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December 9, 2016
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March 20, 2001
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March 1, 1965
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Approved For Release 2001/04/1$E4g 79T01003A002200170001-8 INTELLIGENCE BRIEF CIA/RR CB 65-17 March 1965 Copy No. RECENT UPSURGE IN EAST GERMAN ECONOMIC ASSISTANCE TO LESS DEVELOPED COUNTRIES DIRECTORATE OF INTELLIGENCE Office of Research and Reports SECRET GROUP 1 Excluded From automatic downgrading and declassification Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 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. Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 S-E-C-R-E-T RECENT UPSURGE IN EAST GERMAN ECONOMIC ASSISTANCE TO LESS DEVELOPED COUNTRIES As part of a drive to strengthen its economic recently has Pncreasedldra-ith less developed countries, East Germany matically the volume of its offers and extensions of economic aid. After aid to developing countries having extended only $55 million of economic 1 54-63), East in the first 10 years of the Communist 1964 has more than tripled the amount Germany since the beginning of 0 ion of its previous commitments by extending upsurgerin the level of aid new economic aid (see the table). This d to Extende1 64 Le15 March 1965Countries Developed East German Economic and 1 1954-63 Million US 1954-63 1 January 1964 - 15 March 1965 54.9 191.8 Total 6.8 .8 66.55 1.7 0 Ghana 0 Guinea 50.1 0 Mali 0 6.5 Tanzania 10.6 84.4 Asia 0 42.0 Ceylon 2.0 0 India 8.6 42.4 J Indonesia Middle East J-7'-5 100.9 2.7 0.1 Syrian Arab Republic ioo.8 United Arab Republic 30:1 0 Yemen a. This figure may be as higl: as 0 million. S-E-C-R-E-T Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 S-E-C-R-E-T activities reflects a greater. East German determination to use its increased economic capability to exploit more fully the political poten- tial of the aid program. Another factor in the regime's decision is its need to develop new outlets for machinery and equipment exports that generally are not competitive in Western markets. Pursuant to the ac- complishment of these economic and political objectives in the less developed countries, East Germany has expanded recently the scope of its aid undertakings and has liberalized its terms. I. Pattern of East German Aid, 1954-63 Before 1964, except for a $20 million credit to the UAR and a $3 million credit to Guinea, all East German aid had been designated for the purchase of equipment for single projects rather than for large lines of credit as was typical of the aid from most other Com- mu.nist lenders. Thus, for example, credits were extended to Ghana, Guinea, and Mali for the purchase of printing plant equipment; to India, Syria, and the UAR for textile machinery; to Indonesia for a sugar refinery; and to Yemen for a telephone exchange. Amortization periods for these credits averaged about 5 years, and interest rates were 2. 5 to 4 percent. These hard repayments terms plus the fact that the agreements were actually contracts to sell equipment tended to make most of East Germany's transactions more commercial than aid-oriented. Also, deliveries of equipment under these contracts were expedited rapidly because in many cases there was a minimum of project involvement and the projects were relatively simple to implement. By the end of 1964, virtually all of the $55 million of said committed between 1954 and 1963 had been delivered. 2. The New, Expanded Program Similar to the Soviet practice, East Germany now offers large lines of credit, and recent credit extensions have generally been made under general economic cooperation agreements. These agreements encompass numerous projects for which contracts will be drawn after feasibility surveys are made and individual project negotiations are completed. East Germany also will become more directly involved in project activities and for the first time has agreed to cover local cots of some aid projects that it is undertaking. For example, in its credit to Ceylon, one-fourth of the total amount extended has been obligated for that purpose. Similar provision was made in its aid agreement with Tanzania. In Ghana its offer of aid was for projects for which East "turnkey" Germany would assume full responsibility. Repayment periods, under recently extended credits, also have been prolonged and interest rates reduced to be more nearly consistent Approved For Release 2001 /04/ 7 :E1=RDA-9T01003A002200170001-8 Approved For Release 2001/04/17 : CIA-RDP79T01003A002200170001-8 with Soviet aid terms. The $42 million credit to Ceylon is repayable in 10 annual installments and carries an interest rate of 2. 5 percent. The East German credit of about $100 million to the UAR is to be repaid in 12 years. $70 million of the credit will bear an interest rate of 2. 5 percent and the remainder will carry 4 percent. 3. Political Implications of the New Program While its expanded program is intended to satisfy certain eco- nomic requirements of the East German economy, it is being em- ployed simultaneously as an instrument to exact greater political concessions from the less developed countries. Offers, aggregating more than $135 million, currently are being negotiated with Burma, Cambodia, Ghana, Malawi, Uruguay, and Yemen. Most of these offers, as well as the extensions of aid that have been agreed to in recent months, are believed to have been associated with political conditions. For example, the Leuschner delegation that visited India in February 1964 discussed; (1) Indian recognition of East Germany; (2) establishment of an East German consular or diplo- matic mission in India; (3) Indian representation, such as a trade mission, in East Germany; (4) liberalization of Indian visa regula- tions; and (5) long-term economic assistance. Although in no instance has East Germany achieved full diplomatic recognition as a result of its aid offers, Ceylon raised East German representation to consular status before the receipt of a $42 million credit, and the UAR agreed to establish a consular mission in East Germany when it accepted the credit of about $100 million from East Germany during Ulbricht's recent visit. In spite of the blunt pressures put on Indonesia to extend full diplomatic recognition in return for sizable long-term credits, the threat of-West German withdrawal of aid may have made Indonesia reluctant to go beyond the consular representa- tion that had been agreed to in 1960. Nevertheless, Indonesia has received a series of credits totaling more than $40 million that may come under a line of credit reported to be as high as $60 million. 4. Outlook East Germany will probably continue to press less developed coup- tries to accept additional aid offers so long as the political. and economic factors that have impelled the recent upsurge are operative and so long as the increased viability of the East German economy makes it able to fulfill the higher level of its new aid undertakings. Analyst: Coord: M ORR 25X1A Approved For Release 2001/(%t' -:QiA$LRbP'Y9T01003A002200170001-8 Approved For Release 2001/QJ4l1~DP79T01003A002200170001-8 Approved For Release 2001/~ 7 LTA DP79TO1003AO02200170001-8 CONTROL RECORD FOR SUPPLEMENTAL DISTRIBUTION 25X1A SERIES NUMBER CIA/RR CB 65-17 CLASSIFICATION OF REPORT SECRET DISTRIBUTION TO RC 50 DATE OF DOCUMENT March 1965 NUMBER OF COPIES 280 NUMBER IN RC COPY DATE NO. (S) RECIPIENT 25X1A SENT RETURNED 97, 175- 30 Rec'd in St/P/C 26 Mar 65 97 St/P 30 Mar 65 175 OCR " / b5 176 CGS/HR/O s 1G81 177 178-181 iI 182 25X! C 183-- 184-186i 187 r~ 188-230 Filed in St/P/C 30 Mar 65 ~ 25X1A , 1. 25X1A Approved For Release 2001/04/17 CIA-RDP79TO100 3AO02200170001-8 , Analyst: 1/ rV (Project 41. 5234) A roved For Release 2001/04/17 - FORM 2353 (13) 2.65 Approved For Relegg* QQQf /04/17: CIA-RDP79TO10 A E SEN RETURNED Approved For Release 2001/04/17 : CIA-RDP79TO1003AO02200170001-8 Approved For Release 2001/04/17 : CIA-R 19T01003A002200170001-8 SUBJECT: Distribution of Current Support Brief No. Upsurge East German Zcono c Assistance to Less ountrss.... March (SECRET) Copy No. Recipient 1 O/DDI, Room 7E32, Hdqtrs. 2-3 NIC 4 - 12 OCI Internal 13 - 14 ONE 15 - 20 St/CS/RR 21 O/DDI 22 - 30 NSA 31 NSAL 25X1A 32 - 280 ORR Distribution, St/A/DS, Room GH0915, 25X1A (Distributed by OCR) Excaud l tram autamatlcl dcrr^^rad;n and Hdgtr s. Approved For Release 2001/04/17 : CIA-RDP79T01003A002200170001-8 Approved For Release 2001/04/17 : CIA-RDP79T01003A002200170001-8 St/A/DS Distribution of Current Support Brief No. in East German Economic Asei 1965 (SECRET) Copy No. 32 33 34 35 36 37 - 42 43 - 48 49 - 54 55 - 60 61-66 7 68 - 76 77 - 78 79 - 80 81 82 - 87 88 89 90 91 92 93 94 95 96 9qt 98 99 100 101 102 - 103 104 105 - 107 108 109 110 - 111 112 113 114 - 115 116 - 154 159 - 170 171 - 172 173 - 174 97 &175 - 230 231 - 280 Recipient AD/RR DAD/RR SA/RR Ch/E St/PR D/A (1 each branch) D/MS (1 each branch) D/R (1 each branch) MRA D/P (1 each branch) D/F (1 each branch) St/PS D/I each branch) D/G1 D/GC D/GX/X RID/SS/DS, Unit 4, Room 1B4004, Hq. St/P/A St/FM Analyst/Branch GR/CR BR/CR FIB/SR/CR, Room 1G27, Hq. Library/CR CR Chief, OCR FD CD/OO OCI/SA/R, Room 5G19, Hq. DDI/CGS, Room 7F35, Hq. DDI/CGS/HR, Room 1G81, Hq. DDI/RS, Room 4G39, Hq. OSI OBI 25X1A 25X1A DD/S&T/SAINT OTR/IS/IP, Room 532, Broyhill Bldg., 1000 Glebe (1 - OTR/SIC) Commandant National War Col ege, a McNair, Attn: Classified Records Section, Room 26, National War College Bldg., Washington, D. C. Assistant Secretary of Defense, ISA, Room 4D825, Pentagon Defense Intelligence Agency, DIAAQ-3, A Building, Arlington Hall Station USIA, IRS/A, Room 1002, 1750 Pennsylvania Avenue, N. W., Attn: Warren Phelps State, INR Communications Center, Room 6527, State Dept. Bldg. Dr. Neilson Debevoise, NSC, Room 365, Executive Office Bldg. Frank M. Charrette, Agency for International Development, Chief, S at}st'cs and Reports Division, Room A-204, State Annex #10 St/P/ C /RR, Room 4F41, Hq. Records Center Approved For Release 2001/04/17: CIA-R I /PO) 7i9dTibiillQ1aZo~Q 2200170001-8 do s. railing and SECRET Approved For Release 2001/04/17 : CIA-RDP79T01003A002200170001-8 2 April 1965 MEMORANDUM FOR: Chief, Dissemination Control Branch, DD/CR FROM Chief, Publications Staff, ORR SUBJECT ' Transmittal of Material It is requested that the attached copies of CIA/RR CB 65-17, nt Upsurge in East German Economic Assistance to Less Develo j es March 1965.. Secret, be forwarded as follows: State, INR Communications Center, Room 6527, State Dept. Bldg. Suggested distribution for Embassies in Berlin? )scow, Bonn, and Geneva 25X1A Attachments: Copies #194 :197 of CR 65-17 by annum ha. been completed; Date: cc: CGS/RR Approved For RetT- E /1 Approved For Release 20 Project No. 41,-5234. J CIA-RDP79T01003A002200170001-8 Report Series RR CB 65-17 Title Recent Upsurge in East German Economic Assistance to Less Developed Countries March 1965 (SECRET) 25X1A Responsible Analyst and Branch I/PO RECOMMENDED DISTRIBUTION TO STATE POSTS - Berlin, Germany Bucharest, Romania Budapest, Hungary Moscow, USSR Prague, Czechoslovakia Sofia, Bulgaria Warsaw, Poland Europe Belgrade, Yugoslavia Bern, Switzerland - ,Bonn, Germany Brussels, Belgium Copenhagen, Denmark 0 1! ; Geneva, Switzerland Helsinki, Finland The Hague, Netherlands Lisbon, Portugal London, England Luxembourg, Luxembourg Madrid, Spain Oslo, Norway Paris, France Rome, Italy Stockholm, Sweden Vienna, Austria Bangkok, Thailand Djakarta, Indonesia Hong Kong Rangoon, Burma Kuala Lumpur, Malaya Saigon, Vietnam Seoul, Korea Singapore, British Malaya Taipei, Formosa Tokyo, Japan Vientiane, Laos Phnom Penh, Cambodia Colombo, Ceylon Near East & South Asia Ankara, Turkey Athens, Greece Cairo, Egypt Damascus, Syria Kabul, Afghanistan Karachi, Pakistan New Delhi, India Nicosia, Cyprus Tehran, Iran Baghdad, Iraq Tel Aviv, Israel Beirut, Lebanon Amman, Jordon Jidda, Saudi Arabia Wellington, New Zealand Ottawa, Canada Manila, Philippines Canberra, Australia Melbour e, AusrFali Iapprove or elease 2001/04/17-CIA-RD! Mexico Guatemala Panama Brazillia, Brazil Buenos Aires, Argentina Bogota, Colombia Santiago, Chile La Paz, Bolivia Montevideo, Uruguay Caracas, Venezuela Yaounde, Cameroun Leopoldville, Congo Addis Ababa, Ethopia Accra, Ghana Abidjan, Ivory Coast Nairobi, Kenya Monrovia, Liberia Tripoli., Libya Rabat, Morocco Lagos, Nigeria Mogadiscio, Somal Khartoum, Sudan Tunis, Tunisia Pretoria, South Africa Algiers, Algeria Cotonou, Dahomey Dakar, Senegal Bamako, Mali SECRET RECORD OF REVIEW OF ORR PUBLICATIONS FOR SECURITY/SANIT1cAIlUn "'" 25X1 C SANITIZING INSTRUCTIONS Excluded from automatic downgrading and declassification 25X1A