DCI REQUEST FOR INFORMATION ON ALLEGED SOVIET EXPLOITATION OF AFGHAN RESOURCES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86M00886R001300140025-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 21, 2016
• Document Release Date: December 10, 2008
• Sequence Number: 25
• Publication Date: January 18, 1984
• Content Type: MEMO

Approved For Release 2008/12/10: CIA-RDP86M00886RO01300140025-9
18 January 1984
MEMORANDUM FOR: Deputy Director for Intelligence
Chief, Programs Staff, SOVA
SUBJECT: DCI Request for Information on Alleged Soviet Exploitation
of. Afghan Resources
1. The DCI was told by someone who came in to see him that the Soviets
had "reactivated some mines" in Afghanistan from which they have recovered
enough revenue to cover the cost of the invasion. He appended an article by..
Amity Shlaes in yesterday's Wall Street Journal-on Soviet exploitation and
importation of Afghan gas, copper and perhaps uranium.
- 2. Our holdings contain no reporting on Soviet imports of copper or
uranium from Afghanistan. At least up to the invasion, however, the Soviets
were importing about 2.5 billion cubic meters of Afghan gas each year, at a
cost of $300 to $400 million in Western market prices. We cannot confirm the
assertion in the Journal article that Moscow is crediting the value of the gas
against Kabul's massive debt to the USSR.
3. The Journal is correct in stating that the value of the Afghan
"exports" does not come close to covering the cost of the war which, the
author quotes State as saying, is about $12 billion since the invasion. Our
own estimate is somewhat higher, at $14.3 billion from 1 January 1980 to 31
December 1983, or $3.6 billion per year--roughly 10 times the value of the
imported gas.
SECRET
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Ex cu tive Rer trY
MEMORANDUM FOR:... Deputy Director for 'Intelligence
Director of Central Intelligence'
Soviets in Afghanistan
A few days ago I asked you about information someone could give
me regarding how the Soviets have reactivated some mines in Afghanistan
from which they have received a great deal of revenue, enough it was
said to cover the cost of the invasion. I don't recall the source.
It was someone who came. in to see me. This item from today's Wall Street
Journal deals with the subject, apparently based on information gathered
by the Institute of Strategic Trade, a think tank located in Washington.
William J. Casey
Attachment:
WSJ article, dtd 17 Jan 84,
"Afghan Resources Flowing
to USSR Despite the War;
Hungary Seeks Dollars"
25X1
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 Will I CTRrrT .lflltPNAI
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Afghan Resources Flowing to U.S.S.R.
Despite the War,. Hungary Seeks Dollars
By AMITY SHLA S
viet Union from exploiting and importing'
Afghanistan's natural resources-gas, col. .
per and, reportedly, uranium.
The extent of this exploitation isn't :
known. for certain. The Afghan rebels, in-
eluding former offi-
cials of the Soviet- .. ]POMi
backed govern-
ment's Ministry of Intsight
ets credit the value of the resource imports
against Afghanistan's large debt to Mos
cow. Even so, sources agree that the value
of the Afghan exports don't come close to
repaying Moscow for the cost to it of prop.
ping up the communist government in Ka-
bul. The State Department estimates that
cost to be $12 billion since the Soviets in-
vaded Afghanistan?in, December 1979.
Natural gas, Afghanistan's largest ex-
northern Afghanistan- to Soviet Central
Asia. Radio Kabul, the government radio
station, reported recently that 84 billion cu-
hie. feet of gas was exported to the Soviet
Union last year. But according to the
Washington-based Institute of Strategic
Trade, the Soviets have pumped as much
as four times that amount of Afghan gas
annually in recent years.
Nc one outside the aoviet Union knows
for sure, perhaps not even the Afghan re-
gime, because the meters that measure the
gas flow are on the Soviet side of the bor-
der. The Soviet Union developed Afghani-
stan's natural gas, fields in the late 1960s,
and it has been the principal customer.
The rebel tribesmen have blown up part
or all of the pipeline at least three and per-
haps as many as seven times since the in-
v asion, according to the Center for Afghan-
istan Studies, affiliated with the University
of Nebraska.
"What keeps the Soviet Union so inter
ested in (Afghanistan's) gas is that they
need it for development in the Central
.Asian Soviet republics." says Thomas
I Gouttierre, the center's director. Some of
.the gas, he says, serves to replenish gas
-Lhat-is piped from the Soviet Union to
f :Western Eurore.
More recently; the Soviets have
launched a copper mining and smelter
project near Kabul, according to the cen-
ter. If the project is completed in the next
several years it could give Afghanistan'
about 2% of world production, John F. '
Shroder of the center said in a report.
Some predictions put Afghanistan's copper
ore reserves at 3.5 million metric tons.
And according to a former member of
the Afghan, Ministry of Mines-who defected
recently to Pakistan, the Soviets have be-
gun mining uranium at newly discovered
fields near Kabul.
Hungary is the Soviet bloc's most suc-
cessful exporter of farm products-and it
appears to be seeking recognition of that
fact from Moscow.
American economists who monitor So-
vie( bloc affairs read that interpretation
'
s agricul-
into a recent article on Hungary
tural achievements in the Budapest news-
paper Nepszava - (People's. Voice). The
newspaper noted that Hungarian farms in-
creased production 42%%6 between 1970 and
1981, one and a half times better than the
next best East bloc agricultural exporter,
Bulgaria. The article said that even such
relatively high growth was "inadequate"
and that more should be done to increase
exports of farm goods.
The article is part of a Hungarian cam-
paign to get the Soviet Union to renew an
8-year-old. trade agreement under which
Moscow pays U.S. dollars to Hungary for
agricultural shipments above a certain
level. In turn, the Hungarians pay dollars
for Soviet petroleum above a certain
amount.
Hungary earned $719 million from this
arrangement in 1982, according to North-
western University economist Michael
Marrese, who studied Hungarian govern-
ment statistics. Without this hard=currency
windfall, the Hungarians would have faced
an overall dollar trade deficit of about $200
'million, Mr. Marrese said.
The Hungarians are particularly eager.
to renew the Soviet agreement, which ex-
pires next year, because -of their tenuous
credit position with Western banks.
But the Soviets aren't sure. Faced with
slowing economic growth and lower world
market prices for farm goods, they aren't
interested in continuing such high subsi
dies to Hungary, according to Mr; Mar-
rese.
0.
The good news for Poles is that their
government has bowed to public pressure
and trimmed food-price increases that
were scheduled for the new year. But the
bad news is that some food, specifically
meat, may be harder to get when the
higher prices go into effect next month.
This at least is the suggestion in the
Polish daily Zycie Warszawy (Warsaw
Life). An article by university professor
Ryszard Manteuffel notes* that Poland's
1983 summer animal census showed that
the cattle population since the previous .
summer had dropped 5.4%, while the num-
ber of pigs was down 20%. This situation
would probably result in distribution of
more lower-quality meat products and
shortages at restaurants and stores that
sell processed meats, he said. Prof. Man-
teuffel predicted the government. the na-
tion's main meat distributor, would pur-
chase 16% less meat this year.
The February price increase will vary
from a low of 8% for lard to as high as 42%
for bar, the state-controlled news media
announced last week. Prices will rise for
such staples as bread and butter, but won't
be increased for some basic food items
such as margarine, vegetable oil and tow-
quality beef, the government said.
Rationing will continue for such staples
as rice, sugar, meat and grains, which re-
main in short supply. the Associated Press
reported from Warsaw.
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