Office of the Historian

111. Memorandum of a Conversation, Department of State, Washington, June 26, 19581

Washington, June 26, 1958

SUBJECT

  • United States-Afghan Economic Relations

PARTICIPANTS

  • United States
    • The Secretary
    • Mr. C. Douglas Dillon, W
    • Mr. William M. Rountree, NEA
    • Sheldon T. Mills, Ambassador to Afghanistan
    • Mr. John O. Bell, ICA
    • Mr. Frederick Bartlett, SOA
    • Mr. Armin Meyer, SOA
    • Mr. John Howison, SOA
  • Afghanistan
    • Sardar Mohammad Daud, Prime Minister of Afghanistan
    • Mohammed Hashim Maiwandwal, Ambassador of Afghanistan
    • Abdul Rahman Pazhwak, Permanent Representative of Afghanistan to the United Nations
    • Dr. Mohammed Yusuf, Minister of Mines and Industries

The Secretary recalled that on the previous day the Prime Minister had had discussion of economic questions with Messrs. Dillon and Smith. He asked what the prospects were for the Helmand Dam project.

Mr. Dillon stated that an aspect of this problem which requires prompt and careful study is that of how to make best use of the land irrigated from the Helmand. It appeared likely that a part of the land would lend itself to mechanized agriculture. The United States was attempting to get a team of highly qualified experts into the field to study this question. Another possibility was that of power development at Kajakai for distribution in the Kandahar–Quetta area. If this were found feasible, the next step would be to seek necessary funds. So far as the United States was concerned, the DLF was the most likely source. We recognize that the Afghanistan Government has for good [Page 235] reason decided against further foreign loans, and noted with gratification the Prime Minister’s statement that DLF loans to the private sector in Afghanistan would be permissible.

Mr. Dillon recalled that Prime Minister Daud had indicated that the Afghanistan Government was also facing a severe shortage of local currency. The United States might be able to help in this regard through delivery of consumer commodities under PL 480. Whereas previous PL 480 assistance to Afghanistan had emphasized wheat, it was possible that other commodities might also be made available. We were willing to consider these possibilities in an effort to work out a maximum, program.

With reference to an expression of interest by the Afghan Minister of Mines and Industries in petroleum exploration in the southern part of Afghanistan, Mr. Dillon stated that he would endeavor to arrange for the Afghan Minister, when the latter visits New York, to make contact with petroleum companies.

The Secretary and the Prime Minister agreed that there were no further economic questions for discussion at this time and that further interchanges regarding United States–Afghanistan economic cooperation could take place between the Government of Afghanistan and Ambassador Mills.2

  1. Source: Department of State, Central Files, 889.00/6–2658. Secret. Drafted by Howison.↩
  2. Following his official 3-day visit to Washington, Prime Minister Daud embarked on an 11-day tour of the United States, June 27–July 7. Additional documentation on the Daud visit is ibid., 033.8911.↩