SOVIET ECONOMIC PENETRATION OF LATIN AMERICA
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP60-00321R000400110035-8
Release Decision:
RIFPUB
Original Classification:
S
Document Page Count:
4
Document Creation Date:
December 23, 2016
Document Release Date:
May 15, 2013
Sequence Number:
35
Case Number:
Publication Date:
January 1, 1958
Content Type:
MISC
File:
Attachment | Size |
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Body:
Declassified and Approved ForRelease2013/05/16 : CIA-RDP60-00321R000400110035-8
Soviet Economic Penetration of Latin America
?In 1958 the business recession in the US and an accompanying
disorganization of many commodity markets produced severe economic
dislocations in Latin America. The chief source of foreign exchange
and thus of money for financing economic development in these countries
is derived from the export of one or two commodities--in Venezuela,
oil; in Brazil, coffee; in Uruguay, wool; and in Argentina, hides and
meat. Falling prices and contracting markets have both depressed
personal incomes in these countries and seriously retarded their own
economic development programs. The result has been increasing antag-
onism toward the US.
The Bloc has reacted to this situation of discontent in a not
unfamiliar fashion. It offers to barter not arms but products in
great demand at home in exchange for the commodity surpluses of Latin
America. Its activities have been concentrated in the three strategic
countrier Argentina, Brazil and Uruguay. In these countries not
only are economic troubles involving the sale of surplus products and
foreign exchange shortages especially severe, but their national
foreign policies for some years have tended to be relatively indepen-
dent of the US.
Argentina has been the prime target of the Soviet economic
offensive. Until 1957 Argentina accounted for ever half of Latin
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America's trade with the Bloc. Since then an increasing shortage of
foreign exchange and urgent requirements for imports of machinery and
materials such as oil and coal have heightened Argentinals receptivity
to Bloc offers. Since the first of the year Argentina has signed
sizable trade contracts with the USSR, Poland, and Czechoslovakia and
negotiations are now in progress with Hungary. Under these contracts
Argentina has agreed to purchase, partly on the basis of 4-year credits,
steel rails, machinery and transport equipment. Argentina is currently
considering seriously a Soviet bid to supply 7,266,000 barrels of crude
oil during the next year at a price of $3,78 per barrel. This was the
lowest of eight bids submitted, and it may be difficult for Argentina
to refuse such an offer. In addition, the USSR and to a lesser extent
Czechoslovakia have for some time indicated interest in aiding the
development of Argentina's petroleum industry, although thus far only
fairly vague offers of economic and technical assistance have been
forthcoming.
Brazil's attempts to maintain export7a=44.1by withholding its
coffee supplies have intensified its chronic shortages of foreign
exchange. Meanwhile the country's domestic economy is almost com-
pletely dependent on external supplies of fuel and lubricants. On
June 4, after more than a year of hints and vague trade proposals,
the USSR officially offered Brazil 200,000 tons of crude oil in exchange
for such commodities as cocoa, cotton and coffee. This proposal, which
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involves about $9 million worth of petroleum, has been approved by
the Brazilian Foreign Office with the proviso that no Soviet tech-
nicians accompany oil deliveries. In addition, negotiations are
currently underway in Rio de Janeiro with a Rumanian trade mission
which is offering petroleum production equipment and petroleum
products in exchange for Brazilian commodities. Also in May 1958
Brazil contracted to exchange coffee and other commodities amounting
to $24 million for 14 Polish merchant ships. Brazil, whose diplomatic
relations with the USSR were severed in 1947, has sold minor amounts
of certain goods to the Soviet Union for some years, the trade being
conducted through other countries or private companies. Lately,
however, the USSR has worked for the establishment of official trade
relations and has been assisted in this by important political and
business groups in Brazil.
In 1958 the USSR displaced Great Britain as the largest importer
of Uruguayan wool, the countryts main export. Soviet wool purchases
amounted to $18 million during the 5 months October through February
1958. Meanwhile Soviet sales to Uruguay were insignificant. In
mid-April, however, Uruguay agreed to the first of a possible 10
shipments of Soviet petroleum in payment for the wool. This first
shipment reached Montevideo on June 3.
Soviet economic activities have not been confined to these three
countries. The USSR, for example, recently bought 15,000 tons of
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copper wire from Chile; it has contracted with Colombia for the
exchange of 20,000 tons of Syrian wheat for Colombian coffee. Several
of the European Satellites as well as the USSR have hinted at offers
of industrial plants in Bolivia, Chile, Colombia, Cuba, Ecuador, Mexico,
Peru, and Paraguay, as well as in Argentina, Brazil and Uruguay.
Thus, although the total volume of Bloc trade with Latin America
has been small to date, the USSR aided by other members of the Bloc
has succeeded within the past six months in exploiting depressed or
unstable economic conditions in key countries by arranging to purchase
surplus commodities for sorely needed fuels or machinery. A signif-
icant short-run expansion of Bloc trade with Latin America may be
expected during the present disorganization of world commodity markets.
This expansion may well be confined to the present period although we
must expect that the USSR and its associated communist states will
attempt to maintain, in the future, the gains in Latin American trade
made during this dislocation.
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