AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD 1969

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010028-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 80
• Document Creation Date: December 21, 2016
• Document Release Date: January 25, 2006
• Sequence Number: 28
• Publication Date: February 1, 1970
• Content Type: REPORT

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Secret
USIB
UNITED STATES
INTELLIGENCE
BOARD
Economic Intell i ence
Committee
Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free World, 1969
Secret
EIC R14-S24
February 197)
Copy No.
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Foreword
The EIC-R14 series provides periodic summaries
and analytical interpretations of significant devel-
opments in the economic and military aid activities
of Communist countries with less developed countries
of the Free World. Highlights of trade developments
also are included. These developments are reported
on a current, factual basis in the Biweekly Reports
in the EIC-STA-l series.
This report, covering the 12 months from 1 Jan-
uary through 31 December 1969, constitutes the
twenty-fourth report of the EIC-R14 series. The
present report updates and revises data in the pre-
vious annual reports; figures in the current supple-
ment supersede those in previous issues. This
report was prepared by the Department of State and
the Central Intelligence Agency. The draft was
reviewed and coordinated by a Subcommittee on Inter-
national Trade and Aid of the Economic Intelligence
Committee, which includes representatives of the
Department of State, the Defense Intelligence Agency,
the Departments of Commerce and Agriculture, the
Agency for International Development, the National
Security Agency, and the Central Intelligence Agency.
The final report was approved by the Economic Intel-
ligence Committee on 10 February 1970. Project
tables on economic credits and grants (formerly
Appendix Tables 1-4) are available to recipients on
request.
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, Czechoslo-
vakia, East Germany, Hungary, Poland, and Romania.
For certain limited purposes the term also may in-
clude Albania, Cuba, Mongolia, North Korea, and
North Vietnam, none of which is normally a donor of
aid. Yugoslavia is not normally 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 East Asia 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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Summary . . . . . . . . . . . . . . . . .
I. Communist Activities in Less
Developed Areas, by Type
of Activity . . . . . . . . . . . .
Major Trends and Prospects . . . . . L
Economic Assistance . . . . . . . . . 4
Credits and Grants . . . . . . .
Extensions . . . . . . . . .
Drawings . . . . . . . . . .
Repayments . . . . . . . . .
Communist Economic
Technicians . . . . . . . .
Technical Trainees in Com-
munist Countries . . . . . .
Academic Students in Communist
Countries . . . . . . . . . . . L O
Military Assistance . . . . . . . . . L1
Extensions . . . . . . . . . L i
Drawings . . . . . . . . . . L a
Repayments . . . . . . . . . t4
Military Technicians . . . . 1b
Military Trainees from Less
Developed Countries . . . . 15
Value . . . . . . . . . . . . . . 16
Direction of Trade and Relative
Shares . . . . . . . . . . . . . 18
Commodity Composition . . . . . . 19
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AID AND TRADE ACTIVITIES
OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS
OF THE FREE WORLD
1969
Summary
The rapid expansion that characterized the Com-
munist offensive in the Third World until 1964 has
given way to low-keyed programs in recent years.
The lack of significant growth is apparent in all
sectors of the program: trade, military and economic
aid, technical services, and training. While the
level of new aid extensions* has fluctuated widely
from year to year, deliveries of economic and mili-
tary aid together have leveled off at almost $900
million annually during the past four years.
Communist countries' annual total trade with the
Third World remained constant at roughly $4.8 billion
during 1965-68. The scale of Communist technical
assistance, both military and non-military, has not
shown any appreciable growth since the mid-1960s,
nor have the Communist countries expanded their
programs to train Third World academic students dur-
ing this period.
The general lack of growth in the Communist
economic offensive primarily reflects the leveling-
off in aid flows from the USSR, which accounts for
almost 80% of all Communist economic and military
assistance. Soviet economic aid deliveries have
remained at roughly $300 million a year -- equal to
about one-tenth of 1% of Soviet GNP -- for the past
four years, while Soviet military aid flows to the
Third World as a whole have averaged about $380
million a year during this period. Soviet trade
with these countries has shown no appreciable growth
since 1965.
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 format declaration of %n-
tent. The term drawings refers to the delivery of
goods or the use of services.
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Communist China's trade with the less developed
countries has not changed significantly in the past
several years while deliveries of economic aid in
1969 remained at the low level of 1968. Although
East European countries greatly increased their
extensions of new economic aid in 1969, aid deliv-
eries, which accounted for somewhat less than 20%
of the Communist total, declined during the year.
East European trade with the developing countries,
however, has grown fairly rapidly -- at an average
annual rate of 8% since 1964 -- and exceeds Soviet
nrade with these areas.
The absence of vigorous Soviet aid initiatives
~_n recent years seems to reflect the Soviet leader-
r;hip's realization that aid as a political weapon
has severe limitations, conveys no guarantee of
continuing influence, and sometimes leads to un-
wanted involvement in disputes between two client
estates.. Moreover, during the past few years the
USSR's attention has been turning to other, more
,..argent problems: the China border conflict, East-
West European relations, and domestic economic
problems. In some cases the amount of Soviet aid
extended and drawn has been limited by the USSR's
belated appreciation of the restricted absorptive
capacities of Third World countries for both arms
and investment aid.
Economic Aid (See Figure 1)
Communist countries extended $940 million of
oconomi.c aid to less developed countries in 1969,
bringing total cumulative aid extensions up to
::;10.8 billion. One-half of the total extended in
1,969 was provided by the USSR, 48% by East European
countries, and the remainder by Communist China.
Near East and South Asian countries again received
the major share of new commitments, with Iraq, Iran,
and Turkey accounting for two-thirds of the total.
Guinea, which received aid commitments of $104 mil-
Lion -- $92 million from the USSR and $12 million
from Communist China -- was the only other country
to which large amounts of aid were extended. Aid
deliveries in 1969, estimated at $415 million,
dropped for the fifth consecutive year, reflecting
reduced levels of East European and Soviet deliveries.
~,--P..multaneously, repayments of principal and interest
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due for Soviet deliveries of economic aid rose to
some $180 million in 1969, about 30% higher than in
1968. (See Figure 2.)
During 1969, Communist economic technicians in
less developed countries numbered 22,000, only
slightly more than in 1968. Although the USSR
accounted for about 70% of total economic aid
deliveries in 1969, only 45% of the technicians
were from the USSR. East Europeans, many of whom
were under commercial contract rather than associated
with aid projects, accounted for 35% of the total
number of technicians. The remainder were from Com-
munist China. As in the past, about one-half of the
total number of Communist technicians were in African
countries and most of the remainder were in the Near
East and South Asia. Communist countries continued
in 1969 to provide technical training for personnel
from the less developed countries and to expand the
training of these personnel on-the-job and in train-
ing facilities being built in their own countries.
A total of approximately 16,700 students from
less developed countries were in attendance at Soviet
and East European. academic institutions during 1969.
New enrollees increased to 3,400 in 1969, reflecting
openings made available by students who had completes
their academic training.
Military Aid (See Figure 1)
Known military aid commitments, totaling about
$180 million in 1969, were significantly less than
those in recent years. Three recipients -- the UAR,
Iraq, and India -- accounted for about 85% of the
new aid provided, with the remainder extended to six
other countries. Cash sales totaling $20 million
were made to Nigeria. Arms deliveries of $340
million were somewhat lower in 1969 than in the past
several years, with the Arab states accounting tor
about one-half of the total. By the end of 1969
the combat equipment losses resulting from the June
1967 war had been replaced. Also, of particular
significance in 1969 was the implementation of the
1968 Soviet-Pakistani arms agreement, which repre-
sented a marked shift in the former Soviet policy
of selling only non-combat equipment to Pakistan..
During 1969, developing countries paid an estimated
$110 million in principal and interest to the USSR
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on their debt for Soviet military aid. The number
K.)f Communist military technicians in the less
developed countries declined by more than 5% to an
K::stimat.ed 7,200 in 1969, and the number of developing
country nationals going to Communist countries for
military training may have fallen off by as much as 20%.
Preliminary data suggest that total Communist
trade with the less developed countries may have
been slightly above the 1968 level in 1969, with
1aast European and Soviet trade with North African
and Near Eastern countries the most active part of
the total.
Communist trade with the less developed coun-
;ries reached $4.8 billion in 1968, an increase of
5% over 1967, Virtually all of the increase was in
;astern Europe's trade (especially its export trade)
with these areas As in the past, the less developed
countries' share of Soviet and East European trade
was less than 10%. but it was possibly somewhat more
than 20% of Communist China's trade. For most less
developed countries the Communist countries accounted
!or only a small part of their total trade. For the
(JAR, Afghanistan, and Syria, however, Communist
L.rade comprised more than one-third of their total
trade. More than half of the Communist countries'
..mports from less developed countries came from
Near East and South Asian countries in 1968, and
almost two-thirds of their exports went to these
a..reas. There were no marked changes in the commod-
...ty composition of Soviet trade with the less
developed countries in 1968. Machinery and equip-
ment continued to account for the major share of
soviet exports, and food was the major import cate-
44ory. The commodity composition of East European
trade was roughly comparable to that of the USSR,
although sales of fertilizers and other chemicals
made up a larger portion of Eastern Europe's exports,