INTELLIGENCE MEMORANDUM AFGHANISTAN: SOME ECONOMIC CONSEQUENCES OF THE PROLONGED DROUGHT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700020060-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: May 19, 2010
• Sequence Number: 60
• Publication Date: October 1, 1971
• Content Type: IM

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Confidential
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
A fghanistan: Some Economic Consequences
Of The Prolonged Drought
Confidential
ER IM 71-206
October 1971
copy !To, ff
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
October 1971
AFGHANISTAN: SOME ECONOMIC CONSEQUENCES
OF THE PROLONGE;.o DROUGHT
Introduction
1. Two consecutive droughts have sharply reduced Afghanistan's
foodgrain production and jeopardized its important livestock industry. Even
under normal conditions, the semi-arid climate with its limited rainfall
requires extensive irrigation for crop cultivation. As a result, the country
has one of the highest ratios of irrigated to cultivated acreage it the world.
But wells have gone dry as the water table has dropped, and pasturage
has declined drastically. This memorandum reviews the developing crisis and
the actions taken by the government, and assesses the nature and adequacy
of foreign assistance rendered thus far.
Discussion
The Drought Develops
2. Inadequate rainfall and abnormally high temperatures during the
past two growing seasons have created unprecedented drought conditions
throughout Afghanistan. Precipitation was 30% below normal in 1969/70( 1
and 40% below normal in 1970/71 (see the chart). Annual precipitation
is usually only 5 to 15 inches in Afghanistan's semi-arid climate. By the
summer of 1971, rivers were almost dry, water tables had dropped sharply
(reducing the effectiveness of underground irrigation wells), and the Kajeki
reservoir on the Helmand River - a key facility in the $180 million Helmand
Valley project to reclaim desert lands - was almost empty.
1. Precipitation is reported for 1 June to 31 May.
Note: This memorandum was prepared by the Office of Economic Research
and coordinated within the Directorate of Intelligence.
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AFGHANISTAN
Wheat Production and emports,and Precipitation. Index.
1,000 Metric Tons
2500
Wheat
Production
3. The 1971 wheat harvest, essentially completed in September, was
reportedly the lowest on record. Kabul estimates production at 1.9 million
metric tons compared with 2.1 million tons in 1970 and 2.5 million tons
for the bumper crop in 1969. In the northern and western regions, where
dry farming is prevalent, crops were particularly hard hit. Barley and corn
production reportedly sustained declines similar to those for wheat, but
rice was not as seriously affected because it is cultivated on irrigated land.
4. Afghanistan is not normally self-sufficient in foodgrains, and the
recent drought has increased import requirements substantially. Kabul has
estimated that available supplies will fall short of requirements by 538,000
tons, and it is requesting 500,000 tons of foodgmins on concessionary terms
from potential donors. The US Embassy in Kabul projects a deficit closer
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to 400,000 tons. Whatever the actual deficit, it is still well above previous
shortfalls. Wheat imports averaged iess than 10(1,000 tons annually during.
the 1960s, with a peak of 154,000 tons in 1 S':;?.
5. The drought has jeopardized the nation's livestock. Available
pasturage has already been reduced and slaughter rates are unusually high,
but the critical period will be during October-November, when flocks are
forced by winter weather to return from summer pasturages in the
mountains. They will find meager pasturage on the plains, however, and
fodder supplies are reportedly insufficient even for the next few months.
Kabul estimates that 15 million of its 22 million sheep are in jeopardy,
including about 6 million karakul, a major source of Afghanistan's foreign
exchange earnings.
6. Fodder import requirements for the next six months are estimated
by Kabul at a minimum of 650,000 tons. The shortage is most critical
in Ghazni and Badghisat Provinces and the Andkhvoy, district of I' aryab
Province (see the map). By July the, number of sheep being slaughtered
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in Kabul was 20%-30% above normal, and the rate was even higher in
forage-short areas.
The Government Acts
7. Since July, when a new government was formed, Kabul has moved
rapidly and forcefully to resolve the current crisis. The previous government
had been both ineffective and vacillating in facing the problems of drought
and rising paces. The new government led by Dr. Abdul Zahir acted quickly
to alleviate the most immediate problems of food and fodder shortages
and to reduce the expected impact on the balance of payments from an
inevitable drop in exports. Appeals were made to the international
community for emergency food relief and a special mission headed by the
Foreign Minister will visit the major potential donors this fall. The importing
of chemical fertilizer was opened up to the private sector and transport
mobilized for distribution of food stocks. Water pump production was
ordered expanded and drilling rigs for deep-water wells were detailed
exclusively to the most critically water-short areas. By mid-September, the
government was distributing subsidized food in Kabul and some other urban
and remote areas, and a food-for-work program was under way to promote
public works projects in rural areas.
8. The government also has appealed internationally for emergency
fodder supplies and other assistance to save the country's sheep. Exports
of cotton seed cakes and other fodder were banned and the available supplies
distributed to areas in greatest need. The Soviet Union and Iran were asked
to allow Afghan sheep to graze in adjacent border areas, and special
legislation was passed to permit livestock exports.
9. Afghanistan has also asked its major creditors -- the Soviet Union,
the United States, and West Germany -- for a debt moratorium until at
least March 1972 and a subsequent debt rescheduling. Most of Afghanistan's
exports are agricultural commodities - fruits, cotton, karakul, wool, and
casings - and all have been adversely affected by the drought. The
anticipated decline in export earnings will make it increasingly difficult for
Kabul to maintain import levels while at the same time servicing its growing
debt. Kabul has had a trade deficit throughout the 1960s, which it has
financed mainly by official loans and grants. By FY 1971,(2) debt service
payments had risen to $24 million, about one-third of expected export
earnings.
10. Shortfalls in wheat production and the danger to livestock are
more pressing concerns for Kabul than the balance-of-payments position.
The fiscal year (FY) begins on 21 March of the stated year.
4 -
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Although Kabul will be pressed by heavy debt repayment obligations, a
sharp deterioration in the balance of payments is unlikely until next fiscal
year. Increased livestock slaughter rates should enable Afghanistan to meet
its export commitments for the remainder of this year, and sales of karakul
are expected to be up nearly 15% in FY 1971 compared with FY 1970.
Moreover, natural gas exports also are on the rise.
Help on the Way
11. The international community's response to pleas for foodgrains
has not yet been adequate to cover the expected deficit, and government
stocks are now at a minimum of some 50,000 tons. By early October,
only about 200,000 cons of foodgrains were on the way, including a US
pledge of 100,000 tons in addition to the 510,000 tons the United States
had promised earlier. The remainder was pled ad mainly by the European
Community, Communist China, and Pakistan. The US Embassy in Kabul
has recommended that the United States grant Afghanistan an additional
150,000 tons, leaving an estimated deficit of only 50,000 tons to be filled
by other donors - possibly the USSR. Several governments have promised
cash grants as emergency aid, totaling about $1 million.
12. International response to Afghanistan's livestock crisis has been
negligible, and Kabul has mobilized its own r- .ources to meet fodder needs.
The USSR promised 20,000 tons, and Pakis._3n and India have indicated
that they might supply rominal amounts. This falls Far short of Kabul's
requested 650,000 tons. Neighboring Iran, Pakistan, and the Soviet Union
have experienced drought conditicas in areas contiguous to Afghanistan,
so that the grazing of Afghani sheep in neighboring countries is not feasible.
Sheep exports - live or slaughtered - may ease the fodder shoriage
somewhat, In early October, export negotiations were under way with both
Iran and Lebanon, but no cortracts have yet been signed.
13. Moscow - Afghanistan's principal creditor -- has not yet responded
to Kabul's request for a debt moratorium. The World Bank reportedly has
agreed to chair a meeting of Western creditors, but the latter are not likely
to make commitments without at least an informal indication of Soviet
intentions.
14. Afghanistan's debt problems stem primarily from heavy flows of
foreign assistance from the Soviet Union. Three-fifths of the total $1.2
billion in economic assistance extended to Afghanistan since 1949 has come
from the Soviet Union, with the remainder mainly from the United States
and West Germany. About 80% of Soviet aid has been in the form of loans,
and more than three-fourths of these loans were disbursed by the end of
1970. The heavy drawings of Soviet aid have sharply increased Afghanistan's
debt servi"e payments in recent years. In FY 1970, about 75% of its $22
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million debt payments went to the Soviet Union. By FY 1976, in the
absence of rescheduling, Kabul's debt obligations are expected to approach
$37 million annually.
Prospects
15. Afghanistan is not yet assured of sufficient foreign assistance to
offset the anticipated economic consequences of the two-year drought.
Foodgrain stocks and imports currently on the way are expected to cover
requirements only until the end, of the year. Fodder is being trucked from
surplus to needy areas but stocks are low. The threat to export earnings,
however, will -sot materialize for at least several months, because of rising
natural gas exports and large inventories of karakul and other related
products.
16. Humanitarian aid responses wiii probably assure that serious food
shortages do not materialize. With normal precipitation this winter and in
the spring, the next harvest should be larger but not necessarily up to
pre-drought levels because of the low water tables. Heavy winter snows
would brighten crop prospects but. would further jeopardize the livestock.
In any event, export earnings are almost certain to decline next year, and
Kabul will need some debt relief to avoid drawdowns of its foreign exchange
reserves - currently about $40 million,, the equivalent of three months'
imports.
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