‘get the memo’. For the moment, let’s call it Country X. As its currency was demonetised, inflation was at 30{83ecf5b61c3deac6f8cdad8e1c8bee36d10ac3107192903d905d6fe2d4e88cad} and bus fares tripled, the government declared martial law and enforced a bloody crackdown instead.

There wasn’t even a chance to ‘stabilise, liberalise and privatise’ because something much harsher was enforced: international economic sanctions. Country X was deprived of access to global markets, foreign direct investments, development aid and hard foreign currency as its economy teetered on the edge of collapse.

Yet, surprisingly, Country X did not go belly up, thanks largely to an unconventional route it adopted in desperation to tackle economic isolation and chronic conflict. Its military rulers tolerated a single cash crop to bring in revenues and revive the economy.

In a little over two decades, the economy was well enough that the military rulers called for elections, the first step needed to remove the painful sanctions and be considered again by the lenders of last resort. So where is Country X, and how did this happen?

Resource curse

Country X is a typical developing country with a ‘resource curse’. It has rich mineral areas, forests and fertile valleys but since independence these had become dangerous places where armed groups roamed, engaging in civil wars in which no side could win nor be defeated.

Much of the conflict was in the rugged, mountainous northeast, which historically was the poorest and most marginalised area because it couldn’t develop intensive agriculture, lacked water and had poor infrastructure for bringing harvests to markets before they spoiled.

But two crops were suited for the terrain and remoteness of this region – tea and a crop we’ll call Crop Z for now: a low-volume, long-lasting and high-value agricultural product. These gave highland communities the cash they needed to buy not only food, but also modern consumer goods – from cooking oil and sugar to pots and pans.

However, when the conflicts ignited, tea diminished in importance because it needed lots of land to grow. Crop Z, on the other hand, could be grown just about on any hillside, over a much shorter period, and with considerably less maintenance.

As the conflicts dragged on, armed groups were the only ones who had the means to move Crop Z to border crossings and the markets beyond. They got a 20–30{83ecf5b61c3deac6f8cdad8e1c8bee36d10ac3107192903d905d6fe2d4e88cad} commission for every kilo they delivered to buyers at the border.

Curiously, while there was intense fighting over territory and political causes, very little actual violence was triggered by the trading of Crop Z itself.

The evolution of Crop Z

Over time, the armed traders thought of ways to make deliveries less burdensome. By processing raw Crop Z into semi-processed product No.1, volume was reduced by 90{83ecf5b61c3deac6f8cdad8e1c8bee36d10ac3107192903d905d6fe2d4e88cad}. As such, they invested in backyard processing, which also meant giving jobs to hired hands, mostly refugees displaced by the conflict.

Additional processing led to product No.2. As the processing expanded, the added profits shifted to the local producers and primary traders.

Still the wars raged, and so did Crop Z cultivation and processing, allowing a lifeline to poor households unable to escape the conflict.

It then turned out that the armed traders could produce Crop Z’s finished product themselves – like selling flour, rather than just wheat. And so, with the profits they were making, they invested further in processing and refining, and started making products No. 3 and No. 4.

As the enterprise expanded, tools and equipment, like electricity generators and water pumps, proliferated. Roads were maintained. Loans were made available to growers who were too poor to qualify for credit through normal channels. Soon, more migrants looking for work turned up.

As cash flowed in, the new-found purchasing power sustained demand for food and other products that made lowland economies more viable. A ‘trickle-up’ effect emerged. Most importantly, the violence calmed down and ceasefires were agreed.

Revealing Country X and Crop Z

According to one study, by 1995 Crop Z was pumping more than half a billion US dollars each year into the economy, an amount bigger than the government’s tax revenues. Over the next two decades, banks and various companies sprouted, capitalised by Crop Z profits. One ex-militia leader and Crop Z trader, who died in July 2013 as a tycoon, had obituaries written about him in major publications around the world.

The Economist called him ‘a pillar of the economy.’

… and a ‘heroin king‘.

That’s because Country X is Myanmar, and Crop Z is opium. Products No.1 and 2 are the morphine base and heroin base, respectively, while products No.3 and No.4 are brown and white heroin.

Illicit crops and development – challenging the narrative

I am not suggesting that illicit crops are a solution. Crop Z could be another crop, like bananas or sugar, and have the same impact – as long as its production distributes income, provides credit, pays for public services and re-invests profits back into the local economy. So, what I am explaining is the difference between structural adjustment and structural economic transformation – and pondering what we can learn from this.

Myanmar did not ‘stabilise, liberalise and privatise’, and achieved some economic transformation by following a different route. Its story shows that illicit economies, while often sustained by violence and coercion, can also be a source of order and contribute to income and employment growth, especially in conflict-affected areas.

This challenges the dominant narrative that drug economies are only a law enforcement problem, with no developmental impacts, implying that we need to think hard about policy and practice around illicit economies. This seems to be the lesson that can be taken away from this curious case study.

For more on challenging the narrative on illicit crops and development, read our new report Peace, illicit drugs and the SDGs: a development gap.

How the war on drugs criminalises the poorest in human society

This post was first published on the Huffington Post on 11 July 2019. Read original article.

When some of the world’s poorest people are denied basic rights such as land, access to credit and social protection, it is no surprise they turn to cultivating illicit crops in order to survive, but it’s a mistake when they are criminalised.

According to the latest estimates, the global value of the illicit drug market could be between $300 and $600billion a year. Globally, opium production has doubled since the turn of the century. The UN has emphasised that the production of opium and manufacture of cocaine today are ‘at the highest levels ever recorded’.

By any measure, this is a failure of decades of counter narcotic policy. Responses to drugs have varied, from those that seek alternative development, harm reduction to the extreme measures of the ‘war on drugs’.

The two pillars of the ‘war on drugs’ – the eradication of illicit crops and the militarisation of the fight against drug gangs – have both been a disaster.

Crop eradication has led to deforestation and people losing their homes, while doing little to reduce cultivation levels. Aerial fumigation – the spraying of carcinogenic chemicals on illicit crops – has damaged people’s health and their environment. And the use of the military in law enforcement operations has led to egregious human rights abuses.

There have been an estimated 27,000 extrajudicial killings in the Philippines related to President Duterte’s war on drugs. In 33 jurisdictions globally, drugs users are executed. In Colombia in 2017 and 2018, 47 members of a peasant farmers’ movement – which gives cultivators of illicit crops a voice – their activism in promoting more humane public policies on illicit crops.

The continuing militarisation of the ‘war on drugs’ has translated into a sustained and often devastating attack on human rights from displacement of land, access to health and livelihoods, to killings.

Some of the principal victims of this ‘war and drugs’ are the poor communities that live on the margins and the borderlands of countries such as Afghanistan, Colombia and Myanmar. These are neglected and marginalised areas where violence, fragility and displacement are rife. Communities in these regions lack access to the bare essentials and are struggling to build peace after decades of war. It is perhaps no accident that in Afghanistan, Colombia and Myanmar, illicit drug cultivation has continued to grow even after the signing of ceasefires and peace agreements.

While these communities face violence and coercion, they are not simply victims. They have agency and are often forced to find unorthodox ways to survive. Often they turn to illicit drug economies because it might their only solution. These economies can provide them with an income, employment and protection amid violence, insecurity and poverty.

Efforts to move away from the militarised approach inherent in the ‘war on drugs’ are welcome. However, to date, the evidence base to support such reforms remains weak. There is a prevailing tendency in practice to view illicit crop economies primarily through a narrow law enforcement lens.

A much more comprehensive development and peacebuilding approach is needed. Firstly, we need to recognise that people need to survive, and if this means cultivating illicit crops, this is what they will do in the absence of state support, lack of access to credit, lack of access to land and the absence of social protection. They should not be treated as criminals for trying to survive.

The Sustainable Development Goals, the globally agreed framework to create a better world, provide a unique mandate for addressing this blind spot of dealing with the issue drugs. The failure to date to fully understand the wider role of drug economies has real-life consequences for ordinary people – in different ways for men and women.

Secondly, states need to recognise the true impact of illicit economies and their role in development and peacebuilding when addressing the SDGs. This would encourage a radical shift away from the counterproductive policies that have historically defined their relationship to illicit drug economies.

Thirdly, if the aim of counter-narcotics policy is to reduce people’s reliance on illicit crops and create peaceful transitions from armed conflict, the criteria of success should not be metrics like ‘reduction in hectares cultivated’ or ‘kilograms of drugs seized’. They should be measures of economic development, access to public services, poverty reduction, respect for human rights, levels of human security, confidence in the state, and access to meaningful employment.

Finally, rather than seeing illicit economies as problems to be solved by law enforcement operations, peace agreements need to deliver more than an end to fighting, they need to comprehensively address the marginalisation and exclusion of those in borderlands and provide people with secure land tenure, access to public services, and alternative economic opportunities to address the factors that attract poor subsistence farmers to illicit activities in the first place.

Solutions to transforming economies of war to economies of peace have to include people in marginalised territories and solutions should be built by those that understand the problem best.

Karol Balfe leads peacebuilding work at Christian Aid, a partner in the Drugs and (dis)order research project funded by the UK’s Global Challenges Research Fund.

Peace, illicit drugs and the SDGs: A development gap

The two strategic pillars of the ‘war on drugs’ – that is the eradication of illicit crops and the militarisation of the fight against drug gangs – have both been a disaster. The fragile consensus surrounding the ‘war on drugs’ is falling apart.

The Sustainable Development Goals (SDGs) provide an opportunity to develop new, contextually attuned approaches to counter-narcotics and peacebuilding – based on solid research and applying a gender lens.

This policy paper provides recommendations for a new approach to transforming illicit drug economies, in order to support sustainable transitions that achieve the targets and ambition of the SDGs.

Read policy paper.

This paper was published by Christian Aid, a partner in the Drugs and (dis)order research project funded by the UK’s Global Challenges Research Fund.

Illicit drugs and peace: why the borderlands matter

It has become a truism amongst policymakers that transitions from war to peace involve a shift from illicit to licit activities. Once the guns fall silent, unruly borderland regions no longer have a comparative advantage in illegality and violence, and should become investment hubs for productive and licit activities.

But in Afghanistan, Colombia and Myanmar – three of the world’s biggest drug cultivators – production has continued to grow following the signing of ceasefire and peace agreements.

Illicit drug economies flourish in the borderland regions – where there’s weaker state presence and easy-access to lucrative foreign markets. And home to some of the poorest and most vulnerable communities, borderlands often become marginalised hotspots of persistent conflict and poverty, even after ‘peace.’

While the borderlands lie at the margins of the country, we believe that they are central to the processes that generate war and peace. And what happens in the borderlands is fundamentally shaping and reshaping the centre.

Here are a few of the issues and perspectives emerging from our early research on building peacetime economies in the aftermath of war that demonstrate the importance of borderlands, and that we hope to develop and explore over the next three years.

The borderlands have been neglected in policy debates

Historically, the borderlands have been characterised as ‘unruly’ regions where the population seeks to evade or resist the central state – see for example James Scott’s ‘The art of not being governed.’ These regions are represented as background and problematic areas that are frequently marginalised or left out of the debates about drug policy reform and peace transitions. There is a dominant narrative that views the extension of the central state’s footprint into ‘unruly borderlands’ as a pacifying and developmental dynamic. But the reality is far more complex.

Take for example the Colombian department of Putumayo on the Ecuador border. Government drug substitution programmes are actually impoverishing families for whom coca has been central to the local economy for decades. There are barriers to enter new legal economies, such as licenses to grow particular cash crops, or lack of infrastructure to get goods to markets. People are trapped in coca production – there simply aren’t viable alternatives.

In fact, what’s emerging from our research is that there is nothing inherently rebellious or anti-state about the borderlands. They do want the state to govern them, but they want a stake in negotiating the terms of that governance.

The borderlands have demonstrated remarkable creativity and adaptability

The borderlands are often seen as lagging behind the rest of the country. But this is far from true.

Borderlands have demonstrated remarkable creativity and adaptability in surviving, and sometimes thriving, in risk and uncertainty – especially those involved in drug economies.

In Afghanistan, communities in frontier zones such as the Shegnan and Ishkashim districts of Badahkshan turned to the drug economy in the 1990s as a means to cope with political disorder after the collapse of the Soviet-backed Communist government. These marginal territories transformed into important opium cultivation and trafficking hubs, shaping political dynamics both within and beyond the province.

In fact, across Afghanistan’s diverse border regions, we see many examples of experimentation, adaptability and the transfer of know how, technology, improved seeds and credit instruments, all related to the dynamics of the opium economy.

Borderland drug economies can be a form of resistance to exclusionary development processes

The fact that illicit drug production in Afghanistan, Colombia and Myanmar has continued to grow following the signing of ceasefire and peace agreements – and in spite of large infusions of donor funding and government development programmes – suggests a far more complex and context specific relationship between illicit economies, development and transitions from war to peace than commonly thought.

Take for example, the eastern borderlands of Myanmar, Shan State. The region has a long history of poppy production and armed conflict. In recent years, ceasefires between the government and ethnic armed organisations have paved the way for new licit economies – such as logging, mining, agriculture, road and dam building and increased cross-border trade with China and Thailand.

However, the inequalities underpinning these new economies have pushed some people back into illicit activities. For example, processes of violent dispossession, including land grabs, leave many poor rural communities with few economic options beyond cultivating opium or migrating across the country’s borders.

In some respects, poppy cultivation is a form of resistance to exclusionary development processes. Also, where opium bans were enforced under the ceasefires, rural populations experienced severe food shortages and worsening poverty.

‘Drugs and (dis)order: building peacetime economies in the aftermath of war’ seeks to better understand the historical context and political economy that has shaped the emergence of illicit drug economies, their persistence during wartime and how they have affected and been affected by transitions out of large-scale violence. The project intends to shine a light on the role of the borderlands as critical vectors of change in the transition of war economies, and to amplify the voices and perspectives of borderland populations that have ignored and marginalised in debates on drugs, development and post war transition.

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International Journal of Drug Policy

The International Journal of Drug Policy (IJDP) provides a forum for the dissemination of current research, reviews, debate, and critical analysis on drug use and drug policy in a global context. The journal is particularly concerned to explore the effects of drug policy and practice on drug-using behavior and its health and social consequences.  IJDP is edited by the Drugs and (dis)order Co-Investigator Professor Tim Rhodes.

Journal of Illicit Economies and Development

Journal of Illicit Economies and Development (JIED) is a peer-reviewed, open access, electronic journal publishing research and policy commentary on the complex relationship between illicit markets and development.

The journal is cross-disciplinary and engages with academics, practitioners, and decision makers in facilitating for interventions and development planning that incorporates an in-depth understanding of the dynamics of illicit markets.

The journal welcomes scholars and practitioners from all disciplines with an interest and expertise in the complexities illicit markets pose to the achievement of key development goals, such as the United Nations 2030 Agenda for Sustainable Development, and progress towards peace and security in fragile settings.

Is forced eradication of coca crops effective?

In Colombia, attempts have been made to control coca production through aerial eradication, manual eradication and voluntary crop substitution programmes.

Available data on land area with planted coca crop suggests that these measures have not been successful in reducing production. What’s more, they have negative effects on the populations that live in those areas.

Rigorous studies on the effectiveness of anti-drug policies indicate that other measures yield better results.

Further research is needed to evaluate the impact and efficiency of sustainable development policy alternatives, and the strengthening of state presence. While alternative measures involve high investment, they seem to have a greater impact in the long-term and few negative side effects for civilian populations.