SOVIET AND EAST EUROPEAN AID TO THE THIRD WORLD, 1981

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CIA-RDP08S01350R000601960004-2
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K
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30
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December 22, 2016
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March 14, 2012
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4
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February 1, 1983
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REPORT
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Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 United States Department of State Soviet and East European Aid to the Third World, 1981 February 1983 STAT Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Department of State Publication 9345 Bureau of Intelligence and Research Released February 1983 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 United States Department of State Soviet and East European Aid to the Third World, 1981 February 1983 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Soviet and East European Aid to the Third World, 1981 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Soviet and East European Aid to the Third World, 1981 Summary Warsaw Pact countries signed $8 billion worth of military agreements with Third World countries in 1981, down sharply from the record $15 billion in orders in 1980. Soviet and East European economic aid pledges to Third World countries also declined dramatically in 1981 to a little more than $1 billion. The decline in military agreements was entirely attributable to a drop from $14 billion to $6 billion in Soviet military sales, as major clients absorbed heavy equipment deliveries' under previous contracts. Traditional clients in Africa, the Middle East, and South Asia accounted for 95 percent of new Soviet orders. Moscow added Jordan and Nicaragua to its list of military customers in 1981. East European military sales of $2 billion (almost all to the Middle East) nearly tripled the 1980 sales record. Soviet economic assistance dropped to a four-year low of $450 million as several major negotiations dragged on without final agreement. We do not believe this drop reflects reduced Soviet interest in its foreign economic program. Most of the 1981 Soviet economic credits went to small clients, were trade associated, and carried harder repayment terms. East European economic assistance also dropped dramatically, to $665 million. The data on economic and military agreements reflect the latest information available and supersede data in our previous publications. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Contents The Military Assistance Program in 1981 3 North Africa: An Integral Part of Moscow's Arab Policies 9 South Asia: Invasion of Afghanistan Clouds Relationship 10 Central America and the Caribbean: Penetration Activities Increase 11 South America: Trade Considerations Drive Aid Program 12 Sub-Saharan Africa: Bases Primary Soviet Concern 12 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 1. USSR and Eastern Europe: Military Agreements With LDCs, 1981 2 2. USSR and Eastern Europe: Military Deliveries to LDCs 2 5. Eastern Europe: Economic Aid Extended to LDCs, 1981 4 6. USSR and Eastern Europe: Military Relations With Non-Communist LDCs 4 7. USSR and Eastern Europe: Military Technicians in LDCs, 1981 14 8. USSR and Eastern Europe: Training of LDC Military Personnel in Communist Countries, 1955-81 15 9. USSR and Eastern Europe: Economic Credits and Grants to LDCs, Extended and Drawn, 1954-81 16 10. USSR and Eastern Europe: Economic Aid Extended to Non-Communist LDCs, by Country 17 11. USSR and Eastern Europe: Economic Technicians in LDCs, 1981 20 12. Academic Students From LDCs Being Trained in the USSR and Eastern Europe as of December 1981 22 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Soviet and East European Aid to the Third World, 1981 Warsaw Pact agreements in 1981 continue a post-World War II pattern of aggressive- ly building Communist political, military, and economic influence in the Third World. The Communist programs emphasize mili- tary rather than economic aid and focus on a few key countries. Throughout the last three decades, Moscow's basic objectives have remained unchanged: (a) to erode Western influence and substitute its own, (b) to persuade Third World countries that the Soviet economic model offers a solu- tion to their economic problems, (c) to establish military and political bases from which to project Soviet power, and (d) to gain access to strategic raw materials. East European countries have pursued similar aims in LDCs, and their economic and military programs have complemented those of the USSR. The Soviet Military Program Moscow's $6 billion of new military agree- ments in 1981 brought the value of its Third World military agreements to $70 billion over the past 26 years. Soviet arms sales have been heavily concentrated on a small number of countries-primarily those that are strategically situated and/or have friendly governments. The largest share (95 percent since 1955) has gone to nations on the Soviet border and to radical North African and Middle Eastern states such as Algeria, Libya, and Syria. A num- ber of them-notably Afghanistan, Alge- ria, Iraq, Libya, and Syria-have equipped their military forces largely with Soviet arms and remain dependent upon Moscow for parts, supplies, and servicing. The Economic Program Moscow still considers economic aid a useful tool for expanding Soviet influence in the Third World despite the loss of much of the early political dynamism of its pro- gram, which now emphasizes economic criteria rather than political criteria in de- termining what countries will receive aid. Because of its early emphasis on large, showy projects in the industrial sector- projects that often had been turned down by Western donors because of question- able economic returns to the client-the USSR's aid has often gained a reputation not warranted by its size. Indeed, the USSR accounts for less than 3 percent of international aid flows to non-Communist LDCs. Still, the USSR gained entree into Egypt, India, Iran, Syria, and a number of other countries through its economic pro- gram, and these ties endure even when other relationships wither. More recently, Moscow has pressed for broad, long-term cooperation agreements with all of its major LDC clients to synchro- nize their planning cycles with Moscow's. These open-ended, nonbinding agree- ments are designed to provide a firmer Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 1 USSR and Eastern Europe: Military Agreements With LDCs,1981 Total a 6,060 2,030 North Africa 650 Sub-Saharan Africa 1,910 5 Latin America 105 10 Middle East 3,505 1,365 South Asia 535 5 a Because of rounding, components may not add to totals shown. Table 2 USSR and Eastern Europe: Military Deliveries to LDCs 1977 4,740 355 1978 5,705 550 1979 7,615 635 1980 6,290 525 1981 6,445 775 Table 3 Military Technicians in LDCs,1981 a Total 16,280 1,925 39,175 b North Africa 4,000 600 50 Sub-Saharan Africa 4,535 765 36,910 Latin America 165 60 1,715 Middle East 5,425 500 500 South Asia 2,155 NA aNumbers are rounded to the nearest 5. b Includes combat units in Angola and Ethiopia. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 economic base for long-term planning by client countries, while increasing the USSR's assurance of a stable flow of raw materials. Over the past 27 years, East European countries have pledged nearly $12 billion of aid to more than 60 countries, of which The Military Assistance Soviet Arms Sales Slip Program in 1981 Moscow continued as a major supplier of weapons systems to the Third World in 1981,' despite a sharp drop in contracts to $6 billion from the record $14 billion in 1980 (table 1). Moscow's military sales program scored important gains in the Middle East, the Caribbean, and in key black African states. The Kremlin added Jordan and Nicaragua to its list of arms clients and received record reorders from Syria. We had anticipated the falloff in new agreements last year from the record-shat- tering 1980 sales of $14 billion since: ? Some major buyers stayed out of the market to absorb large delivery backlogs from record orders placed in 1979-80. ? Moscow would not sign large new weap- ons contracts with Iraq and Iran because of the war. Moscow made inroads into new markets in 1981 with its first arms agreements with Jordan and Nicaragua. Soviet officials un- doubtedly consider their sale of air defense equipment to Jordan a major break- through among conservative Arab customers. ' Includes aircraft, ground armaments, missiles, and naval craft. $4.3 billion has been disbursed. The com- mercially oriented East European program, which usually provides financing for equip- ment purchases rather than large, high- visibility projects, has not had much politi- cal impact in LDCs. Arms Deliveries Second Highest on Record In contrast to sales, Soviet equipment de- liveries rose slightly in 1981 to $6.4 billion, pushed by transfers under multibillion-dol- lar contracts signed with major clients in 1979-80 (table 2). Since the mid-1970s, the growing arms buildup in the Middle East financed by oil money has meant that Arab countries have overwhelmingly domi- nated the Soviet arms supply program. Military Technical Services: An Expanding Presence Military programs in the Third World re- quired the services of 57,400 military per- sonnel from the USSR, Eastern Europe, and Cuba in 34 Third World countries during 1981, 8,700 more than in 1980 (table 3). The Soviet presence continues to focus on advisory and training functions in Africa and the Middle East. The Soviets have played a key role in improving the capabilities of established clients-mainly Algeria, Angola, Ethiopia, Libya, and Syr- ia-with a pervasive advisory and techni- cal presence that sometimes reaches down to the company level. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 4 USSR: Economic Aid Extended to LDCs 13,060 430 1978 3,000 1979 3,345 1980 2,070 1981 450 Table 5 Eastern Europe: Economic Aid Extended to LDCs, 1981 355 30 Table 6 USSR and Eastern Europe: Military Relations With Non-Communist LDCs Total a 1955-71 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 USSR Eastern Europe USSR Eastern Europe 08,415 7,630 49,415 4,905 8,615 1,115 6,920 1,040 1,680 155 1,215 75 2,890 130 3,135 130 5,735 600 2,225 210 3,205 635 2,045 280 6,100 355 3,085 335 9,335 650 4,740 355 2,520 565 5,705 550 8,360 675 7,615 635 13,915 710 6,290 525 6,060 2,030 6,445 775 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 USSR: No New Directions The USSR's economic program fell to its lowest level in the past four years with only $450 million in new credits to a few small recipients (table 4). Following recent pat- terns, the USSR's new credits in 1981 were designed primarily to promote the sale of Soviet equipment and were less concessionary than traditional develop- ment aid that allows 12-year payments at 2.5- to 3-percent interest. The decline in Soviet extensions this year does not reflect reduced Soviet interest in its economic program. Rather, negotia- tions were under way on several billion dollars in projects at yearend, which, if completed, could have upped the total close to earlier levels. For example, various press sources report that the USSR signed a $2 billion accord with Angola early in 1982 that calls for large, new credits to development projects. In 1981 the bulk of Moscow's new aid went to hitherto small recipients of Soviet economic assistance. The USSR provided a well-publicized grant of 20,000 tons of wheat (to replace US supplies) and $75 million of other aid to Nicaragua-Mos- cow's largest economic commitment in 1981-for developing agriculture and communications. The development credits are the first specific allocation of Soviet aid to Managua and come under the broad, open-ended framework accord of 1980. Moscow also extended a 10-year, $70 million credit to Bangladesh, under their trade agreement, for two 110-MW genera- tors to expand the Soviet-built Ghorosal electric plant. The USSR signed contracts with India and Turkey, allocating credits under earlier agreements to projects in metals process- ing. India received permission to use $350 million of outstanding credits to finance a blast furnace complex at Visakhapatnam. Moscow approved $200 million under a 1975 Soviet-Turkish accord to expand the Soviet-built aluminum complex at Seydise- hir, and Soviet officials continued negotia- tions with Ankara for expanding the Isken- derun steel mill. The USSR will receive payment in output from these plants, an arrangement that is becoming increasingly beneficial to the beleaguered Soviet econ- omy. Moscow's large new allocations to India and Turkey for steel and aluminum development underline the importance the Soviets have long placed on aiding Third World public-sector minerals and metals industries. Eastern Europe: Promoting Business Interests East European economic agreements with 13 diverse Third World clients totaled $665 million in 1981, one-half the previous year's level (table 5). While East Europe- an countries did not provide new aid to their major Middle Eastern clients, they were able to capitalize on unsettled events to promote commercial relationships (al- ways the major aim of the aid program) without the use of credits. At least 100,000 b/d of barter oil flowed to Eastern Europe in 1981 from Iran and Iraq (despite their production cutbacks) in return for military and industrial goods, food, and consumer items. Growing hard currency shortages, as the costly war dragged on, assured even more comprehensive barter deals with Baghdad and Tehran that will help alleviate severe hard currency shortages in Eastern Europe. Disbursements Still High Soviet deliveries of project and commodity aid under earlier agreements sustained their momentum in 1981, although they dipped from the record level achieved in 1980, when grant consumer goods and food to Afghanistan raised total aid dis- bursements to $810 million. Support to Afghanistan and Ethiopia kept disburse- ments in 1981 well above levels in previous years. The USSR did not begin any major Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 new projects in LDCs in 1981. East Euro- pean disbursements recovered somewhat from the five-year low of 1980 but still did not reach levels set in the mid-1970s, because: ? Economic deterioration in Poland forced Warsaw to renege on some project commitments. ? Romania has completed $350 million worth of projects in Syria that kept deliv- ery levels high for several years. ? Programs in Iran and Iraq were curtailed because of the war. Technical Services: A Source of Ready Cash The Soviet Bloc technical presence in the Third World rose to a record high of 115,000 personnel in 1981, a 15-percent jump from the previous year. For the USSR and Eastern Europe, the civilian technical services program is one of their most prof- itable undertakings in LDCs. From a small effort employing only a few hundred peo- ple in the 1960s, it has evolved into a high- visibility program involving 96,000 Soviet and East European technicians in 75 coun- tries in 1981. About two-thirds of these personnel were working in Arab and other countries that pay hard currency for services. Academic Training: The Most Concessional Program About 72,000 students from LDCs were enrolled in universities in the USSR and Eastern Europe at the end of 1981, over one-half in the Soviet Union. Students from African countries made up nearly one-half of the total. Both Soviet and East Europe- an scholarship support was heaviest to Marxist LDCs, whose personnel accounted for one-third of all students from develop- ing nations studying in the USSR and Eastern Europe. European Communist countries provide most academic training to LDCs free of charge. Students are awarded full scholar- ships, which cover subsistence, living quar- ters, tuition, and transportation. Some East European countries value this assistance at the equivalent of $10,000 per student per year. We believe that the USSR, in particular, views its academic program as a potential- ly high-yield effort. Scholarships have fa- vored African countries (50 percent) , touching 50 of them on that continent. For many African countries, the Soviet scholar- ship program is Moscow's only aid effort. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Economic and Military Programs: A Regional Analysis The Middle East: New Opportunities for Moscow Selling arms to Jordan and successfully balancing its aid program among regional antagonists were the most notable accom- plishments of the USSR's efforts in the Middle East in 1981. Military sales to the region, the most important asset of Mos- cow's Middle East policy, rebounded strongly to $3.5 billion, the third-best year ever. For the third year, Moscow sent more than $3 billion worth of modern armaments into the Middle East. Economic Aid Slips to 20-Year Low Commercial interests (always close to the surface in Communist aid relations with Arab countries) took the lead in Bloc economic relations with Middle Eastern customers during 1981; for the first time in nearly two decades, the USSR and its European allies did not promise new eco- nomic aid to a major Middle Eastern client. Only North Yemen received new aid. Mos- cow also allocated $200 million under an earlier framework agreement with Turkey to expand the Seydisehir aluminum com- plex. Nonetheless, Soviet and East Euro- pean willingness to supply food and other consumer goods to Iran and Iraq paid handsome dividends in a resumed flow of oil and burgeoning trade. Trade data show that Soviet exchanges with Iran were re- stored to prerevolutionary levels-$1.1 bil- lion-and Moscow received 2.5 million tons of Iranian oil (shipped to India). Egypt Just before his death, President Sadat surprised Moscow in September by expel- ling some 400 Soviet economic and some diplomatic personnel (including the Am- bassador) for alleged involvement in sub- versive activities. Sadat also announced the canceling of all outstanding contracts between the two countries and closed military offices in Cairo and Moscow. Presi- dent Mubarak at the end of the year requested the return of Soviet personnel needed for the operation of Soviet-built facilities, such as the Aswan dam, the Asyut cement plant, and the aluminum plant at Nag Hammadi. Mubarak also lifted the ban on cotton sales to the USSR and Eastern Europe imposed by Sadat in 1977. Iran Tehran guardedly expanded its relations with the USSR to gain access to badly needed military equipment and technical assistance, industrial products, and com- modities for its faltering economy. The Khomeini regime reportedly signed a new military agreement and asked Moscow to accelerate work on several ongoing devel- opment projects. Nonmilitary trade was restored to prerevolutionary levels because Iran sold its first oil to the USSR (40,000 b/d for India) as a substitute for gas that was used until 1980 to settle accounts. Although Iran and the USSR were not able to resolve pricing problems to restore gas deliveries to the USSR, the two sides re- sumed discussions on development pro- jects under at least $1 billion in agree- ments signed with the Shah. According to the Soviet news agency, TASS, work will begin soon on two power and irrigation dams on the Araks border river, a mining machinery plant at Kerman, and a welding electrodes plant. More than 2,000 Soviet personnel were back at work after Iranian forces managed to secure Soviet project sites that were under attack by Iraq. They activated two smelters at the Isfahan steel plant, stepped up work on the Isfahan power plant, and completed electrification of the Tabriz- Julfa railway under a 1968 agreement. Press reports indicate that the USSR agreed in May to accept more transit goods for Iran, and assigned personnel and locomotives to the Iranian railway or- ganization to help clear backlogs at the Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Iranian border and to get Soviet and West- ern transit goods flowing more smoothly into Iran. Improved transport facilities, along with the USSR's first Iranian oil deliv- eries, restored trade to $1 billion in 1981, about the level reached before the Kho- meini takeover. Iraq The USSR's influence with the ruling re- gime in Iraq was severely eroded by Bagh- dad's belief that Moscow had let it down at a time when its arms requirements had been most urgent. In fact, the Soviets maintained a complete embargo on arms shipments until the early spring, but they did endorse East European arms agree- ments with Iraq. Hastening to cash in on lucrative trading opportunities, the USSR and Eastern Eu- rope concluded several large commercial contracts with Iraq in 1981. Soviet exports topped $1.2 billion in spite of Iraq's refusal to allocate any of its limited oil exports to the USSR in return. In the past, Moscow had made a considerable profit in reex- porting barter oil from Iraq to hard curren- cy customers in Europe and elsewhere. Moscow probably was able to clear the 10,000-ton backlog of Iraq-bound equip- ment that piled up after the closure of Iraqi ports in 1980. Still, activity on projects did not reach prewar heights as Iraq's costly war with Iran (estimated at $1 billion a month) drained resources from development. Romania maintained the fast pace of activ- ity that has made it Baghdad's most im- portant East European partner with con- tracts to assist power and petroleum development. According to press reports from Sofia, Bulgaria offered aid to airport construction and other communications projects and signed a trade protocol call- ing for exports to reach $350 million in 1982. Hungary signed a contract to supply $20 million worth of cold storage facilities, while 8,000 Polish technicians worked on a variety of projects under technical services contracts. Jordan Moscow's $200 million sale of air defense equipment to Jordan provided the USSR with a long-sought breakthrough in rela- tions with this moderate Arab state. Mos- cow is expected to begin military deliveries to Jordan in second-half 1982. Syria Damascus remained one of the most im- portant elements in Moscow's Middle East policy in 1981. The mutually supportive relationship, formalized in the long-term Treaty of Friendship signed in October 1980, was reinforced by a large new arms agreement calling for the introduction of new missile systems, advanced aircraft, and tanks. Communist countries continued their broad-based effort in Syria's economic sector with 4,100 personnel working on projects under $740 million of outstanding credits. European Communist countries signed agreements for trade valued at more than $3 billion over the next five years, and an estimated $500 million in new development contracts, repayable in Syrian goods such as petroleum, phos- phates, and cotton. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 The USSR also signed protocols to contin- ue prospecting for the Communist-built oil industry, handed over the 750-kilometer Latakia-Qamishlie rail line and began ne- gotiating further rail construction that will enable Syria to develop the port of Banias. North Africa: An Integral Part of Moscow's Arab Policies Algeria and Libya demonstrated both di- rect and indirect support of Soviet foreign policy objectives last year. Both stepped up assistance-military and financial-to the Marxist regime in Nicaragua, in concert with expanded Soviet and Cuban aid pro- grams. The escalation of Libyan activities aimed at undermining moderate Arab and African Governments also serves Soviet interests. Colonel Qadhafi's tripartite co- operation agreement with Ethiopia and South Yemen had Soviet encouragement and should facilitate coordination of Mos- cow's interests between these three major arms recipients. Soviet economic and commercial ties with other North African countries were strained by the USSR's indirect support to the Polisario rebels fighting Moroccan rule in Western Sahara and disapproval of the USSR's occupation of Afghanistan. De- spite these problems, Mauritania signed a joint venture fishing agreement under ne- gotiation since 1979, and Tunisia permit- ted continuing access to ship repair facili- ties at Menzel Bourguiba. In Morocco, work proceeded on the multibillion-dollar Meskala phosphate project. East Europe- an business activities were not affected by Soviet actions. Algeria Moscow's economic relationship with Al- geria took on new dimensions with several hundred million dollars of agreements to construct priority projects in Algeria's cur- rent five-year development plan. Terms for these new agreements were not revealed. The USSR also is considering aid to Alge- ria's extensive planned railway construc- tion and to the minerals industry. Libya Libya is by far the USSR's largest Third World arms client, having purchased about $15 billion of military materiel from the USSR since the 1973 Middle East war. About one-half of these purchases have been delivered and include a wide variety of advanced ground forces weapons, fight- er aircraft, air defense systems, and naval vessels. Although Colonel Qadhafi's mas- sive defense procurement project has giv- en Libya one of the largest and most modern inventory of arms and equipment in Africa, shoddy maintenance and storage practices seriously impair its operational readiness. The Communist economic effort in Libya has been nearly as large as the military program and just as profitable. Commer- cial construction and services contracts are valued at several billion dollars, and there were no cutbacks in development projects in 1981 in spite of Libya's worsen- ing cash flow problems. Even as several major projects drew to a close, Moscow deepened its involvement in Libya's economy with contracts to con- struct a nuclear power plant at Surt and to participate in the second stage of the Misurata steel complex. The number of East European technicians employed in Libya soared to 30,000, supplementing lucrative equipment sales to Tripoli with hard currency earnings from technical services. Morocco East European countries have adopted a noncontroversial posture on the Western Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Sahara and pursued low-key commercial exchanges of goods and services for Mo- roccan phosphates. Technical assistance was the mainstay of most East European programs as nearly 2,200 teachers, doctors, and other person- nel worked in Morocco during the year. Romania offered to expand construction activities to include an airport, a steel mill, hydropower plants, and road projects. Bul- garia offered joint ventures in lead, zinc, and silver production under a December protocol, while Hungary agreed to provide silver-refining equipment valued at $1.5 million. South Asia: Invasion of Afghanistan Clouds Relationships European Communist initiatives in South Asia during 1981 were tempered by con- tinuing adverse South Asian political reac- tions to the Soviet occupation of Afghani- stan. Area leaders were alarmed by Moscow's military support of the Marxist regime in Kabul. To counter Soviet pres- sures, they emphasized their already warm ties with China and the West. Pakistan also enlisted the political and financial support of the moderate Arab states. Afghanistan The military takeover in Afghanistan has forced Moscow to augment its already large aid commitments to shore up the Afghan economy and rebuild the military structure. Moscow's political stake in Afghanistan is underlined by its unprecedented $800 mil- lion of economic support to the Marxist government, one-half of it free of charge. Moscow is refashioning Afghan Govern- ment institutions along the Soviet model by placing hundreds of advisers in ministries and financial institutions. The USSR also has tied Afghanistan's economy more closely to its own by monopolizing trade and developing industries whose produc- tion is oriented toward the Soviet econo- my. Among the hundreds of agreements announced during the year, the most nota- ble were: ? A five-year trade agreement (1981-85) designed to triple trade over the 500- million-ruble level of 1980. ? An agreement to proceed with transpor- tation and servicing facilities that will almost certainly be used to supply Soviet troops. ? A contract to deliver 150,000 tons of wheat as a grant. ? An agreement to supply 300,000 tons of petroleum products. The USSR continued work on oil and gas development, the half-billion-dollar Ainak copper complex, and agricultural develop- ment and processing projects. Soviet tech- nicians also started work on a $200 million power transmission project; on straighten- ing border rivers; and on truck mainte- nance, bridge, railway, and oil storage facilities that will support the Soviet military presence. East European countries have actively sup- ported Soviet aims in the country with $170 million of credits since the Marxist takeover to finance agriculture and indus- try. Czechoslovakia agreed to refurbish the US-built Helmand Valley irrigation project and had delivered half of the equipment necessary by yearend. Bulgaria worked on agriculture and processing projects, while East Germany delivered communications and power equipment. India Under its economic program, the USSR focused on projects to be constructed during India's Sixth Plan (1980-85) with some $800 million of outstanding Soviet credits. Contracts were signed for: (a) $350 million of equipment for a 3-million- ton steel complex at Vishakapatnam, (b) Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 a dam and irrigation project using experi- mental blasting techniques in Himachal Pradesh, (c) oil prospecting over the next 10 years, (d) a comprehensive power development plan for Madhya Pradesh that will take five years to complete, and (e) coal development that could result in an annual production increase of 50 million tons. Work proceeded on modernization of the Bhilai and Bokaro steel plants, and the 6-million-ton Mathura oil refinery began trial production. The two countries also continued to explore opportunities for Indi- an participation in Soviet projects abroad. East European countries focused on ex- panding trade by selling industrial plants. Czechoslovakia offered to participate in metallurgy and power development pro- jects, particularly through the Czech-built Bharat heavy electrical equipment plant. Romania won a contract to build an iron ore pelletizing plant. Hungary plans to build a heavy truck manufacturing facility, while Bulgaria agreed to expand economic and commercial ties. The USSR agreed to provide military equipment to Afghanistan and India. In addition, Moscow provided new economic aid to Afghanistan ($25 million in com- modities) and Bangladesh ($70 million for a power plant). East Asia: Resisting Soviet Political Overtures The USSR's continued occupation of Af- ghanistan, its support of Vietnam's aggres- sion in Kampuchea, and its military pres- ence in Vietnam puts it at odds with most nations in East Asia, and Moscow's politi- cal overtures during the year were largely rebuffed. East European countries, whose $665 million credit program in the area has always been designed to promote their commercial interests, expanded ex- changes of equipment for raw materials. Latin America Central America and the Caribbean: Penetration Activities Increase Communist countries intensified their aid activities last year to strengthen leftist re- gimes in Central America and the Caribbe- an. These countries accounted for almost all of the Communist military agreements and one-half of the economic commit- ments to all of Latin America. Nicaragua was the main recipient, signing agreements for $100 million in military assistance and nearly $200 million in economic aid. The Cubans, acting to consolidate their own influence as well as to serve Moscow, dispatched 2,000 more technicians to the Caribbean and Central America in 1981, accounting for most of the 50-percent increase (to 6,900) in the Communist presence over 1980. Nicaragua. The Soviet Union actively ex- ploited new opportunities to forge military and economic aid ties with Nicaragua in 1981, signing new military agreements and providing $80 million in economic aid un- der a 1980 framework agreement that calls for assistance to agriculture, fisheries, min- ing, and energy. In an unusual move, the Soviets provided 20,000 metric tons of wheat in the spring as a grant, which, together with 60,000 tons of free grain from Bulgaria and East Germany, more than made up for the cancellation of P.L. 480 grain deliveries for 1981. In July the USSR allocated $50 million in 10-year credits for the purchase of agricultural, roadbuilding, and communications equip- ment, which already has begun to arrive in Nicaragua. The USSR also has sent six research vessels to conduct an extensive survey of Nicaraguan fisheries resources. Nicaraguan press reports indicate that Ma- nagua is negotiating for Soviet participa- tion in a 180-MW hydropower project. Clearly supporting Moscow's initiatives, East European countries provided upward Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 of $40 million in new economic commit- ments as well as an estimated $20 million in short-term financing for commodities and raw materials. The new pledges bring Communist commitments since the leftist takeover in 1979 to $170 million. East Germany has been the most active under a program that began in 1979, providing food and aid to public health. Bulgaria appears ready to move rapidly on $25 million in aid for agriculture, industry, and mining promised in 1981 and is negotiating an additional $30 million for power devel- opment. Cuba provided $70 million in new aid, mostly to support the activity of 4,000 teachers, doctors, and other civilian personnel. South America: Trade Considerations Drive Aid Program Since the early 1960s, when the USSR and Eastern Europe began their drive to ex- pand relationships with South America, they have provided nearly $3 billion in credits for development projects, largely in the electric power industry. The credits were provided to penetrate Latin American equipment markets, historically dependent on Western (particularly US) suppliers. Even with these inducements, Communist countries still find themselves on the buy- ing side of a commercial relationship char- acterized by heavy purchases of agricultur- al products, large trade imbalances, and local apathy toward Communist offers to finance equipment for development. This trend was intensified in 1981 as the USSR restructured its food imports by turning to Argentina and Brazil following the US ban on agricultural sales to the USSR. These purchases made Moscow's goal of reducing its traditional large Latin American trade deficit even more elusive, and its deficit in 1981 soared to $4 billion, more than double that of the previous year. The USSR was able to conclude only about $200 million in civilian equipment contracts with the two countries. Argentina. Argentina's growing economic relationship with the USSR has not yet been translated into broader political sup- port for Soviet policies. In 1981 Buenos Aires was the main beneficiary of the US embargo on Soviet grain purchases with sales to the USSR that reached 10 million tons valued at $3.2 billion. The USSR also signed agreements to buy a minimum of 5 million tons of grain annually over the next five years. According to press reports, Argentina agreed to let the Soviets supply 15 percent of the equipment for the multibillion-dollar Yacyreta hydropower project, but Moscow is pressing for more meaningful participa- tion in Argentina's power development program. The USSR also signed agree- ments to supply enriched uranium and heavy water to the nuclear industry and has begun fishing research under an agreement ratified in 1981. Brazil. Brazil, the largest Latin American recipient of Communist economic aid ($925 million), also has emphasized the commercial side of its Communist relation- ship. Brazil's view of European Communist countries as promising markets for Brazil- ian goods was reinforced in 1981 by major Soviet purchases of grain and the conclu- sion of a long-term trade agreement that press reports say is worth $6 billion, mostly in Brazilian exports. The USSR's attempts to sell hydropower equipment on deferred terms resulted only in a $135 million con- tract to supply equipment to the Ilha Gran- de hydropower project. Nor did Brazil agree to draw on some $650 million of East European aid pledged in previous years. Sub-Saharan Africa: Bases Primary Soviet Concern Moscow's military sales to Sub-Saharan Africa rose to a record $1.9 billion in 1981 as Soviet military supply relationships with key clients matured and Moscow consoli- dated its position with pledges of greater Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 arms support. In contrast, economic agreements reached only $125 million, al- though there are some indications that the USSR is considering increasing economic support to Africa. The Soviet, East Europe- an, and Cuban military and economic presence on the subcontinent rose to its highest level ever-more than 65,000 troops, advisers, and military and econom- ic technicians, nearly all Cubans. Soviet Economic Aid Levels Still Low Moscow provided only $125 million in new economic credits to African countries in 1981. East European countries almost matched the Soviet contribution with $115 million in new pledges focused on Mozam- bique, Nigeria, and Zimbabwe. Nonethe- less, there are several indications that Moscow may be preparing to reverse its longstanding neglect of African economic development needs, particularly if the re- cipient's politics are compatible with Sovi- et goals. Early in 1982 Moscow signed a $2 billion, 10-year economic agreement with Angola that calls for aid to develop- ment projects. Other outstanding offers include hydropower assistance to Mozam- bique and aid for port development in the Seychelles. Angola A 10-year trade and economic coopera- tion agreement signed by the USSR early in 1982 and valued at $2 billion should sweeten relations, although it has become obvious to Angolan officials that the Com- munist countries will not commit sufficient resources to assist economic recovery as military expenditures continue to drain the economy. Even with 10,500 Communist economic personnel, Angola has not been able to restore production of basic neces- sities to prewar levels; Luanda now wants to hire Portuguese experts to rebuild the country's basic infrastructure. Most Ango- lans strongly resent the Communist, partic- ularly Soviet, exploitation of their econo- my. Moscow has been harshly criticized for causing domestic shortages by overfishing Angolan waters under their fishing treaty and for siphoning off hard currency to pay for inferior goods and services. Nonetheless, Angola signed agreements with several Communist countries to move ahead with economic projects that have been under discussion for some time. Bul- garia agreed to build assembly and rrmain- tenance shops for road transport equip- ment and completed a project to process rock phosphates. Czechoslovakia agreed to provide credits for unidentified projects, while East Germany signed protocols to aid energy and mining. Mozambique Mozambique considers Communist coun- tries its natural allies and has relied on them to fill its defense needs. South Afri- can cross-border raids and intensified South African-supported dissident activi- ties in 1981 pushed Mozambique toward greater dependence on the USSR and its allies for more advanced support and se- curity assistance. European Communist countries have not gained as much influence over Mozam- bique's economic affairs because Maputo has followed more pragmatic policies and has encouraged Western aid, trade, and investment. Still, the economy was the focus of Communist attention in 1981, as the USSR and Eastern Europe took steps to enhance their presence with new eco- nomic pledges and a 10-year Soviet- Mozambican economic cooperation agree- ment. The USSR and East European countries apparently turned down Mozam- bique's application to join the Council for Mutual Economic Assistance. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 7 USSR and Eastern Europe: Military Technicians In LDCs, 1981 USSR and Eastern Europe Cuba b Total 18,208 39,175 Africa 9,900 36,960 North Africa 4,600 50 Algeria 2,000 NA Other 2,600 50 Sub-Saharan Africa 5,300 36,910 Angola 1,600 23,000 Ethiopia 1,900 12,000 Guinea 50 10 50 205 Mozambique 550 1,000 Other 945 850 Latin America 225 1,715 Nicaragua 125 1,700 Peru 100 5,925 550 700 1,100 Syria 3,300 Other 275 South Asia 2,155 Afghanistan 2,000 India 150 a Minimum estimates of the number of persons present for a period of one month or more. Numbers are rounded to the nearest 5. b Including combat units In Angola and Ethiopia. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 8 USSR and Eastern Europe: Training of LDC Military Personnel in Communist Countries, 1955-81 a Total 57,795 Africa 18,330 North Africa 4,530 Algeria 2,395 Libya 1,990 Morocco 145 13,800 180 Equatorial Guinea 200 Ethiopia 2,095 Ghana 180 530 850 2,600 350 East Asia 9,300 Indonesia 9,270 Kampuchea 30 1,050 260 Middle East 20,750 Egypt 6,255 Iran 395 2,060 1,115 South Asia 8,365 Afghanistan 5,580 Bangladesh 445 2,285 45 a Data refer to the minimum number of persons departing for training; numbers are rounded to the nearest 5. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 9 USSR and Eastern Europe: Economic Credits and Grants to LDCs, Extended and Drawn, 1954-81 Total a 1954-71 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 USSR Eastern Europe USSR Eastern Europe 22,355 11,885 9,765 4,295 7,890 3,435 4,030 1,255 655 925 430 175 715 630 500 230 815 840 700 235 1,955 545 500 270 1,030 835 475 385 430 460 550 480 3,000 1,575 480 405 3,345 645 575 290 2,070 1,330 810 255 450 665 715 325 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 10 USSR and Eastern Europe: Economic Aid Extended to Non-Communist LDCs, by Country a 1954-81 1980 1981 USSR Eastern Europe USSR Eastern Europe USSR Eastern Europe Total 22,355 11,885 2,070 1,330 445 865 North Africa 3,250 980 315 Algeria 1,045 525 315 Mauritania 10 10 Morocco 2,100 215 Tunisia 95 230 Sub-Saharan Africa 2,870 1,990 310 280 125 115 Angola 30 100 Benin 10 NA 5 Central African Republic 5 Ghana 95 145 Guinea 215 110 5 Guinea-Bissau 10 5 Madagascar 70 35 50 35 Mali 100 25 Mauritius 5 Sao Tome and Principe NA NA Somalia 165 10 Sudan 65 270 Tanzania 40 75 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 10 (continued) USSR and Eastern Europe: Economic Aid Extended to Non-Communist LDCs, by Country a 1954-81 1980 1981 USSR _ Eastern Europe USSR Eastern Europe USSR Eastern Europe Zambia 20 165 30 Other 1,275 250 255 185 100 90 East Asia 260 665 40 Burma 15 215 40 Indonesia 215 365 Kampuchea 25 15 Laos 5 5 Philippines 65 Latin America 1,420 2,135 250 195 170 50 Argentina 225 300 Bolivia 100 75 15 Brazil 145 780 150 55 10 Chile 240 145 Colombia 215 80 Costa Rica 15 10 Ecuador NEGL 20 275 215 250 60 30 NA 10 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 10 (continued) Million US $ 1954-81 1980 1981 USSR Eastern Europe USSR Eastern Europe USSR Eastern Europe Middle East 7,925 4,495 675 55 Cyprus 15 10 5 Egypt 1,440 1,225 300 Greece 5 NA Iran 1,165 685 Iraq 705 495 Jordan 30 NA South Yemen 205 125 15 Syria 770 1,155 Turkey 3,400 755 355 Other 55 55 South Asia 6,625 1,370 1,195 135 100 250 Afghanistan 2,120 210 395 135 25 Bangladesh 375 320 70 250 India 3,080 455 800 Nepal 30 Pakistan 920 150 Sri Lanka 100 95 Other 140 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 11 USSR and Eastern Europe: Economic Technicians in LDCs,1981 a USSR and Eastern Europe Cuba Total 95,685 23,075 Africa 60,600 14,685 North Africa 45,870 5,250 Algeria 11,150 250 Libya 31,700 5,000 Mauritania 50 2.350 600 Sub-Saharan Africa 14,730 9,435 Angola 3,900 6,500 Ethiopia 1,800 1,000 Gabon 10 660 275 100 425 1,800 15 4,400 10 395 60 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 11 (continued) Number of persons USSR and Cuba Eastern Europe 930 75 200 125 330 640 27,150 3,650 2,450 3,500 13,000 South Asia 6,795 100 Afghanistan 3,750 100 Bangladesh 125 India 1,625 Nepal 10 Sri Lanka 125 Other 10 a Minimum estimates of number present for a period of one month or more. Numbers are rounded to nearest 5. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 12 Academic Students From LDCs Being Trained in the USSR and Eastern Europe, as of December 19818 Africa 34,805 North Africa 4,485 Algeria 2,225 Libya _ 275 Mauritania 280 Morocco 650 1,055 30,320 1,655 400 Cape Verde 340 Central African Republic 525 Chad 235 Comoros 30 Congo 1,845 Djibouti 20 Equatorial Guinea 250 Ethiopia 5,355 Gabon 325 The Gambia 45 Ghana 1,135 Guinea 825 Guinea-Bissau 425 Ivory Coast 595 Kenya 805 Liberia 110 Madagascar 2,180 Mall 735 Mauritius 230 2,535 205 310 470 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2 Table 12 (continued) Number of persons 350 405 6,800 105 800 835 Middle East 18,650 Egypt 775 Iraq 2,275 South Yemen 1,335 Syria 3,665 Other 9,280 Afghanistan 8,700 Bangladesh 905 India 1,130 a Numbers are rounded to nearest 5. Most of the estimates are based on scholarship awards. Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000601960004-2