Office of the Historian

544. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1

Washington, June 7, 1967.

SUBJECT

  • Afghanistan—Loan for Kajakai Hydroelectric Plant

Here is the request for your formal approval of a $12 million loan to Afghanistan to finance the installation of additional generating equipment at the Kajakai dam in the Helmand Valley, with which we’ve been associated for many years. When Ambassador [Prime Minister] Maiwandwal was here in early April, you advised him we would decide on the loan within thirty days, but AID has given it a most thorough going over.

After careful review, they concur that it is economically sound. If you approve this loan, actual construction will not be started until satisfactory progress is made toward improving accounting procedures, the rate structure and the collection of payments in their electrical industry.

Secretary Fowler agrees the balance of payments effects of the loan are minimal.

It would create a political problem if we turned it down now. We have done three feasibility studies and already in 1965 told them we “agreed in principle” to finance it.

[Page 1078]

Charlie Schultze agrees with Bill Gaud we should go ahead.2 I recommend you approve.3

Approve Kajakai

Disapprove

See me

AID has also been holding off on a $4.5 million equipment loan for earth-moving machinery to be used in building irrigation works in the Helmand Valley. This small a loan would not normally come to you, but AID has held it up ever since you put a freeze on all Afghan aid. They would like to go ahead now. I recommend we proceed.

Yes on small loan

Disapprove

See me

W.W. Rostow 4
  1. Source: Johnson Library, National Security File, Memos to the President, Walt Rostow, Vol. 30, June 1–12, 1967. Confidential.↩
  2. Schultze recommended approval in a May 29 memorandum to the President. (Ibid.)↩
  3. In both cases, the last option is checked and 6/8/67 is handwritten in the margin. Telegram 214155 to Kabul, June 22, states that the two loans had been approved. (National Archives and Records Administration, RG 59, Central Files 1967–69, AID (US) 9 AFG)↩
  4. Printed from a copy that bears this typed signature.↩