The State Department also noted backsliding in some key Latin American nations like Bolivia, while it praised improved performances by Mexico and traditional Asian transshipment points China and Thailand — but slammed neighboring Myanmar for illicit drug production.
In its annual global survey of the drug war, the department said massive opium poppy production in Afghanistan, long the world's top producer of the main ingredient for heroin, continued to pose a major threat due to its links with groups such as the Taliban.
"Afghanistan's huge drug trade undercuts efforts to rebuild the economy and develop a strong democratic government based on the rule of law," the department said in the 2007 International Narcotic Control Strategy Report.
"There is strong evidence that narcotics trafficking is linked to the Taliban insurgency. These links between drug traffickers and anti-government forces threaten regional stability," the department said.
It added that endemic "corruption" and prevailing "dangerous security conditions" were seriously hindering efforts to combat Afghan poppy production, which shot up 59 percent to a record 5,644 tons from 2005 to 2006.
"More must be done," Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Anne Patterson told reporters.
The report stressed that Afghan President Hamid Karzai remained committed to reducing the harvest, but Patterson said that results remained "insufficient."
Across the border in Pakistan exists a major transit point for opiates and hashish, where Taliban and Al Qaeda operatives are also believed to operate, the State Department said. It said it believed the government there had launched several promising new anti-narcotics initiatives.
But the report said rampant corruption, especially by underpaid lower-level law enforcement and local officials, had hurt Pakistan's efforts and "is likely to be associated with the movement of large quantities of narcotics and precursor chemicals."
Iran, a member of President George W. Bush's "axis of evil," is attempting to deal with a domestic drug consumption surge but has yet to enact or enforce laws to decrease demand that has resulted in what the report said "can only be called an epidemic of opiate abuse."
It also noted indications that domestic opium production is on the rise in the Islamic Republic.
In the Western Hemisphere, Colombia, Mexico, Venezuela and Bolivia were identified once again as major suppliers of illegal drugs, mainly cocaine, to the United States, Europe and Asia.