Estimating Insurgency Funding in Afghanistan and the Political Economy of Reporting
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For years, major institutions of the international community have claimed that the Taliban earns 10 per cent of the value of the illicit drugs trade in Afghanistan. The UN sanctions monitoring report repeatedly claimed that the Taliban earned as much as US$ 400 million from the drugs trade each year. And In 2017 General John Nicholson, head of USFOR-A argued that 60% of the Taliban’s funds were derived from the drugs industry and that they were a “narco insurgency”.
This assertion has been used to justify a number of interventions. From banning opium poppy cultivation, pressing for the aerial spraying of the crop to the bombing of 200 heroin labs, each has been justified not only as a means to reduce drugs production but also as a way of undermining the Taliban’s finances, and as part of the counterinsurgency effort. In the case of the destruction of heroin labs, DoD later claimed they had denied the Taliban $46 million in revenue.
As researchers, we were confused. As a team we have spent more years in rural Afghanistan among poppy farmers than many others. A number of us were conducting research with poppy farmers and traders during the Taliban regime of the 1990s and did not recognise the taxation system described then, or now. Even in the 1990s — when the Taliban were de facto government and controlled 90% of the country — we saw a system at the farm gate that was far more complex, where payments varied within and between provinces, and where there was scope for considerable negotiation based on economic conditions, individual circumstance and patron-client relations. This system reflects the nature of power in the Afghan countryside, of bargains and deal-making.
Over more than two decades our work in rural areas brought us into regular contact with a wide variety of communities: talc miners in the upper areas of Achin district where US forces deployed the Mother of All Bombs; traders transporting fuel and transit goods on the main highway at a number of major border crossings including Spin Boldak, Mile 78, Islam Qala and Torkham; workers in heroin and methamphetamine labs in Farah and Helmand; and people smugglers operating out of Zaranj in Nimroz. They consistently told us that the taxes they paid were a fixed price levied on a unit of land, weight or volume: on the jerib, kilo, the metric ton, the truck, the passenger or the pickup. Price and value did not feature in the calculations.
We set about trying to better understand these taxes as part of a wider exercise examining the cost of doing business across a wide range of cross border value chains in Afghanistan. We did this building on a method we had developed over many years that merged in-depth fieldwork and high-resolution satellite imagery. Given the potential scale of the task we decided to focus our efforts on one province, Nimroz in the southwest corner, neighbouring Pakistan and Iran.
Nimroz was an ideal place to start. Considered a desert backwater it has been transformed over the last decade into a major trading hub for hundreds of millions of dollars in fuel and transit goods from Iran. It is also a major producer of opiates and methamphetamine and a primary conduit for illegal drugs en route to both Iran and Pakistan. The city of Zaranj, the provincial centre is also the central hub of the people smuggling industry in Afghanistan. This myriad of activities gave us an opportunity to not only better understand these trade flows but also their relative importance in funding the insurgency.
We set about our task pulling together detailed fieldwork, photography and high satellite resolution imagery. The in-depth fieldwork gave us the opportunity to talk to those that directly paid the taxes and record the amounts paid on what volumes and weights and to whom. It meant documenting the movement of goods along the different stages of their journey as they were cross-decked from one vehicle to another, often transforming the volume or weight, and the taxes that were collected by multiple actors along the way, including the former government, the Taliban and local powerholders.
The photography and imagery allowed us to verify the results from the ground and in many cases count the units and measures on which they are taxed. For example, smuggled fuel is transported in barrels across the border from Iran on tractor, before being loaded onto pickup vehicles and driven to the city, then transported by tanker to Kabul and other parts of Afghanistan.
In the case of people smuggling, migrants initially depart for Iran from their hotels on three wheeled vehicles known as Zaranj, before mounting a pickup to south of the city and travelling to Charburjak. From there they cross the Helmand river by boat then continue their journey through the desert by pickup and disembark at Dark on the border with Pakistan. From there it is a further pickup truck through the desert of Baluchistan to the border with Iran.
By understanding the different units on which taxes were levied, the routes by which goods are transported, and counting the numbers moving through key chokepoints each day we could estimate then map the revenues earned and their relative importance.
The numbers were staggering. We found that as much as $2.2 billion in goods passed through Nimroz each year, and a people smuggling industry worth up to $270 million. Contrary to the narratives that continue to prevail we found that the Taliban earned 80% of its revenue in Nimroz from taxing the legal trade in cross border goods on the main highway - a total of $40 million - and only $5 million in taxes from the production and smuggling of illegal drugs.
You might ask why this all matters. Why go into this kind of granular detail, sometimes literally in the weeds? Surely the kind of ballpark figures we have been working with are good enough? We would argue that the details are important, for a number of reasons.
First, the small details accumulate into very large discrepancies. Official narratives present a taxation system based on prices, of the kind familiar to Western governments and almost impossible to administer by insurgent groups. What we have shown from our work is just how inaccurate these official estimates are, how they are based on hearsay or aggrandised stories, leading to a misunderstanding of the very foundations of taxation in Afghanistan.
Our work points to a need to revisit the way we understand and calculate insurgent funding not just in Afghanistan but in other fragile and conflict-affected states.
Second, this work has shown just how self-defeating some past interventions have been. Designed to undermine Taliban financing, they have done nothing of the sort. They have not only failed to deny the Taliban anything like the kind of revenues claimed but have disproportionately impacted the rural communities and their views of counterinsurgency efforts.
As such, in failing to understand how insurgent groups like the Taliban finance themselves these interventions have actually undermined support for the very Afghan government that the US and other Western donors sought to support.
Third, our work highlights the importance of mundane commodities in rebel funding. For all the talk of illicit drugs and minerals as the primary sources of funding for the Taliban, it is the trade in the everyday legal goods – fuel, food items, vehicle spare parts and cigarettes – where the Taliban found most of their profits as an insurgency and now as a government. As such, the Taliban’s capture of the official border crossings was critical to its success. While others talked of simple territorial gains – the number of districts they chalked up – it was the Taliban’s iterative strategy of taking the official borders, denying revenue to the government and an ability to provide largesse to local powerholders, that was catalytic to the Republic’s collapse.
This points to a much more pressing issue as we move forward in Afghanistan with policy discussions on sanctions and the nature of the humanitarian response. Right until the end of the Republic, analysts and policy-makers continued to count the wrong things, used the wrong measurements, and applied weak research methodologies. Hearsay dominated and continues to do so despite the availability of methods and technologies that allows us to examine change as it happens.
A single event or individual’s experience is far too often generalised for the country as a whole. For example, claims that the borders are closed dominate in the media, yet high-resolution satellite imagery shows disruption not closure—and some borders, particularly those with Pakistan, are now busier with trade than they have been for years.
Nor do the UN’s reports of widespread drought match the latest geospatial analysis, or indeed the photos on social media of melons, vineyards and pine nuts being harvested in abundant quantities. One has to wonder, given how wrong so many got it for so long in Afghanistan, and the priority that is being given to both providing a significant humanitarian response and minimising the financial support to the Taliban, whether we will continue with such poor research and reporting or will more robust methods involving geospatial imagery become a prerequisite.
Presumably we have passed through the dark period when a misunderstanding of the rural economy would lead to air strikes that rain misery on farmers, but what other mistakes could result from continuing to ignore useful data? Humanitarian resources are precious: if we send food trucks in response to a drought that does not exist, that wastes funding that could address Afghanistan’s many other problems. Donors cannot afford to keep stumbling blind from one disaster to the next.
For more information and to read the AREU report, click here
There are two further reports that you might be interested in:
War gains: how the economic benefits of the conflict are distributed in Afghanistan and the implications for peace A case study on Nimroz province. Click here to read the report.
Managing Local Resources and Conflict: The undeclared economy. Click here to read the report
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