EMBARGO OF COPPER WIRE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61S00527A000100180009-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 8
• Document Creation Date: December 12, 2016
• Document Release Date: September 5, 2000
• Sequence Number: 9
• Publication Date: September 25, 1957
• Content Type: MEMO

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r'~~ ^cranciun belo~r, and the accomoanying paver, will be considered at
e o+i~^ittee meetint* of Tuesday, October 1, 1957_7
TO: THE CHAIRMAN, EXECUTIVE COD 1TTEE
FROM: Defense 1, tuber
SUBJECT: Embargo of Copper Wire
1 A'O?A1TDUM?
apply.
trade agreement negotiations to which the "prior cavnitment" policy will
It is urged that this matter be expedited due to the pending U.K.-USSR
the Executive Committee develop and propose a subsequent course of action.
1. In view of'the extended negotiations and assuming the results of
the current bilaterals between-and U.S. relative to the embargo
of copper wire will prove negative, the Defense Department suggests that
25X6A
2. Defense"propooesthat the USDEL, as soon after October 1 as
possible, introduce in COCOM a proposal to upgrade copper wire to embargo
status. To offset possible with other exporters of copper
wire, it is further proposed that the U.S. engage in bilaterals. with such
countries. In both instances it is suggested that a unilateral version
25X6A of the agreed paper, subject: "The Nature and Extent of the
Dependence of the'Sino-Soviet Bloc on Imported Supplies of Copper?" be
usod along with-.tither studies understood to have been developed by State-
on the net value1ie g. (processing) of exports by-,countries concerned.'
3. Defens caling attention to the high etrateglavalue placed 4 4z_
may be reflected;;n subsequent courses of action relative to the.inmplom9n
tation of the recently approved U.S. economic defense policy.; It is ;
anticinatod that.manv facets of 1nteraeenav controversy msv.be resolved in
to conclude COC.OM negotiations on this commodity so: that the experience`
on all forms 600pper'=by the U.S., considers it to be urgently important,
interpretati _ be ,revealed. A .;..
 fed For 00
Will= 9. 1S00527A0001991QQfl, -9
THE '' ATURE AND EYTE 7 OF THE DEPENDENCE OF THE
"
NOSOVIET BLOC ON IMPCRTED SU'PLIES OF C
-t'OPPER
The copper requirement of the Bloc for 1956.(exclusive of stockpiling
is estimated at 660,000 tins.
In 1956,'the Bloc produced about 460,000 tons of copper and imported
about 115,000 tone,.of which 85,000 tons consisted of bare wire from COCOM
countries.
Consumption in 1956 is estimated to have been as follows:-
Military production for current use 120,000 tons
Telecommounications networks, mainly
strategic stockpile, civilian industry still went short by some 50,000 tons,
probably met; in full but, even if some 35,000 tons were withdrawn from the
I \
61o,ooo tons
Essentfal military production and telecommunications demands were
g
w
to match requirements. The copper shortage is likely to become more seriaaip
or that `that; deice to make up the arrears of stockpiling will weaken. On the
other head'production will increase but 4ndi
en au lie
ill till f ;1
there was in 1956 a shortfall of 220.,000-tons, consisting
the civilian econoW, the probable withdrawal of 35,000 tons
0
00 tons,
astockpila, and the failure to add 135,000 tons to it.
and telecommunioations requirements-will increase, and we
71
lave no evdence.that the military demand for current use is likely to diminish
wtth repercussions :both military and. civil programs.
for military use. 90,000' n
Civilian'iiiidustry. (electrical
An anncuail allocatioei for military stockpiling might be about 135,000 tons..
pmant, atomic energy etc.) X00,000 n
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1. Exports of copper from COCOt4 countries to the Soviet Bloc were placed
under quantitative control in August 1950, and under embargo in April 1951.
After the revision of the lists in 1954 bare copper wire was transferred
to the "!latch List" where .it now stands, other primary forms of the metal
remaining embargoed.
s 2. The present paper is produced jointly by U.S. defence and intelligence
representatives, who have expzessed the view that recent exports of copper
wire from CCCOM countries to the Bloc have frustrated the embargo over the
metal
3. Copper is widely used throughout all highly industrialized economies,
and is a classic example of 'n item whose uses range from the wholly military
to the purely civilian,-through sectors of the econariy whose normal uses are
in the civil field in peacety=n-c, but which contribute both to a country's
military effort in wartime and to its peacetime preparations for or against
war - especially in times of tension.
4. It is impossible to estimate the military requirement for copper and
products containing it without considering what kind of war the Soviet Bloc
may have in mind. Soviet interest in nuclear weapons and in arrangements
for their delivery is well known and nuclear energy requirements are believed
to form an important constituent of the total demand for copper within the
Bloc - though in the later sections of this paper the nuclear requirement is
included in our estimates of civilian consumption. Nevertheless, the avail-
able intelligence suggests that the emergence of the new weapons has not led
the Soviet planners to abandon the concept of a war of considerable duration,
necessitating the prior accumulation (as raw material or in finished forms)
of scarce materials such as copper. Nor has the Bloc abandoned programs of
t
ockpiling scarce materials, including copper - a program, which is prepon-
d
era" ly strategic in conception - though some diminution of the copper
stockpile has been forced on it.
5. Ln the talks preceding the issue of this paper
the main emphasis has
,
been on the relation between total supplies of coyer available to +_:e Bloc
and current military requirements. The following sections of the paper treat:..
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( .. I A"A
tons) ?;._
(b) The volume, sources and types of Bloc imports of copper.
(o) The requirements different sectors of the econcaay, and
the incidence of s falls in allocation.
(a) Bloc production of copper.
(d) The current rates of allocations of copper in the Bloc to
different sectors of the econoaW, and changes in stocks
and reserves.
PRO? TION
6. The latest information on Soviet copper production has resulted in a
downward revision of earlier estimates for each year since 1945. These re-
vised estimates show a steady increase in Bloc production from 136,o0 tons
in 1945 (as against an earlier estimate of 166,000 tons) to 461,00 tons in
1955 (as against an old estimate of 545,000 tons). The resulting cumulative
difference between old and present estimates of the total amount produced in
postwar years amounts to 615,000 tons.
7. The following table shows latest estimates of Bloc production in 1950,
1955 and 1956, and of planned production for 1960 (all. in thousands of metric
457
8. Not`onh>bas Bloc production throughout the postwar years been consistently
lower, than vas previously estimated; the Soviet Union, which Is tine only large
producer in the Bloc, failed by a substantial margin to achieve its planned
production in the Fifth Five-Year Plan (1951-55) and apparently failed to
achieve any increase. in 1956 over its 1955 production figure of 377,000 tons.
ftbage-2001/08/30 : Ct '=l l "1 '1b0180004-'9'
Satellites
and Coutnunist China
39 286
84 461
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for 1960 will be exceedingly diffictlt in view of the Soviet Union's shortage
of high-grade copper ore deposits and its recent record of failures.
It fell 90,000 tons short of the production for 1955, and in 1956
there was little ar no improvement. Achievement of the production planned
BLOC IHP(RTS
9. The Sino-Soviet Bloc as a whole is a large importer of, copper. Exports
from the Bloc to countries outside are negligible.
10. Bloc imports of copper have varied between about 90,000 and 140,000 tons
annually over the last four years. In 1953 and early 1954 these imparts
were mainly in primety forms and advantage was taken of technical weaknesses
in the operation of the controls, weaknesses which us" largely eliminated in
January 1955. Since August 1954, imports have been mainly in the form of
bare wire from COCOM gauntries and the total volume has been much the same as
before.
from non Bloc countries, but received a considerable quantity via Poland.
The total imports shown above are estimated to have been distributed within
11. Total Bloc imports in 1956 are estimated to have been between 110,000
and-120,000 tons, of which 85,000 tons consisted of bare wire from COCOM
countries. 'China did not import any significant quantity of copper directly
Lion from one year to another. There are already substantial orders. for de-,
600,000 tons represent an addition of 22 per cent, to total Bloc production of
2,720,000 tons, and there has been relatively little variation in this proper-
on the other hand remain in China. Over the years 1950-1956'total imports of
their industries (especially those of Caechoslovakia and Eastern Germany) are
used by the Soviet Union to meet Soviet requirements -for manufactured goods.
In addition to the amounts shown they may have received further quantities
from the Soviet Union to help them fulfil Soviet orders. Chin's imports
U.S.S.R.
European Satellities
China
The large proportion of the total absorbed by the satellites is believed to
reflect not only their low level of production, but also the extent to which
livery in 19570-d''
CONFIDENT. k, s
Appr For.ReIease!1961108130 . 91-6w M
1 h
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RESERVE STOCKS
12. In 1945 the Soviet Union had a large stockpile of copper which was
accumulated mainly from United States lend-lease shipments during the war.
This stockpile has been partially run down from time to time and the net
withdrawals are estimated to have totalled some 100,000 tons by January 1956,
leaving a residue of about 585,000 tons.
REQUIREMENTS AND CONSUMPTION
13. It has long been recognized that copper is one of the few raw materials
which are in chronic short supply in the Soviet Bloc. Because the severity
of this shortage is an important element in the present discussion, a realistic
assessment of requirements is essential. Since the Soviets never publish re-
quirements data - as distinct from production plans - we have estimated re-
quirements from deductions drawn from pre-war statistics and post-war Western'
experience, and from what, is known of their major copper consuming programs.
Requirements
14. It can be demonstrated, that in any major industrialized, steel-producing
country, there is in peace a fairly steady ratio between the production of
crude ingot steel and the consumption of copper. This ratio varies slightly
from country to country in accordance with trade patterns and other factors,
but for the United States, some other Western European
countries, and it has been remarkably constant as between the 1930a
and Post-war years. 25X6A i 25X6A
15. Soviet figures for steel production are available for both pre-war and
post-war years, Statistics on Soviet copper consumption are available for
the 1920e and 1930e but not for the poet-war years. In order to estimate
the post-war requirement we have assumed that, as in the West, the post-war
steel,/coppery,ratio in the Bloc has been that known for the pre-war period.
16. 1136 tb s. basis, the Soviet Bloc's copper requirements for current con-
sumption,,-including military production, in 196 would be about 660,000 tons..
.Bloc requirements estimated by this method would thus have exceeded indigenous
production by.200,000 tons or 1+3 per cent.. A similar aaloulation based on
the original published Plan tar 1960 suggests that the demand will reach
96b,000 tona.hl that year.
 Consumption
17. -After comparing estimates of Soviet bloc military consumption derived
tinue expenditures at something like this level over a number of years.
Taken together military end-items and telecommunications m e therefore
estimated to have used 210,000 tons of copper in 1956 or 44 per cent. of
indigenous production.
from Soviet and Satellite budgetary allocations and from the Bloc's production
of military end-items for current use by the forces in being (including com-
ponents and spares), it is estimated 120,000 tons of Bloc copper was consumed
for these items in 1956.
18. 90,000 tons are estimated to have been used in the wires, cables, re-
ceivers, transmitters, etc., of the communications networks. These communi-
cations facilities are designed to a strategic plan, and to a large degree
are related to the requirement for setcure, high-capacity systems capable of
meeting air defence demands. Part of the total system is used for civilian
communications in peacetime, but much of it is even now used mainly for
surveillance and military training. The telecommunications consumption of
copper is preponderantly of a military nature. In order to overcome the
inadequacies of the present communications system, the Bloc will have to con
mated total requirement of 660,000 tons, there remains a requirement of 450,000
tons for the whole of the rest of the industrial economy of the Bloc. Domestic
production and imparts amounted to 575,000 tons (see paragraphs 7 and 11) from
which, after deduction of the 210,000 tons, only 365,000 tons would remain for
general industrial use. An estimate of consumption in the main copper using
industries suggests, however, that civilian industry as a whole must have used
rather more than this - probably about 400,000 tons, of which considerably
more than half went to electrical equipment. Domestic production and imports
must therefore have been supplemented by 35,000 tons drawn from the strategic`'
210,000 tons (which we believe were met in full) are deducted from the esti-
20. When demands of military end-items and telecco?uaioations amounting to
tion of the military supporting programs will not be undertaken in this paper..
notably those arising from the atomic energy program, but fhor identifica-
19. Some other -.industrial.uses are closely related to military requirements
CONFIDENTIAL
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STOCKPILING
21. In the above calculation, we have made no allowance for building up
strategic stocks. On the evidence set out in paragraph 4 the Bloc wo-iid have
to have reserves on hand before the onset of any major hostilities in order
to meet the impact of expanded wartime rates of use. These reserve stocks,
whether primary metal or in fabricated forms - e.g. ammounition, weapons,
military vehicles, eta. - are just as much a military requirement as the
equipment which is now being used. But as indicated above we believe that
copper shortages have made stockpiling impracticable, and indeed that the
Bloc has had to withdraw copper from reserve, particularly in the past two
years.
22. The magnitude of this set-back - measured in tons of copper nct placed
in reserve - can be assessed only by assuming that the Bloc has a s:ockpi~.e
objective which .it would hope to achieve within a reasonable period. If we
assume that the objective is to provide for two years' war tiaae consumption,
the amount might be 1,250,000 tons. If the Bloc wished to build up to this
figure from the present level in five years, the annual installment would
have to be about 135,000 tons.
-7-
C0I IFIID 1. NTJAL
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