Afghan farmers grew more poppies for opium in 2007 than ever before, the second year in a row of record production in the nation the United States invaded after the Sept. 11, 2001 terror attacks. The drug trade deters progress toward a stable, economically independent democracy, the report said.
"The counterinsurgency nexus is both real and growing," said Assistant Secretary David Johnson, the State Department's top drug enforcement officer.
The International Narcotics Control Strategy Report said the largest and best-known insurgent group - the hard-line Taliban - benefits with money and weapons while offering protection to growers and traffickers.
"Eliminating narcotics cultivation and trafficking in Afghanistan will require a long-term national and international commitment," the State Department said.
"The Afghan government must take decisive action against poppy cultivation soon to turn back the drug threat before its further growth and consolidation make it even more difficult to defeat," the department said in the report.
The report noted that Afghan President Hamid Karzai considered limited aerial spraying to eradicate opium poppies last year, but opted not to do it. Such action would have been extremely dangerous and highly unpopular.
Afghanistan grew 93 percent of the world's opium poppy last year, according to United Nations figures cited in Friday's report. The haul, worth an estimated $4 billion on the illegal world market, represented more than a third of Afghanistan's combined total gross domestic product, or GDP, of $11.5 billion.
Production was up 34 percent above 2006 levels and was nearly double the total for 2005.
Land under cultivation for poppies increased 17 percent in 2007 and good weather helped increase production on land already under cultivation, the report said.
Johnson welcomed some projections that say Afghan drug production will fall in 2008.
The report measures foreign drug production and efforts to fight it. The report does not examine drug production, interdiction or eradication in the United States.