AFGHANISTAN SITUATION REPORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000202300001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: April 6, 2011
• Sequence Number: 1
• Publication Date: April 29, 1986
• Content Type: REPORT

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Top Seere
Directorate of
Afghanistan Situation Report
29 April 1986
79-81
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AFGHANISTAN SITUATION REPORT
CONTENTS
TROPOSCATTER COMMUNICATIONS NETWORK ESTABLISHED
A tropos.catter network, which will improve Afghan
military and civilian communications, has been
established since last fall. The system links
Kabul, Jalalabad, and probably Mazar-e Sharif.
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KABUL GRANTS VISA TO THE RED CROSS
The Kabul regime's decision to grant a permanent
visa t.o a representative of the International
Committee of the Red Cross probably is motivated
by the government's desire to improve its
international. image before the peace talks resume
in Geneva.
INCREASED PAKISTANI OPTIMISM OVER RESISTANCE PROSPECTS
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A recent public opinion poll conducted by the
Pakistani Gallup organization indicates that urban
Pakistanis are now more optimistic about the
prospects of the Afghan resistance than they were
in early 1980.
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PERSPECTIVE
AFGHANISTAN'S FINANCIAL SECTOR: THE IMF VIEW 6
The International Monetary Fund's annual report on
the Afghan economy--the most exhaustive
unclassified study on the subject--describes an
economy which has largely s-tagn'ated since the
Soviet invasion in 1979.
WESTERN EUROPE:-NEW PROTESTS OVER AFGHANISTAN
In recent months, several European governments and
publics have expressed renewed concern over the
Soviet occupation of Afghanistan.- This refl-ects
some dissatisfaction over bilateral issues as well
as a reaction to the political and humanitarian
implications of the invasion.
This document is prepared weekly by the Office of
Near Eastern and South Asian Analysis and the
Office of Soviet Analysis. Questions or comments
on the issues raised in the p.ublication should be
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International boundary
Province boundary
# National capital
9 Province capital
Railroad
Road
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TROPOSCATTER r_OMMUNICATIONS NETWORK ESTABLISHED
An R-410 Twin Plate troposcatter communications relay
network--linking Kabul, Jalalabad, and Probably Mazar-e
Sharif--has been established since the fall of 1985,
Comment: The new troposcatter system has many
advantages over the existing microwave systems,
including increased range, greater resistance
jamming, and improved reliability.F
oug the sys em
is primarily for military communications, it probably
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KABUL GRANTS VISA TO RED CROSS
In mid-April, the Kabul regime. granted a permanent visa
to a delegate of the International Committee of the Red
Cross (ICRC),
It has tentatively agreed to allow the ICRC to
provide medical supplies to hospitals in Kabul and to
establish a center to provide artificial limbs and
therapy to war victims. The regime has also agreed to
allow the ICRC to visit insurgent prisoners held in
Kabul. The ICRC has not been allowed to operate in
Comment: Kabul's receptivity toward the ICRC probably
is largely motivated by a desire to improve its image
before the Geneva peace talks resume on 5 May. The
regime probably believes that the move will help
strengthen its claims to legitimacy. It may also hope
that granting prisoner visitation rights to the ICRC
will result in a reciprocal gesture by the
insurgents. Resistance leaders, however, are unlikely
to cooperate because of their resentment over Kabul's
refusal to participate in ICRC-sponsored prisoner
exchange deals in 1984.
INCREASED PAKISTANI OPTIMISM OVER RESISTANCE PROSPECTS
A recent public opinion poll conducted by the Pakistani
Gallup organization in 100 selected towns and cities
across Pakistan suggests more optimism among urban
Pakistanis toward prospects of the Afghan resistance than
existed shortly after the Soviet invasion in 1979.
According to the poll, 50 percent of the respondents
believed that the resistance will be successful, 10
percent predicted a Soviet victory, 18 percent expected a
protracted struggle, and 22 percent did not answer the
question. A similar poll in early 1980 indicated that 40
percent believed the resistance would be successful. The
new survey also indicated that Pushtuns were less hopeful
about the war's outcome, 36 percent predicted a
resistance victory, and 28 percent expected a protracted
struggle. In addition, the poll showed that 67 percent
of the urban sample supported continued Pakistani aid and
shelter to Afghan refugees.
Comment: The poll's results reflect the reality that the
Afghan insurgents have been able to deny the Soviets a
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military victory after more than six years of fighting
and the popular view that Islamabad's Afghan policy has
worked. The more pessimistic response'by Pushtuns,,.most
of whom live in the Northwest-Frontier Province (NWFP)
bordering on Afghanistan, may result from proximity to
the war and the influx of Afghan refugees into the
region. Another factor that may have influenced.
attitudes in the NWFP is a Soviet and Afghan regime
sabotage campaign, which seeks to erode support for the
insurgency in Afghanistan.
IN BRIEF
Soviet and Afghan
regime forces in late March established an
observation post on a mountain 35 km northwest of
Qandahar.. The post provides a panoramic view-of
major. insurgent supply routes into Qandahar,
Oruzgah, and Helmand Provinces. On 2 April, an
insurgent convoy was spotted from the post and six
insurgent suppl.y trucks were captured.
in Wroclaw, Poland
re recently distributed in
the city proclaiming May Day as a day of unity wth
the freedom fighters in Afghanistan. The leaflets
were handed out during demonstrations-encouraging
"independent" May Day activities
22 April, a Soviet MI-8 transport helicopter was
shot down near Qandahar.airfieldwhile landing.
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PERSPECTIVE
AFGHANISTAN'S FINANCIAL SECTOR: THE IMF VIEW
The International Monetary Fund (IMF) recently issued
its annual report on the Afghan economy. We believe
that the report is the most exhaustive unclassified
examination of the Afghan economy available. Our
comments on certain parts of the report are contained
in the final paragraph.
Government Finances
According to the IMF, spending by the Afghan Government
has increased substantially during the past five
years. Total expenditures increased by more than 77
percent--from Af 29.8 billion to Af 52.7 billion ($590
million and $1 billion respectively at official
exchange rates)--between 1981 and 1985. Revenues
increased little over the period--except those from
natural gas exports--leading to progressively larger
deficits. Currently, the budget deficit is roughly
one-third of total expenditures. It is financed by
foreign aid (primarily from the Soviet Union) and
increasingly by borrowing from the domestic bankin.g
system.
Defense expenditures--Af 7.9 billion ($156 million) in
1985--have nearly doubled since 1981 and are currently
about 15 percent of government expenditures,.-ac-cor-ding
to the IMF. Interest payments on foreign debt--
primarily to the Soviet Union--have also increased
sharply over the same period and were Af 1.1 billion
($21.7 million) in 1985.
Banking and Credit
The banking system in Afghanistan includes Da
Afghanistan Bank (DAB)--which operates as a commercial
bank and as the country's central bank--three
commercial banks, and three specialized development
banks. The commercial banks primarily finance foreign
trade, while the development banks (the Agricultural
Development Bank, the Industrial Development Bank, and
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the Mortgage and Construction Bank) have not been
particularly active in recent years. Interest rates
charged by the banks for loans are below the annual
inflation rate and substantially below the rates in the
bazaar.
As in many less-developed countries, a large part of
Afghanistan's liquid assets are held outside the
banking system. Only a small part of the population
has dealings with official financial institutions. For
the majority, bazaar merchants play an important role
in the financing of domestic trade and other financial
transactions. Bazaar dealers freely buy and sell
foreign exchange and provide rapid clearing facilities
through correspondents abroad. The magnitude of these
transactions is unknown, but the bazaars provide a
considerable amount of loans to the private sector.
The authorities do not interfere in the activities of
the money bazaar.
The External Sector
With a narrow export base and a heavy dependence on
imports, Afghanistan has traditionally incurred sizable
trade deficits. Remittances from Afghans working
abroad, tourist income, and foreign aid receipts more
than offset the trade deficits until the Soviet
occupation, according to the IMF. The small deficit
that first developed in 1982 increased rapidly in the
following years, largely because of the slow growth in
exports relative to imports and a decline in aid
flows.
With the exception of a 43 percent increase in exports
in 1981 caused almost entirely by a doubling of the
price of natural gas, the value of exports rose only 12
percent during the subsequent four-year period.
Moreover, the share of gas exports in the total went
from 35 percent in 1981 to 49 percent in 1985, as
foreign demand for dried and fresh fruits, cotton,
wool, and Karakul skins declined. Efforts by the
regime to increase exports by such measures as
expanding into nontraditional markets and adjusting
interest rates to increase the profitability of exports
have not succeeded.
Imports provide most of Afghanistan's nonfood consumer
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goods, oil, and capital and intermediate goods.
Although most food consumption is domestically
produced, some wheat and sugar and all rice and tea are
imported. With minor exceptions, there are no
prohibitions or qualitative restrictions on imports.
Other imports are financed through the purchase of
foreign exchange in the bazaars.
According to the IMF, gross aid inflows reached a peak
of Af 18 billion ($355 million) in 1981, declined to an
annual average of Af 12.8 billion ($253 million) in the
subsequent three years, and rose again to Af 14.8
billion ($292. million) in 1985. The total foreign debt
outstanding on 20 March 1985 amounted to Af 13.1
billion ($2.6 million) in disbursed loans. About 80
percent of the total debt is owed to Council for Mutual
Economic Assistance countries, which have provided most
of Afghanistan's foreign aid since 1978.
Exchange and Trade System
The exchange market is operated by DAB, the commercial
banks, and the dealers in the bazaars. Historically, a
complex multiple exchange rate system has involved at
different times, different exchange rates between'DAB,
the commercial banks, and the bazaar market, and
different exchange rates for different transactions.
The official exchange rate is Af 50.6 per US$1, with the
bazaar exchange rate substantially below this. Since
August 1981, when this rate was established, a growing
proportion of international trade has occurred with
foreign exchange purchased on bazaar markets. Even
public sector enterprises may purchase foreign exchange
on bazaar markets for required imports.
Comment
The IMF study presents the most comprehensive view of the
Afghan economy available, but it has some shortcomings.
One is its concentration on economic activity in official
channels and exclusion of black market activities, which
constitute a large part of economic activity in
Afghanistan.
More importantly, the study relies exclusively on
government statistics. Much of the data presented are
consistent with other sources, but in one key instance,
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we have identified a substantial difference.. The IMF
reported defense expenditures as approximately Af 7.9
billion ($156 million) in 1985. Because some defense
expenditures appear in other accounts, such as general
administration and public order, and extrabudgetary
expenditures are excluded, we believe actual defense
expenditures are on the order of Af 26.3 billion ($520
million).
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PERSPECTIVE
WESTERN EUROPE: NEW PROTESTS OVER AFGHANISTAN
West European governments and publics in recent months
have expressed renewed concern about the Soviet
presence in Afghanistan. Although this activity may
reflect dissatisfaction with the Soviet Union in
general, we think it also signals skepticism about
recent hints that Moscow may be softening its policy in
anticipation of the resumption of the UN-sponsored
talks on Afghanistan in Geneva next month. We also
believe the Europeans are increasingly aware of the
public relations value of the resistance's cause and
may be displaying a willingness to assist in promoting
Afghan Resistance Leader Visits Great Britain
Prime Minister Thatcher and Foreign Secretary Howe
extended an official welcome on 12 March to Afghan
insurgent leader Abdul Haq. Howe assured Haq that
Britain will press for the withdrawal of Soviet troops,
although direct assistance to the guerrillas will be
limited to humanitarian aid. In fact, recent US
diplomatic reporting from London indicates that British
officials are now pushing humanitarian aid as one means
of both helping the insurgents and marketing their
cause in world forums. Labor Party members of
Parliament criticized the meeting as contrary to the
principle of avoiding contact with political groups
engaged in violent activities. Soviet officials in
London also lodged complaints with the Thatcher
government about holding consultations with a "known
terrorist."
Petitions, Hearings, and Demonstrations
Elsewhere in Europe, the Italian Communist Youth
Confederation (FGCI) unveiled a country-wide petition
campaign against the Soviet presence in Afghanistan
during a 5 March press conference. Within hours of the
announcement, 50,000 signatures had been collected.
The Confederation hopes to obtain 300,000 signatures
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within the next two months, which they will then
deliver to the Soviet Embassy in Rome.
A Norwegian committee, including leading personalities
from the political, educational, and cultural
communities, sponsored an international hearing from 14
to 16 March on Soviet war crimes. in Afghanistan.
Participants heard testimony from Afghan guerrilla
leaders, a former Soviet soldier, and civilian war
victims. The Counselor of the Soviet Embassy in Oslo
delivered a formal protest to the Norwegian Government
on 12 March, stating that the last such hearing--held
in 1983--was an exercise in anti-Soviet propaganda.
The US Embassy in Oslo reports the Soviets seemed
particularly upset that a deserter from their own
military would be testifying.
The West German Bundestag foreign affairs committee and
the entire Bundestag convened their own hearings on
Afghanistan from 18 to 20 March. Again, witnesses to
the conflict, including scientists, physicians,
journalists, and Afghan guerrillas presented
testimony. In addition, several Social Democratic
Party parliamentarians who had visited Pakistan and
Afghanistan from 9 to 15 March recounted their findings
on the state of the resistance movement and the
refugees. The Soviets assailed the Bundestag debates
in both their own and the German media. Nonetheless,
the normally divisive German political parties
demonstrated surprising consensus in their attacks
against Soviet human rights abuses.
Thousands marched in the streets of Stockholm and
across Sweden on 22 March to demand the immediate
withdrawal of Soviet troops from Afghanistan. The
rallies were sponsored by the Swedish Afghanistan
Committee (SAC)--the organization through which most
government aid to the resistance is channeled. More
than 70 political, labor, and church groups
participated, representing all major Swedish parties
and ideologies, including the Communists. Along with
Afghan guerrillas, the crowd of about 9,000 in
Stockholm heard Foreign Minister Undersecretary Pierre
Schori vehemently condemn the Soviets' "terrorist
war." In addition, for the first time parliamentarians
representing every party in the Riksdag--from
conservative to Communist--became members of the SAC
board.
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Implications
In some cases, this renewed European concern over
Afghanistan may reflect the dissatisfaction of
individual governments over bilateral issues with the
Soviets. This is especially true of the Swedes, who
recently have stepped up criticism of the Soviet Union
on several issues--the Raoul Wallenberg case and the
treatment of Soviet Jews, as well as Afghanistan--
probably in anticipation of Prime Minister Carlsson's
trip to Moscow in April. Indeed, Swedish officials
have reportedly encouraged speculation that all this
tough talk is meant to show their government's
unhappiness with Soviet intransigence on maritime
boundary disputes and submarine incursions.
European governments, nevertheless, are concerned about
the humanitarian and political implications of the
Afghanistan conflict and are skeptical of recent
conciliatory gestures from Moscow. Both publics and
governments are squarely behind the cause of the
resistance and would like to see a negotiated settlement
to the conflict. However, the US Embassy in London
reports that British officials believe the Soviets are
quite capable of conducting a two-track policy:
"Sovietizing" the country while working for a settlement
in Geneva that meets Soviet terms. Reports indicate
that Norwegian and West German officials concur with
this interpretation of Soviet behavior. Furthermore,
British officials are convinced that Moscow will not
leave Kabul unless a "reliable" regime is firmly in
power. Some individuals state that this very fact
negates the possibility for a peaceful solution, as
Afghan resentment now cuts so deeply that no pro-Soviet
government could survive for long on its own.
Despite recent pro-Soviet presentations in the British
media by spokesmen for the far left, we think most West
Europeans see this as a public relations contest that
the West could and should win. Although the West must
deal with "compassion fatigue" and the difficulty
reporters have in gaining access to the situation,
Europeans are increasingly eager to have the resistance
movement speak for itself. We believe recent activities
indicate that European governments would be willing to
provide venues for insurgent leaders to voice their
cause and that such presentations would be well-received
by European publics.
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Previous West European concern that the resistance not
be hurt by perceptions that Afghanistan is merely a
staging ground for East-West conflict seems to have
decreased, but these governments still warn that the
guerrillas must not be too closely associated with the
United States. For example, the Italian Government
hesitated to support mention of Afghanistan in a coming
UNICEF report on children in war for fear it would
prompt a list of references identified with Soviet and
US interests. These officials changed their minds only
after being assured that many other countries were to be
specifically cited in the report. Likewise, British
officials have told US diplomats that the
internationalization of aid financing is critical.
These officials said that they sense a reluctance among
Europeans to be associated with American efforts and
they have indicated a willingness to take the lead in
promoting the insurgents' cause, both in Europe and in
the Third World.
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Top Secret
Top Secret
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