ANALYSIS OF SOVIET CASH FLOWS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88B00443R001904420059-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: June 23, 2011
• Sequence Number: 59
• Publication Date: February 27, 1986
• Content Type: MEMO

Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
 Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
'1,Q - RET
27 February 1986
iviEIv1URANDUrV1 FUR: Director of Central Intelligence
VIA: Chairman, National Intelligence Council
FROM: Douglas J. MacEach i n
Director of Soviet Analysis
SUBJECT: Analysis of Soviet Cash Flows
REFERENCE: Memo from DCI to C/NIC, dtd 20 Feb 86,
Same Subject
1. With regard to your memorandum of 20 February 1986, we
agree with Mr. Robinson that, in the aggregate, Soviet foreign
activities are possible only with foreign borrowing. However, by
our calculations of USSR's balance of payments position,
financial inflows, including borrowing, exceed known expenditures
by an average of $3 billion over the last several years.
Unaccounted Soviet expenditures include such items as hard
currency assistance to client states (probably under $1 billion)
and costs of covert operations and routine diplomatic and
cormierciai activities.
2. while our estimates do not capture all of Soviet
financial flows and, by implication, expenditures, we believe
that unrecordeu net rnflows--includin6 interbank deposits
discussed by Mr. Robinson--are small. because the Soviets
conduct their financial transactions through Western financial
institutions that are required to routinely report their
All portions classified
Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
 Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
TOP SECRETI
SUBJEC'T': Analysis of Soviet Cash Flows
activities to government authorities, most of Moscow's financial
flows are captured in reported Western statistics. These
conditions hold true for Soviet-owned banks in the West. Like
all Western financial institutions, Soviet-owned banks want to
attract deposits from other Western entities, including interbank
funds. All such deposits probably amount to about $5 billion,
Interbank time deposits, as reported to you by
re less than $200 million. These funds cannot
indiscriminately be transferred to Moscow but must be lent in
accordance with government regulations--which limit the share of
overall loans a bank can make to any borrower--and reported to
the appropriate authorities. We estimate that outstanding Soviet
loans from Soviet-owned banks in the West were unaer $3 billion
at the end of 1985, about 10 percent of total Soviet debt to the
West.
3. We are unaware of any current Soviet efforts to obtain
control of Western banks as described in the 16 February
New York Times article. But the article does highlight the
importance of timely intelligence in monitoring developments of
national security interest. I will ensure that our analysts
following Soviet financial dealings keep their eves out for
suspicious transactions.
4. We would welcome the oportunity to discuss with Roger
Robinson nis ideas on Soviet financial activities. In addition,
we are in the process of preparing a typescript memorandum
assessing the impact of recent oil price declines and the dollar
depreciation on Soviet hard currency earnings and what options
the Soviets may have in dealing with this situation.
Douglas J. MacEachin
2
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Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
 Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1
")P SECRETI
SUBJECT: Analysis of Soviet Cash Flows
SOVA/NIG/EPD/FT,
Distribution:
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Addressee
DDCI
DDI Registry
Exec Registry
Chm/NIC
VC/NIC
NIO/Econ
D/OGI
D/SOVA
Exec Staff
C/EPD
C/EPD/FT
(26 Feb 86)
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TOP SECRET
Sanitized Copy Approved for Release 2011/06/23: CIA-RDP88B00443R001904420059-1