LENIN'S TOMB: Ever wonder where that bank bailout money came from?

Tuesday, December 15, 2009

Ever wonder where that bank bailout money came from? posted by Richard Seymour

Guest post by redbedhead:

According to the United Nations Office on Drugs and Crime, some of it came from the Afghan opium trade. Foreign Policy in Focus has a fascinating article analyzing the recent UNODC study on the drug trade, entitled "Addiction, Crime, and Insurgency: The Transnational Threat of Afghan Opium." While the original study headlines the role of the Taliban in the Afghan opium trade, the FPF article notes that buried deep in the study is the admission that the Taliban receives less than 15% of its funding from drugs and that it likely only benefits from 4% of the Afghan drug trade. Poppy farmers, for instance, take about 21% of the drug trade's earnings. And the rest?

"... the remaining 75% is captured by government officials, the police, local and regional power brokers and traffickers ‹ in short, many of the groups now supported (or tolerated) by the United States and NATO are important actors in the drug trade."

Besides "our" allies being the main beneficiaries - not surprising since many of the people NATO and the USA put into power in 2001 were widely recognized to be warlords with large stakes in the drug trade. In comparison, the Taliban had outlawed poppy cultivation in 2000 based upon a promise from UNODC to provide aid to offset the revenue losses that would result from the ban. That aid never arrived:

That basic logic prompted UNODC to open negotiations with the Taliban once they had gained control over much of Afghan territory, using Executive Director Pino Arlacchi's hollow offer of USD 250 million as bait and raising unrealistic expectations about international recognition. In September 2000, two months after Mullah Omar's decree, Arlacchi announced that, instead of compensation, UNODC would close down all operational activities in Afghanistan. The decision took even UNODC staff in the country by surprise. They learned about it from a BBC broadcast. The Taliban were understandably angry: "We have fulfilled our obligations. We demand that the agreement we made should be fulfilled up to the end," said Abdel Hamid Akhundzada, director of the Taliban's High Commission for Drug Control. "We have done what needed to be done, putting our people and our farmers through immense difficulties. We expected to be rewarded for our actions, but instead were punished with additional sanctions" (Transnational Institute, 2001).

It is likely that the UN backed off on the aid under direction from the US which was in secret negotiations with the Taliban until five weeks before September 11 to build gas and oil pipelines from Central Asia, through Afghanistan, to a Pakistani port. The Taliban were resisting the US conditions and US negotiators were at turns offering threats and rewards to them. According to the French author of the widely read book "Bin Laden: the forbidden truth", US negotiators told the Taliban that "either you accept our offer of a carpet of gold, or we bury you under a carpet of bombs." However, Colin Powell, US Secretary of State at the time, did provide a Drug Enforcement Agency (DEA) grant of US$43 million - a drop in the bucket - to aid Afghan farmers who lost significant revenue from their traditional cash crop. One is tempted to see this as an incentive to submit to the conditions offered to win the release of further aid. As a result of the Taliban ban on poppy cultivation, Afghanistan went from providing 75% of global opium to zero almost overnight - a drop of 4,000 metric tons. Besides demonstrating just how much the US/NATO invasion has transformed Afghanistan into a "narco-state", to use DEA parlance, it also demonstrates, once more, just how craven and dishonest was UK Prime Minister Tony Blair. Blair is now all over the media saying that if the WMD justification hadn't worked he would have invaded Iraq in any case. The same dishonest - and deadly - method of international relations applied to Afghanistan. Blair stated that they would "bomb their poppy fields" even though there were none. And Downing street backed up this fiction:

"A senior Downing street aide said: 'We have reliable information that theTaliban are planning to use money from drugs to finance military action, anthat bin Laden has ordered farmers to step up production'"

But if the Taliban have never been the major beneficiaries of the Afghandrug trade, there have certainly been others. In particular, western banks have used drug money to lubricate the interbank credit system during the 2008 credit crisis. According to the UNODC report, somewhere between US$400-$500 billion in drug money has found its way into the banking system.

In fact, Antonio Maria Costa [UNODC exec. director] was quoted as saying that drug money may have recently rescued some failing banks: "interbank loans were funded by money that originated from drug trade and other illegal activities," and there were "signs that some banks were rescued in that way." "At a time of major bank failures, money doesn't smell, bankers seem to believe," he wrote in UNODC's 2009 World Drug Report (emphasis in original).

While the UNODC report may have attempted to provide a cover to further justify the war in Afghanistan, their use of stats that counter the report's headline claim actually reveals one more sordid truth about the war in Afghanistan. In addition to the death, destruction and destabilization of the region, the war has facilitated a massive growth in the Afghan poppy trade. From 200 tons in 1980, Afghanistan last year produced 6,900 tons and now controls 90% of the global opium trade. Upwards of 1.5 million Afghans are employed in poppy cultivation. And it reveals an irresolvable contradiction for the US: the more they attack the drug trade, the more they attack their own allies, some of whom - like Hamid Karzai's brother - are on the US' payroll. And most of all it hurts poor Afghan farmers who rely on the poppy trade to sustain their livelihood. It is they who will fill the ranks of the insurgency.

Labels: 'war on drugs', afghanistan, banks, finance capital, opium, US imperialism