SOVIET EGYPTIAN ECONOMIC RELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900030182-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 19, 2016
• Document Release Date: August 18, 2005
• Sequence Number: 182
• Publication Date: November 1, 1974
• Content Type: REPORT

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Economic Relations
Soviet--Egyptian economic relations have remained
essentially unchanged despite the pre-war ouster of
Soviet forces, the temporary postwar arms embargo, and
other political manuevers. Barring some major political
upheaval no change is likely in the immediate future.
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For the next several years Moscow probably will continue
to be a major supplier of arms to Egypt. Cairo's postwar
efforts to diversify arms procurement have only been
partially successful. The Egyptian military still must
rely on Moscow for spares to maintain its present arms
inventory, for replacement of certain major pieces of
equipment, and for easy credit terms.
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I The USSR is unlikely to terminate
its relationship Such a move
would rob Moscow of its principal lever in Middle Eastern
affairs and eliminate any hope of eventual repayment. The
probable outlook is for Moscow to continue to supply arms
on old contracts while endeavoring to exact political
concessions and some repayment in exchange for larger and
longer term agreements.
It is also in the interest of both countries to continue
a substantial portion of present bi-lateral trade. In
the future, as in the past, Egypt will need the USSR as a
buffer market for surplus cotton, an arrangement that thus
far has effectively placed a floor under extra long staple
cotton prices in the West. In recent yea:--s Cairo has also
supplied the USSR with large quantities of exotic and out
of season agricultural produce and with increasing quantities
of manufactured goods, some of it produced in Soviet built
factories. Most of these goods would be difficult to sell
in the West, but Egyptian food and consumer goods, in
pe.rticular., find a ready market in poorly stocked Soviet
stores. The USSR's interest in continuing this trade has
almost certainly been enhanced by the prospect that increased
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postwar Egyptian procurement in the West will reduce the
chronic Egyptian deficit that previously characterized
bi-lateral transactions with Moscow.
The lack-luster Soviet economic aid program that has
prevailed in Egypt, since completion of the Aswan High Dam
probably also will continue. Over the last several years
Soviet supported development projects have progressed
steadily
Recently
signed agreements to further expand the I ielwan steel mill
and to increase the size of the newly installed aluminum
plant indicate Soviet willingness to continue at least a
modest economic aid program. Since Egyptian preference for
Western goods and services probably will assure little
acceleration in Soviet aid utilization
The Egyptians, however,
may use further aid negotiations with the USSR to prod
other prospective. donors and investors. Cases in point
are thi,. recently announced request for a Soviet nuclear
generator, also requested from the US, and alleged
discussions of a Soviet iron and steel complex in Alexandria,
z~ow under negotiation with Brazilian, Japanese and West
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MEMORANDUM FOR: The Record
In response to a rec uost from
N'.11/Egypt the attached cortiments on
r;conciriic Relations
were prep :rc:ciy
for inclusion in ric -ing papers
being assembled at State for
Secretary-'-
4 November 1974
(DATE)
F
IoAUGH54 101 WHRLPILCHACMES FORM 100101
Distribution: (S--Pro-ioc't- ti5Rti)
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I.