Inside The Afghan Poppy Wars

It's one of the most critical battles in the war on terror, fought not on the ground in Iraq, but in the poppy fields of Afghanistan. More than one half of Afghanistan's economy is based on the opium trade. U.N. figures show 93 percent of the world's opium comes from that country's poppy fields. And the Taliban is estimated to have earned as much as 100 million dollars last year from the poppy trade. The U.S. has spent ten times as much trying to wipe out the problem - with little to show for it. Chief Investigative Correspondent Armen Keteyian looks at a billion-dollar program.

"Because that flower turns into heroin, which turns into money," said Eric Sherepita. "That money turns into weapons used against us."

Sherepita spent a year supervising a small army of private contractors and hundreds of Afghans cutting down fields of poppies all over the country - at a cost of more than $6,800 per acre.

But despite their best efforts and more than a billion in taxpayer dollars poured into the war on drugs on all fronts since 2004 - poppy production is up 300 percent in the last six years. It now totals more than 470,000 acres.

Former Assistant Secretary of State Robert Charles, who authored the poppy program, now tells CBS News it missed because it never went on the offensive.

"What we are looking at in Afghanistan is a colossal missed opportunity," Charles said.

"My biggest fear was that we would end up where we are today: with record harvests and just 10 percent of the crop eradicated; one-third of what experts say is needed to make a difference," Charles said.

And Charles is hardly alone. Secretary of Defense Robert Gates told Congress: "I think it's patently obvious we have not been successful in the counter-narcotics effort in Afghanistan."

In the end, it appears the only big winners are private military contractors like DynCorp -- paid over $200 million to destroy these fields. But even contractor Sherepita, who believes in the program, sees the anger it feeds.

"Sometimes you'd meet with the locals. They'd be, you know, kind of furious. You know you're takin' money and food out of their mouths," Sherepita said.

"I've talked to elderly people who have said they might as well have just run over me with the tractor, because how am I going to feed my family?" said Norine MacDonald.

For the last three years, MacDonald has lived among Southern Afghans and seen the U.S. poppy policy backfire, she says, from the ground up. Watching farmers who had their fields wiped out switch their sympathies to the Taliban.

"The U.S.-led war on drugs in Southern Afghanistan is undermining the war on terror. It's absolutely conclusive," MacDonald said.

MacDonald's European-based advocacy group - the Senlis Council - proposed an alternative: A pilot project where farmers grow poppies legally, to produce morphine for medical use.

While there's growing support abroad for her idea - it met a stone wall at the State Department.

CBS News wanted to talk to the State Department official in charge of the poppy program, Ambassador Thomas Schweich, but he canceled a scheduled interview at the last minute. The government said no one else could do it because no one else feels comfortable talking about the subject.

Little wonder. Despite all the money spent trying to eliminate their cash crop, U.S. military analysts say the Taliban is growing in strength.

EDITOR'S NOTE: CBS News incorrectly reported that Thomas Schweich was at the State Department when this story originally aired on June 25, 2008. Schweich left his job five days earlier.

While still serving at the State Department as the Coordinator for Counter Narcotics and Justice Reform in Afghanistan, Ambassador Schweich cancelled a scheduled interview with CBS News. Earlier, he had offered to do an interview once he left the Bush Administration. However, CBS News wanted an interview with a State Department official accountable for the program and declined Schweich's offer.