Fluid Markets

Deep in Congo's violent east, the business of beer meets the ugliness of war.

It's a June night in Kinshasa, and rapper JB Mpiana's weekly VIP bash is just starting to heat up. Toned groupies splash like mermaids in a sunken pool. Middle-aged businessmen perch on the ledge above to watch. A minute before midnight, JB runs onstage among a huge posse of gyrating dancers in sunglasses. He rips into some of his biggest hits; a bombastic performer, he glides across the stage with a beefy grace, dressed in a hunter-orange jumpsuit and matching cap.

Most songs deal with the usual material, girls and gangbangers, in the Democratic Republic of the Congo's Lingala language. But when JB starts to chant the lyrics of his biggest hit of the night, the real purpose of this party -- festooned with yellow-and-blue banners advertising Primus, the beer that everyone would be drinking anyway, even at this lush downtown wine bar -- becomes obvious.

"I love my Priiimus!" JB yells. The crowd yells back: "I love my beer!"

After the show, as his black Cadillac Escalade purred nearby, backup dancers waiting impatiently in the back seat, we asked JB about his lucrative contract with Bralima, the Heineken subsidiary that brews and distributes Primus. In return for writing numerous odes to Primus and featuring its trademark yellow-and-blue trucks in his videos, JB gets invaluable national exposure -- and some $300,000 a year.

The dream contract for any celebrity in the Democratic Republic of the Congo (DRC) is with Bralima -- better than any Kinshasa-based record company, it can guarantee its stars secure, stable careers and fame, even in places where a different rebel group takes over the radio station practically each month. Bralima even played peacemaker for JB's Biggie vs. Tupac-style beef with a local rival, convincing them to share the stage for Bralima's 90th-anniversary party. "There's so many advantages to being with Bralima," JB said. "They have reach all over the country."

Of course, in the DRC, "all over the country" includes some of the most dangerous places on Earth. The authority of the national government in Kinshasa does not extend to all of eastern Congo, which is largely run by a rogues' gallery of rebel groups, including the notorious M23, whose list of alleged crimes against humanity includes looting, murder, and rape. Congo's civil wars have been fueled by everything from blood diamonds to conflict coltan extracted from the country's abundant mines, which makes operating any sort of business in the east a morally dubious proposition. But that has not stopped Heineken and many other foreign firms, which see themselves as the country's best hope for postwar reconstruction.

Corporations from the East India Company to United Fruit did shady business in conflict zones for decades, inviting the wrath of diplomats and international watchdogs who accused them of war-profiteering. By the end of the 20th century, however, the rapidly growing international peace-building community -- including NGOs, the United Nations, development consortiums, think tanks, and some developed-world governments -- started taking a different tack. These days, an emphasis on economic opening and corporate social responsibility means that many of the world's most powerful organizations are actively encouraging corporations into conflict markets, hoping this will lead to peace. Sometimes, though, when Bralima's yellow-and-blue trucks hit those dusty Congo roads, the results can be messy.

IN 1923, A GROUP of European investors founded one of Africa's first breweries, naming it Brasserie de Léopoldville after Belgian Congo's colonial-era capital. Primus, its inaugural brew, did not fare particularly well, with drinkers preferring better-tasting and cheaper Dutch and German beers until the 1950s, when the company -- in which the Netherlands-based Heineken purchased a minority stake in the 1930s -- began expanding production. Over time, Primus became Bralima's marquee beer and a source of national pride: a workhorse pilsner with a taste satisfaction directly proportional to the bottle's coldness and the degree of grime built up inside your sinuses from a day of breathing Congo's diesel-fume-laden air.

Following Congo's independence from Belgium in 1960, Primus played a central role in the new country, even basing its logo on the national flag. Bralima -- as the company was now called, for Brasseries, Limonaderies et Malteries Africaines -- brewed a whopping 145 million gallons of beer in 1974, the year Muhammad Ali and George Foreman duked it out in the "Rumble in the Jungle." When dictator Mobutu Sese Seko banned imported beer for a time in the 1970s, he kept the Primus flowing, making it a core policy to maintain local production while other services and infrastructure crumbled and the state went bankrupt. Beer, he believed, was the magic ticket to keeping his citizens happy: If it ever ran out, his days would be numbered.

Ultimately, it wasn't beer that toppled Mobutu, but a 1997 uprising supported by neighbors Burundi, Rwanda, and Uganda. The country was given a new name, the Democratic Republic of the Congo, but its struggles continued. The current government, under President Joseph Kabila, has faced monumental challenges, from entrenched corruption and nonexistent infrastructure to raging conflict both within and around the country. Bigger than the U.S. Midwest, the DRC holds some 70 million people. But, by some estimates, nearly 10 percent of its population has died as a result of a series of fratricidal civil wars that began in 1996. Last year's mutiny by the M23 rebel group in the eastern city of Goma, as well as the ongoing violence since then, has displaced hundreds of thousands and killed hundreds. Rebel offshoots are now stockpiling weapons for a potential showdown with the world's largest U.N. peacekeeping force, which has been in the country since 1999 but has just been given an unprecedented mandate to take offensive action against the rebels.

Heineken, which bought out Bralima in 1982, has maintained its investment in the DRC throughout the turmoil, anticipating major shifts in the global spirits trade, as giant conglomerates like Belgium's Anheuser-Busch InBev and London's SABMiller have moved away from reliance on stagnant European and American markets to snap up foreign brands. Heineken doesn't report profits by country, but Africa and the Middle East accounted for $873 million in profits and 14.4 percent of the company's revenue in 2012. Frontier beers like Bralima are emerging-country lottery tickets, chances to buy into a market before the country booms and drinkers develop new, more exotic brand loyalties. China, the big success story, saw a 1,000 percent explosion in beer sales in the 1990s that led to local brands like Tsingtao and Kingway Brewery being acquired by foreign companies and later encouraged odd imports like the luxury Chinese version of Pabst Blue Ribbon that sells for $44 a bottle. Since taking over Bralima, Heineken has acquired major stakes in other national classics like Egypt's Stella, India's Kingfisher, and Mexico's Sol.

Under guidance from Amsterdam, Bralima's market share in the DRC has rocketed from 30 percent in 1987 to 60 percent today -- with Primus as the flagship brand. Bralima's main plant in Kinshasa, one of its six in the country, churns out up to a quarter-million of the football-sized brown, dimpled bottles every day, alongside Heineken, Coca-Cola, Sprite, and Fanta. (Bralima is also the country's biggest soda distributor.) In addition to its contracts with celebrities, the brewery has exclusive deals with many bars in Kinshasa, which are festooned with Primus-branded tables, chairs, and ashtrays. Hand-painted signs for Primus seem to paper every surface in the DRC, many with the slogan "Toujours Leader!" ("Always the Leader!").

GIVEN THE VOLATILITY of the country's politics, remaining the leader in Congo can call for some tricky maneuvers. But you wouldn't immediately know that from visiting Bralima's Kinshasa plant, where tall Dutch managers in crisply collared shirts oversee operations from the bird's-eye-view walkways and negotiate employee contracts at the plant's on-site watering hole. Inside the main brewing complex, Congolese technicians wearing lab coats inject hops into a row of massive copper vats. At the loading dock out back, the stacks of empty crates reach 20 feet high as an endless procession of trucks waits for refills.

Sylvain Malanda, Bralima's Congolese communications manager, was in his quiet office in the building next door when we visited in June. Under a hand-painted mural depicting some of Bralima's charitable activities (grain handouts, people lined up at a free clinic) and the legend "Bralima: Sower of Growth," Malanda seemed surprised when asked about corruption in the DRC: "We can do some favors and give gifts [to] politicians if they get in trouble or ask us. But no corruption." Malanda says the help is mutual: "The government is helping us a lot. Congo is open for business!"

In the east, however, with its virtually nonexistent government presence and horrifically bad transportation infrastructure, it is the rebels who determine what stays open. Anyone driving through eastern Congo quickly becomes familiar with the experience of getting stopped at checkpoints and being asked to pay fees. The checkpoints are low-tech affairs, often little more than a wooden log or slack rope thrown across a muddy red jeep trail, perhaps with a shack nearby sheltering a couple of guys holding Kalashnikovs. Still, even a single checkpoint can bring in more than $700,000 per year and probably much more, according to a 2008 report by the U.N. Group of Experts on the Democratic Republic of the Congo.

The checkpoints are the primary revenue source for armed groups in the area and bring in more than enough to fund an insurgency in a country where the average wage is about a dollar a day and used AK-47s can run for as little as $50. And with automatic weapons as prevalent as they are, almost anyone can be a checkpoint "rebel" in the eastern DRC, including less-than-scrupulous police and armed forces trying to supplement their anemic wages.

M23 is one of the major players in the blockade racket. Formed by those unsatisfied with a 2009 peace deal that had only nominally integrated the Rwandan-backed rebels into the Congolese army, the group, which is estimated to have up to 6,000 members, wants greater autonomy in parts of North Kivu province. The United Nations sanctioned M23 late last year, accusing it of murdering, raping, and looting across swaths of eastern Congo in an attempt to intimidate its way to power. Longtime Rwandan-Congolese rebel general Bosco Ntaganda, currently at the International Criminal Court on charges of war crimes, rape, and use of child soldiers, is one of the founders.

Eastern Congo's levy bosses aren't exactly hiding from international retribution. In a surprisingly easy-to-arrange conversation, we spoke by cell phone in July with a taciturn Rwandan calling himself Mr. Damien, "tax collector" for M23. Damien said that he splits his time between M23's three primary checkpoints, overseeing operations at the Bunagana, Kibati, and Kiwanja stations. As matter-of-factly as if discussing tolls on the New Jersey Turnpike, Damien explained that he charges $38 for a van to pass, $300 for a medium-sized goods truck, and $700 for a fuel tanker, handing out official-looking receipts for payment. The three main checkpoints bring in most of the group's funding, enough money to purchase weapons, pay salaries and bribes, and even occasionally dole out social aid to eastern Congo's poor.

Everyone gets stopped, even the Bralima trucks painted like big yellow-and-blue DRC flags. Damien explained that M23 takes $500 from the trucks hauling crates of Primus into rebel-controlled areas: "NGOs pay. People carrying charcoal pay. Women going to the market pay. Everyone pays! We don't do preferential treatments. So, of course, those who transport beer also pay." Drivers leaving for rebel areas are given extra cash to cover the payments, a security officer at one of Bralima's main distribution depots in eastern Congo told us. By the time the brown glass bottles reach their remote village destinations, prices can rise to four times the $1 they cost in Kinshasa.

We took Damien's numbers and multiplied them by the thousands of trips per year that Bralima runs through eastern Congo's rebel-held regions. Extrapolating from Bralima's DRC market share and per capita rates of beer consumption elsewhere in rural Africa, we estimate that approximately 16 million bottles of Bralima beer, or about 2,000 transport vehicles' worth, must pass through checkpoints each year. Assuming, based on our low-end estimates, that these trucks are fortunate enough to be stopped only once per journey at the dozens of blockades along the region's few transport links, manned not only by M23 but also other road and river rebel sentries, Bralima distributors could be paying upward of $1 million a year to rebel groups.

When we presented Heineken with our figure this summer, John-Paul Schuirink, financial communications manager, said that due to the complexity of the situation in the DRC and the use of local distributors, the amount and the payments were difficult for Heineken to verify. But Schuirink said that in response to Foreign Policy's inquiry, the company was in the process of investigating and, as a precaution, had "immediately suspended all payment of third party distributor invoices in the area." Schuirink also noted in an email that "this area represents far less than 1% of our total volume in the DRC and that the vast majority of our deliveries in the area are outside of the territories that are under the influence of M23."

Bralima outsources its distribution to local independent operators, a common way for corporations working in militia- or cartel-controlled zones to keep space between themselves and the road. Heineken has denied that it uses local distributors to immunize the company, pointing out that it operated this way for decades before the rebels occupied the area. But the structure has certainly allowed Bralima to keep running in the east as warlords have come and gone.

Bralima had breweries in cities under control of the rebel group RCD-Goma during its occupation of eastern Congo between 1998 and 2003, explained Jason Stearns, who in 2008 headed the U.N. Expert Group on Congo, conducting a special investigation into violence in the country's east. "So the choice they would have had at that point -- and that any local businessman had at that point -- was to disengage and to leave and stop business, or to continue," Stearns said. Bralima's decision, along with those of other companies that continued to operate in the region, was extensively documented in the "Lutundula Report," the Congolese parliament's 2005 assessment of conflict profiteering. Although the widespread payments to rebels are common knowledge, the Congolese government hasn't followed up the Lutundula Report with further investigations, and business has proceeded as usual ever since. "It's not just Bralima that continued, but it's every single Congolese company in the country," Stearns said.

Given beer's almost mythical status in Congo, shutting down Bralima in the east, though it could dry up some funds going to M23, would do little beyond driving up prices and encouraging smuggling. (Last year, a logistical problem disrupted the flow of beer in Goma for just under two weeks, leading to a 50-cent increase per bottle, according to members of Bralima's distribution staff, who said that thousands of Congolese took to the streets to riot throughout the city. As locals say: "You can bomb a hospital, but not Bralima!") Beer trafficking would potentially provide an even more lucrative source of income for rebel groups than the blockades do today. Imagine Prohibition-era Chicago, transposed onto one of the planet's least stable regions.

The international community has placed some checks on companies that do business, either directly or indirectly, with the rebels. U.S. Executive Order 13413, a 2006 directive, penalizes any American corporation or its subsidiary found "to have materially assisted, sponsored, or provided financial, material, or technological support" to any anti-government militants operating in the DRC. U.N. Security Council Resolution 1493, adopted in 2003, also sanctions assistance to rebel groups in the region. But the sanctions are extremely difficult to enforce, especially given that most companies in eastern Congo work with local partners. Stearns, whose experts group had a role in monitoring violations of U.N. sanctions, said, "We were able to prove that individuals and small local companies were liable, but while companies above them in the supply chain were morally negligent, it is often far more difficult to prove legal liability." Despite all best efforts, in a place like eastern Congo, once a corporation goes in, it can become difficult for anyone -- whether local governments, international observers, or far-flung corporate executives -- to control exactly what goes on there.

ACCORDING TO MALANDA, Bralima's communications manager, his bosses back in Amsterdam don't care much about how he makes money -- so long as it gets made. "For Heineken, what matters is our sales goals. If we make them, all is good. If not, big trouble!" Malanda said, laughing as he pretended to beat us with an imaginary stick. (Schuirink told us, "We do not recognize, nor condone these statements.")

At Heineken's headquarters in central Amsterdam, a vaulted house perched across the canal from the firm's original brick brewery, global communications director John Clarke put the company's philosophy in quite different terms. "There's a view, a belief that you can help the most by being there, being present ... being a contributor to the local economy," he told us.

Heineken's approach in the DRC follows a business concept known as corporate social responsibility (CSR). Part social investment, part public relations campaign, and part community integration effort, CSR assumes that if big companies can align their self-interest with the interests of the countries in which they're investing, everyone benefits. Early versions, such as the charitable works of United Fruit, may have appeared to be little more than smoke screens for bad practices overseas. In 1970, Milton Friedman called mixing social welfare and profit little more than "hypocritical window-dressing," "a suicidal impulse" for businesses. But CSR is now a multibillion-dollar industry in its own right and an essential component of many major corporations, complete with beautifully designed websites and thick, glossy annual reports.

The Heineken Africa Foundation, for example, spent more than half a million dollars last year supporting programs for prenatal care, sickle cell anemia clinics, blood banks, and primary schools. Heineken's 304-page CSR report lists dozens of positive projects, ranging from its comprehensive AIDS program to the local sourcing of rice used at its production facilities. Bralima's foundation recently spent $90,000 building an orphanage. Almost all other international food and drink conglomerates operating in fragile countries, from Kraft and Mars to Pepsi and Nestlé, undertake similar outreach. "I have always believed that business could be a force for good," CEO Irene Rosenfeld said upon the release of Kraft's 2010 CSR report.

The most recent thinking about CSR holds that the mere presence of a major corporation in an unstable region is beneficial. A century of scholarship on the complicated ties between poverty and violence has argued that greater economic integration can help bring peace to chaotic parts of the world. According to the World Bank, this sort of corporate opening is "crucial for countries coping with and emerging from violence" and can lead to a more utopian future for local residents. Having Bralima in eastern Congo, so the theory goes, is a CSR activity in itself. It means better economic opportunities, better clinics, better educational prospects -- and in the long term, a less violent society as economic growth decreases the motivation to fight.

In reality, having Heineken in eastern Congo may boost GDP, but its payments to rebels fuel a conflict that leads the country in the wrong direction. Will Reno, of Northwestern University's Program of African Studies, succinctly described the dilemma: "Will you favor CSR and economic opening, or consider the payments a violation of legal statute? You have to pick. It can't be both." Heineken's troubles in eastern Congo, where just the cost of driving through the region poses ethical and legal questions, point out exactly what makes even the most socially responsible economic opening so fraught in vulnerable countries. Who will enforce international law if, as seems plausible, Coca-Cola's reopening of its plant in Mogadishu requires taxes paid on al-Shabab-controlled roads, if FARC offshoots in Colombia collecting money from SABMiller's Bavarian-beer distributors buy more guns with the funds, or if Boko Haram shakes down trucks laden with Nestlé and Unilever products in Nigeria? Companies expanding into post-conflict Afghanistan will almost undoubtedly find militia checkpoints awaiting them. It is hard to imagine that these companies will not in some way be implicated in the conflicts they are supposed to help end.

IN KINSHASA, some 800 miles away from the lawless eastern DRC, the difficulties -- and the benefits -- of bringing Primus to the people seem distant. Stealing away to his afterparty, JB was clear on the upside of trusting corporations in Congo: "I have faith in [Bralima], and they have faith in me. We have faith in each other." Sidestepping dozens of fans, JB jumped into the idling Escalade and rode off into the night, with his trademark motto, pelisa ngwasuma -- "light the fire" -- echoing through unpaved slum roads. Eastern DRC seems far from reaping the rewards of economic growth, or seeing peace. In fact, the latest peace deal has only created a bigger power vacuum, encouraging spinoff rebel franchises, like Raia Mutomboki, to follow M23's financial model, counting on the fact that delivery trucks will keep lumbering through the Goma mud on their way to new opportunities.

Back in Amsterdam, Heineken has greater ambitions than to be the DRC's liquid savior. There are always new markets to win. As the United States has eased sanctions on Myanmar over the past year, multinationals of all shapes and sizes have sprinted in to engage in heavy-duty economic expansion. Heineken, already in 178 countries, knocked out a $50 million joint venture with locally owned Alliance Brewery just this past May. Clarke, the Heineken spokesman, has high hopes for the company's global future. "Think Star Trek!" he told us. "There shouldn't be any frontiers for the enjoyment of a nice cold Heineken that's enjoyed responsibly."

Jason Miklian

Jason Miklian

Aubrey Graham

Aubrey Graham


Cooking in Karachi

The world's most dangerous megacity is the next frontier in the global meth trade.

KARACHI, Pakistan — The holy month of Muharram is a dangerous time in Pakistan. It marks the beginning of the Islamic calendar but is also a period of mourning for Shiite Muslims. Each year, in the overflowing metropolis of Karachi, they take to the streets in processions by the thousands to observe Ashura, the anniversary of the martyrdom of Hussein ibn Ali, the Prophet Mohammed's grandson, and one of the holiest days of the year for Shiite Muslims. It is often a bloody affair, and not just because of the ritual self-flagellation in which many of the devout partake. Over the past four years, with astonishing punctuality, Shiite processions and mosques have been brutally attacked by Sunni supremacist militants bent on starting a sectarian war.

In 2009, two bombs exploded along the parade route, splattering the concrete street with human entrails and shredded clothing, and killing 43. The following year, on Nov. 11, the Pakistani Taliban drove a car bomb right up to Karachi's elite counterterrorism Crime Investigation Department, destroying the building and killing 18. And in late November 2012, in Orangi Town neighborhood, two bomb blasts killed five people, as the city's undaunted Shiites continued with their mourning processions.

Understandably, Karachi's streets were tense on the ninth night of Muharram last year, as final preparations were being made for the Ashura festivities. Nervous government officials had cut cell-phone service across the city for 11 hours that day, hoping to prevent attacks. Some 10,000 police officers had been dispatched to the main parade route, though in a city with an estimated 20 million people, even this show of force was only a drop in the bucket.

As night fell on Saturday, Nov. 24, the deputy superintendent of police, Zameer Abbasi, was out making the rounds. He had decided to take one last patrol when he received a phone call around 9:20 p.m. about a small explosion at a nearby apartment building. "My first thought was that this might be a high-value target, a terrorist who had planned to target the procession but had made a mistake with the bomb," Abbasi later told me. When he arrived at the scene, smoke was pouring from a third-floor apartment window.

Abbasi didn't wait for the bomb squad to arrive. He quickly cordoned off the street and raced inside, fearing that there might be more explosives or a suicide bomber. When he got to the apartment, however, the scene was unlike anything he had seen before. A red chemical had been sprayed across the white walls. There was what seemed to be a laboratory: conical flasks connected by rubber tubing, sacks and boxes labeled with the names of chemicals, a small centrifuge. A silvery blue powder was spilled across the bathroom floor, and blood-red footprints crisscrossed the living room. "I thought this might not be the kind of blast I thought it was," Abbasi said. "It looked like some kind of chemical reaction had happened." He didn't know it at the time, but he had just made the first bust of a Pakistani meth lab.

IT'S HARD FOR AN OUTSIDER to understand the pace of change in Karachi these days. Statistics don't really do it justice. But here's one: From 2000 to 2010, Karachi's population grew more than 80 percent. That's roughly equivalent to adding more than New York City's entire population in just a decade. (For all the talk of the staggering boom of Chinese metropolises, the world's next fastest-growing city -- Shenzhen -- grew only 56 percent, adding fewer than 5 million people.) Over the past decade, millions of Pakistanis have fled the fighting and terrorism in their country's northwest to settle in Karachi, Pakistan's pulsing commercial heart -- home to banks and corporations, shipping and transport, entertainment and arts. But the flood of migrants in search of jobs and opportunity has also brought Karachi some less savory additions.

Gangs tied to political parties have long operated in the poorer parts of the city, running extortion rings and land-grab schemes. More recently, Pakistani Taliban militants have also gained a foothold in the city, carving out territory in neighborhoods like Manghopir, where they run criminal and smuggling rackets, rob banks, and administer a cruel and terrifying justice. From restive Baluchistan province, in Pakistan's west, a war economy driven by more than a decade of conflict in Afghanistan has opened Karachi and its ports to narcotics and weapons smuggling. Pitched firefights that go on for days between gangs, or between gangs and the police, are not uncommon.

As a result, Karachi is far and away the world's most dangerous megacity, with a homicide rate of 12.3 per 100,000 residents, some 25 percent higher than any other major city. Consider this telling statistic from a megacity next door: In 2011, 202 murders occurred in Mumbai, India. Karachi had 1,723 -- and more than 2,000 in 2012. Now added to this combustible mix are drug gangs often with links to Iran -- like the one Abbasi and his men busted. And they've brought with them a new commodity that is increasingly making its way from Karachi's ports to the wider world: methamphetamine.

Opiates had always been Karachi's drug of choice. With as much as 90 percent of the world's heroin production right across the border in poppy-rich Afghanistan, Pakistani drug barons have reaped the benefits of proximity. Despite a ban on opium production in 1955, Iran saw a heroin resurgence in subsequent decades, becoming a major regional production center. But after the mullahs came to power in 1979, the drug trade shifted east. Heroin was produced en masse in Afghanistan and Pakistan to fund the mujahideen fighting the Soviets. The drugs primarily went to market through Karachi's port and on to Europe and the Americas.

Setting up the infrastructure for this trade was almost a matter of policy for military ruler Gen. Muhammad Zia-ul-Haq, who created the National Logistics Cell -- essentially a military trucking business -- to transport heroin from the northwest to Karachi and bring weapons in the other direction. Even by the standards of rogues and dictators, Zia was unusually brazen and corrupt, with close associates implicated in drug trafficking and money laundering plots. Pakistan seemed on the verge of becoming a narcostate. In 1980, on his way to the United Nations in New York, Zia's diplomatic cargo was searched, and heroin was reportedly found stuffed into marble lamps. After the war with the Soviets and Zia's mysterious death, that transport infrastructure was more or less privatized by Pakistani cartels and drug mafias, and it has lasted through the present day. Today, as much as 40 percent of Afghanistan's heroin still transits through Karachi, according to the United Nations.

But as the global appetite for heroin has waned, producers and smugglers are turning to methamphetamine, demand for which is soaring in nearby East Asia. Iran has emerged as the biggest producer of methamphetamine in the region, but Pakistan still appears to be the natural transit route to eastern markets like Malaysia and Australia, as well as a major supplier of the precursor chemicals that are the drug's main ingredients. There are signs, however, that sophisticated labs are being set up in Pakistan itself, perhaps by Iranian syndicates. And links to Pakistani meth are showing up in places from Mexico to Melbourne.

AS ANYONE WHO has seen the TV drama Breaking Bad knows, the production of methamphetamine is a complex and combustible process, requiring a laboratory and various chemical ingredients, or precursors -- the most notable of which is ephedrine or its close cousin, pseudoephedrine. These precursors have legitimate uses in cough, cold, and allergy medications (they act as a decongestant), and drug companies produce them on an industrial scale. But in Karachi, which has an advanced pharmaceutical industry, it has become clear that production is being diverted to criminal enterprises.

In April 2011, Karachi port officials discovered 540 pounds of ephedrine hidden in packets of spice mix bound for Australia. That same year, officials in Tehran reported the seizure of 1,170 pounds of ephedrine coming from Pakistan. And in June 2012, a group of men with more than 1,750 pounds of meth was stopped at Karachi's airport. Authorities only managed to arrest one of the smugglers; accomplices waiting outside barged into the customs hall and fled with the drugs. But what really has international drug-control officials worried is the sense that these seizures are just the tip of the iceberg. For example, Australian police are investigating a Melbourne biker gang, the Black Uhlans, that is suspected of setting up a massive Indian meth lab and contacting a senior Pakistani government official about drug importations.

The U.N. International Narcotics Control Board (INCB) helps governments regulate and monitor the potential for illicit drug production, and Pakistan, like most countries, reports its need for ephedrine -- what are called annual legitimate requirements. In 2007, Pakistan reported a legitimate requirement of 11 tons of pseudoephedrine to the INCB. In 2010, it reported 53 tons -- nearly three times the amount that most countries produce, making Pakistan the world's fourth-largest producer of pseudoephedrine. That means that either a lot more Pakistanis have suddenly come down with the sniffles -- or the drug trade has, once again, corrupted officials at the highest levels.

In September 2012, former Prime Minister Yousuf Raza Gilani's son, Ali Musa, was arrested for allegedly pressuring officials, with help from the country's health minister, to increase ephedrine quotas for two pharmaceutical companies. One of these firms, Berlex Lab International, which was granted a license to produce some 14,300 pounds of ephedrine, claims it sold its tablets to a company called Can Pharmaceutical. But according to an Associated Press report: "[I]nvestigators discovered the address for the company was a residential house in Multan, and nobody answered the door. The owner of the company didn't answer his phone." No wonder that prosecutors speculated that the ephedrine was destined for meth labs in Iran. (Gilani maintains his innocence, and his lawyer claims the accusations were politically motivated.)

Worryingly, the trend appears on the rise. The INCB notes that in 2008, Iranian authorities dismantled two meth labs; in 2010, that number had spiked to 166. That year, Pakistani officials reported four seizures of smuggled ephedrine, totaling 585 pounds, near the border with Iran, as well as more than 14 tons of diverted cold medicine, according to the U.N. Office on Drugs and Crime (UNODC). Matt Nice, of the INCB's secretariat in Vienna, said that the size of some of the recent seizures of ephedrine originating in Pakistan suggests that a significant portion of legitimate cold medicine gets diverted to the black market. "If the [declared annual requirement] is so high that 500 kilograms can go missing, then that means you have something that's probably already been infiltrated," Nice told me.

A person familiar with the Gilani case, who requested anonymity, citing the ongoing investigation, explained how the scam allegedly worked. "You register yourself as a pharmaceutical company," he said. "Then you register yourself for a chemical like ephedrine. Then you get a quota for ephedrine on an export order, and then you say, 'Can I have this converted to local consumption because my export order has fallen through?' And then I take that, I falsify my distribution documents, and I have it smuggled." At many steps along this path, he said, it's necessary to bribe officials and bureaucrats to sign documents and deflect attention.

Corruption has a long, sordid history in Pakistan, but drugs add an extra layer of societal corrosion. On paper and anecdotally, evidence suggests that the meth trade is already having a deleterious impact on a country that doesn't need any more problems. Drug use, particularly of opiates and cannabis, is already high in Pakistan, with 1 percent of the population using heroin and 4.1 million people thought to be drug-dependent, according to the UNODC. But a 2013 report issued by the UNODC and the Pakistani government notes that a "detectable emergence of methamphetamine use has been found in certain areas of the country.… This finding is noteworthy because it is the first time a study has generated data relating to the use of amphetamine-type stimulants" in Pakistan. Just as the transport of massive amounts of heroin through Pakistan inevitably created a local market, and millions of addicts, the new focus on methamphetamine has led to a metastasizing trade on Karachi's streets.

"Crystaal," as it's pronounced, is everywhere, from the city's upscale neighborhoods to the poorer sections, like Lyari. The crime-ridden south-central district is Karachi's fiercest, a dense network of slums housing some 1 million people. It's basically a no-go zone for law enforcement. Police generally need to ask permission to patrol and must negotiate entrance with the district's crime boss: Uzair Jan Baloch, the head of the now-banned People's Aman Committee, a gang cum political party cum philanthropic organization. When police attempted an operation in Lyari this past April, Baloch's men held them at bay for days under a hail of bullets until the police retreated. In late July, an elite police ranger unit raided Baloch's mansion; he had disappeared into the night.

In Manghopir, a violent, impoverished slum in Karachi's north, the users are easy to spot. "I've seen these guys start banging their heads against a wall; they become out of control. It's like they are numb and don't feel pain," said a community activist who asked to remain nameless due to numerous threats from the Taliban and gangs. "Now heroin is ending and crystal is taking over." A gram of crystal goes for anywhere from 500 to 800 Pakistani rupees -- roughly $5 to $8. That's still more expensive than heroin, but users say the high is more intense. Most of the young men whom the activist sees tweaking in the streets are foot soldiers for Baloch's gangsters: "The gangs hire the kids, get them addicted to crystal, and then make them do crimes when they are high so they have no fear. Then they pay them with more crystal."

JUST TWO WEEKS after Pakistan's general elections this spring, I visited one of Karachi's largest drug-rehabilitation programs, the Drug Free Pakistan Foundation (DFPF), which treats around 4,000 addicts annually. The DFPF's headquarters are on a quiet street in the leafy Gulshan-e-Iqbal neighborhood, a middle-class area ruled by the Muttahida Qaumi Movement, a secular political party that dominates politics in Karachi. The party's red, white, and green kite-shaped posters and painted slogans still adorned nearly every light pole and wall. Like all the major political parties here, though, it has an armed wing, and like the rest, it profits from an intimate relationship with criminal activities.

Approximately 1.2 million drug addicts, the majority of whom are heroin users, live in the city, said the foundation's director, Farheen Naveed. Beginning in 2010, however, she has seen an influx of meth addicts seeking help at DFPF. As we toured the foundation's headquarters, she noted the uptick. At the end of May, 35 of the 101 patients in DFPF's treatment center in the industrial neighborhood of Landhi were there for meth abuse. "The numbers at the facility today are actually much higher than I was expecting," Naveed said.

If Karachi's police seem helpless to combat drugs on the streets, perhaps Pakistan's Anti Narcotics Force (ANF) is the last, best hope to stem the large-scale trade and trafficking. Staffed by former military officers, the ANF is in practice a branch of Pakistan's powerful army, but it has received funding from the United States and guidance from the U.S. Drug Enforcement Administration (DEA). Its more than 1,500 well-armed troops form the front line in the drug war, and the force's website trumpets the staggering quantities of hash and heroin seized: 9,863 pounds of hash apprehended on May 1 in Killa Abdullah, 613 pounds of heroin on April 26 in Karachi. And on July 26, the ANF announced that its Lahore office had seized some 117 pounds of ephedrine, 95 pounds of ephedrine mixed with vanilla powder, and, bizarrely, 1,272 bottles of ephedrine mixed with jam. Often, though, the news releases accompanying such successes contain a line of boilerplate that speaks to the scale of the problem: "Although the endeavors of ANF are wholehearted and wide-ranging, the meager strength / resources remains to be a challenge." According to Naveed, "The crackdown on ephedrine has not had an impact on the prevalence of crystal use on the streets; it continues to rise."

Pharmaceutical executives in Karachi, however, say that the ANF has cracked down hard on access to ephedrine and pseudoephedrine, so much so that companies are afraid to apply for new quotas. Insiders say that this is blowback from the Gilani case: ANF officials are embarrassed that they didn't catch the scam themselves, and in an attempt to show their underwriters that they are serious, they have overreacted -- but will soon back off. The labs and the traffickers are likely biding their time, waiting to see whether the ephedrine spigot is easily loosened again. "I think that there is such easy money to be made [by diverting ephedrine] that I don't think it's going to go away," said a former official. "It's like bootlegging."

ONE YEAR BEFORE Ali Musa Gilani was charged in Islamabad, another young Pakistani man was arrested for his alleged role in selling ephedrine on the global black market. Shiraz Malik, then 34, was taken into custody last year after landing at Prague's airport on a flight from Dubai. He was later extradited to the United States, where he awaits trial in a federal court in California. Malik is accused of running a multimillion-dollar "industrial scale" online narcotics and precursor business, according to the U.S. attorney in California's Eastern District.

Undercover DEA agents found a website for a Karachi-based pharmacy that offered to ship a number of prescription opiates as well as ephedrine, according to a criminal complaint the DEA filed against Malik. After agents emailed the pharmacy, Malik is alleged to have written back offering to send samples of his wares via express mail. Between 2008 and 2011, Malik mailed everything from heroin to ephedrine powder to Ritalin. The agents wired tens of thousands of dollars to bank accounts associated with Malik in the United States and Europe. After accessing his email account, the agents found that Malik had done regular ephedrine business with customers in Mexico. (They also found photos of kilogram-sized bags of ephedrine packed in suitcases that were believed to be headed to Mexican customers. The shipment never made it. A Pakistani-American mule was arrested with the cargo as he attempted to fly to Mexico City.)

Malik has pleaded not guilty. But there is still what appears to be an online business directory listing for the pharmaceutical wholesaler -- Shama Medical Store -- that the DEA alleges was a front for Malik's operation. In the section for company information, the site reads: "we are abal to provide u any kind of medicion and any kind of row matirial all our tha world and we also doing drop shipping all or tha world." There's even a physical address, located in Karachi's Hijrat Colony neighborhood, which was described to me by an urban-rights activist as "a nursery of crime" controlled by a powerful drug gang known as the "Hamid Terha Group" (terha roughly translates as "crooked").

I decided to pay Shama Medical a visit this past spring and see whether I'd be able to get prices for ephedrine or bulk amounts of cold medicine. I brought along a friend who covers crime for a local newspaper, and we made our way to Hijrat Colony slum, which is bordered by railway yards to the east and a mangrove swamp to the west. We took a main thoroughfare near the port into the colony and were quickly squeezed to a standstill by the suddenly winding, narrow streets. We doubled back, stopping to ask for directions.

Finally, we pulled up to Street 56, got out of the car, and walked into an alley.

After a couple of hundred yards we reached a four-story concrete building with faded red paint that read, "Shama Hospital." Next door was Shama Medical Store. Both seemed abandoned except for a group of young toughs loitering in the shade outside. One of them, with a long beard and wearing a white T-shirt and jeans, asked us what we were looking for; the others just gave us hard stares. "Shama Medical Store -- is it open?" my friend asked haltingly. In the silence, I realized that the street, in the middle of a densely packed slum, was unnervingly empty.

"Yeah, it's here. But it's been closed for a long time," the bearded guy said -- just as an older man in a purple button-down shirt, gray suit pants, and pointy black dress shoes that looked to be made of imitation alligator stepped out of the medical store. A cell phone was pressed to his ear.

We should go, I whispered under my breath. So we did -- walking quickly back to the car and driving away, hoping we wouldn't be followed.

Later, through a well-sourced local contact, I inquired about whether the police and ANF had investigated Shama Medical. They said they had never heard of it.