BACKGROUND DATA ON AFGHAN-SOVIET ECONOMIC RELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000300040021-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 20, 2016
• Document Release Date: July 20, 2006
• Sequence Number: 21
• Publication Date: December 16, 1954
• Content Type: MEMO

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FU
OCI No. 2709 CENTRAL INTELLIGENCE AGENCY
Copy No. OFFICE OF CURRENT INTELLIGENCE
16 December 1954
TO: Deputy Director (Intelligence)
SUBJECT: Background Data on Afghan-Soviet Economic Relations
1. A preliminary examination of Afghan-Soviet economic
relations was undertaken as a result of recurring reports that
during 1954 the USSR has been making a serious effort to pene-
trate the Afghan economy and to convert that country into an
economic satellite. The examination indicates quite clearly,
despite the paucity of reliable statistics, that although there
has been some increase in Afghan-Soviet economic relations,
many of the reported statements are unsubstantiated and the
extent of Soviet penetration is probably less than has been
indicated.
2. At first sight, Soviet efforts to penetrate the Af-
ghan economy within the last few years seem to have been un-
usually successful. The two countries are said to have dis-
cussed numerous economic development projects, including oil
exploration and the construction of a railroad, a hard-surfaced
road, an oil pipeline, and gasoline storage facilities in north-
ern Afghanistan. Czechoslovakia has also discussed oil develop-
ment with the Afghans. Successive Afghan-Soviet barter agree-
ments are said to have provided for trade in steadily increasing
amounts--from a total of about $6,000,000 in 1950 to about
$25,000,000 in 1954. During the latter year, the two countries
signed three credit agreements totaling $6,200,000 for Soviet-
assisted industrial construction and road-building projects,
and unconfirmed reports have stated that 200 to 300 Soviet tech-
nicians were to be in Afghanistan by the end of 1954. A Czech-
Afghan credit agreement for $5,000,000 was also signed on 22
August 1954 and probably should be considered as. integrated
into the Soviet program.
3. Actually, Orbit performance in the fields both of
trade and technical assistance cannot be shown to be as great
as reported. For example, reports that the Soviet Union now
supplies 80 to 90 percent of Afghanistan's total annual con-
sumption of. gasoline''_ appear highly eicaggerated.
State Dept. review completed
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4. Afghan gasoline consumption was reliably estimated
prior to 1950 to be about 3,000,000 imperial gallons per year.
despatches from the American
embassy in Kabul Indicate a western sources have supplied
Afghanistan with approximately 1,800,000 to 2,400,000 imperial
gallons annually since 1951. Deliveries during the first nine
months of 1954 were in line with these figures. If, as re-
ported, imports from Western countries are only 10 percent of
current total consumption, Afghanistan's requirements must
thus have risen since 1951 from 3,000,000 to about 20,000,000
gallons--an unlikely increase.
5. With the possible construction under Soviet super-
vision of gasoline storage facilities of up to 500,000 gallons,
and with the increased use of Soviet trucks in the northern part
of the country, the USSR may by now have increased its exports
from about 500,000 gallons to a maximum of 1,500,000 gallons
annually. This would at best still represent only about 40 per-
cent of the total used.
6. Because of the primitive nature of Afghan facilities
for the production, distribution, and consumption of goods, it
also seems unlikely that the Afghans now consume four times as
many Soviet products as in 1950. The only Soviet commodity
whose use in materially increased quantities can be reliably
documented is gasoline.
7. It also seems unlikely that the Afghan trade organi-
zation has quadrupled its exports in recent years of wool, cot-
ton, hides and skins--the bulk of its trade with the USSR--as
indicated by the reported total trade figures of recent Afghan-
Soviet trade pacts. Afghan raw cotton production apparently
increased nearly 50 percent between the 1951-52 and 1952-53
seasons. It seems doubtful, however, that the USSR could have
taken a large proportion of this increase, since Afghan cotton
exports to the West almost doubled in value between 1952 and
1953, a period when world prices declined.
8. In wool, as recently as October 1953 the American
embassy in Kabul reported indications that Afghanistan was
having serious difficulty in meeting its delivery schedules to
the USSR. Unless there has been a considerable growth in the
size of flocks since late 1953--an unlikely event in the view
of the nature of Afghan ecological conditions--Afghanistan can-
not have substantially increased its wool export commitments
in.1954.
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foreign karakul skins,
years Afghani-
stan's majorosource n of of
declined
from a level
of about 3,000,000 skins in the late 1940's ton approximately
1,000,000 in 1953, though it is reported to haverisen ely
mto
1,500,000 skins in the 1954 season. Since the decline of kara-
kul exports.to the West has not been far out or proportion
with the drop in Afghan production, it is also unlikely that
Soviet trade in this commodity has increased greatly.
10. Eyewitnesses have seen several new Soviet-sponsored
construction projects actually started, but there has been no
indication'of any implementation of the 22 August Afghan-Czech
agreement. None of the Soviet projects--including a bakery,
a flour mill, gasoline and foodgrain storage facilities, and
paved streets in Kabul--is such as to give the USSR a perma-
nent pressure point for extending its influence over the Afghan
economy.
HUNTINGTON D. SHELDON
Assistant Director
Current Intelligence
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