>> next reporter richard peters. she talks about the taliban's

control of the opium trade and the financing of terrorist groups like al qaeda. the half king in new york city hosted the event. gets 45 minutes. >> thank you all for coming. so i would just read a quick passage from chapter four, and then do my little routine, my talk. >> this is a chapter called the new taliban. win in game for the taliban's treasurer, he was hurtling down an isolated smugglers path in a rocky wasteland known as the desert of death. he traveled in a four by four with the regional taliban sub commander. after passenger was one of the biggest heroin smugglers. it was december 19, 2006. unbeknownst to him, a rural air force airplane had picked up his

trip when he spoke earlier on a satellite telephone. according to british officials, the spy plane made contact with the u.s. special operations teams hunting high-value targets. the raf reached out to a military intelligence unit tracking military. once again for he was on phone, a u.s. warplane took off from back ran instead to haman. the four by four was obliterated in a flash. they never knew what hit them. as the moneyman as a military commander, he was at the time the highest ranking taliban officials to be eliminated since the us-led coalition invaded afghanistan in october 2001. although u.s. military and -- a key circumstance of his death got little attention.

the man in charge of the taliban finances got taken out while he was doing a dope deal. one of the things that i hope comes from this book is that it helps people to redefine how they think of the taliban and al qaeda. most of us have preconceived notion of what the taliban are like that we think of them as, you know, guys with turbans and kalashnikovs. most of them desperately in need of a pedicure or at least a bath, living in caves in afghanistan. we think of them as illiterate, fanatic, fanatical gun toting, basically backwards and illiterate people. and what i would like to put forward tonight among you, all

of you have tried to come out to hear me speak, i would like to put forward another model that i also think is useful. now, i am not suggesting that mullah omar has development taste for pursuit o., nor am i suggesting that osama bin laden has started drinking commodity or nor are they starting to open a new wing of a bada bing. however, what i have done over the last five years or so is to investigate the taliban's operations on the ground level. and when you start doing that, they start looking more like mafioso than mucci hussein. this has to do with the way they earn money. and i think that one of the mistakes that the western governments have made and we

made in our operations in afghanistan is to underestimate him as religious fanatics who live in caves. i think we need to start looking at the norma's economic forces bankrolling this insurgency that is now spreading rapidly across pakistan, not just afghanistan. just to move through it quickly, the taliban have for a long time earned money off of the opium trade in afghanistan. and when i found is that since 2001 they have actually increased their activities, vis-à-vis the drugs trade. they collect tax and the southern areas off of the farm output, almost usually about 10% of the drugs trade. it's different from district to district, so it's a confusing situation. similar to your local mafia that operates, this is the tony soprano model comes back in.

they forced farmers, local residents, local shopkeepers to contribute to the insurgency. they call this protection money or gifts. in many cases as opposed to receiving actual cash, because in rural areas there's not a lot of money floating around. they actually receive physical items. they will get motorcycles, vehicles, mobile phones. because the insurgents and change votes all the time to try to avoid detection like the type that killed us money. they will demand that the locals find a phone unit and the chips that go inside them. and afghanistan is a country where the phone system is pay-as-you-go so they will demand a card that provide credit on those phones. food, even medical care. one of the interesting thing i found was a hospital in pakistan which is owned by a drug smuggler. and taliban soldiers can go

there and seek medical care. they also even pay for taliban soldiers to come and take r&r in pakistan, incredibly. the taliban also protect drug shipments as they leave the farm areas and head toward the border areas. that will involve actually providing armed heavies to protect drug shipments as they go down afghanistan's highways and on the smuggling trails. and also involves increasingly as the years have progressed, it has even involved taliban launching attacks on nato forces on afghan national army forces to actually divert them to one part of, say, elmont province where the big drug shipment is going down another road. may also help protect drug refineries that exists along the pakistan border. literally providing protection

that many of those refineries. also taxing the output as much as $250 per kilo produced. increasingly, as the years have gone on, we have even seen some taliban commanders start to run their own hair when refineries. and so we are watching what my researchers, the local researchers who work on this and what i found they are actually increasing their involvement in the drug trade. this is very similar to what happens in colombia and other insurgent groups around the world. taliban commanders also pay directly to the senior officials in what's known as the ruling council of the taliban. these donations can be similar to the tune of several million dollars per year from the big cartels that operate from pakistan that moved this enormous amount of heroin and

opium out of the region. al qaeda and other extremist groups in the region, of course, one of the things that is so confusing when you are trying to explain the situation is that there are so many different groups operating along the borders. in some areas, people who are involved in the drugs trade are just local thugs, really local criminals. in a lot of cases they are actually refer to as taliban by the locals, but they are only connection to the taliban may be money that they pay into them occasionally. they are really not in the original taliban. you also have pakistani extremist groups. you also have regional extremist groups like the i in you which is the islamic movement of this pakistan. that's a group we don't hear much about here in the united states. their goal is to try and take over this pakistan and put in place a taliban style government there. but i in you is very important in the drugs trade in the

region. interpol believes they control as much as 70% of the heroin that comes out of afghanistan and reaches the streets of europe. so we are talking about billions and billions of dollars every year that a profit off of. they work very closely with al qaeda, always have, and what my research, what i and my researchers found working on this book was that al qaeda and the imu come into the trade as the drugs reach afghanistan's borders. so the taliban control it, or tax it and protect it until it gets to the borders. and that's where these other groups come into play your and that is precisely the moment when the value of the drug goes up, it goes up indict exponentially often as much as 12 times. so that's really where you stand to make the most money. which is kind of a funny thing given that they want to launch more attacks against the west.

the other phenomenon that we have seen over the last five years is the expansion into other forms of criminal activity. even a lot of stuff has happened since the book went to final print. there is a lot of activity, a lot of criminal kidnapping rings that operate. you see people get kidnapped and one down and sort of sold up the chain, sold up the food chain. a lot of us no a prominent journalist based in the city has been kidnapped by a local criminal gang and was sold to an extremist group that operates from north is beer stand. they also export a lot of local operation, mines, gemstones are one of the things i've been hearing from people and swat where the taliban have recently taken over in pakistan is that they have taken over the emerald

mines there and have started selling emeralds on the black market. smuggling guns and ammunition is something that a lot of these extremist groups have been involved with since the early 1980s. human trafficking again is another field they get into. robbing moneychangers. recently the head of the pakistan taliban, his people robbed huge money changing operation in karachi of millions of dollars of cash and brought that money up to him in the border area. they also, according to national geographic, smuggle millions of dollars worth of antiquities out of the region every year. and as many of you here tonight who have been to afghanistan know, this country that was at the crossroads of the silk route has this incredibly rich ancient history. and a lot of ancient sites there are being absolutely pillaged by this. again, most of it is being

smuggled out through pakistan. pakistan is always the linchpin in these situations. >> when i started looking into how the money functions in the insurgent system, again, this was what takes me back to my sopranos model. even though some of these groups, some of these, the various groups that operate in the border regions they only be very loosely affiliated with each other. a guy at the district level always have to kick a percentage up stairs to whoever his commander is. and everybody pays in, so it sort of like a peer may. i guess an upside down peer may. the money goes towards the top, which would indicate that the top leaders of all of these movements are making huge amounts of money off of all of this criminal activity in the region.

we heard numerous reports of financial representatives from each of these groups, from al qaeda, from the imu, from the taliban, rum that haqqani group, from the hig which operates in eastern afghanistan. they routinely meet usually in pakistan often and the city of in the southwest. i've heard of other meetings in the tribal areas. we heard about other meetings in the shower. they need routinely to divide up the funds. it's kind of like one of those scenes you see in a movie or in the sopranos or a movie like goodfellas where they get together, everybody has to answer envelope to the boss. and similarly i should add another reason why i find this very similar to the idea of these groups being like crime families, like the new york crime family and the new jersey crime family is that sometimes they fight over the spoils. i mean, we hear reports of

fighting that takes place between the imu and a pakistani taliban. it happens all the time. and usually if you start looking into it, they are fighting over money. and i'll come back to that idea. the top smugglers from the cartels are usually the intermediaries between corrupt officials in the afghan and pakistani and iranian governments and the insurgents. what's ironic about this, what i found probably both surprising and all of my research was the extent to which insurgents were actually cooperating with government officials in afghanistan and pakistan. i even heard cases of the police pretending to lose a district to the taliban because they had been paid off so much to lose that district so the drugs could get through. the smugglers tend to be intermediaries. another person who is often said

to be intermediaries is cars act, president cars act half-brother who lives in kandahar. i was shown intelligence, u.s. and british intelligence documents that indicated that he was the man that helped coordinate this whole network. and that perhaps i think is the most complex issue of all, because we not only are fighting an enemy that's making hundreds of millions of dollars off the drug trade but our so-called allies in the region are also made hundreds of dollars -- millions of dollars off the drug trade every year. so there's a perverse incentive to create stability in the region. i don't want to bore all of you too much, but might minutia of the criminal of these groups, but just to give you a brief

talk or they all act. down here, down in this area, in southwestern afghanistan, that's mostly criminal groups that call themselves taliban. these two provinces, that's mostly your core taliban. you get up into this area, you get into the haqqani group, which is run by a leader, he has operated there since the early '80s. you get up into here, and you're into the hig. many say got his start by throwing acid in women's faces when they started to attend college in afghanistan. down in pakistan, you have people who operate in these areas. all of them are involved in kidnapping, drug smuggling, gunrunning, human trafficking. and as i watched them spread or

sort of move in this direction, every step of the way one of the first things they do is establish a mechanism for earning money. and it's usually illicit funds. the united nations estimates that the taliban earns between $400 million a year off the drugs trade. i put that number closer to half a billion dollars a year, but that's because the un's office of drug control that does extensive surveys, they really do great work in afghanistan. they don't count the donations of commodities, trucks, motorcycles, telephones, they actually count the taxes that are taken on refineries, the protection money.

so i put the number closer to about half a billion dollars a year. either way, it's an astonishing amount of money and it's far more than it costs them to run their operations. nobody has any idea how much al qaeda and the imu maybe earning off the drugs trade. and maybe much as 400 million, it may even be more. they come into the drugs trade just at the moment when the drugs leave the region. at the farm gate level, i kilo of opium now costs about $75 in afghanistan. by the time it reaches pakistan's border it's gone up and die or 12 times. by the time it's refined into crystal heroine, and move towards the west it's gone up again about 200 times. so if you're the guys who are moving it out of the farm areas, you're making a bit of money. if you're the guys moving it to other parts of the world, you're

really making a killing. and so i'll end on that note. 9/11 only cost $500,000. so i think people often say to me, well, the last thing we want to do is get involved in another messy drug war. colombia has been a total disaster. mexico is looking pretty messy. why should we bother doing this, getting involved, sucked into this in afghanistan? and i'll agree that the things i think need to happen to turn this around are going to be extremely expensive, extremely complex or it's going to take a long time. it's not going to be easy. it's going to take a lot of coordination, which is something that the coalition operating there has famously lacked since 2001. but i think the consequences of not writing does could be astronomical, could be you know unimaginable. and so on that happy note i'm open for questions.

[applause] >> because they are filming is if you have a question, please step up to the microphone first. michelle? >> is it on? >> can you talk a little bit about how you collected all the evidence and what your field research and stuff like? >> sure. some of the -- a lot of the interviews i did myself. i collected about five years of hiding some of my work in my trips for abc, and i also did a

report for the u.s. institute of peace, which gave me a grant for $38000 which i spent mostly on local researchers who helped me. we surveyed 350 people which believe that might not sound like it big number but believe me reaching 350 people who work in or alongside the drug trade in areas controlled by the insurgent was no easy matter. so we surveyed them, and then went back based on those results, went back and two dozen more interviews. the process of collecting information was complicated by the fact that i had two children during that period. so it becomes kind of hard to bounce down afghanistan lumbar crushing highways when you are six months pregnant. but it also became so dangerous over the course of my researching that there were a lot of these places i couldn't

go anymore. the local guys i will work with refuse to take me. they saw me as a liability and thought i would get them killed or all of us kidnapped. so that meant i had to go in myself. so in some ways was an advantage because they were able, i used researchers that were local journalists that were from the areas where they operated. and they had tribal and family connections. they were able to get terrific information, but sometimes they have sort of different ideas about what was important and what was interesting. i will give you an example. i have a chapter that's about the biggest drug smuggler in the region. he was recently arrested. he exactly here in new york now at the mcu prison on the lower east side. i was getting really frustrated partway through the research because i hadn't gotten an interview with anybody who actually physically knew him.

i was getting all secondhand information, and it was really frustrating me. so i sent my researchers with this order to find people who knew him, who had met with him. i was like what is he like? they are such colorful stories about pablo escobar and his incredible temper and stuff. i wanted to know what hockey was like as a person so i said i want you to come back with color. i want you to tell me what he is like. i went back in about two weeks if someone sent me an e-mail visit his favorite food is chicken. [laughter] >> which is really what i was looking for. so sometimes it worked to our advantage and other times it was really a struggle to get the kind of information i wanted, and i was really sorry that i couldn't do more field research in some of these areas. but it had just become too

dangerous. >> could you comment on ties to international banking in terms of processing all that money? >> international banking organization? >> how in terms of a process that amount of money. >> well, i have a chapter on the money trail in the book, and i researched this. that something when things get real murky and scary in these things. a lot of the money that's connected to the insurgency basically comes through pakistan. some of it seems to get park in real estate. as far as, well, anybody here who has been to afghanistan or pakistan recently has seen the explosion of what we locally called in architecture, this sort of huge bank nations with green windows and really ghastly sculpture. real estate seems to be a place

for their parking their money. once you have made a few real estate deals your money comes out clean. it has a trail. another place that it seems to go is to the hawala network. there are efforts to try to regulate the hawala, but anyone who has been and i hawala market anywhere in the middle east or south asia knows just how hard that's going to be. another place that i visited that was very, very interesting is down in karachi. the karachi stock exchange has grown by 250% annually since the drug trade exploded. and so if you go down there and start meeting, there are four or five stockburger sue came out of nowhere. one used to be a bookie for cricket games, for example. who appeared to be laundry day schmo, the head of the stock exchange -- there was a terrific head of the karachi stock exchange who resigned in disgust

and demanded that these guys be investigated. i interviewed him. he said i don't know if it's drug money but it's definitely dirty money that's in there. they are just slipping stocks. and you do a couple of stock trades and the money comes out clean. and so that becomes, the karachi stock agenda sort of a gateway that money enters the western banking institutions. it's been interesting to watch over the last few years, a lot of western banks have opened an western finance guppies have opened branches in karachi despite all the dangers there because there is so much money coming through. another issue is real estate in dubai. a lot of money in seconded by, the city with 20% of the world cranes. people say it's an oil-rich shakeup. what a better place to park your dirty money bennett or the rich shake them with 20% of the world cranes. so that certainly is something that needs -- nobody is

examining this i did some of it all i offer one chapter. but within the u.s. government, i'm not sure what our intelligence dollars are going for, but when i go and ask people about this in the u.s. government they are like really? do you think it's in dubai? [laughter] >> it's kind of stunning to see how much they don't -- nobody has bothered to work on this. >> so do you see any hope for afghanistan as a unified state anytime soon? because obviously it has a lot of different at the cities, and if not, why not support breaking it up to borders that make sense for local populations, things like that? >> yeah, i actually think about afghanistan as being more unified as a nation than pakistan.

the afghans are always fighting for cobbles. you have a number of different separatist movements going on in pakistan. i can sort of see a way out of the afghan problem. i mean, nationbuilding is becoming a dirty word in washington, but basically all these communities need is law and order if we were able to establish governance, we're shortly not going to get rid of the taliban and al qaeda by trying to kill them all. it sort of like that doritos at. they just make more of them as we do that. but if we actually make them irrelevant i getting people a good alternative, i think that's the exit strategy for the region. people talk about that being expensive and complex and taking years. i don't disagree with that, but we're already spending $2 billion a month on our military operations alone in afghanistan. and surely that's not sustainable