U.N. OFFERS CREDIT TO AFGHAN FARMERS TO DROP OPIUM

VIENNA (Reuters) - The United Nations said on Wednesday it was
sponsoring a program of small loans for farmers in war-ravaged
Afghanistan to give them an economic incentive not to produce opium.

Afghanistan was the world's top producer of opium, the source of
heroin, until the former Taliban regime banned its cultivation two
years ago.

But it continues to be a major producer because many poor farmers see
little reason to give up the lucrative opium poppy and production has
sprung back since the Taliban were ousted by a U.S.-led offensive
last year.

"In Afghanistan, the chain of narcotics cultivation, production,
refining and export, starts with the farmers and the very simple
process of borrowing money from narcotics traders to grow poppies,"
the U.N. Vienna office's new Director-General Antonio Maria Costa
told reporters.

Costa, who also heads the U.N.'s Office for Drug Control and Crime
Prevention (ODCCP), said the program of offering small credits to
farmers who grow legal crops other than poppies would be in place
before the next planting season.

"We are trying to use the laws of economics to undermine the
narcotics trade from inside," said Costa, who was Secretary-General
of the European Bank for Reconstruction and Development (EBRD) before
starting at his new post on May 7.

The EBRD successfully implemented a similar program developed in
Bosnia after the war there, he said.

"The micro-credits (were used in Bosnia) to trigger a process of
reconstruction -- of all the houses destroyed, all the stocks of
cattle and seeds needed to relaunch agriculture."

Costa said the program, which the Asian Development Bank would
support, would model itself on current local lending practices,
whereby clan leaders often arrange loans for farmers interested in
growing opium.

"We want to offer the farmers an alternative to their cash
requirements prior to planting," he said. "We want to attack the
problem at the source, at the roots."

He also said that the interim Afghan government's program of
eradicating opium poppy crops appeared to have been successful,
though he said it was difficult to give precise figures.

"Our impression is that the eradication program has been successful
to the extent that you can imagine and hope that it would be
successful," he said, adding that up to a third of the suspected
cultivation area might have been eradicated.

In February, the U.N. Drug Control Program (UNDCP) said some 45,000
to 65,000 hectares of opium poppy could have been planted for the
season with a potential yield of up to 2,700 tons, enough to make it
again the world's top opium producer.