The U.N. drug czar is actually not totally ignorant about drugs

A story in the Guardian on Monday, reporting on another cable from the paper’s WikiLeaks master cache, opens with a bang:

The United Nations’ drugs czar told NATO that Afghan insurgents were withholding thousands of tonnes of heroin and treating their drugs like “savings accounts” to manipulate street prices in the west, according to a leaked US cable.

The cable is from May 2009, and details a briefing by Antonio Maria Costa, then the United Nations’ top drug official, at NATO headquarters, on the occasion of the release of his office’s 2009 Afghan opium survey. My first thought reading the Guardian piece was, Wow, the U.N. drug czar has no idea what he’s talking about. Then I read the cable. It turns out this is what’s actually in there:

Costa said that Afghanistan has 12,400 tons of opium stocks because it produces more than the world consumes. Costa believes the insurgency is withholding these stocks from the market and treating them like “savings accounts.” He said the stocks pose a serious threat as it could be used to finance the insurgency. Costa encouraged intelligence organizations to keep focus on the storage and movement of Afghanistan’s opium stocks.

Costa is talking about the price of unrefined opium within Afghanistan, not the price of the finished product in London or New York — which means the Guardian is unfairly saddling Costa with its own rather large analytical error here. If you want the long explanation for why, read this very useful paper on the Afghan opium trade and counternarcotics strategy, released by New York University’s Center for International Cooperation in June, written by drug policy experts Jonathan Caulkins, Mark Kleiman, and Jonathan Kulick. If you want the short answer, read this bit of it:

[T]he price of raw opium, and even refined heroin ready for export from Afghanistan, contributes only modestly to the retail prices facing heroin users in drug-importing countries — the effect of falling opium prices in Afghanistan would be tiny in remote markets such as western Europe, larger but still quite modest in nearer markets, and substantial only within Afghanistan itself. Effects in the United States, if any, would be even smaller than those in western Europe, since the U.S. heroin market is currently supplied primarily from Colombia and Mexico.

Rising prices are similarly insignificantly affected by price fluctuations inside Afghanistan — which is why supply-side-only counternarcotics strategies, in Afghanistan or anywhere else, tend to work poorly.