SINO-SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000700010061-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 16, 2016
• Document Release Date: August 10, 2005
• Sequence Number: 61
• Publication Date: June 9, 1958
• Content Type: REPORT

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BIWEEKLY REPORT
SINO - SOVIET BLOC
ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
EIC-WGR-1 /61
9 June 1958
PREPARED BY THE WORKING GROUP
ON SINO-SOVIET BLOC ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
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16 JUN 1958 RECD SECRET
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SECRET
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WARNING
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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Summary of Events
23 May - 5 June 1958
An Indonesian firm purchased Soviet electrical equipment
valued at $796, 000 early in March. Subsequently, Soviet officials
in Djakarta informed the Indonesians that Soviet credit is avail-
able in unlimited amounts to Indonesian private enterprise for
the purchase of capital goods. The Soviet officials also indicated
that these funds would be entirely separate from the $100-million
Soviet credit to the Indonesian government.
At least 4, and possibly as many as 5 or 6, 1I1-1.4 aircraft
equipped as troop transports arrived in Indonesia on or about
22 May. These planes (reportedly 11 in all) were purchased
from the Omnipol factory in Prague at a unit cost of about
$250, 000. On 28 May the Indonesian Air Force publicly demon-
strated one of the new I1-14's, and on the same occasion two
MIC-15 jet aircraft were observed in the air over Djakarta.
The threat of the withdrawal of Soviet aid to Yugoslavia which
was discussed in the Biweekly Report of 26 May has partially been
carried out. On 27 May the USSR announced its unilateral decision
to "postpone" for 5 years the utilization of the: remainder of the
$110-million Soviet investment credit of 12 January 1956 as well
as the $175-million joint Soviet - East German credit of 1 August
1956 for the construction of an aluminum combine. Other Bloc
credits (totaling $179 million) were not mentioned by the USSR and
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presumably are not as yet affected. Yugoslavia angrily refused to
agree to any postponement or even to any negotiation to postpone.
Furthermore, Yugoslavia threatened to claim compensation "for
losses suffered" -- apparently for Yugoslav expenditures already
made in anticipation of receiving Soviet capital equipment.
Bloc economic activity in South Asia during the period included
(1) a provisional acceptance by the government of Afghanistan of a
Soviet offer of free surveys for all projects under the $100-million
credit which have not already been started,- (2) an offer by the USSR
and Czechoslovakia of nine commercial aircraft to Nepal, (3) the
discovery of a considerable volume of natural gas in the first test
oil well being drilled with Rumanian assistance in Punjab state in
India, and (4) the departure of a 10-member Indian trade promotion
delegation for a tour of the USSR and a number of the. European
Satellites.
In Africa the USSR has offered to increase greatly Soviet trade
with Sudan, to settle Sudanese credit balances in any suitable cur-
rency, and to extend financial and technical assistance to Sudan for
its economic development program. A Czechoslovak offer to con-
struct a cement plant in. Eritrea reportedly will be accepted shortly
by the Ethiopian government. Czechoslovakia will finance the project
with a $2-million loan and furnish the necessary technicians for con-
struction and operation. Czechoslovakia also is reported to have
offered to supply Ethiopia with military aircraft in exchange for
coffee and oilseeds on terms very favorable to the Ethiopians. The
offer includes fighter and transport planes as well as an accompany-
ing training program for pilots and ground crews.
The USSR and Finland issued a joint communique/on 30 May
announcing that the Soviet government had agreed in principle to
grant Finland a long-term, low-interest credit of $100 million to
$125 million for the purchase from the USSR of goods to be used
for the industrial development of Finland. The communique/also
stated that talks would begin as soon as possible on the subject of
Finnish use of portions of the Saimaa Canal.
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For the past 3 years the USSR has been extending numerous
offers of aid to countries outside the Soviet Bloc for the develop-
ment of atomic energy. Agreements concluded with Yugoslavia
and Egypt involving the peaceful use of atomic energy are now being
implemented. Reactors at Vinca, Yugoslavia, and Inshas, about
20 miles east of Cairo, are expected to be in operation by the end
of 1958. Other Soviet offers of atomic aid to underdeveloped coun-
tries include the extension of scholarships and the provision of
radioisotopes.
- in -
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CONTENTS
Page
1. General (Soviet Atomic Aid to Underdeveloped Coun-
tries of the Free World) . . . . . . . . . . . . . . 1
II. South Asia . . . . . . . . . . . . . . . . . . 4
A. . Soviet Offer to Afghanistan of Free Project
Surveys . . . . . . . . . . . . . . . . . . . 4
B. Soviet and Czechoslovak Offers of Civil Aircraft
to Nepal . . . . . . . . . . . . . . . . . . . 5
C . India . . . . . . . . . . . . . . . . . . . . 5
III. Southeast Asia (Indonesia) . . . . . . . . . . . . . 6
A. Delivery of Bloc Aircraft . . . . . . . . . . . . 6
B. Soviet Credits to Private Enterprise . . . . . . . 6
IV. Middle East and Africa . . . . . . . . . . . . . . . 7
1. Discovery of Natural Gas in Northern India
by Rumanian Drilling Team . . . . . . . . 5
2. Visit to Bloc of Indian Trade Promotion
Mission . . . . . . . . . . . . . . . 5
A. Syria . . . . . . . . . . . . . . . . . . . . 7
1. Visit of Nasser to the USSR . . . . . . . . . 7
2. Chinese Communist Offer to Construct Paper
Factory in Damascus . . . . . . . . . . .
Ethiopia . . . . . . . . . . . . . . . . . . .
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1. Possible Construction by Czechoslovakia
of a Cement Plant in Eritrea . . . . . . . . 9
2. Czechoslovak Offer of Military Aircraft . . . 10
Europe . . . . . . . . . . . . . . . . . . . . 10
A. Soviet Suspension of Developmental Credits
to Yugoslavia . . . . . . . . . . . . . . . . . 10
B. Soviet Credit Offer to Finland . . . . . . . . . . 12
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