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September 18, 1962
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Approved For Release 2005/01/0~4~'& i F 00255R00030010006 } ' DEPARTMENT OF STATE BUREAU OF INTELLIGENCE AND RESEARCH Research iaorandum -3.45a September 18, 1962. ,TO : T ereary THROUGH: B// FROM a Roger 9ilsm,n SUBJECT.* The SIno-Sawlet 'Economic offensive Throe a u g 196 increasi al y i' port it role in the bloc ? s relations vitb the laatter, in sos Instances providing, the Initial c& of penetration. as a, Prelude to erminti the foundations of free Bove nt The prii ,ry -objective of.. the Gino-Soviet bloc .is to enhance total c =Ist power relative to that of the United States and, Its allies 4 The bloc's economic offensive- Is ntel rat` part. of a Long-range policy 4eei;gnne4 to-attain this objective. Offers of- development credits and technical assistance, and proposals for expanded- trade hay been subtly combined with political, pr ; da, and dlploa tic stratagems in an effort to replace W tern influence A major goal of the econooIc offe ive 1s to convince the world of the black a s growing paver a, prssti s, as illustrated by Soviet achia m uts I m nile devslopr nt and specs exploration and by Soviet laft%trial txp ion. Economic diplcs cy serves as a major iustrwa nt for acquiring Influence in less-developed countries, often providing the, bloc with a political entree Into countries .where its role has hit uerto 'been limited. Economic agreements area the , reml n ? s eyes., the opening wedge for establishing trade missions negotiating cultural am scientific cooperation agreements, exc - ing delegations, and training studo s n Fight years after Its inception., the bloc's economic offensive . continues to exhibit signs of vitality, expanding in both scope and w,galtude. lace 195 the bloc s extended a, total of $7.2 billion in credits and grants to 29 less?deve1o; ed c cries a Countries In Africa and Latin ricer have beco tae focal points of major efforts to establish beachheads In West* spheres of Infl ue ce The problems of any less-developed countries In 41sposIng of their principal export commodities In traditional markets at prices they consider satisfactory provide the bloc vtta opportunities to explot trade relations as a tool of diplomacy. TTotal trade turnover of the bloc with the less-developed countries rose from $860 million in 11?54 to 3 4 -bilhion1s in 1960, an Increase of 295 percent. UNCIASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 The existing capabilities of the Soviet and satellite economies give the Kremlin sufficient economic end technological power to meet conmsitments under present aide and trade agreements. These commitments could be considerably expanded if the Soviet leadership should decide that political gains justify the diversion of repources from alterna- tive uses within the bloc. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 1 - TABLE OF CONTENTS Pa e I. Bloc Economic Policy toward Less-developed Countries . . . . . 1 II. Bloc Capabilities . . . . . . . . . . . . . . . . . . . . . . 4 III. Objectives of the Economic Offensive . . . . . . . . . . . 6 IV. Nature of the Offensive . . . . . . . . . . . . . . . . . . . `. V. Bloc Credits and Grants to Some Specific Less-developed Countries . . . . . . . . . . . . . . . . 24 1. Sino-Soviet Bloc Economic Credits and Grants Extended to Less-developed Countries of the Free World - January 1, 1954 - June 30, 1962 . . . . . . . . . . . . . . 9 2. Sino-Soviet Bloc Economic Technicians in-the Less?- developed countries of the Free World . . . . . . . . . . 17 APPENDICES Table 3. Bloc Exports to Selected Underdeveloped Countries - 1959 - 1961 . . . . . . . . . . . . . 37 Table 4. Bloc Imports from Selected Underdeveloped Countries - 1959 - 1961 . . . . . . . . . . . . . . 41 Table 5. Types of Trade and Payments Agreements between Bloc and Less-developed Countries as of June 30, 1961 . . . . . . . . . . * . . . 45 Table 6. Number of Trade and Payments Agreements between Bloc and Less-developed Countries, December 1955 - June 1961 . . . . . . . . . . . . . . 45 UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED I. BLOC ECONOMIC POLICY TOWARD LESS-DEVELOPED COUNTRIES Foreign economic policy as practiced bar the nations of the Sino- Soviet Bloc is an instrument of overall_ foreign policy. As such it is determined mainly by political; considerations and must therefore be viewed against the broader background; of broad..forei&a policy, strategy and ob- jectives and the attempt to enhance total communist power relative to that of the United States and its all__~.ewd The peoples of Asia, Africa, and Latin America, as inhabitants of "have not" nations or colonial dependencies, have always been regarded by the Soviet leadership as potential allies of coimimanist revolution. Accord- ing to Lenin?s theory of imperialism, the capitalist West has been able to delay its inevitable collapse by expanding the exploitation of its own working class to include the colonial and dependent peoples who also pro- vide markets for its factories and rar materials and foods for its metropolitan centers. Con.sequen~ly, "the disintegration of the "colonial system", which is continually being reported in the Soviet press, is expected to aggravate the "'general crisis of capitalism" and to reaken the industrial countries of the free world by causing them to lose their, markets, their sources of raw materials, and the military bases which they have located in less developed free world countries. A. The Years Tanediate 'al ~cr rb Worlrl. War II - A.r, ried Struggle Some of the most radical changes in Soviet foreign policy since World War II have been concerned with the less-.developed countries. In the early postwar period, and especially during the years 1948 -50., Moscow encouraged the local communist parties in the less-developed countries to follow militant, hard-line tactics. The results ranged from armed struggle against the government, such countries as the Phirlippines.. Malaya, and Burma to attempted _-g2 d.vetat in Indonesia. These tactics were the loogical outcome in Asia of the broader policies heralded by the founding of the Cumin dorm in August 1947, when Moscow reaffirmed the basic Leninist thesis that the world was split into two "camps" -- communist and imperialist - and posited implacable hostility and struggle between them. Militant tactics were probably also encouraged by the success achieved by the Chinese Communists in using such methods to come to power. B. Moderation of Mils.tancar l O- Communist militant tactics had very obvious adverse repercussions from the Communist standpoint- tarnishing the image of peace-loving policy which the USSR sought to project, st.u.latkag rearmament and greater political unity in the West, and forcing the USSR to run unexpected risks in Korea. Furthermore, severe defeats of indigenous communist parties, e.g., Indonesia, threatened to destroy their effectiveness for years to come if they continued their -militant tactics. A moderation in militant tactics of Approved For Release 2005/9 I P68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 2 - local communist parties began to be discernible in the 1950-51 period. For its part, the USSR, began to make some effort to court not only the "people" but also the leaders in developing countries through support of the "anti- colonialism" issue, exploitation of nationalist, anti-Western sentiment, and rather tentative offers of economic assistance. C. The Post-Stalin Policy of Cultivating Noncommunist Governments After the death of Stalin in March 1953, Soviet policy toward the less-developed countries, ;underwent. a dramatic change away from the extreme of the 1945-50 period of armed struggle. This new policy, which began gradually (in 1953) and emerged fully in 1955, was crowned with the official stamp of approval at the 20th Congress of the Communist Party of the Soviet Union (CPSU) in February 1956. At that time the Soviets proclaimed, in seeming contradiction to the Coriunformts "two-camps" theory, a "vast zone of peace" conposed. of "peace-loving states" of the Afro-Asian area and the countries of the communist bloc. It became evident that the post-Stalin Soviet leaders saw the less- developed countries -- with taei: weak economic and political systems, strong nationalist and anti-colonialist sentiments, neutralist tendencies, and resentment at past and present dominat--or_ by West European countries -- as very susceptible to expansion of Soviet influence at Western expense. It is probable that they viewed more realistically than did Stalin the poor prospects of the local communist parties for seizing power and calculated that the best way to advance the interest of international communism in many less-developed countries was to offer temporary, tactical support to noncoumunist -iational.ists (i.e.,, the 'rational bourgeoisie" while at the same time building up Whe local communists, where possible, in preparation for a long-term test of strength. The new Soviet approach consisted of efforts to court the noncom- munist bourgeois governments in the less-developed countries by a combination of approaches in the political, economic, and cultural fields. Communist state efforts to establish good relations with the governments of the neutralist less-developed countries were usually accompanied by a slowing down of the militant, aggressive action in which the local communist parties had previously been engaged. In some instances, local communist party interests wore neglected when it appeared that their support from Moscow conflicted with Soviet efforts to maintain good relations with the local government. The Soviets have also protested vigorously in some cases, over what they have interpreted as unfair treatment of local com- munist party leaders. D. Soviet Methods and Oblectivev The immediate Soviet objectives in the underdeveloped countries have been, at a minimum, to get them to take a neutral stand in the East-West disputes, to get them to side with the Communist bloc in such disputes whenever possible and to aggravate their differences with Western or Approved For Release 2005/ &qt P68B00255R000300100067-6 Approved For Release 2005/01/05 : CIIA--RDEP68B00255R000300100067-6 -3- pro-Western countries. An equally immediate objective has been to increase Soviet influence and prestige, with a concomitant deterioration of the Westvs position, including its defense arrangements with certain less- developed nations. To that end, Moscow hopes to alienate these less- developed countries completely from the West and soften them up for their takeover by communist governments, which remains, of course, the ultimate objective of Soviet policy. Moscow has pursued its immediate objectives through multipronged but integrated efforts. These have includeds high-level contacts with the political leaders of the less-developed countries (e.g., Mikoyan?s visit to West Africa), the red-carpet treatment extended to leaders and delega- tions from less-developed countries visiting Moscow; expansion of broad- casting and. other information activities; the launching of intensive campaigns of cultural penetration which have included delegation exchanges on the popular level, offers of economic and technical aid to lessen these countries' dependence on the West;"training of selected students; and liberal military aid programs, including shipments of modern arms and equipment, to satisfy their national aspirations and make them dependent on the bloc fqr military instruction and training. The changes in. Soviet foreign policy regarding specific less-developed countries and on issues affecting such areas have been paralleled by equally roti,ble shifts in economic policy. In the years immediately fol- lo- ing World War II, Soviet economic relations with the less-developed countries were confined to a relatively small amount of foreign trade. Modificat-ions in Soviet foreign economic policy were foreshadowed about 19 0, although the first moves were confined to propaganda gestures with little effort being made toward concrete implementation. Probably the first specific Soviet aid offer was made in 1949 during a meeting of the Economic Commission for Asia and the Far East (ECAFE). It consisted of an offer to extend trade and technical assistance in Asia, and was followed by a Czech-Indian technical aid agreemenh. It is possible that these apparently exploratory initiatives were part of a complex of moves designed to minimize the adverse impact of the militant policy with- out changing it,, In 1951, however, the new tack began to be followed more vigorously as Moscow renewed its expressions of willingness to undertake trade and technical assistance in ECAFE. In 1952 it followed up these offers at a large international economic conference in Moscow where it urged "international cooperation"" for the achievement of rapid industriali- zation of less--developed areas and offered to provide the less-developed countries with technical assistance and complete factory installations. Perhaps, however, because of its vague terms, this offer was not followed up by any specific agreements. The death of Stalin in 4953 gave a sharp impetus to these sporadic moves toward a new Soviet policy for the less-developed countries. In April 1953, the USSR signed a technical assistance agreement with Afghanistan. This was followed by an announcement that the USSR would henceforth contribute to the United Nations Technical Assistance Approved For Release 2005/01IQWACM B68B00255R000300100067-6 Approved For Release 2005/ON/LASSI?P68B00255R000300100067-6 -4- Program (UNE'TAP), although in practice Soviet contributions to this program continued to be small, nonconvertible and are still basically bilateral in character. The principle of assisting late-developing countries was officially proclaimed in a Soviet-Yugoslav communique of June 1955 and in Khrushchev's speech to the 20th CPSU Congress in 1956. The principle, or at least the scale, of assistance to non-communist states would appear to have been one of the many subjects for high level debate within the USSR and to some extent between Moscow and Peiping. The underlying ideological issues involved in the decision to extend aid to non-Communist countries are complex and beyond the scope of this paper, but for practical purposes the dramatic expansion of assistance offers and agreements provides con- vincing evidence that the bloc countries will continue to use trade and assistance on a growing scale as a useful and effective tool of foreign policy. II. BIAC CAPABILITIES Under Stalin the Soviet Union was prevented from developing an effective foreign aid program not only because of doctrinaire internal political policies which reflected an attitude of complete hostility to all noncommunist countries, but also by real limitations on its capacity to export capital goods or otherwise expand trade. Today, however, nearly ten years after the end of the Stalin era, the rapid and continuing grow.: of the Soviet and the satellite economies has given Moscow sufficient economic and technological power to meet its commitments under present aid and trade agreements. In fact, commitments to provide aid could be greatly expanded if the Soviet leadership should decide that the political gains justify the diversion of resources from alternative uses within the bloc. From a purely economic point of view the USSR would probably gain by substantially increasing its trade with the free world. It continues, L_owover, to be a known precept of Soviet policy to avoid dependence on free world markets either from fear of potential political implications or of what Soviet economists refer to as "capitalist crises and fluctuations.n Although the export of some. types of industrial equipment, such as steel :rolling mills, chemical equipment and generators, in greatly increased volume would create definite problems for the USSR, such limitations have not placed a serious brake can bloc aid efforts. For- ward commitments allow such items to be integrated into future bloc economic planning, and in most cases the shopping lists of the less- developed countries are sufficiently varied to enable Soviet and satellite negotiators to select project or commodity commitments which are most compatible with their own c-arrent and planned availabilities. Areas of particular Soviet capability are illustrated by recent initiatives in the field of petroleum exploration and production, development of civil aviation, construction of hydroelectric facilities, offers to pro- vide standardized machine tools and agreements to construct small or Approved For Release 2005/04/D P68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Ulu CLASSIFIED - 5 -_ medium-sized, fully equipped manufacturing plants. The forced industrialization of Eastern Europe hae now put these bloc countries in a position to contribute heavily to Moscow7s economic offen- sive, especially as far as foreign trade is concerned. The expanding need for imported food and raw materials in Eastern rope provides these countries with a growing incentive to expand markets for industrial exports. In some cases they try to obtain entry into such markets through price cutting, favorable terms or barter deals involving payment in commod- ities which a less-developed country has been finding it hard to dispose of in the free world. experience in implementing projects under agree- ments concluded in earlier years and better cooperation between the USSR and the satellites on new projects are adding to the b ocas ability to carry out a foreign aid programb Among the factors which are expected to further enhance bloc foreign aid and trade capabilities over the next several years are an acceleration in research on the less-developed countries9 with a subsequent, increase in highly tx a .ed bloc personnel who have a specialized 2o1 ledge of-the language, politics, social structure and' economic problems of the country to w dch they are assigned Efforts to make CE&A (the bloc Council for Maxtual Economic Ass- stance) mare influential in coordinating bloc, foreign economic, policy, may i )rove the effectiveness of MoscOw s foreign aid program during the next years. A' growin body of t ained teohax di, ~x~. y end prof professional personnel is also increasing bloc capabilities to provide tecinical services abroad. Such resources have permitted the assignment ' of large numbers of skilled personnel on short notice for service abroad, and this, tdgether with the high. degree of state control over individuals, has enhanced the bloc v s reputation foaa? being able to re pond promptly to requests for assistance. Facilities are being greatly handed for providing academic and technical training for civilians from lest-developed countries, and special programs have been set up for military personnel from African, Asia, and Latin American Communist China is sander severe strain to meet its own development goals and hence can afford to divert only limited resources to foreign aid progr?s, In the total product .on picture,, however, the amounts so far involved are very small and. the burden of exports under assistance programs has been minimized by providing. mainly ',heap consumer goods, fairly simple machinery or plants involving simple teclnology and various ties of tech- assistance. With regard to trade, pe ; ,zgss la :rge high priority need for capital goods from the industrialized countries and its limited need for agricultural ray materials together with a shortage of foreign exchange tends to place limits on a major expansion of imports from less-developed countries. How ver, such purchases are timed and shifted among suppliers to increase their political impact. The, quantity of cheap Chinese-manu- factured goods which could be made available for export is growing, but promotion of such sales abroad often meets resistw-ice from local producers. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -6- A few types of producers' goods in demand in developing countries (e.g., con- struction steel, textile and paper manufacturing equipment) could be made available in small quantities, but such exports will probably go mainly into Chinese assistance projects in areas which Peiping wishes to impress with its progress and considers somewhat vulnerable to its influence. III. OBJECTIVES OF THE ECONOMIC OFFENSIVE The economic offensive, coordinated with political, psychological, cultural, military, and subvarsive activities, is an integral part of a long-range policy designed to establish communist control in the countries receiving bloc aid. It in no way represents the abandonment of traditional communist goals, although it may involve, at least temporarily, supporting "national bourgeois" leaders and strengthening the noncommunist economic system in developing countries. An attempt toexplain this apparent paradox was made at a special conference of leading communist theoreticians held in East Berlin in May 1959. At this meeting the speakers criticized the earlier failure to appreciate the usefulness of the "national bourgeoisie" in the first, "anti-imperialist," phase of the revolution, which is concerned with break- ing the political and economic ties binding the less-developed countries with the industrialized countries of the free world. It was stressed that in the second, ttsocjal," phase of revolution, conflict was likely to develop in the ranks of any nationalist-communist coalition. Lest there be any confusion as to the final goal of all communist activity, a publication, Problems of Phi? oeo . , in May 1958 had advised each communist party to support all "democr- ~tic" activity of the "national bourgeoi8&t but " the same time fJ carry on a struggle to widen its influence, to increase the role of the working class and to strengthen its ties with all the popular mass in order to lead the country in the path of the construction of socialism (L e., communism)." The article went on to cite the success of the Indian and Indonesian Com- munists in this regard. The communists usually describe their ultimate goal, however, in more circuitous language, and direct their tactics toward immediate objectives which facilitate but do not make obvious their constant drive to achieve power. For example, the programmatic statement adopted by the conference of world communist leaders in Moscow in November 1960 urged communists in the less-developed countries to work for "national democratic states." This new formulation envisages, in the less-developed countries, strongly anti-Western regimes, which would be headed by nationalist rather tharr- communist leaders, but which would grant them influence in the government. Such regimes would pursue a communist-style domestic program of agrarian reform, the buildup of the state sector of the economy, and "democratic freedoms" for the "progressive" forces (i.e., communists and their sympathiz- ers). In short, the formulation envisages a regime in which the communists UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 200 ?SjDP68B00255R000300100067-6 do not hold outright? power, but one which they strongly influence and one which is constantly moving in the direction they desire. The Castro regime in Cuba was originally hailed as an example of the "national democratic state's described in the November 1960 statement. Foreign aid is not measured, in the Soviet calculus, on its own merits but only as it contributes to . policy objectives in recipient countries as a part of a thole complex of official and unofficial bloc activities designed to increase total Soviet power. It is justified to the extent it helps create a more favorable environment and more..opportunities to spread communist influence and conversely weaken that of the West. In the long run, it is hoped that conditions will be created which will facilitate an assumption of power by col'mriun .st and other "progressive" forces.. The economic offensive, however, promotes a number of more immediate Soviet objectives in preparing the groundwork for an eventual communist takeover. An important aim is to increase the prestige of the USSR through strengthening the desired image of Soviet good will and economic success, This involves painting the USSR as not only a sympathetic friend but as a country which; was itself underdeveloped until recently and whose system. thus provides an appropriate model for others to apply. This appeal ignores the major differences in resources and problems of most underdeveloped countries today as compared with those of the USSR when it launched its first five-ye?,r plan. Where it provides alternative sources of assistance and markets.. Moscow hopes to stir up dissension in existing economic relations and to weaken ties between the less developed countries and the West. By holding out the lure of. trade and aid, it maneuvers to increase internal pressures in developing countries for closer relations with the bloc and policies inimical to Western business interests. By raising trade and credits to significant levels it hopes that as a minimum, it will move the recipients to a more neutral position in a.ternationa relations and, if possible, to a position in: support of the bloc in international disputes. Domestically, Moscow hopes that the respectability of local communist parties will be enhanced,, and that the local environment will be made more favorable for the exdension of its influence. In the case of Communist China., -which is subjecting its people to dire hardships to obtain resources for its own development. the political motivation of grmx.ts and credits is abundantly clear. Such offers are strongly influenced by Peipi.ngVs desire to gain recognition and prestige and by its conviction that it has a special opportunity and responsibility to further the cause of world communism in newly independent countries. The European satellites have mixed incentives. In addition to sup- porting bloc political objectives, the penetration of foreign markets provides a means of obtaining imports of food and raw materials which are needed in increasing volume to meet planned production goals. In some cases the USSR has found it difficult or undesirable to supply the imports involved in the growing mounts needed in Eastern Europe. UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2004MfFMDP68B00255R000300100067-6 - S - IV. NATURE OF THE OFFENSIVE A. Extent of Aid Since 1954 the bloc program of foreign assistance has been enlarged continuously both in size and geographical scope. At the present time it encompasses 29 independent nations in the free world. Initially modest in total annual amounts, economic credits and grants were extended at an average rate of about $1 billion annually during the 1959-61 period. The rate thus far in 1962, however, has been somewhat lower than this. By the end of June 1962, a total of $7.2 billion in credits and grants had been extended by the bloc countries to 29 less-developed countries on four continents (see Table 1). Nearly $2.4 billion,of this amount is estimated to be creditsf$6 the purchase of Soviet bloc arms, extended mainly to Egypt, Syria, Indones a,/Cuba, and Afghanistan. Of the $4.9 billion extended for economic purposes, 24 percent was extended in 1960 and 21 percent in 1961. Communist China has made grants totaling $116 million to Cambodia, Ceylon, Nepal, Egypt, Yemen, and Guinea, but the USSR apparently has been reluctant to provide grants instead of credits except in special cases - for example, Afghanistan and Nepal -- where it could not accomplish its purposes otherwise. The USSR is providing about $3.6 billion of the total economic credits and grants and is taking a commanding role in the aid program. On some major economic credits the Soviet Union appears to be acting as financier and prime contractor, utilizing the more industrialized satellites as sub- contractors. The European satellites have extended about $920 million for economic aid in their owrn right; it is quite obvious that Moscow has under- written some of their major arms deals. Communist China has also partici- pa,ed in the bloc's aid activities to the extent of $410 million. The USSR is concentrating on major lines of credit for general economic development. Thus, agreements involving $100 million or more account for nearly 60 percent of all bloc economic assistance. These include: credits of $500 million to Afghanistan; $100 pillion to Argentina and Ethiopia; $100 million to Cuba for the expansion oifliickel industry in addition to $200 million for general economic develoment; three credits to India of $135 million for a steel mil!, $125 million for industrial enterprises under India's Second Five-Year Plan and $5OO million under its Third Five-Year Plan.; $325 million to Egypt for the Aswan Liam in addition to $175 million for industrial development; $150 million to the Syrian Arab Republic; $138 million to Iraq; and two credits to Indonesia of $100 million and $250. million respectively. The other bloc countries have tended to concentrate on smaller lines of credit or individual projects. Czechoslovakia and Poland, however, have provided India with substantial lines of credit. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED Table 1. SINO-SOVIET BLOC 4CONOMIC CREDITS AND GRANTS EXTENDED TO LESS-DEVELOPED COUNTRIES OF THE FREE WORLD,-:./ January 1, 1954 - June 30, 1962 (Mi.l]jions of US dollars) Area and Country Credits Grants 4,904 4,748 156 America ti L w 567 a n Argentina 104 104 Bolivia 2 2 Brazil 4 4 Cuba .437 437 Middle East 1.92 1.1&7 Cyprus:. 1 1 Iran 6: 6 0 Iraq 216 216 Q Syrian Arab Republic 178 178 Turkey 17 17 0 United Arab Republic (Egypt) 671 J 666 Yemen 44 43 1 14 Africa Z Ethiopia 111 712 2 Ghana 200 200 0 Guinea 125 119 6 Mali 100 100 0 Morocco 5 5 0 Somali Republic 63 57 6 Sudan 25 25 Tunisia 46 46 Asia 2,410 2,274 116 Afghanistan 515 cj 515 0 Burma 93 93 0 Cambodia 65 g 57, Ceylon 58 42 ,16 India 950 946 4 Indonesia 641 640 .l Nepal 55 0 55 Pakistan 33 30 3 UNCLASSIFIED Approved For Release 2005/01/05 :CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -1?- Table 1. SINO-SOVIET BLOC ECONOMIC CREDITS AND GRANTS EXTENDED TO LESS-DEVELQPED COUNTRIES OF. THE FREE WORLD January 1~ 1954 -'June 30, 1962 (Millions of US Dollars) (Continued) Area and Country Total Credits Grants Europe ' , 326 116 Iceland 5 5 0 Yugoslavia 111 111 J 0 a. Not including military credits and grants. b. Not including about $12 million in credits that were extended in 1958 and 1960 and have expired. c. Although some grant aid is included, a breakdown is not possible. d. Not including about $353 million in credits that were extended in 1956 and subsequently either canceled or allowed to expire. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 TJI OIASSIFIED The geographic scope of the offensive has expanded significantly in the past year or so, notably in Africa. Although five countries, LIAR, Indo- nesia, India, Afghanistan, and Cuba account for about two-thirds of all bloc aid commitments,, the impact potential of even the smaller lines of credit is substantial when viewed in the context of the. level of the recipient country's investment from domestic sources, recent aid received from free world sources, and general level of technology. Although this campaign is worldwide in scope, it is apparent that the bloc tUre-cts its aid where it believes situations exist which lend them- selves to exploitation for political, psychological, or even, in a broad sense, strategic gains. In a number of cases bloc aid overtures have coincided with a strain in the country's relations with the United States or one of its allies. Offers to Greece, Iran, Turkey, and Pakistan pro- vide notable examples of Soviet attempts to use aid as a means of weaken- ing Western defense pacts; but despite much pressure, US allies have accepted only very lindted bloc credits. Among the neutralists, Soviet tactics include concentrated efforts in key cotmtries whose regional influence is expected to expan4. Drawixigs under bloc economic credits generally extend over a number of years. In ter ie case of the ,*ecent Soviet credit of $250 million to Indonesia, for example, the program will ext. erLd over seven years. As of mid-year 1962 about 72 percent of all bloc economic credits and grants to less developed free world countries had been earmarked for specific pur- chases or projects. Economic assistance has been provided-for a variety of purposes. Development projects account fear the major portion of the assistance funds that has been obligated thus fear. Nearly three-fifths has been obligated for manufacturing enterprises red nearly one-fourth for agriculture, energy, and mining industries. A large] segment of bloc assistance is designated for multipurpose installations I(such as the Aswan dam) which are intended to increase supplies of waters ifor? irrigation purposes in the recipient country and at the same time expand its electrical generating capacity as well as improve its capability for flood control. The following table illustrates how bloc economic assistance to less-developed countries has been utilized. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED ?- 12 - Percent of Total obligations End Use All Uses 100 Manufacturing Multipurpose projects and agriculture (including reclamation, irrigation, and hydroelectric power projects) 57 Transport and communications Mineral S-&rveys and exploitation Health, education, and municipal services 3 Commodity credits 3 Gold, foreign exchange, and funded trade deficits 2 The rate of utilization of bloc assistance has increased -- particularly during 1961 and 1962 -- as more and more projects have reached the con- struction stage. Work was begun on the Aswan Dam in the UAR; the Home oil refinery in Syria was finished in 1959; the Bhilai steel mill in India was finished in 1961; and in 1962 the Gauhati oil refinery commenced operations in India. Although the Soviets are generally moving ahead with the imple- mentation of their agreements, initial progress in some countries has been slow and efforts by the USSR to expedite programs have not produced any very new or effective formulas for eliminating administrative or technical delays on the part of recipient governments or local contractors partici- pating in the projects. In a few cases progress has been slowed at times by technical disagreements between bloc and local engineers or by labor problems, e.g., at Aswan and in Syria. Progress on the Aswan project has been delayed by the inadequate Soviet drilling equipment and it has been slow on power installations in India. Much of the drawing on bloc credits is still for surveys and initial planning; however, drawings on economic credits during 1961 are estimated at about $285 million and were up to about $225 million during the first half of 1962. About 25 percent of total extensions of economic credits had been utilized by mid 1962. Military assistance agreements have been implemented more rapidly than economic agreements; two-thirds or more of military aid commitments had been fulfilled by July 1962. C. Credits Rather Than Grants Most Soviet and European satellite assistance is in the form of interest- bearing credits to finance specific projects. The Sovi.etsprobably hwish to give the impression of making businesslike deals and may consider interest-free loans or grants arouse suspicion as to "strings" in the recipient countries. hprovision for repayment with a Grants at a a low ratemakes the assistance relatively low cost to the , Approved For Release 2005/011//005 : ClAI- 68BO0255RO00300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -13- are frequently made by China, b~t in limited amounts. I While`Khrushchev has adroit ed that some of the major aid projects were not financially advantageous to the USSR, the public within the bloc is assured that Soviet foreign assistance is "mutually profitable" and that the only reason the West charges higher interest rates is to reap "capitalist profits." The general use of credits rather than grants also serves as a restraint on the volume of requests, enabling the USSR from the outset to limit the overall scope of its aid program, with minimum adverse; political effects. Finally, and most important, the use of credits assures that throughout the repayment period the Soviets will be able to maintain close and continuing relations with the target countries. Annual negotiations regarding the form of repayments will give the bloc creditors opportunities either to court favor with debtpr countries or to exert pressure as suits the bloc's interests at the time. While the recipients of bloc aid hope to repay in "surplus" products,!the effect in practice may be to cut into their earnings of convertible ecchange. D. Interest Rates One of the features of Soviet credits to less-developed countries which has attracted wide attention has been the low interest rates, typically 2.5 percent. A recent large-scale loan to Afghanistan, however, is interest fred. There has been more variation in the terms of credit extended by the satellites. A number of these lave carried considerably higher rates of interest and other provisions (L e., substantial down payments) which were closer to prevailing commercial! terms. The larger of the recent satellite credits, however, generally parlel those terms granted by the Soviets. Chinese interest rates tend to be lower than Soviet rates and in some instances the Chinese have not charged interest. The interest rate on So-vieF credits appears to be motivated by political rather than economic factors. Soviet theory and practice do not even recognize the use of interest cr.arges internally on investment capital. If such charges were made, the chronically severe shortage of capital in the USSR in relation to planed in Vestment would undoubtedly impose a considerably higher rate than is used in Soviet foreign credits. E. ReRE ei t Terms Most of the major Soviet agreements provide for repayment in annual installments over a period of 12 years. However, the large loan.extended to Afghanistan in 1961 provides: for repayment over 50 years, the first payment not commencing until 25 years after the aid is used. Annual negotiations will take place to establish lists, prices, and quantities of goods to be delivered in repayment. It is not yet clear just what these provisions imply, but they could easily result, in making the real cost of aid higher than it appeared originally. In any case, they leave a large Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 L:CLASSIFIED area for later bargaining, which m,Ey become a source of future friction and possible pressure by the USSR if it should so choose. While the assumption generally is that local products will be used for repayment, most of the agreements allow the bloc creditor the option of demanding convertible currency. The USSR usually has agreed to defer repayments until completion of its own projects or deliveries of equipment and services. For the recip- ients of such assistance this provision is attractive because it permits production to begin before repayments are due. This provision does not apply to interest, which accrues from the time the credit is drawn upon. Terms of the Daropean satellite credits resemble those of the USSR. Satellite credits, however, are more often of medium-term duration, calling for payments in 5 to 8 years and substantial initial payments. The repayment terms of Coiiunist Chinese loans are more liberal than those extended by the Soviets and Communist China is more inclined than the USSR to provide for the loca'I currency costs of projects that it undertakes. The USSR's readiness to accept particular commodities in repayment from a debtor country and the prices it offers will probably vary with political developments but will also be affected by its domestic supply situation. A few of the exports of the less-developed countries are of great importance to the Soviet economy (examples: Indonesian and Malayan rubber), and the USSR may well be willing to accept such goods, occasion- absorbed, ally even at prices above the world market. Other products tsican be but substantial additiona? imports of most primary secondary importance to the Soviet economy from the planners' point of view (examples: sugar, rice, cocoa, tea, coffee, raisins, spices, cotton, wool, hides, etc.). Still others may not be easily absorbed in volume either because the Soviet economy lacks processing capacity or already has sufficient domestic supplies. Soviet programs to increase internal but production of cotton, Wheat, wool, and hides, for example, may limit, b b do not exclude imports of these products from Egypt, Syria, Afghanistan, Argentina, and other countries. F. Mi.lite Assistance By the end of June 1962,bloc agreements to supply arms and military training to noncommunist countries provided for military aid of nearly $2.1+ billion.. Egypt, Syria, Indonesia, Iraq, Cuba, and Afghanistan account for the bulk of the assistance.- commitments to Yemen, Guinea, and Mali, which are much smaller, are still of major significance in relation to the size and requirements of the recipient country. The timing of Soviet arms offers has almost invariably coincided with periods of tension between the target country and a neighboring country or a member of a Western alliance. In a number of instances UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 15 the West refused to make the arts available out of a desire to avoid increased regional frictions. ?he blocts desire to exploit such situations -- despite the professed dedication to peace continuously proclaimed in its propaganda statements -- explains the scope of its military agreements. Such factors affect prices and paymetat terms, which vary considerably among recipient countries. Technological, and supply considerations appear also to exert an important influence: Thus, items no longer being delivered for use by bloc forces or in surplus have been sold at less than half price, while quotations on more modern' equipment or items equally usable for civilian or military purposes (0.g., some types of trucks) may involve little or no discount. PaymentI terms are based mainly on the importance of the recipient country in the'Soviet international political calculus and on the Kremli.nvs estimate of how much Soviet influence can be expanded by closer ties with the countryes armed forces, which often play a key role in determining government polio .,es far beyond the military sphere. The types of equipment range from small arms to tanks, submarines, and jet aircraft, plus substantial mounts of spare parts and ammunition. Recently Soviet deliveries have; tended to include more items of advanced technological design, such as TO-16 jet medium bombers, MIG-21 jet fighters and some tactical missiles. The bloc does not require ny commitment that its arms be used only for defensive purposes. Most of its m li.tary aid, has been rendered under cir- cumstances in which the arms have increased the threat of hostilities between countries. In. some oasis it appears that, the arms have been intended to permit exports of military items by the recipient to political dissidents elsewhere. Bloc techrn.ical assistance ~s generally provided in conjunction with developmental and military aid. ' Almost all such services are paid for by the recipient, and they are not1 provided under a special program such as that carried out by AID. About! 12,000 bloc technicians spent a month or more on the job ii-4 29 less-developed countries during the first half of 1962. This rise reflects a ste-up in implementation of bloc agreements and the conclusion of new accor . s. Nearly 22,000 nationals from the less- developed countries have also gone to the bloc., notably the USSR, for academic study and military or technical training during the last five to six years. About 9,600 bloc tecinnicians were employed on economic projects during 1962 (see Table 2). The largest single group was engaged in planning or supervising the construction of a pride variety of industrial installations. Technicians engaged in prospecting for petroleum and other minerals or in making geographic or geological surveys accounted for the next largest total while the remaining were engaged primarily as laborers employed on roads., harbors, and power projects. About 2,500 bloc military specialists in 10 countries were engaged in assembling bloc equipments and training local forces. UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 16 - About one-half of all bloc nonmilitary technicians were in the Middle East. About 25 percent were in Africa, nearly 15 percent in Asia, and the remainder in Latin America. The Soviet Union's rob in the dispatch of technicians has continued to increase, now accounting for approximately 70 percent of all bloc specialists. The European satellites and Communist China account for 20 and'10 percent, respectively, of the remainder. Those from Communist China are in Burma, Ceylon, Yemen, Guinea, Cambodia, Nepal, and Cuba. In the first half of 1962, India, Cuba, Afghanistan, the UAR, Guinea, Iraq, and Yemen -- were the principal hosts to the bloc economic technicians -- accounting for more than 75 percent of the total in the economic category. By sending technicians to countries where skills are in very short supply and by providing training both in the bloc and in the countries concerned, the bloc has brought many key individuals and groups into contact with its arguments in support of its own methods and products. While bloc personnel in general have an acceptable level of technical skill and have pursued their assignments diligently, their performance in a number of cases has reflected narrower training and less advanced pro- cedures than those commonly employed by their Western counterparts. Russians sent to work on petroleum refining in Iraq are a case in point. Typically, bloc personnel seem to be selected on the basis of their technical or pro- fessional skill and political reliability, and evidence of specialized knowledge of the recipient country or its language is so far fairly rare. Bloc technicians as a whole appear to have been careful about overt proselytizing, and the bloc's widespread political propagandaand sub- versive activities seem to be mainly assigned to other personnel. Never- theless, technical assistance provides valuable opportunities and means for ultimately influencing the nationals of the less-developed countries in directions favorable to communist objectives. With this in mind, the Soviets have made special efforts in some countries to place their personnel as advisors to influential officials or in key ministries and projects (e.g., planning, internal security, defense, communications, education, etc.). Such services are expected to yield significant political dividends to the bloc, especially where the recipient government is relatively new or short of experienced officials and technical personnel. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -17- Table 2. SINO-SOVIET BLOC ECONOMIC TECHNICIANS IN THE LESS- DEVLOPED COUNTRIES OF THE FREE WORLD Area and Country 1960 1961 1962 (Jan.-June) Total, All Countries 6,510 8,500 9,620 Middle East 2.730 2.545 2.945 Greece 5 0 0 Iran 60 75 20 Iraq 400 630 830 Syria 540 420 425 Turkey 70 50 55 UAR 1,065 730 960 Egypt Syria Yemen 1,130 640 655 Africa 15 2,000 1.785 Ethiopia , 40 100 .30 Ghana 120 250 255 Guinea 385 1,440 1,080 Mali 120 120 170 Morocco 10 5 Somali Republic 15 40 Sudan 15 25 Tunisia 45 170 Asia as_9A0 3,135 3,870 _ Afghanistan 1,650 1,920 2,320 Burma 60 35 60 Cambodia 235 170 170 Ceylon 40 25 35 India 735 560 665 Indonesia 165 315 410 Nepal 50 75 130 Pakistan 5 35 80 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 18 - Table 2. SINO-SOVIET BLOC ECONOMIC TECHNICIANS IN THE LESS- DEVELOPED COUNTRIES OF THE FREE WORLD / (continued) Area and Country 1960 1961 1962 (Jan.-June) Latin America 290 820 1.015 Argentina 55 50 45 Brazil 10 10 10 Chile 5 5 5 Cuba 220 750 950 Ecuador 5 5 a. Minimum estimates of personnel working on a contract basis for a period of one month or more. Personnel engaged solely in trade promotion or military activities are excluded. Numbers are rounded to the nearest five. UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -19- H. Air Route ansion The expansion of air route's in the less-developed countries has been a major aim of the bloc in rece4,t years. Regular air service from Moscow and Prague is regarded as a useful supplement to the operations of bloc economic assistance programs, tie exchange of cultural and governmental delegations, and the establishment of a Soviet presence in countries where the Soviet Union had been virtually unknown. In negotiating agree- ments providing aircraft, equipment, and training, the USSR appeals to they strong nationalist ambitions of the developing countries and their desire to assert their newly acquired independence and sovereignty in the international arena. Econ=omically profitable operations do not appear to be the paramount objective of bloc air agreements in various areas of the world, but rather economic penetration, political influence, and the pro- motion of Soviet prestige. Since mid-1961 bloc civil aviation efforts in less developed countries have been considerablr accelerated, notably in Africa. During the first six months of 1962, 9e USSR concluded air agreements with Guinea, Ghana, Mali, and Morocco, and initiated an accord with Sudan. In addition the USSR concluded an air agree rent with Cuba, marking the first Soviet civil air penetration of Latin .merica, and Poland entered into an air agreement with Afghanistan. Bloc air routes currently in operation to less--developed countries include Aeroflot and CSA regular scheduled flights from Moscow and Prague to Southeast Asia --- Rangoon, Phom Penh,, Djakarta via New Delhi and Bombay; Czech airline: flights to North ~nd West Africa -- Rabat, Dakar, Conakry and Bamako; and Aeroflot and CSI service to the Middle East -- Cairo and Baghdad. Czechoslovak Airlines; also make regular flights to Havana. Aeroflot ear-vice to West Africa to Khartoum in the Sudan, and to Havana via Guinea is expected to begin; during the late summer of 1962. I. Some Economic PiE advarnta es of Bloc Aid Pr9 rams In addition to the political risks., there are serious economic dis- advantages in Soviet aid for recipient countries as compared with Western aid. The less-developed countries cannot afford projects undertaken for their political appeal or q. ck impact, with their basic economic soundness either ignored or given secondary consideration. In practically all cases these countries furnish a substantial part of the initial out- lay -- not to mention the repayment of credits -- from hard-pressed domestic sources. Inflationary pressures are a common problem. Balanced., self-sustaining growth can be delayed by poorly chosen projects, even if such projects are carried out with technical efficiency. While the bloc can show large gains in output of manufactured goods, few observers would question the general superiority of Western industrial technology and capital goods over their bloc counterparts. Thus, what Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED appears at first to be an advantageous purchase can turn out to be costly in the end. In utilizing Soviet credits for development purposes, the recipient is relatively confined in choosing the goods and services that will be supplied. A loan from a Western, country, by contrast. permits the recipient to shop in a market composed of many competing private suppliers axd to pick and choose from among a wide assortment of goods and services. Bloc credits result in making important development projects depend- ent upon limited and sometimes undependable bloc sources of supply. Countries accepting bloc equipment also make themselves dependent upon bloc support for replacement parts; and, aside from the potential leverage involved, the bloc does not have an enviable record for parts and servicing. 1. General Aims - Prior to 1.954 the Soviet Union had shown little interest in developing trade with the less-developed countries. While the USSR, as a matter of policy, has always tried to maintain an overall balance in its imports and exports, the less-developed countries were viewed largely as suppliers of tropical products and as occasional sources of various types of raw materials not available within the Soviet orbit; for the most part the USSR paid for these purchases by proceeds from sales to the industrialized nations of the West. Since 1954 trade offers -- both export and import -- have played a growing role in Soviet attempts to gain increased political influence in the less-d>'-eloped countries, including diplomatic recognition of bloc governments. The USSR has stepped up both the tempo and scope of its trade pro- motion drive, sending out a large number of trade missions, pressing for conclusion of trade agreements and barter deals, participating extensively in trade fairs and exhibitions, and developing local agencies for its products. Various other members of the bloc have engaged in similar efforts on a wide front. Although the foreign aid side of the economic offensive has received the most publicity in the free world, the Soviets' own statements have emphasized the trade aspect. A leading Soviet economist has stated} ''The most important form of economic cooperation of the USSR with other powers, including the countries which are poorly developed in regard to economic relationships, is foreign trade...." The lure of vast new markets has been repeatedly held out to countries with surplus goods and balance of payments problems. In fact, total Soviet trade with non-bloc countries in 1960 was only about $2.9 billion, a volume of trade comparable to that of Denmark. In the hands of a state monopoly, however, such trade has been timed and directed to give significant support for Soviet political designs. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 . UNCLASSIFIED 2. Value and Pattern of trade - Total trade turnover of the bloc with less-developed countries increased from $860 million in 1954 to $3.4 billion in 1960, an increase of 295 percent (see Tables 3 and 4)*. The great bulk of this trade is accounted for by the UAR, Iran, Yugoslavia, Cuba, Malaya, and Singapore, India, Indonesia, and Brazil, A notable feature of bloc trade with the less-developed areas has been the increasingly important role played by the USSR. Although the European satellites have consistently exchanged the largest volume of goods with these regions, Soviet trade has expanded most sharply. Thus, while trade between the less-developed countries and the European satellites increased from $440 million in 1954 to $1,479 million in 1961, trade with the Soviet Union itself increased from $215 million in 1954 to $1,376 million in 1961. Trade between the less-developed countries and Communist China increased from $205 million to $557 million between 1954 and 1961. To some extent these figures overstate the real growth of the trade since they rare not adjusted for price increases and in some cases represent a switch from indirect trade circumventing strategic controls to direct trade. A few countries account for the bulk of the increase. By careful timing and adroit exploitation of distress situations communist propaganda has been able to make considerable impact from amounts of trade that are relatively small. Although the bloc enjoys only a moderate share of the total trade of the less-developed countries, it occupies a much more important position in the trade of particular countries. In 1960 the bloc accounted for more than 20 percent of the total v4lue of exports of Afghanistan, the UAR, Iceland, Yugoslavia, Greece,, Syria, Iran, and Guinea and for more than 15 percent of imports of Finland, Iceland, Yugoslavia, Egypt, Cuba, and Afghanistan. 3. Commodit; Comosit.i~nof Bloc Trade - Trade between the Soviet Union _ and the less-developed countries is characterized by the exchange of Soviet machinery and equipment, crude'oil and oil products, and metal products for free world agricultural cornmod#rties and raw materials, particularly tropical products. Soviet imports of n=one agricultural products --- natural rubber, raw cotton, wool, raw hides, cr4ffee, cocoa beans, raw sugar, rice, and tea -- account for two-thirds o three-quarters of total Soviet imports from the less-developed gauntries. These, plus other agricultural products such as tobacco, jute, vegetables, Fruits, etc., account for the great bulk of Soviet imports from the less-developed countries. Wool in the past has been imported in considerable volume;, but in recent years these purchases have been declining. Soviet exports of machinery and equipment generally represent about one- third of total Soviet exports to the less-developed countries. Variations from this average are considerable, ranging from no machinery among Soviet sc- In Statistical Appendix. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UPICLASSIFIED -22- exports to Portugal and the Malay Federation to about 75 percent in the case of Turkey. In addition to machinery, the USSR exports other products utilized by the less-developed countries in their infant industrial sectors, including petroleum and petroleum products, rolled steel and other ferrous metal products, cement, chemicals, etc. While machinery and equipment exported by the Soviets are not obsolete, generally it is technologically less sophisticated than much of the capital wares exported by Western countries. The -pattern of trade of the European satellites with less-developed countries is also characterized by the export of machinery and manufactured goods in exchange for raw materials and agricultural products. Purchases in the less-developed countries enable the European satellites to fill mary of the more notable gaps in crude material availabilities. Imports of these products have risen considerably during the past several years. At present, satellite (except for Albania) imports from the less-developed countries are rising under the stimulus of providing substitute supplies for those goods which Communist China is unable to deliver. On the other handy Communist China's exports to the less-developed countries, which have not declined during the current period of distress on the mainland, still include some food products. Imports from less-developed countries provide China with supplementary food and material supplies, as well as most of its rubber supply. It is noteworthy that exports of manufactured goods rose from about 11 percent in 1953 to 41 percent in 1960. These manufactured goods consisted of cotton textiles, light industrial products, cement, chemicals, and steel products. 4. Trade Agreements - The blocs offensive has been spearheaded by a campaign to expand its network of bilateral trade agreements with less- developed countries. By mid-1961, the bloc had signed 222 such agreements with 35 different countries. (See Tables 5 and 6.)* These agreements estab- lish the official framework and conditions for the conduct of trade. They usually express the wi7lingnesa of both parties to engage in trade, establish the types of com wodities to be exchanged, sometimes set target quotas for these items, and arrange for the method of payment. The predominant portion of Soviet trade is with countries with which the Soviet Union had trade or payments agreements., oz- both. It is difficult to make an over-all judgment on performance under bloc trade agreements. About half of the agreements with the less-developed countries do not provide specific targets for volume. In most of the cases where trade targets have been stated, actual levels of trade have fallen short of the specified amounts, indicating that the latter may have been set for propaganda impact. Nevertheless, the agreements are important as an indication of intentions and for purposes of propaganda, and they have generally been * In Statistical Appendix. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 (NCLASSIFIED -23- followed by some increases in trade. 5. Character of Bloc Trade - Foreign trade is a state monopoly in bloc countries and can thus be manipulated at any time to suit the purposes of the government. The problems oaf many less-developed countries in disposing of their principal export commodities in traditional markets at prices they consider satisfactory provide the bloc with opportunities to exploit trade relations as a tool of diplomaby. The bloc thus has taken advantage of Burma's temporary rice surplus; Egyptfs cotton disposal problem, Uruguay's problems in selling its wool, and Iceland2s difficulty in marketing its expand its relations with these countries. Threats,to reduce or out off trade have also been used to exert political pressure on Yugoslavia, Finland, and Iran. While bloc offers are often tempting to countries faced with temporary marketing difficulties for their basic export products, and while bloc countries have stepped 'in on a 'number of occasions to make significant bilateraldeals, this type of trade has drawbacks which may only become apparent to the less-developed country when it tries to obtain return goods. Trade balances built up in onel bloc country are seldom usable elsewhere -- even in the bloc -- and under virtually all bloc barter deals the less- developed country loses the valuable independence of choice of imports of goods and services necessary to economic development, which only multi- lateral, trade with free-markets countries affords. By sharply narrowing the area of choice, it often forces them to obtain commodities inferior to those which could be purchased'for a similar price elsewhere. Furthermore, the expected; improvement in the terms of trade may be illusory. With some notable ekceptions explainable in political terms, bloc traders drive hard bargaa s, sometimes engage in devious trade tactics, and reportedly often. discrimixn6te among purchasers or suppliers. In some cases prices for bloc goods ha re been higher than for those of traditional suppliers. For example, in Burma,, a top-level official, publicly stated that the 'barter deal with the USSR ltimately resulted in a, 10 to 2.0 percent price disadvantage to his country. ientthe price of rice rose on the free market.. Burma sought and finally obtaia ed from the USSR a waiver of its commitments, and a3 a result Burmese-SoTaiet trade fell off in 1956 and 1957. Uruguay reportedly accepted Polish coal at a considerably higher price than that of the world market in order to use its clearing balance with that country. Over a wide range of products, imports from the bloc have proven to be inferior in quality and to represent less modem design and technology than their counterparts offered by free world suppliers. In the event of dis- satisfaction on a -trade deal., the USSR has ordinarily refused to accept the jurisdiction of arbitration tribunals other than its own. Western experience with this state-control arbitration process has not led to confidence in its impartiality. The USSR~s willingness toy provide types of goods in short supply internally has been confined mainly to cases in which political considerations Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -24- were paramount. Thus, some of the less-developed countries have found them- selves with substantial export balances because the Soviets were unwilling or unable to provide the types and qualities of goods which they required. Some of these balances (e.g., in Argentina) persisted for years and have in effect constituted credits from the less-developed countries to the bloc. Po tically inspired bloc purchases at prices higher than those prevailing on the world market result in the diversion of trade and in time lead to the gradual drying up of traditional market outlets. This has occurred to some extent in the case of Egyptian cotton. While the bloc could absorb considerable quantities of imported food and raw materials if it wished, large-scale purchases frequently present the bloc with at least short-run problems of processing and storage capacity, and some countries have complained that their products were re-exported by the bloc at cut-rate prices. Most important, while the Soviet economy is sometimes described as complementary to those of non-industrialized countries, there is no convincing evidence that the USSR plans to change its basic trade policies. Thus, it will probably not provide large new markets for underdeveloped countries in general but will continue to increase its trade -- in terms of commodities and countries -- on a highly selective basis. Moreover, there is little reason to believe claims that markets will be "stable." One of the outstanding features of such trada to date has been its sporadic nature, in some cases reflecting internal economic developments in the bloc but in other instances clearly indicating political pressure on a trade partner. V. BLOC CREDITS AND GRANTS TO SOME SPECIFIC LESS-DEVELOPED COUNTRIES A. Asia Afghanistan - Afghanistan is a major recipient of economic aid from the bloc. Credits and grants received from the bloc since 1954 amount to $514 million. The USSR has been the principal bloc creditor and has offered unusually liberal terms to Afghanistan. The first large loan ($100 million) carries an interest rate of 2 percent and is to be repaid over a 22-year period. More recent loans provide for payment up to 50 years, with grace periods up to 25 years. Afghanistan is the only country which has received a substantial grant from the USSR. It also is the recipient of a substantial amount of local currency aid, not generally available from the USSR. Small credits extended in 1954 have been used for the construction of two wheat elevators, a flour mill and a bakery, and for the paving of streets in Kabul. A $100 million credit, extended by the USSR in 1956, has been earmarked for a number of projects. Machinery for a metals workshop complex has been delivered and installed. Work is either Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -25- finished or well toward completion on transportation projects, such as the Salang Pass road and the Bagram and Kabul airfields. Considerable progress has been made on the Darunta irrigation and hydroelectric project and on the Naghlu dam and hydroelectric plant. The large grant of.$80 million was provided by the USSR in 1959 after Afghanistan determined that it was financially unable to assume additional foreign debts. The grant provides for Soviet assistance in building a 470-mile road from Kandahar to the Kushka railhead on the Soviet-Afghan border. Construction is underway on this road. Soviet projects covered by other credits or grants include port work at Qizil Qala (completed), oil exploration (half finished), and POL storage facilities (completed). Some wheat also, has been given to Afghanistan, The most recent credits of more than $200 million are for use during the Second Five-Year Plan. Petroleum exploitation and power development account for the major part of these credits. Czechoslovakia also has provided a small amount of economic aid to Afghanistan. A 65 million medium-Iterm credit provides funds for two cement plants (completed) and a fruit cannery (completed). India - India has received mc{re economic aid from the bloc than any other country in the free world. All but a minor portion of the $950 million that India has been extended by tJe bloc has been in the form of credits, primarily large extensions from t,e USSR. The first Soviet credit was extended in 1955, for $116 million}, to cover the foreign exchange cost of the Bhila,-L steel mill. Since the. additional large lines of credit were extended in 1956 (6126 million), in 1959 ($375 million), and in 1960 ($125 million). Other, smaller credits1for specific purposes also were extended by the USSR during the 1955-60 pe4iod. Some of the European satellites, most notably Czechoslovakia, also have extended smaller credits, ranging in size to as large as $49 million obtairild from Czechoslovakia in 1959. Terms for both Soviet and satellite credits call for repayment over 12 years. Early credit extension$ specified that repayment would begin one year following the drawing of any part of the overall credit. Agreements since 1959, however, have stipulated that repayment would not begin until one year after project completion. Interest rates are generally 2.5 percent. The Bhilai steel mill is the:major Soviet bloc project that has thus far been finished. An agreement has been negotiated to expand the capacity of the mill. Several smaller projects, a petroleum refinery, three sugar refineries, and a cement plant, for example, also have been completed. A number of projects ,re under construction; substantial progress has been made, for example, on the large hydroelectric installa- tion in Neyveli. The large projects, promised for construction during Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCl ASSIFIED - 26 - the period of India9e Third Five-Year Plan, however, generally have not been carried beyond the survey and planning stage. Many of the bloc projects, such as the expansion of the mill at Bhilai, a heavy machinery plant at Ranchii, a mining equipment plant at Durgapur will play a key role in ful- filling the construction goals of the plan period. Important also is the Soviet bloc assistance promised for petroleum and gas exploration and development. Indonesia - The bloc has continued to extend new economic credits to Indonesia, which at the end of 1961 had received a total of $641 million in bloc credits and grants. While recent assistance has been in the form of relatively small credits, primarily from the satellites and China, large credits of $100 million (1956) and $250 million (1960) have been extended by the USSR. The larger credits follow the 12-year repayment at the 2.5' per- cent pattern; the smaller credits -- which account for about 45 percent of all bloc credits to Indonesia -- generally are on less favorable terms. The $100 million Soviet credit -- not ratified by the Indonesian Parliament until 1958 -- has been committed in large part for road con- struction and a steel mil?,, both of which are underway. Some of this credit was used to purchase cargo and tanker ships from the USSR, as well as roadbuilding and construction equipment. The $250 million credit has been only partially obligated; the commitments include hydroelectric and aluminum reduction facilities, an integrated iron and steel mill, and several small chemical, textile, and metal-working plants. Nuclear reactors also have been promised, one for Djakarta, under this credit. A large hospital as well as-the stadium for the Asian games also are Soviet projects, the former as a grant. The European satellites have been active in Indonesia. Poland has pr?)vided credits for ship deliveries and for shipyard construction, more recently for a cement plant, -a smelter, and railroad cars. Czechoslovakia has extended credits for construction of a tire factory in Djakarta, a cement plant in South Celebes, irrigation protects in Java, and for agri- cultural modernization in Sumatra and Borneo, and the purchase of diesel generators. East. Germany has built a sugar refinery in Jogjakarta, encounter- ing more than the usual number of difficulties. Hungary agreed during 1961 to erect several ma'1 light industrial factories under a $22 million credit. Rumania has provided petroleum development assistance. Commmist China has not supplied project assistance to Indonesia, but it has furnished an $11 million credit for textiles and rice deliveries and agreed in 1956 to fund an earlier trade deficit of $16 million. Moreover, China is now committed to furnish textile plants under an agreement negotiated during 1961. Enormous amounts of military goods have been supplied by the bloc to Indonesia. Ground, air, and naval equipment has been delivered and training Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 2 - has been. furnished under creditt extended by the USSR and the European satellites. Much of the equipment, moreover, has been priced with sub- stantial discount allowances, Burma - Burma M6 received; about $91 million in extensions of economic assistance from. the bloc. Most i of this sum, $84. million, has been obtained as a loan from Corm unist China during the past year. This loan is interest- free, to be repaid over a 10-year period beginning in 1971. Other bloc assistance consists of a technological institute, a hotel, and a hospital, valued in total at about $12 million and provided by the USSR. Al]. three of the Soviet projects in Burma have been completed. Specific project com fitments under the Coprmau.nist. China credit were not negotiated before December 19611 consequently none of the installations have yet been started. Scheduled for construction are such things as several cement plants, a sugar *ill., a tire factory, a bridge over the aaiween river, several small hyiroelectr is plants, and a 265 mile highway. It appears probable that the to al cost of this list of projects will be greater than the credit from G ad Cambodia - Bloc economic apsistance to Cambodia now totals about $65 million. About $49 million has lbeen received from Communist China as grants extended in 1.956 and in 1960. ether assistance consists of small grants from European bloc cou ntries, t e largest of -which is a Soviet--b4it hospital valued at `$6 million, and of a ~zeeh credit estimated at about $14 million. Aid from Communist China w a used in the construction of a textile plant, a paper m11, and a plywood factory and is currently being used on a cement plant, and various ag4cultural or public works projects. Addi- tional Chinese assistance has been committed for-the expansion of the factories already, finished or under construction, as well as for the con- struction of a steel mill and a; farm implement works. Technical studies for this assistance are now under way. Contracts for the Specifics use of the Czechoslovak credit have not yet been annownced. It appears,, hoover, that the credit, when it is used,, probably will be drawn upon for financing a palm sugar refinery, a tire factory, and a tractor assembly plant. Czechoslovakia has already delivered a: grant aid two generators to Cambodia. Ceylon has accepted $58 million in. credits and grants from bloc countries, all of which was obtained during 1957-58. USSR credits amount to $30 million, Czechoslovak credits less than $2 million, and Communist China credits about $11 million. Communist China also extended a grant Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 of $16 million. Some of the smaller bloc projects, a sugar refinery and a bus workshop, for example, have been completed, but the remaining projects, including hydroelectric installations, a rolling mill, a grain elevator, and agricultural facilities, have not advanced beyond the survey stage. A number of construction contracts, however, were negotiated during 1961. Nepal has accepted about r54 million in bloc economic assistance, all in the form of grants. Corr::ani-st China has provided about $44 million and the USSR the remainder. Lbout :5 million of the grants from China have been available in foreign exchange, which has been used, and the remainder has been assigned for roadbuilding and, to a lesser extent, such projects as a paper mill, a cement plant, and power facilities. While construction contracts were signed during 1961 under the grants from China, one of which dates back to 1956, work has not yet begun. Construction of the Soviet hospital and the road survey, however, are both under way. Pakistan accepted a ti30 r::illi.on credit from the USSR during 1961. The entire sum-is to be used for oil exploration -- which has already begun -- in Pakistan. B. Middle East The UAR (Egypt) - The U%a has accepted about $673 million in econor;ic credits and grants from the bloc, as well as a substantial amount of military aid. The USSR was committed to extensive economic aid to Egypt beginning in January 1958 with the signing of an agreement for a $175 million Soviet line of credit. Annex I of the araer;:ent covers 40 specific projects agreed upon by Soviet and Egyptian authorities. These include geological research and mining, petroleum research and refinery operations, equipment for metallurgical and engineering industries, three textile plants, and other manufacturing enterprises. Annex II lists 25 other projects as potential areas of cooperation. Implementation of the large Soviet economic aid agreement of January 1958 has proceeded slowly, but a number of construction contracts have been signed. In October 1958, the USSR agreed to provide Egypt a credit of *W1OO n.illion for the construction of the first stage of the Aswan High Dam. The x;100 million Soviet credit is expected to cover the cost of machinery and equipment as well as a portion of the expenses of Soviet experts work- ing on the dam; it is Egypt's responsibility to finance the local costs of the first stage of construction which may run as high as $200 million over the next four or five years. Construction was formally inaugurated in 19160. Also in 1960, it was announced that the UAR had reached a pre- lix:inary agreement with the USSR to finance the latter stages of the Aswan I,ih Dam project by means of an additional $225 million credit. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 29 The UAR is to repay the Aswan Dam credits in 12 annual installments beginning the year after work has been completed. Interest at 2.5 percent per annum will accrue from the time each part of the credit is drawn upon. Work on the first stage ofthe..Aswan Dam appears reasonably on schedule, considering engineering difficulties encountered. It was necessary, however, for the USSR to send to Egypt iii late 1961 a high official in its foreign assistance organization in order to iron out some of the more difficult troubles that had arisen. While final second stage plans have not yet been presented to UAR officialsfor approval, the Soviets have announced that construction of the necessary machinery and equipment is under way. In August 1955 East Germany provided the UAR with a credit of $21.5 million for 20 industrial projects in Egypt. Other East German projects in the Egyptian region involve two additional credits, totaling $6.2 million, extended in 1955 and 1956 for electrification projects in the Nile delta. A series of Czech-Egyptian economic agreements concluded over a five-year period have provided some $34 million in credits for the con- struction of sugar refineries,a ceramics factory, cement plant, and bicycle factory, and for the purchase of machinery and equipment for municipal and rural projects. Hungary extended a credit of $5.7 million for a power plant at Al Tabbin 'in 1955 as well as the $14.4 million credit, noted above, which was extended in late 1960. Syria - The sudden departure of Syria from the union with Egypt apparently has not prevented tl'e bloc from going ahead on its aid commitments. All of the bloc assistance committed to the Syrian area had been extended prior to the union with Egypt. Total bloc commitments to Syria amount to $178 million. Proposed projects under the $150 million Soviet credit opened in 1957 include river development programs and related irrigation schemes, geo- physical surveys, electrification programs, and the construction of a railway, electric power plants, and a fertilizer plant. Implementation of this agree ment has moved slowly. Only asmall sum has been drawn, and this primarily for geological surveys. A num~er of contracts have been let, and several technical studies have begun. ;Three major contracts (valued at about $71 million) awarded to the Soviet'Union relate to construction of an ammonium nitrate fertilizer plant at Homs, oil and phosphate prospecting in north Syria, and construction of the; Qamishli-Latakia-Aleppo Railway. A major undertaking that the USSR was expected to assume in the Euphrates river basin, however, has been assigned to free world interests. Between 1955 and 1957 the Syrian region also received credits totaling $13.7 million from Bulgaria for the construction of a grain elevator, military barracks, and an airfield; nearly $20 million from the Czechs for the construction of cement plants, sugar refineries, a china factory, and a petroleum refinery at Hems; and nearly $3 million from. East Germany for textile Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -30- mills, a cement plant, a shoe factory, and a hospital. All of these projects have been completed. Yemen - Yemen has received about $44 million in credits from the bloc since 1956 to carry out various economic development projects. The USSR in mid-1956 provided Yemen a credit of $25 million to be utilized over a five-year period and to be repaid over 15 years at 2.5 percent interest. Part of this credit was earmarked for port construction work at Hodeida, now finished. Some 05 million of the 25 million credit has been obligated for projects related to the development of agriculture, particularly irriga- tion works and cotton cultivation projects on the coastal plain near Hudaydah. In 1959 the USSR completed construction of an airport north of Santa and delivered a 10,000-ton gift shipment of wheat for famine relief in that year. Communist China in January 1958 extended a $16.3 million interest- free credit for the construction of a road from Hodeida to Santa, and for the construction and equipment of a textile mill. Repayment of this credit is to be made in 10 annual installments beginning one month after completion of the projects. The construction of the road has been accomplished despite difficulties in obtaining some materials and friction between the Yememis and Chinese personnel, the latter numbering, at times, 800 or more workers and technicians. Work on the textile mill has not begun. Some technical assistance has been provided Yemen by bloc personnel. A geological survey of mineral resources was carried out by Soviet technicians in 1958, while a few specialists from the European satellites have been employed in Yemen on highway, communications, and light industry projects. The USSR, Czechoslovakia, and East Germany have also sent medical personnel to Yemen in small nur.~bers. Iraq.- The Qasijn government in Iraq has accepted about $216 million in economic credits from the bloc since it seized power in 1958. rilitary forces in Iraq have been receiving substantial quantities of Soviet bloc materiel, largely under credits. . The.USSR has been the principal bloc creditor, extending for economic assistance about $138 million in 1959 and $45 million in 1960. Czechoslovakia has extended an economic credit of about $34 million. The Soviet credit of 1959 envisaged its use for a steel :mill, a fertilizer plant, a pharmaceutical plant, an agricultural machinery plant, a glass factory, railway expansion, three textile mills, a shipyard, three telephone exchanges, a geological survey, and river development projects. Separate project agreements were to be negotiated for each project. The 1960 credit of $45 millicn from the USSR was for major rehabilitation of the Basra-Baghdad Railway. The 03.6 million credit from Czechoslovakia covered technical studies on oil refining, a petrochemical industry, and power generation. UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -31- Difficulties in carrying, out bloc-aided projects appear to be reflected in mutual charges of procrastination and failure to cooperate, andin Iraq-' criticism of the bloc's failure to deliver goods on schedule and lack of quality control. In general, .projects have not progressed beyond various stages of planning and surveys. Exceptions include bloc activity on experimental farms, a broadcasting station, and a telephone exchange, and the oil exploration program it the area near Kh,.-aaa i`i.n. Laying of track on the Baghdad-Basra railroadhas begun. A food-processing plant and a tractor station are nearly completed. Construction of a.garment factory and a drugs plant has gotten underway. Specific contracts for many of the other bloc projects have been signed. Other Middle Eastern Countries Turkey has accepted about $17 million in credits, from Soviet bloc countries. A $5 million Czech credit was extended in 1955 for the purchase of 150 railway cars. During 1956 and 1957 Turkey contracted with Czech firms for a textile plant and:equipment for a diesel engine factory financed under two credits which together totaled about $1.4 million. These plants are now completed as are a power plant and a vegetable oil factory financed under two 19% agreements with Hungary for credits totaling $1.1 million. Soviet credits to Turkey; first extended in July 1957, totaled nearly $10 million. Additional and sibstantial Soviet offers of aid have not been accepted. Soviet aid was extended for textile machinery, a flat-glass manufacturing plant, and for the purchase of road construction equipment. The flat-glass factory is neaxing completion and the textile plant has been finished. Iran has received only $6 million in credits from the bloc, all from Poland and intended for use ir'n the construction of two privately owned sugar refineries. Both have been completed. Soviet offers of aid, generous in amount but demanding in political concessions, have been rejected by the Shah's government on several occasions. Although Cyprus has received no long-term credits or grants from 'the bloc, it recently concluded an. agreement with Poland for the improvement of the Port of Famagusta. Cost of the project will be $3.4 million, with 40 percent of this sum carried on a two-year Polish credit. C. Latin America Cuba - Castro's government has been extended,;uli,; million in long-term credits by the bloc. USSR commitments amount to v3,00 million, Communist China commitments are $60 million, and the European satellites $97 million. All of these credits have beer' extended since February 1960 and all are for use during the 1961-65 plan period of Cuba. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -32- Acco,.sding to Cuban claims, 204 factories or other installations are to be built with bloc assistance. The USSR is to have ready for operation by 1964 or 1965 a steel mill, a nickel plant, and an oil refinery. Among the plants promised by the European satellites are factories for the pro- duction of textiles, metal produc-s, refrigerators, pencils and kitchen- wares, and several power plants. Communist China is to assist in establishing farm stations as well as other unspecified projects. While several surveys and other exploratory studies by bloc specialists have been completed and many of the bloc projects are under way, only a few small projects have been finished. Bloc assistance has been instrumental, in other ways, however, in providing assistance for the Cuban economy. Many of the 950 or more bloc technical personnel have been employed in existing factories and plants, filling pEart of the gap created by the departures of the supervisory, technical, and administrative personnel who had been running these estab- lishments. Moreover, by paying premium prices for its sugar (4 cents per pound as compared with the present world market price of less than 2.5 cents) the bloc is in effect providing a grant to Cuba. These purchases amounted to about 4.5 million tons during 1961. Bs'a'ail - While Brazil has entered a number of short-or mediur'-term contracts with bloc countries, involving substantial sums of money, long- term credits amount to less than 04 million. The long-term credits were for a Polish sale of ships to a private firm and a Czech sale of equipment for a cement plant. The most significant short-and medium-term credit transactions involved sales of 1?4. Polish freighters. of Czechoslovak hydroelectric equipment worth $7 million, and of East German automotive machinery valued at $5 million. A. number of bilateral trade agreements with bloc countries were negotiated during the spring of 1961. These agreements appeared to open the wady for Brazil to purchase capital equipment on credits, the terms for which are ambiguous and may, but probably do not, involve long-term financing. All of these agreements were negotiated by the Quadros government and those requiring. legislative approval have not been ratified by the Brazilian legislature. Consequently, their status is unclear. A Soviet offer to construct a pilot plant for the ex-.raction of gas from extensive oil shale deposits in-Brazil, also, is an unsettled matter, as is a Soviet proposal for extensive projects in the restive northeastern area of Brazil. Argentina - Extensions of bloc credits to Argentina amount to $104 million. A Soviet credit of $100 million was obtained in 1958, to be used for the purchase of petroleum equipment. Supplies valued at about $32 million have been delivered. An agreement has been reached permitting the remainder of the credit to be drawn upon also for other types of equipment and machinery. A small delivery of roadbuilding machinery has been made. The Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED -33- other small bloc credits came from Czechoslovakia for use in installing a coal- washing plant and in constructing a cement plant, both of which have been finished. D. Africa Guinea - Guinea has been a major target of the bloc in Africa and has now accepted credits and grants totaling $125 million. The Czechs spear- headed the drive in 1959 with a $10 million long-term economic credit and several grants for highway equipment, a radio station, and arms. During 1960, the Hungarians. Poles, and East Germans provided Guinea with credits totaling $12.4 million. Communist China first entered the picture in mid- 1959 with a donation of 5,000 tons of rice, followed by a second gift of 10,000 tans in mid-1960. In 1959 Guinea accepted a$35 million line of credit from the Soviet Union for material and technical assistance. Projects later agreed upon include: a technical institute;, a 17,000-acre state rice farm, a number of small industrial projects, a 25;,000-seat sports stadium, and reconstruction of the Conakry airport and the Conakry-Kankan railway line. Bloc aid to Guinea was nearly doubled in the fall of 1960 following a September visit of Guinean Prime Minister Sekou Toure to Moscow and Peiping. The Soviets extended a further development credit of approximately $21.5 million and the Chinese Communists extended Guinea a $25 million interest- free credit, repayable over 10 years beginning in 1970, for technical assistance and for the delivery of equipment and materials to be used in various other economic development projects. The only specific project mentioned under the new Soviet credit was USSR participation in a couple of projects on the Konkoure River. During 1961 the construction pace was stepped up; several projects, including a radio transmitting !complex and a printing plant, have been finished. The number of bloc tlachnicians operating in Guinea has multiplied rapidly in conjunction with bloc assistance in carrying out geological research, road building, and project surveys, and with the extension of bloc advisory services to the Guineah broadcasting system, the Conakry airport, the Bureau of Mines, and other government agencies. Bloc personnel in Guinea now number nearly 1,500. Ethiopia - Credits and grants extended by bloc countries to Ethiopia amount to.$114 million. The largest extension of assistance was a 1959 Soviet credit of $100 million fcr construction of an oil refinery in Assab,- a gold ore-processing plant in Adola, geological and mineralogical surveys, and a feasibility study for a metallurgical plant. To date, the only portion of the credit actually used by Ethiopia has been $2 million in con- vertible currency for the Emperor*s land reform program. A contract for a $12 million oil refinery, however, was signed in 1961. The USSR also Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 34 - provided Ethiopia with a $1.8 mil]4on grant in 1959 for the construction of a technical school. Czechoslovakia agreed in 1959 to furnish a $10 million line of credit for the construction of a canvas shoe factory and for the development of cotton and sugar plantations. Previously, Czechoslovakia had extended nearly $1.8 million in.credits for the purchase of hospital equipment and supplies. While the latter have been delivered, only the shoe factory has been started under the $10 million credit. Failure to implement with despatch bloc- supported projects probably has been due in large part to increasing Ethiopian wariness that bloc aid might promote communist subversion. Ghana - President Nkrumah has declared that Ghana has received about $265 million in credits from the bloc. Of this sum, about $196 million is identifiable as credits arranged for specific announced agreements for economic assistance. All but $53 million, received from the USSR during 1960, has been obtained during the past year. In 1961 the USSR extended a new $42 million credit, Communist China extended a $20 million credit, and the European satellites extended the remaining $67 million. Under the USSR line of credit the Soviets are committed to work on a geological survey, a steel mill, a study for a major hydroelectric power station on the Volta river, a shipyard at Tema, housing development in Accra, a tractor assembly plant, and other projects. While some specific obligating contracts have been signed, few projects have gone beyond the planning stage. Delivery has been made, however, on several aircraft (IL-18's) for Ghana Airways. European satellites are now building a tire factory, a printing press, a pharmaceutical plant, and an electric bulb factory. They are also committed to construct other installations such as a cable factory, a sugar refinery, and a shoe factory. The specific commitments of Communist China, if they have been made, are not known. Other African Countries Bloc activity in other parts of Africa during 1961 has increased con- siderably the scope of its economic relations with the newly independent countries on the continent. Mali. has now accepted $98 million in bloc credits, the Somali Republic $63 million, Sudan $25 million, and Tunisia $46 million. Mali has accepted a $44 million credit from the USSR and smaller credits from the European satellites, primarily Czechoslovakia. The USSR is committed to engage in mineral prospecting, to build a cement plant and a connecting rail line to the Guinean line, and to deliver aircraft. All of these have been started. Other uses of its funds, a training center and a stadium, have not begun. The satellites are to build a flour mill, a textile complex, pro- vide press equipment, and peanut processing plants, and deliver several buses. Some progress has been made on some of these commitments, but since all were entered in 1961, it is unlikely that they will be fulfilled entirely for some time. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 35 - The principal credit received by the =So na7~ '- epu~l amounts to $52 million from the USSR. Smaller credits have been obtained from Czechoslovakia, $4 million, and both the USSR and Czechoslovakia have extended grants amount- ing in total to $6 million. No firm project agreements have been signed as yet under the. lines of credit; 1owever, a number of surveys have been com- pleted and contracts may soon be, forthcoming. Among the most undertakings are a hydroelectric complex on the Giuba river, port development and water well drilling by the USSR, and a tractor assembly plant, a power plant, and food storage plants by Czechoslovakia. Sudan concluded a $22 million credit agreement-with the USSR in November 1961. The USSR is to Provide assistance in the construction of three grain elevators, four caning factories, an asbestos cement plant, agricultural and animal husbandry research laboratories, and a cotton selection station. Soviet techticians already have begun the surveys preparatory to construction. All but $8 million of the bloc credits received by Tunisia were obtained during 1961. A Soviet credit of $28 million, extended in August 1961, is intended for use in building several irrigation dams and to estab- lish a National Technical Institute at the University of Tunis. Czechoslovakia extended a $10 million credit 1h October 1961 to cover deliveries of unspeci- fied machinery and equipment. A Polish credit of $8 million, also, covers sales of machinery and equipment. No additional details are available on the implementation of these agreements. E. kSope Iceland - Iceland has accepted two credits from bloc countries totaling about 4.6 million. The first,from Czechoslovakia in 1956, involved X105 million for the purchase of hydroelectric units and three small power trans- former stations. These commodities were delivered during the period 1957-58 and are now in operation. Contracts were signed in 1957 with East Germany for 12 ships (250-ton fishing vessels) valued at $3.1 million. In 1958 this agreement was converted into a long-term credit, and the USSR agreed to refinance it over a 12-year period by increasing the overdraft facility under its clearing agreement with Iceland. Interest on this Soviet $3.1 million credit was set at 2.5 percent payments to be made in fish products. The delivery :in 1959 of several of these small trawlers was followed by mounting criticism of faulty construction, inferior aluminum linings in the holds, defective auxiliary engines,-and poor-quality ballast. Iceland has drawn only about half of the credit, and it seems unlikely that the remainder will be utilized. Yugoslavia - In 1956 Yugoslavia accepted a total, of $464 million in economic credits from several countries of the Soviet bloc. Almost all the credits had a 10-year repayment period and bore 2 percent interest. The ideological controversy with Yugoslavia was renewed early in 1958, and as a result the USSR in May of that year suspended a $110 million Soviet investment Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED - 36 - credit earmarked for a thermoelectric power station, fertilizer factories, dredging equipment, and mining improvements, and a joint Soviet-East German credit for $175 million extended for the construction of an aluminum combine. Prior to suspension Yugoslavia had been able to utilize only $15.8 million of these two credits. Work had already started on one fertilizer factory and on the coal-mining combine but little progress had been made on the huge aluminum combine to be constructed in Montenegro under the joint Soviet- East German credit for $175 million. All of a USSR credit of $30 million in hard currency was used, but only $27.1 million of a $54 Soviet conniodity credit, likewise extended in 1956, was drawn upon before the remainder was suspended in May 1958. About $18 million of two Czechoslovak credits amounting to $75 million was utilized or was under contract before the remainder of these two credits expired at the end of 1958. A Polish credit of $20 million, however, remained in force and was completely drawn upon by the close of 1960 Thus, of the total of $464 million in bloc credits extended in 1956, only $171?1 million was actually available for disbursement. This entire amount was entirely utilized by early 1960. Despite limited improvement in Yugoslavia?s economic relations with most Soviet bloc countries since mid-1959, there have been no new offers of credit. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2 Ekfl!a-RDP68B00255R000300100067-6 Table 3. Bloc Exports to Selected Underdeveloped Countries a/ 1959 -1961 Million Current US $ Total Blo c European Satellites Cosmuxist China. Area and Cowit 1 1959 1960 9 1959 1960 9 1959 19 9 99 9 9 1,129.2 1,374.1 1,673.L 32698 435.9 590.6 563.6 676.8 792.2 237.0 258.9 281.6 Latin America. 125.4 265.2 535.9 28.0 114.3 246.1 96.5 137.5 208.1 0.8 13.3 76.8 gentiiia,- d/ 49.1 47.1 48.6 21.9 13.4 10.7 27.2 33.7 37.8 C/ 0.1 -I -a zil 49.Z 79.6 70.3 1.3 17.6 19.2 47.9 62.0 51.1 0.3- 0r.~:e d/ 0.5 1.1 1.5 0/ 0/ 0.5 1.1 1.5 y c/ c/ olombia 2.6 5.4 5.0 W 0?2: 2.5:. 5.2 4.9 O.I.. ' 7/ 0.71 1.5 105.0 395.0 V 72.0 21500 1.4 21.0 100.0 c/ 1,200 75.0 uadar cz/ 1 0 f f . o o Guiana d7 0.9 1-3 104 c/ 0.8 1?3 1 0.1 2.4 3.6 3.1 005 0.5 0.3 1.5 2.3 1.7 0.4 _8 1.1 _o u d/ 0...8 1.33< 1.2 c/ Q/ 0/ 048 1?3 1.2 C/ V c/ 1 1,3 15.0 4.1 4.3 10:6 009 7.0 4.4 3.2 1 W Venezuela b/d/ 7.0 5.8 5.7 0/ c/ 6.8 5.2 5.3 0.2 0 75 o1 .371w-5 .. .. -380.1 401.9 ~34~0 ----157.E---208-0 213 --205el - . 29.1. 29a7 38.8--- :yen 2g8 3.9 2.7 2.7 3.7 2.6 0.1 0.2 O.1 y:;2 -us 3.0 2.7 3.2 06 1.7 300 2.0 1.5 Greece 42.2 55.5 50.4 16.0 28.3 19.9 25.9 27.2 30.4 0.3 cf 0.1 rn d/ 37.1 3003 49.2 20,8 1793 23.0 16.3 13.0 16.6 a 9.6 ;aac a/ 18.2: 3810 38.9 4.0 7.4 10..6 . 10.? 23.5 2146 3.5 7.2- 6.7 ere 6.2_ 4.2 6.7 0.3 0.4 0.3 5.8 3.8 5.8 c/ 0.6 0~-o ' an .6 4 .2 7 7.4 0.1 0.1 4.6 5.9 6.2 1 0.9 _-h nona f/ 8.9 13.9 13.0 2.5 4.7 4.0 6.4 9.2 g.0) - oya d/a 1.4 2.4 4.5 0.6 0..9 1.9 0.8 1.2. 2.1 0.3 0.5 _lta d/ 1.1 1.2. 2.0 c/ C/ c/' 1.1 1.l 118 P 0.1 0.2 Syrian Arab - Republic d/ 19.9 19.3 18.6 6.1 7,3 8.0 12.3 10.7 9.3 1.5 1.3 i.2 turkey d/ 42.4 -K.6. 3944 6.6 6.0 8.7 35.8 36.6 30.6 of United Frab Ree. b/181.6 158.9 165.9 77.1 63.4' 7984 82.6 75.7 67.6. 23.7 19.5 18;9 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 TINCLUMMIM Table 3. Bloc Exports to Selected' Underdeveloped Countries a (continued) million Current US $ Total Bloc USSR European Satellites "Co=rvnist Mina - T ZT 1 59 19 1~&LL 1 60 1961 1959 13W 1959 1960 9 9 Area and Country 1959 9 8 0 12 1 158 12 0 2 26 36.0 56.2 73.3 89.5 21.5 27.2 30.14 Lfrica. 9.5 9. . , . eria b/ 1 l 114014 10.8 7.7 3.9 1.9 0.6 8.6 7.0 6.1 2.G.- 1.8 0.8 , g l d7 0 ? 0 4 14 0 - ~.. 0.7 ?.14 0,14 -- C/ "o a o d7 Ccn . 3 1 . 2.1 . 0.6 0.1 c/ C/ 3.0 2.1 0.5 61 0.1 g Cameroun d/ . 1.14 1.0 112 c/ Z. _1011 1,0 C/ C/ Ethiopia 1.8 14.6 14.1 0.6 1.5 0.9 1.2. 2.8 2.9 0.73 Federation of Rhodesia and 1 N A Nya sal and 1.3 2,0 1.9 a/ 210 N.A. 1.2 N.A. 0. . . Ghana d/ 10.2 15,0 21.1 1.6 6,2 8.6 10.4. 12.5 2,2 3.0 2.4 Guinea-b/ 9.0 22.a 29.8 ]Z0 5.2 8.5 6.0 16.0 16.7 -- 0.6 4.6 Ivory Cost N.A. 0.l N.A N.A. - N.A. N.A. 0.1 N.A. N.A. N.A. a K 0 14 0 6 0.6 --- 0.14 0.6 0.6 eny rocco M . 1 15 . 22.7 26.9 2,5 6.5 14.1 14.9 9.2 114.2 8.0 7.1 8.6 o Nigeria d/ . 114.7 16.7 19.0 c/ 9.5 11.7 15.2 5.2 5.0 3.8 Se:iegal,1li, Mauretania N A 6 5 9.9 N.A. 5.14 N.A. 0.1 1.1 N.A. 6.111 3.14 Sudan d/ . . 12.14 . 16.7 22,0 2.9 7.6 7.0 7.9 9.7 2.6 2.2 14.6 Togo d7 N.A. e/ 0.1 T.A. -- N.A. e/ 0.1 N.A. -- Tunisia 4.2 67 10,1 1110 29 2.7 1.8 3e0 6.1 1.4 0.9 Uganda 0.1 001 C : --~ 0.1 0,1 0.1 1 Sierra Leone 0.14 1.0 2.6 -- 0.1 C/ 0h 0.9 2 f1 0.5 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 3. Bloc Exports to Selected Underdeveloped Countries a/ ( continued) Million Current US $ A?ea, and country Afghanistan f/ Burma b/, d/ - bodia l/ Ceylon India b/ d/ Indonesia-b/ d/ Ma3a ya Pakistan Taiwan d/ Thailand Europe Total Bloc USSR European Satellites 1Q Q 3Q iZ5 , In en -rn 317.2 346.9 367.5 32,5 31.7 25.4 X3-5.0 6,2: 1404 36.4 32.4 78.9 74.4. 69.2. 72.4 56.0 64.0 7.9 14.9 1,6 2,2 3.1 5.5 22506 252:,9 32.0 26.0 1203 18,2 124.6 69.2 67.0 10.6 1.3 6,3 73.3 81.4 99 1960 9199-~-191 103.5 64,3 76.1 1127.2 182.4 187.6 135.3 28,0 31.7 32.0 4.0 N.A. N,A, 0.5 3,9 269 3.5 5.1 7.-6 4-7 16.4 1.1 2,1 1.:6 0.8 3.6 3.8 4.2n0,5 1.3 2.0 4.4 3.3 8.9 31.5 35.0 27.9 47.2 31,2 39.7 7304 11.7 2.5 6,7 8.8 - 5.15 7 5 20.8 61.2 0.8 2,2 2'.8 4.4. 4.7 7.9 51.1 0.8 5.3 3.8 209 5.5 3.2 4.2--. 0.7 210oO 79.5 Iceland 29?1 20,6 17.4 15.2 Portugal 4.7 8,1. 8.5 1.6 . . Spain d/ 19.5 11.5 12.2- 5.1 3.7 1.4 Yugoslavia b/ 172.?3 212.7 171,9 57.6 57.2 3304 N.A. LAO 24.6 17.8 8.1 6.1 27.8 7.3 6.8 p3.7 5*e0: 39.2 57.1 56.3 4.0 3.6 2.2 1.3 -- 1.6 204 4.2 4,5 142.6 17 3,6, 162.3 3,2-- 13.8 2.8 13.9 112.1 803 6.4 5.5 6.6 7.6 10.8 154.9 138.5 J C/ V.a Oe4 26 1.1 0/ 0._3 0,2- o.6 0,3 C/ 0.3 a, These data. are based on a f ici tra e std istics o t e Free t~~br countries iravoi~e the excep -ion Af zha o Stasz) ~. - Cla # c i 1 a a R F n ovrarave# n w.y fi .. J _ J _ __ _ t traA.A...e. ~?ns ne s reported IMPOMSO 'AU values have been rounded to the nearest $100, 000. A dash (..:) entry indicates that no _ figure for trade is known., although some trade may have taken place, Totals are derived from unrounded data and may not agree with the sums of the rounded components. 1,3 75.6 12.4 2 3 1:,8 47.4 11.0 1 6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 3 Woo Exports to 3eLdcted Underdeveloped Countries al( (-continued) b. Total figures include the following Bloc exports: Destination Thousand Current US $: North Vietnam Nortt Iowa 1959 1960 19gr 1959 13W-m 1700 -- S,a0O Yeraezaela~ t now Jordan 123 87 United Arab Republic E7lgeria 56 ho 203 25 Guinea ~,,,,Bir'ma podia 36 203 590 856 1 lama. 1? 1 l,051 1 Indonesia 1,a4o 166 326 Thailand 31 Yugoslavian 57 c. Less than $50,000. Trade figures fo I961 are at an annual rate for the fo7loaring countries: Nigeria, India., Peru, Syria and Turkey for January-November; Spain, Angola and Argentina and Guiana for January- October; Ira$, Libya and Burma, Ethiopia, Togo and Sierra Leone for JanuarywSepte2mber; Sudan for Jam-August; Chile and Taiwan for January-July; Ecuadox`, Indonesia and Yalta "for January June; Iran,, and Venezuela for January-may;: Cameroair for Jlanuary-April and Congo for January-March* e. Estimatedo f. Imports for 1961 are estimated g. Includes imports from unspecified Soviet Bloc countries to Federation of Rhodesia and Nyasaland, Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 uyaASSMED Table 4. Bloc Imports from Selected Underdeveloped countries a/ 1959 - 19 Million Curren Total Bloc ? . _ 1 9 ., Latin Azierica Argentina d/ Brazil r-i Chil ed/ colomub!a Cuba b/ f/ Ecuador Mexico _d1?. -Uruguay Midd1e East Lden Cyprus Greece d/ Ir Iraq =fir' USSR 1- i9 1961 1,226.8 19474.0 1,1,' .77 496.5 585?1 784.5 157.9 -299.5 -554.2 6L1 55.3 71.5 0.6 2.-7 8.1 16.5 L143.o 0.2 1.5 1.7 0.1 0.1 27~: 13. 355.6 392.4 0,a 0.1 1.2 1.4 33.6 .4.9 22.1, 28.0- -6.1 3.4 -54i_. 3.8 Jordan 1.0 I.1 Lebanon '/ 2.5 3.-2 Lib a 0 5 0.7 y dab . Repaiblic Tart d/ 1 4'.? '126.7 341.8 55.9 19.3 17.8 12-7 -74.8 N7 13.3 19.2 1,2 2..1 - 0.2 178.0 16.3 93.0 09,0. 2 0 . 14.6 c/ 0.9 004 -84 355,5 1130 e 214 e/ 45.4 - .a8 28.2 13.6 4A 2.5 -7..0 e-1 0.9 3.5 2.1 0.8 0.4 e/ 16..6 0.6 1.14 8.8 1.3.9 -17.6 15.0 0.7 210 0.3 0.b .$_.7 2.0 0.4 0.7 European Satellites 199 19W 542.0 6648.2 1961 687.4 105.4 '131.1 '178.7 34.5 4.9 38.5 51.6 57.6 55.6 0.6 1.2 2,7 1.9 0.1 16.0 69.0 0.2 c/ 0.2 c/ 0.1 0.1 071 0.1 0.4 11 iw6 Communist CUM 9 9 185.2 4.8 0.1 237.4 38.9 274.6 117.6 1.4 4.7 0.5 e% 32.0 96.0 4.5 of 2.4 1.5 0.7 196.5 -203.6 211.8 36.0 M e 1.2 0.8 0.9 oe? 21.8 26.1 31.4 a/ 8.4 ie.4 13.2 '1.7 1.~ 0,8 1.9 5.1. 3.4 6a 21 110 1.1 0.9 0.4 i;5 1.5 0.1 0.3 0.1 2.12.4 22.3 ?i 40 6.6 3.5 e.9 13d4 41.0 39.2 28.2 4.8 4.6 4.8 36.2 34.4 11.E 011 2.3 10.2. 23.4 -- _- e/ United 11b Republic 229.8 24403 208.6 81.4 8807 72.9 112.7 110.9 121.1 33.8 44.5 14.6 Approved For Release 2005/01/05: CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 4. Bloc Imports from Selected Underdeveloped Countries a/ (continued) ._ Total Bloc USSR Euro Satellites Conanunist China Area and Country 1959 1960 9 1959 1960 9 JL959 1960 161 199 9 434.2 436.6 450.6 223.9 188.2: 223.3 ':79.3 12116 118.2 129.9 123.4 106.7 Afghanistan f/ 20.0 16.7 17.0 1600 16:7 17.0 3.5 N.A. N.A. 0.5 N.A. N.A. Burma d/ - 3.0 13.4 54.1 0.9 5.0 e/ 1.6 2.0 449 0.4 6.4 49.2- Cambodia b/ 2.5 7.6 3.5 3.1 0.9 ill 2.3 0.7 1.4 1.3 0.7 Ceylon 23.7 37.5 33.9 6.4 8.2 9.5 0.9 4.0 7.0 16.4 25.3 17.4 India b/ d/ 110.4 106.3 115a3 63.7 62.9 67.4 28.0 33.7 46.5 17.7 11.8 0.4 Indonesia d/ 72.3 70.3 68.8 15.5 28.1 34.6 3.7 6.7 9.0 53.1 35.4 25.2 CV 1921.27a 189.0 113.9 128,9 115.8 53.9 69.9 33,5 61.6 35.2 39.7 28.4 3.8 Pakistan 10.9 30.7 27.0 3.5 4.4 3.4 6.7 U.S 13.6 0.7 14.8 10.0 Thailand b/ 2.4 8.8 2.1 2.1 5.9 0.6 0.3 2.8 1.3 80.7 119.9 110.5 57.7 41.5 30.5 37.5 37.3 11..4 24. 23.4 Algeria 4.7 "2.1 2.0 3.2 1.6 1.0 1.07 0.5 1.0 Angola d/ 0.6 2.6 0.8 0..4 -- 0.6 1.8 0. E. 0.4 Cameroun d/ 5.7 0.5 0.4 5.5 0.2 0.2 0.3 Congo 0.1 0.8 N.A. -- I.A. 0.1 0.8 .v 'its. e/ Ethiopia d/ 0.4 0.6 1.3 t-2 0..4 0.2 0.5 0,1 Fed., of Riodesia and Nyasaland 15.0 17.0 12.0 c/ 11.9 12.0 N.A. 2.0 4.5 N0:L. 1.1 0.5 N.Ao Ghana d/ 6.2. 22.5 10.5 5.5 20.4 12.5 0.7 0.8 1.7 -- 1.4 0.2 Guineas 5.2 12,6 16.4 0.5 3.9 5.3 4.7 8.6 940 -- -- 2.1 Ivory Coast f/ 5.6 2..9 3.0 5.6 2.8 3.0 - 0.l Kenya 0.2 -- Morocco 14.4 1 6.0 17.6 1.3 3.5 4.7 6.6 5.8 9.3 6.5 6,6 3,6 Nigeria d/ - 4.1 Q 9.6 502 -- 5.5 - 4.0 2.9 2,.y 0.1 1.2 2.3 Sudan d/ 14.0 23,6 24.0 4.3 5.8 12.1 6.8 8.4 6..0 2.9 9.4 5.1 Togo - 0.1 -- - - 0.1 - - -- Tunisia 4.7 3.9 7.7 1,0 1.6 2.5 2.9 2.3 1c7 0.8 - 0.5 Uganda e/ 5.1 y.4 -- -- - 0,1 --- e/ 5.1 9.4 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 14. Bloc Imports from Selected Underdeveloped Countries (continued) Million Current US $ Total Bloc USSR European Satellites Area and Country 1959 1960 61 19 5 9 60 19 122 P61 1959 9 Europe 198.14 225.6 203.0 - - 64.9 72.5 61.3 130.3 150.8 141.4 3.1 2.1 0.1 Iceland 21.9 16.1 10.1 11,9 9,9 5.1 10.0 6.14 5.0 -? e/ Portugal 6.7 7.5 4.9 1.6 2,5 e/ 14.5 14.6 4.8 0.6 0.3 071 Spainf 21.0 18.1 13.14 14.2 7.1 2.4 15, 7 10.7 11.0 1.1 o.6 e/ YugoslaviaW/ 1148.8 183.3 1714.6 47.2 53.0 53.8 100.1 129.1 120.6 1.14 1.2 a. -These data are based on official trade-statistics of the Free World countries involved (with the exception of Afghanistan) - that is, the Bloc imports indicated are the Free World trading partnersv reported exports. All values-have been r ided to the nearest $100,000. A dash (-_-) entry indicates that no figure for trade is known, although-some trade may have taken place. Totals are derived from unrounded data and may not agree with the sums of the rounded components.. b.- .:T . al ..figures . include the-- following Bloc. imports--- Thousand Current US $ Northi Vietnam North Korea Mongolia ' 99 `9 . 959 . 9 1959 1960 1961 Caba Q- 1,000 14,000 'United Arab Republic 1.658 133 9143- -2614 Cambodia 259 1,162 India 567 11} 393 3914 14 4-71 Indonesia 3 Thailand Morocco 1140 1 Yugoslavia 77 190 as Includes exports to unspecified Soviet Bloc countries from the Federation of Rhodesia and Nyasaland. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED Table 4. Bloc imports from Selected Underdeveloped'Countries a/ (Continued) Trade figures for 1961 are at an annual rate for the o owing countries: Greece, Nigeria, India, Peru, Syria, and Turkey for January-November; Spain, Angola and Argentina for January-October; Iraq, Libya, Burma and Ethiopia for January-September; Indonesia and Sudan for January August; Chile for January-July; Ecuador for January-June; Iran for January-My- and Cameroun for January-March. e. Less than $50,000. f. Exports for 1961 are estimated. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 5 PAYMENTS AGR ; 1TS BE ffi BLOC AND LESS-DEVEr OPED CQUNMIES AS OF JUNE 30, 1961 Czaoho- East rrnJ 4t _Dr North Igrt Area and Country . 1,bania Bulgaria slovakia GEMEZ leery Poland Rumania USSR Chian Mongolia Korea v e nam Middle East Afghanistan TP * Greece TP TP Iran TP . Iraq T T T Israel TP . Lebanon T TP TP Pakistan T Turkey TP TP IAR Egypt Syria Africa Ethiopia Ghana Guinea Mali cco Sudan Tunisia T= Y TP fiP T TP TP T TP b TP TP TP TP T. TP TP 1P T P TP T c TP Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 TP TP TP TP TP . . T T TP TP - TP TP TP Tp it TP TP TP T PP TP T T? 4 PkP TP Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 QED Table 5. TYPES OF ODE AND PLT1!NTS At .'S BMM EL( AND LESS-DEVE[APE) COUNTRIES AS OF DEER 319 1960 - JUNE 349 1961 Czecho- East Commmist Outer North North Area and Country Albs~nia~Bulgari a slrrvakia Gwmw MaarY Poland Rya II Mongolia Korea Vietnam T TP T 'TP + T T T T T ? PP TP TP Ceylon ? iL- 7p~y 1~C 'TP ? TP TP TP India . .4i .4i TP TP TP TP TP ? T T Iefa . T TP T T TP TP TP TP REM loel d ? ? `P ii ii TP TP . . ? Portugal ? P P P ? . . . ? ? Spain P P P P P . TugoalaT3a TP TP TP TP TP TP TP TP 7P ? Latin erica Argentina . T a T T T TP ? ? ? . *azil a . -TP P P -TP P 'TP Colombia T T e ? 1 T ? ? ? ? Cuba ? TP 4-- TP P TP 4f TP TP 4. TP TP 4 TP 4 TP f- TP ?84 xWdeo . TP ? P TP P P P TP P . ? Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 5. TYPES OF TRADE AND P tTS AGREEMENTS BETWEEN BLOC AND LESS-DEVELOPED MUNTRIES AS OF JUNE 30,E 1961 (Continued) Notes. Symbols used in t * table have the following meanings 4- s new agreement since June 30, 1960; s trade and pleats a ?eementa p trade agreement only; PS payments agreement only. Inc = ezen know to be in for cep agreement-s- are assumed to have been tacitly renewed,, and-- newly signed agreements of uncertain date of -entry into force. Agreements include agreements as--w,611 as-nongovernmental agreements. the latter are listed only Vhen they assume the -practical. characteristics of a government-to-govt c ement. Barter agreements and contracts are not included. Paymentw agreement added. c. Agreement or mss not have lapsed, d. Payments agreement terminated, e. Agreement lapsed. Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 Table 6. NUMBER OF TRADE AND PAYMIIdTS AGREE JTS BET'AEE 4 BLOC AND LESS DEVELOPED COUNTRIES, December 1958 - June 1961a Area and Country Estimated Number as of J~me 30, 1961 222 December 319 1960 206 December 31,, 1958 174 )t dd3.e East 76 73 A?fgbanistan 4- Greece 7 7 Iran 4 4 Iraq 11. 11 Israel 4 4 Lebanon 6 6 Pakistan 4 4 SrIdA 9 9 Turkey 7 7 um Egypt 31 11 11 Yemen 8 6 6 38 31 22 Ethiopia 2 2 1 Ghana 3 2 0 Guinea 7 6 2 Mali 3 1 0 Morocco 7 7 7 Sudan 7 6 7 Togo 7 0 Tunisia Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 - Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 U '3 DIED Table 6. . XWM OF ODE AND PAS AGRE TS BE MM BLOC AND LESS DEVELOPED D IES, December-19.58 - June 1961a (Continued) Area and Country Estimated Number as of June 3- , 1961 December 31, 1960 Decemb? 31, 1958 8 GRmbodia 6 cey-lon -8 1 India 10 10 Indonesia 10 10 Burope 26 Imo- 6 _6 'Portugal !t 4 Spain 6 6 Yugoslavia 10 10 Latin America 39 35. Argentina 6 6 Brazil 6 Colombia !4 Cuba 11 >do 1 Uruguay 7 39 8 5 7 10 9 25 6 4 5 nts known to be i&a. force, agreements. ~ are - as to have -been tacitly renewed, a. Including g und m agreements f incerta to of -ems into force.. to ao1 e gov r - _ gno agreements as well as _ Longos _ al agreements.- the latter are. listed. only when they 22 7 5 2 contracts are no1A aL c or Release 2005/01/05: CIA-RDP68B00255R000300100067-6 Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6 UNCLASSIFIED UNCLASSIFIED Approved For Release 2005/01/05 : CIA-RDP68B00255R000300100067-6