Following the start of the war on terror in 2001, U.S. policymakers determined that winning the war on drugs in Afghanistan was necessary for winning the war on terror. Yet despite spending $12 billion on drug interdiction in Afghanistan since 2002, the country is currently producing three times more opium than at any other point in its history. We examine the failures of the U.S.-led war on drugs in Afghanistan using the tools of economics. By driving the opium economy into the black market, the war on drugs has fostered regime uncertainty, resulted in the violent cartelization of the drug industry, empowered the Taliban insurgency, and contributed to corruption. The U.S. experience in Afghanistan has broader implications for international drug and terrorism policy.