DEVELOPMENTS IN THE CHEMICAL AND RUBBER INDUSTRIES OF THE SINO-SOVIET BLOC IN 1961 AND PROSPECTS FOR THE FUTURE

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CIA-RDP79R01141A002400140001-8
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July 1, 1962
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i Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 SECRET Economic Intelligence Report N? 9 ~ DEVELOPMENTS IN THE GHEMIGAL AND RUBBER INDUSTRIES OF THE SINO-SOVIET BLOC IN 1961 AND PROSPECTS FOR THE FUTURE July 1962 CENTRAL INTELLIGENCE AGENCY Office of Research and Reports SECRET 50X1 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 SECRET Economic Intelligence Report DEVELOPMENTS IN THE CHEMICAL AND RUBBER INDUSTRIES OF THE SINO-SOVIET BLOC IN 1961 AND PROSPECTS FOR THE FUTURE This material contains information affecting the National Defense of the United States within the meaning of the espionage laws, Title 18, USC, Secs. 793 and 794, the trans- mission or revelation of which in any manner to an unauthorized person is prohibited by law. CENTRAL INTELLIGENCE AGENCY Office of Research and Reports SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 report includes data on production, trade, and construction in these in- dustries of the Bloc in 1961 and their prospects for the future. Recent trends in Bloc policies on standardization and specialization of chemical products and equipment also are reviewed. Products of the chemical and rubber industries of the Bloc that are discussed in this report include chemical fertilizers, plastics, chemical fibers, synthetic rubber, phar- maceuticals, and motor vehicle tires. 50X1 ~OX1 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Summary and Conclusions 1 I. Intra-Bloc Developments . 5 A. Long-Range Planning 5 B. Specialization in Production of Chemicals 6 C. Exchanges of Technical Data and Eguipment 7 D. Standardization 8 A. Chemical Technology and Equipment 9 1. Imports from the Industrial West 9 2. Exports to the Industrial West 9 3. Exports to Underdeveloped Areas 10 1. Rubber 11 2. Fertilizers 13 III. Developments in Each Country of the Sino-Soviet Bloc 15 A. USSR 15 1. Plan Fulfillment, 1961 15 a. General 15 b. Synthetic Rubber 17 c. Motor Vehicle Tires 17 d. Plastics 18 e. Chemical Fibers 19 f. Fertilizers 19 2. New Plans 21 3. Outlook 21 B. East Germany 22 - v - S-E-C-R-E-T Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Page 1. Plan Fulfillment, 1861 22 2. New Plans 2~+ 3. outlook 2~+ C . Poland 2~+ 1. Plan Fulfillment, 1961 2~+ 2. New Plans 25 3. outlook 25 D. Czechoslovakia 25 1. Plan Fulfillment, 1961 25 2. New Plans 26 3. outlook 27 E. Rumania 27 1. Plan Fulfillment, 1961 27 2. New Plans 28 F. Hungary 28 1. Plan Fulfillment, 1961 28 2. New Plans 28 3. outlook 29 G. Bulgaria 1. Plan Fulfillment, 1961 2. New Plans 29 29 29 H. Albania 30 I, Communist China 31 1. Developments in 1961 31 a. Output of the Industry 31 b. Output and Supply of Chemical Fertilizers 31 c. Construction and Equipment Supply 32 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Page 2 , outlook 33 J. North Korea 3~+ 1. Production 3~- 2 . New Plans 3 5 3. outlook 36 K. North Vietnam 36 L. Outer Mongolia 37 Appendixes Appendix A. Sino-Soviet Bloc: Planned Cooperation in the Chemical Industries in Supply of Equipment and Technical Assistance: Selected Develop- ments in 1861. 39 Appendix B. Sino-Soviet Bloc: Imports of Chemical Equip- ment and Technology from the Free World: Selected Orders Placed in 1961 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 DEVELOPMENTS IN THE CHEMICAL AND RUBBER INDiJSTRIES OF THE SINO-SOVIET BLOC IN 19 1 AND PROSPECTS FOR THE FUTURE~- Summary and Conclusions Output of chemicals in the USSR and the European Satellites rose sharply in 1961, a reflection of the high priority that has been accorded this sector of industry for the past several years. Soviet production in 1961, as shown below, was 1~+ percent above the level in 1960, an acceler- ating rate of growth, as the increases achieved in 1959 and 1960 were 10 and 12 percent, respectively. Increases in the European Satellites ranged EAST GERMANY BULGARIA CZECHOSLOVAKIA USSR POLAND HUNGARY RUMANIA Chemical Production 1-I tan Actual Total Industrial Production Actual 20~ Zoe from 7 percent in East Germany to a high of 27 percent in Rumania, but in every country the increase in output of chemicals was greater than the in- crease in the total industrial production. Production of chemicals was generally in accordance with plans announced at the beginning of the year, although there were some significant failures to meet goals for individual -~ The estimates and conclusions in this report represent the best judg- ment of this Office as of 1 June 1962. ~ 14.5Ai 14!k Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 commodities, notably those for synthetic materials in the USSR. In Com- munist China the plan for production of chemicals was reported to have been fulfilled, although output of the chemical industry actually may have declined. However, production of a few chemicals, notably ferti- lizer, reportedly increased. Although the record of chemical production was fairly impressive, the program of constructing new facilities went poorly. In the USSR, investment in the chemical industry was scheduled to rise about 50 per- cent, but the actual increase was only 13 percent. Investment plans also were underfulfilled in East Germany and Czechoslovakia and probably in Hungary and Bulgaria. Although the Polish investment plan for chem- icals reportedly was fulfilled, this achievement is misleading, for 8 of a total of 17 industrial projects not completed on schedule in 1861 were projects of the chemical industry. Construction of chemical plants in Communist China probably slowed considerably, but there is evidence that investment in fertilizer plants was given high priority. A continuing bottleneck in construction for the chemical industry in the Sino-Soviet Bloc- has been the limited availability of chemical equipment and technology, particularly for new products and processes. To ease this bottleneck, the Bloc placed a number of new orders with chemical engineering and equipment firms in the Free World during 1961. The USSR signed about 18 major contracts in 1961 compared roughly with about 50 signed in 1958-60. Approximately 10 major contracts were known to have been signed by the European Satellites. For the first time, Albania approached the Free World for chemical technology and equipment, evidently to replace Soviet technical assistance that was discontinued following the rupture in relations between the two countries. As an indication of the importance of equipment from the Free World in the chemical field, Polish sources revealed that at least 20 percent of the equipment needed by the chemical industry of Poland in 1962 would be obtained from the Free World. To increase the accessibility of chemical technology of the Free World, the USSR and several of the Satellites have been offering to the West technical data for various chemicals. Few buyers have appeared as yet, although the USSR and Czechoslovakia may have made a few sales in 1961. Exports to underdeveloped areas of standard types of equipment and technical data in the chemical and rubber fields continued in 1961, and a number of new agreements were concluded. The USSR and Czechoslo- vakia, for example, agreed to supply tire plants to Ceylon and Ghana, respectively, during the next 3 years. ~ For the purposes of this report, the term Bloc hereafter will always refer to the Sino-Soviet Bloc. - 2 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 In addition to chemical and rubber-fabricating equipment, the Bloc purchased record quantities of natural rubber in 1961. Imports for the year amounted to about 530,000 tons, more than 100,000 tons in excess of imports in 1960 and about 75,000 tons above the previous peak, which was reached in 1959? A significant curtailment in purchases of rubber by the Chinese Communists was more than offset by a sharp rise in imports by the USSR. The increase in Soviet purchases apparently was a result of the failure to put new capacity into operation according to plan. Imports of synthetic rubber by the Bloc, negligible before 1958, in- creased to x+8,000 tons in 1961, and the upward trend is likely to con- tinue. Within the Bloc, trade in chemical technology and equipment is being increased, as evidenced by the large number of new agreements concluded in 1961. Furthermore, a working group was set up in 1961 to facilitate the exchange of chemical plant designs among member countries. (Designs purchased from the Free World may be among those disseminated.) Stand- ardization of equipment and designs also is being encouraged, as is specialization in production of equipment. Intensified efforts appar- ently also were made in 1961 to coordinate research and development work in the chemical and rubber industries and to promote cooperation at the plant level. In recent years, much has been made in the Bloc of plans for the specialization of chemical production, but statements made during 1961 indicate that little progress has been made so far in this direction. Recommendations submitted for the consideration of the Council for Mutual Economic Assistance (CEMA) apparently have not been economically and technically feasible in many cases. Nevertheless, Czechoslovakia did sign bilateral agreements with East Germany, Poland, and Hungary providing for some specialized production, notably in the pharmaceu- tical field. Many of the meetings of CEMA in 1961 on the chemical industry dealt with coordination of long-range plans, and work was begun on forecasts of trends in chemical technology through 1980. Meanwhile, the USSR announced plans apparently calculated to continue the rate of growth in chemical output scheduled in the Seven Year Plan (1959-65) -- about 15 percent annually -- through 1980, and Czechoslovak and Bulgarian planners released various bits of information indicating that their long-range plans also were quite ambitious. Czechoslovakia plans to make the chemical industry a "second basic branch of materials." With regard to short-range goals, progress to date indicates that many of the targets for 1965 of the Soviet and Satellite industries ~ Tonnages are given in metric tons throughout this report. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 will not be reached. In the USSR, investment in chemicals during 1959-61 was oxLly about 25 percent of the total planned for 1959-65, and the chem- ical industry appears headed for a shortfall of at least 10 percent in the goal to triple output during 1959-65. Some production goals, notably the goal for 1865 for fertilizers, which was increased recently from 35 million to 37.7 million tons, may even be missed by much larger margins. Underfulfillment of the goals for 1965 also is virtually certain in the case of East Germany, but progress elsewhere in the Satellites appears to be generally in line with plans. A recognition of the slow progress toward goals in the USSR, as well as the serious view taken of the situ- ation, is evident in Khrushchev's statement in March 1962 that it might be necessary to convene the Central Committee of the Communist Party of the USSR to discuss development problems of the chemical industry. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 I. Intra-Bloc Developments A. Long-Range Planning In 1961 the USSR announced ambitious plans for the development of its chemical industry during the next 20 years. According to data released at the 20th Party Congress in October 1961`, output of chemi- cals in 1g8o is planned to be 17 times output in 1960 compared with a fivefold increase for all industry. The rate of growth for the chemi- cal industry over the next 20 years is to average 15 to 16 percent per year, which is about the same as that planned for the Seven Year Plan (1959-65) but above the average rate of 12 percent actually achieved in 1959-61. A few Satellite goals for chemical production in 1980 also were released in 1961.- Output of chemicals, the Czechoslovak planners feel, must increase ninefold during 1961-80 while industrial production is in- creasing fourfold. They say such a relatively great increase is needed because the limitations of the existing raw material base make it nec- essary to make chemicals a "second basic branch of materials." The Bulgarians announced that output of fertilizers in that country in 1980 is to be 10 times output in 1960. It also was reported that production of plastics in the countries belonging to CEMA, excluding the USSR, would increase l~+ times during 1961-80. Discussions of long-range planning and coordination of such plans for the chemical industry continued at the CEMA level. Following the meetings of the Permanent Commission on Chemicals of CEMA in January and November 1961, it was announced that the coordination of long-range plans had been discussed along with the related problems of specialization by the various countries in production of particular chemicals. At a meet- ing of one of the Permanent Commission`s working groups, planning and equipping of chemical plants under the long-range plan were discussed, and it was stated that the efficient planning and building of new chemical plants would be facilitated by (1) the joint planning of new enterprises; (2) the introduction of new, highly practical machines and aggregates; and (3) the construction of plants and installations in the open.~~ 50X1 One of the tasks that has been assigned to the Permanent Commis- sion on Chemicals in connection with long-range planning is the fore- casting of trends in chemical technology through 1980, which CEMA plan- ners recognize to be a difficult job because of the highly dynamic ~ Goals for 1975 have been announced for the Polish and Rumanian chemi- cal industries. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 nature of the industry. Early in 1961, working groups of the commission were said to have begun this work in the following areas: synthetic rub- ber, tires and other rubber products, plastics, chemical fibers, mineral fertilizers, petrochemicals, basic inorganic chemicals, and paper and cellulose. The working group for plastics asked a special group of ex- perts to submit, by the end of 1961, a study of the extent to which non- ferrous metals could be replaced by plastics. B. Specialization in Production of Chemicals In spite of the claim in December 1960 that CEMA had worked out recommendations for specialization and coordination of production of some 500 chemical products accounting for 80 to 85 percent of the total volume of production of the chemical industries of the countries belonging to CEMA (excluding rubber products), evidence accumulated in 1961 that the feasibility of some of these proposals was being reexamined. For example, CEMA planners reportedly decided that the existing plan for specialization in pharmaceuticals was much too elaborate and that perhaps the manufacture of the most important products should be initiated or kept at the national level. Similarly it was stated in an East German trade journal that 50X1 problems of planning and implementing s ecialization in the rubber industry had not yet been satisfactorily solved. The East German press also re- 50X1 ported that plans for specialization were not always economically and tech- nically sound and that a "methodology" for specialization in chemicals was being prepared. Fina lly, the Minister of the Polish chemical industry 50X1 admitted in Novemb er 196 1, following a meeting of the Permanent Commission on Chemicals, that speci alization in the chemical industry was a "theme which has not so far been developed" and indicated that the meeting was devoted merely to the formulation of conditions on which specialization should be based. ~ 50X1 Some progress was discernible, nevertheless, as a result of bilat- eral negotiations. Following a meeting of the Joint Czechoslovak -East German Committee for Economic, Scientific, and Technical Cooperation in August 1961, it was reported that the two countries would cooperate in production of laboratory chemicals, pharmaceutical raw materials, serums and vaccines, textile dyes, rubber and asbestos products, and textile and leather-processing agents.~~- Similarly, the Czechoslovak-Hungarian ~- At the 15th Session of CEMA held the following month, the discussion centered around the guiding principles on which specialization should be based, and intra-Bloc specialization in the production of weed killers reportedly was established. ~ In a related development the chief of the East German chemical indus- try stated in May 1961 that specialization in these products would help free the East German economy from disruptive measures by West Germany. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 committee on cooperation reported agreement on bringing about further expansion of specialization in the chemical industry. Also, Czechoslo- vakia reported an agreement with Poland on specialization in production of synthetic rubber, pigments, and pharmaceuticals. C. Exchanges of Technical Data and Equipment A number of new agreements between countries of the Bloc to ex- change chemical technology and equipment were announced in 1961, supple- menting the list of those already concluded for 1961-65.~ The new agreements included provisions relating to technology and equipment for pharmaceuticals, nitrogen fertilizers, basic chemicals, rubber, and tires. .There was mention also of plans for joint construction by the USSR, East Germany, Czechoslovakia, Poland, and possibly Hungary of a phosphorite mining and concentrating combine in Estonia to serve the needs of the latter four countries. At the same time, East Germany complained that the quality of East German tires had been lowered because of a lack of modern equipment that was not available on a large scale from other coun- tries belonging to CEMA.~ Evidence also appeared in 1961 that Poland 50X1 was unable to obtain technical data for producing organophosphorus insecti- cides from East Germany or the USSR. There are indications that trade between countries of the Bloc in chemical technology and equipment will be accelerated. Deliveries of equipment for complete chemical plants in 1965 are to be about seven times the deliveries in 1958, and efforts are being made to provide for increased specialization in this area. Moreover, it was announced in 1961 that the Permanent Commission on Chemicals had established a Working Group for Designing and Equipment and that the group had recommended an exchange of designs among member countries for approximately 70 pro- cesses. Efforts also are being intensified to coordinate research and development work in the chemical industry. Closer cooperation at the research stage was planned in bilateral agreements involving Bulgaria and Rumania, Czechoslovakia and the USSR, Poland and Rumania, and Poland and Hungary. East Germany and Rumania agreed to joint research on cel- lulose (rayon) fibers. Close collaboration was said to exist between Soviet and Hungarian research institutes on the basis of a common re- search plan. East German and Soviet specialists also were reported to be working on the problem of the automation of production of divinyl- styrene rubber; East Germany, the USSR, and Czechoslovakia were reported to be collaborating on the automation of production of chlorine; and Soviet and Hungarian specialists were reported to be examining the Described as "coloring materials." ~~ For a selected list of agreements, see Appendix A. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 problem of the use of radioactive isotopes in measuring and regulating instruments for the chemical industry. The working group of CEMA on plastics discussed the coordination of research and development work in this area through 1980, Activities of CEMA in the synthetic fiber field reportedly came to a standstill in 1959-60 following the decision by Rumania, and later by Czechoslovakia, Poland, and the USSR, to buy synthetic fiber plants in the Free World. The Rumanian government allegedly failed to send representatives to a CEMA meeting in the fall of 1958 because it was obligated not to reveal details of technology from the Free World and felt that it would have difficulty avoiding revelations if representa- tives were present. This case suggests the possibility that efforts by CEMA to increase the exchange of indigenous technical data among Bloc countries would have the effect of promoting the dissemination of tech- nology being obtained in the Free World. Cooperation at the operating level is being encouraged. Poland and Hungary have agreed to coordination at the plant level in the fields of polyvinyl chloride, ammonia, caprolactam, pharmaceuticals (steroid- hormones), and photochemicals. Late in 1961, pharmaceutical plants in Hungary and East Germany agreed to cooperate through exchange of skilled workers. Previously in 1960, countries belonging to CEMA had exchanged operating experience in the fields of ammonia and sulfite cellulose through plant visits. In 1961, there were evidences of slow progress in standardizing construction of chemical plants in the USSR and the European Satellites. The Polish Vice-Premier pointed to the "need for speeding up work of the CEMA bodies on the standardization of the basic units of machines and industrial equipment, especially as regards the new investment projects in the chemical industry,"~ The lack of standardization in this area, including mechanization an automation of chemical processes, was said to result in much time lost "in the adjustments that are necessary due to the different regulations in the individual countries." ~ Also pointed out was the close relation of this problem to cooperation in production of chemical equipment. Discussions continued in 1961 on development of unified standards for chemical products, but no concrete progress has been reported to date. -8- S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 II. Trade with the Free World A. Chemical Technology and Equipment 1. Imports from the Industrial West One of the most significant contracts concluded by the Bloc in 1961 was one involving the purchase of $25 million worth of plastics- making equipment from the UK by a consortium of four European Satellites. Under the contract, which was signed in April after a year of negotia- tions, East Germany, Poland, Czechoslovakia, and Rumania reportedly will each obtain equipment for a plant capable of producing 2+,000 tons of polyethylene plastic per year. Polyethylene is not produced commercially in the Satellites as yet, but imports of this equipment will substantially aid the four countries in meeting their goals for 1965. During 1961 a number of other major contracts were signed by countries of the Bloc. Among the Soviet purchases were three plants for producing ammonia -- a petrochemical and a raw material for production of fertilizer. The dramatic rise in imports by the Bloc of chemical equipment from the Free World in recent years as a result of these con- tracts is illustrated by Soviet trade statistics, now available through 1960, which give the value of imports of equipment for the chemical industry~~ as follows (in million new rubles~~~): 1957, 6; 1958, 18; 1959, 70; and 1960, 122. As an indication of the current inflow, Poland has indicated that at least 20 percent of the equipment needed by the Polish chemical industry in 1962 will be obtained in the Free World. 2. Exports to the Industrial West In 1961, countries of the Bloc made further offers of chemi- cal technology to the Free World as a means of increasing the accessi- bility of Western technology in this field and also of earning foreign exchange. Late in 1960, East Germany agreed to give a British engineer- ing firm the rights to an extensive list of East German chemical proc- esses in exchange for assistance in obtaining for East Germany the rights to a number of British patents. Then, in 1961, it was reported ~- Other major agreements made during 1961 are shown in Appendix B. ~-~ As listed in Soviet foreign trade statistics under the category "equipment for the chemical industry." This category probably does not include pumps, compressors, and other types of general industrial equipment for use in chemical plants. ~~-~ Ruble values in this report are given in new rubles (based on the Soviet currency reform of 1961). Foreign trade rubles may be converted to US dollars at the official rate of exchange of 0.9 ruble to US ~l and other rubles at a rate of 0.~+ ruble to US $l. Neither rate of exchange necessarily reflects the value of the ruble in terms of the dollar. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 that a US firm had obtained rights to 60 Soviet patents and, in addition, could arrange for rights to 10 chemical processes, Also, a second US firm reported that it was preparing, jointly with a French firm, a sur- vey of chemical and other processes available in the Bloc following visits of its representatives to Eastern Europe. From the details so far released it seems unlikely that much will come of the efforts of the Bloc to sell chemical technology, because of the generally inferior position of the Bloc in this field. For exam- ple,- the USSR apparently has offered to sell technical data for producing butadiene from butane, but Polish sources have admitted that the Soviet process is inferior to the comparable US process, which the USSR, Poland, and Rumania have all tried without success to obtain during the Yast sev- eral years. In isolated cases, however, the USSR may have marketable processes -- for example, one to produce phenol and acetone from isopro- pyl benzene. A recent Soviet press article claimed, in fact, that sev- eral foreign countries had purchased licenses from the USSR to use a Soviet process for utilizing byproducts from the cumene process. 50X1 It was claimed in the Czechoslovak press that the country had sold tech- nology for making cellulose and nylon, ~ but it was not clear whether 50X1 this statement referred to sales to countries of the Free World. Also, Hungary appears interested in selling technology in the pharmaceutical field to the US, 3. Exports to Underdeve7..oped Areas There was no significant change during 1961 in the pattern of exports of chemical technology and equipment from the Bloc to the underdeveloped countries. As in the past, exports consisted mainly of technical data and plants for producing basic chemicals, fertilizers, pharmaceuticals, and rubber products. Selected developments are as follows: a. Czechoslovakia was to have begun construction of a tire plant for India, the daily capacity of which is to be 500 tires and 500 inner tubes. b. Czechoslovakia signed an agreement to build a tire plant for Ghana during 1962-63. c. The USSR has contracted to build by 1964 a tire plant for Ceylon, the initial annual capacity to be 250,000 tires and an equal number of tubes, d. East Germany is supplying India with a plant for making 10,000 tons of calcium carbide per year. ~ Not all relating to chemical processes. - 10 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 e. The USSR will supply Indonesia with a chemical plant capable of producing 100,000 tons of soda ash and 40,000 tons of caustic soda per year. f. Hungary will supply Ghana with a pharmaceutical plant with an annual -capacity of 1 million ampoules and 1 billion tablets. g. The USSR will supply equipment and technical assist- ance for pharmaceutical plants in Egypt, Iraq, and Lebanon. h. The USSR swill supply Indonesia with a superphosphate plant. i. The USSR will supply the United Arab Republic (Egypt with equipment for a nitrogen fertilizer plant. cal pliant. j. Hungary will help Guinea build its first pharmaceuti- There was little evidence in 1951 f o any current or planned exports of technology or equipment from the Bloc for making rubber, the newer types of plastics and synthetic fibers, and basic chemicals from petroleum and natural gas -- a reflection of the limited capabilities of the Bloc in these areas. There was, however, a report late in 1961 that 'the nitrogen fertilizer plant whic USSR is to help build for Iraq will be based on nat l . ura gas. B. Chemicals and~Chemical Raw Materials 1. Rubbber Imports by the Soviet Bloc of natural rubber increased sub- stantially in 19,51 and more than offset a sharp decline in imports by Communist China,. Statistics published by the International Rubber Study Group indicate that the total imports by the Bloc amounted to about 530,000 tons compared with imports of 416,000 tons in 1960 and the pre- vious peak of 45$-,000 tons in 1:959? Soviet imports were about tons, an increase of about 155,000 tons above imports in 1 60.330'000 same time, Chinese Communist imports in 1961 were 82,000 tons, o~y the about three-fifths of the 135,000 tons imported in 1960. The rise in Soviet imports probably reflects a combination of factors, including reduced Soviet stockpiles following curtailed ~ Official Soviet statistics on imports of rubber, which are not yet available for 1961, sometimes differ significantly from those of the International Rubber Study Group. - 11 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 purchases in 1960, lower world-market prices, and the failure to increase production of synthetic rubber according to plan (33 percent, or about 116,000 tons) in 1961.x- The reduction in Chinese imports, partly coun- terbalanced by reduced reexports to the USSR and the European Satellites, probably reflects, in part at least, the general retrenchment of the economy in 1961, efforts to conserve foreign exchange, and reduced activ- ity in the rubber fabricating industry. Imports of synthetic rubber by the Bloc from the Free World, negligible before 1958, continued to increase in 1961 and are assuming some significance. According to the International Rubber Study Group, the Bloc purchased x+8,000 tons in 1861 compared with purchases of about 29,000 tons in 1960 and 16,000 tons in 1959? The USSR purchased 26,000 tons from the Free World, or about two and one-half times the purchase of 10,x+00 tons in lg6o. Purchases by the Satellites also rose. On the other hand, imports by Communist China totaled about 13,000 tons less than in 1960, when 16,000 tons were purchased. The Bloc made its first purchase of synthetic rubber from Japan in 1961, when the USSR reportedly purchased 2,000 tons and Com- munist China 500 tons. Larger sales to the USSR may be provided for in a long-term contract now in the planning stages. Although the USSR and at least four of the European Satel- lites -- Poland, Rumania, Czechoslovakia, and Hungary -- have talked of plants for commercial production of stereoregular, or stereospecific, types of rubber,~~ which are complete substitutes for natural rubber, little progress was reported in this direction in 1861. The USSR, which appar- ently plans to produce annually about 200,000 tons of polyisoprene by 1965, reported development in August 1961 of a highly automated, low- cost process. Initial production of polybutadiene also was reported. In October 1961 a Hungarian trade official said that Hungary was anxious to obtain technolo for the construction of a polybutadiene or a poly- isoprene plant. Production of stereoregular rubber elsewhere in the 50X1 Bloc evidently is still in the planning stages. In view of the limited progress to date in improving the technology of the Bloc in this area, plus the evidence of shortfalls in producing other types of synthetic rubber, it is probable that the Bloc will continue to be a large-scale importer of natural rubber at least through 1965. ~- For further details on production of synthetic rubber in the USSR, see III, A, 1, b, p. 17, below. ** Cispolyisoprene and cispolybutadiene. They are referred to as stereo- specific because their molecular chains have a definite and specific spa- tial arrangement. Cispolyisoprene is identical with natural rubber and is often called the synthetic natural rubber. cispolybutadiene has the same stereospecific structure as natural rubber but is said to have im- proved properties. - 12 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Information published in 1861 by the USSR revealed that the quantities of Soviet potash exported to the Free World continued to rise steadily in lg6o in spite of the fact that supplies of potash to domestic agriculture declined. In 1959, exports amounted to x+39,000 tons, all but 8 percent of which went to the Free World. In 1860, exports jumped to 628,000 tons, of which about the same percentage went to the Free World. Meanwhile, supplies to Soviet agriculture declined from l.g million tons in 1959 to 1.8 million tons in 1860. Japan, the largest importer of Soviet potash, took 38 percent of exports in 1959 and ~+0 percent in 1860. It is uncertain as yet whether or not this trend was interrupted in 1861 following the Plenum of the Central Committee in January 1861, when a higher priority for Soviet agriculture was ordered. A similar conflict between exports and domestic requirements appears to exist in the case of apatite concentrate. In spite of short- ages of the concentrate at superphosphate plants and a decline in the amount of phosphorus fertilizers supplied to agriculture, exports, about one-third of which go to the Free World, continued to rise steadily in 1960. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 III. Developments in Each Country of the Sino-Soviet Bloc A. USSR 1. Plan Ftiilfillment, 1961 a. General Production of chemicals in the. USSR in 1961 rose 14 per- cent, the highest rate of increase achieved during the Seven Year Plan, but this progress was overshadowed by a significant shortfall in capital investment. The reported increase of 14 percent- in production of Soviet chemicals compared with increases of 10 and 12 percent, respectively, in 1959 and 1960 represents only a slight underfulfillment of the official goal to increase output 14.5 percent. Nevertheless, production of pri- ority chemical products -- fertilizers, rubber, fibers, and plastics -- failed to meet the plan, although increases in fibers and plastics were substantial. Soviet production of selected chemicals in 1961 is shown in the following tabulation: ~ Information made available during 1961 on the value of Soviet ehemi- cal output in 1955 suggests that the value of such output in 1961 was about 7.5 billion rubles. ~-~ Computed from reported percentage increase. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Sporadic shortages of electric power and skilled labor in the chemical industry showed up again during 1961. In addition, the midyear fulfillment report indicated that increases in labor productivity in the chemical industry lagged behind those in all industry and thus tended to confirm the reported delays in the introduction of new chemical technology and in the mastery of new processes. A further irritant was the continued lack of coordination in supply and production plans, caused in part by overoptimistic predictions of the startup of plants producing primary chemical materials. Shortcomings continued in the procurement of chemical equipment as a result of the disorganized planning of chemi- cal construction in general. Reflecting the widespread evidence of shortfalls in con- struction, capital investment in the chemical industry was officially reported to have increased only 13 percent compared with a planned in- crease of about 50 percent.- Thus the investment goal for 1961 appar- ently was fulfilled by only 75 percent. Investment goals were met or exceeded for only ~+5 of 202 chemical enterprises being built, expanded, or modernized in 1961. In addition, a midyear report revealed that con- struction costs in the chemical industry had failed to decrease in 3 years -- mid-1958 to mid-1961 -- and that the costs of building some major plants (synthetic rubber and tires) had actually increased. Glaring examples of the lagging progress in construction and the failure of recently developed chemical processes to meet expecta- tions include the admission that new capacities for chemical fertilizers in 1959-61 fell short of the plan by 2.7 million tons and that the actual capacities of several of the newest Soviet synthetic rubber plants had turned out to be 30 to ~+0 percent under planned capacities because of errors made in planning the processes. In the vital area of petrochemical raw materials, a plant that reportedly went into operation in 1959 using a process based on electrocracking of methane to produce acetylene had failed to provide any useful output as of November 1961. ~ The official plan published in December 1960 had stipulated an in- crease of ~+2 percent in chemical investment in 1961, but the absolute goal (1.278 billion rubles) was 50 percent greater than the level of capital investment subsequently reported for 1960 (852 million rubles). It is thus possible that in December 1960 the USSR overestimated the actual fulfillment for 1960. The data on investment should be considered approximate because the available data through 1960 include both state and decentralized investment, whereas the 13-percent increase reported for 1961 and the absolute figure given in the plan (1.278 billion rubles) presumably represent only state investment. In the case of the chemical industry, however, the difference may be slight. S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 b. Synthetic Rubber Although a number of Soviet rubber plants reported initial production or expansion of facilities in 1961, it is virtually certain that the production goal of a 33-percent increase above output in 1960 was not met. Considerable evidence is available that serious delays in con- struction were encountered and that defects were revealed in some of the newer production processes. The Omsk Synthetic Rubber Plant, under con- struction for about 10 years, failed to go into operation again in 1961. At Sumgait the planned startup of facilities for producing butyl rubber and styrenes failed to materialize, and an installation for production of nitrile rubber by a continuous process was dismantled, defects having proved to be too serious to be rectified in place. There has been diffi- culty in obtaining sufficiently high yields of butadiene at some of the newer rubber plants, and the redesign of certain equipment at the Sterli- tamak plant was underway during 1961, although the plant went into opera- tion only in 1960. Nevertheless, some progress was apparent, New rubber plants went into operation at Stavropol' and Temir-Tau, and initial pro- duction of butadiene (sufficient to meet one-third of the plant's re- quirements) was reported at Sterlitamak. Additional butadiene ca- pacity was installed at Sumgait, and the initial production of polybuta- diene, one of the new stereoregular rubbers, was reported at Yaroslavl' in December. In August the development of a new, highly automated 50X1 process for pro uction of polyisoprene rubber was reported at an insti- tute at Leningrad, the new process allegedly permitting production at one-fifth the cost of other processes currently available. The 50X1 USSR also claimed development of a one-stage process for production of synthetic rubber in 1961 by chemists of the Azerbaydzhan Academy of Sciences.t c. Motor Vehicle Tires Production of motor vehicle tires in the USSR rose to 19 million units in 1961, an increase of 10.5 percent, but the shortage of tires that has plagued the Soviet economy during the past several years persisted throughout 1961. The shortage can be attributed to lag- ging construction of new manufacturing facilities, to inadequate road ~ Production in 1960 is estimated to have been 350,000 tons. ~~ An intermediate for production of copolymer rubber. ~~ The Sterlitamak plant went into operation in 1960 but had used buta- diene imported from other regions. t Possibly referring to a one-stage process for producing butadiene, a major component of most types of synthetic rubbers. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 life caused by the poor quality of tire components, and to the failure to recap more than a negligible part of wornout tires. Construction delays were encountered at Omsk, Yaroslavl', Krasnoyarsk, and Moscow in 1861. Continued evidence of the low quality of Soviet tire cord is apparent in the admission that 40 percent of all tires in the USSR go out of operation because of inferior tire cord. In addition, the quality of synthetic rubber provided by some of e newer rubber plants is substandard. In spite of the shortage of tires, not more than 3 to 5 percent of wornout tires are being repaired. Equipment for 12 tire repair plants schedu_l.ed for operation in 1961 had not been provided as of June of that year. Progress reported for the Soviet tire industry in 1g61 included the commissioning of the Dnepropetrovsk Tire Plant and expan- sion of production at the Baku Tire Plant. The Dnepropetrovsk facility, supplied by a British firm, reportedly will have an hourly output of about 54 pounds of finished product per worker compared with 48 pounds per worker in leading US tire plants. In spite of the reported expan- sion of the Baku Tire Plant, there is evidence that many shortcomings are still encountered and that some of the planned improvements in mechanized operation have not been attained. Development is underway on tires using metal cord and on the vulcanization of tires by radia- tion. In addition, Soviet testing of tubeless tires for trucks is al- most completed, and tires with replaceable treads apparently are ready for serial production at one tire plant. d. Plastics Production of plastics and resins in the USSR rose to about 405,000 tons in 1861, an increase of 22 percent compared, with a planned increase of 32 percent. The failure to achieve the goal for the second straight year suggests that continued difficulties may be en- countered in fulfilling the Seven Year Plan. Possible evidence that a revision of the Seven Year goal may already be under consideration ap- peared in a Soviet article of December 1861, in which it was stated 50X1 that production of plastics in 1865 would be ive to seven times that in 1958, whereas the original goal was more than seven times that in 1958. Concern is being voiced about disproportionate develop- ment of branches producing basic plastic materials and those producing fabricated plastic articles. No comprehensive plan apparently is yet available for the processing of plastics scheduled for production dur- ing the Seven Year Plan, especiall for provision of the required ma- chinery and engineering talent. In addition, some of the new types 50X1 of plastics starting to be produce do not embody the necessary charac- teristics for effective use in industry, lacking additives that would impart stability or improved dielectric properties. Development work is lagging on certain of the newer plastics, notably polycarbonates. - 18 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Achievements of the Soviet plastics industry during 1961 included the initial production of polyformaldehyde plastic and poly- propylene ,- the completion of a polyethylene installation at Groznyy~~ (to use a low-pressure process), and the construction of a unit for pro- ducing urethane foam at the Roshal'sk Plastics Plant. e. Chemical Fibers~-~ Soviet production of chemical fibers in 1961 totaled 250,000 tons, an increase of 18.5 percent compared with a planned in- crease of 20 percent. The industry was again plagued by the low quality of certain raw materials (cellulose and caprolactamt) and by shortages of equipment for new plants. In addition, downtime for repair of exist- ing equipment reportedly was high, and a number of plants attempting to master new processes failed to fulfill the plan for labor productivity. The Soviet offer to sell to Western firms in the early part of 1961 sub- stantial quantities of an intermediate for production of a new synthetic fiber su ests that disproportionate growth is occurring in the indus- try. ~~ 50X1 Achievements of the Soviet chemical fiber industry in 1961 included the completion of the second section of the dacron plant at Kursk,tt the first section of the caprolactam plant at Lisichansk, and the initial production of acetate fiber at Engels. In addition, facilities were being readied in October for production of cellulose from reeds in Astrakhan', and it was reported that work was completed on development of a new process for carbon disulfide.ttt The abundant evidence of lags in installing new capacities for chemical fibers in the USSR in 1961 included reports of delays at plants scheduled to pro- duce nylon and orlon types of fibers, cellulosic fibers, and improved viscose tire cord. f. Fertilizers Although Soviet production of mineral fertilizers in- creased 10 percent to a total of 15.3 million tons in 1961, the level ~ A similar product is produced in the US with the trade name "Delrin." -~-~ It is believed that this plant may have been scheduled for operation as early as 1959 but that technical and other difficulties delayed start- up. ~~ Including both cellulosic fibers and synthetic fibers such as nylon and dacron. t An intermediate for production of a nylon type of fiber. tt There was some evidence, however, that inventories of dacron accumu- lated in 1961 because of a lack of proper dyeing facilities. ttt An intermediate for production of rayon. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 of output was modest compared with the ambitious goal for 1965, which ap- parently was revised upward from 35 million to 37.7 million tons during 1961. Although Soviet reports maintain that the goal for production of fertilizers in 1959-61 was exceeded, the planned introduction of new ca- pacities for fertilizer in 1959-61 fell short by 2.7 million tons,- a lag confirmed by Khrushchev at the Plenum of the Central Committee in March 1962.*~ Earlier, in December 1961, Khrushchev, apparently recog- nizing the lengthy construction periods required in the USSR for plants producing the more effective fertilizers, stressed the importance of quickly expanding output of the "cheapest kinds of mineral fertilizers -- above all, phosphorite and lime."~-~~ During 1961, two additional nitrogen fertilizer plants in the USSR started using natural gas, and it was reported that 30 per- cent of all Soviet ammonia was produced from natural gas, whereas 50X1 there was no such production before 1958. Ammonia was pro uced for the first time at new plants at Salavat and Shchekino, and additional ammonia capacities were put into operation at Novomoskovsk (formerly Stalinogorsk). Initial delivery of raw potassium salts was reported from the new Saligorsk combine,t as was initial production of sulfuric acid and superphosphate at Chardzhou. New plants producing nitric acid went into operation at Rustavi, Novomoskovsk, and Gorlovka. The lag in introduction of new fertilizer capacities was amply documented during 1961. Shortages of equipment or defects in equip- menttt plagued construction of new or expanding nitrogen plants at Nevinno- myssk, Fergana, Rustavi, and Lisichansk. Lags also were encountered in the construction of facilities for production of superphosphate or phos- phorus raw materials at Sumgait, Dzhambul, Sumy, and Kara-Tau. A report of August 1961 indicated that the shortage of phosphorus-containing raw materials and sulfuric acid had resulted in utilization of only 83 to 8~+ percent of the available capacities at superphosphate plants. In spite of the reported shortage of phosphorus raw materials, however, the USSR continues to export large quantities of such materials. ~ There is some evidence, however, that the goal for fertilizer for 1959-61 was unrealistically low in view of the ambitious goal for 1965. ~~ Although Khrushchev did not give the shortfall in absolute terms, he stated that the plan for commissioning new facilities was fulfilled by only 44 percent in 1959-61. -~~~ In accordance with general practice, lime is not considered a ferti- lizer in Soviet statistics. t The Saligorsk combine was originally reported in operation in 1960. tt The serious nature of the defects in equipment is illustrated by the admission that 200 workers per day were required throughout 1960 to repair defects in new equipment arriving at the Lisichansk Chemical Com- bine, a producer of fertilizers. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 2. New Plans Production of chemicals in 1962 is planned to increase 16.2 percent compared with the actual increase of 1~+ percent in 1961. All- Union goals have been announced for several of the more important product groups, with output of ammonia scheduled to increase 28 percent in 1962; plastics and resins, 26 percent; synthetic rubber, 21 percent; and chemi- cal fibers, 12 percent. Production of fertilizers is planned to reach 17.2 million tons (a 12-percent increase) and that of tires 21 million tons (a 10-percent increase). In December 1961 it was announced that 1.295 billion rubles would be invested in the Soviet chemical industry in 1962, apparently an increase of 17.7 percent above investment anticipated in 1961.- The re- sults in 1961 appear to have been poorer than expected, however, and a more recent Soviet report states that an increase of 22 percent is planned for 1962 above the actual investment in 1961.~~ 50X1 There are indications that the USSR will initiate construction of relatively few new chemical plants in 1962. The regime apparently will put a high priority on completion of current chemical projects, however, and 75 chemical installations are on the list of "especially important" construction projects. 3. Outlook There is little doubt that the large carryover of uncompleted chemical plants and the decision to initiate construction of only a few new chemical projects in 1962 will result in a substantial improvement in the number of completions. Thus it is quite possible that the rate of increase in production of chemicals in 1962 will be the highest achieved thus far under the Seven Year Plan, although such an increase will partly be the result of the lag in commissioning new capacities in 1961. In- creases in production of plastics and rubber probably will be substantial, and goals for production of fertilizers and fibers appear within reach. Although sizable increases in production of Soviet chemicals were attained in 1959-61, the rate of development required for implemen- tation of the goals for the Seven Year Plan has significantly lagged. Investment in chemicals in 1959-61 appears to have reached only about 25 percent of the investment of 10.0 billion to 10.5 billion rubles planned for 1959-65, and technological improvements have been tardy and often more ~ Because the figure of 1.295 billion rubles does not equate with a 17.7- percent increase above the official plan for 1961 (1.278 billion rubles), the percentage increase probably relates to the anticipated fulfillment in 1961 as of December of that year. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 expensive than anticipated. If an increase of 16.2 percent is achieved in production of chemicals in 1962, the industry will still require average annual increases of about 20 percent during 1963-65 to meet the Seven Year Plan. Performance to date suggests that sustained increases of this magnitude are highly unlikely, and the original Seven Year Plan may be underfulfilled by 10 percent or more. B. East Germany 1. Plan Fulfillment, 1961 In November 1961 it was claimed that production of the East German chemical industry had increased 7.5 percent above output during the same period in 1960, a 0.7-percent overfulfillment of the plan,~- whereas production in industry as a whole increased only 6.2 percent for the year, a slight underfulfillment of the plan. Thus the increase claimed for the chemical industry for the first 10 months of 1861 is about the same as the 7.6-percent increase reported for 1960 but sub- stantially below the average annual rate of 11 percent required to ful- fill the East German Seven Year Plan (1959-65) for the chemical industry. In spite of the reported overftiilfillment of the plan for the industry, the production plan for several products was not fulfilled. It was announced in November that production of synthetic fibers in 1961 would exceed production in 1960 by ~+l percent, whereas the plan for 1962 had called for an increase of 50 percent. It was reported in October that plans were not being met for production of calcium carbide and soda ash and that the supply of rubber products was unsatisfactory because production was lagging in the rubber industry. Production of nitrogen fertilizer actually declined. Achievements for individual products were considerably below the goals set for 1961 in the Seven Year Plan. Production of synthetic fibers was 13 to 1~+ percent below the goal, while production of other products for which figures are available fell short of the goals by the following percentage amounts: synthetic rubber and nitrogen fertilizer, 3 to ~+ percent; sulfuric acid, calcium carbide, and soda ash, 6 to 7 per- cent; and phospho~;-us fertilizer, about 11 percent. Only caustic soda, for which a very modest increase had been planned, was produced in a slightly greater amount than scheduled. ~ Fulfillment of goals for some of the more important products groups (fertilizers, chemical fibers, and plastics) will require even higher annual increases during 1963-65. ~~ These figures imply a planned increase of 6.7 percent for 1961, whereas the planned increase announced early in the year was 6.3 percent. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 The investment plan of the chemical industry for 1861 also was underfulfilled. Investment was slightly more than 1 billion DME but below the plan of 1.23 billion DME. Important additions, however, were made to capacity, including capacity for 180,000 tons per year of calcium carbide, equivalent to nearly one-seventh of production in 1961; for 20,000 tons per year of polyvinyl chloride plastic, equal to more than one-third of production in 1860; and for 6,000 tons per year of polystyrene plastic, or about 150 percent of production in 1860. Difficulties encountered by the chemical industry in 1861 included the perennial problems of poor management and inadequate sup- port from the designing, construction, and machine-building sectors of the economy and were compounded by problems resulting from the peculiar political climate of 1861. The supply of manpower was inadequate, partly because the large exodus of refugees preceding the closing of the Berlin sector border on 13 August undoubtedly contained at least a proportional share of workers and technicians from the chemical industry but also be- cause insufficient numbers of university and trade school graduates have been entering the industry.~~ 50X1 The performance of the industry also was adversely affected by the campaign to achieve "immunity to disruptive maneuvers" by West Germany -- that is, to become independent of West Germany as a source of important materials and items of equipment. Dislocations occurred as East Germany attempted to produce domestically products that previ- ously were obtained from West Germany or to adapt processes to operate with substitutes. The necessity of making extensive shifts in the economy to assure immunity to disruption has been partly responsible for the failure to maintain the schedules of the Seven Year Plan. To some extent, however, the "immunity" campaign has been a handy excuse for not meeting goals that would not have been met in any event. In November it was reported that of about 30,000 tons of chemical materials for which East Germany had been dependent on West German only about 100 tons remained to be "covered" from other sources. The "covering" 50X1 of import requirements, however, apparently means, in general, an ad- vanced stage of contingency planning rather than an actual placing of contracts. It also should be noted that independence from West Germany does not imply independence from all Western sources and that, in fact, some products previously imported from West Germany are now being fur- nished by other Western countries. -~ Deutsche Mark East (East German marks) may be converted to US dollars at the official rate of exchange of ~+.2 DME to US $1. - 23 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 2. New Plans Plans for 1962 call for an increase of "more than" 6 percent in chemical output compared wih an increase of 5.8 percent for industry as a whole. Production of plastics is to increase 26 percent and pro- duction of chemical fibers 24 percent. Investment in the chemical in- dustry is to be 25 percent greater than in 1961. The emphasis of invest- ments is to be on completing projects already begun rather than on start- ing new ones. A number of projects, especially those of small size, scheduled to be started in 1962 have been postponed until the period 1963-65. 0 Production of cellulose acetate and methylene chloride, 50X1 both important to the East German film industry and formerly obtained largely through imports from West Germany, is to increase by 100 percent and 50 percent, respectively. The film industry in general has been designated under CEMA as a principal supplier of photographic films to other countries of the Bloc. 3. Outlook Although no revisions have yet been announced in the goals for 1965 -- and there is talk of resuming the tempo of the Seven Year Plan in 1963 -- it is clear that the arrears that have accrued to date will necessitate some downward revisions in production goals for 1965. The increase in production during 1959-62 will average only about 8 per- cent per year, and an increase of 1~- to 15 percent per year would be re- quired during 1963-65 to meet the original goal of a 105-percent increase during the 7-year period. Investment in the industry in 1962 is scheduled to be 25 percent greater than in 1961, but a shortfall of 5 to 10 percent in the investment plan for the Seven Year Plan is likely to occur. It is significant that in spite of the emphasis on establishing a petrochemical industry in East Germany, the completion of the first stage of the petro- leum refinery at Schwedt, scheduled to be one of the two major centers for petrochemicals, has been delayed a year, from 1963 to 196+. C. Poland 1. Plan Ftiilfillment , 1961 The value of output of the Polish chemical industry increased 19.1 percent in 1961, substantially exceeding the planned increase for 1961 of 15.5 percent and the average annual rate of ab out 15 percent re- quired to achieve a doubling of output during 1961-65. Investment in the chemical industry in 1961 was valued at 7 billion zlotys, slightly in ~ Zlotys may be converted to US dollars at the official rate of exchange of 4 zlotys to US $1. This rate of exchange does not necessarily re- flect the value of the zloty in terms of the dollar. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 excess of the planned investment of 6.6 billion zlotys for 1861 and one- sixth of the total planned investment of 42 billion zlotys during 1861-65. A partial explanation for the favorable showing in output relative to the plan may be found in a statement by the Minister of the Chemical Industry that higher production than had been anticipated in the plans is being attained at all newly opened plants.~~ 50X1 On the negative side, out of a total of 17 industrial proj- ects that were not completed as planned in 1861, 8 projects were in the chemical industry. In commenting on the fact that about one-half of the delayed projects were chemical installations, the Polish Vice-Premier stated that "this is a disquieting signal if one takes into account the immense and difficult investment in the chemical industry." ~~ 50X1 2. New Plans Output of the Polish chemical industry in 1962 is planned to increase 14 percent above the level in 1961. The amount of investment in 1962 is to be g billion zlotys, and in an effort to achieve quick pro- duction results the funds are to be concentrated on such projects as the Plock Petrochemical Combine and the nitrogen plant at Tarnow rather than being spread over a wide range of projects. This measure of con- centrating investments is to avoid a repetition of the failure to com- plete the eight projects in the chemical industry in 1961, the completion of which has been postponed until the first quarter of 1962. The Vice- Minister of the Chemical Industry, B. Taban, stated that "in the field of investments, 1962 will be decisive for the development of the chemical industry during the whole Five Year Plan" for 1861-65. 3. Outlook The output plan was exceeded in 1961, the typical pattern in recent years, and the relatively modest goal of a l~+-percent increase in 1962 also is likely to be exceeded. Similarly the plan to double output in comparison with the 1961-65 period probably will be achieved, aided in a substantial way by the continued heavy import of chemical equipment and technology from the Free World. Difficulties are likely to be en- countered, however, in keeping construction of the Plock combine on schedule. D. Czechoslovakia 1. Plan Fulfillment, 1961 Output of the Czechoslovak chemical industry in 1961 reportedly increased 13 percent above that for 1960, or somewhat in excess of the planned increase of 11 percent. This increase is intermediate between Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 the average rate of 12.0 percent achieved during the Second Five Year Plan (1956-60) and the rate of 14.5 percent planned for the Third Five Year Plan (1861-65). Although the over-all production plan was over- fulfilled, production goals were not met for a number of important groups of products: nitrogen fertilizers, plastics, sulfuric acid, and chemical fibers. Moreover, construction in the chemical industry went badly. In December, new superphosphate installations (locations unknown) were reported to have been completed during 1961, but considerable del, ays were reported in other "key" projects in the chemical industry. Specific projects where construction was lagging were not mentioned at that time, but these lagging projects may have been the same as those cited in the first quarter of 1961 for construction difficulties. At that time, shortcomings were reported at nine plants covering abroad range of chemical products. As was true in 1960, criticism also was made of long-drawn-out construction periods, with the synthetic alcohol plant at Most-Zaluzi given as an example. Underfulfillment of construction plans in the chemical in- dustry has been a chronic problem in Czechoslovakia, 1958 having been the only recent year, according to Czechoslovak sources, when the plan was fulfilled. The failures in 1961 were not unexpected, in that it was reported late in 1960 that deliveries of chemical equipment in 1961 from domestic machine-building plants would not be in accordance with previously established construction schedules. Delays in design work were said to have contributed to shortfalls in construction work at the Kralupy Rubber Works and the Stalin Works at Zaluzi. Also, actual con- struction costs were said to be exceeding the plan. Failures also were admitted in chemical research and development. As of the end of November, some 56 percent of the planned tar ets for research and development were in danger of not being fulfilled. Difficulties also were evident in 50X1 the automation of the chemical in us ry. The industry will not have com- puters for working out chemical production data until 1964. Only semi- automatic machines are available at present. Also, the automation plan for the Stalin Works is not being fulfilled. 2. New Plans~- A planned rate of growth in output of chemicals for 1962 has not been released, but Czechoslovak planners expect output to exceed that stipulated for 1962 in the Third Five Year Plan by 500 million koruny.-~ ~ For a discussion of the 20 Year Plan (1961-80), see I, A, p. 5, above. ~- Koruny (crowns) may be converted to US dollars at the official rate of exchange of 7.2 crowns to US $l. This rate of exchange does not neces- sarily reflect the value of the koruna (crown) in terms of the dollar. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Reflecting the lag in construction, however, greater utilization of ex- isting capacity is to play the "decisive part" in increasing output, and the increase as a result of the opening of new plants is to be 300 million koruny lower than envisaged by the Five Year Plan. .Although unfinished projects will be given first priority in the construction plan for 1962, the regime finds it necessary to count on slower progress in the expansion of chemical capacities than originally planned. Partly re- flecting the lag in production of nitrogen fertilizer, the plan for 1862 provides for the use of fertilizers to a lesser extent than anticipated in the Third Five Year Plan. 3. Outlook Production targets for 1965 seem to be endangered by the in- auspicious performance in construction of chemical plants in 1961 and the cutbacks in construction planned for 1962, but it must be recalled that output goals in the Second Five Year Plan were substantially achieved in spite of a chronic underfulfillment in construction. This situation may be due in part to underestimates by planners of the improvements possible in utilization of existing capacity. Most likely the plan to increase production 97 percent during 1961-65 will not be underfLilfilled by any substantial amount, but failures are likely in production of new chemical products such as synthetic rubber. E. Rumania 1. Plan Fulfillment, 1961 Output of the chemical industry in Rumanian increased 27 per- cent in 1961 compared with an increase of 16 percent in 1960 and an aver- age rate of 22 percent required to achieve the goal of the Six Year Plan (1960-65) of more than tripling output during 1960-65. The over-all out- put plan was exceeded, for the planned increase for the year announced earlier was 18 percent. Of the total industrial investment, 18 percent is reported as having gone into the chemical industry. In spite of this favorable showing with respect to the over- all output goal, the chemical industry was criticized for insufficient utilization of production capacities and, in some instances, for the poor quality of products. In addition, several projects were not com- missioned on schedule, in part because of delays in supplying blueprints and also because insufficient attention was given to the adoption of new technological processes.~Moreover, it appears that output of chemi- 50X1 cal fertilizers and synthe is fibers was below the planned level. The shortfall in the planned output of fertilizers may be due in part to the Including paper, cellulose, and rubber industries. _ 27 _ S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 failure to commission the nitrogen fertilizer plant at Roznov. It is significant that the plan goal for synthetic fibers, which was not achieved, was quite low -- only 1,700 tons. 2. New Plans Output of the Rumanian chemical industry is to increase 25 percent in 1862 -- slightly above the average rate required to fulfill the Six Year Plan -- with production of fertilizer scheduled to rise about 50 percent (partly reflecting underfulfillment in 1961). Beginning in the third quarter of 1962, production of tires is planned to reach suf- ficient levels to fill the country's entire requirement from domestic production. A continued rapid rise in output of chemicals is probable, although a tapering-off of the current rate of increase is likely to take place during the last 2 or 3 years of the plan period. The exten- sive purchases of technology and equipment from the Free World will be a significant factor in implementing plans. The failure to commission new installations on schedule may persist in 1962, which could imperil the goals established for output of specific chemical and rubber products in 1965. F. H~ 1. Plan Fulfillment, 1961 In 1961 the Hungarian chemical industry produced 20 percent more than in 1960, thus fulfilling its goal. Within the chemical in- dustry, output of pharmaceuticals is reported to have risen nearly 50 percent compared with a planned increase of 20 percent. Hungary sent a trade delegation to the US in April 1961, at which time the Hungarians presented a shopping list of items that they hoped to purchase for the chemical industry. On the list was a plant to produce acetylene from natural gas, a nylon plant, an activated car- bon black unit, a caprolactam installation, and pharmaceutical and plastics raw materials and equipment. In return, the Hungarians offered to sell pharmaceutical technology. This visit apparently has produced no noteworthy results to date. 2. New Plans In 1962, output of the Hungarian chemical industry is planned to rise 15.1 percent above that in 1961 (possibly including petroleum products and aluminum). Hungary seems to be having considerable success - 28 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 in raising its output of pharmaceuticals, for by the end of 1962 such output is expected to have reached the level planned for 1963. Pharma- ceutical exports for 1962 are expected to rise even more than production. 3. Outlook The Third Five Year Plan (1961-65) appears to be within reach, as the achieved rates of 22 percent and 20 percent in 1960 and 1961, re- spectively, were well above the planned increase of about 16 percent per year. Although construction plans are not being implemented on schedule, the increases in output achieved through new investment have exceeded expectations, particularly in the pharmaceutical sector. On the 50X1 other hand, there have been complaints of a shortage of adequately trained personnel, including chemical engineers for operating chemical plants and also for design work.~~ 50X1 G. Bulgaria 1. Plan Fulfillment, 1961 Output of the Bulgarian chemical and rubber industry in 1961 was to increase 15 percent above that in 1960. Actually, this output rose only 12 percent. This result was attributed to shortfalls at two chemical enterprises (which happen to be Bulgaria's two lar est in ful- filling their plans and also at a small antibiotics plant. Because 50X1 expansions were to be commissioned at the two large enterprises, it can be inferred that they did not take place as scheduled. Although signifi- cant increases in 1961 above output in 1960 were reported for phosphorus fertilizers, sulfuric acid, and motor vehicle tires, only the plan for the latter was fulfilled. Small increases were achieved in production of caustic soda and nitrogen fertilizers, but output of soda ash declined from the level reached in 1960. According to a draft plan released in November 1961, output of the Bulgarian chemical and rubber industry is to increase 15.5 percent in 1962 compared with an increase of 10 percent in the total industrial output. In spite of the substantial increases currently planned for several products, it should be noted that these, now under the Fourth Five Year Plan (1961-65), represent a downward revision of the goals for 1962 given in 1959 for the terminal year of the now canceled Third Five Year Plan (1958-62). The old and new goals may be compared as follows: - 29 - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Unit New 1962 Plan O (Fourth ld 1962 Plan (Third Product of Measure Five Year Plan) n Five Year Plan) Chemical ferti- lizers (gross weight) Thousand tons 686 1,000 Sulfuric acid Thousand tons 257 290 Soda ash Thousand tons 232 243 Plastics and resins Thousand tons 15 16 Motor vehicle tires Thousand units 286 350 to 400 On the basis of performance in 1961 and earlier years, underf`~tl.fillment of the revised plan for 1962 is likely. As regards the goals for 1865 for the chemical industry, none has been disclosed as yet except for chemical fertilizers. H. Albania In December 1961 it was reported that the Albanian chemical in- dustry, which consists of one pharmaceutical plant and a few other minor installations, was expected to fulfill its plan by 125 percent. By earlier agreements, Albania was to have obtained a nitrogen fertilizer plant from the USSR and a phosphorus fertilizer plant (to be apart of a chemical metallurgical combine) from Czechoslovakia. Construction actually began on the Czechoslovak plant in February 1961,~but the 50X1 USSR reneged completely on its commitment. For this reason, the Albanian government entered negotiations with an Italian firm in 1961 for the pur- chase of a $25 million nitrogen fertilizer plant in place of the one promised by the USSR. By the end of the year, however, a firm agreement evidently had not yet been concluded. The Chinese Communists apparently are to provide the financial backing for this purchase. Albania is now shifting its sources of supply of many such im- ports from the USSR and the European Satellites to the Asian Bloc and to Western countries, such as Italy. In 1961, Albania signed a trade agree- ment with Italy for 1962-64 under which Albania is to buy a number of chemical and rubber products formerly obtained from the USSR, including chemical fertilizers, sulfuric acid, pharmaceuticals, pesticides, rubber, and tires as well as artificial and synthetic fibers and polyethylene products. A trade agreement signed with Brazil in 1961 called for 50X1 Albanian imports of chemical products, basic pharmaceuticals, and anti- biotics.~ By other trade agreements signed in 1961 and early in 1962, 50X1 Albania is to obtain chemical products from North Korea and chemical fertilizers and pharmaceuticals from Communist China. 50X1 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 I. Communist China 1. Developments in 1961 a. Output of the Industry Over-a`11 production of industry in Communist China dropped sharply in 1961, but the indications are that the chemical industry fared somewhat better. The Chinese claimed, in fact, that output of some chemi- cal products increased. Peiping stated in January 1962 that there had been a "considerable increase" in output of chemical fertilizers, insec- ticides, and consumer goods made from chemicals. The Chairman of the State Economic Commission also claimed an increase in chemical fer- tilizers and insecticides. Production of antibiotics such as peni- cillin, syntomycin aureomycin, and chloromycetin also were said to have increased.~~China's output of polyvinyl chloride in the first 10 months of lcc~~l was' 12.7 percent greater than in the same period of 1960. Peiping also claimed that the chemical industry "fulfilled" its production plans, but the significance of this assertion is not clear, as no details on plans were announced. Output of some products, however, evidently declined. Imports of crude rubber (natural and synthetic) amounted to about 100,000 tons in 1961 compared with imports of 158,000 tons in 1960, and output of some rubber products probably declined. Production of alkalies also may have dropped. b. Output and Supply of Chemical Fertilizers The report that production of fertilizer increased is difficult to interpret, but it seems unlikely that production of chemi- cal fertilizers in 1961 exceeded 2.8 million tons, the amount of the unattained plan goal for 1960. Several of the eight major plants producing chemical fertilizer claimed to have produced more than in 1960 or at least to have exceeded their production goals. These eight plants account for the bulk of production of nitrogen and phosphorus fertilizers., China's main plant for producing potassium fertilizer is situated in a remote and desolate area in Tsinghai Province. This plant probably had much difficulty in obtaining supplies to sustain its opera- tions during 1961, and consequently the production of fertilizer probably had to be reduced. By mid-1961, however, the plant was producing potas- sium chloride with an average nutrient content of 48 percent compared with an average of only 30 percent during the first quarter. ~- Reexports to the rest of the Bloc also dropped, from 18,000 tons to virtually zero. 50X1 50X1 50X1 50X1 50X1 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 The apparent increase in production of fertilizers tended to be offset by a reduction in imports. Fragmentary information suggests that imports of fertilizers of all types from Bloc and non-Bloc sources may have totaled about 800,000 tons compared with imports of nearly 1.5 million tons in 1960, including a large amount (about 575,000 tons) of phosphate rock from Morocco. Western Europe, the major supplier, is be- lieved to have shipped about one-half of the amount delivered in 1960. With the resumption of limited and unofficial trade with Japan, Chinese agriculture obtained 50,000 tons of Japanese ammonium chloride fertilizer. c. Construction and Equipment Suppl It does not appear that construction of any large chemi- cal plants was started in Communist China in 1961. Emphasis was on the completion of projects already underway and on the enlargement of exist- ing plants. Construction work continued on eight large new chemical fertilizer plants and on seven of the eight large existing plants that are being expanded. Construction of at least some of these large 50X1 chemical fertilizer plants, however, fell behind schedule. Three of the eight new plants (at K'ai-feng, at Canton, and in Chekiang Province) were scheduled to go into operation in 1 61 but available information indicates that they were not completed. Nevertheless, 41 percent 50X1 of all capital investment in the Chinese Communist chemical industry in 1961 was reported to be allocated for construction of chemical fertilizer plants. This investment was said to comprise the highest proportion des- ignated for such uses since the regime came to power and reflects the shift of rior ities within the industry in favor of support for agri- culture. At the same time, it suggests severe cutbacks in construc- 50X1 tion act ive y in other sectors of the chemical industry. Some progress was evident in the construction of "small plants," a program that has been virtually abandoned in other industries. According to the Chinese this approach has been retained in the chemical industry because of the pressing need to supply chemicals to agriculture in a hurry (small fertilizer plants can be built in about 6 months, where- as large ones require 2 years or more) and also because small plants ma,k- ing farm chemicals have an important advantage over small plants in other industries, in that the quality of the product is not so critical. By 1961 the planners in the chemical industry apparently had decided upon a few types of standard designs for small plants using modern production methods and had convinced the regime that valuable resources should be committed to push forward construction of a number of plants of each type. Most of the miniature synthetic ammonia plants were of two sizes: 800 tons per year (producing about 3,000 tons of _ 32 _ S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 aqueous ammonia fertilizer) and 2,000 tons per year (producing 8,000 tons of ammonium bicarbonate fertilizer). In the Shanghai area alone, there were 12 of the 800-ton plants in production by December 1961. One more of the few existing 2,000-ton plants was about to begin operations late in 1961 in Shantung Province. The construction of small phosphorus fertilizer plants was more widespread because these plants are relatively simple to build and operate. Plants with a capacity of x+,000 tons per year of sulfuric acid and 10,000 tons per year of superphosphate appear to have been adopted as standard. The Chinese also are using plants that were con- verted from "discarded" small blast furnaces. These plants have a ca- pacity of 10,000 tons per year of calcium-magnesium phosphate. Con- struction of plants other than fertilizer plants received little atten- tion in 1961, judging by the dearth of press reports. Given the priority to concentrate on making equipment for chemical fertilizer plants, various machine and equipment-producing plants strived to step up production of the necessary units. Shanghai apparently was a major producing center for complete sets of synthetic ammonia equipment for plants of various sizes of annual capacities: small (800 tons), medium-size (2,000 tons), and large (25,000 tons). 50X1 Enterprises producing tubing, boilers, machine parts, instruments, an electrical equipment turned out seamless steel tubing, high-pressure compressors and piping, meters, valves, and other component parts. In the first half of 1961, Shanghai completed 12 sets of e uipment for 800-ton plants and 7 sets for 2,000-ton plants.~~ 50X1 2. Outlook Announcements from Peiping indicate that the general guide- lines for the whole economy in 1962 constitute virtually a playback of the policies set down in 1961. Although problem areas in industry are to be further stressed, no significant upturn in industrial output is suggested, Capital construction, however, is to be "further reduced," but the "weak links in industry, such as the capacity of the ... chemi- cal industries, must be strengthened."~ Expectations are that no ma- jor construction projects will be started in the chemical industry but that resources will be concentrated on winding up projects near comple- tion, especially large fertilizer plants. Emphasis probably also will be placed on building a small number of modern small and medium-size fertilizer plants. The ambitious plans for chemical fertilizers made in 1958 were severely jolted by the withdrawal from Communist China of technicians from the Bloc and by the curtailment in supply of major equipment for expanding the large nitrogen facilities built by the USSR. China is forced to rely Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 on its own machine-building industry, which apparently has just begun to overcome some problems connected with series production of equipment, notably units to withstand high pressures for making synthetic ammonia. Experience to date, however, has been chiefly in making equipment for small nitrogen fertilizer plants that will add relatively little to the national output of fertilizer for several years, even if problems con- nected with installation and operation are involved. More time is needed to develop experience and materials for producing equipment for numerous large nitrogen fertilizer plants of 100,000 tons per year or more. Communist China will continue imports of certain chemical products, particularly fertilizers and crude rubber. There is some evi- dence that imports in 1962 of fertilizer materials of all types from Western Europe, combined with an anticipated rise in deliveries from Japan, might more than double the estimated amount of about 800,000 tons in 1861. In January a Japanese trade firm concluded a contract to ship 100,000 tons of urea during 1962. Japanese surplus stocks of ammonium sulfate also are available to China, but the latter has continued to in- sist on a very low purchase price, and the producers believe such sales would hurt their industry and jeopardize sales to other Asian countries. Imports of crude rubber, chiefly natural rubber, axe likely to amount to nearly 120,000 tons in 1962. This amount is greater than the esti- mated import in 1961 but less than receipts during several previous years. Chinese exports of chemical products are not likely to increase appreci- ably above the low level set in 1961, and the reexport of natural rubber probably will be insignificant. J. North Korea The chemical industry in North Korea apparently did poorly in 1961, the first year of the North Korean Seven Year Plan (1961-67), which calls for an average annual rate of growth in chemical output of about 26 percent. No report has been issued on over-all plan fulfill- ment, nor has a percentage increase in chemical output been given, but reported increases in output of several chemicals, as shown below, in- dicate only modest advances: Product Thousand Tons Percentage Increase Above 1960 Chemical fertilizers (gross weight) 662 18 Sulfuric acid 274 7 Caustic soda 26 5 Calcium carbide 1~+1 12 - 3~+ - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Production of polyvinyl chloride and other plastics, however, was said to have increased rapidly in the course of the year. 2. New Plans Practically no information is available on plans for 1962. Although the general aims of the Seven Year Plan for the North Korean chemical industry were announced in 1960, the concrete goals for a number of products, along with added details, were given in 1961. The goals for 1967 are as follows: Chemical fertilizers (gross weight Pesticides Sulfuric acid Caustic soda Soda ash Calcium carbide Plastics and resins Artificial and synthetic fibers Pharmaceuticals 1,700 12 650 100 113 530 68 9~+ N.A.~ By 1967 the over-all chemical output in terms of value is planned to in- crease four times the level of 1960, which, as stated above, is an average of about 26 percent per year. As an indication of the scope of North Korean plans for the chemical industry, comparison can be made with the fertilizer plans of certain European Satellites. The North Korean goal for 1967 is 1.7 .million tons, whereas, by 1965, Hungary and Bulgaria plan to produce about 1.4 million tons each and Rumania about 2 million tons. The chemical fiber goal given above would make North Korea second to East Germany in the Bloc in per capita production. A petroleum refinery, which also will produce basic petrochemicals, is to be built at Aoji by 1967. North Korea, which produces no tires at present,~--~ is to build a synthetic rubber plant with a capacity of 15,000 to 20,000 tons and a tire plant. The capacity of the latter is unknown, but it is to be sup- plied by Communist China. -~ Five times the level of 1960. ~~- In 1961 a chemical research institute, aided by workers of the Pyong- yang Rubber Plant, succeeded in producing a tire from polybutadiene, a synthetic rubber with properties approximating those of natural rub- ber. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 3. Outlook North Korea is apt to have difficulty in obtaining the equip- ment that it needs to implement the Seven Year Plan. The most vulnerable item would appear to be the tire plant to be obtained from Communist China. It also should be noted that North Korea has had difficulty in expanding production of phosphorus fertilizer in the past. K. North Vietnam In 1861, the first year of its First Five Year Plan (1861-65), the North Vietnamese government claimed to have increased its output of chemical and rubber products 56.5 percent above that for 1860. The chemi- cal industry, however, is still in an embryonic state, and the first chemical plants of any size will be the Phu Tho Superphosphate Plant, the Viet Tri Chemical Combine, and the Bac Giang Nitrogen Fertilizer Plant, which are now under construction with aid from other countries of the Bloc. Scattered reports have been received on production of chemicals and rubber products in 1861. North Vietnam reportedly produced 1,900 tons of caustic soda during the year as initial production of this product got underway. Production of apatite, a phosphorus-containing-raw material used in producing pulverized crude phosphate fertilizer and superphosphate fertilizer, reportedly rose 17.6 percent in 1961. Most of the apatite extracted from North Vietnam's extensive deposits is exported to other countries of the Bloc, although some ~+0 tiny fertilizer plants built in the countryside of North Vietnam consume a small part of the output. With Soviet aid, production of polio vaccine began in 1861. By the end of 1861 the Hanoi Rubber Goods Factory, with the assistance of Chinese Communist specialists, was ready to begin trial production of motor vehicle tires. With regard to construction activity, it appears that the Phu Tho Superphosphate Plant, which is being built with Soviet aid, was not in operation by the end of 1g61 as planned.~Construction of North Viet- 50X1 norm's first modern insecticide plant, with an annual capacity of 1,000 tons, was reported to have been largely completed by the end of 1861, but there has been no indication so far of a start in production. Communist China has been helping with construction of this plant and also with the building of the nitrogen fertilizer plant at Bac Giang. North Vietnam is continuing to establish natural rubber plantations, but commercial output is not expected to begin until 1g65. The only goal announced for chemical output in 1862 is an increase in production of fertilizer of more than four times. This announcement ~ Index of 530. -36- S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 suggests that the Phu Tho plant is now scheduled to be put into operation in the course of 1962. One of the major projects in which over-all in- dustrial investments are to be concentrated in 1962 is the Bac Giang Nitrogen Fertilizer Plant. The fulfillment of these and other goals for the North Vietnamese chemical industry during the First Five Year Plan depends to a large ex- tent on continued receipt of aid from other members of the Bloc. Because of the present economic difficulties in Communist China, North Vietnam may not be able to maintain its schedule for construction of those chemi- cal plants that were to be furnished wholly or in part by Communist China. L. Outer Mongolia Some details were released in 1961 on plans to develop a chemical industry in Outer Mongolia during the period of the Third Five Year Plan (1961-65). Under various economic-technical aid agreements signed in 1960-61, Outer Mongolia is to receive chemical plants and technology from several countries of the Bloc. During 1962-63 the USSR is to provide an oxygen plant, which is to produce enough oxygen to cover the industrial and medical needs of Outer Mongolia. By 1963, Communist China is to com- plete construction of the Dzuunharaa Alcohol Plant, which will produce annually 1 million liters (l.l million. quarts) of alcohol, and by 1964 a second section of this plant is to produce 50 tons a year of carbon di- oxide. Hungary is expected to furnish the equipment for a veterinary pharmaceutical plant for production of animal vaccines and hormones. One source reported that in 1961 a plant with an annual production capacity of 5 million plastic articles was to be built in Ulan Bator, but the coun- try providing this plant was not mentioned. Also, in 1961 an official of Outer Mongolia reportedly stated that the government would soon erect a phosphate fertilizer plant, although some members of the Ministry of Agri- culture believe that there is no need for fertilizer, because most of the crops are being grown on virgin land. -37- Declassified in Part - Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 S-E-C-R-E-T APPENDIX A SING-SOVIET BLOC: PLANNED COOPERATION IN THE CHEMICAL INDUSTRIES IN SUPPLY OF EQUIPMENT AND TECHNICAL ASSISTANCE: SELECTED DEVELOPMENTS IN 1961 Recipient of Aid Supplier of Aid Type of Aid Czechoslovakia Technical data for chemicals "Technical papers on new technological processes and pharmaceuticals for chemical production and the manufacture of pharmaceuticals." Also information on the design and running of compressors for the chemical in- dustry. Czechoslovakia Joint venture Construction of a phosphorite mine and concentra- Hungary (?) tion plant is planned at Kingisepp in Estonia. East Germany Poland Poland Chemical equipment Czechoslovakia USSR Technical data USSR Technical data - 39 - "Numerous Soviet rosin and turpentine plants will receive Polish equipment." Plans and blueprints for improved technological processes in the chemical industry. Relating to the design of a chloroprene rubber plant. The supply of Soviet experience and knowledge reportedly saved the work of a year of 10 research workers. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 S -E -C -R -E -T Recipient of Aid Supplier of Aid Type of Aid Comments Czechoslovakia USSR Technical data Soviet experts will participate in planning a (Continued nitrogen fertilizer plant. USSR Technical data Relating to the design of a plastics-processing plant. USSR Complete plants For production of sulfuric acid and divinylbenzene. USSR Technical data Petrochemical technology, including information on methods of purifying olefins used for syn- theses and on isolation of aromatic hydrocarbons. East Germany USSR Technical data All technology necessary for the planning of two tire plants. Poland Czechoslovakia E quipment Complete plant to produce "phosphorus fertilizer from a carbamide base." Czechoslovakia East Germany Technical data Relating to production of trichloroethylene, monochloroacetic acid, suspended polystyrene, formic acid, cumene phenol, and acetylaldehyde (from acetic acid . Poland Technical data Relating to the use of catalyzers in produc- tion of synthetic rubber monomers and to production of trichloroethylene. Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Recipient of Aid Supplier of Aid Type of Aid Comments Rumania Czechoslovakia Joint venture Construction of a cellulose combine for processing East Germany reeds, Poland Czechoslovakia E quipment and technology Czechoslovakia will build a plant to produce 2,300 tons of viscose rayon annually. Poland E quipment For ammonia synthesis. Albania Czechoslovakia Training of workers In rubber-fabricating industry. Communist China Czechoslovakia E quipment for chemical To be delivered sometime after January 1961. fiber production Czechoslovakia Technical data Inorganic chemical industry and the processing of rubber and plastics. North Korea Czechoslovakia Exchange of technical data In the field of manufacturing artificial fibers. Cuba Hungary Technical assistance Assistance in the organization of a pharmaceuti- cal industry and of a planning institute of the chemical industry. Bulgaria E quipment and technical Plant for producing calcium carbide will be sup- data plied. Hungary USSR Technical aid and equip- For a methanol plant with a capacity of 15,000 ment tons per year. Bulgaria East Germany Complete plant Cellulose and rayon staple fiber. - ~+l - S-E-C-R-E-T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 S-E-C-R-E-T APPENDIX B SING-SOVIET BLOC: IMPORTS OF CHEMICAL EQUIPMENT AND TECHNOLOGY FROM THE FREE WORLD: SELECTED ORDERS PLACED IN 19 1 Importing Production Capacity Price Exporting Scheduled Type of Plant Country (Metric Tons) (Million US $) Country Plant Site Completion Date Remarks 6.25 UK Merseburg 1964 Negotiations conducted by a consortium of countries of the Bloc, including East Germany, Czechoslovakia, Poland, and Rumania. The total value of the contract covering the purchase of specialized equipment and process data for four plants is provisionally set at $25 million. Polyethylene Czechoslovakia 24,000 per year 6.25 UK N.A. L964 Polyethylene Poland 24,000 per year 6.25 UK P1ock or Kedzierzyn 1964 Polyethylene Rumania 24,000 per year 6.25 UK N.A. 1964 Polystyrene Chemical fibers and Rumania N.A. - 2.24 UK N.A. 1963 To produce all types of general- purpose and impact grades plus spe- cial grades and expandable poly- styrene. intermediates Rayon Cellulose acetate USSR USSR 24,000 per year 7,000 per year N.A. N.A. Japan Japan N.A. N.A. N.A. N.A. Cellulose USSR 200,000 per year ~ 16 ~ Italy Arkhangelsk 1963 a. A few sources have ascribed a capacity of 00,000 tons to this plant. b. Other prices have been quoted between $11 million and $11.9 million. - ~+3 - S -E -C -R-E -T Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 S-E-C-R-E-T Importing Production Capacity Price Exporting Scheduled Type of Plant Country (Metric Tons) (Million US $) Country Plant Site Completion Date Chemical fibers and inter- mediates (Continued) Nylon-66 USSR 6,000 per year Dimethylolethyleneurea USSR 12,000 per year 50-percent water solution Caprolactam (two plants) USSR N.A. N.A. Italy Rustavi N.A. Chernigov Product to be used to wrinkle-proof (drip-dry) fibers. To be .constructed by a UK firm with equipment from both the UK and West Germany. Cellulose Poland 245 per day N.A. Finland N.A. N.A. A Finnish firm will supply "main" machinery. Orlon type of fiber Poland Initially 5,000; ulti- 5.6 UK Lodz N.A. Acrylic fiber. The seller to supply Tire-processing USSR N.A. equipment Butyl-rubber USSR N.A. processing equipment Equipped to carry out only an inter- mediate phase in the total production of tires. 5.07 UK Vol'zhskiy Mid-1963 Contract is for all the necessary equip- ment for handling, storing, and auto- matic weighing of the basic raw mate- rials for making tires. 4.23 UK N.A. Delivery scheduled Equipment for filtration, drying, wrap- in July-December ping, and packaging butyl rubber. 1962 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 rtilizers Urea trochemicals Ammonia Ammonia Poland USSR USSR 500 per day 350 per day N.A. 4.2 N.A. N.A. UK West Germany Belgium Ammonia USSR 420 per day N.A. ~ Italy Methanol USSR 720 per day N.A. Italy Propylene USSR 10,000 per year N.A. Japan Propylene USSR 10,000 per year N.A. West Germany Oxygen and nitrogen Poland (Three plants each with N.A. UK 10,000 cubic meters of in December 1962. The UK firm, in con- oxygen and 12,500 cubic junction with a US firm, is supplying meters of nitrogen per the process techniques. 24 hours) c. The ammonia and methanol plants apparently are part of the same installation, at Least part of the payment for which will be provided in the form of petroleum. d. Possibly Shchekino or Novomoskovsk (formerly Stalinogorsk), both being sites of fertilizer plants. -~+5- License, specifications, and equipment. A small part of output will be used as cattle feed. The plant will employ a Japanese process licensed to a British firm. Gor'kiy Delivery early in Natural gas basis. 1963 Tula area J Late in 1962 or early in 1963 Tula area Late in 1962 or early in 1963 N.A. Delivery scheduled during 1961 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Importing Production Capacity Price Exporting Scheduled Type of Plant Country (Metric Tons) (Million US $) Country Plant Site Completion Date Remarks Other chemicals Oxygen (six plants) USSR (Each unit to have a ca- 14.12 Japan N.A. N.A. pacity of 15,000 cubic meters per hour) Ethylenediamine USSR 3,000 per year N.A. Italy N.A. N.A. Monochlorophenoxy USSR 4,200 per year 3.8 UK Ufa January 1964 Hormone weed killer. acetic acid Ethylene oxide Rumania N.A. 5.6 Italy N.A. N.A. The deal is believed to have been com- Ethylene glycol (estimate for pleted. each plant) Formaldehyde Rumania N.A. N.A. Italy Fagaras N.A. An Italian firm is participating in construction. Tripolyphosphate soda Rumania 10,000 per year 1.5 Belgium Ploesti area N.A. Vitamin C Rumania N.A. N.A, UK N.A. N.A. Calcium carbide and Bulgaria 5 per hour of calcium N.A. West Germany Reka Devnya By 1965 To be operated in connection with a acetylene carbide polyvinylchloride plant under con- 6tI'i10tl.On Declassified in Part - Sanitized Copy Approved for Release 2013/03/25: CIA-RDP79R01141A002400140001-8 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Q Next 2 Page(s) In Document Denied Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8 SECRET SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/03/25 CIA-RDP79R01141 A002400140001-8