AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD, 1967
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CIA-RDP92B01090R000400010023-8
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23
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Publication Date:
June 1, 1968
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REPORT
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Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free World, 1967
Secret
June 1968
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FOREWORD
This series provides periodic summaries and analytical interpreta-
tions of significant developments in the economic relations and mili-
tary aid activities of Communist countries with less developed coun-
tries of the Free World. These developments are reported on a cur-
rent, factual basis in the Biweekly Reports under the same title.
This report updates the previous annual report and includes the
more significant developments during the reporting period. It also
covers noteworthy noneconomic activities, including military aid and
student exchanges. Data have been revised to include new informa-
tion, and figures in the current supplement supersede those in previous
issues.
In this report the term Communist countries refers primarily to the
following countries that extend aid to less developed countries of the
Free World: the USSR, Communist China, and the following countries
of Eastern Europe-.Bulgaria, Czechoslovakia, East Germany, Hun-
gary, Poland, and Rumania. For certain limited purposes the term
also may include Albania, Cuba, Mongolia, North Korea, and North
Vietnam, none of which is normally a donor of aid. Yugoslavia is
not included.
The term less developed countries of the Free World includes the
following: (1) all countries of Africa except the Republic of South
Africa; (2) all countries of the Far East except Japan; (3) Portugal
and Spain in Europe; (4) all countries in Latin America except Cuba;
and (5) all countries in the Near East and South Asia.
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CONTENTS
Summary ......... 3v ge
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AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD, 1967
SUMMARY
Major Trends
During 1967 the Communist countries continued to expand their
presence in the less developed countries by delivering large amounts
of military and economic goods and services, primarily from aid agree-
ments made in previous years. New aid commitments emphasized
military assistance, which rose sharply compared with 1966. The
decline in new extensions of economic aid followed three years of
record high commitments in 1964-66, and in part reflected the lack of
opportunities for new aid extensions and the large backlog of un-
expended credits (see Figure 1 ).*
Soviet aid undertakings during 1967 were highlighted by military
assistance to the Arab states. Substantial deliveries of military equip-
ment were quickly made to the UAR, Syria, and Iraq after June as Mos-
cow sought to shore up the military capabilities of these countries and
to restore its prestige in the Middle East. Political considerations
also were dominant in Soviet arms aid to Yemen, where the Soviet-
supported Republican regime was threatened. Nigeria, which tra-
ditionally has relied on the West for its military supplies, signed its
first arms agreement with the USSR. A large arms credit to Iran
in January 1967 was of economic as well as political value to the
Soviet Union. Under its terms, Iran will make repayment in natural
gas, which the USSR will use to meet expanding industrial needs in
the Transcaucasus region. In summary, the use of economic and
military aid continues to be an important facet of Soviet foreign policy
in Free World less developed areas.
* In this report the term extension refers to a commitment to provide goods and services,
either as a grant or on deferred payment terms. Assistance is considered to have been extended
when accords are initialed and constitute a formal declaration of intent. The term obligation
refers to our tentative estimate of the allocation of Communist aid to end uses. The torrn
drawings refers to the delivery of goods or the use of services.
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The Eastern European countries also lowered new aid commitments
during the year compared with 1966. As in the past, these commit-
ments were primarily economic rather than military, and were directed
largely to the countries of the Near East and South Asia. Notable
progress was made in East European aid relations with Latin America,
where there were increased signs of reciprocal interest during 1967.
East European aid and trade delegations to Latin America concluded
at least two new credits (Ecuador and Uruguay) as well as a number
of trade agreements.
Communist China's new aid commitments were also considerably
smaller than in recent years and consisted exclusively of economic
credits and grants. The major outlay during the year was to the UAR,
where, in an effort to continue some Chinese influence following the
June war, the Chinese provided the Nasser regime with a $21 million
grant in wheat and foreign exchange. Peiping also made some head-
way in its aid efforts by adding Mauritania and Zambia to its expand-
ing list of recipients in Africa. In Burma, however, the Chinese pro-
gram sustained a major setback when Rangoon dismissed Chinese
technicians because of serious political differences with Peiping.
Economic Credits and Grants
The Communist countries extended approximately $215 million
Of new economic aid to the less developed countries of the Free World
in 1967, bringing total extensions since 1954 to about $9.4 billion.
This is the smallest amount of new commitments in any year since
1955. The largest decline occurred in new commitments by the USSR,
which fell from about $1.3 billion in 1966 to about $90 million in 1967.
,&bout two-thirds of the new Soviet aid went to Chile in the form of a
$55 million credit for industrial projects and machinery and equip-
inent. The East European countries extended about $75 million in
economic aid, with Bulgaria and Rumania being the major sources.
The UAR, after Chile, was the major recipient of economic aid during
1967, accounting for about 30 percent of East Europe's new commit-
ments and about 40 percent of Communist China's $50 million in new
aid.
Drawings on Communist economic aid of about $500 million in
1967 were virtually the same as the average annual level of the past
four years. Drawings on Soviet credits, representing about 60 percent
of the total, declined for the third consecutive year while those on
East European and Chinese credits rose slightly in 1967. Cumulative
drawings since the inception of the program in 1954 have amounted
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COMMUNIST ACTIVITY IN LESS DEVELOPED COUN
OF THE FREE WORLD*, 1454-67
ECONOMIC ASSISTANCE EXTENDED
O Communist China
Eastern Eu
ro
W Eastern Europe
Million US Dollars 11 l` ] USSR
pe C] Communist China
Q USSR
~1
i i t J l 1 f 7 F= 1
1954 1955 1956 1957 1956 1959 1960 1961 1964 1963 1964 1965 1966 1967
ECONOMIC AND MILITARY TECHNICIANS
IN LESS DEVELOPED COUNTRIES
Thousand Technicians
30 r
1956 1957 1958 1959 1960 1961 1962 1963 1964 9965 1966 1967
RI;E 11
MILITARY ASSISTANCE EXTFNDEI)
STUDENTS DEPARTING FROM LESS L'EVELtD
COUNTRIES FOR TRAINING
IN COMMUNIST COUNTRIE;
*00t' Sr re .nd pp iod,cally to irkl de new information and
therefore ""y not be co,nporable 5n 15 dots previously presented
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to somewhat more than $3.6 billion, or almost 40 percent of total aid
extended by the Communist countries.
Economic Technicians
The number of Communist economic technicians employed in less
developed countries declined by about 5 percent to approximately
21,200 in 1967. By the end of the year, the number fell to less than
20,000 as Communist economic technicians left Burma and various
countries in Africa and the Near East either because of political con-
siderations or because of the completion of their work on various proj-
ects. Of the total in less developed countries in 1967, about one-half
were from the USSR, about one-fifth from Communist China, and the
remaining 30 percent from Eastern Europe. As in the past the
largest share of Communist technicians (about 50 percent in 1967)
were employed in Africa, notably in Algeria, Guinea, Mali, and
Tunisia. The next heaviest concentration (about 45 percent of the
total) was in the Near East and South Asian countries, with Afghanis-
tan, India, and the UAR having the largest numbers.
Academic Students and Technical Trainees
The number of academic students who departed for training in
Communist institutions in 1967 was about 1,600. The total in train-
ing at the end of the year was about 14,300, somewhat less than in
1966, which may indicate a leveling off in the program. Of the new
enrollees, about 61 percent came from Africa, 25 percent from the coun-
tries of Near East and South Asia, 10 percent from Latin America,
and 4 percent from the Far East. The USSR continued to receive
the largest number of new students, about 83 percent of the total,
with Eastern Europe accounting for the remainder in 1967.
Technical trainees who departed for Communist countries in 1967
are estimated to have numbered 1,200, or approximately the same
as in 1966. About 13,500 have undertaken such training since 1956,
and about 2,100 were being trained at the end of 1967.
Military Credits and Grants
The Communist countries extended an estimated $480 million worth
of military aid to the less developed countries during 1967-,ui in-
crease of about 40 percent over the level in 1966 and the largest
amount committed since 1964. Total military aid extended during
1955-67 amounted to about $5.5 billion. About 90 percent of the new
arms aid came from the USSR, which completed new agreements with
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a number of the Arab countries and a sizable $110 million pact with
Iran-that country's first with a Communist state. Deliveries of mili-
tary aid in 1967 amounted to about $400 million. The Arab states of
the Near East received at least half of the total, with remaining de-
liveries to Afghanistan, Algeria, India, and various African states.
Military Technicians and Trainees
The number of Communist military technicians in less developed
countries rose to about 6,1.00 in 1967, nearly double that in 1966. The
increase was due almost entirely to the large influx of Soviet tech-
nicians and advisers to the Arab states following the June war.
During 1967, a total of about 1,200 nationals from eleven less
developed countries enrolled in military training programs in Com-
munist countries, about 80 percent of the number who departed for
training in 1966. At the end of the year, about 3,500 were being
trained in Communist countries-94 percent in the USSR.
Trade
There appeared to be very little change in both the value and
direction of Communist trade with the less developed countries during
the first half of 1967. In 1966, total trade turnover was about $4.8
billion, 7 percent more than in 1965. East European trade with the
less developed countries expanded in 1966 and exceeded that of the
USSR-$1.9 billion versus $1.8 billion. Communist China's trade with
the less developed countries also increased in 1966 to about $900
million. Communist exports to the less developed countries con-
tinued to exceed imports in 1966, but the trade surplus which has
decreased in recent years remained about the same as in 1965.
The geographic distribution of Communist trade with the less de-
veloped countries in 1966 continued to follow the pattern of recent
years. Thus the Near East and South Asian countries accounted for
t he major share (57 percent) of the total, while Africa and the Far
Eastern countries each accounted for 13 percent, Latin America 12
percent, and Europe-Portugal and Spain-5 percent of total Com-
munist trade with the less developed countries. Although trade with
the Communist countries represents a small (6 percent) share of the
total trade of the less developed countries, it nevertheless forms a
comparatively important segment of the trade of individual countries.
Thus, in the case of Afghanistan, Syria, and the UAR, trade with the
Communist countries accounted for more than one-fifth of individual
imports and exports in 1966.
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