MERGER OF CEMA COMMISSION ON COMPLETE INSTALLATION WITH CEMA COMMISSION ON FOREIGN GRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00246A045500100001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 22, 2016
• Document Release Date: June 16, 2010
• Sequence Number: 1
• Publication Date: November 17, 1958
• Content Type: REPORT

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INFORMATION REPORT
CET "SR iL, IN- ELLIGENCE AGENCY
This material contains information affecting the National Defense of the United States within the meaning of the Espionage Laws, Title
18, U.S.C. Secs. 793 and 794, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law.
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USSR/Soviet I _
Merger of CENA
Complete a ', L- VT,
Commission:. o;:. ._ a
ENC. J
DATE OF
INFO.
PLACE &
DATE ACQ.
COMA nave their offices on the lower floors.
took place in the building recently taken over by CEPIMA at Pe- 2 JP! 195?
trovka 14 near Red Square. Various CEMA commissions, including;
the Commission for Complete Tz-atallations are permeuently located
{Here,
and the secrotariats for the various country representatives to
from 26 to 30 June 1958- Representatives of all the Satellit
countries except Albania were present, and representatives of
Ching. RfA Nnrth Rrnrnn +.,.,U ...,..4. ., .. ..~. -------- ..., ??
of the Council for Economic Mutual lssis~nce, (CEMA)_ met in=Moscow
1. The Working Group of the Commission for Complete Installations
v.n vv ~as~ 11ev1A V.L:V6L7UM U1
conference, Plenary sessions of the Working Grou4 which took
place at the beginning, middle, and end of the meeting, out-
lined the subjects of discussion for the committees, endorsed
the recommendations of the committees, and sent the recommenda-
tions forward to the CEMA Commission for Complete Installations.
The Chinese and North Korean observers took part only in the
plenary sessions. They were not active in the discussions, and,
when asked for an opinions always expressed agreement with the`
formal proposition under discussion.
The meeting of the Working Group concluded on 30 June 1958 be-
cause of decisions made at a meeting of the CELIA council in
.Bucharest. The Commission for Complete Installations was dis-
solved, and its functions were combined with those of the Com-
mission for Foreign Trade. The reason for the reorganization
was of a practical nature, as the activities of the commissions
for Complete Installations and for Foreign Trade had overlapped.
Further, as the discussions in Moscow especially made clear, the
problem of credits could not be resolved without the closest co-
operation of these t-,o commissions - a large number of basic
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STATE X I ARMY X NAVY I I `AIR I I FBI I I AEC
(Note: Washington distribution indicated by "X"; Field distribution by '1#11.)
17 November 1958
FV X
ERE -01 HE 5719M
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DATE DISTR.
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REFERENCES
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problems arose from the granting of ehort-?term credits by the
various trade organizations.
4. In the plenary sessions there was ve2y;thor6u#h discussion of
new prospects in trade policies. TheCELS 'countries will in-
crease their activity in capitalist countx~"ien`, p,P..rticularly
in the underdeveloped capitalist countries. The CE?L countries
rill become noreA LK- and, instead f rely responding
to requests, they will ma.Ise' their own props to the'-
he canit' l-
ist countries. On this matter there was; aneial egreomont. In
connection with this, it u^c considered necepsarv to study 'lore
closely the mothodo of the or,iit^list tour s in the under-
developed areas, - the methods of planning,' ,setting of costs,
terms of credit, and other delivery ter>e
5. The order of emphasis: of the countries to rah :ch credit is granted,
6. In contrast to previous conferences- of thhe. 7orkinr Groun, the
political position of the various delegations in relation to the
Soviet Union was quite clear. On the evening of the :,ocond day
of the conference, Jakob Boulanger, General -Director of DIA Invest
,xport rind leader of the East German deletion, called the members
of the East German delegation together ".nd'addressed them openly
and directly to the following effect: "You have certainly noted
that a clear phalanx has formed in opposition to the Soviet Union.
To have the task of throwing the ball to the Soviet Union from time
to tine, and under no circumstances must we sta?,, our 'soviet friends
in the back. This is our special mission-in the discussions."
7. I; modiately after the first day of discussion Boulanger took one of
the younger East German representatives aside and c::;-aaine - to him
that East Germany and Czechoslovakia have a special rol8 to play at
such conferences, is those are the only two countries which have no
"Thotorn complex". Those two countries have the task of supporting
the policies of the Soviet Union. Boulanger raid that at the Pro.[-ue
C' .-..A conference considerable differences had arisen with the flungar ns.
The Hungarians did not -;ant to submit to certain decisions for coordina-
tion of their production within the frame of CEI,PA -'lanning; they demanded
special rights and exceptions. The Czechs and East Germans, working
with the Soviet Union, made the political line prevail and broke down
the opposition of the Hungarians.
8. Major and vicious personal differences developed among several members
of the East German doleg^.tion at the meeting. Two of the members,
Schuenemann and Kuchta, became involved in a loud and 'abusive quarrel
in front of the CE11A building. On another occaciaLl Boulanger and
Kuchta quarreled and each called the other an enemy of the Party and
the state.
The net,ytda of the conference included the following points:
a. Critic^.1 examination of the proposals of the member countries
regarding the delivery of comalotc installations in economically
underdeveloped caeitaist countries for the period from 1959 to
1965; working out of recommendations for the further harmonization
of the export program for complete inst.rllations.
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b. Critical examination of the proposals of the member countries
and working out of recommendations regarding ooordinrtion and co-
operation for deliveries of complete installations plax;ned for the
period 1959 to 1965; recommendations for trade activity of the
foreign -trade organizations of the member countries.
c. Critical examination of the proposals of the member countries
and working out of recommendations for the moat suitable forms for
bringing technical aid to economically underdeveloped capitalist
countries.
25X1
d. Critical examination and working out of recommendations regarding
conditions for the granting of credits connected with the delivery of
complete installations to underdeveloped countries.
f. Discussion of the projects on the basis of the recommendations
of the meeting of experts in Prague concerning the method of deciding
on further technical aid and of working out projects for underdeveloped
capitalist countries; decision regarding the minimum rtes for s'-ecial-
ists sent to give technical aid in these countries.
g. Discussion of proposals worked out by the Polish Cekop and Bulgarian
Techno-Impex trade organizations; working out of recommendations for
mutual calculations for common projects : as well as for projects and
deliveries of equipment for ;complete installations outside the Bloc.
10. The committee to discuss the first poi*& ':.t ,o agenda (Para. 9-a
above) met under the chairmanship of a ~' , tdelegate, V. D. Ivanov.
The committee recommended that the CE1, tee concentrate in the
future more and more on 10 typos of indt l1 Installations for ex
port. Among these 10 types are cement pan. sugar factories, and
electrical-engineering installations. 1t`'i hoped that by the utmost
rationalization it will be possible to. del lidr these insto.llatione'on
more favorable terms than the capitalist?c ttrios. To this end, the
widest possible cooperation among CEITA curios will be necessary,
and it will be necessary to avoid any a it on among CELA countries
outside the Bloc. It will be necesaar
~1 - :_ gtiire exactly into the
requirements of the underdeveloped co and into their probable
requirements up to 1965, and this inq itself be included: in
the long-range planning.
11. In the granting of credit (Para. 9-d above),-?it was. decided after
lengthy debate to offer an interest- rate` f? 2.5,percent per annum,
for short-term credits. Czechoslovakia had demanded during the debate
that the interest rate be raised to 4 percent. The Czechs argued that
if the Soviet Union gave unusually favorable rates for credit, the
other CEMA countries must do so also, even if these rates were ecoxtomi-
cally unacceptable. The Poles agreed with the Czechs and suggested a
a minimum rate of 4 percent. The Hungarians went still further and
asked that short-term credits be granted at a minimum interest rate
of 6 to 7 percent. The East Germans did not commit themselves at
first but seemed to want to support the Czech proposals. The Soviet
Union then made a compromise proposal of 3 percent. The East Germans:
now gave in and, with the Rumanians, supported the Soviet proposal,
but the other Satellites, under the leadership of the Czechs,'would
not give in. As no agreement could be reached, the Soviet representa-
tive announced that the previous policies would remain in force: the
Soviet Union would offer an interest rate of 2.5 percent n.nd the other
countries could do as they wished. A sharp o.-change between the repre-
sentatives of the Soviet Union and Czechoslova'-in folowed.
12. Considerable discussion concerned the question of ;ranting credits
under favorable conditions for the borrower. It was agreed that in
such cases the lender ,.^,ould inform the CCF?L secretariat of the
particulars and that the other countries should be informed of
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experiences in this regard. The East Guns asked that the
reasons for the ;ranting of credit under:,e.se conditions be
13. The members of the committee c=)nsidee_points of agenda
listed under Para. 9-b and g above.general directors
of foreign trade organizations. T4 chairman of the
committee stated that the question df F?coats for specialists
sent out to underdeveloped countries rtromely important
and that there must be unity about c tins them as low as
possible. One must not forget'thate ; 7dtey which is paid
out for this purpose will come in a~.., ` ter. Through the
employment of these specialists thed idu trial plants now
being built are tailored for the home entry or countries
of the CEItA states, and that will payir of'f in every way in the
future. The chairman continued, "Thy employment of the special-
fists is one of the most important way. of penetrating the under-
developed countries." Immedir.tely, however, he corrected this
formulation as follows: "The expression-'penetrate' is not really
suitable. It is used by the capital.atand imperialist powers,
and we would do better to avoid it.":
14. The basic purpose of the Soviet Union Was to set upper and lower
limits, exactly specifiedp for the costs of sending out specialists
and for project planning. The lower limit should cover the prime
costs, while the upper limit should always be below the price level
of the capitalist states.
15. Hungary and Czechoslovakia opposed these limitations. The Hungarians
pointed to their own economic weaknesses and maintained that they
could not carry these debits. The Czechs followed different tactics.
They suggested that the problem be brought again before the plenary
session. With allusion to formulations used by the Soviet Union in
previous. negotiations, the Czechs explained that they had-by no_ means
had sufficient experience in the employment of specialists.-abroad and
that they therefore could not see themselves in a position to agree
to the limitations in form demanded. They wanted to recognize
only a limit which would in each case be below the price level of
the capitalist countries.
16. The East Germans and.the Rumanians tried to help the Soviet Union,
but the other people's democracies remained stubborn. This resulted
in the most serious incident at the entire conference. I. N. Krupin,
the secretary of the Commission for Complete. Installations appeared
and stated that the decision to draw only one limit would %e a definite
stop backward and that the Soviet Union would act as it had proposed.
17. Wide differences regarding the setting of definite figures had al-
ready appeared. The subject had been thoroughly discussed and a
table had been worked out which was to be taken as a basis for the
calculation of project planning coats and for the sending out of the
specialists. The Czechs were now requesting the postponement: of this
question. ?Srupin'a sharp reply was as follows: "Postponement.Won't
do.. The matter has already been postponed throe times acid mast ..0w
finally be settled. The question must otherwise be raised whether
the members of this working group should not '-be called to 8cOt 4t
for their poor work." After his statement the formulation was approved
which appears in the minutes.
18. The final point of the agenda (Para. 9-g above) was postponed by
common agreement for-later consideration at the conference of-experts
in Warsaw in September 1958.
19. The minutes of the 'conference, in Russian,.wVrd given to the East
German delegation intwo copies. Among the Hast`German recipients
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of the minutes were: DIA Invest Export, Berlin; the Politburo; the
Ministry of Foreign and Internal Trade; the State Planning Commission -
Schuenemann; and. the Ministry of Heavy Machine Construction. The minutes
are TOP SECRET.
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1.1 Comment: It turned out at the Moscow conference, however, that
the Czechs were extremely hard to deal with, and it was as a result of
this development that Boulanger called the East German delegation together
after the second day of the conference.
A list of se delegates to the
is given in Annex C.
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Part of the minutes distributed to members of the Working Group of
the CEMA Commission for Complete Installations on 30 June 1958.
Recommendations on the question of conditions for granting of trade
credits (postponement of payment) by the foreign trade corporations
which are concerned with the delivery of complete installations in
economically underdeveloped countries.
In accord with the usual practice of granting trade credits (postponement
of payment) in connection with the delivery of complete installations to
economically underdeveloped countries, it seems most suitable to begin
with the following:
1. In cases where it does not seem possible to effect the sale of equipment
for complete installations for cash (free foreign currency or delivery
of goods), a trade credit may be granted in the form of postponement
of the payments.
2. The credits are to be granted according to agreements concluded between
the foreign-trade organizations of the member countries of CEMA and
state enterprises and undertakings or private firms of the economically
underdeveloped capitalist countries. If the credits are granted to
private firms, there must be bank guarantees. In some cases, very
large credits are to be granted only with a government guarantee.
The extent of the credit (postponement of payment) is to be expressed
in an acceptable foreign currency of the contracting states or in freely
convertible currency of the capitalist countries. The liquidation of
the credit granted is to be effected by the delivery of goods at world
market prices as stipulated by the buyer or by payments in freely convertible
foreign currency. In order to assure the interests of the country
making the deliveries, the gold clause is usually to be included in the
agreement, and when it is necessary, the credit granted will be insured
with suitable organizations. (The calculation of the insurance is to
be carried out separately.)
4. The postponement of payment is from the moment of the conclusion of
the deliveries and can last up to four years. Only in exceptional cases
can the postponement of payment be granted for a longer period. For
covering the expenditures of the country making the deliveries for
re-export, foreign exchange, and other expenses, an effort is to be
made to get 40 to 50 percent of the value of the equipment from the
buyer at the time of the conclusion of the deliveries. This 40 to 50
percent will include the advance payment which the buyer made when
the agreement was conlcuded.
5. The interest rate for trade credits (postponement of payment) will be
set according to the established practice of the CEMA member countries.
6. In cases where the member countries, in order to conclude an agreement,
have to forgo the conditions which have been recommended, the foreign
trade organizations will inform one another about such exceptions and
the reasons for them. At the meetings of the general directors a general
assessment will regularly be made of the manner in which the recommendations
have been carried out.
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Annex B
Completion of the Recommendations of the Conference of Experts Which
Took Place in Prague from 22 to 26 April 1958.
A. Concerning the method of determining the value of technical aid.
1. The experts recommend that points 1 to 6 of attachment number 1
to the report of the Prague conference be accepted.
2. Considering the great political and economic significance of
intensifying the provision of technical aid to economically under-
developed capitalist countries by sending specialists from the CEMA
member countries, it is important that the terms for sending the
specialists to these countries be more favorable for these countries
than the terms by which technical aid is granted by the capitalist
firms.
3. Since the right determination of the level of the rates for the
provision of technical aid is of great importance, the following
recommendations are made:
a. The representatives of the countries in the Standing Commission
are requested to clarify the mutual relation of the rates which are
levied on the one hand by the CEMA member countries and on the other
hand by the capitalist firms. A report on this subject is to be sent
to the Secretariat of the Standing Commission within two months.
b. For the harmonization of the actual level of the rates for
the specialists who are sent to individual underdeveloped countries,
all the foreign trade organizations of the CEMA member countries are
requested to fulfil completely in the course of two months the recom-
mendations for the exchange of information concerning the rates for
specialists which were made at the Prague conference of experts. The
foreign trade organizations are also to exchange data concerning the
extent and the methods of reckoning of direct expenditures, by indi-
vidual items of expense, sustained by each foreign trade organization
in connection with the sending of specialists. This is to be done
for each country separately.
c. The secretariat of the Standing Commission for Complete Installations
is to organize within two months the receipt of the materials mentioned
above, to generalize them, and to bring recommendations before all
the member countries concerning minimum rates for specialists, so
that the recommendations can then be examined at the conference of the
general directors and be endorsed by the Standing Commission for
Complete Installations.
B. Concerning the method of determining the value of planning jobs which are
carried out for the economically underdeveloped capitalist countries.
1. The recommendations of the experts which are presented in attachment
number 2 to the report of the Prague meeting are to be accepted. It is
to be borne in mind that the figures which are included in the recommenda-
tions are a first attempt to generalize the materials available on this
question and that these figures need to be improved and to be made more
precise. To this end it is proposed that the foreign trade organizations
of the CEMA member countries:
a. Study carefully the planning practice of Western firms with regard to
determining the content and the extent of the planning carried out by
them. This study is to be accomplished on the basis of trade agreements
and literature which are available to the foreign
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trade organizations as well as in the countries where these firms
carry out planning and construction.
b. Deliver within three months reciprocal reports on all
agree-ments for planning completed with capitalist countries in the past
throe years. This will include agreements both for imports and ex-
parts. These reports will include the extent of the work to be carried
Out, the absolute value of the project9 and also the value of the project
eireened'in percentage of the value of the total installation or of the
value of the equipment for the given installation. In the future a sys-
tematic exchange of such information is to be carried out with regard
to all agreements concluded.
Technoexport foreign trade corporation of Prague is requested to assemble
the information turned in by the individual countries so that it can be
examined by the then current conference of experts. The assembled materi-
als areto be sent to all the foreign trade organizations up to one month
before they take part in the conference of the CEMA Commission for Com-
plete Installations.
The Secretariat of the Commission for Complete Installations is requested
to call a meeting of experts of the foreign trade organizations at the
beginning of 1959 in order to work out further the recommendations made
at the present meeting.
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Annex C
Participants at the Moscow conference of 26 to 30 June 1958
Krupin, Ivan Nikolayevich
Secretary of the Commission for Complete
Installations, Moscow
Krutikov, F. A.
Member of the Commission for Complete
Installations, Moscow
Chernishev, I. I.
Probably an employee of Tekhnoeksport
Ivancv, V. D.
Sergeyev, P. S.
Smirlov
East Germany : Boulanger, Jakob
Leader of the East German delegation,
General Director of DIA Invest-Export,
member of the Commission for Complete
Installations
Von Krepel, Kurt
Plans Chief in DIA Invest-Export
Pfeuffer, Wolfgang
VEB INEX Berlin
Kuchta, Konrad
Planning Commission
Schuenemann
International Cooperation Department,
Planning Commission
Poesch, Manfred
Chemical Department, Planning Commission
Liebmann, Georg
Translator in the Planning Commission
Czechoslovakia: Marek
Leader of the Czech delegation, General
Director of Technoexport, Prague
Ellisak
Member of the Commission for Complete
Installations
Kuchta, 0.
Employee of Technoexport, Prague
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Poland Furtak
General Director of Tekop, Warsaw
Mackiewicz
Member of the Commission for Complete
Installations
Konarszewski
One other Pole
Hungary . Des
General Director of Komplex, Budapest
Doman
Member of the Commission for Complete
Installations
Bulgaria Stoyev
General Director of Techno-Impex
One other Bulgarian
Rumania : Two representatives
Albania : Not represented
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