SINO-SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000700010057-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 16, 2016
• Document Release Date: August 9, 2005
• Sequence Number: 57
• Publication Date: April 14, 1958
• Content Type: REPORT

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SECRET
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BIWEEKLY REPORT
SINO -SOVIET BLOC
ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
EIC-WGR 1 /57
14 April 1958
PREPARED BY THE WORKING GROUP
ON SINO-SOVIET BLOC ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
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SECRET ~ox~.----
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SECRET
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
These biweekly reports on "Sino-Soviet Bloc Economic Ac-
tivities in Underdeveloped Areas" are prepared and issued
by a Working Group of the Economic Intelligence Commit-
tee, including representatives of the Departments of State,
the Army, the Navy, the Air Force, Commerce, and Agricul-
ture; the International Cooperation Administration; the
Office of the Secretary of Defense; and the Central Intelli-
gence Agency. Their purpose is to provide up-to-date fac-
tual information on significant developments in the eco-
nomic relations of Sino-Soviet Bloc countries with under-
developed countries of the Free World. The EIC-R-14 series
of reports, under the same title, provide periodic summaries
and analytical interpretations of these developments.
Printed and Disseminated by the
Central Intelligence Agency
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S-E-C-R-E-T
Summary of Events
28 March - 10 April 1958
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The disclosure of Indonesian purchases of Bloc arms valued in e:x-
cess of $1.00 million was the most significant event affecting the economic
relations between the Sino-Soviet Bloe and the underdeveloped countries
of the Free World during the period 28 March - 10 April 1958 ~~
Indonesia also has arranged to obtain military goods, probably
produced in the Bloc, from Egypt and Yugoslavia The Indonesian
Ministry of Shipping has announced that key members of Soviet crews of
vessels recently purchased by Indonesia from the USSR will remain with
the ships until Indonesian replacements are able to take over.
Gamal Nasser, President of the recently formed United Arab Republic,
is expected to seek some relief for the hard-pressed Egyptian economy
during his forthcoming visit to Moscow. He may ask the USSR to con-
sider paying hard currency for Egyptian cotton and to ease payment terms
for the arms. debt to Czechoslovakia and the USSR. He may even seek
more Soviet long-term credits.
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India has- decided to accept the recent Rumanian offer of assistance
in the establishment of the proposed petroleum refinery in Assam. The
total cost of the refinery is estimated to be $31. 5 million, about one-half
of which will be a foreign exchange cost. The loan is to be repaid through
the export- of Indian commodities, which may include textiles, mica,
shellac,. oilseeds, ,jute goods, and hides and skins.
The Burmese government has decided that loans from the USSR to
Burma, totaling $4. 2 million to $6. 3 million, will not be formalized or
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drawn on this year, because of Burma's difficult financial situation.
These loans were expected to finance the foreign exchange costs of two
irrigation projects in central Burma, Also in Southeast Asia, arrange-
ments have been made for delivery of the second portion of the $22, 4-
million Ghinese Communist aid program in Cambodia. Deliveries of
the first portion, amounting to $5. 5 million, were completed in Novem-
ber 1957. The second. ;portion will consist mainly of textiles, cement,
and ferrous products worth $6.86 million.
The Sino-Soviet Bloc has continued to expand its economic activities
in other countries of the Free World. Chile has recently begun to export
copper wire and iron ore to the Bloc and is negotiating along-term nitrate
sales contract with Communist China; Pakistan has ordered on deferred
payment terms Czechoslovak equipment worth $l, 7 million to be used
for the expansion of a cement plant in West Pakistan, anda trade mission
from the Turkish state bank has signed an agreement in Moscow for the
purchase of three small textile mills,
The USSR apparently has evolved a pattern for economic credits to
underdeveloped countries of the Free World under which repayment is
made in 12 annual installments. The exceptions have been credits to
Afghanistan and Yugoslavia, which call for 22 and 10 annual installments,
respectively. The European Satellites have generally required a sho rter
period for repayment. Mast Soviet economic credits- carry an interest
rate of 2, 5 percent, whereas Satellite economic credits carry interest
rates of 3 to 4 percent and, in one instance, 6 percent. Generally, Sovieti~.
agreements provide for repayment in commodities or in convertible cur-
rencies. The terms for military credits call for repayment over rela-
tively short periods of 5 to 7 years, Interest on these credits is believed
to be 2 percent.
Over the past 2 years, Communist China has agreed to extend eco-
nomic assistance worth about $100 million to underdeveloped countries
of the Free World. Until recently, all such assistance has been in the
form of grants. In December 1957, however, Communist. China began
offering low-interest credits and, since then, has agreed to lend at least
$40 million to Indonesia, Burma, and Yemen, Communist China also has
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extended assistance to Bloc countries amounting to more than $700
million during the past- 4 years, More than $175 million was budgeted
for foreign aid by Communist China in 1957, and a similar amount
has been budgeted for 1958
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P awe
A. Repayment Terms of Major Soviet Bloc Credits
to Underdeveloped Countries of the Free World 1
1. Major Economic Credits . . 1
a~' 'dime Period for Repayment . 1
.~. Interest Payments . . , 9
c. Medium of Repayment . 9
2. Major Military Aid Credits , 1 d
A. Acceptance by India of Rumanian Refinery Offer 14
B. Afghan-Czechoslovak Contract for Czechoslovak
Trucks . 14
C. First Pakistan Development Contract with a Soviet
Bloc Country 15
1. Confirmation of Purchase of Bloc Arms
by the Indonesian Central Government 1.~
2. Bloc Merchant Marine Personnel in Indonesia . lb
B. Status of the Chinese Communist Aid Program
in Cambodia a ,
C. Burmese Postponement of Irrigation Loans
from the US5R .
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Page
IV. Midd
A.
le East . . . . ~ . . . .
United Arab Republic . . . . ., ~
18
18
1. Visit of Nasser to Moscow . . , .
18
2. Implementation of Soviet Economic Agreements
with Members of the United Arab Republic
19
a. Egypt . . . . . .
20
b. Syria. . . .. . . .
20
3. Arrival of Three Soviet Submarines in Egypt
20
B.
Turkish Purchase of Soviet Textile Plants
21
V.
South America (Expansion of Chilean Mineral Exports
to Bloc) . . . .
? 2
VI.
Euroge (Joint .Yugoslav-Rumanian Danube Power
Project) . . . . .
Tables
24
1. Terms of Repayment for Major Soviet Bloc Economic
and Military Credits . .
2. Foreign. Economic Assistance Program of Communist
China . 11
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S-E-C-R-E-T
Map
Following Page
Communist China:. Economic Assistance to Foreign
Countries ?
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