As the International Security Assistance Forces (ISAF) reduce their military footprint, Afghanistan faces a threat from illicit narcotics trade that is likely to affect the long-term reconstruction and state building efforts. In the midst of political transition and an unstable security environment, Afghanistan is likely to descend into further chaos due to the illicit activity that funds insurgents, fuels corruption and undermines governance.
Corruption and insecurity in the region have created an environment that is ideal for illegitimate poppy production to expand and fund the insurgent activity (particularly Taliban) in the region. According to Transparency International’s 2014 Corruption Perceptions Index, Afghanistan is the fourth most corrupt country in the world (rank 172nd among 175 countries) marginally ahead of Sudan, North Korea and Somalia, while in World Bank’s 2015 Doing Business Report, it ranks a poor 182nd out of 189 countries. For the past 12 years, Afghan economy has been practically dependent on foreign aid. According to the Ministry of Finance, almost 100 percent of its development budget and 45 percent of its operating budget is externally financed, with the U.S. being the major donor.