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November 16, 2016
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February 28, 2000
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May 1, 1975
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Approved For Release 2000/05/15: CIA-RDP79TO1098A000500060002-4 Secret No Foreign Dissem 'D, YUl Aawr Communist Aid and Trade Activities in Less Developed Countries, April 1975 Secret ER RP 75.15 May 1975 Approved For Release 2000/05/15: CIA-RDP79T01098A000500060002-4 Copy . _ 0 Approved For Release 2000/05/15: CIA-RDP79T010J$A000500060002-4 NATIONAL SECURITY INFORMATION Unauthorized Disclosure Subject to Criminal Sanctions Classified by 015319 Exempt from general declesslfkation schedule of E.O. 11862, exemption category: 468(1), (2). and (3) Automatically declassified on: Date Impossible to Determine Approved For Release 2000/05/15: CIA-RDP79TO1098A000500060002-4 Approved For Release 2000/Q?/A egis {,gDP79TO1098A000500060002-4 CONTENTS AND SUMMARY OF EVENTS (April 1975) Pte Note: A study of recent Soviet fisheries development in LDCs places Soviet aid allocations to these industries at more than $115 million since 1959. Soviet aircraft sales were in the news during April; Peru will become the first Latin American country to receive military aircraft under a contract signed recently for - helicopters. The Central African Republic ordered two passenger aircraft for civil use. Brazil was considering a Soviet offer of helicopters, and Burma inquired about Soviet military aircraft prices. MIG deliveries continued to Uganda and Egypt. A review of Communist trade with less developed countries in 1973 will be distributed to recipients of the monthly publication as a separate Research Publication. Recent Developments in Soviet Fisheries Aid . . . . . . . . . . . . . . . . 1 Since 1959, the USSR has pledged more than $115 million in fisheries development assistance to 30 countries. Recent fisheries agreements have stressed the formation of joint fishing ventures and the provision of technical assistance, in contrast to earlier pacts that called for financing equipment and construction of onshore facilities. Africa USSR Sells Aircraft to the Central African Republic . . . . . . . . . . . . . The CAR purchased two Soviet passenger-cargo aircraft at a cost of about $2 million each. Soviet Gold Extraction in Mali . . . . . . . . . . . . . . . . . . . . . . . . The USSR and Mali signed contracts to go ahead with gold extraction at the Kalana mines-a site which the USSR has been prospecting for several years. i Approved For Release 2000/05/1 ?et,PIA-RDP79T01098A000500060002-4 Approved For Release 20001051g~ ,ttJPP79TO1098A000500060002-4 Page Communist Credits to Mozambique . . . . . . . . . . . . . . . . . . . . . 5 Communist countries have offered a total of $25 million in credits to Mozambique, with agreements to be formalized after independence on 25 June. Soviet Military Construction Activity in Somalia . . . . . . . . . . . . . . 5 The USSR has resumed work on an ammunition plant near Mogadiscio and is constructing a new airfield that is expected to be operational at the end of the year. Soviet MIG-21 Deliveries to Uganda . . . . . . . . . . . . . . . . . . . . . 5 Soviet MIG-21 deliveries to Uganda continued with the arrival of aircraft in April. Burmese Inquiry About Soviet Military Aircraft . . . . . . . . . . . . . . . 5 Burma has requested price and delivery information on several types of Soviet aircraft, reportedly to be used in a comparative study on aircraft replacement possibilities. Europe Portugal Negotiating an Aid Agreement with Moscow . . . . . . . . . . . . 6 Negotiations are reported nearing completion on Soviet aid for an aluminum smelter and development of the cement industry in Portugal. 25X1 B Latin America Peru Buys First Soviet Military Aircraft . . . . . . . . . . . . . . . . . . . 6 Peru became the first Latin American country to purchase Soviet military aircraft under a contract for- helicopters signed recently. 25X1 B Approved For Release 2000/05/15: 9.!'At RDP79T01098A000500060002-4 Secret Approved For Release 2000/05ii5 AaR P79TO1098A000500060002-4 Page Romanian President Tours Islamic States . . . . . . . . . . . . . . . . . . 7 Jordan and Tunisia signed agreements on Romanian participation in development projects and to expand trade during visits by President Ceausescu. Moscow Pledges New Development Aid to Bangladesh . . . . . . . . . . . . The USSR signed an agreement early in April to provide $51 million in additional credit to Bangladesh. Greece Cancels Philippi Power Project . . . . . . . . . . . . . . . . . . . . Greece has canceled the controversial Philippi power project, which would have used peat as fuel for three steam power generators to be provided by the USSR. Iranian-Soviet-West European Gas Contract Signed . . . . . . . . . . . . . 8 The USSR and a West European consortium have concluded a contract with Iran on the delivery of 1.3 billion cubic feet of gas per day to the USSR and West European consumers. Results of Iraqi Leader's Visit to Moscow . . . . . . . . . . . . . . . . . . 8 The increasing strains in Iraq's military relations with the USSR, as well as Baghdad's dispute with Syria over the allocation of Euphrates river waters, probably were major topics of Iraqi discussions in Moscow in April. Iraq Signs Protocols with East European Countries . . . . . . . . . . . . . 9 Iraq signed protocols on trade expansion and utilization of outstanding credits with Bulgaria and East Germany andl signed an agreement on Hungarian assistance to poultry farms costing $145 million. Approved For Release 2000/05/15 :ssIA-RDP79TO1098A000500060002-4 in Approved For Release 200010511 Fd,epJ79T01098A000500060002-4 Page Other Activities Economic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Approved For Release 2000/05/15: CIAcret-RDP79T01098A000500060002-4 e Approved For Release 2000/05/N155,: '-RDP79T01098A000500060002-4 oretgn COMMUNIST AID AND TRADE ACTIVITIES IN LESS DEVELOPED COUNTRIES April 1975 General Recent Developments in Soviet Fisheries Aid* Introduction Since 1959 the USSR has concluded fisheries assistance agreements with 30 less developed countries (LDCs) and pledged approximately $115 million to support fisheries development programs in LDCs (see Table 1). Most of this aid has been channeled to African and Middle Eastern states. Although initially the program was concerned with provision of equipment, in recent years it has emphasized technical and research support. Moscow also is seeking client states adjacent to major or potentially major fishing grounds. It hopes to establish joint companies that will provide a modicum of security for continued Soviet exploitation of marine resources throughout the world, regardless of future decisions that may emerge from Law of the Sea deliberations. Recent Developments Since 1973, Moscow has added two new clients, Argentina and Portugal, as fisheries assistance recipients. The amount of assistance will be determined after agreement is reached on the character of the projects, but a large part of the assistance certainly will be for technical services and training. The USSR also has actively followed through on prior agreements with at least 14 nations, including assignment of approximately 1,000 fisheries personnel in LDCs. Among the most notable developments was the proposal to Indonesia in December 1974 to reestablish the fisheries aid program abandoned in 1965. Moscow 25X1A Note: The substance of this publication has been coordinated with the Bureau of Intelligence and Research of the Department of State, with the Defense Intelligence Agency, and with the Agency for International Development. Comments and queries regarding this publication are welcomed. They may be directed to of the Office of Economic Research, Code 143, Extension 5291. Approved For Release 2000/05/15 s9JA, -RDP79T01098A000500060aa4 Approved For Release 2000/05/1c,IA-RDP79T01098A000500060002-4 has offered not only trawlers, crews, and training but also help in developing port facilities. Moscow encourages joint ownership of fishing companies and has approached at least 14 LDCs about such ventures (see Table 2). It has joint agreements with Egypt, Somalia, and South Yemen. Generally, these agreements provide for the following: ? The ships used are of Soviet origin and are leased to the firm or purchased by the LDC. ? Proceeds of the operation are used first to cover expenses of fishing operations, and any residual profits are then divided equally by the two parties. ? Ships used are jointly manned and are also used for training and research purposes. ? A portion of the catch is delivered to the LDC for local distribution, and the remainder is frozen and shipped to other markets. Data on joint operations indicate that leasing and depreciation charges are inordinately high, limiting profitability. Moscow's interest in joint venture arrangements reflects the uncertainties of pending decisions on a global Law of the Seas and the subsequent need for a buffer position. Moscow, in concert with the world's other major fishing nations, continues to push for inclusion of an optimum utilization clause* in any treaty defining a new Law of the Sea fishing regime. LDCs with embryonic fishing capabilities would be disadvantaged by such a provision; most at the outset would have to permit foreign fleets to operate in their coastal water to optimize their fishing activities through licensing arrangements, royalty payments, or joint ventures. The Soviets view the latter as the more secure and profitable position from which to operate. Moscow's reliance on technical services as a major part of its assistance program emphasizes basic economic considerations. Technical assistance is critical to successful LDC fishing operations. It is less costly for Moscow to provide than * Achieving maximum sustainable yield over time, consistent with certain environmental and economic factors, Approved For Release 2000/05/15 :2CIA-RDP79T01098A000500060002-4 Secret Approved For Release 2000/05/15 Gf4-RDP79TO1098A000500060002-4 Estimated Soviet Aid Extensions for Fisheries Development in Less Developed Countries January 1960 - April 1975 Soviet Joint Fishing Venture Agreements with Less Developed Countries Recipient Current Status Total Million US $ 115.6 Argentina Bangladesh Letter of Intent Under negotiation Africa 47.0 Egypt Joint fishing venture under Algeria 4.5 way in central Atlantic Equatorial Guinea Gambia N.A. N.A. Gambia Under negotiation Ghana 11.2 Guinea 6.3 Indonesia Offer Kenya Mauritania N.A. N.A. Iraq Agreement signed Mauritius 5.0 Morocco N.A. Liberia Offer under consideration Senegal 6.7 Sierre Leone N.A. Mauritania Company formation Somalia 9.8 approved in April Sudan 2.0 Tanzania 0.9 Mauritius Offer pending Tunisia 0.6 Middle East 37.7 Morocco Protocol signed Egypt 7.0 Iran 6.3 Peru Under negotiation Iraq 11.0 North Yemen 7.8 Somalia Joint fishing venture South Yemen 5.6 in operation Syria South and East Asia N.A. 12.1 South Joint fishing venture Bangladesh 8.0 Yemen in operation India 2.2 Indonesia 0.3 Sri Lanka Negotiations in limbo Pakistan 1.6 Sri Lanka Latin America N.A. 18.8 Argentina Chile' N.A. 17.0 Peru 1.8 Europe Portugal N.A. N.A. 3 Approved For Release 2000/05/15: CIA-RDP79TO1098A000500060002-4 Secret Approved For Release 2000/05/15 : e11K RDP79T01098A000500060002-4 is equipment or onshore facilities which it furnished heretofore. Technical assistance provides a higher return to Moscow in terms of fishing information as well as an immediate return in profits from the ventures. Since the planned expansion of Moscow's own fleet apparently is not being met, technical assistance in lieu of equipment transfers places no additional strain on the USSR's overloaded production capabilities. The major fisheries centers have moved gradually southward in recent years, with important implications for fisheries aid and Soviet fishing in general. Moscow has used earlier fisheries aid to extend research on the southern reaches of the Indian, South Atlantic, and Pacific Oceans, where over the past 18 months new fisheries aid, including offers of joint ventures, has been extended. With the Soviet fishing fleet already topheavy in support ships and with the need for repair facilities closer to major fishing grounds, these joint ventures may well be the most economically feasible way for the USSR to expand its exploitation of the world's southern fisheries. Prospects Soviet fisheries aid is profitable and low cost and may be an important element in effective fisheries exploitation in the, future. Joint ventures and technical assistance will continue to keynote the program, which will concentrate on recipients with access to lucrative fisheries areas. USSR Sells Aircraft to the Central African Republic The Central African Republic purchased two Soviet AN 24/26 passenger-cargo aircraft, following demonstration flights conducted in Bangui early in March. The cost of each plane probably was in the $2 million range and undoubtedly required a substantial downpayment. Under the contract the USSR reportedly will install fuel supply depots at outlying airports in the CAR. (Secret No Foreign Dissem) Soviet Gold Extraction in Mali b K The USSR and Mali have signed a contract allocating $5.7 million from earlier credits for production of gold at the Kalana mines - a site at which the USSR has been prospecting for several years. The new agreement provides for construction of wells, shafts, and, presumably, a processing plant. Annual output from the mine 4 Approved For Release 2000/05/15: RDP79T01098A000500060002-4 Approved For Release 2000/05/15 : 1f-RDP79T01098A000500060002-4 is projected at 25,000 tons of ore initially, rising to 60,000 tons on completion of the second stage (estimated to cost an additional $8.2 million). Capacity operation will yield about 1 ton of gold annually which has a current market value of about $5 million. (Unclassified) Communist Credits to Mozambique A Soviet economic delegation arrived in Mozambique at the end of March to discuss economic cooperation, presumably a follow-up on Frelimo leader Machel's December trip to Communist countries. He was reported to have received firm pledges of assistance during his trip, which will be formalized into agreements after 25 June, when Mozambique becomes independent. Some $25 million in aid was promised - $10 million from the USSR, $5 million from East Germany, and a total of $10 million from Czechoslovakia, Hungary, and Poland. All of the prospective Communist donors but Hungary also agreed to provide military hardware and training support. (Secret No Foreign Dissem) Soviet Military Construction Activity in Somalia 25X1 B 25X1 B The USSR has resumed work on an ammunition plant northwest of Mogadiscio under an agreement concluded during President Podgorny's July 1974 visit to Mogadiscio. Moscow also is constructing a new airfield. Although only recently begun, the airfield could be operational by the end of the year, if the current rapid rate of construction is continued. The new facility should be able to accommodate jet fighter and transport aircraft. (Secret No Foreign Dissem) Soviet MIG-21 Deliveries to Uganda Uganda received - MIG-21 fighters in April, bringing the number delivered thus far in 1975 to- The aircraft, ordered under a major arms accord concluded with the USSR last year, are the first supersonic planes in the Ugandan air force inventory. Moscow previously had supplied Uganda with a small number of MIG-17s. (Secret No Foreign Dissem) Burmese -Inquiry About Soviet Military Aircraft In late April, Burma asked the Soviet military attache in Rangoon to provide prices, delivery schedules, and full technical data on several types of Soviet aircraft 5 Approved For Release 2000/05/15. CIA-RDP79TO1098A000500060002-4 Secret Approved For Release 2000/05/15 :6!fl-RDP79T01098A000500060002-4 (including fighters, transports, and helicopters). The information was to be used for a comparative study of replacement possibilities for aircraft currently in use by the Burmese air force. Burma last' signed a military contract with the USSR in 1970, when a small amount of support equipment was ordered. (Secret No Foreign Dissem) Europe Portugal Negotiating an Aid Agreement with Moscow The Soviet press reported in late April that negotiations were almost complete on economic aid to Portugal for an aluminum smelter and cement industry development. Lisbon also is interested in Soviet aid in coal mining and nuclear power generation. Earlier this year, Moscow and Lisbon signed a fisheries agreement under which the USSR will supply equipment and training to Portuguese fishermen. The terms and value of the Soviet aid proposals were not released. (For Official Use Only) Latin America Peru Buys First Soviet Military Aircraft 25X1 B Following Peru's failure to reach agreement on aircraft purchases from the United States, Peru's army recently bought _helicopters from the USSR. Although Moscow previously had supplied MI-8s to Peru for commercial use, the recent deal represents the USSR's first sale of military aircraft to any Latin American country. (Confidential No Foreign Dissem) 25X1 B The value of the. new contract is roughly which includes some training, technical assistance, and spare parts. Each MI-8 reportedly 25X1 B costs about - comparable to the price charged other developing countries. 25X1 B (Confidential No Foreign Training will be a major element in the agreement because the army has few qualified helicopter pilots. Some personnel already have begun a 15-week training program in the USSR, but both Lima and Moscow are uncertain that this short period of training will be sufficient. (Confidential No Foreign Dissem) 25X1 B 25X1 B 6 Approved For Release 2000/05/15: CIA-RDP79T01098A000500060002-4 Secret Approved For Release 2000/05/15 :`'IA-RDP79T01098A000500060002-4 The USSR hopes to follow the MI-8 deal with sales of 65-passenger MI-6 helicopters. Since mid-1973, when Moscow first sold T-55 tanks and other ground equipment to Peru, it has tried to interest Lima in a wide range of military equipment. Until now, only land armaments have been sold. (Confidential No Foreign Dissem) Near East and South Asia Romanian President Tours Islamic States Romanian President Ceausescu's mid-April visit to Pakistan, Jordan, and Tunisia produced new economic agreements with Amman and Tunis. Bucharest will increase its imports of Jordanian phosphates, conduct oil exploration, and build an oil refinery in Jordan on a joint venture basis. Romania also agreed to participate in agricultural projects and to study Jordan's request for vocational training schools. Details of these accords are to be worked out during the June meeting of their joint economic committee, established last year. (Confidential) A joint communique with Tunisia mentions a Romanian agreement to participate in joint ventures in oil refining, water distribution, and agriculture. The two sides also signed an agreement to increase their trade above the $14 million level of 1974. (Unclassified) Moscow Pledges New Development Aid to Bangladesh For the fourth consecutive year the USSR has provided large amounts of new aid to Bangladesh. A $51 million agreement for Soviet assistance to development projects was signed in Moscow early in April. The credits, repayable over 15 years, including 3 year's grace, at 2% interest, are somewhat easier than those usually associated with Soviet agreements. (For Official Use Only) Moscow has allowed $7 million of the credits for commodities to finance local costs, a departure from standard practice. The rest of the credit -- $44 million - was allocated for constructing a cotton spinning mill, a gas liquefaction unit, an experimental cotton farm, and continued geological prospecting. Soviet aid pledges to Dacca now total approximately $300 million, two-thirds of which was provided after Bangladesh's independence late in 1971. (For Official Use Only) 7 Approved For Release 2000/05/15 is 1A-RDP79T01098A000500060002-4 Approved For Release 2000/05/15S.e A-RDP79T01098A000500060002-4 Greece Cancels Philippi Power Project Greece has scrapped its plans for a power project at Philippi because of local farmer opposition. The original project was intended to use peat deposits at Philippi as fuel for three 125-megawatt steam power units to be provided by the USSR. About one-quarter of the equipment has arrived for the plant under an $89 million contract signed in 1973. Alternative use of the equipment was allowed for in the original contract should plans for Philippi fall through. The equipment now may be diverted to a lignite-burning unit presently under discussion. (Unclassified) Iranian-Soviet- West European Gas Contract Signed The USSR, Iran, and a West European consortium have concluded a 23-year switch arrangement for the sale of natural gas to. West Germany. Iran contracted to deliver 1.3 billion cubic feet of gas per day to the Soviet border beginning in 1981. The USSR will consume the gas in the Caucasus and, in turn, will deliver approximately 1.1 billion cubic feet of Soviet gas at the Western terminal. West Germany plans to use one-half of the gas and reexport the rest to Austria, Italy, and France. (Confidential) Gas prices will be linked to the price of oil at the time of delivery. The West Europeans probably will pay Tehran directly in hard currency. The difference in volume between the Iranian and Soviet gas deliveries probably represents a transit fee to the USSR. (Confidential) Iran will deliver the gas through a second pipeline to be built by Iran to the Soviet border. Compressors for the project will be purchased from the USSR, probably on a commercial basis. (Confidential) Results of Iraqi Leader's Visit to Moscow The increasing strains in Iraq's military relations with the USSR probably were a major issue of mid-April talks held in Moscow by Iraq's Saddam Husayn. Baghdad appears to be displeased with the performance of its Soviet MIG-21 s. Iraq reportedly has canceled some if its Soviet military contracts and in at least one instance refused to accept a delivery of Soviet military cargo. There is no indication that these differences were resolved during the April meeting. (Secret No Foreign Dissem) Iraq's dissatisfaction with the volume of Euphrates River waters flowing from Syria undoubtedly was discussed in the mid-April talks. Moscow apparently refused Approved For Release 2000/05/15: tIA-RDP79T01098A000500060002-4 Secret Approved For Release 2000/05/15SpOIA-RDP79T01098A000500060002-4 to play an active role in settling the dispute between the two major Soviet aid clients. Last year, the USSR attempted to mediate the dispute at the technical level, but Soviet recommendations on division of water were rejected by both Syria and Iraq. Husayn's visit also was designed to reduce Soviet-Iraqi tensions caused by Iraq's growing preference for Western materials and expertise. An agreement on the peaceful uses of atomic energy was signed, but details were not announced. (Confidential) Iraq Signs Economic Protocols with East European Countries The seventh session of the joint Iraqi-Bulgarian economic committee meeting ended with the signing of a protocol on the uses of some $23 million still outstanding under credits provided in 1967 and 1970. Most of the aid will go for food production and processing. The two sides also signed an agreement to increase trade turnover to $140 million annually. Crude oil as in the past probably will bulk large in Iraq's exports to Bulgaria. In 1974, Sofia took $50 million worth of Iraqi oil. (Secret) A similar meeting with East Germany led to an agreement to increase activity under East Germany's $84 million 1969 credit to Iraq. A new 5-year trade agreement was signed, as well as an oil agreement. In 1974, East Germany agreed to import 40,000 b/d of Iraqi oil during 1974-76, and the new agreement probably set the price and delivery schedules for 1975. (Secret No Foreign Dissem) ~.- In addition, Hungary signed an agreement to build poultry farms in Iraq at a total cost of $145 million. Financing arrangements were not announced. (Unclassified) OTHER ACTIVITIES Economic Africa General. Soviet Foreign Minister Kosygin is scheduled to visit Libya and Tunisia in May. (Confidential) Algeria. The Algerian Minister of Agriculture traveled to China at the invitation of Chinese officials, probably to discuss further Chinese assistance to agricultural and forestry development. China is. providing limited agricultural assistance under a $50 million aid agreement. (Unclassified) Approved For Release 2000/05/15: GIA-RDP79T01098A000500060002-4 Secret Approved For Release 2000/05/15S?`CiA-RDP79T01098A000500060002-4 Gambia. President Jawara is scheduled to visit China in June to discuss allocation of the $16 million Chinese credit extended earlier this year. Peking has tentatively agreed to finance road construction, agricultural development, a hospital, and a sports complex. (For Official Use Only) Guinea. Guinea's Minister of Mines and Geology announced in April that the USSR is to build a hydroelectric complex and to assist in establishing a new bauxite mine and aluminum plant at Gaoual, near the Equatorial Guinea border. This is the first indication that the USSR was considering financing a second aluminum project in Guinea. There is no evidence that a formal agreement has been signed on these projects. (Confidential) Under the Soviet-Guinean trade protocol for 1975, Guinea will substantially increase bauxite exports to the USSR from the Soviet-financed Kindia complex. In April, bauxite exports from Kindia reached one million tons. (Unclassified) Libya. A Romanian deputy minister of foreign trade was in Tripoli to discuss the establishment of joint projects in Arab and African countries. (Unclassified) Libyan Prime Minister Jallud signed agreements on long-term trade and economic and industrial cooperation during a visit to East Berlin in April. No details were announced. (Unclassified) Morocco. A Chinese mission composed of experts in equipment and industrial machinery was in Casablanca to explore possibilities of sales to industrialization projects in Morocco. (Unclassified) The Czech Minister of Foreign Trade arrived in Casablanca on 26 April. (Unclassified) Togo. During April, China agreed to provide agricultural equipment valued at $0.5 million as a grant. A similar gift of equipment worth $0.4 million was made in December 1973. (For Official Use Only) Tunisia. Bulgaria and Tunisia signed a protocol calling for Bulgarian assistance to an agricultural complex in Matior to produce grain, vegetables, and livestock. (Unclassified) The Tunisian Prime Minister traveled to Peking in April to discuss a speedup in implementation of a $40 million credit extended by China in 1972. The two sides agreed to begin construction of an irrigation canal, already surveyed by the Approved For Release 2000/05/1510CIA-RDP79TO1098A000500060002-4 Cret Approved For Release 2000/05/1*