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Can Economic Diplomacy Work?

The World’s Greatest Opportunity is in Afghanistan!

By: Walton Cook

Today, it is hard to get 5% on your investment money with any safety of
principal, no matter how smart you are or how hard you try.

At that rate, even a very rich person or group of persons, let’s say a very large group with $8.4 billions to invest, could expect no greater
a return on $8.4 billion than $400 million. $400 million sounds like a
lot, but compare that to a return of $52 billon on the same $8.4
billion. The difference in return is $43.6 billion dollars! For those
slow in math, $43.6 billion is 43,600 millions. In short, the latter
investment returns the full original principal 6 times in the first
year alone. Not 5% but 600% return-on-investment.

How long might the line be for such an investment? What if the
investment were offered to pay that return for 10 years, making the
return $436 billion? How long is the investment line now?

What if this whole long line of potential investors, fighting and
shouting to preserve their spot in line, were U.S. taxpayers—all the
U.S. taxpayers?

How would this unexpected return become possible?

Returns of this magnitude might be possible only if someone invented a
cure for cancer, (or any other major disease) a cheaper gasoline
substitute, lifetime immunization against flu or AIDS, or even
high-tech home construction materials at half the cost. What I’m
getting at is that when we can reduce or eliminate some aspect of the
present recurring cost structure, we can then use that savings for
something else. And since so many of us work daily toward such goals,
to say nothing of our student sons and daughters studying engineering,
biology and medicine—we obviously have hope that our future efforts
will bring answers where answers are now lacking.

But are all the big answers now lacking? Is it possible that some great
savings and investment opportunity is available right now, but merely
overlooked? Could it be the very investment described in the opening
paragraph? Yes! It could, and it is!

Cutting Recurring Cost Items:

Every nation has recurring cost items, both those that pay for problems
yet unsolved, and those that pay for scientific advances, breakthroughs
yet unachieved.

One such recurring cost item is the worldwide attempt to control
illicit narcotics. The Organization for Economic Cooperation and
Development (OECD) represents 30 of the world’s more developed
economies. By their estimate, 1.5% of the combined GDP of $33 trillion
dollars, or $495 billion dollars, is today’s ‘societal cost’ of
narcotics. The costs related to the two major narcotic plants, the
opium poppy (heroin) and the coca shrub, (cocaine) make up 65% of that
‘societal cost,’ or $321 billion annually. The U.S. ‘societal cost’
(ONDCP) of just those two narcotic plants is $104 billion, (65% of $160
billion) also yearly. The U.S. cost of opiates alone is $52 billion. We
will come to that item often, because this $52 billion accounting
column provides the $43.6 billion return on our $8.4 billion, creating
the “world’s greatest investment.”

However, first bear in mind that it is the richer nations that tend to
be big narcotics users, while narcotics producing nations tend to be
poor. In fact there is a huge gap, sometimes called a ‘wedge,’ between
‘street’ prices paid for narcotics in richer user nations and ‘farm
door’ prices paid to poor nation narcotics crop farmers.

Afghanistan is a prime example. At present, 92% of the world’s opium
poppies are grown there. Nonetheless, the 300.000 opium farmer families
receive only $2.8 billion dollars in ‘farm door’ income from
cultivations that sell at worldwide ‘street’ prices of $160 billion
dollars. (Afghanistan now supplies 95% of the European opiates market.)
Before the farm product reaches the street, warlords, criminals,
Taliban, terrorists and corrupt officials take a cut.

Put that ugly thought aside now, to apply the gap between ‘farm door’
and ‘street’ prices.
First, subtract the $2.8 billion Afghan farmers get from the worldwide
opiates cost of $i60 billion—and the difference is $157.2 billion.
Solving the opiates problem alone, would net OECD nations this vast
annual savings. The U.S. cost of opiates is $52 billion, which would be
saved concurrently. The other $52 billion U.S cost is represented by
cocaine derivatives. (This investment prospectus will also consider
Andean cocaine production.)

Helping to create this vast cost differential is the fact that in
richer nations everything costs more, often much more,. That includes
law enforcement, imprisonment, treatment, other health costs, economic
costs of lost work time and opportunity and a myriad of other costs. A
cost not even counted is the economic value of drug deaths,
representing a $120 billion annual loss. (Standard wrongful death cost
of $6 million dollars per person.)

But it is because of this rich nation/poor nation cost differential
that solving the narcotics problem associated with only two plants can
save $321 billion dollars annually. How does solving the problem
become a profitable investment because of price differentials? Only
through more creative economic diplomacy!

Because of the cost differential, the U.S. can afford to pay poor
grower nations the same amount for not growing a specific narcotic
plant as they presently derive from growing it. We can also do this for
a long enough period to enable the grower farmers to learn new
vocations or adopt other cultivations. Also because of the
differential, we can afford to support vocational and other schools,
support small business, provide vaccinations, disease prevention,
health care, clean water and to support development.

This proposal assumes a U.S. pump-priming investment of $8.4 billion to
gain the cost differential savings for U.S. taxpayers. $2.8 billion is
to compensate poppy farmers for not cultivating their crops and $5.6
billion is to sustain the changes in vocation and agriculture.

Are there pressing political reasons to make this investment now, other
than just gaining a fabulous $43.6 billion annual return-on-investment
for U.S taxpayers? Yes!

Writing to President Bush on September 7th, 2006, Chairman of the House
International Relations Committee, Henry J. Hyde, (R-IL) proposed
‘immediate’ action and expressed distress over U.S. strategy in
Afghanistan: “An increase of neatly 60 percent in illicit opium
production in the course of the last year undergirds warlord support of
anti-coalition forces, such as the Taliban. We have to revisit our
counter-drug and counter-terrorism policies in Afghanistan, or we risk
creation of a ‘failed narcotics state.” He supported his ‘failed
narcotics state’ claim by stating that the highest levels of violence
and corruption since liberation now prevail and that “Drug money
continues to finance terrorism and threatens to destroy Afghanistan’s
emerging democracy.”

(Note that there is no cost estimate placed by Chairman Hyde on costs
of any terrorism funded, all or in part, by revenues from narcotics,
even though he clearly spells out terrorism as a beneficiary. For
example, were it true that 9/11 and/or current insurgencies are funded
in some part by narcotics, (as stated officially by the 9/11
Commission, then that growing cost should be added to the total cost of
terrorism.)

It is also difficult to determine how Chairman Hyde learned the word
‘immediate’ as it is completely unknown in government policy debate or
vocabulary.

For example, nine long months ago, Secretary of State, Condoleezza
Rice, announced a forthcoming major U.S. policy shift in a speech
titled: Realizing the Goals of Transformational Diplomacy. She did not,
however, use the word ‘immediate’ in tandem with ‘policy shift.’ In her
speech, Secretary Rice did say the following:

“We are building partnerships with traditional allies…”

“ The greatest threats today emerge more within states than between
them.”

(We will) “respond to the needs of people who conduct themselves
responsibly in the international system.”

“We are committed to using American taxpayer’s dollars in the most
effective and responsible way possible to strengthen America’s mission
abroad…. It will improve our fiscal stewardship.” No we should not!

“The United States takes our international obligations seriously, and
we remain committed to strengthening the financial stability,
efficiency, and effectiveness of international organizations.”

“Our principal objectives are to stem the tide of terrorism and to help
advance freedom and democratic rights.”

“These requirements are essential and immediate…and the United States
must continue to open a path for it’s expansion, (freedom) especially
in Iraq and Afghanistan.”

“The United States is advancing bold development goals.”

“Another key global challenge is to curtail the illicit drug trade and
to dissolve the relationships between narco-traffickers, terrorists
and international criminal organizations.”

Given Chairman Hyde’s call for action and Secretary Rice’s speech, the
time has come to put transformational economic diplomacy into action.
With Afghanistan as our example, we have detailed how to advance
economic diplomacy; rewarding bilateral diplomacy and utilizing
taxpayer dollars responsibly and efficiently. Additionally, we bolster
national security, reduce poverty and improve people’s lives; all
through curtailing the illicit drug trade. Considering diplomacy to be
a more productive and immediate policy option than military force or
law enforcement, we can add those timeliness advantages to actual money
saved.

Diplomacy does not occur in a financial or intellectual vacuum. It
requires both money and rational policy. Rational policy also demands
oversight, responsibility for money spent.

Since we want this money to reach present poppy farmer families and not
corrupt officials, terrorists or the Taliban, we would put severe
controls on its distribution. Until Afghanistan was a democracy in fact
rather than merely in name, the U.S. should insist that the U.S. (with
Afghan participation) monitor the use of the money, probably through
USAID and carefully monitored NGOs.

Will Afghanistan accept economic diplomacy? First, it seems a better
offer to Afghanistan than poppy eradication without compensation and/or
the continuous presence of armed personnel. The cost of maintaining
U.S. and NATO forces in Afghanistan is considerably more than $8.4
billion yearly. In addition, although forces will need to remain until
the Taliban threat is controlled, available strength can be better
utilized without poppy cultivation. In our view, despite our promises
to make Afghanistan a positive demonstration for democracy in the
Middle East, we are only likely to give $8.4 billion toward this noble
end after seeing exactly how that investment can be realized and how it
can pay off. This plan offers substantial returns for both Afghanistan
and the United States. It is funded by criminals and terrorists, not by
taxpayers or poor farmers.

Should we seek a coalition-of-the-willing? No we should not! This is a
grant, not a war. The United States should initiate bilateral economic
diplomacy with Afghanistan? The reasons are simple. America is the
largest user of illicit narcotics and the primary target of
terrorism—we have the most to gain from the control of narcotics.

America is not held in high esteem by far too many nations, even in
Europe. The recent anti-American conference in Cuba attended by 116
nations (also Kofi Annan) is a good example why seizing the moral high
ground is an opportunity the U.S. should not share, but should initiate
and implement alone. Conspicuous generosity is an opportunity that does
not come often.

Moreover, we don’t need others to share the cost—as we profit directly
and best from our investment. Although all nations benefit without any
investment, the generosity is ours.

Not having opiates to deal with saves us many billions of dollars.
Financially, it is a happier outcome for U.S. taxpayers than the
continuation of current ineffective strategy. Chairman Hyde will also
be happy. Secretary Rice will be happy. Afghans will be happy. Policy
goals will be more efficiently and ‘immediately’ achieved. The United
States will provide other rich nations with both savings and an
example--two reasons to spend at least some of their dividends toward
the betterment of less fortunate nations. If they do not, guilt will be
theirs, not ours.

Finally, we should also adapt this policy to our Andean allies and the
coca shrub, saving both ourselves and the world’s nations, hundreds of
added billions annually.

A repeated thought and a challenge;

Neither Chairman Hyde not Secretary Rice places any specific economic
cost of terrorism to narcotics, despite the fact that acts of
terrorism, all or in part, are funded by narcotics revenues. This was a
conclusion of the 9/11 Commission Report and is also a conclusion
widely accepted. What are the costs of narcotics when added to the
costs of terror? The reduction of terrorism is an additional benefit.
In a nation victim to both narcotics and terrorism, how can we possibly
make a better investment? How will you support this incentive? Will you
editorialize on this opportunity? What can you do? It is time to take
your place in the line of investors!

Letter to Editor                                                             Go back to Index