By Tim Gaynor
KABUL, Jan 18 (Reuters) - Afghanistan produces more than 90 percent of the world's supply of opium used to make heroin. It is also the largest supplier of hashish, a potent cannabis resin.
Here are some questions and answers about the trade, how it is evolving, and what it means for Afghan President Hamid Karzai and his foreign backers.
WHAT IS AFGHANISTAN PRODUCING?
Over the past several years, Afghanistan's opium production has consistently exceeded the entire global demand for opiates, despite an international effort to stamp the trade out.
In its 2010 drugs report, the United Nations estimated world consumption at 3,700 tonnes of opium equivalents. Last year Afghan potential output was estimated at around 3,900 tonnes but that was after a blight devastated crops. The previous year output was estimated at 6,900 tonnes.
Most of Afghanistan's opium is grown in Helmand and Kandahar provinces in the Taliban's southern heartland, where thousands of U.S. and British troops are based.
Aside from leading the world in opium production, Afghanistan has become the biggest producer of hashish, turning out between 1,500 and 3,500 tonnes a year.
Hashish is becoming an attractive alternative to opium for many farmers because it can provide a higher return per hectare and draws less attention from law enforcement agencies.
WHERE IS IT GOING?
Most opium and hashish traditionally go to Pakistan and Iran and on to markets in the Balkans and Europe.
But stepped-up Afghan and NATO-backed International Security Assistance Force (ISAF) operations in southern Afghanistan this year are pushing more trafficking through northern Afghanistan to Tajikistan and, to a lesser extent Uzbekistan and Turkmenistan, from where it flows on to Russia.
Experts say HIV cases in Russia have doubled over the past eight years to at least one million, mostly driven by drug users who inject heroin which originally comes from Afghanistan.
Faced with a high mortality rate and shrinking population, Russia is keen to battle this epidemic and in late October hailed an unprecedented joint anti-narcotics operation with the United States in Afghanistan as a powerful result of efforts to improve strained relations between the Cold War foes.
NATO Secretary General Anders Fogh Rasmussen said in November in Moscow he wanted to see more such operations.
HOW DOES IT IMPACT THE WAR?
The drug trade funnels ${esc.dollar}100 million to ${esc.dollar}400 million a year to the Taliban through levies on farmers and traffickers, according to the United Nations Office on Drugs and Crime UNODC).
Drug funds also reach the Haqqani network, a close ally of al Qaeda in Khost and Paktika provinces on the Pakistan border.
Insurgents use the cash to buy guns, bullets and homemade bombs to fight Afghan and foreign troops. It also pays wages, boosting incentives for poorer Afghans to join the insurgency.
Illicit profits of between ${esc.dollar}1.6 billion and ${esc.dollar}1.9 billion also stay in Afghanistan, where they are used to corrupt all levels of government.
Washington fears graft boosts the Taliban-led insurgency and complicates efforts to strengthen central government control so that U.S. and other foreign troops can begin withdrawing. It also damages Karzai's credibility with Afghans.
Increasing traffic through Central Asia could boost revenues to the Islamic Movement of Uzbekistan (IMU) which is also active in Tajikistan, Kyrgyzstan and Afghanistan -- bringing damaging instability to a wider area.
WHAT'S BEING DONE?
Afghanistan's western backers and Russia agree that steps must be taken to curb the trade, but are divided over what approach to take.
In June, Russia put forward an initiative including a comprehensive crackdown on opium poppy growing but the United States gave it a cool reception.
Eradication of the crop has been largely rejected by the West as it alienates the farmers who grow it, can plunge them into destitution, and does little to stop the trade or eat into traffickers' profits.
U.S. troops have begun paying opium poppy farmers to destroy their crops instead of carrying out eradication programmes.
Efforts are also focused on stepping up Afghan capacity, including a programme supported by the U.S. Drug Enforcement Administration, to train 900 vetted counter-narcotics police to go after mid- to high-level traffickers.
More is also being done to boost cooperation among law enforcement in the region. Backers and analysts say success is closely tied to improving security, as well as boosting development and governance, and could take decades.
(Editing by Emma Graham-Harrison and Miral Fahmy)
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