SINO-SOVIET BLOC ECONOMIC AND MILITARY SUPPORT FOR THE CASTRO REGIME

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79S00427A000500040026-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 16
• Document Creation Date: December 16, 2016
• Document Release Date: September 22, 2004
• Sequence Number: 26
• Publication Date: July 3, 1961
• Content Type: MEMO

Approved For Rei se 2004/10/08: CIA-RDP79S00427AQQ500040026-3
3 July 1961
MEMORANDUM:
Subject: Sino=Soviet Bloc Economic and Military Support
For the Castro Regime
In return for Cuban adherence to both external and
internal Communist policies and for the use of Cuba as an
operational base for propaganda and subversive activities
in the Western Hemisphere, the Communist bloc has under-
written the Cuban economic and military establishment. The
extent of Communist economic support clearly goes beyond a
mutually advantageous commercial exchange. The bloc ap-
pears willing to accept the considerable cost and inconven-
ience required for gaining its first foothold in Latin America.
Bloc commitments are of sufficient magnitude to sustain the
Cuban economy, to provide for Cuba's economic growth, to
tie the country firmly to the Communist system for years to
come, and to eliminate most of Cuba's traditional economic
intercourse with the free world. Bloc military support is suf-
ficient to equip the Cuban armed forces to a level which raises
serious concern over future Cuban military intentions.
Approved For Release 2004/10/08 : CIA-RDP79S00427A000500040026-3
 Approved For Reuse 2004/10/08 : CIA-RDP79SO0427A000500040026-3
1WW
Military Support
Preliminary attempts to arrange the supply of Soviet bloc
arms to Cuba were initiated by Havana as early as 1959. Pend-
ing a favorable response from Moscow, Cuba procured sizable
quantities of small arms and ammunition in Western Europe.
After the bloc's unqualified endorsement of the Castro regime,
in mid-1960, however, firm military aid agreements with Cuba
were concluded by both the USSR and Czechoslovakia.
In the summer of 1960, groups of Cuban military person-
nel began arriving in. the bloc for military training, including
flight instruction in jet aircraft and maintenance work on the
equipment to be supplied. About the same time the first ship-
ments of helicopters, small arms, and ammunition began. to
arrive in Cuba from the bloc.
Since the autumn of 1960 large shipments of bloc arms
and military equipment have been supplied regularly to Cuba
and bloc military advisers and technicians also have arrived.
On 1 January 1961, during the military parade celebrating the
second anniversary of Castro's takeover, the regime unveiled
an array of military hardware indicative of deliveries up to
that time. Units equipped with medium and heavy tanks, as-
sault guns, artillery, antiaircraft weapons, and mortars, as
-2-
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For ReI a 2004/10/08 : CIA-RDP79SO0427AO 0040026-3
well as rifles and machine guns, were prominently fea-
Large additional amounts of land armaments have
been supplied Cuba since January
Recent shipments have included at least a
squadron (12) of MIG jet fighters which have long been awaited
in Cuba and which will greatly enhance the capability of the
Cuban air force.
The following is a partial listing of the types of bloc
arms and military equipment which have been supplied to
Cuba. As in the case of the MIGs, the land armaments have
been supplied in sufficient quantities to outfit tactical military
units.
25X1
25X1
25X1
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Rele a 2004/10/08 : CIA-RDP79SO0427A000500040026-3
N.WW
Land Armaments
JS-2 heavy tanks
T-34 and T-54 medium tanks
SU-100 assault guns
122 mm. field guns
85 mm. field guns
76 mm. field guns
57 mm. antitank guns
85 mm. antiaircraft guns
37 mm. antiaircraft guns
30 mm. twin antiaircraft guns
12.7 mm. quad antiaircraft machine guns
120 mm. mortars
82 mm. mortars
Rocket launchers
Aircraft
MIG jet fighters
MI-1 and MI-4 helicopters
Z LIN-326 piston trainers
AN-2 single-engine transports
In addition to the equipment listed above, the bloc has
provided Cuba with large amounts of small arms and ammuni-
tion, military vehicles, and a variety of other military-related
items such as radar, communications equipment, engineering
equipment and other supplies necessary to modernize and ex-
pand the Cuban armed forces. This support enables Cuba to
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
*Mw
maintain military forces well beyond levels needed to ensure
internal security.
Bloc Economic Support
Through a network of bilateral economic agreements
with all the countries of the bloc, Cuba's economy is bound
tightly to the fortunes of the Communist economic system.
Prior to 1960 bloc economic contacts with Cuba consisted
largely of occasional sugar purchase and a few sales of.
Czech manufactured goods. Within a year from the February
1960 start of the Cuban effort every country in-the bloc had
signed one or more bilateral economic agreements with Cuba
and by now the regime depends on the bloc as a source of im-
ports and as a market for at least two thirds of the Cuban
sugar crop, Bloc economic aid has become an essential fea-
ture of the Cuban scene and Havana's plans for industrializa-
tion rest almost solely on the procurement of large-scale bloc
material and technical assistance.
In contrast to 1960, when the bloc accounted for only
25 percent of Cuba's foreign trade, official Cuban pronounce-
ments indicate bloc trade will amount to about 75 percent of
the total in 1961. Under its barter agreements with Cuba the
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For RJ se 2004/10/08 : CIA-RDP79S00427AQW500040026-3
bloc supplies those goods which are necessary to sustain the
Cuban economy--petroleum, industrial machinery, foodstuffs,
fertilizers, agricultural equipment, and even a variety of con-
sumer goods often in short supply within the bloc, The supply
of spare parts for Cuba's Western-built industrial establish-
ment continues to be a major problem, but in the long-run the
bloc intends to eliminate this difficulty by re-equipping the
island with bloc-manufactured goods.
Bloc aid extended for Cuban economic development totals
about a quarter of a billion dollars, but this program is still
largely in the formative stages. Technical assistance, primarily
planning and survey work, under this program is well under
way, however, and construction of a few smaller projects is
in progress.
Bloc Imports from Cuba
Despite the low priority of sugar in bloc import require-
ments and the fact that some Eastern European countries are
small traditional sugar exporters, the Communist countries
are taking large amounts of Cuban sugar in return for the polit-
ical advantages derived from having Castro and his allies in
power. On the other hand, the Soviet and Chinese populations
Approved For Release 2004/10/08 : CIA-RDP79S00427A000500040026-3
 Approved For ReIWe 2004/10/08 : CIA-RDP79S00427A0 QOD0040026-3
whose consumption rates are always severely restricted in
order to make available to their governments maximum
amounts of national resources, can easily absorb all of the
Cuban sugar and will do so at state-set prices which return to
the respective governments several times the price paid out.
In 1960, bloc countries initially pledged to import about
1,800,000 tons of Cuban sugar. When Cuba's US sugar quota
was cut by 700,000 tons, however, Moscow immediately re-
sponded by agreeing to accept that much additional sugar,
bringing the bloc's total commitment to about 2,500,000 tons,
or nearly six times more than its average annual purchases
from Cuba in recent years. By the end of 1960 total bloc im-
ports of sugar from Cuba had reached nearly 2,300,000 tons--
roughly 40 percent of total Cuban sugar exports.
Following the travels by Cuban trade missions through-
out the bloc in late 1960, Moscow and its allies agreed to take
a total of 4,000,000 tons--valued at about $360,000,000--of
Cuban sugar in 1961 or about two-thirds of the island's crop.
In addition, the bloc agreed to pay four cents a pound for the
entire amount--about 30 percent more than Cuba is receiving
on the world market, but still well below the premium six
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Release 2004/10/08 : CIA-RDP79SO0427AO00500040026-3
cents a pound Cuba formerly received from the United States.
The Soviet Union is committed to import 1,000,000 tons an-
nually under its long-term trade agreement with Cuba and in
1961 is pledged to take up to 1,700,000 tons extra. By stip-
ulating that the additional tonnage is to be reduced by any
amount the United States takes from Cuba, Moscow paints an
even more vivid picture of itself as the "benefactor" of Cuba
in contrast to US "economic aggression:'
Communist China boosted the amount of sugar it was
scheduled to buy in 1961 from 500,000 to 1,000,000 tons--also
priced at four cents a pound. The East European satellites,
most of which are sugar exporters, collectively are buying
about 300,000 tons. More important, the satellites are acting
as intermediaries for the Cuban government by re-exporting
sugar to free world countries in cooperation with Cuban trade
authorities.
Although by far the most important single item, sugar
is by no means the only commodity the bloc is importing from
Cuba. Fruits, tobacco, minerals, and metals are being
shipped to the bloc in ever-increasing volumes. A recent
Czech announcement of proposed bloc aid for the Cuban mining
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Rele a 2004/10/08 : CIA-RDP79SO0427AOW0040026-3
industry noted that the bloc would take Cuba's entire mineral
exports over the next 20 years.
Bloc Deliveries to Cuba
Bloc deliveries to Cuba clearly demonstrate Communist
willingness to make elaborate efforts to readjust its own plans
in order to provide for Cuban needs. Chinese Communist de-
liveries of food grains continue, even though China itself suf-
fers from famine. Less dramatic, but more important, was
the effort by the USSR to supply Cuba's petroleum needs even
though for a time this required a considerable disruption of
Soviet oil export operations, particularly in the deployment of
bloc tankers, and the rescheduling of deliveries to other coun-
tries.
When Castro confiscated the oil refineries in Cuba in July
1960, the USSR immediately stepped in to supply all Havana's
petroleum needs.
25X1
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Rele a 2004/10/08 : CIA-RDP79SO0427AO 0040026-3
Petroleum, however, makes up only part of total deliv-
eries from the bloc. For more than a year shipments of other
items to Cuba have steadily grown in number and variety. Be-
sides large amounts of military equipment and supplies, Soviet
grain, fertilizers, metals, chemicals, motor vehicles, farm
and industrial machinery, foodstuffs, and consumer goods have
been arriving in quantity. In at least one instance Soviet con-
sumers have openly complained about Moscow's efforts to
supply Cuba with goods not readily available in the USSR.
The East European satellites are supplying trucks, buses,
automobiles, tractors, small industrial plants, chemicals, coal,
and a wide variety of consumer goods to ease shortages caused
by the sharp drop in Cuban imports from the West.
Communist China continues to deliver rice, corn, meat,
and other foodstuffs to Cuba despite the problems of distance and
severe domestic food shortages requiring extensive Western
grain imports for partial relief. Peiping also has shipped
Chinese-produced trucks and is supplying textiles, toys, and
some industrial equipment.
-10-
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
Terms of Trade
Communist desires for Castro's success result in es-
sentially favorable prices and terms for Cuba's trade with the
bloc. Thus, although the bloc pays a premium price for Cuban
sugar, there is thus far no reason to believe that the USSR is
charging Cuba similar premiums for bloc exports. The bar-
ter agreements, however, sharply curtail Cuba's earnings
of convertible foreign exchange and restrict the country's con-
tacts with the West. Provided with only small amounts of hard
currency by bloc trade, Cuba is forced to cut its purchases
from the free world to a minimum and to speed its integra-
tion into the Communist economic network.
The special position accorded to Cuba by the bloc is
pointed up by a multilateral payments arrangement negotiated
late last year. Under this arrangement- -used only sparingly
even within the bloc--the bloc allows Cuba to sell sugar and
other products to one bloc country and to buy an equivalent
value of goods from another. Thus, while only selling small
amounts of sugar to certain countries- -particularly the Euro-
pean satellites--Cuba can continue to purchase large quan-
tities of goods it desires from these countries by utilizing
credit balances accumulated with the USSR through sugar exports.
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Relqpe 2004/10/08: CIA-RDP79SO0427AO 00040026-3
Bloc Economic Development Aid
In relation to Cuba's size and population bloc economic
involvement in Cuban affairs is probably more extensive than
the bloc has yet undertaken in any country outside the bloc. Al-
though total bloc development credits to India, Indonesia, and
the UAR considerably exceed those extended so far to Cuba,
in terms of long range planning, speed of execution, and per
capita support, Cuba rates well at the top of bloc efforts.
25X1
12
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Rele a 2004/10/08: CIA-RDP79SO0427A00 0040026-3
Only a few of the smaller facilities to be built under these
agreements have been started, but extensive surveys have been
and are being carried out in Cuba by bloc technical teams. On
the basis of these preliminary reports, contracts have been signed
for more than 100 separate industrial projects to be constructed
with bloc assistance over the next five years. Many of the prom-
ised "complete factories" are small-scale installations to pro-
duce tools, household items, clothing, and other goods which have
always been imported by Cuba.
In a speech last spring, Che Guevara sketched the regime's
economic plans and the role to be played by each of the partic-
ipating bloc countries. The Soviet Union will concentrate its
efforts in the field of mining, with the aim of expanding Cuba's
output of iron ore, nickel, copper, chrome, and manganese.
The nickel industry is singled out for special attention because
of the large Cuban ore reserves and the sizable processing fa-
cilities already in existence. The USSR also has agreed to con-
struct a steel' mill with an eventual capacity of over 1, 000, 000
tons as well as fabricating plants. Other Soviet projects include
an oil refinery, power stations, chemical fertilizer plants, paper
factories, and cement plants.
-13-
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Releoe 2004/10/08: CIA-RDP79SO0427A0Q0500040026-3
Czechoslovakia's major undertaking is a project designed
to establish a motor vehicle industry in Cuba by 1965. Vehicle
components will be shipped to Cuba for assembling, but later
the plans envisage fabrication facilities for at least some of
the parts. The facilities of a General Motors plant confiscated
by the Castro government will be used to start this project.
The other satellites are to build metallurgical plants, textile
factories, household appliances, food processing plants. Poland
will construct two shipyards as the basic element in establish-
ing a Cuban shipbuilding industry.
Communist China's is to be used to
construct some 24 factories in Cuba, including textile, chem-
ical, and paper mills, and to provide for technical assistance
in agricultural development- -the latter a somewhat ironic ges-
ture for the Chinese who currently are experiencing the disas-
trous results of their own neglect and mismangement of agricul-
ture during the past ten years.
Bloc Technical Assistance
A growing influx of technical experts from bloc countries
has been in progress since the spring of 1960. The situation is
developing so rapidly that no accurate count has been possible,
-14-
25X1
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
but at least 500 bloc technicians are estimated to have been
working on development projects and helping the Cuban regime
with administrative and operational matters during the first
six months of this year.
Bloc technicians have been employed to conduct surveys
of economic resources, to make engineering studies in con-
nection with development projects to be financed by bloc credits,
and to advise major departments of the government in such
critical fields as trade and finance, economic organization and
planning, and industrial, agricultural, and mineral production,
- 15 -
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
 Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3
Approved For Release 2004/10/08 : CIA-RDP79SO0427A000500040026-3