Ever since Afghanistan became embroiled in a vicious civil war in the late 1980s, the battle-scarred country has been the world’s largest opium producer. Except in late 2000, when the Taliban banned production on the grounds that it was forbidden by Islam, the country has produced bumper harvest after bumper harvest of the colorful poppies. Production picked up last year after the Taliban were ousted: Afghan farmers produced some 3,400 metric tons of opium in 2002. This year’s harvest is expected to be even greater: some 4,000 metric tons, accounting for approximately 75 percent of the world’s supply.

The initial opium boom could be excused by the power vacuum following the Taliban’s collapse. But that doesn’t explain what’s happening now. Increasingly powerful warlords–most of them U.S. allies–have begun nurturing poppy cultivation and elbowing their way into the illegal trade, despite President Hamid Karzai’s prohibitions against it. Their defiance is further weakening the central government’s authority in the provinces as more Afghans cash in on the drug bonanza. There is now evidence that smugglers and Taliban remnants may be teaming up to challenge Karzai’s authority. In fact, the network of warlords and corrupt officials who operate this illegal traffic may pose the most potent threat to the country’s stability. Referring to the smugglers and their warlord backers, one provincial governor admits, “I don’t dare touch these snakes.”

Two names that come up when one talks to people about the opium business are Hazrat Ali and Gul Agha Sherazai, the Kandahar governor, who also holds sway over three neighboring provinces, all large opium producers. Ahad, a 28-year-old former Taliban official turned drug smuggler, says that warlords like Hazrat Ali and Sherazai are either directly involved in narcotics trafficking or getting paid off to cooperate with the smugglers. Often, says Ahad, the strongmen’s military or police officials ride along with the 50- to 70-vehicle-long convoys to ensure the drug caravans don’t encounter delays. Both men strenuously deny they have any ties to the drug trade, but few take those denials seriously. “It’s inconceivable that warlords like Hazrat Ali and Gul Agha are not profiting handsomely from the drug production and trafficking taking place right under their noses,” says a Western diplomat in Kabul.

In Nangarhar and elsewhere, most farmers refuse to name the traffickers who buy their opium, fearing retribution. Farmer Ghulam Shah, 35, is the exception. He thanks God and Hazrat Ali for his good fortune as he and his family collect raw opium sap from the scored poppy bulbs on his small plot of land. He says he will sell the 25 kilograms of raw opium he hopes to harvest–worth some $9,000–to one of Hazrat Ali’s local commanders. His earnings from last year’s crop allowed him to pay off all his debts and take his teenage daughter to Pakistan for a kidney operation. “Now I can feed my family’s stomachs, send my daughter to school and sleep well,” he says. Not only that, Shah says Hazrat Ali has also given him an AK-47 to protect his crop. “We are all Hazrat Ali’s soldiers,” he exults.

As in Nangarhar, farmers in southern Kandahar province are reluctant to say who buys their opium. But they readily admit that the buyers are largely commanders in Sherazai’s militia. One senior Afghan official says that a governor of a southern province on a main drug-smuggling route told him he was powerless to stop Sherazai’s drugrunning. The governor complained that Sherazai even parked drug-laden convoys of Land Cruisers at the governor’s provincial office during breaks on smuggling runs to the Iranian border. “My bad luck is that my province is on the main drug-smuggling route to Iran and that high-level officials in neighboring provinces are directly involved in this drug trafficking,” the governor told NEWSWEEK. “I simply don’t have the soldiers and resources to combat drug trafficking, the Taliban and Al Qaeda all at once.”

The problem, however, could be one and the same. U.N. sources say there are credible reports of an “unholy alliance” between certain drug kingpins and Taliban insurgents. Taliban military activity has been on the rise in Zabol, Uruzgan, Kandahar and Helmand, all opium-producing areas. The United Nations suspects that local opium traffickers are dishing out money to the Taliban in an effort to encourage more attacks against American and government soldiers in the main poppy-growing areas. The goal seems to be to frighten away government militiamen and international aid workers who could interfere with the drug traffic. A U.N. official adds that drug smugglers successfully hired Taliban hit men this spring to kill a local government commander who had been harassing drug convoys.

There is mounting evidence that the country’s narcotics business is becoming increasingly sophisticated and tied to international drug cartels. Afghanistan traditionally exported only raw, dried opium to its neighbors. Now for the first time, Afghan police have seized precursor chemicals that are used in laboratories to turn raw opium into refined heroin. There are credible reports from U.N. and government sources that Gen. Mohammad Daud, a senior general in northern Afghanistan, is operating several heroin labs with the assistance of ethnic Wa experts from Burma, the world’s second largest opium producer. The general allegedly exports his refined heroin and opium north to Tajikistan, where Central Asian and Russian drug networks move it westward to Europe.

For smuggler Ahad, who still supports the anti-American and anti-Karzai jihad, trafficking in drugs is like going to war against Kabul. He gets excited as he describes the convoys of heavily armed Land Cruisers making high-speed runs across the desolate southern Afghan desert into Iran. Reveling in the scene, Ahad boasts, “No one can touch us.” He is right. If this is a war, there is no doubt which side is winning.