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July 1, 1975
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Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret No 1%nr1jIUn Dltte!Ini Communist Aid and Trade Activities in Less Demlop d Countries, May 1975 Secret ER RP 75.20 July 1975 Copy N2 Approved For Release 2000/09/14: CIA-RDP86T00608R0005002300 ~9 19-3 Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 NATIONAL SECURITY INFORMATION Unauthorized Disclosure S041tct to Criminal Sanctions Clacclfled by 013319 txe:Npt from Oene-al Declassification Schedule of 1.0. 11699, exemption( categoryt Auloma calirf dec aulfled ont dale Irnpocclble to determine Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Approved For Release 2000/09/14 :sell#-RDP86T00608R000500230019-3 No Foreign Dinetn CONTENTS AND SUMMARY OF EVENTS (May 1975) Highlights Significant Soviet activity in the Third World in May focused on North Africa, During a visit to Libya, Soviet Chairman Kosygin apparently signed a military agreement valued at about $500 million. Kosygin flew on to Tunisia, where he signed an agreement in principle to construct two dams, a Soviet specialty In the area. Soviet officials arrived in Morocco to resume negotiations on a deal to develop phosphate deposits in return for a long-term Moroccan contract to supply phosphate rock. China signed its first direct trade contracts with Bangladesh and was negotiating its first long-term iron ore purchase ugrrement with an LDC. The Philippines received its first Communist aid, from Ru-,nania, while Bucharest was the beneficiary of a bond issue sponsored by Kuwait on behalf of the Romanian Foreign Trade Bank. Page Summary of ER IR 75-16, Communist Aid to Less Developed Countries of the Free World, 1974 .. .... .. .. ...... . . .. . Africa Soviet Chairmra Kosygin Visits North Africa .. . ... ....... . 3 Chairman of the USSR Council of Ministers Kosygin signed agreements with Libya and Tunisia during visits to the two countries in May. Soviet MIG-23 Deliveries to Libya . . ... . ... ....... .... 4 The USSR del:'vcred the first MIG-23 to Libya during May under an arms agreement concluded last year. USSR and Morocco Resume Discussions on Phosphate Agreement ..... 4 Soviet and Moroccan officials resumed discussions on a draft agreement calling for Soviet assistance for exploitation of phosphate deposits at Miskalas in return for long-term phosphate rock deliveries from Morocco. Approved For Release 2000/09/14 -OeA-RDP86T00608R000500230019-3 Approved For Release 2000/09/14: 9$ -RDP86T00608R000500230019-3 No VorrII;n hlAAri-i Ia15i Asin Em e Ii onesin Proposes Projects for Comnrimist Financing . . . . . . . .... . 4 The Induiidsian National Planning Board has compiled it list of project proposals for Soviet and Last European financing valued at $825 million, Philippines Receives First Communist Credits . . . . . . . . . . . . , . . 5 Romania became the Philippines first Communist aid donor with it pledge of $31 million in credits for a thermal powerplant. Latin America Brazil and China Negotiate Iron Ore Contract . . . . . . . . . . . .... . During May, China was negotiating a long-term iron ore purchase contract with Brazil, its first major deal with an LDC iron ore producer. Peru Signs $95 Million in Contracts with Hungary .... . .... .... . Peru signed contracts in May to deliver $75 million in Penrvicm commod- itics to Hungary over the next five years and to purchase $20 million in Hungarian equipment under credit. Near East and :south Asia Bangladesh Signs First Trade Contracts with China Bangladesh and China established their first formal trade links with the conclusion of four contracts in May. Egypt and USSR Sign Economic Agreements .. .. ... . . .. ..... 7 Egypt and the USSR signed contracts to go ahead with construction of a cement plant, expansion of an aluminum plant at Naja Hamadi, and other projects. it Approved For Release 2000/09/14 :&IA-RDP86T00608R000500230019-3 Approved For Release 2000/09/14: ~ -,RDP86T00608R000500230019-3 No I orelp D!Mrm Romania Negotiates Kuwaiti Financing . . . . . . . . . . . . . . . . . . . 7 During May, Romania's Oil Minister visited Kuwait to discuss the joint ratublishummt of a billion dollar petroehe:nicul complex In Romania to use Kuwaiti oil. In addition, Kuwait sponsored a second bond issue, valued at $40 million, on behalf of the Romanian Trade Bank. Other Activities Economic ....... . ... . . ... . ...... . . . . . . . . . . Militsty . .... .. .. . .. . ... . ...... . . . . . . . .. . . . 12 Annex Communist-LDC Trade Continues To Rise in 1973 .. . . . .. .. . . . A-1 Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret Approved For Release 2000/09/144: r-1 P86T00608R000500230019-3 NO l ura1go sa~rn rOMMUNIST AID AND TRADE ACTIVITIES IN LESS DEVELOPED COUNTRIES MAY 1975 General Summary of ER IR 75-16, Communist Aid to Less Develo2ed Countries of the Free World, 1974 New Communist military and economic aid to the less developed countries (LDCs) of the Free Wai Id dropped to US $2.7 billion In 1974, Its lowest level In three years. In spite of the reduced program, there was no apparent change in Communist aid policy. Programs under way continued at roughly the same pace as in most recent years, and the number of Communist military and economic personnel stationed in LDCs increased. Most of the ' -cline In 1974 was In military aid, which dropped sharply from the abnormally high crisis levels of 1973. Military aid, always more politically oriented than economic aid, although 30% smaller In 1974, demonstrated again the extent of the Soviet and East European commitment to the Middle East. For Iraq It was a record year; for Syria, second only to 1973. Reflecting the strains in Soviet-Egyptian political relations, Egypt received no new military aid, while aid to Iraq and Syria accounted for more than 60% of the USSR's and Eastern Europe's $1.2 billion of new military assistance to the LDCs. Iraq and Syria also hati the largest contingents of Communist military advisers. Most significantly, Moscow's new deliveries of equipment to Iraq and Syria surpassed In sophistication the equipment furnished to any other LDC. The supersonic MIG-23 jet fighters, shipped to 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. 25X1 A Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret Approved For Release 2000/09/14 11L4-RDP86T00608R000500230019-3 Iraq and Syria, have not been provided to Warsaw Pact countries. Also reflecting political overtones, Iran was the only other country to receive a large new military commitment in 1974 -- a $250 million credit for ground forces equipment, military support, and engineering equipment. Moscow and Eastern Europe continued to use economic aid to advance and protect their commercial and long-term economic interests. Again, in 1974, the formation of joint Industrial and commercial ventures with LDCs Increased, and joint committees for economic cooperation were operating in a number of LDCs as coordinating and aid planning bodies. New Soviet and East European economic commitments in 1974 totaled $1.2 billion, about the same as In 1973 but 25% below the 1971-72 records. The failure to furnish large blocks of new aid reflected mostly the continuing slow drawdown of previous aid. Although drawings against unused economic credits in 1974 reached a new high of $930 million, they were propelled by a record $265 million Soviet grain shipment to India. Otherwise, drawings would have approximated recent annual levels. The commercial motivation for economic aid was highlighted by the large Communist credits to Argentina, intended to correct the imbalance in Soviet and East European trade with Argentina. Other major Soviet and East European economic aid went largely to ongoing projects, such as Moscow's new credit ($216 million) to Pakistan for a steel mill being built with $210 million of Soviet aid extended in 1971. In an unusual move, Moscow agreed to provide one-half of its $28 million budget support credits to Bangladesh in hard currency. China's $200 million of new economic aid in 1974 marked a significant drop from its $575 million annual commitments since the Cultural Revolution. Although still pursuing an active aid program in Africa, Peking reduced its new economic airs pledges, mostly because of a lack of opportunities and because outflows still were heavy for completing the Tan- Zam Railroad, China's largest single aid project in the Third World. Nevertheless, Peking's area of interest was unchanged, and except for a $25 million credit to Laos, its major effort continued on the African continent. Approved For Release 2000/09/14: CIi-RDP86T00608R000500230019-3 Semi Approved For Release 2000/09/14: (JsRDP86T00608R000500230019-3 Peking's two major clients -- Tanzania and Zambia -- again took the lion's share (65%) of China's total economic aid. Its only significant military commitment ($61 million) was to Its chief military client -- Pakistan. (Secret No Foreign Dissem) Soviet Chairman Kosygln Visits North Africa Chairman of the USSR Council of Ministers Kosygin visited Libya and Tunisia during May for wide-ranging talks on economic and political matters. Kosygin probably negotiated a new military agreement with Libya In the $500 million range. (Confidential) As a result of discussions In Libya, the two sides signed an economic and technical assistance agreement, whose provisions will be further elaborated during the annual meeting of the Soviet-Libyan joint economic commission in June. Libya has requested Soviet assistance for an iron and steel plant and a nuclear powerplant, but it is unlikely that agreement on these projects was reached. There was no public reference to discussions of Libyan oil sales to the USSR. On the military side, Moscow has denied Egyptian press allegations that a multibillion dollar military agreement was signed during the visit, but the USSR probably signed a military supply agreement valued at around $500 million. Libyan Chairman Qadhafi accepted the Soviet leader's invitation to visit the USSR, presumably in the near future. (Confidential) In Tunis the Soviet delegation studied Tunisian requests for Soviet assistance to Tunisia's new five-year plan. The USSR announced agreement in principle to construct two dams under some $18 million of previous Soviet credits and offered to expand Tunisia's fishing industry. (Confidential) Approved For Release 2000/09/14: Cl-RDP86T00608R000500230019-3 S.cnt Approved For Release 2000/09/14 UC9'!A-RDP86T00608R000500230019-3 Soviet MIG-23 Deliveries to Libya 25X1 D The USSR delivered as MIG-23s to Libya in May, the first MIG-23s in Tripoli's Inventory. The shipment moved under an arms agreement concluded with the USSR last year. Libya becomes the fourth Arab country to receive the advanced MIG-23. (Secret No Foreign Dissem) USSR and Morocco Resume Discussions on Phosphate Agreement Soviet and Moroccan officials resumed talks in Rabat on Soviet development and exploitation of the Miskalas phosphate deposits. The draft agreement calls for Soviet financing and construction of a phosphate mine at Miskalas, construction of a 20-mile railroad to the port of Essouira, and installation of phosphate handling facilities at the port. Under the proposal, the USSR would buy 3-5 million metric tons of phosphate rock a year in 1980-90 and 10 million tons annually for a subsequent 15-20 years. Negotiations which have gone on for more than a year foundered because Morocco refuses to permit the USSR to reexport Moroccan phosphates or to use them to raise exports of Russian-produced phosphates. Morocco also wants a shorter term contract. Recent softening in demand for Moroccan phosphates may strengthen the Soviet bargaining position. (Confidential) East Asia Indonesia Proposes Projects for Communist Financin The Indonesian National Planning Board has compiled a list of projects suitable for Soviet and East European financing valued at $825 million. The proposals concentrate on development of ports, inland waterways, inter- island transport, and Indonesia's oceangoing fleet. Construction activity and ship procurement carry a total price tag of more than $500 million. An additional $95 million is for power development and $35 million for the rehabilitation of railroad and motor transport facilites. The remaining projects are scattered over agricultural processing and manufacturing industries. (Secret No Foreign Dissem) Approved For Release 2000/09/14: (MA-RDP86T00608R000500230019-3 Secret Approved For Release 2000/09/14: Clk-WbP86T00608R000500230019-3 During a tour of the USSR and Eastern Europe last fall, Indonesian Foreign Minister Malik received assurances that Indonesian aid requests would receive favorable conpideration. The USSR signed a new economic and technical assistance agreement In December. The magnitude of credits will be set after Soviet review of Indonesian project suggestions. (Secret No Foreign Dissem) Indonesia's Interest in following up on aid requests to Communist countries may have cooled since Western countries pledged over $900 million In new aid at their annual consortium meeting in May. This level was higher than pledges in 1974. Jakarta's Initiatives In seeking aid from Communist countries last year were prompted by fears of a sharp decline in Western aid attendant on Indonesia's Increased oil earnings. (Secret No Foreign Dissem) Philippines Receives First Communist Credits During a state 'isit tp the Philippines in April, Romanian President Ceausescu signed an agreement to provide $31 million for construction of a thermal powerplant on Cebu. The terms of the credit agreement, Manila's first with a Communist country, were not announced. Romania also agreed to buy $65 million worth of nickel over the next six years. For Its part, the Philippines signed contracts to purchase offshore oil drilling equipment, valued at $3.6 million, and 500 Romanian tractors. (Confidential) Latin America Brazil and China Negotiate Iron Ore Contract Negotiation of a 10-year contract with Brazil marks China's first attempt to conclude a long-term iron ore agreement with an LDC producer. A Brazilian firm has offered 6.9 million tons of ore to be shipped at a rate of about 700,000 tons annually through 1984. Prices would be negotiated each year, but the current market value of the agreement is estimated at a 5 Approved For Release 2000/09/14: CI R,P86T00608R000500230019-3 Approved For Release 2000/09/14~;cQIA-RDP86T00608R000500230019-3 minimum of $80-$90 million. The new agreement is consistent with Chinese initiatives over recent years to assure long-term supplies of basic raw materials for Chinese Industry. Brazil, with Its abundant supplies of agricultural and other primary products, has become a particularly import- ant trading partner for China over the past three years. (Secret No Foreign Dissem) Peru Signs $95 Million in Contracts with Hungary During May, Peru signed a $20 million contract with Hungary for expanding the Canon del Pato hydroelectric plant as the final allocation under a $38 million credit extended in 1972. Lima previously has drawn on the credit to finance purchases of power generating and distributing equipment and educational materials, Long-term trade contracts signed at the same time are valued at about $75 million. Among other items, Peru will, export 40,000 tons of fishmeal annually (1976-78), worth $30 million at current prices, as well as an estimated $36 million of copper and other metals during 1975-80. Hungary Is Peru's major East European trading partner. In 1974, trade between the two countries totaled $19 million, of which only $5.5 million represented Peruvian exports. (Unclassified) Near East and South Asia Bangladesh Signs First Trade Contracts with China The Dacca press reported in May that Bangladesh established its first formal direct trade links with China during the visit of a four-n,,.-An delegation to the Canton Trade Fair. Four contracts reportedly were signed, but the goods to be traded were not announced. The agreements were hailed as a prelude to the establishment of diplomatic relations. (Unclassified) Bangladesh has been seeking new markets for its jute products and views China as a potentially important source of cheap consumer goods Approved For Release 2000/09/1 ~ CIA-RDP86T00608R000500230019-3 Approved For Release 2000/09/14: CIAPRbP86T00608R000500230019-3 imports. In addition, Dacca probably hopes that China might agree to persuade Pakistan to adopt more favorable policies on the division of assets and repatriation of Bangladesh nationals, questions outstanding since Bangladesh achieved independence in 1971. Pakistan is the largest recipient of Chinese economic and military aid In the Third World. (Unclassified) Egypt and USSR Sign Economic Agreements (Egypt and the USSR concluded a number of economic agreements during May which should heighten activity at existing Soviet project sites in Egypt. The USSR signed final contracts valued at $105 million to go ahead with a 600,000-ton cement plant at Asyut, to Increase the capacity of the Soviet- assisted Naja Hamadi aluminum complex to 166,000 tons annually, and to expand a machinery plant. The USSR will take 35% of Egypt's aluminum output. The two sides also discussed third-stage expansion at the Helwan iron and steel complex, an undertaking that will require new credits. Second-stage activity now in progress will raise steel capacity to 1.5 million tons a year by 1976. (For Official Use Only) The two countries also signed protocols on electrification projects valued at $15.6 million. Projects include installation of transformers in upper Egypt, renovation of the Suez power station, and improvements to the Aswan power station. (For Official Use Only) Romania Negotiates Kuwaiti Financing Romania's Oil Minister visited Kuwait in May for talks which reportedly covered joint participation in a petrochemical complex in Romania at a total cost of $1 billion. Kuwait would supply 49% of the equity as well as the crude oil feedstock for the venture. (Unclas;ified) Romania already is importing small amounts of Kuwaiti crude under an agreement signed in 1974. The new complex may come under an economic Approved For Release 2000/09/14: CIAADP86T00608R000500230019-3 Socret Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 8.cret cooperation pact signed last year which e,his for development of joint projects In the chemical, petroleum, and construction Industries over the next five years. (Secret No Foreign Dissem) In addition, the Kuwait International Investment Company was arrang- ing a second bond issue on behalf 'i Romania during May. The $40 million issue was to carry the same terms as a $60 million nrtc negotiated In March, which was fully subscribed by the Kuwait Ministry of Finance on behalf of the Romanian Bank of Foreign Trade. Repayment Is scheduled for eight years at 9.5% interest. ('6c' ret No Foreign Dissem) Kuwait and other OPEC countr1Lcs are likely to Increase economic contacts with Eastern Europe in search of new sources of raw materials and outlets for surplus funds. East European countries, in turn, are seeking means to finance higher oil end other Import costs. Budapest will send an economic delegation to Kuwait in dune, most likely to follow up an earlier Hungarian request for a $300 million line of credit from Kuwait. (Confi- dential) OTHER ACTIVITIES Economic Africa Angola. The Secretary General of the Front for the National Liberation of Angola (FNLA) intends to travel to Peking In the near futurc- to request Increased Chinese military and financial assistance to his movement. China currently is providing military instructors for the FNLA army. (Secret No Foreign Dissem) Gabon. Gabon signed an agreement on economic and technical cooperation with Romania in May, Gabon's first such pact with a Communist Approved For Release 2000/09/18: CIA-RDP86T00608R000500230019-3 s. crst Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret country. A trade agreement was signed at the same time. The two sides agreed to set up a joint committee to identify areas suitable for Romanian assistance. Projects mentioned Include a petroleum refinery and petrochem- ical complex, agricultural development, and medical centers. (Unclassified) Ghana. China and Ghana signed a protocol to their 1972 trade agreement calling for a trade turnover of $21 million during the next year. Ghana will export timber, minerals, cocoa, and other agricultural products in return for agricultural machinery, ferrous metals, and textiles. (Unclassi- fied) Mozambique. Frelimo leader Machel reportedly departed for a week's stay in the USSR In mid-May. The USSR has offered economic and military support to Mozambique following Independence on 25 June. (Confidential) Somalia. A high-level Somali agricultural official departed for Peking at the invitation of Chinese officials to discuss assistance to animal husbandry, the development of water resources, and aid to the forestry Industry. China has been providing agricultural assistance to Somalia for more than 10 years under an $18 million credit agreement. (Unclassified) East Asia Indonesia. The Indonesian government has approved the direct sale of up to 10,000 metric tons of rubber to Bulgaria, with dt!ivery to begin within three months. The transaction could be worth up to $5.3 million. (Unclassified) Philippines. Hungary and the Philippines began formal negotiations on their first trade agreement on 19 May. (Unclassified) Approved For Release 2000/09/14: cIA-RDP86T00608R000500230019-3 Secret Approved For Release 2000/09/1&~,CIA-RDP86TOO608R000500230019-3 Latin America Brazil. Brazil Is studying a Poll,-th proposal to purchase ships of 20,000 to 50,000 tons from Brazil and to sell ships of up to 200,000 tons to Brazil. Earlier this year, the two countries signed a $1 billion agreement for the exchange of polish coal for Brazilian iron ore. (Unclassified) Ecuador. Construction is scheduled to start in June on a Iolnt astronomy research station to be manned by Soviet and Ecuadorean scientists. (Unclassified) Mexico. During May, China agreed to buy 1,000 tons of Mexican coffee valued at $1 million. Trade between the two countries has been active since the conclusion of their first trade agreement two years ago, and in 1973 exchanges approached $40 million. (Unclassified) Mexican officials have responded cooly to an East German offer of $10 million in credits for the purchase of communications equipment. The offer reportedly Involved discounts of up to 30% on the German equipment, which could be paid for under a barter agreement. (For Official Use Only) The USSR and Mexico signed a technical protocol on 20 May calling for cooperation in machine building, energy, agriculture, geology, and other fields. A joint committee will oversee technical exchanges under the agreement. (For Official Use Only) Trinidad and Tobago. Peking agreed to purchase sugar, cocoa, and coffee and to consider purchases of other traditional products during the visit of a trade mission from Trinidad in May. It is not known whether the two sides considered a recent Chinese proposal to exchange oil industry technicians. (Unclassified) Approved For Release 2000/09/141:OCIA-RDP86T00608R000500230019-3 Secret Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret Near East and South Asia Bangladesh. Bangladesh and East Germany concluded their annual barter trade protocol on 30 April calling for the exchange of $5 million of East German medical and pharmaceutical goods, fertilizers, and typewriters for jute goods and other products. (Unclassified) Cyprus. Bulgaria signed an agreement to employ Cypriot personnel on construction projects in Bulgaria. The number of workers involved was not disclosed. (Unclassified) The USSR will supply equipment for sulfuric and phosphoric acid plants In Cyprus under the provisions of a trade contract to be signed In the near future. The USSR already has delivered port equipment and a cement plant to Cypru,;, probably under an agreement signed earlier this year. (Unclassi- fied) Egypt. The Romanian-Egyptian trade protocol for 1975, signed in mid- May, calls for a total turnover of $156 million, a slight increase over 1974. (Unclassified) India. The USSR has allocated $7 million for the preparation of engineering studies for development of coal fields at Singravii and Ranlganj. (Unclassified) A Soviet delegation led by the Deputy Foreign Trade Minister arrived in India to continue negotiations on a new long-term trade agreement for 1976- 80. The two sides have announced plans to double the present level of exchanges by 1980. In 1974, Soviet-Indian trade totaled $812 million. (Unclassified) Iran. Czechoslovakia and Iran signed a protocol to double trade in 1975 to $80 million. (Unclassified) Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 Secret Irac. The PRC will purchase 50,000 tons of sulfur from Iraq under a contract signed on 28 May. Deliveries will be completed in six months. (Unclassif led) The joint Romanian-Iraqi economic commission signed trade and economic agreements during a session held in Bucharest early in May. Romania agreed to provide assistance to agriculture and the petroleum industry. Romania extended $35 million in credits to Iraq for oil development In 1971. Little activity has taken place under this agreement. (Unclassified) South Yemen. China signed a formal agreement in May to build a 140- mile road, probably with funds from a 1972 agreement. (Unclassified) Turkey. The USSR and Turkey concluded an agreement to expand the capacity of the Soviet-financed Iskenderun steel mill from 1 to 2 million tons of steel. In 1972 the USSR extended $158 million for second stage expansion at the plant, bringing total commitments to the project to $421 million. (Unclassified) Turkey's National Assembly has endorsed an agreement with the USSR for joint construction of a dam on the Arpa Cayi River. Turkey's contribution to the project, which will irrigate 40,000 acres on the Igdir plain, totals $2 million. (Unclassified) United Arab Emirates. A Romanian delegation to Abu Dhabi outlined proposals to purchase crude oil in exchange for Romanian equipment and expertise for the petroleum industry. (Unclassified) Military Africa 25X1 B 25X1 B Congo. The PRC delivered - patrol boat helicopters to Pointe Noire in March. - patrol boat is scheduled for delivery some 25X1 B Approved For Release 2000/09/1412CIA-RDP86T00608R000500230019-3 s.cnt Approved For Release 2000/09/14: CIA-RDP86T00608R000500230019-3 $acnf time before midyear. These deliveries are part of a $5 million grant military aid program which has been under way since late 1964. (Secret No Foreign Dissem) Somalia. In early May a 16-member Somalian military delegation left for a 10-day visit to the USSR. The delegation was expected to hold talks on bilateral military relations with the Soviet government. (Unclassified) Sudan. A Chinese military delegation left Peking on 19 May for Sudan, to take part in the sixth anniversary celebration of the 29 May Revolution. China has previously provided some $7 million worth of military equipment to Sudan, Including jet fighters and tanks. Although no major Chinese deliveries have occurred since 1973, about $1 million In arms remains to be delivered. The delegation may discuss delivery schedules for the remaining equipment. (Secret No Foreign Dissem) Zaire. North Korea has made Its first delivery of artillery to Zaire. In late March, North Korean artillery pieces were observed being unloaded from a ship in Matadi. A North Korean-Zaire arms accord covering this delivery was concluded last year when military delegations were exchanged. Additional deliveries will probably Include the range of weapons common to a North Korean infantry division -- machineguns, antitank missile launchers, recoilless guns, mortars, and artillery. (Confidential) 25X1 B Near East and South Asia 25X1 B Afghanistan= Kraz-255 prime movers were shipped from the USSR to Afghanistan in late March and an additional- delivered in early 25X1 B April. These are the first known military deliveries since November 1974, when deliveries stopped because of the winter weather. Tanks are expected to be delivered soon; (Confidential) 25X1 D 25X1 D Approved For Release 2000/09/14 : A~RDPHT00608RO00500230019-3 Approved For Release 2000/09/14: C - DP86T00608R000500230019-3 COMMUNIST AID AND TRADE ACTIVITIES IN LESS DEVELOPED COUNTRIE,3, MAY 1975 ANNEX COMMUNIST-LDC TRADE CONTINUES TO RISE IN 1973 Summary 1. Communist-LDC trade made unprecedented gains in 1973, over- shadowing the record performance of the previous year. Price inflation and changes in the values of currencies, however, contributed substantially to the increase. 2. The dollar value of Communist-LDC trade turnover rose by almost 50%, to more than $13 billion, compared with a growth In total world trade during the same period of about 40%. Still, LDC trade accounted fa;' less than 15% of total Communist trade, and for the LDCs this trade was only 5% of their total turnover. 3. All Communist countries participated In the Increase, but the rise in Chinese trade was proportionately greater than for others. The jump in trade with the LDCs reflected Peking's more vigorous Initiatives to expand Its markets and its need to augment raw material supplies to support Its expanding industrial effort. China continued to show a surplus of more than $200 million in Its LDC trade, in spite of a large deficit with Latin American partners. 4. The overall Communist surplus in trade with the LDCs rose by $900 million in 1973, to almost $2.4 billion. Although much of the surplus cannot be distributed among LDC trading partners, the undistributed element A-1 Approved For Release 2000/09/14 : .IAprRDP86T00608R000500230019-3 Approved For Release 2000/09/14.c, lA-RDP86T00608R000500230019-3 almost certainly includes Soviet military exports* as well as East European exports under military contracts and economic aid agreements. Discussion Rising Prices Have Major Impact 5. Far higher prices for the food, metals, minerals, and other primary products that constitute the bulk of Communist purchases from LDCs contributed heavily to the overall increase in Communist-LDC trade. In 1973, for example, the USSR paid 30% more for rubber and 40% more for sugar, and the price for raw wool more than doubled. The world market price of other major Communist Imports, such as Latin American copper, grain, and fishmeal, rose 60%-90% In 1973 compared with 1972. Throughout the year, prices for primary products rose faster than those for manufac- tures. The Increase in prices of Soviet exports, dominated by machinery and equipment deliveries, reportedly Increased by about 10% In 1973. 6. As world demand and prices rose for primary products In 1973 some LDCs began to take a hard look at the profitability of their long-term barter arrangements with Communist countries. LDC producers became less willing to accept Communist machinery and equipment for hard currency earning exports. By 1974, several LDC exporters of petroleum, phosphates, metals, and agricultural raw materials had renegotiated some of their agreements with Communist countries to require payments in hard currency. Notable among these were Iran, Iraq, Syria, Ghana, Morocco, Nigeria, Sudan, and Tunisia. This phenomenon was less evident among sub-Saharan African countries than elsewhere. A large proportion of their imports from the USSR and China, are shipped under aid agreements. Communist countries often take less desirable commodities that do not find a ready market * For a more detailed discussion of Soviet-LDC trade see ER IR 74-29, Reccrd Soviet-LDC Trade in 1973 November 1974, Confidential. Approved For Release 2000/09/14 IMA-RDP86T00608R000500230019-3 Approved For Release 2000/09/14: CJA-RDP86T00608R000500230019-3 cret elsewhere. Communist countries probably do not press for annual settlements on barter account if African partners are facing severe payment difficulties. Direction of Trade 7. Although Latin American countries emerged as major raw mater- ials suppliers during 1973, they did not challenge the dominance of Near Eastern and South Asian countries in Communist trade (see the table). 8. The Importance of the Near East and South Asian area was bolstered by a doubling in the value of Communist fuel Imports to more than $600 million. This increase reflected expanded volume, as well as price Increases. Moscow almost tripled the volume of Its crude imports from Iraq, but the price rose only 20%. Iraq, Iran, and Afghanistan were the source of r;iost of the $400 million of Soviet fuel purchased from the Third World. The volume of Eastern Europe's direct purchases of crude oil from LDC producers rose almost 80% in 1973. 9. Latin America's Increased Importance as a raw materials supplier reflected a rising demand in Communist economies for basic commodities to satisfy agricultural shortfalls and to expand Industrial production. Latin America accounted for the largest relative gain -- more than 60% -- In Communist-LDC trade turnover. Most of the Increase came from a near- doubling in the value of Communist Imports of food, hides, and minerals. The hefty Communist deficit In Latin American trade, experienced by all Communist trading partners, doubled in 1973 to over $800 million. iu. In an attempt to stem the rapid deterioration in their trade -positions, all Communist countries Intensified their sales campaigns In Latin America. These were accompanied in 1974 by liberal Soviet and East European offers of credits for sales of machinery and equipment. The USSR was negotiating several large contracts for sales of power equipment to A-3 Approved For Release 2000/09/14: CJAR DP86T00608R000500230019-3 Approved For Release 2000/09/1'kcQlA-RDP86T00608R000500230019-3 Argentina and agreed to sell $160 million of petroleum products to Brazil. However, most Communist trade activity was still on the buying side, with additional new contracts In 1974 for sugar and other products from Brazil; meat, grain, and hides from Argentina; and minerals and metals from Chile and Peru. Commodity Composition 11. Communist countries remain primarily a market for LDC raw materials and agricultural products In spite of LDC attempts to Increase their sales of manufactured goods. For the USSR, raw materials and foodstuffs still represented 5.56 of its total Imports from the LDCs in 1973. Although the share of manufactures has doubled since 1960, It accounted for only 13% of total Soviet Imports from the Third World. The most significant change in the composition of Soviet-LDC trade Is the large Increase of fuel as a share of total Soviet Imports. It accounted for 17% of total Soviet Imports from LDCs in 1973, compared with 12% in 1972 and only 7% In 1971. 12. Machinery and equipment dominate Soviet exports to the Third World, having accounted for 50%-55% of Soviet exports to LDCs for more than a decade. These sales have been maintained to some extent by credits provided under the Soviet aid program. The ruble value of Soviet crude oil sales to Third World customers dropped 15% in 1973, to only 6% of total exports. Manufactured goods and other crude materials, however, main- tained their usualdshares for most recent years of about 10% each. 13. The composition of East European trade is believed to follow the Soviet pattern with a somewhat heavier weight to crude materials and fuels in the Import totals 14. Almost all of China's Imports from LDCs were raw materials and food. Developing countries provided 45% of China's crude materials imports in 1973, including all of China's rubber, half of its cotton, and 45% of its nonferrous metals imports. A-4 Approved For Release 2000/09/14 ~k-RDP86T00608R000500230019-3 Approved For Release 2000/09/14: CIAEPODP86TOO608R000500230019-3 15. Light manufactures accounted for one-half of the PRC's exports to LDCs while food made up most of the remainder. Among Peking's world exports in 1973, 80% of its grain (mostly rice) exports, 70% of its iron and steel exports, and 30% of Its textiles went to the Third World. (Confidential) Approved For Release 2000/09/14: CIAAfDP86T00608R000500230019-3 S.cnt Approved For Release 2000/09/14: CIA-RDP86T00608RO.0050.? 00(1 ? ., ,r Nil ;311 11)lparlll from Selected Lem 1972 1973 Lllpurlll Inlpor111 'I'n01ll...... 3,II14 :1.010,2 7,710,5 5,312,11 2, 1113,0 1,1197.3 ?1.003,$ 2,4110,1 Alriea ..................... 732.2 582,7 994,7 828,5 249,3 241,2 283,8 271.0 1311 I) 1:11 7 171 : I . , , A gerht .................. I Angola,,,,,,,,,,,,,,,,,, 1,5 N.It,n N.H. N,IL N.H. Burundi ................. 2,7 N.H. N.It, N, It, N. 11, II 11 1) 111 2 11 I ?I (' , , , . anleruou , , , ('rutntl A(rIeatl Itepuhilr, . 0,I 0,5 0,1 (1,5 Chad ................... 0,8 1.11 1.1 N.H. 114.11. N. it, IN. It, ('oligo. . ............... . 2.I 2.2 1,0 :1,13 0,1 1 .2 I ,II 3,3 Unhotney,,,,, 2.7 2.8 Isquulorlnl (1ulniat,,,,,.,, I), I 1,2 0,1 .,, ,,, 4,2 I?;thlupht , . , , , , , , , . . Ii.11 8,0 I5,0 13,?1 I'll 2,5 2,2 :1,1) (htbuo .................. (Ili 1.5 II, 1 1,4 IN, It. N.H. N,It. N.111 ?1, ?1 11,7 1 N. It. N.H. N,It, N, It, 23,:1 511, 5 31,0 711,0 11,1 :17,1 13.1 :17.8 (iulnen ............... 51,3 0,8 50,4 2.11 111,11 Ivory ConIt ............ 7,7 111,11 11.11 51,:1 2,1 11.8 1.3 511, ?1 11,3 2,11 8,4 Keuyn .................. I8,)) 7.8 15,13 12.2 (I,8 11.8 0.3 Liberia .................. 5,b 12.1 N. It. N. It. N. It. N. It, I.Ibya..... ..I ........ 80 , ?I 55.7 1:39, it 1.55. 13 W. 11 :lll,:3 111,11 I I .11 IInlagany I{cgwbil........ \e?1, 1,5 10.1 0 , 8 ,... 1 . ?1 ..,. 11. .1 Mali .................... 5,0 1,1 11,:3 0.7 113 1 . 1 3.0 0.7 Mgurllanla.. I,1 1.7 I,8 2.11 N.R. N. It, N.H. N.H. Miturltio, .............. . 1.3 0 ,4 N. It. N. It. .... ,.. NIn11110 ................. 1 1,5 Negi, N.H. N. It, Morocco ..... I ... I .... I . 79.2 77.7 7r i. ?1 102.1) 38.1 28,7 38.2 33,2 Mozantbiyuo ...... . ... . 11,2 Neel. 0 .2 11,1 N.H. N. It, .... Niger ................... 11.1 NegI. N. It, N.It. N. It. N.H. Nigeria .................. 135.0 35.1) 01 .1) 51.11 10,0 21.1) 11.8 311.11 Iteunlon ................. 7 ,8 $cnegnl ................. 10.3 I.1) 12 .4 NvgI, 1.7 .1 It'll Sirrnt Loon. ............. 11.7 2.2 11 1.2 2.1 1.0 I .11 ].6 2.0 Somalia ................. 17.0 5.3 :1 1.?1 2.4 1.1.2 3.5 15.5 1.5 Sudgn ................... 1111.2 (it). )) 11' 1.7 85.3 20.7 1 .3 3.4 .... Ton7,8(Iiit ............... . 77.1) 23.0 111 .2 22.0 0.7 1.0 11.8 :1. ?I 'I'ugo .................... 8.2 11.3 5 .1 2.0 1.7 4.7 1.11 .... Tuni?la ................. 15.2 23.13 27 .1 27.:) 3.:3 8.:3 7.8 7.3 Ugundn ................. 13,5 2.1.2 ?1 .M 17.11 ?1.1 0.8 1.2 3.2 Upper Volta ..... . ....... 1.3 2 .5 20,0 N.R. N.H. N.R. N. It. Zairee .................... 8 .3 ll.I N.H. N.H. N. It. %nrtthig ................. 22.4 21.1 20 .6 30.11 Nit. N. It, N?11. N.H. Europe................. 170.3 117.5 247 .5 130.0 26.9 27.7 42.0 1.3.3 \Inlta ................... 0.7 0,8 1.1 .0 0.8 1 .6 NtgI. 1.111 .... Portugal ................ 10,11 7.11 3 0.3 10.3 .... .... N. It. N.R. Spain ................... 108.8 203 .2 l:gt