The prime minister of Afghanistan, Mohammad Daoud Khan, pursued a foreign policy guided by two principles: balancing what he saw as pro-Western orientation on the part of previous governments by improving relations with the Soviet Union (without sacrificing U.S. economic aid), and pursuing the Pashtunistan [Pakhtunistan] issue by every possible means. Afghanistan agitated for the creation of a Pathan state, along the North-West Frontier of Pakistan. To some extent the two goals were mutually reinforcing when hostile relations with Pakistan caused the Kabul government to fall back on the Soviet Union and its trade and transit link with the rest of the world. Daoud believed that the rivalry between the two superpowers for local allies created a condition whereby he could play one against the other in his search for aid and development assistance.
In the face of Daoud's virtual obsession with the Pashtunistan issue, all other foreign policy issues faded in importance. In 1953 and 1954, Daoud applied more of his time-honored techniques to press the Pashunistan issue, such as payments to tribesmen on both sides of the border to subvert the Pakistani government as well as dissemination of hostile propaganda. In 1955, however, the situation became more critical from Daoud's point of view when internal politics forced Pakistan to abolish the four provincial governments of West Pakistan and form one provincial unit (the One Unit Plan). The Afghan government protested the abolition of the North-West Frontier Province (excluding the Tribal Agencies). The Pakistan border closure in between the spring and fall of 1955 again highlighted the need for good relations with the Soviets in order to keep transit routes open for Afghan trade.
When the Pakistan-Afghan border was closed for five months in 1955, Daoud's desire for improved bilateral relations with the Soviet Union stepped up a notch to a necessity. When the Iranian and United States governments declared that they were unable to create an alternate trade access route through Afghanistan, the Afghans had no choice but to request a renewal of their 1950 transit agreement with the Soviet Union. Ratified in June 1955, it was followed by a new bilateral barter agreement. After the Soviet leaders Nikolay Bulganin and Nikita Khrushchev visited Kabul in 1955, they announced a US$100 million development loan for projects to be mutually agreed upon.
Although the Afghans remained undersigned to accepting the status quo on the Pashtunistan issue, the conflict remained dormant for several years afterward (in which time relations improved slightly between the two nations).