New York, Feb 10 2004 2:00PM

Unless illegal drug activities in Afghanistan are reined in, the country risks becoming a key player in the narcotics trade now fuelling terrorism, the head of the United Nations anti-drug agency warned today.

"I don't think we can call it a narco-State now but Afghanistan is at a critical juncture - it could go either way," Antonio Maria Costa, Executive Director of the UN Office on Drugs and Crime (UNODC), said at a press conference in Kabul.

Mr. Costa was in the Afghan capital to present the outcome of the two-day International Counter Narcotics Conference on Afghanistan, which wrapped up yesterday and adopted five action plans on strengthening law enforcement, alternative livelihoods, the criminal justice system, promoting awareness, and drug abuse prevention and treatment.

"The more we allow the narco-economy to become ingrained in the behaviour of key people, the more we allow the narco-economy to penetrate legitimate business, the more we allow military commanders to benefit and profit from these activities, the greater the risk that the country will go the wrong way," he stressed.

The UNODC chief said while he had no specific figures, hundreds of millions of dollars in narcotics profits are ending up in the hands of terrorist groups, which control shipping routes with roadblocks. They also demand toll payments in the form of drugs that are then traded for military equipment, transport vehicles or money for troops. "There is no doubt that the Taliban and Al-Qaida are applying the same toll, which becomes a way of funding terrorism," he said.

Mr. Costa called on the coalition forces and the NATO-led International Security Assistance Force (ISAF) to help the country fight against illicit activities. "Resources from trafficking feed into funding terrorism and therefore fighting drug trafficking equals fighting terrorism," he said.