AFGHANISTAN: DEPENDENCE ON SOVIET ECONOMIC AND MILITARY AID

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700050003-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 20, 2016
• Document Release Date: March 10, 2006
• Sequence Number: 3
• Publication Date: January 1, 1973
• Content Type: IM

 Approved For Release 200610411 P85T0 875R001700050003-21.)
Secret
DIRECTORATE OF
INTELLIGENCE
CIA
DOCUMENT SERVICES
FILE COPY
00 NOT DESTROY
Intelligence Memorandum
Afghanistan: Dependence on Soviet Economic and Military Aid
Secret
ER IM 73-4
January 1973
Copy No. 5
75
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SECRET
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
January 1973
INTELLIGENCE MEMORANDUM
AFGHANISTAN: DEPENDENCE ON SOVIET
ECONOMIC AND MILITARY AID
'1. Landlocked Afghanistan - the first "economic battlefield" in the
Cold War outside the Marshall Plan area - has successfully taken sizable
quantities of aid from both sides. Afghanistan depends on the neighboring
USSR for all its military equipment and one-half its economic development
funds. Kabul, nevertheless, remains essentially independent of Soviet control
and enjoys friendly relations with the United States, The People's Republic
of China (PRC), and other leading nations.
2. The ' USSR has delivered US $300 million worth of military
equipment to Afghanistan since 1955 at 75% off the list price. Soviet aid
to Afghanistan's economic development programs, about $600 million, has
been critical to the expansion of the road network, the development of
a small electric power grid, the extension of irrigated agricultural acreage,
and the exploitation of natural gas deposits. The USSR now accounts for
about 40% of Afghanistan's foreign trade.
3. Aid from the United States has been confined almost entirely
to the economic side. Deliveries since 1956 have been at a rate
approximating 60% of Soviet economic aid and have featured shipments
of foodgrains and aid to the agricultural and transportation sectors. US
aid in 1970-72 was particularly important in alleviating serious food
shortages caused by persistent drought.
Note: This memorandum was prepared by the Office of Economic Research
and coordinated within the Directorate of Intelligence.
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4. The Soviet leadership traditionally has viewed developments in
the countries on its southern borders as of vital concern. Moscow not only
believes that its security interests are involved but also considers these
countries within its legitimate sphere of influence. Thus, when Afghanistan
accepted large amounts of US economic aid in the early 1950s the
post-Stalin regime moved in rapidly with its own major program. Kabul
basked in the warmth of this early aid competition as it received large
amounts of aid for ambitious economic development programs. Kabul
avoided political difficulties by assigning US economic aid to the lower
half of the country, leaving the half adjacent to the Soviet border to
Moscow's program. Nonetheless, both the United States and the USSR carry
out programs in the Kabul area, and over the years a number of activities -
such as Soviet road-building - have extended beyond the arbitrary
geographical zones. Military aid became, and remains, the almost exclusive
province of the USSR.
5. The competition eased in the early 1960s. Although US aid
remain:. fairly substantial, Soviet aid now plays the dominant role.
Afghanistan ranks fourth among Third World recipients of Soviet economic
and military aid - after Egypt, India, and Iraq. Nowhere in the Third World
is the Soviet presence more pervasive or the Soviet role in development
more critical than in Afghanistan. This memorandum examines the
dependence of Afghanistan on Soviet military and economic aid arid also
describes the smaller US aid program. The text and tables in the Appendix
supply details on Afghanistan's economic development plans and on foreign
military and economic aid programs.
Soviet Military Aid
6. Whatever modern trappings Afghanistan's military establishment
presents have been woven by the USSR. Afghanistan was one of Moscow's
first Third World arms clients. Spurred by its border conflict with Pakistan
and alarmed by the large quantities of arms Pakistan was receiving as a
member of the Southeast Asia Treaty Organization (SEATO) and the
Baghdad Pact, Afghanistan enlisted Moscow's aid to expand and modernize
its armed forces. Kabul signed a $100 million arms agreement in early 1956
and subsequently has relied almost entirely on the Soviet Union for its
military equipment. By 1 072 it had concluded $455 million worth of arms
agreements with the USSR'
1. Czechoslovakia has been die only other Communist source of military aid, providing some
$20 million in credits for weapons purchases and the construction of small military production
and repair facilities.
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7. As with economic aid, Kabul has received the best repayment
terms of any of Moscow's major arms clients - a 75% discount on
practically all purchases and repayment of the balance over 15 to 25 years
at 2% interest. An estimated $50 million had been paid on the military
debt by the end of 1972. Annual repayments have been running at about
$4 million.
8. By the end of 1970, Moscow had delivered 35 IL-28 jet light
bombers, 24 SU-7 fighter-bombers, 42 MIG-21 jet fighters, 224 other
fighter and auxiliary aircraft, and the SA-2 surface-to-air missile system.
Land armaments delivered included more than 1,500 field and antiaircraft
artillery pieces, 435 medium tanks, about 50 assault guns, and 300 armored
personnel carriers (APCs).2 In January 1971, Kabul launched a program
to further upgrade its inventory of military equipment and signed a
$40 million agreement covering more than 100 medium tanks, an
undetermined number of PT-76 light tanks, 60 APCs (some with Sagger
wire-guided antitank missiles), 76-mm and 100-mm artillery, and crew-served
weapons and small army for a division. Some of this equipment was delivered
in 1971. A further $67 million agreement signed in July 1971 covered,
among other items, MI-8 helicopters armed with rockets and machine guns
and 152 tank transports.
2. For a listing of major Soviet military deliveries through 1972, see Table 6 in the Appendix.
3
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9. Hundreds of Soviet military advisers and technicians serve as staff
advisers and instruct Afghan personnel in the operation and maintenance
of equipment. The number varies with the flow of arms. It reached a peak
of about 525 in 1967 but declined to 200 by 1972. The USSR also had
trained more than 2,200 Afghan military personnel in the USSR by the
end of 1972.3
10. Despite a varied inventory of modern arms and 17 years of Soviet
technical assistance, the Afghan military establishment is far from becoming
a modern and effective force. The armed forces probably could not handle
the sophisticated arms or provide the necessary support activities in a
combat situation. Field training never has been adequate, and the Afghans
could not maintain the equipment without Soviet assistance. The armed
forces probably can do no more than maintain internal security.
Economic Development Plans
11. At the end of World War 11, Afghanistan was one of the least
developed countries in Asia. Kabul began a small economic modernization
program and in 1956 launched the first of a series of five-year economic
development plans.4 During the next 15 years, more than $1 billion was
spent on development (see Table 2). The current plan calls for additional
outlays of $330 million.
12. More than three-fourths of the outlays under the First and Second
Plans went for the construction of transportation, irrigation, and electric
power facilities and similar infrastructure projects. Additional funds were
spent on increasing cement and textile production and developing newly
discovered natural gas deposits.
13. Under the Third Plan, the pattern of planned investment featured
agricultural and industrial projects, including the construction of 80 (mostly
small) industrial plants. The plan also envisioned the building of feeder roads
from the main road network and transmission lines from major electric
power generating facilities. Actual investment, however, fell far short of
the original goal of nearly $500 million because of shortages of professional
and technical personnel and skilled labor, inefficient administration, a severe
drought that cut into domestic revenue, and an unexpectedly small inflow
of foreign capital.
3. By contrast, about 300 Afghan military personnel have received training in the United States
since 1958.
4. The plan years have been as follows: the First Five-Year Plan (October 1956 - September
1961), the Second Fivc-Year Plan (21 March 1962 - 20 March 1967), the Third Five-Year Plan
(21 March 1967 - 20 March 1972), and the Fourth Five-Year Plan (21 March 1972 - 20 March
1977).
4
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Afghanistan:
Allocation of Development Expendituresa
1956-77
First Platt
Third Plan
Second Platt (Estimated)
Fourth Plan
(Target)
Million VS $
Total (actual)
236
528
309
332
Percent
Sectoral allocation
100
100
100
100
Agriculture and
irrigation
13
18
34
39
Industry, mining,
and electric power
26
34
31
34
Transportation and
communication
49
39
18
10
Education, health,
and social services
12
9
17
17
a. International Monetary Fund, Afghanistan-Recent Economic Developments, 20 March 1972.
14. The less ambitious Fourth Plan is designed to complete earlier
projects and to increase the yield of past investment. Planned outlays are
about the same as for the previous plan, with the largest share again
scheduled for agriculture and industry. The share allocated to transportation
is cut back further (see Table 2).
15. Despite the sizable outlays of the plans and a substantial increase
in gross domestic product (GDP), the basic underdeveloped character of
Afghanistan's economy persists.5 Subsistence economic activity still
predominates and per capital GDP remains well below $100 - only slightly
higher than in the mid-1950s. Perhaps 80% of the labor force is directly
engaged in agriculture - roughly the same as 15 years ago. Only slightly
5. Afghanistan's statistics concerning income and production are poor at best and often arc
confusing. The World Bank, for example, indicates a doubling of GDP during the plans but almost
no change in the production of the major agricultural products -- the backbone of the economy.
Even though a substantial percentage growth occurred in industry and mining, trade and
transportation, and services, overall economic activity could hardly have doubled in this period.
5
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more than 5% are employed in industry and handicrafts. The industrial
sector, consisting of about 30 small-to-medium-size plants, contributed less
than 15% to GDP in 1970.
Shindand.
if lpltanktan
DeveiopMent Aid Proj3cts;
t?built roof
US-built road
Soviet.built natural
pas pipeline
Natural deposit
16. From 1954 through the end of 1972, the USSR extended more
than $800 million in economic. aid tr Afghanistan, of which $600 million
has been drawn.6 Of the drawings, about 35% has been funneled through
Afghanistan's five-year development plans. Another 11% has gone for
commodity aid - the largest volume of Soviet commodity aid to any Third
World country - and 4% for education and technical training.
OSnrdelr Dnm
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17. Moscow has played a central role in Afghanistan's economic
development.7 Nearly half of total development expenditures during the
first three plans consisted of Soviet aid deliveries (see Table 3).
Afghanistan: Soviet Aid for Five-Year Plans
1956-77
Total Development
Expenditures Soviet Aid
Planned
Actual
Exten-
sions
Plan
Related
Drawings
Soviet Aid Drawings
as a Percent of
Total Expenditures
First Plan
350
236
250
94
40
Second Plan
556
528
330
297
56
Third Plan
493
309
119
112
36
Fourth Plan
332
....
121
18. Soviet aid has been particularly valuable in certain sectors. It has
accounted, for example, for about two-thirds of the 2,000 miles of roads
built or paved since 1956. In addition to constructing the largest part of
a major highway connecting Kabul With Pol-e Khoniri, Mazar-e Sharif, Herat,
and Qandahar (see the map), the USSR built roads linking Herat, Pole
Khomri, and Mazar-c Sharif with Soviet rail systems at the Soviet border.
During 1970, more than 250,000 metric tons of cargo moved over these
roads. More than half the increase in Afghanistan's installed electric power
capacity - from 18,000 kilowatts (kw) in 1956 to 209,000 kw in 1970 -
was built with Soviet aid. The USSR constructed the only sizable
transmission network in Afghanistan, which connects the Soviet-built
hydroelectric plants on the Kabul River with the Kabul area.
19. Soviet aid has furnished ..40 million for industrial facilities. These
generally have been small and simple to operate and maintain. The largest
is a chemical fertilizer plant at Mazar-e Sharif, which absorbed about
$13 million of Soviet aid and ases natural gas. The Soviets completed a
7. An additional $85 million was obtained from other Communist countries, of which an estimated
$32 million has been used. The People's Republic of China committed about $72 million for various
agricultural and light industrial projects. Bulgaria. Czechoslovakia, and Poland extended the balance.
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survey for a steel mill in 1969 and found that it probably would not be
economically feasible. Nevertheless, Kabul has included funds for the initial
stages of the project in the Fourth Plan.
20. Moscow's aid to agriculture is substantially expanding
Afghanistan's usable land and increasing the productivity of existing acreage.
At least 60,000 acres of the 200,000-acre Nangarhar project have been
converted from desert to cultivable land. The Sardeli clam and irrigation
project involves nearly 65,000 acres and four state farms. Two farms have
been completed, largely for fruit production.
21. In the early 1960s, Soviet technicians found gas deposits in
northern Afghanistan estimated at more than 250 billion cubic meters. Two
pipelines from these deposits -- one to the Soviet border and the other
to Soviet-built electric power and chemical fertilizer plants -- were
constructed with Moscow's assistance. By 1970 the pipeline to the USSR
was pumping annually 2.4 billion cubic meters valued at $14 million.
22. These gas exports, along with Iranian gas deliveries, serve as a
useful supplement to the dwindling supplies in neighboring southern USSR.
They save Moscow the cost of bringing gas into the area from more distant
fields in Soviet Central Asia and free Soviet gas for sale in Europe. Moreover,
Moscow is paying Afghanistan $5.70 per 1,000 cubic meters, compared with
a contracted price of about $12 per 1,000 cubic meters for Soviet gas to
be delivered to Western Europe. A second pipeline is being constructed
and when completed in 1974 will double existing capacity.
Drawings and Repayments
24. Drawings rose rapidly in the early years of the program and during
the Second Plan averaged nearly $67 million annually.8 After reaching a
peak of more than $80 million in 1964, Soviet expenditures dropped
rapidly, falling to $12 million in 1971 and $11 million in 1972. Meanwhile,
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aid repayments have been rising.
Technical Assistance
25. Most Soviet assistance has been project aid that has required the
services of many Soviet technicians. In addition, small groups of Soviet
advisers work in Kabul's economic ministries. For instance, Gosplan
personnel helped formulate the Fourth Plan and are advising on its
implementation. The first large group of project technicians -- an estimated
400 - arrived in 1956. As work accelerated during the Second Plan, the
number rose sharply, reaching a peak of 1,800 in 1963. Since 1967 the
number has leveled off to about 1,000. Their services currently cost Kabul
an estimated $8.5 million annually.
Impact of Aid on Trade with the USSR
26. Afghanistan and the USSR always have been important trading
partners. After the mid-1950s, their trade expanded even further and the
USSR now accounts for about 40% of Afghanistan's total trade (see
Table 4).
27. Imports from the USSR accounted for most of the trade
expansion during the early 1960s. A threefold increase in imports during
1957-66 stemmed almost entirely from expanded aid deliveries.
Aid-generated imports averaged about $37 million annually during
1960-66 - almost 80% of total imports from the USSR in those years.
A drop in 1967 stemmed from a steep decline in Soviet aid exports.
Afghanistan's imports from the USSR have consisted largely of machinery
and equipment. In 1966 this category accounted for 70% of the total. Other
significant imports are grain, foodstuffs, petroleum products, and motor
vehicles.
28. Until 1968, Afghanistan's exports to the USSR had consisted
almost entirely of agricultural commodities, textile raw materials, and
semi-finished products. Natural gas export3 have since become important,
accounting for about 40% of total exports to the USSR in 1970; they
9. Afghanistan's fiscal year begins on 21 March of the stated year.
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Afghanistan: Trade with the USSRa
71ade with the USSR
Total
Totalb
Importse
Exports
Percent
of Total
1956
115
33
18
15
29
1957
120
39
18
21
32
1958
117
36
23
13
31
1959
141
44
28
16
31
1960
137
49
32
17
36
1961
152
59
39
20
39
1962
175
65
39
25
37
1963
193
64
45
20
33
1964
212
70
47
23
33
1965
201
72
52
20
36
1966
218
92
73
19
42
1967
205
78
57
21
38
1968
196
71
40
31
36
1969
206
75
45
31
36
1970
203
74
40
34
36
1971
217d
89
50
38
41d
a. Data on Afghanistan's total trade are taken from the IMF International
Financial Statistics series, which reports Afghanistan imports c.i.f. and exports
f.o.b. Data on trade with the USSR are taken from the Soviet Foreign Trade
Handbook, which reports both imports and exports on an f.o.b. basis.
b. Because of rounding, components may not add to the totals shown.
c. Excluding grant aid deliveries that are not recorded in Soviet trade data.
d. Estimated.
represent repayment for Soviet aid. Gas exports are expected to expand
further as production increases and the second pipeline is completed.
Retention of Independence
29. Afghanistan has maintained its independence despite the pervasive
Soviet presence. Afghanistan has never altered its basic foreign and domestic
policies and has achieved Soviet acceptance of its neutral stance on
international issues. Neutralism and independence, in the eyes of the Afghan
Government, are intertwined and inseparable. Kabul has refrained from
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joining any formal military or political alliance that might have direct
bearing on the balance of power between East and West and has pursued
courses of action that offend no one and prevent foreign powers from
becoming too influential in Afghanistan's internal affairs. Afghanistan has
modeled its post - World War II economic system along lines believed
relevant to its own needs for modernization and has followed neither the
Soviet nor the American model; Kabul enjoys friendly relations with the
United States, the PRC, and other leading nations.
Character and Complementarity of US Aid
30. When Afghanistan launched its post - World War If development
effe ts, it first turned to the United States for much of its external capital
requirements. Washington responded with, Export-Import Bank loans for the
development of the Helmand River Valley, which by 1953 totaled about
$30 million. By the end of US fiscal year 1971, LIS aid commitments had
reached about $420 million,10 most of which has been delivered. Nearly
67% has been technical assistance and project-type aid and 30% Food for
Peace.
31. Almost two-thirds of total US aid was committed prior to 1965.
Since then, direct development assistance has declined and food deliveries
have accounted for nearly 45% of total US aid. The severe drought sustained
by Kabul in 1970 and 1971 was broken in early 1972, but its effects will
continue to be felt into 1973. In 1971 the critical shortage of wheat
(Afghanistan's main subsistance crop) was alleviated largely through US
efforts. In US FY 1972, Washington, in response to urgent Afghan
Government appeals for relief, contributed at least 214,000 tons of the
estimated 300,000-500,000 tons of wheat requested from the world
community.
32. Most US aic to Afghanistan has been provided under liberal
repayment terms. About three-fourths has been grants, and about half of
the remainder calls for repayment over 30 to 40 years at nom;-.J rates
of interest. The balance consists of medium-term Export-Import Bank loans.
33. Much of the US aid has been used for investments that have often
paralleled, and frequently complemented, Soviet undertakings. Both
programs have channeled their funds into public sector projects and have
emphasized infrastructural development (see Table 5). The Helmand River
10. Other Western donors have provided an additional $185 million of aid. West Germany has
spent more than $90 million for hydroelectric facilities on the Kabul River, several textile plants,
and a number of agricultural and telecommunications projects. Approximately $95 millior has been
obtained from other sources, mainly from international organizations. Only about $40 million has
been committed by all Western sources for the Fourth Plan.
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Afghanistan: Sectoral Allocation of US and Soviet
Economic Aid
US
Soviela
1950-71
1954-71
Million
US $
Percent
of Total
Million
US $
Percent
of Total
Total
420
100b
705
100b
Agriculture and multi-
purpose projects
110
26
120
17
Commodity assistance
130
31
75
11
Petroleum, natural gas,
and other mineral
development
10
2
195
28
Transportation
110
26
260
37
Education and tech-
nical assistance
50
12
35
5
Other
10
2
20
3
a. The $121 million extended in 1972 still has not been allocated.
b. Because of rounding, components may not add to the totals shown.
-Valley development scheme is the largest US aid project in Afghanistan,
having consumed about $100 million during the past 20 years. It eventually
will add some 300,000 productive acres in sparsely populated southwestern
Afghanistan. Soviet aid to agriculture is concentrated in the more heavily
populated east and northeast sections of the country.
34. Both the United States and the USSR have provided sizable funds
for transportation. A 500-mile section of highway built by the United States
in southeastern Afghanistan joins a 1,000-mile Soviet stretch to form a
circumferential highway connecting Afghanistan's largest cities. The United
States built an international airport near Qandahar and four domestic
airfields; the USSR built an airport at Shindand and a military airfield at
Bagram. Moscow also constructed the Kabul International Airport, whereas
American firms designed and built most of the accompanying
communications and navigational aid buildings and fire-fighting stations. The
Soviets constructed the control tower, but US technicians installed the
communications and navigational equipment required to run it. The United
States has furnished technical and managerial assistance to Ariana Airlines,
which is 49% owned by Pan American Airways.
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35. Through technical assistance, both the United States and the
USSR have exerted substantial influence on the key policy-related areas
of planning and education and, in the case of the United States, of public
finance. In education, for instance, the United States built and helped staff
Kabul University.
36. The greatest difference has occurred in the share of aid for
commodities and for petroleum and natural gas development. Almost
one-third of US aid has been for commodity imports; the USSR has provided
only 11% or its aid for this purpose. Almost 307e, of Moscow's aid has
been allocated for petroleum and natural gas development; US aid to this
sector has been negligible.
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APPENDIX
STATISTICAL TADLES
Table 6
Afghnuirinn: Major Military Equipment
Delivered by the USSR
1956.72
Units
Lantl runtaincnls
Trucks
487
T?34
200
''?54/55
287
Artinncti petsonticI carders
3411
to
04
11TR?60 PII/PK
00
11''12.152
106
Other
50
Artillcrya
1,750
Sch'-propcllcd guns
48
I.ircrafI
Jet light bombers (IL-28)
35
Jet lighters
190
MIG?15
12
MIG.i7
112
Nil(;-21
42
SU?7
24
Transports
21
AN-12
11:14
II
1I: 18
I
'trainers
46
Icllcopters
is
Other aircraft
18
Guided missile system
Surface-to-surface antitankt'
24
Surfacc?to-airc
I I
Air-to-gird
42
a. Including recoilless rifles, rocket launchers, and mortars
over 100-ntm in caliber.
b. Indicating the number ot'vehicles used as launchers.
c. Indicating the number of SAM firing battalions (sites) -
(six launchers per SA-2 site).
d. Indicating the number of MIG-21 righter aircraft, cach
capable of carrying two Atoll air-to-air missiles.
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