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Cablegate: Afghanistan: What's Required to Make Alternative Livelihood

VZCZCXRO1893
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #3183/01 3441319
ZNR UUUUU ZZH
P 091319Z DEC 08
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 6371
INFO RUEATRS/DEPT OF TREASURY WASH DC
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 4450

UNCLAS SECTION 01 OF 03 KABUL 003183

DEPT FOR SCA/FO, SCA/RA, AND SCA/A
DEPT PASS AID/ANE
DEPT PASS USTR FOR GERBER AND KLEIN
DEPT PASS OPIC FOR ZAHNISER
DEPT PASS TDA FOR STEIN AND GREENIP
CENTCOM FOR CG CFC-A
NSC FOR JWOOD
TREASURY FOR LMCDONALD, ABAUKOL, BDAHL, AND MNUGENT
OSD FOR SHIVERS
COMMERCE FOR HAMROCK, CHOPPIN, AND FONOVICH

SENSITIVE

SIPDIS

E.O. 12958 N/A
TAGS: SNAR PREL ECON ETRD KCRM EAID EINV AF
SUBJECT: AFGHANISTAN: WHAT'S REQUIRED TO MAKE ALTERNATIVE LIVELIHOOD
PROGRAMS SUCCEED?

Summary

1. (SBU) Alternative livelihood programs are a key item in the
counter-narcotics toolbox, but no one would contend that they are
easy or always successful. Even in purely economic terms, poppy has
some advantages that licit alternative crops do not enjoy. This
message analyzes those advantages and seeks to identify the
circumstances under which alternative livelihood programs can
succeed in overcoming them. We find that political will, especially
the commitment of provincial governors, is an essential supporting
factor for alternative development (AD) programs and sine qua non
for eliminating poppy. Successful governor-led campaigns in Balkh,
Badakhshan, and especially Nangarhar in 2007-2008 show what can be
accomplished when the reach of the government is expanded into the
provinces. In addition, success requires the development of
adequate infrastructure, both physical and financial, to make
growing cash crops other than poppy the wise choice for Afghan
farmers. Security may be the Achilles heel that can doom AD
programs even when good governance and other supportive pieces are
in place. Coalition members, NGOs, the Afghan government, the UN --
all agree that without security, AD programs stand little chance of
success. End Summary.

Poppy is a Commodity

2. (SBU) Any effort to persuade Afghan farmers to grow licit
alternatives has to contend with the economic advantages of the
competition. Poppy is a lucrative cash crop. Although the UNODC
reports that in 2007-08 the ratio of gross income from a hectare of
opium to that from a hectare of wheat declined from almost ten in
2007 to less than three this year, the staying power of this trend
is questionable. Recent price increases of onions and pomegranates
also notwithstanding, legitimate crops rarely match the
profitability and the convenience of poppy.

3. (SBU) The opium business is a "model" of success. It has
vertically integrated itself along the entire value chain within
Afghanistan and has a well-developed international transportation
and distribution network able to avoid many of the constraints
confronting licit alternatives, such as delays at borders and other
bureaucratic hindrances to trade in the region. We see more and
more seizures in Afghanistan of precursor chemicals and other
materials for turning poppy into opium and heroin. In addition,
poppy farmers benefit from easy credit, seed, and even insurance
that opium brokers provide. With production up and prices down in
recent years, isolated reports of the Taliban forbidding poppy
production or hoarding supply in some areas - to exert an OPEC-like
control on prices - further demonstrate that opium, like grapes and
wool, respects the basic tenets of any commodity market.

Economic Development Challenges . . .

4. (SBU) Unfortunately, there are also significant challenges to
bringing robust alternative livelihood programs online. Facilities
for collection and preservation of fresh produce require some form
of cold storage. Cold storage can be run - expensively and
inefficiently - on diesel fuel, but making this economically viable
requires both sufficiently high prices for commodities and reliable
quality and availability of product to maximize and maintain
profits. Only reliable electricity generation and distribution can
make commercial cold storag profitable, and this commodity is still
rare in most of Afghanistan.

5. (SBU) Official and unofficial hurdles at the borders also raise
costs for Afghan exporters of licit farm goods and represent
critical obstacles to sustainable and long-term growth of regional

KABUL 00003183 002 OF 003


trade. Roads that link internal and external markets therefore are
a critical component in alternative livelihoods. Donors have built
hundreds of kilometers of farm-market roads, as well as housands of
kilometers of irrigation works and flood-control dams and canals,
but more needs to be done.

. . . And Models for Progress?

6. (SBU) Aid agencies and the GIRoA have learned much about poppy's
built-in advantages and other challenges and are designing
alternative livelihood programs accordingly. USAID's contract
farming program steals a page from the opium brokers. The program's
provision of seed, credit, and guaranteeing a market for the produce
goes a long way toward providing a real alternative to either
growing poppy or starving.

7. (SBU) In Helmand province, the world's leader in poppy
production, Governor Gulbuddin Mangal's roughly USD $10 million
"food zones" project is attempting to open an in-road into poppy
country by combining alternative livelihoods with improved security
and governance. Mangal, with support from PRT Helmand and the
Embassy, is targeting a 100-square-mile zone near Lashkar Gah in
three phases. It is a good example of a "carrot and stick"
approach.

8. (SBU) First a governor-led public information campaign used
local shuras to enroll farmers in a program to provide
seed/fertilizer for wheat and fodder cultivation. Village elders
and farmers have signed no-poppy pledges. Breaking the pledge will
make their fields, along with any other poppy fields in these areas,
liable to eradication. Second, in early October, the governor's
officials distributed seed and fertilizer (or ouchers for them),
renewing the no-poppy pledges from recipients.

9. (SBU) Finally, in January through March, farmers who plant poppy
will see their fields eradicated by the governor's police and the
Poppy Eradication Force. Mangal recognizes that the carrots and
sticks are both critical elements of success, that eliminating poppy
from farmers who can grow nothing else does nothing tosupport the
counter-insurgency and might even be counterproductive. In this
case, despite significant resistance from Taliban and
narco-interests, the public information and seed distribution phases
in Helmand have gone well. Few if any farmers in the food zone can
claim they have not been offered assistance to shift to licit crops
this season. Response from farmers in various parts of Helmand has
been positive. Farmers and governors in Farah and Oruzgan have
requested that similar initiatives be undertaken in their provinces.


Security and Governance

10. (SBU) We won't know until next year whether Helmand's food zones
project will succeed in promoting alternative livelihoods. Project
design and strong commitment from the governor bode well. The key
variable and weakest link in the chain is Helmand's precarious
security situation. Indeed, nationwide, security is probably the
Achilles heel of alternative livelihood programs.

11. SBU) Nangarhar province offers a good example of how an
adequate level of security and governance can help reduce poppy
cultivation. "Security" in the Afghan context does not have to mean
a completely permissive environment. In Nangarhar, where the local
governor has exercised authority, economic development has occurred
because a minimum level of security exists for governors and police
to reach villagers in most, if not all, parts of the province. The
environment is hardly "permissive"; both this year and last year,

KABUL 00003183 003 OF 003


dozens of U.S. soldiers have died there. However, the governor's
forces and development agencies do get around and conduct business,
and in 2008 the province became virtually poppy-free. The risks for
poppy farmers are great, and development opportunities in Nangarhar
offer realistic alternatives. Poppy may still offer a per kilo
price advantage over other cash crops, but farmers appear to have
decided that it is simply not worth the risk of having the poppy
confiscated and going to jail.

12. (SBU) Unfortunately, the insurgency's recent targeting of the
contractors and NGOs that actually implement most development
programs has slowed efforts supporting alternative livelihood
programs. The COIN strategy of "clear, hold and build" is
addressing the security problem, but current coalition and ANA troop
numbers as yet do not permit the aggressive and long-term
implementation of alternative development programs everywhere they
are needed.

Lessons From What's Worked

13. (SBU) The differing past experiences of Nangarhar and Helmand
show that alternative livelihood pursued in the absence of a certain
level of security and the political will to suppress poppy
cultivation will not succeed as a counter-narcotics measure.
However, in Helmand and elsewhere in the poppy belt, major
alternative livelihood and infrastructure projects are underway.
These have the potential to anchor a prosperous licit agricultural
economy if security and governance create an environment in which
law enforcement can compel farmers to turn away from poppy
cultivation. Only then can economic development give real
sustainable alternatives to poppy.
DELL

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