The enclosed memorandum reflects the review and embodies the proposal. We
suggest this memorandum serve as a basis for discussion during Ambassador
Steeves’ meeting with you at 4:30
p.m. on Friday, January 18. Under Secretary George C. McGhee, AID
Administrator David Bell, Assistant
Secretary Phillips Talbot and AID Assistant Administrator William Gaud will also participate in this
meeting.1
Enclosure2
SUBJECT
- United States-Afghan Relations
Proposed Line of Action
To continue our aid program in Afghanistan using the more expensive route
through Iran and taking the additional transportation costs out of the
planned levels of aid.
Problem
The impasse between Afghanistan and Pakistan has continued and the border
between the two countries is still closed. We have now reached the point
where we can no longer maintain an aid program of the dimension
necessary to the achievement of our objectives in Afghanistan and in the
area unless we decide to make fuller use of the more expensive route
through Iran. Our bilateral relations with Afghanistan, but more
importantly our interest and objectives in the surrounding area,
principally Iran and Pakistan, are being placed in jeopardy. A good
United States posture in Afghanistan is insurance for United States
interests and investments in Afghanistan’s two neighbors Iran and
Pakistan.
Ambassador Steeves has come back
to participate with us in a review of our policy toward Afghanistan and
our objectives there and to work out a course of action designed to
achieve these objectives.
Alternate Courses of Action
The instruments available to maintain a United States position in
Afghanistan in sufficient force to achieve our objectives are limited.
In fact, they revolve around our efforts in the aid field. We have
considered four possible courses of action.
- 1.
- In view of their stubborness on the border issue, we could inform
the Afghans that we would delay implementation of various aid
projects until the supply route through Pakistan was open to us for
heavy and bulky items needed in various capital projects.
- 2.
- As a tougher version, we could let the Afghans know that if the
border were not open by a certain date we would terminate our aid
activities.
- 3.
- We could go to the other extreme and expand the fiscal content of
our aid program so that the existing levels of aid could be
maintained in spite of increased transportation costs through
Iran.
- 4.
- We could continue our aid program in Afghanistan using the more
expensive of the routes through Iran but take the additional
transportation costs out of the planned levels of aid.
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Conclusion
Course one is, in effect, what we have been doing over the past 17
months. It has not proved effective in getting the border open.
Course two would probably produce a negative Afghan response and deal us
right out of the country. This would greatly accelerate the country’s
drift toward the Soviet sphere.
Course three would reward the Afghans for their stubborness and remove
whatever pressure remains for them to seek a compromise with Pakistan.
It would also place us in a very difficult position with Congress.
Course four is, in effect, a holding action. We believe it will slow down
but not reverse Afghanistan’s slide toward the Soviets. However, it does
give us an interval during which more favorable conditions could
develop. Such developments could include a more moderate government in
Afghanistan. Certainly by retaining an effective position in the
country, we will strengthen those elements in Afghanistan who wish to
continue close ties with the West. Additionally, we will have more time
to work for a constructive approach from Pakistan which we are prevented
from effectively doing at present because of the tension over the supply
of military aid to India.
We believe course four is the only logical one available to us. Even
though its objectives are limited, we propose to move forward with
it.
Some Aspects of Implementing This Proposal
The major United States project, the Kabul-Kandahar road, has come to
symbolize United States interest and position in Afghanistan. To
complete this project will clearly demonstrate United States
determination to maintain its position in Afghanistan. We propose to
complete this project using the route through Iran. Being aware of the
effect of extra costs domestically and the need to demonstrate to the
Afghans that their stubborn political policies will cost them, we will
take the additional transportation costs out of planned aid levels.
Completing the road will demonstrate United States determination to aid
Afghanistan, but the specifications for two-thirds of the road will be
changed from blacktop to gravel to bring the project within the $41.4
million obligated. Included in this expenditure by the time this road is
completed will have been some $2.6 million of additional transit costs.
There are force majeure costs of up to $3.0 million which are
additional, but the exact figure will not be known for a considerable
period, perhaps years, pending review of claims. Total costs of
cancelling the road now without having provided one mile of acceptable
road would be $22.0 million.
The approach to the road project demonstrates our approach for the
over-all program. Projects will be curtailed or specifically selected in
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order that the additional
transit costs will in effect be borne by the Afghan program. In view of
the recent IMF Mission and general Afghan Government agreement to their
findings, a slower pace of economic development appears not only in
order but mandatory. Therefore, what in effect will be a somewhat
reduced level of United States aid will probably appear less
unpalatable.
The grant program in Afghanistan in FY
1962 was $38.5 million, including $23.7 million for the Kabul-Kandahar
road. In FY 1963, the grant program under
consideration is for approximately $15.0 million; in addition, a loan
program of $5 million is contemplated. The carryover of unliquidated
obligations from previous years is about $44 million. Therefore, the
actual expenditures in FY 63 will
probably reach $30 million. The grant program in FY 1964 will be of the same magnitude, but United States
interest in orientating Afghanistan to the Free World through the
building of a road to Iran will increase the loan program to
approximately $15.0 million.
Our efforts in the aid field would be incomplete were we to ignore the
dangerous increase in Afghan-Soviet trade over the past few years. An
important facet of our efforts, therefore, is to increase Afghan trade
with the Free World. Accordingly, we are working with the Afghans to
improve the quality of their exports so that they will find larger
markets in the West.
The increased transit costs make a PL-480 program impractical and this
will be dropped.
In implementing this course of action, Ambassador Steeves on his return, will inform the
Afghan Government that the United States has decided to take up the
Royal Government of Afghanistan’s proposal that the United States avail
itself of Afghan forwarding facilities through Iran. In this manner the
real costs of this route will be developed so that both we and the
Afghans can use it as a basis for discussion. At the same time, the
Royal Government of Afghanistan will be informed that additional
transportation costs which we expect to range from 10% to 25% will
result in a modification of projects to cover that amount.
We believe the foregoing course of action will achieve our limited aims
and can be defended as prudent.
U.S. Objectives
Protection of U.S. Investment in Subcontinent and in
Iran
Our aim which is to maintain Afghanistan as an independent buffer state
stems not from fondness for the Afghans but rather from the strategic
importance of the territory they occupy. The security of our allies,
Pakistan and Iran, would be gravely jeopardized should a drastic
curtailment of the United States position in Afghanistan result in full
Soviet domination of that country. Moreover, there would be implications
to the
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security of the
subcontinent as a whole should this situation develop. Thus, the
safeguarding of our investment in Afghanistan’s Free World neighbors is
a fundamental objective of our Afghan policy.
Thwart Soviet Aims
Secondly, but of equal importance, we can thwart a major Soviet effort by
maintaining an effective position in Afghanistan. We will be
demonstrating to the Soviets that the type of operation they have
launched in Afghanistan will not be unopposed and will not achieve the
results they hope for. To curtail seriously our position in Afghanistan
would be a signal to the Soviets that their efforts were succeeding. If
we retreated, the Soviets would press forward to fill the vacuum.
In short, our efforts to counter Communist encroachment into the
subcontinent as evidenced by our aid to India, would be incomplete
should we neglect the vital northwestern flank.
