EASTERN EUROPE OFFERS LIMITED MARKET FOR MIDDLE EAST OIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000601950004-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 3
• Document Creation Date: December 27, 2016
• Document Release Date: March 2, 2012
• Sequence Number: 4
• Publication Date: February 6, 1970
• Content Type: MISC

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Declassified in Part - Sanitized Copy Approved for Release 2012/05/23: CIA-RDP08SO135OR000601950004-3
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Declassified in Part - Sanitized Copy Approved for Release 2012/05/23: CIA-RDP08SO135OR000601950004-3
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/23: CIA-RDP08SO135OR000601950004-3
EASTERN EUROPE OFFERS LIMITED MARKET FOR MIDDLE EAST OIL
Recent East European barter
arrangements with the Middle East
for oil will result in only a
small flow for at least several
years. National oil companies
of the Middle East states wel-
come these opportunities, how-
ever, to get a foothold in the
oil market. I?r.,,
Moscow now supplies about
85 percent of the 35 million tons
of oil required by Eastern Eu-
rope, except Romania which is a
net exporter of oil. Commitments
made to East European countries
in return for investment in So-
viet industry probably ensure
that the USSR will remain their
major supplier at least through
the mid-1970s. Both the USSR and
Eastern Europe are expanding the
existing pipeline network so
about 45 million tons of Soviet
oil can be delivered in 1975.
At that time an additional 10-15
million tons per year probably
will also be delivered by sea.
Faced with oil production
problems and a dependency on oil
sales to Western countries for
substantial hard currency earn-
ings, the USSR has encouraged
East European countries to de-
velop other sources of supply.
These countries are participating
in a number of long-term deals
calling for the delivery now of
industrial goods and technical
services that can be paid for
later with oil shipped by na-
tional oil companies in the Mid-
dle East. Hungary will send
$15 million worth of machinery
and equipment to Iraq for the
development of the North Rumaila
field where the USSR also is in-
volved. Recently, Czechoslo-
vakia agreed to provide equip-
ment, valued at $32 million, for
constructing a refinery at Basra.
Both Czechoslovakia and Hungary
also have agreements with Iran
which they have recently reaf-
firmed.
The closure of the Suez
Canal complicated the delivery
of oil to Eastern Europe. The
construction of pipelines is be-
ing considered by some Arab
countries and could relieve this
situation. A new trans-Israeli
line paralleling an existing one
that has carried small amounts
of Iranian oil for transshipment
to Romania is about to go into
operation and may be used to
transport more Iranian oil des-
tined for Eastern Europe.
Czechoslovakia and Hungary
find their landlocked positions
to be a major obstacle to im-
porting oil from the Middle East.
A pipeline to those countries
from the Mediterranean Sea across
Yugoslavia has been discussed for
several years but probably could
not be operational before 1974.
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 Declassified in Part - Sanitized Copy Approved for Release 2012/05/23: CIA-RDP08SO135OR000601950004-3
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GREECE INCREASES TRADE WITH COMMUNIST COUNTRIES
Greece's recent trade agree-
ments with several Communist coun-
tries represent a new approach
to its balance-of-payments prob-
lem. Athens has hastened to point
out that the agreements do not
signal a political opening toward
the East, but the moves, neverthe-
less, enable Greece to express ef-
fectively its pique with those
Western nations that openly oppose
the regime.
Increasingly concerned over
a growing trade deficit, Greek
officials have recently signed
trade agreements with the USSR,
Albania, Bulgaria, and Hungary.
Greece will probably also estab-
lish a Chamber of Commerce mis-
sion in East Germany to promote
the sale of Greek products there.
The agreements are mutually advan-
tageous because the USSR and
Eastern Europe are often pre-
pared to accept surplus Greek
agricultural products in payment
for capital goods, but prospects
for an increase in trade appear
limited.
Although the new agreements
call for some rise in trade be-
tween Greece and the Communist
nations, the recent charges in
the Western press of substantial
increases are greatly exaggerated.
A Soviet Embassy official in
Athens has explained that the
new trade agreement is essentially
an extension of the old one, with
the level of trade unchanged.
The actual volume of Soviet trade
since 1966 has been ?ehwthe.
`level foreseen by past agreements.
Greece and the USSR now will at-
tempt to close the gap between
agreement and performance. With
the exception of the Albanian trade
agreement, which is entirely new,
the situation has been similar
with other East European nations.
The publicity that the re-
gime has accorded these Eastern
trade moves, however, may re-
flect Athen's pique over its
treatment in the Council of
Europe last December. At that
time, the Greek regime withdrew
from the council, accusing its
members of interference in Greece's
internal affairs, and threatened
economic retaliation. Foreign
Minister Pipinelis subsequently
outlined the three basic criteria
for future Greek trade agreements:
friendship with all nations re-
gardless of the government; mutual
respect for national sovereignty;
and noninterference in internal
affairs.
This obviously excludes
many Scandinavian countries and
may ultimately involve the UK
and West Germany, because of their
support for the Scandinavian pro-
posal to expel Greece from the
Council. Thus, these new trade
agreements may constitute a signal
to the West that Greece is not al-
together dependent upon traditional
friends. Athens appears well aware
of the potential political prob-
lems involved in dealing with
Communist nations, however, and
has assured Western officials
that it will exercise close con-
trol over any Soviet technicians
involved in projects in Greece.
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