Army snipers keep watch from the water tower as the local officials eye each other warily from their plastic chairs in the boiling heat. The Afghan and Tajik presidents Hamid Karzai and Emomali Rahmon give their platitude-drenched speeches, promising improved trade and cooperation between their two nations. But what both men diplomatically ignore is that the $37m (€27m), 670m-long bridge that they are here in late August to open officially, is just as likely to aid the region’s industrious drug smugglers.

It seems that the bridge in Nizhny Pyanj, on Tajikistan’s southwest border, is smack in the centre of one of the world’s biggest drug-trafficking regions. Afghan opium cultivation is up 34 per cent this year and Tajikistan will account for as much as 20 per cent of its export; the result of the porous and desolate border that connects the two nations. The smallest of Central Asia’s countries, Tajikistan became independent from the crumbling Soviet Union in 1991. But even then the Russians remained. Fearing Afghan insurgents and pushing regional influence, a force of up to 6,000 Russian soldiers mined and patrolled the 1,340km border until being asked to leave in 2005 by the Tajik government. Today the border is patrolled by 2,200 teenage conscripts who live off a few dollars a month and a diet that largely consists of dry bread.

The real money is to be had back in Dushanbe, Tajikistan’s capital, where almost half the booming unofficial economy is in some way drug related. “The shadow economy keeps the country running, otherwise it would collapse,” says an affable twentysomething Tajik, who works for an international organisation in Dushanbe.

Driving along the Tajik-Afghan border, through the Pamir mountains, is not an experience for the faint-hearted. Known locally as “Bam-i-Dunya” – the roof of the world – they feel more like its edge. Past signs painted with images of dismembered legs that warn of uncleared minefields, and along terrifying mountain switchbacks dug into vertical mountain slabs, it is difficult to see where one country ends and the other begins. The only demarcation is the unguarded Pyanj, a river so narrow in some parts that the only requirement for crossing is a small boat or reasonably strong arms. “It’s on the map,” chuckles a US army official, “but that’s about it.”

As dusk settles along the Pyanj, traffic slows while police fish a woman’s body from the waters below. Further on, sweet-faced conscripts fitted with old Kalashnikovs patrol their patch. They say they are 18 years-old but look far younger, posing happily for photos despite strict orders not to do so from from the authorities in Dushanbe. Working for two-year stints, they are told, a little unrealistically, to chase down machine-gun equipped smugglers. In 2006 the Tajik Border Force seized 220kg of heroin, compared to the approximately two tons the Russian troops seized in 2004. During the first six months of 2007, the seizures of heroin by the Tajik Border Force dropped to just 70kg.

With an economy that runs on some cotton exports to the Netherlands and a single aluminum factory that is currently mired in legal woes, the drug business is virtually the only one in town, prompting suspicion that the elite benefits from the illicit trade. President Rahmon is said to have a personal fortune worth €400m – more than the annual Tajik revenue budget of €390m.

As part of an austerity campaign, Rahmon recently banned gold teeth as well as birthday parties that include non-family members. (In a nationalist move, Rahmon, né Rahmonov, also banned the Russian suffixes –ov and –ev on all surnames.) But as a president who clawed his way to the top by removing all opposition and placating the surviving incumbents, it would seem impossible for him to stop the trade without putting his presidency on the line. Though Tajik officials are occasionally arrested on drug transiting charges, the business thrives. “This is an incredibly centralised state; you couldn’t run drugs without the government,” one analyst asks when quizzed how far up the government ranks the business goes.

If the Pamirs are the drug trade’s main artery, Khorog is its heart. After an 18-hour drive and numerous stops at roadside mutton-soup stands, the town emerges in the distance like an oasis. Khorog is located in the Gorno-Badakhshan autonomous oblast, a Soviet-era creation along the border with China and with a wary attitude towards the central government. The Pamiris – who are Ismaili muslims, followers of the Swiss-born Aga Khan – are cheerful, egalitarian and industrious, like Midwesterners dropped into a 19th- century Gold Rush town. Women make eye-contact and wear jeans and tank tops; many of the teenagers speak exacting text-book English, thanks to an Aga Khan-sponsored English-language lycée. It makes a dramatic contrast to the fatalism and inertia that prevails elsewhere.

On the surface, life goes by quietly. But once you know where to look, signs of the drug trade are everywhere. BMWs and Land Cruisers race along the main road, packed tight with men. At the bazaar, drug addicts bob messily through the crowds.

“Khorog is built on drugs,” says someone who works with the border guards. It’s easy to see why. Khorog is a short swim from Afghanistan’s Badakh-shan district, where an estimated 17 processing labs go through the laborious task of turning bulky, smelly opium into heroin ready for transport. One kilo of heroin goes for €2,500 at the border but is worth up to €75,000 once it reaches Russia. And while drug smugglers used to be paid in cash, they are increasingly paid in fancy cars and heroin. “It’s cheaper to get high than drunk here,” one Tajik woman complains.

Others are less forthright. Mavji Atomamodova, a striking 20-year-old Pamiri, invites us into her home where she lives with her grandparents while her mother works in Russia. Sitting on a rug in her bedroom she excitedly pulls out a binder from her accounting class but is less eager to talk about the curse of her hometown. “Everybody knows who the drug smugglers are,” says another woman we meet, “but no one in the government does anything about it.”

With the pleasant pitch of a long Sunday afternoon, leafy Dushanbe feels worlds away from Khorog. Women wear bright headscarves and loose Tajik dresses in Fauvist combinations – green with pink, red with orange – adding a splash of colour to a city shot through with neoclassical and Soviet monumentalist designs.

In Dushanbe, a tiny expat community – mainly from Europe and the US – bump into each other every evening. They head to the same few foreigner-priced restaurants, including incongruously an Ecuadorian one. Most of the expats are US and European diplomats or part of EU and UN programmes.

Some of their tight-knit ethos has translated into the work. The EU and the US State Department decided to divide informally the Afghan-Tajik border between themselves – not to manage or control the border for the Tajiks they are quick to point out but simply to lend a hand. They rebuild shabby border posts, run courses for guards and provide fancy equipment ranging from mobile X-ray vans to communication systems. On the European side, two UN development programmes work on enhancing border security while promoting legal trade. The first, BOMBAF, which works on the Afghan side of the Badakhshan border is run by William Lawrence, a former British army officer. BOMCA, its counterpart on the Tajik side of the border, is headed by Suhrob Kaharov, an energetic young Tajik. The two men work from adjacent offices in a downtown business centre and have had funding of about €11m since 2004.

The Americans work on the western half of the border where they built the new bridge and have a combined budget of €14.7m for security and legal reform. Besides a senior law enforcement agent, the US Embassy in Dushanbe installed a representative from EXbS (Export Control and Related Border Security Assistance Programme), a post-September 11 agency with the sole aim of preventing WMD from passing through. The main concern is nuclear material tansiting through the country.

Over the past eight months, western-backed security programmes have been more difficult to implement. In December, the Tajik government transferred its border guards to the FSB, the KGB’s successor. With Tajikistan’s fear of Afghan insurgents, combined with the opaqueness of its secret service, the result has been growing intransigence. But everyone says they are optimistic the schemes are making progress, even if slowly.

But the western programmes face a tricky proposition: how do you promote trade and prevent smuggling, when both rely on the same channels – open borders and good roads – to grow? The new US-built bridge linking Tajikistan and Afghanistan will see up to 1,000 cars a day cross and cut the distance to Pakistan’s ports in half while opening up energy and trade markets to Central Asia. A handsome slab of concrete built to withstand the most serious earthquakes, it is the most important transport link ever constructed between the two countries. But for now, the traders lining up on the border are unlikely to have regional development on their minds.

Most of Dushanbe’s significant Russian, Ukrainian and Jewish populations left during the civil war. But now, eyeing markets in China and India, Tajikistan is attracting a new breed of foreigner. On one flight from Istanbul, there was a Finnish road builder, Lebanese architect, and a German economist.

Chinese trucks crowd the Chinese-built highways. Russia has been building a hydropower plant and Iran, a 5km-long tunnel. But outside infrastructure projects, President Rahmon has been loath to open up to foreign investment, perhaps with good reason. In 2006, Turkish Airlines started offering two flights a week from Istanbul to Dushanbe, breaking Tajik Air’s monopoly. The state-owned carrier now teeters on the edge of bankruptcy.

Enter a Pamiri house, and you will find a framed photograph of the Aga Khan on prominent display. With his well-cut suit, he looks more CEO than spiritual leader of the world’s 15 million Ismaili Muslims. But in his 50 years as imam, he has combined both.

The Aga Khan Development Network has invested some €33m into the region this year alone, with programmes that range from setting up irrigation systems to teaching television repair. With scholarships to study abroad, Pamiris are generally better educated and more liberal than other Tajiks.“Parents encourage their children to get a good education and to be independent,” says Malika Kimatshayeva, a director of an Aga Khan development programme in Khorog.