Foreign Relations of the United States, 1964–1968, Volume XXV, South Asia

534. Telegram From the Embassy in Afghanistan to the Department of State¹

Kabul, June 12, 1965.

734. Joint Embassy/USAID Message. Ref: Deptel 342;² NESA action memorandum May 25;³ Embtel 732.⁴ I had two hour session with Prime Minister Yusuf morning June 10 to outline agreement in principle on Afghan aid program reached in Washington during my consultations. MinPlan Yaftali and Farhadi (FonOff) were with PriMin, and HVA head Wakil joined us for discussion HVA. DCM Brewer and AID Director Nucker accompanied me.

Began by explaining to PriMin I had been asked return Washington view completion IMF study, Nucker’s presence there and fact I already relatively near in Western Europe. Told Yusuf we had been able reach general agreement in three main areas and fourth miscellaneous category future USG aid RGA and said would like outline entire package prior discussing details. PriMin agreed.

Re PL 480 wheat, I reminded PriMin Afghanistan about only country in world still on Title II⁵ basis. We had agreed this would be continued for another year with program up to 150,000 tons if detailed studies supported. I noted questions higher deposit price, storage and transportation were among problems on which technicians would have to reach agreement and suggested this working level study begin promptly. PriMin expressed pleasure at news.

Re loan program, I referred request Yaftali letter⁶ and said we favored selective project commodity loan which would make maximum contribution in areas USG already assisting such as agriculture on which MinAg had appealed to me month ago. We also hoped such loan would encourage small industries in private sector. However, both imagination and administrative machinery would be required implement program properly. I suggested we get down to technical studies right away to determine how best use $2 million which being made available as first tranche but noted program capable of increments as need shown. PriMin asked whether as much as $4 million might be available in coming year if RGA could justify. Nucker explained details, adding if $2 million orders from farmers and businessmen right away then more possible. Yusuf expressed gratitude but noted program would not help foreign exchange problem. American prices were higher than elsewhere. I interjected American goods also better. PriMin agreed but added had hoped loan could be used for consumer goods. I told Yusuf frankly this was not possible but of course our suggested help would give RGA greater flexibility in use other funds. Nucker stressed our approach could be used soak up Afghanis from private sector and at same time assist agricultural and industrial development. I added use agricultural or industrial bank might result establishment of some sort revolving fund which might then prompt interest some American bank consider lending additional help. Told Yusuf we had been promised first priority on assignment advisor who could sit with bank manager and show him how make this program work. PriMin asked whether advisor might come soon to which Nucker replied as soon as RGA desired. PriMin indicated expert should come now.

Remaining three-quarters our discussion largely devoted HVA, I told PriMin we suggesting four-pronged approach: (a) special case re Arghandab; (b) equipment loan for ACU⁷ which might illustratively work in Shamalan; (c) BuRec team proceed in Darweshan and elsewhere prepare basis for subsequent loan applications; and (d) agreement in principle on Kajakai power. Informed Yusuf that, as rapidly as we could prepare drainage map Arghandab and get data on which contractor could base bid, we were willing get this going on special basis. We would also need examine irrigation gates and sluices so that both supply water and drainage regulated. PriMin asked who might do required survey. Nucker replied we thinking several experts might be added J.G. White contract save time. PriMin asked whether USG funds available for survey and construction. Nucker affirmed re survey but said construction would be on loan basis.

Re ACU equipment loan, I stressed urgency so ACU could get to work on HVA areas Afghans might choose. PriMin felt ACU work should be supplementary to that of US contractor brought in later. I agreed, assuring him funds would be available for equipment loan. Response Yusuf’s query re amount, Nucker said $4–5 million had been discussed. I told PriMin it was in this area that we would look to RGA provide men and money enable ACU start work on semi-classified land such as Shamalan. PriMin remarked he would have two thousand men trained as machine operators by next month, but said ACU could only help in total picture on limited supplemental basis.

Re BuRec, I told PriMin we would expect team continue work in other areas such as Darweshan on basis original concept full land classification needed justify subsequent incremental loans. However, we could be working on Arghandab and ACU on Shamalan at same time.

Turning Kajakai power, I informed PriMin USG agreement in principle loan this project. Nucker explained following steps: (1) as soon as RGA requested, we prepared make loan approximating $1 million for two 1500 kw diesel generators Kandahar; (2) in August pair experts would arrive work with RGA resolve problems remaining from Beck report and develop loan application for Kajakai power units; and (3) power distribution line, which already funded, going forward with Washington starting work with Harza re contract for project. PriMin said troubled lest whole power development be dependent on agreement particular arrangements re organization and foreign scholarship training. I commented Beck report total set recommendations some of which might not need be immediately implemented. PriMin stressed RGA unprepared spend substantial sums on loan basis on foreign scholarships. I cautioned him total program must incorporate enough of Beck and related suggestions to assure that power system we were helping provide could be operated. PriMin stressed need begin construction immediately rather than waiting five years and opined Beck schedule should be accelerated. With USG agreement in principle now in hand he felt necessary technical details could be worked out. I urged Yusuf not dismiss training aspects project lightly. Yaftali asserted in the past training had always been on grant basis.

Re miscellaneous category, told PriMin I had feared foregoing might have required sacrifice something else in program but was happy assure him this not so. HIQ⁸ and AID could go forward on schedule.

Additionally, where RGA had development schemes which required equipment for exploitation, such as coal mines, USG prepared under certain conditions consider equipment loans. One condition would be some American management. I mentioned both Dar-e-Suf and Herat locations and said we happy discuss if RGA interested.

In subsequent general discussion PriMin sought fix clearly in mind what USG proposal meant in terms HVA. Said he accepted proposals re Arghandab and need for ACU equipment loan application but asked what proposed re other HVA areas including Shamalan, Darweshan, Nadi Ali, Marjeh and Tarnak. I replied additional investment Nadi Ali probably unjustified. Tarnak and Darweshan would require land classification as prelude loan application. Wakil noted quality Arghandab land similar Darweshan-Shamalan. Difference was more settlers Arghandab with greater skill. Would be pity tackle Arghandab now and “forget about” Darweshan and Shamalan. Nucker commented Arghandab had Washington approval in principle, since land being preserved required different technical and legal tests than undeveloped land. Re-equipped ACU could get started on Shamalan with our guidance while elsewhere land classification and project planning would be down. Soon as ten thousand acres or more found meet USG legal requirements development loan application could be submitted.

Yaftali asked whether private contractor could not do Darweshan survey. Nucker replied yes on loan basis. PriMin stressed RGA would not apply for loan for survey work. Wakil argued for private contractor do survey work as most efficient. Brewer noted past disappointing rate BuRec progress in large part due failure HVA lend proper support. Nucker felt BuRec could be instructed concentrate its efforts and, with necessary HVA support, would do as well as private contractor. I said would be difficult shift from BuRec entirely without creating confusion and misunderstanding. Wakil replied BuRec could oversee quality contractor’s work. PriMin emphasized RGA concerned lest work be delayed as in past. Inquired how long survey Arghandab would take. Nucker replied should not take excessive length of time. Wakil disagreed, noting permeability study and similar work needed in addition to drainage pattern. PriMin again inquired why private contractor could not do work under BuRec supervision. Wakil added could not understand why grant money available for BuRec survey but not for survey by private contractor. Yaftali cited fine RGA experience with private contractors such as MK and AHC.

I told PriMin we had great faith in entire package and accordingly hoped RGA would leave to us matter of assuring BuRec moved with appropriate speed and momentum. PriMin wondered whether contract could be drawn up with either BuRec or J.G. White giving timetable within which work to be finished. I remarked might be possible get Arghandab out of way in three years. Nucker added elsewhere might do twenty thousand acres a year. PriMin seemed satisfied and inquired re steps to be taken following this meeting. Nucker said staff would spend considerable time with HVA and would ascertain who should make Arghandab study and how long it would take.

In summing up, PriMin expressed hope program would be workable as proposed. While it did not meet all RGA had asked, it showed USG good will and cooperative spirit. He was pleased some work could start promptly to overcome frustrations all sides had experienced. Work would be done certain areas as outlined with remaining land being completed on basis twenty thousand acres a year.

PriMin then said Herat-Kandahar road would be open in two months and inquired re status HIQ. Nucker replied detailed specs being prepared Livorno and hoped contractor might mobilize during winter, start construction next spring and finish in one year. PriMin expressed appreciation and again said how pleased he was work could start promptly on HVA.

Comment: While obviously not meeting RGA wishes on all points, believe our presentation package did succeed convincing PriMin USG determination move ahead more rapidly than in past, notably re HVA which to him is all important. Afghans still would prefer faster rate development which they think possible through private contract arrangement. They have, however, accepted our proposals as basis for moving forward. We can now get down to detailed work and I would hope will be able demonstrate on continuing basis that any further delays in implementation will be RGA responsibility, not ours. To this end, CT will do all it can see foregoing schedule carried out, and I urge maximum continued support appropriate Washington agencies to achieve this end.

Steeves

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) AFG. Confidential. No time of transmission is on the telegram.
2. Telegram 342 to Kabul, May 28, from Ambassador Steeves, who was in Washington for consultations, described the program for aid to Afghanistan that had been tentatively agreed upon and suggested the Embassy request that the Afghan Government withhold any policy decisions on the Helmand Valley until after his return. (Ibid.)
3. Not found.
4. In telegram 732 from Kabul, June 10, Ambassador Steeves reported that the package agreed upon during his Washington consultations had been favorably received by the Prime Minister and his associates. (National Archives and Records Administration, RG 59, Central Files 1964–66, AID US–AFG)
5. Title II of P.L. 480 authorized the transfer of surplus agricultural commodities on a grant basis.
6. See footnote 2, Document 531.
7. Afghan Construction Unit.
8. Herat-Islam Qala road.