Feasibility of Licensing Poppy Cultivation for the Production of Morphine-Based Medicines in Rural Afghanistan

by Ricky Denzle (Author)

Bachelor Thesis 2009 26 Pages

Business economics - General






The Opium Poppy

Farmer Motivations


LED - Importance and Implications
Poppy for Medicine in Practice
Project architecture
Provisions for security and control
Economic benefits at the village level
Sociological rationales

Economic Feasibility
The fallacy of demand
The dilemma of competitiveness
Security Feasibility




“Either Afghanistan destroys opium or opium will destroy Afghanistan.”

- President Hamid Karzai (2006)

This paper intends to explore the feasibility of a licensing system for licit opium cultivation for pharmaceutical purposes in selected areas in rural Afghanistan from various angles and its particular implications for the concept of local economic development (LED). More specifically, it scrutinizes the economic, socio-cultural and political conditions necessary for such a counter-narcotics initiative to be successful in the short and medium-term. An extensive technical dossier published in June 2007 by the International Council on Security and Development (ICOS – formerly known as The Senlis Council), an international research and development policy think-tank, will serve as a basis for reference while this paper intends to challenge its underlying assumptions.

The opium economy and its associated pitfalls of insecurity, warlords, state weakness, and poor governance remains one of the core problems for Afghanistan in the 21st century. Unlike any other country, the Afghan drug industry is unprecedented in terms of its relative economic size, impact on politics, economy, and society, and the insecure and lawless environment that it could thrive in (Byrd & Ward, 2004). As a matter of fact, it remains a critical source of corruption (particularly at the district level) and undermines public institutions especially in (but not limited to) the security and justice sectors (Buddenberg & Byrd, 2006). The international community’s ability sees itself almost resigning given the fact that ever more money is being spent on intervention and eradication strategies while at the same time opium cultivation and output has been growing steadily since the beginning of the decade, supplying more than 90% of worldwide illicit opiate (UNODC, 2008). Despite some advantages the opium economy may offer, such as its support for the overall macro economy and the stimulation of rural incomes, the associated drawbacks by far outweigh the combined economic benefits. Until the present day, Afghanistan’s counter-narcotic strategies have largely been unsuccessful in tackling the fundamental problem, thus making us realize that the issue is of a different order of magnitude. Indeed, past (mostly US-led) counter-narcotic development initiatives merely focussed on all too wrong measures such as elimination, eradication and interdiction, thereby addressing only consequences rather than causes, leaving the local population in unrest.

Yet, there has been a change of thinking among scientists and researchers to tackle the opium crisis in Afghanistan. The ICOS’s bottom-up approach called Poppy for Medicine (short: P4M) draws upon collaboration with the local Afghan community to reduce their reliance on opium while encouraging the production of opiate-based medicines available for pharmaceutical application (Spivack et al., 2005a). Thus, it tries to integrate local resources and expertise with external capabilities and funds. Accordingly, the main question for the goodwill of the country should be how to progressively and sustainably reduce its reliance on opium cultivation while fostering political stability and economic growth. In this light, it is probably fair to say that Afghanistan will not be able to do so itself in the short-run; rather, it has been dependent upon external intervention and assistance and is likely to remain so in the near future. This is where the link with LED comes into play. Quite naturally we expect endeavours by the international community to improve local conditions through the introduction of development programmes linking domestic with external resources to achieve conditions, that one day allow for licit economic self-sufficiency, just as indicated in the P4M proposal

However, before we draw our attention to the LED project, some necessary background information on Afghanistan’s opium poppy production, extraction and its application for medical purposes is being provided. Similarly, motives for farmers to grow opium poppy will be examined as those crucially influence the design and architecture of any similar LED proposal. Afterwards, the P4M project as proposed by the ICOS will be introduced and exemplified within the wider field of LED. As a matter of fact, security and control embody one of the key aspects when introducing a licensed poppy operation, and thus will remain the centre of attention in the subsequent analysis. Not any less important, however, is the economic aspect of the P4M initiative. In this light, I will enquire how the development proposal intends to bring economic development at the lowest level of LED programmes, namely the community level. Despite all macroeconomic benefits that such programmes may bring along on a national level, it is of crucial importance that those right at the bottom of society, in our case the opium farmers, profit from economic growth and prosperity. Aside from that, I will analyze the feasibility of associated proposed socio-economic merits such as increased loyalty to the authorities, decreasing levels of corruption and overall elimination of illicit drug trade. Similarly, emphasis will lie on discovering demand and supply potential of those highly institutionalized opiate-based medicine markets.

In the discussion part, I will rigorously evaluate possible weaknesses that may fundamentally hamper the development and sustainability of this counter-narcotics project. That is to say, if the P4M project was such a “silver bullet” where all involved stakeholders may win (as claimed by the ICOS), then ultimately the question arises why it has not been suggested and implemented earlier on. The argument is that similar enterprises implemented in both Turkey and India in the 1970’s were economically successful and thus serve as a role model for P4M. However, it will become clear throughout this thesis that relatively strong institutional environments (as they were prevalent in respective countries) are a fundamental necessity and must under no circumstances be neglected when implementing a project the scale and complexity of P4M. Eventually, the discussion will be rounded of with an holistic and thorough conclusion towards the LED proposal, weighing up the different arguments that may speak for and against its soon implementation. Yet, it may already be anticipated that there are no easy answers but only difficult compromises in searching for a long-lasting, sustainable counter-narcotics strategy that simultaneously caters for the vital needs of the Afghan population.


The dilemma of opium poppy cultivation is a topic that has received increasing attention from both academics and non-academics in the previous decades, not least because the international community under the name of the United Nations has a common interest in solving this issue as illicit drug trafficking and consumption affects all parts of the world in similar negative ways. Likewise, LED programmes nurtured the debate on how to improve living conditions for those living at the edge of survival. Expectably, there is a great deal of literature available on the two issues mentioned above, however, considerably less authors dedicated their work towards the development of LED programmes in conjunction with fighting illicit opium cultivation.

In business research terms, the analysis of this exploratory research paper is construed as a review of mainly secondary literature, which has been collected via the help of the prevailing indexes and bibliographies. This process is a crucial phase of a research project, where the researcher expands his understanding of the underlying management dilemma, among others, by looking for ways others have addressed and solved similar issues (Cooper & Schindler, 2006). Accordingly, relevant data has been extracted from academic journal articles and non-academic sources alike. The bulk of research and associated literature has been carried out and published by both intergovernmental organizations (IGO), such as the United Nations (UN) and its specialised agencies like the United Nations Office on Drugs and Crime (UNODC) and the World Bank, as well as international nongovernmental organizations (INGO) such as the ICOS. Most of the sources applied in this thesis were published within the last five years which ensures high actuality of the data used.

The initial research complication is the short-term to medium-term feasibility of licensing poppy production in rural provinces of Afghanistan under the supervision of the ICOS. In a wider sense, this renews the question on the degree of political stability required to let P4M potentially succeeded, as the Afghan government under its President Hamid Karzai has not yet managed to get violence and instability under control, despite this fact being a significant determinator in the decision whether to run P4M or not. Hence, there are numerous internal as well as external threats that might cease the P4M project before it actually kicks off. I will thoroughly investigate how the ICOS answers questions regarding internal and external project security, that is to say, the regained strength of the Taliban in certain provinces, efficiency of operations, competitiveness of the morphine tablets on the market, potential backup plans and the like. Thus, investigating the feasibility in economic, social and political terms will help me in finding possible answers to these questions.



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University of Groningen – Faculty of Economics and Business
Feasibility Licensing Poppy Cultivation Production Morphine-Based Medicines Rural Afghanistan


  • Ricky Denzle (Author)


Title: Feasibility of Licensing Poppy Cultivation for the Production of Morphine-Based Medicines in Rural Afghanistan