THE ROLE OF TRANSPORT IN SOVIET-AFGHAN ECONOMIC RELATIONS

Created: 3/6/1956

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sssret

issemination Authorised Assistant Director Office of Current Intelligence

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THE ROLE OF TRANSPORT IN SOVIET-AFGHAN ECONOMIC RELATIONS

of Research and Reports CENTRAL INTELLIGENCE AGENCY

Thia aocument contains information within tlt Congress, i" tm hn

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FOREWORD

Soviet interest in Afghanistan has increased progressively in recent months. Since the imposition of border restrictions by Pakistan, the USSR has had an opportunity to extend its influence further Into the Afghan economy. art of this general effort has been the Soviet offer toAfghan foreign trade to transit the USSR. Because traditional trade routes had been effectively blocked, the offer was readily accepted. The purpose of this report ia to determine the extent of liability or advantage accruing to Afghanistan in implementing the agreement and to investigate the feasibility of continued Afghan adherence to thechange in normal trade patterns.

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SECRET

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CONTENTS

Summary and Concluaiona

I. Transport

U, Pattern of

III. Comparative Transport Costs

Table

Costs of Transport on Afghan Foreign Tradeto Afghanistan

Appendixes

Appendix A. Gaps in Intelligence

Appendix B. Source

Mat

Afghan Transport6 Inside

Back Cover

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ORR

ROLE OF TRANSPORT' IN SOVIET-AFGHAN ECQNfSgQ^TIOWfi*

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Summary and Concluaione

The limited transport system of Afghanistan is being increasingly oriented toward theestrictions imposed by Pakistan on the use of traditional rojite^'through the Khyber and Chaman PassesAfghanistan, to sign an agreement with the USSR which-permits Afghan foreign trade to transit the USSR at preferential freightubsequent relaxation of border restrictions byelaxation that would be expected to draw trade away from transiting the USSR, has not greatly diminished the growth of the implementation of thefghan transit agreement./'Some import requirements normally met by thVWeet sisibeing supplied by the USSR and,to some extent by the -European Satellites. .The Soviet Bloc is also taking more Afghan exports.

Generally lower transport costs accompanying the reorientationfghan trade both through and to the USSR facilitate extensiveof fhe transit agreement and greater acceptance of Soviet offers of direct trade. Continued emphasis on the-improvement of Afghan roads to the Soviet borderat least partly financed by Soviet -credit,ong-range intention of eliminating dependence on Pakistanoute 'for1'the foreign transit trade of Afghanistan. The resulting dependenceAfghan economy on the USSR will beto reverse, especially If it is. accompanied by disuse and neglect of traditional trade routes.

Network.

The estimates and conclusions contained in this report represent the best judgment of ORR as* Inside back cover.

transport system of Afghanistan, traditionally oriented toward the south and west, consists primarilyew roads connecting major cities and Joining essential border points with internal commercial Railroad and inland-waterway transport facilities do not exist in Afghanistan. Air service is limited to Internal service by the Aryana Airlines Company, Limited, and to international service by Airnce.weekly betwean^Kabul and Delhi and by Aerpflot.twiceiM Aeroflot service is for the mostourier flight, concerned with serving the Soviet Embassy in Kabul. The accompanyinghows the. principal roads in Afghanistan and the. surface transport facilities available in adjacent areas.

There are no all-weather roads in Afghanietah, because thesmall volume of traffic moving has not warranted'the large ex-necessary for their construction. Road maintenance >has irregular, and in the past it has been financed throughand World Bank fuhds. rogramof road improvementway in the northern"-part ofowever, is beingleast in part, by the Soviet government within the terms of abetween the two countries. The urgency of the programby the fact that, in a'major effort to, improve existingwith the Soviet border, the^Af^han government recentlyto northern Afghanistan all available road machinery notbeing used on priority

Road construction has-been repprted in progress,pn the Termessection of the main north-south route .and furtherthis route nearhumr'i. Recently the USSR has offered tothe following routes: Herat-Kandahar, Kelifharif, and

Other' significant developmerits'lnvoWinJ "'transportthe recently-undertaken consir'action of new port facilities atthe Amu Darya River along the northern border of tnethe buildingoad-to connect .the port with the Kunduzhich leads to Kabul. The construction cost of theborne by Afghanistan, andthe cost of port.improvewith the' Completion..of the connecttag; road:ore direct route to the Soviet,bo.rq'er from major Afghan.center^a'wool and cotton. General road improvement, to other pcJfntsthe Soviet border will allow Afghan import andotal of four Soviet border transshipping points overwill be superior to other roads in'the country. Byare only two available routes for Afghan foreign

II. Pattern of Traffic.

* For serially numbered source references, see Appendix B. he UTT.is the transit rate schedule for the Agreement OnRailroad Goods Traffichich governs transit traffic in the Sino-SovietSloc. Freight rates prescribed by UTT are lower than internal

Traditionally, the international traffic of Afghanistan has been oriented toward the West through Pakistan via the Khyber Pass and. the Chaman Pass. 2 percent of Afghan foreign, trade,erms of value, passed over these routes. The recent border dispute with Pakistan resultedirtual closing of the Khyber PaS's, thus denying Afghanistan access to its.principal foreign market. In order to alleviate this situation, Afghanistan was forced to seek anoute for its foreign trade. ransit agreement with the USSR'was concluded in5 allowing Afghan trade with Western markets transit the USSR at rates which are aboutercent below Sovietrates and which are similar to transit rates in effect within the Sino-Soviet Bloc under the Uniform Transit Tariff (UTT);

SEQRET

Sovfrakht*designated ai the Soviet agent to handle transport negotiations between Afghanistan and the Sino-Soviet Bloc, and an Afghan transport forwarding company was formed in5 to handle traffic incident to the tranaitagreeraent. The objectives Of the company are aso supervise the transport of goodsAfghanistan from tbe USSR ando conclude agree-incuts with Soviet economic establishments and other foreign companies for the transport of goods between the USSR and Afghanistan andfghanistan and other countries via the USSR,o prepare and maintain transport.records and agreements, concluded with domestic and foreign transport

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Recent reports indicate extensive implementation of the transit agreement despite the relaxation in5 of restrictions on transport over the Pakistan route. Diplomatic sources in Karachi have stated that Afghanistan has been diverting most of its transit trade with the West to the route through the USSR, Onwedish firm was directed to ship via Batumi all drilling materials included in its contract with the Ministry of Mines of Afghanistan. 6/ Moreover, Afghanistan was reported to have made an agreement in Octoberest German transport firm to ship goods destined for Afghanistan through the USSR. 7/ ignificantly large shipment of0 metric tons) destined for West Germany via Batumi reached the border point of Qizil Qala on tho Amu Darya River in October.

. Although .traffic with the West is continuing. Soviet-Afghan traffic haa.beenn the past, the USSR has taken "half of the Afghan cotton and* wool exports. ' however, the USSR contracted to purchaseercent of total wool production, .or virtually the entirecrop In addition to normal cotton imports, the USSR reportedly offered to take one-third of the crop awaiting export in/ Furthermore, Soviet offers to Afghanistanilling* neaa to supply all of Afghanistan's import requirements.

* Numerous reports indicateonsiderable volume of traffic also is developing between Afghanistan and the European Satellites under_the .terms of the transit agreement.

jAfghan trade with the Soviet Bloc, wiil develop "tremendously

in the near future. Most of this traffic is still in the process of negotiation.ew shipments have been reported. Forarge ahipmentof arma from Czechoslovakia reportedly arrived at the Soviet-Afghan border in

III. Comparative Transport Coats.

* Soyfrakht (AU-Uhiba-Aaaqciatton for Ship Chartering)oviet organisation canternedlwith-chartering Soviet and foreign vessels and .with organizing the movement of. goods ia transit across the: The table- follows.on pi,4Y,

The Government.of Afghanistan has-concluded that its foreign transit, trade can-move*more-cheaply and rriore quickly through tho USSR than through Pakistan,his conclusion: is. supported by estimates oftransport costs to the shipper, aB shown in the Table,hich

Costs of Transport on Afghan Foreign Trade Routes Adjacent to Afghanistan

York

New. York

Chelyabinsk

Machinery ew York

Textiles

New York

USSR ".

Hamburg

Hamburg

Batumi Kushka529

Karachi

y

Batumi Kushka

Karachi

Batumi

Karachi

Termez

till ^

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r *

.

of Transport on

n Afghan-Foreign Trade Routes AdjacentAfghanistan

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compares transpdrt costs incurred on alternative transport routes. be seen that cotton and wool, which are major Afghan exports,normal markets via the USSR at rates which are appreciablythose incurred through Pakistan. Although the cost ofanother important export item, is somewhat higher.-by wayUS$R, the difference in transport cost is negligible relative toof the karakul and is unlikely to exert much influence.on the

Transit costs involved in Afghan import trade are also lowerUSSR. Major import items such' as machinery and vehicles canmore cheaply via the Soviet route, and textiles can beapproximately the same cost as that incurred over the route ';

It is difficult to establish precise estimates of transport-costsbecause they are generally based on the transport distance the condition of the route. Costs'oad in poormaybe double.the;costsood road for the same distance. however, ihe domestic transport costs involved!in

Afghan export trade through the USSR should be less because the export commodities originate in areas which are; close to border and because the transport distances involved1 Jn trucking the Soviet border are shorter than those over traditional routesPakistan border. Because the conditions of the routes involved are the routing of this trade through the USSR may, ineduction in.internal transport costs. The. distribution of Afghan ' does.not in most casesistance advantage

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Traffic to and from the HelmandRiver valley (primarily fruitsand construction requirements of theowever, would'involvetransport 'costs if reoriented to the north, since it wouldiles to the Soviet border as againstiles towould bs to the advantage ofherefore; to, maintaintrade route through the ChamanPass for this traffic. for the important traffic of perishable fruit, .which! the USSR "la.to accept in competition with similar; domestic products, it.isecessity. As an alternative, the airlUUng of iruit toprincipal market, .would entail transport costsua-period would be prohibitively high in relation to the value of

Transport equipment would notimiting factor. It is estimated that there areotor vehicles in Afghanistan, most of which are trucks. Thie number is sufficient to. move total Afghanand export .traffic to and from the Soviet border, as well as within Afghanistan, for which it has beenrucks would be required. *

* Baaeday turnaround time, an average loadetric tons per truck, and an averageperable days per year per vehicle.

There are Indication! that Afghanistan intends to develop railroad transport, in which case physical transport limitations on traffic to and from the Soviet border would be minor and transport cost further reduced. Accordingecent report, Soviet railroad experts are scheduled to go to Afghanistan in the spring6 to discuss railroad An earlier report dealingzechoslovak-Afghan agreement mentiona the poasible construction by the Czechoslovaks of small-gauge railroad The total volume of traffic that wouldailroad connection to the USSR, however, does not now aaam sufficient to justify tha expenditure forroject.

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APPENDIX A

GAPS IN INTELl.ir.ffMf-F

Tha moil serious gaps In intelligence noticed in the preparation of this report were information on rate* charged for various commodities moving over internal Afghan routes andesser extent for transit movements to Weatern countriae via rail and aea. Timely detail is also lacking on the direction and volume of traffic Involved in Afghan foreign trade, particularly that with the USSR and lately with the European SateUltaa.

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APPENDIX B

SOURCE REFERENCES

lh" classification entry and designatedave the following algnlficance:

of Information

Doc.Documentary

ompletely reliable

aually reliable

airly reliable

D, -Not uaually reliable

ot reliable

annot be judged

Information

- Confirmed by other source.

- Probably true

- Possibly true

- Doubtful

- Probably false

- Cannot be Judged

and

andopies or translation, of such documentstaff

.ofeXtrBCtcd from Buch document,taff officer,

all of which may carry the field evaluation "Documentary.

M^^ValUa"bn' "ot otherwi" designated are those appearing on the

* of this report.

ith the evaluation on the cited document.

2.

. 5.

6-

; 7.

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10.

.fcJSval. RR 3.

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State, Kabul. Dsp 3, C. Eval. RRIA. * C. Eval. RR 3.

ZZZ-ZII6FF USE.

CIA7] nfoR 3.

^IA- I 9. St EvairRR 2.

ff?.

State, Karachi. u; Eval. RR 2.

13.

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USE. Eval. RR 2.

State, Kabul. abul. . S. RR 3.

State, Kabul.if;;RR 2.

.Yal.. nter-Poet-Ost,. Features and News from Behind the Ironol VII, U. Eval. RR 4.

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