POLITICAL IMPACT OF FREE WORLD CONTROLS ON TRADE WITH THE SINO-SOVIET BLOC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64-00014A000100020006-4
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: November 16, 2016
• Document Release Date: March 22, 2000
• Sequence Number: 6
• Publication Date: June 8, 1955
• Content Type: OUTLINE

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Political, fact of Free World Controls
Trade with the Sino-Soviet Bloc
A. CONCLUSIONS
to Examination of the indications from available intelligence
provides strong support for the view that Free World controls on trade
with the Sino-Soviet Bloc -
(a) have a broad political impact upon the foreign relations of the
Bloc;
(b) represent a lesser threat to the internal political stability
of the Bloc regimes, which however could be considerably increased by
total embargo; and
(a) at their present level or at a higher level controls-constitute
major Free World bargaining points in negotiations with the Bloc.
Trade controls as a diplomatic device contain sanctions which can be
applied entirely at the discretion of Free World governments both as
to timing and extent
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B. UNDERLYING CONSIDERATIONS
2. In an examination at this time of the effects of Western trade
controls on countries of the Sino-Soviet Bloc, it is assumed that
despite apparent concessions recently made by the Soviet rulers,
(a) there is no convincing evidence that the ideological force of Com,
munism is abating, (b) the fundamental hostility of the Communist leaders
toward the Free World re:.-ains unchanged, and (c) the basic objective of
the Communist leaders is a continued expansion of their own sphere of
power at the-expense of the Free World.
3. The political structure of the Sino-Soviet Bloc is vulnerable
to the impact of Free World economic measures because all Marxist po-
litical thinking is conditioned by economic considerations.
.4. The total political impact of Free Uorld denial of goods and
services to the Sino-Soviet Bloc involves effects of economic and mili-
tary measures which are not here assessed. Although the political
significance of this impact may be greater or less at any given time,
the Free World controls constitute an effective overall bargaining
instrument
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instrument in negotiations with the Sino-Soviet Bloc and produce dis-
ruptive intra-Bloc political effects of an ideological and psychological
character from which tactical advantages can be derived. For these
reasons the correct assessment of the political impact of trade controls
is a vital factor in the formulation or revision of an economic defense
program aimed at the preservation of Free World security.
5. It is a premise of the Free World controls that they impose a
greater strategic cost on the Sino-Soviet Bloc than on the Free World.
By parity of reasoning, any increase of the level of controls would
increase the relative strategic cost to the Sino-Soviet Bloc, and the
maximum possible strategic cost would be imposed by a total embargo.
6. Although the system of Free World controls has been based pri-
marily on the idea of selectivity, the trend in the recent past in the
main has been toward selecting items for decontrol rather than toward
selecting items which would have a major strategic impact if denied to
the Bloc. For example, in the context of current Soviet Bloc economic
conditions, it might be that agricultural commodities should be near
the top of the list from the point of view of strategic impact,
Another
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Another important area of direct vulnerability is the provision of
shipping and shipping services to the Bloc (shipbuilding and repairs
for Bloc accounts in l~jlestern yards), chartering of ships in trade with
the Bloc, etc.
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C. POLITICAL STABILITY OF THE SINO-SOVIET BLOC
7. Tho system of Free World controls on trade with the Sino-Soviet
Bloc represents a contix.uing challenge to the political stability of
the Bloc regimes. The controls --
(a) compel the Bloc to'ccmpensate by autarchic measures in those
particular area-- where Free ,'.orld denial of goods and services is of-
fective;
(b) hamper Soviet state planning;
(c) contribute to the failure of the Bloc to benefit from Free t'dorld
advances in broad fields of science and technology;
(d) restrict the flexibility and possibly influence the basic pattern
of the development of the Bloc's mobilization base and even influence
military decisions as in the case of Communist China.
8. As regards relationships between the various member states of the
Bloc, Free World controls tend to -
(a) maximize strains, stresses and consequent chances for disunity by
compelling the institution of priorities for the allocation of scarce
goods
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goods and services on the basis of Bloc-wide strategic requirements
decided by Moscow;
(b) cause the European satellites to be turned by ioscow from tra-
ditional Free World markets in order to satisfy overriding internal
requirements of the Bloc as a whole or of specific Bloc partners;
(c) require policing efforts among Bloc partners to insure compliance
with intra-Bloc priority allocation systems made necessary by Free
World controls;
(d) encourage satellite countries to reestablish normal relations
with the Free World,
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D. INTERNATIONAL RELI TIONS BETL'.T,EN SINO-SOVIET BLOC A' ND FREE V. ?RLD COUNTRIES
9. In international relations between Sino-Soviet Bloc countries and
the Free World, strategic trade controls:
(a) limit the Blocs freedom of action under peacetime conditions and
in preparation for war;
(b) constitute a major bargaining point for Free World negotiators,
particularly for negotiations involving economic requirements or the
political prestige of Communist China;
(a) call attention to the advantages of a free exchange of goods and
persons enjoyed by non-Communist countries (see ga(d) above);
(d) emphasize the decreasing dependence of Free World economies upon
trade with the Bloc.
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