COMMUNIST AID ACTIVITIES IN NON-COMMUNIST LESS DEVELOPED COUNTRIES, 1980

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000200390002-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 22, 2016
• Document Release Date: April 6, 2012
• Sequence Number: 2
• Publication Date: May 1, 1981
• Content Type: REPORT

9F,)(1
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National vV.. cL
Center
Communist Aid Activities
in Non-Communist
Less Developed Countries, 1980
Secret
ER 81-10168
May 1981
Copy 3 4 2
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rranonai secret
Foreign
Assessment
\a' Center
Communist Aid Activities
in Non-Communist
Less Developed Countries, 1980
Information available as of 24 March 1981
has been used in the preparation of this report.
OER,
The author of this paper is Office of
Economic Research. Comments and queries are
welcome and should be directed to the Chief, Trade
and Aid Branch, Near East-South Asia Division,
International Development
The substance of this publication has been
coordinated with the Bureau of Intelligence and
Research of the Department of State, the Defense
Intelligence Agency, and the Agency for
Secret
ER 81-10168
May 1981
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Figure 1
Communist Countries: Aid Agreements With Non-Communist LDCs
Military
Billion US $
L China
Eastern Europe
USSR
1955-70 71 72 73 74 75 76 77 78 79 80
Annual
Average
Economic
Billion US $
China
Eastern Europe
USSR
Deliveries
1954-70 71 72
Annual
Average
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Summary
Communist Aid Activities
in Non-Communist
Less Developed Countries, 1980
In 1980, record-breaking Soviet arms sales and large economic accords with
select LDCs gave new impetus to Soviet penetration of the Third World.
Bolstered by large amounts of East European assistance to Soviet clients
($625 million of military and nearly $1 billion of economic aid) and accom-
panying high levels of Cuban and East European personnel, the USSR
strengthened its supplier-advisory position in a number of key Third World
countries. China's military sales failed to pick up momentum, despite an all-
out sales campaign begun early in the year. Nevertheless, its commitments
of economic aid regained some lost ground, rebounding to $325 million-a
level not reached since 1975. 25X1
Massive orders from Libya, Algeria, and India drove Soviet arms sales to the
Third World to $14 billion in 1980-a record even in real terms, and nearly
double the 1979 total. Libya, whose $8 billion order moved it to the top of
Moscow's arms buyers list, accounted for nearly 60 percent of Soviet sales,
followed by a long-delayed multiyear purchase accord by Algeria, report-
edly worth at least $3 billion. As in most recent years, Moscow concentrated
its sales efforts on the wealthy radical Arab states, and there is ample
evidence to suggest that without the Iraq-Iran conflict, Soviet arms gains
would have soared even higher last year. Moscow's continued desire to
perpetuate relationships with governments that are politically or strategi-
cally important to Soviet interests was the motivation behind the year's third
major deal, a $2.4 billion agreement with India. 25X1
As in the case of the military program, a few large commitments to favored
LDCs drove Soviet commitments of economic aid to $1.8 billion in 1980.
Although well below the 1979 peak, 1980 was Moscow's fourth highest
commitment year, still surpassing most earlier years in real terms despite
the effect of higher prices. 25X1
associated, carrying the usual harder repayment conditions.
The large amounts and character of Soviet economic assistance to India,
Afghanistan, and Ethiopia-which accounted for about two-thirds of the
USSR's 1980 aid-reflected Moscow's deep political interests in those
countries. The $800 million credit to India was the largest ever to that
strategically located country and was provided on exceptionally easy repay-
ment terms. At the same time, Moscow made an unprecedented $330
million of grant aid available to Ethiopia and Afghanistan-for unusually
large amounts of commodities to Afghanistan and for oil subsidies to
Ethiopia. Other credits to Peru and Algeria for power plants were trade
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Although it is unlikely that Moscow can match the $14 billion 1980 arms
sales figure this year or next, we feel certain that orders for Soviet arms will
remain strong as major buyers complete ongoing negotiations for new
military supplies. Moreover, the surge in arms sales this year virtually
ensures a continued upward trend in Soviet arms delivered in the next two to
three years, resulting in annual hard currency earnings in excess of $3
billion. Moscow and Eastern Europe also have several multimillion-dollar
development agreements in the discussion stage, which should sustain recent
economic agreement levels. The USSR and Eastern Europe will continue
their profitable sale of technical services-an effort that earns at least half a
billion dollars of hard currency annually.
Cuba, with 31,000 military personnel in the Third World, continued to
support Moscow's military supply initiative, particularly in Africa.
China's military sales failed to pick up momentum, despite an all-out sales
campaign begun early in the year. Nevertheless, its commitments of eco-
nomic aid regained some lost ground, rebounding to $325 million-a level
not reached since 1975.
North Korea became a major arms source to LDCs for the first time last
year.
Values of military agreements and deliveries are
US dollars at current rates.
The term Communist countries refers to the USSR, China, and the following countries of
Eastern Europe: Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and Romania.
Included also are data on Cuban, North Korean, and Yugoslav aid to and
personnel present in LDCs.
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The term less developed countries includes the following: (1) all countries of Africa except the
Republic of South Africa; (2) all countries of East Asia except Hong Kong and Japan; (3)
Malta, Portugal, and Spain in Europe; (4) all countries in Latin America except Cuba; and (5)
all countries in the Middle East and South Asia except Israel. Cambodia, Laos, and Vietnam,
which became Communist countries in 1975, are reported on for prior years for historical
reasons.
Within the aid context, the terms extensions, commitments, and agreements refer to pledges
to provide goods and services, either on deferred payment terms or as grants. Assistance is
considered to have been extended when accords are initialed and constitute a formal
declaration of intent. For economic aid, credits with repayment terms of five years or more
are included. Where terms are known, the credits are designated as "trade credits" if
amortization is less than 10 years. For military transactions, all sales are included-whether
for cash or provided under credits or grants. The terms drawings and disbursements refer to
the delivery of goods or the use of services. 25X1
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Summary
The Sales Program 4
Looking Ahead 6
Economic Aid: Still at High Levels
7
Eastern Europe: A Few Large Allocations
9
China's Program: A Modest Effort
10
Technical Services: Still a Big Moneymaker
10
LDC Training: Continued Growth
10
Appendix
Regional Developments, 1980
13
Latin America
East Asia
1.
Communist Military Agreements Concluded with LDCs, 1980
2
2.
Communist Economic Aid Extended to LDCs, 1980
8
3.
Communist Economic Technicians in the Middle East and North
Africa, 1980
13
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1. Communist Countries: Aid Agreements With
Non-Communist LDCs
USSR: Military Agreements by Major Non-Communist LDC 3
Recipient
Communist Military Personnel in Non-Communist LDCs, 1980
USSR: Economic Agreements by Major Non-Communist LDC 9
Recipient
6. Economic Technicians from Communist Countries in
Non-Communist LDCs, 1980
7. Middle East-North Africa: Communist Military and
Economic Agreements, 1955-80
8. South Asia: Communist Military and Economic Agreements, 20
1955-80
9. Sub-Saharan Africa: Communist Military and Economic 24
Agreements, 1955-80
10. Latin America: Communist Military and Economic Agreements, 30
1955-80
11. East Asia: Communist Military and Economic Agreements, 34
1955-80
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Communist Aid Activities
in Non-Communist
Less Developed Countries, 1980
remainder.
Soviet sales, which began rising sharply in the 1970s,
were triggered by the opening of Moscow's modern
arsenal to LDCs as a reaction to Israel's deep penetra-
tion raids of Egypt, and a burgeoning new military
supply program in the Arab states. Except for select
cases in the Middle East, before that time Soviet arms
supplies had consisted largely of outmoded, recondi-
tioned equipment to a few countries, often unable to
buy arms from other suppliers. The increase in the
value of sales during the 1970s reflects the more ad-
vanced and costly weapons sold and the fact that the
USSR began charging much higher prices for its
equipment. But volume too was up. After 1973, in-
Massive orders from Libya, Algeria, and India drove
Soviet sales of military equipment to the Third World
to a record $14 billion in 1980 (table 1). Together the
three major arms buyers accounted for more than 95
percent of the total, with Afghan, Ethiopian, Peruvian,
and Tanzanian purchases making up much of the
munitions, spare parts, and support items.
with Soviet consent) in Iraq's war with Iran and
supplemented Libyan orders from the USSR with
Eastern Europe's $625 million of sales in 1980
matched 1977-79 annual levels. More than 60 percent
of 1980 sales went to Libya and Iraq as East European
countries assumed a major resupply role (presumably
remainder.
Chinese sales ($115 million) fell to one-half the 1979
total despite a government marketing campaign to
boost overseas orders for military equipment. Pakistan,
China's largest arms customer, accounted for more
than one-half of total sales in 1980, while Bangladesh
(with purchases of $17 million worth of tanks, artillery,
and mortars) and a few African countries made up the
sales.
North Korea broke into the top 10 rank of world arms
suppliers for the first time last year, outselling neigh-
boring China almost four to one. Libyan and Iranian
purchases of ground weapons and munitions made up
90 percent of P'yongyang's $421 million of military
might have climbed even higher
The USSR: Aggressive Arms Sales
Lengthy negotiations had signaled big deals with
Libya, Algeria, and India for 1980, but the value and
scope of the new agreements went well beyond our
earlier estimates and surpassed any previous orders
placed by these governments with the USSR. If not for
the outbreak of the Iran-Iraq war, which halted Soviet
sales to those countries, Moscow's total arms sales
dividual sales became larger and less frequent, mostly
because of longer leadtimes for advanced equipment-25X1
one to three years-and the need to schedule require-
ments further ahead. 25X1
Moscow's arms sales drive has been dynamic, aggres-
sive, and focused on the countries on its borders and in
strategic locations of the Middle East and the northern
tier of Africa. Together these countries have accounted
for more than three-fourths of total Soviet arms
transactions with the Third World since Moscow's first25X1
sale of equipment (to Egypt) in 1955. Even though
Moscow has lost a few important clients, it has more
than replaced these with higher sales to other clients,
resulting in a rise in 1980 sales to equal roughly those
of the United States for the first time (if calculated in
terms of what it would have cost LDCs to buy the arms
from US firms; although in terms of the actual dollar 25X1
cost to LDCs, Soviet sales surpassed those of the
United States by 40 percent). 25X1
The regional arms buildup following the Middle East
war and the increased wealth of the Arab states accen-
tuated the concentration of sales to the region, with
Soviet performance turning more and more on the
buying practices of this select group of clients. In 1980,
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Total
USSR
Eastern
Europe
China
North
Korea
Other
North Africa
11,467
11,000
107
10
250
100
Algeria
3,000
3,000 _
Libya
8,457
8,000
107
250
100
Tunisia
10
10
Sub-Saharan Africa
438
252
157
25
Angola
31
13
18
Ethiopia
131
126
5
South Asia
2,656
2,555
25 76
Afghanistan
173
148
25
Bangladesh
17
17
India
2,407
2,407
Pakistan
59
a Including all validated military agreements for military supplies
provided (a) for cash, (b) under credit arrangements, or (c) as grant
aid. Values of military agreements are based on export prices
charged LDCs.
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Figure 2
USSR: Military Agreements By Major Non -Communist LDC Recipient
Billion US $
Algeria Algeria
The Big Three in 1980
Libya ordered up to $8 billion of Soviet arms in 1980,
boosting the value of orders placed with Moscow since
the 1973 Middle-East war to nearly $15 billion. Tripoli
now leads Moscow's list of arms clients and assumes
second rank behind Saudi Arabia among active arms
buyers in the Third World. The new deal (the third in a
series of major Soviet buys), together with another $2
billion of orders placed with other suppliers in 1980,
equaled the value of all Libyan military purchases
made during the 1974-79 period and will drive annual
Soviet deliveries to Libya up to $2 billion or more over
India
Algeria
for example, Libya's order accounted for about 60
percent of Soviet sales; Algeria's, another 20 percent.
the next couple of years. We also expect these ship-
ments to further upgrade the Libyan arsenal with 25X1
higher performance MIGs and more lethal ground
weapons.
Since the 1973 war, the Soviets have activated rela-
tions with Libya to bolster Moscow's deteriorating
position in the Middle East. The USSR has overlooked
deep-rooted political differences for economic and
political gain. Aside from large hard currency earn-
ings, Moscow has gained access to Libyan port facili-
ties for its merchant vessels; has gradually been able to
expand the number of military and economic techni-
cians in Libya; and has gradually developed a viable
working relationship in the Libyan leadership. The two
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nations, united in their antipathy for Egypt's negoti-
ated settlement with Israel, have also pursued joint
interests in Libya's support of rebel groups and other
LDCs not openly supported by the USSR.
Heavier Soviet arms deliveries should be accompanied
with a like increase in the Soviet military presence in
Libya-now estimated at 1,800 military advisers and
technicians.
The Algerian agreement, reported in 1979, was not
actually finalized until 1980. Algiers set aside its dis-
approval of the Soviet invasion of Afghanistan in clos-
ing its biggest military deal yet with Moscow. The $3
billion agreement is nearly twice the value of all earlier
orders combined, and scotches speculation that Alge-
ria was attempting to lessen its dependence on the
USSR for arms by diversifying. Under the 1980 ac-
cord, Algeria will be able to field several new T-72
tank brigades, improve its close air support capability
with more helicopter gunships, and increase the size of
its fleet.
Political considerations dominate the Soviet-Indian
military relationship. New Delhi's $2.4 billion in new
Soviet hardware purchases will keep the Indian mili-
tary closely tied to Moscow, laying to rest the diversi-
fication efforts implemented under the previous gov-
ernment. As in the past, unusually generous repayment
terms and inclusion of licensing privileges not afforded
other clients made the Soviet offer irresistible and
underscored India's status. The terms could have been
influenced by the Soviet need to mend fences with
India over Afghanistan or in recognition of the Gandhi
government's return to power
Indian military capability will undergo substantial im-
provement as a result of the new equipment acquisi-
tions, which began arriving before the year ended.
Hundreds of high performance MIG fighters (includ-
ing India's first MIG-23s and MIG-25s), specially
designed cargo and troop-carrying transports, large
numbers of armored vehicles and additional missile-
carrying naval vessels will be added to the inventory.
The Sales Program
Despite the concentration of Soviet arms on a handful
of key LDCs, the USSR still seizes opportunities to sell
arms for political gain anywhere in the Third World.
Despite the inclination of a number of Soviet arms
customers to reduce their dependence on Moscow and
diversify their supplier base, the advantages of buying
Soviet arms often outweigh such considerations.
Reversals in the Soviet program usually have stemmed
from political changes in the LDCs, rather than buyer
dissatisfaction. Thus, sales have increased and the
buyer list expanded because of (a) fast delivery,
(b) practically free technical services, and (c) access to
highly advanced equipment-all giving the Soviets an
edge over other suppliers.
Demand also continues high, even in the face of a more
hardnosed Soviet program. Earlier financial induce-
ments (large discounts from list price, eight-to-l0-year
deferred payments at 2-percent interest, and accep-
tance of local goods in repayment) were largely elimi-
nated by the mid-1970s except as political conces-
sions-as in the recent sales to India. With few
exceptions, Soviet sales now:
? Require payment in hard currency.
? Allow extended repayment periods or discounts only
to select buyers.
? Often require rich buyers, such as Libya, to pay on
delivery.
Nearly 16,500 Soviet personnel supported the arms
offensive in 1980, with assignments in 26 countries.
The number in any one country varies widely depend-
ing on (a) the size of the program, (b) LDC skills, and
(c) the policies of the recipient country. In India, the
Soviet presence has always been kept at a minimum
(150 in 1980); in Syria it has played a critical role. As
late as midyear 1980, the 3,000 Soviet technicians in
Syria reached down to the battalion level (and in some
cases even the company level). Cuban support (31,000
strong) for the Soviet effort has been concentrated
almost entirely in black Africa, as is the modest East
European effort.
Almost 95 percent of the 31,000 Cuban military per-
sonnel in the Third World were stationed in Angola
and Ethiopia. While Castro has been willing to supply
military services to these countries to enhance his own
image as a Third World leader, the large-scale Cuban
presence has been at Soviet behest. Cubans perform
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Figure 3
Communist Military Personnel in
Non-Communist LDCs, 1980
Other
Eastern Europe
maintenance functions on Soviet-supplied equipment,
train local personnel, and sometimes actually support
combat operations. The only large Cuban contingents
outside of Africa are in Nicaragua, where at least 200
Cubans provide advisory services, and in South
Yemen.
Military personnel from LDCs trained in the USSR
also increased (by 50 percent to about 2,750), primarily
because of the large numbers of North Yemenis sent to
the USSR for pilot and aircraft maintenance training,
and the 800 Afghan recruits selected for various kinds
of military instruction
Deliveries Less Buoyant in 1980
Soviet arms deliveries in 1980 fell 25 percent below the
1979 peak level as Moscow cut off shipments to Iraq
after the outbreak of war with Iran and the number of
big-ticket deliveries to Libya declined temporarily.
Still, deliveries of $5.7 billion in 1980 ranked as the
second highest on record-two and a half times more
than deliveries in 1974.
As a result of 1979-80 sales, equipment deliveries
should increase in the next several years. Improved air
and sealift capabilities-especially the upgrading of
arms handling facilities at the Black Sea port of
Nikolayev-will facilitate the expansion. Cargo han-
dling ability at the port, when finished later this year,
will more than double, and help reduce the backlog of
orders that has begun to build. Based on preliminary
research we believe that total Soviet arms deliveries
have actually run 15 to 20 percent a year above our
estimates because these do not include undocumented
follow-on support or services associated with LDC use
of the equipment provided Moscow's LDC customers.
The follow-ons consist of (a) maintenance, support-
such as spare parts, supplies equipment, and tools for
servicing and repair of weapons-and overhauls and
repairs performed for clients by the Soviets in the 25X1
USSR; and (b) all types of ordnance. The associated
services include training and technical assistance and
construction of military facilities.
Continuing research,
is looking into the add-on value of goods and
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services not included in the initial arms sales package
taking into account the flow of items required annual,.
to service previously delivered equipment and to re-
place and add to ordnance stocks. We calculate that
such deliveries could have amounted to as much as $1
billion in 1980,
Looking Ahead
Massive orders by LDC buyers and strong delivery
levels rounded out a decade of progressively larger
weapons transfers that made the USSR a ranking
arms supplier, a position it will try to protect into the
1980s.
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Although it is unlikely that Moscow can match last
year's $14 billion arms sales figure this year or next, we
feel certain that orders for Soviet arms will remain
strong-probably in the $8-10 billion a year range.
This will again depend on the actions of Moscow's big
customers:
? Syria is on the verge of concluding record reorders.
? Algeria and India are slated to make additional buys.
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? Iraq will want to replenish its depleted stocks quickly viet- and Chinese-made hardware; and (c) technical
after the war with Iran. services.
China's Move Into the Sales Market
China ended its traditional military assistance pro-
gram in January 1980 by adopting a commercial arms
export policy. Under the new policy, Beijing will sell an
expanded array of weapons to virtually any buyer for
hard currency instead of the limited weapons cate-
gories supplied earlier to select Third World countries
at little or no cost. Because China cannot compete
directly with major suppliers in the advanced ar-
maments market, it hopes to establish a demand for its
military goods by meeting specified LDC needs for
(a) reliable, older design, low-cost weapons, small
arms, and ammunitions; (b) spare parts for older So-
China still will make liberal price and payment conces-
sions to politically important clients, such as Pakistan.
Nonetheless, sales dipped (to $115 million) in 1980-
far below the $205 million high in 1979 and well off the
1980 sales target. Beijing did add Thailand to its list of
arms clients with a $1 million sale of mines and
antitank rockets that marked Bangkok's first arms buy
from a Communist supplier.
North Korea: Arms Merchant to Watch
In contrast with the Chinese, North Korea trebled its
arms sales, garnering $420 million in new orders in
1980. Fortuitous sales to isolated Iran ($130 million)
and record-setting reorders by Libya ($250 million)
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and Egypt ($40 million) raised P'yongyang from ob-
scurity to ninth rank as a world's arms supplier.
In its desperate quest to raise hard currency earnings,
North Korea has used its relatively large military
production base to exploit opportunities in the lucrative
Middle East arms market. Iraq's surprise attack on
Iran last fall provided an extraordinary opportunity for
P'yongyang to reap immediate lar a financial
paybacks as well as political gains.
As in the case of the military program, large commit-
ments to a few politically favored aid recipients char-
acterized Soviet economic aid to LDCs in 1980 (table
2). Despite a nearly 50-percent reduction in commit-
ments from the 1979 record,' a still-substantial $1.8
billion of new aid was extended on generally more
concessionary terms than before. Of the nearly $1
billion of East European aid-about the same amount
as provided in 1979-85 percent was concentrated on
four recipients. China's pledges, falling back to mid-
1970 levels, made nearly equal amounts available to
countries in Sub-Saharan Africa and the Middle East-
South Asian region
The USSR: Big Recipients Dominate
Moscow's $1.8 billion of pledges to select aid recipients
in 1980 (the fourth highest Soviet year on record) again
set the pace for the program, demonstrating the Krem-
lin's intent to pursue economic aid programs as an
important tool for penetrating LDCs (figure 5). As in
every other big commitment year, in 1980 large credits
to a few LDCs (India, Algeria, Peru, Afghanistan, and
Ethiopia) controlled the aid total. Discussions on
multibillion-dollar contracts with other recipients were
not completed by yearend.
' The comparison with Soviet aid performance in 1979 is based on
new information that raises our commitment estimate in that year
from $1.7 billion to $3.3 billion. The revised Soviet figure includes:
(a) $1.2 billion of 10-year, 4-percent credits for the Ajaokuta steel
Again in 1980 Moscow's aid targeted public sector
enterprises. Its largest pledges were for heavy industry
and power-Moscow's specialty areas in LDCs. An 25X1
$800 million pledge to India was Moscow's largest
credit of the year. Though no match for the open-
ended, wide-ranging frame agreements of the 1970s
and the billion-dollar or more single project accords of
1978 and 1979, the new aid was the largest single
credit Moscow has ever extended to India (even in real
terms). The agreement, signed during Brezhnev's visit,
supplemented the $2 billion of credits Moscow pro- 25X1
vided New Delhi in the past 25 years for public-sector25X1
heavy industrial development. Together with the large
military accords of 1980, the new economic assistance
was intended to repair and strengthen Soviet ties with
the returned Gandhi government.FI 25X1
Unprecedented grants of $330 million to Afghanistan
(for commodities) and to Ethiopia (as oil price sub-
sidies) were in addition to $85 million of other develop-
ment aid to the two countries. Assistance to Peru ($250
million) and Algeria ($315 million) was for power
installations. The aid carried far less attractive repay-
ment terms (up to 10 years and interest ranging up-
wards from~t) than provided Moscow's other
clients. I 25X1
On the whole, however, the aid was far more
concessionary than earlier programs because of the
political motivation for assistance to India, Afghani-
stan, and Ethiopia (together accounting for two-thirds
of the total). The credits to India are repayable over 125X1
years, after a three-year grace, at 2.5 percent, com-
pared with the usual 12-year, 2.5 percent offered India
and most other favored clients. The emergency aid to
Afghanistan and Ethiopia represented the largest
amount of grant aid ever provided LDCs by Moscow
and made unusually large amounts of commodity
assistance available to these recipients.
Soviet deliveries reached a new peak because of the 25X1
$155 million emergency commodity aid delivered to
Afghanistan and the large oil subsidies provided Ethi-
opia. At the same time, Brazil, India, Iraq, Pakistan,25X1
and Turkey received larger amounts of heavy equip-
ment as the USSR moved up completion dates for
major projects. These disbursements do not include
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Total Bulgaria Czecho- East Hungary Poland Romania
slovakia Germany
Sub-Saharan
Africa
403
179
Latin America
411
251
Bolivia
10
Brazil
150
Grenada
1
1
Egypt
396
..
South Yemen
15
..
Turkey
217
..
South Asia
1,220
1,040
Afghanistan
354
240
Bangladesh
33
India
800
800
a Excluding economic and technical agreements that were not known
to provide credits.
63 2 32 29 161
160 10
10 10
150
.. .. .. ..
300 .. .. .. .. .. 300 96
15 .. .. 15 .. . .
217 .. .. .. .. 217
114 93 20 1 66
114 93 20 1
33
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?7Ct:t Vt
Figure 5
USSR: Economic Agreements by Major Non-Communist LDC Recipient
Billion US $
possible Soviet balance-of-payments support through
the trade account (in the $100 million a year range in
1978-80) to poorer clients, such as Ethiopia and South
Yemen.
Soviet aid in 1980 was pushed up by the higher prices
charged for goods and services, a prominent factor in
rising aid totals for most of the past half dozen years.
While we are not able to quantify the exact amount of
inflation in the figures, we estimate that prices have
probably more than doubled since 1980. For example,
the price quoted by Moscow for increasing capacity by
half at the Soviet-built Turkish aluminum plant was
more than twice the cost of the original facility, com-
pleted in 1972. We also estimate that costs of Soviet
steel mills and power plants agreed to in 1980 were at
least 150 percent higher than for comparable facilities
in 1970-71. These increases would not be out of line
with world market prices on which Moscow says it
bases its quotation 25X1
25X1
None of the large multiyear framework accords signed
in earlier years was agreed to in 1980, thus eliminating
this major factor in raising the amount of the annual
aid total.
Eastern Europe: A Few Large Allocations
East European aid pledges showed a similarly narrow
pattern of distribution among recipients, with several
large lines of credit dominating the total. Big alloca-
tions to four major recipients were all for equipment
purchases. In spite of domestic problems at home,
Poland provided record amounts of credit, mostly to
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correct trade imbalances with Turkey and Brazil by
increasing their ability to buy Polish machinery and
industrial equipment. Czech development assistance to
Afghanistan-extended to cover escalating costs of
plants being built under 1973 credits-was more
concessional, as was Romania's 10-year, 2.5 percent
credit to Egypt.
China's Program: A Modest Effort
China's $325 million program, which rebounded in
1980 from a 10-year low the year before, did not
approach the eye-catching aid levels of the early 1970s.
The more modest, more widely spread undertakings-
still concentrated heavily on black Africa-were in
tune with Beijing's recently announced policy of help
to poor countries for developing closer cooperation.
China's largest single credit ($96 million) renewed a
1964 aid package for Egypt and increased the dollar
amount to cover losses from changes in the exchange
rate. Bangladesh and Pakistan also were remembered
with $35 million apiece for development projects.
Technical Services: Still a Big Moneymaker
There were more than 115,000 Communist personnel
working in LDCs in 1980 who not only rendered
important services as administrators, technicians, doc-
tors, and educators, but also provided their own gov-
ernments a steady flow of hard currency under
commercial contracts. The USSR earned $150 million
from nearly 35,000 personnel based in the LDCs.
Eastern Europe earned at least $350 million from its
50,000 technicians stationed abroad, while Chinese
and Cuban earnings were far more modest. The Chi-
nese marketed their services-through the two-year
old China Construction and Engineering Corporation
(CCEC}-at bargain rates (from $6,000 a year for a
laborer to $25,000 for a project manager) while the
Cubans often receive only subsistence pay-about
$500 a year. They have, however, begun to divert their
technicians to higher paying jobs in hard currency
countries. Algeria and Libya, for example, pay Havana
$20,000 a year for technicians, while Angola pays
$7,500.
The Soviets and East Europeans continued to charge
heavily for their services-up to $55,000 a year for
project managers and $40,000 to $45,000 for geolo-
gists, interpreters, and other less senior personnel[
Figure 6
Economic Technicians From Communist
Countries in Non-Communist LDCs, 1980
LDC Training: Continued Growth
The USSR and East European countries made avail-
able in 1980 some 7,500 additional places in their
institutions for training LDC nationals in academic
disciplines. This brought total academic trainees in
Council for Mutual Economic Assistance (CEMA)
countries up to about 63,000 at yearend-nearly one-
half the number that has gone to these countries for
training since 1955. The USSR accounted for about 55
percent of the total enrollment in 1980; Eastern Eu-
rope the remainder. An additional 3,700 LDC per-
sonnel were sent for training in special skills during
1980.
As a follow-on to the youth program introduced by
Castro in 1978, Cuba was providing training for more
than 10,000 foreign secondary school pupils-largely
from Africa and the Caribbean-in 15 special schools
on the Isle of Youth.
25X1
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Of the new academic students arriving in the USSR
and Eastern Europe, about 50 percent came from
Africa, an area always favored by the Communists,
although Jordanian students made up the largest single
contingent, and Afghan students the second largest.
Most of the students in the USSR were on tuition
scholarships, including personal allowances of about
90 rubles a month. East European countries have not
been so generous, sometimes charging hard currency
for attendance at their institutions, especially for Arab
students.
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Figure 7
Middle East-North Africa: Communist Military and Economic Agreements, 1955-80
Agreements, 1980 (million US $)
Donor-Recipient
USSR
Military
Economic
Libya
8,000
0
Economic agreement
Algeria
3,000
315
Military agreement
Other
34
0
Eastern Europe
Military and economic agreement
Egypt
7
300
Iraq
276
0
Turkey
0
217
Other
160
20
China
Egypt
1
96
Other
10
0
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Appendix
Regional Developments, 1980
Moscow has tried to steer a middle course in the Iran-
Iraq war, not providing major military supplies to
either combatant. However, East European countries
(with Soviet sanction) emerged as important military
suppliers to Iraq with agreements totaling $275 mil-
lion, and as suppliers of food and other essential goods
to Iran. Elsewhere in the area, the USSR sold record
amounts of military supplies to Libya and Algeria,
signed a friendship treaty with Syria, and advanced its
position on the Arabian Peninsula with large deliveries
of military equipment to both Yemens.
For Communist countries, the disruption of oil supplies
from Iran and Iraq was a disturbing development. The
cutoff of Iraqi supplies forced Moscow to find new
sources of oil for its regular shipments to India and
Turkey, although Iran still provided 28,000 barrels per
day (b/d) of crude to Bulgaria, Hungary, and Roma-
nia, mostly in return for food. At yearend Tehran also
agreed to send oil to India on the Soviet account
(Moscow's first oil purchase from Tehran), but refused
to resume gas deliveries that had been cut off in the
spring because of a price dispute.
Economic assistance played its traditional subsidiary
role. Nonetheless, aid was proferred in large amounts
to preferred LDCs such as Algeria, which received a
$315 million development credit (Moscow's largest
ever to that country). The USSR also signed an agree-
ment with Morocco to go ahead with the $2 billion
Meskala phosphates project.
Spearheaded by Romania's $300 million of trade cred-
its to Egypt and Poland's $217 million for power
development in Turkey, Eastern Europe broke previous
records with more than half a billion dollars of eco-
nomic assistance to Middle Eastern countries in 1980.
For the first time in the past decade, however, the
number of East European technical economic per-
sonnel in the region declined because of a drop in the
number of Romanians in Syria. Their number in
Communist Economic Technicians in the
Middle East and North Africa 1980
Total
USSR
Eastern
Europe
China
Cuba
Algeria
11,080
6,000
4,550
360
170
Libya
28,655 a
1,000
23,900
5
3,00025X1
Iran
2,275
2,200
75
Iraq
12,610
7,000
3,610
2,000
South Yemen
3,200
2,000
700
200
300
Syria
3,250
1,000
2,225
25
Other
11,930-
2,715
5,790
3,410
North Africa-still the largest Communist non-
military contingent in the Third World-remained
virtually unchanged (see table 3).
Egypt: A Waning Relationship
The USSR made no headway in mending relations
with Egypt in 1980 despite the progress of other Com-
munist countries. Negotiations for a new Soviet-Egy125X1
tian agreement came to naught, and Sadat reduced the
number of Soviet technicians still working at Soviet-
built plants in Egypt. Nonetheless, Egyptian personnel
continued to go to the USSR for training in Soviet
industrial plants, and Cairo followed its 1978-79 truck
purchases from the USSR with an $11 million order
for 600 military trucks.
25X1
At the same time, Cairo continued to seek compatible
equipment from non-Soviet Communist sources to
keep its aging inventory of Soviet military equipment
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operational. It placed an order with North Korea for
$40 million of artillery tank gun barrels, small arms
and ammunition, trucks, and spare parts; and by
yearend was close to signing a purchase agreement
with China for tank gun barrels and F-7 aircraft. Cairo
took delivery of 50 F-6 Chinese fighter aircraft ordered
in 1979. China, also anxious to capitalize on Soviet
failures, renewed a 1964 economic credit, making
some $95 million available for drawdown.
Egypt received a record East European credit in
1980-a $300 million trade credit from Romania-for
building a cement plant and making railway improve-
ments. At the same time, Hungary signed contracts
under 1975 credit lines for additional assistance to
agricultural development, and East German-Egyptian
trade was shifted from clearing to hard currency pay-
ments in a five-year trade and payments agreement,
signed in February.
Iraq: Relations With USSR at a New Low
Iraq's disapproval of the Soviet invasion of Afghani-
stan was capped by Soviet refusal to deliver military
equipment to Baghdad following Iraq's September
invasion of Iran.
Downturn in Military Relations. Except for a trickle
of spare parts and munitions, all of Baghdad's nearly
$500 million of Soviet arms receipts in 1980 arrived
before the attack on Iran. Delivery levels prior to the
outbreak of the war, however, had surged to a record
$1.8 billion in 1979-a sign in retrospect that Iraq was
stockpiling for a possible confrontation. There is little
doubt that Iraqi military planners had counted on
Soviet deliveries remaining heavy right up to the start
of the offensive; but Moscow, piqued over Baghdad's
condemnation of Soviet actions in Afghanistan, report-
edly demonstrated its displeasure by bottling up some
of the $2.5 billion worth of Iraqi hardware in the the
pipeline during the first half of the year.
The Kremlin's refusal to mount a resupply operation or
to honor contracts already signed generated more pub-
lic condemnation from Baghdad and forced Iraq to
negotiate with other Warsaw Pact countries that (with
Soviet permission) provided some critical spares and
Soviet-type equipment. In addition to the $40 million
of East European armaments delivered under agree-
ments signed before the war broke out, Iraq concluded
a series of immediate delivery contracts with Eastern
Europe for critical items:
? Unspecified quantities of ammunition from
Bulgaria.
? $65 million from East Germany to build military
storehouses and provide special materiel.
? $50 million from Hungary from small arms and
antiaircraft guns.
? $80 million from Poland for at least 120 T-55 tanks
and other armaments.
? $60 million from Romania for artillery pieces and
other unspecified arms and support items.
Yugoslavia continued work on $850 million in
construction contracts for developing a small arms and
ammunition industry in Iraq.
Economic. The USSR maintained an air of normalcy
in economic relations with Baghdad. After the war
began, Moscow signed a contract to construct the 100
kilometer (km) Meshahda-Karkh petroleum pipeline
and bid on several new development projects including:
(a) an oil refinery at Halfayah, (b) a subway for Bagh-
dad, (c) development of al-Faw port, and (d) facilities at
the Haditha power project. Progress on projects al-
ready under way was stymied by the closure of Iraqi
ports and a 10,000-ton backup of equipment for Soviet
projects. Hostilities also damaged the Soviet-built
power stations at Nassiriyah and Darbendi-Khan, re-
quired the evacuation of several thousand Soviet tech-
nical personnel, and caused a virtual halt to water
injection at the Soviet-developed Rumaila oilfield.
Hungary and Poland, confronted with similar prob-
lems, each withdrew 500 technicians, mostly from oil
projects in battle areas. By yearend, however, techni-
cians had begun to drift back to project sites. Prague
contracted to repair the war-damaged Czech-built re-
finery at Basrah, and Bulgaria began work on the $68
million Samara bridge project. Of deepest concern to
CEMA countries was the cutoff of Iraqi oil, denying
Eastern Europe 200,000 b/d and the USSR 50,000
b/d (mostly for Turkey and India).
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Iran: Relations With the USSR Disrupted
Continuing strains with the Khomeini regime plagued
the implementation of existing economic accords while
Moscow's policy of evenhandedness in the Iran-Iraq
war deprived Tehran of scheduled military supplies
from the USSR.
Military. Before Iraq's attack on Iran, the USSR had
sent Tehran 100 BMP military vehicles (valued at $80
million). Afterwards, Moscow, portraying itself as a
neutral, refused to supply major military equipment
owed Iran under the nearly $500 million of outstand-
ing contracts. North Korea became the only direct
Communist source of armaments, agreeing to sell $130
million worth of small arms, mortars, antitank weap-
ons, and ammunition.
Economic Relations. Even before hostilities, project
activity had ground to a near halt despite Moscow's
contingent of some 2,200 technical personnel at job
sites. After the outbreak of war, about 500 Soviets
were evacuated. Although in 1980 the USSR was able
to buy Iranian oil for the first time (for its Indian
account), Iranian natural gas still was not being
pumped to the Soviet border at yearend.
East European countries that had supplied food and
raw materials to Iran after Western sanctions were
imposed continued to receive Iranian oil-at least
28,000 b/d of bartered crude going to Bulgaria, Hun-
gary, and Romania after the war began. Poland and
East Germany also negotiated contracts for 1981.
North Yemen: A Military Show
Large-scale arms deliveries and a doubling of the
number of Soviet military advisers in North Yemen
highlighted the continuing improvement in Sana's
relations with Moscow, noted since the signing in 1979
of the huge $717 million agreement for military assist-
ance.
Despite Saudi threats to cut off financial aid to Sana,
Moscow has rebuilt its ties with the Yemen Arab
Republic (YAR) through large volume, and fast deliv-
ery of modern weapons that Western suppliers are
unwilling to provide, which can be easily integrated
into Yemen's Soviet-equipped military establishment.
Deliveries in 1980 topped $400 million-nearly double
the value of all previous Soviet shipments-and in-
cluded SU-20/22, MIG-21 jet fighters, ZSU-23-4 ra-
dar-controlled antiaircraft guns, SA-2 missile equip-
ment, T-55 tanks, BM-21 rocket launchers, and
BRDM-2 armored vehicles. An increase in the number
of Soviet military personnel (to about 300) and the 25X1
dispatch of 1,200 North Yemen cadets to the USSR
for military training also helped revitalize Moscow's
relations with the YAR Government.
China continued as the most active Communist 25X1
participant in North Yemen's economic program, with
2,000 technicians working on road construction, health
care, and industrial development. The Chinese also
(a) agreed to build government office buildings in Sana
and other urban areas, (b) bid on commercial con-
tracts, with some success, and (c) entered into joint
ventures with Yemeni companies. Work on the cement
plant being built by the USSR at Bajil was suspended
because of problems with local contractors.
South Yemen: Virtually a Client State 25X1
Even though South Yemen signed no major new con-
tracts with Communist countries in 1980, military
shipments under old accords were the second highest 25X1
on record, and a larger CEMA country presence
underscored Aden's increasing dependence on these
states. 0 25X1
Military. South Yemen's small armed forces, strug-
gling to absorb over half a billion dollars worth of
modern Soviet weapons received since mid-1978, or-
dered only $10 million of trucks from the USSR in 25X1
1980 and a like amount of communications equipment
from Hungary. The $190 million of Soviet arms deliv-
ered in 1980 included a squadron of MIG-21 fighters,
OSA-II guided-missile patrol boats, T-62 tanks, and
BM-21 rocket launchers. The USSR also added 200
military advisers to the 800 already in country.
25X1
25X1
Economic. East Germany was the only Communist
country to extend new economic assistance to Aden in
1980-$15 million for unidentified construction
projects. Soviet activity focused on carrying forward
programs under the more than $100 million dollars of
undrawn credits. A joint economic commission, estab-
lished in May, will oversee the program and iron out
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.7CCl CI
problems in fulfilling contract obligations. The May
accord also allocated funds for (a) constructing a
desalinization plant and a 30-MW power plant, even-
tually to be expanded to 100-MW; (b) planning water
and land use for expanding the irrigation program; and
(c) exploring for oil-a $55 million obligation.
Syria: Relations With Communist
Countries Strengthened
Moscow viewed Syria's signing of a friendship treaty
with the USSR as a major foreign policy triumph. For
Syria, the treaty was a recognition of its need for closer
relations with Moscow to counteract regional develop-
ments, especially those stemming from the Camp Da-
vid accords.
Military Deliveries Peak. In 1980, Syria account for
one-third of total Soviet arms deliveries, amounting to
a record $1.8 billion dollars-more than twice as much
as shipped to any other LDC. Much of the equipment
included the latest types of Soviet weapons, including
Syria's first IL-76 long-range transports. Additional
receipts of MIG-23 and MIG-25 fighters, SU-20/22
fighter-bombers, T-72 tanks, BMP infantry combat
vehicles, and AA-6 Acrid air-to-air missiles were also
noted. Syria, looking increasingly to Moscow for mili-
tary support, had by yearend increased the number of
Soviet military advisers in country to a record 3,000,
who had penetrated the service structure down to the
battalion level (in some cases the company level).
Damascus also had begun negotiations for another
major arms agreement, which probably will be final-
projects, and Moscow completed the rail line between
Latakia and Qamishli.
Romania, Syria's largest East European donor, sent a
delegation to Damascus in March to discuss Syria's aid
requirements for consideration in Romania's new five-
year plan. Bucharest's exports to Syria in 1980 were
reduced by one-half (to $100 million) as projects under
way neared completion. Among other East European
donors, Bulgaria agreed to step up the tempo of its
assistance to agro-industrial projects. The Bulgarians
proceeded with designs for the 1.5 million hectare
Tigris irrigation system that will adjoin the 1.3 million
hectare Bulgarian-built Kebir system. An East Ger-
man protocol on economic and technical cooperation
was signed in June, probably allocating some of the
$350 million of aid and trade credits still outstanding.
This was followed by a Syrian contract for 200 rail
cars.
ized sometime in 1981.
East European countries delivered $135 million worth
of equipment-mainly Czech T-55 tanks and L-39 jet
trainers ordered in 1978-79. Czechoslovakia and
Romania signed new agreements for an estimated $6
million worth of small arms, spare parts, and
unspecified equipment.
Economic Relations. Syrian-Communist economic
relations maintained their status quo in 1980. No new
agreements were signed, and no new projects were
initiated. The Syrians were disappointed that the So-
viets refused to build a nuclear power plant they had
promised earlier because Soviet studies concluded that
it was not needed. Work continued, nonetheless, on
Soviet railway, port, power, and land reclamation
Turkey: Bilateral Economic Ties With Moscow
Continue Strong
The military government in Turkey that replaced the
leftist Ecevit regime in September, though more skep-
tical of Moscow's intentions and perturbed over the
Soviet invasion of Afghanistan, has tried not to jeop-
ardize relations with the USSR and Eastern Europe.
The government wanted to guarantee continued Soviet
oil supplies to Turkey and the continuation of project
assistance under the Soviet-Turkish framework agree-
ment.
Disappointed that the Soviets would not provide the
60,000 b/d of crude oil agreed to in 1978, the Turks
settled for 26,000 b/d-all transshipped from Libya
and Iraq.
The large open-ended 1975 Soviet agreement, which
makes sizable amounts of assistance available for
heavy industrial projects, is a development source Tur-
key feels it cannot afford to let go. Thus, in 1980,
Moscow proceeded with technical reports for a heavy
industrial equipment plant and drafted an agreement
to enlarge the Soviet-built Aliaga refinery and the
Seydisehir aluminum complex. It also prepared a fea-
sibility report and designs for a 350,000-ton rolled-
steel facility.
25X1
25X1
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East European countries were particularly active in
Turkey. Warsaw reportedly agreed to extend $217
million of new credits (undoubtedly trade credits) that
provided $65 million for a third generator at the
Polish-built Yatagan power plant and $152 million for
a thermal power plant at Sekkoy. East Germany
agreed to construct seven industrial projects in Turkey
in return for Turkish goods, and a Czech-Finnish
company was awarded a contract for expanding the
SOMA B thermal power plant, originally built by
Czechoslovakia and Finland.
Other Middle East Countries
Cyprus received a $5 million supplement to its 1976
credit from Czechoslovakia for importing complete
plants and equipment.
Moscow's failure to provide more oil and the electricity
and natural gas, promised in 1979, clouded the
USSR's relations with Greece in 1980. The USSR also
refused to assure a market for output from a proposed
joint alumina plant that the two countries have been
discussing for the past three years.
Jordan's relations with the USSR cooled at the end of
the year when Moscow canceled King Hussein's sched-
uled visit to the USSR for discussions on military
supplies. The USSR, however, agreed to study the
feasibility of a 300- to 400-megawatt (MW) power
plant, fired by locally produced oil shale. Romanian
technicians worked on the third-stage expansion of the
Zarqa petroleum refinery and a high-voltage electric
network for southern Jordan-probably on a commer-
cial basis. China and Jordan formed a joint venture for
constructing projects in the Middle East. The first
project was a youth rehabilitation center near Amman
for which China provided some building materials and
dispatched 350 technicians.
Kuwait signed a contract allowing Romania to import
15,000 b/d of crude oil for hard currency; China
agreed to provide 125 workers to Kuwait under
commercial contract; and Czechoslovakia tried, with-
out success, to persuade Kuwait to barter oil for power
and cement installations, refinery equipment, food pro-
cessing plants, and prefab housing.
Algeria: Military Aid Still the Vital Tie
The strength of the Soviet-Algerian relationship re-
mains rooted in the military despite additional eco-
nomic aid provided in 1980. An arms accord with the
USSR, reported as a $2.2 billion agreement in 1979,
was not finalized until 1980. The 1980 pact is valued at
about $3 billion, bringing total Soviet-Algerian arms
weaponry.
agreements since 1962 up to about $5 billion and
making Algeria the fifth-ranking buyer of Soviet
25X1
25X1
Some ground weapons ordered under the new accord
were delivered in 1980. The Algerian Navy also be-
came the first in the North African-Middle East re25X1
gion to receive a Nanuchka-class guided-missile
coastal patrol craft-one of three purchased in 1977-
and a Koni-class frigate. 25X1
25X1
More Economic Aid. The signing of a $315 million
contract for a power plant, mining development, and
educational assistance brought total Soviet credits un-
der the 1976 framework agreement up to $600 million.
The 630-MW power plant will support the reduction
process at the proposed M'sila aluminum plant for
which Moscow had previously extended $290 million
of credits under the framework agreement.
As part of the effort to bring capacity at the Soviet 25X1
built Annaba steel mill up to 2 million tons by 1983, a
new blast furnace was commissioned in August. This
raises the mill's annual capacity by 1.6 million ingot
tons. Only East Germany, among the other Com-
munist countries, undertook new initiatives-the re-
newal of a 1977 economic and technical cooperation
accord and agreement to build cement, cable, and
agricultural equipment plants. 0 25X1
Libya: Moscow's Number-One Arms Client 25X1
Despite Soviet reservations over the compatibility of
Communism and Libyan radical Arab nationalism, the
USSR continued to capitalize on Tripoli's fervor for
building an arms arsenal. A 1980 arms agreement
reportedly worth up to $8 billion (Moscow's largest
ever with a Third World country) was yet another step
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toward expanding Soviet-Libyan relations and in-
troducing more Soviet technical personnel into the
country. The new accord pushes total Soviet sales to
Libya to nearly $15 billion, equivalent to 70 percent of
Libya's total arms purchases since Qadhafi took con-
trol in 1969, and made Libya the USSR's leading arms
customer.
As has been noted since early 1974, Moscow showed
little restraint in responding to Libyan requests for
advanced weaponry. The Soviets are anxious to garner
the hard currency and possibly to use the Libyans to
provided for across-the-board upgrading of Qadhafi's
huge arsenal. It could also be used as a source for
equipment that Libya may send to Syria, Iran, and
other LDCs.
Libya's reasons for acquiring this huge arsenal in the
face of limited technical capability is debatable. Its use
for support of Libyan objectives in other LDCs, how-
ever, has been documented. For example (a) Iran has
received Soviet-origin ordnance, spare parts, and
ground equipment from Libya for the war against Iraq;
(b) Chad's present pro-Libyan regime was installed
and maintained by Libyan military intervention;
(c) Syria received MIG-23 aircraft to replace those
destroyed in engagements with Israel; (d) Polisario
forces in Western Sahara have been receiving Libyan
weapons support indirectly through Algeria;
(e) Somalian dissidents operating against the present
government are being supported with Libyan money,
arms, and training; and (f) other dissident groups have
received military training in Libya.
Bulgaria signed an unprecedented $99 million contract
for unspecified military goods in 1980, while North
Korea and Yugoslavia closed deals together worth
some $350 million for ground weapons and technical
assistance.
The Economic Relationship. Technical assistance re-
mained the backbone of Eastern Europe's program in
Libya as about 24,000 East Europeans provided a
broad range of services on a commercial basis. The
Soviet presence remained at the 1,000-man level estab-
lished in 1979, as the USSR continued work on
commercial contracts under an economic and technical
cooperation agreement signed in 1976. Moscow bought
30,000 b/d of crude oil for shipment to Greece and
Turkey, and Tripoli promised additional supplies to
replace Iraqi oil in 1981.
Other North Africa
China remained the most influential Communist coun-
try in Mauritania, as it completed a hospital at
Selibaby, accelerated construction activity at
Nouakchott port, and began work on a 10,000-seat
Olympic stadium in the capital. The USSR renewed
the fisheries licensing agreement that had been can-
celed in 1978, and Romania and Mauritania entered
into a joint fishing venture. Both accords were under
review at yearend.
The on-again/off-again Meskala phosphate complex
in Morocco seemed firmly headed for implementation
at yearend with the signing of a contract to begin
construction early in 1981 and scheduled initial oper-
ations in 1983. Rabat also agreed to sell the USSR
phosphates from other Moroccan fields, and Moscow
again raised the question of participating in oil shale
development at Timahdit.
East Germany signed the only new Communist-
Moroccan economic agreement-its first with Mo-
rocco-for cooperation in metals and minerals ex-
ploration. Romania, Morocco's most active East
European contractor, agreed to cooperate further in
mining and transportation development.
The Communist presence in Tunisia tripled in 1980 to
1,165 as China accelerated construction of the
Madjerda-Cap Bon Canal. Sixty Soviets arrived to
work on the $75 million Soviet-financed Joumine Dam
at Mateur, joining the 275 Soviet teachers and doctors
in country. About 15 Soviet ships were repaired at the
Menzel Bourguiba shipyard in 1980 under the 1978
agreement. Moscow also offered to increase the num-
ber of boats brought in for repairs and to provide
technical help in order to expand Tunisian services to
Soviet ships.
25X1
25X1
25X1
25X1
25X1
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New Soviet overtures to India and an even deeper
entrenchment into Afghan affairs characterized the
USSR's 1980 stance in South Asia. At the same time,
the Soviet presence in Kabul heightened Pakistan's
regional uncertainties and precipitated Islamabad's
turn to China for new economic and military aid, and
to its Arab benefactors for financial assurances.
Afghanistan: Dependence on the USSR Grows
The seating of the new Babrak Karmal regime in
Afghanistan backed by an expanded Soviet military
presence and large amounts of emergency commodity
assistance gave Moscow direct control over Afghani
government affairs.
Economic Aid. The USSR agreed to (a) provide $230
million of emergency commodity and food assistance,
all as grants-with $155 million for delivery in 1980,
and (b) increase Soviet payments for Afghan natural
gas, bringing the total to more than $200 million a
year-equivalent to one-third of Kabul's export rev-
enues. We also have reporting on $410 million of
Soviet aid extended in 1979 but not previously noted,
that includes $106 million for oil development and
$304 million for exploitation of the Ainak copper re-
serves. The 1979-80 aid pledges bring Soviet commit-
ments since the Marxist takeover in 1978 to nearly
$700 million ($1.9 billion since 1954), maintaining
Kabul's fourth ranking among Moscow's Third World
economic aid recipients.
Continued rebel activity reduced the scale and scope of
Communist project activity and led to a reduction in
the number of technical advisers. Nonetheless, the
USSR was able to complete the $56 million Jeraqduq
gas desulfurization unit, and exploratory work uncov-
ered reserves of 100 million barrels of crude oil at six
locations and 40 trillion cubic feet of natural gas.
In addition to the estimated flow of some $185 million
of Soviet goods and project assistance to Kabul in
1980, the 85,000 Soviet troops stationed in Afghani-
stan imposed an additional drain of more than 425
million rubles.
East European countries willing to support the Soviet
position in Afghanistan pledged an additional $115
million of aid. The Czechs extended $90 million of the
total for coal, power, and other development projects
and East Germany $20 million as part of its first
economic cooperation agreement with Afghanistan.
Bulgaria promised to accelerate assistance to agricul25X1
ture and light industry but was unable to implement 25X1
projects because of civil unrest. 25X1
Military Stranglehold. The overwhelming Soviet
presence was extended to every level of the Afghan
military and security forces. While the 4,000-man
Soviet advisory team was kept at the 1979 level, the
50,000 Soviet troop contingent rose to 85,000 by 25X1
yearend 1980. Because of difficulties in separating
Soviet military deliveries for Afghan Government us-
from those sent to Soviet forces, we can account for 25X1
only about $20 million of ground support items specifi-
cally for Afghan forces in 1980
new military accords, valued at about $15025X1
million, were promulgated soon after the seating of the
Karmal government. 25X1
As part of Moscow's plan for rebuilding Afghanistan's
military establishment, the USSR accepted large
groups of Afghan personnel for training-their num-
ber rising from a few hundred a year before the Soviet
occupation to 800 in 1980. 25X1
India: Continuing Close Relations With USSR 25X1
The Brezhnev visit in December 1980 highlighted the
importance Moscow attaches to India as a coun-
terweight to China and as a major ally among the
moderates of the nonaligned bloc. The visit capped a
year of active economic and military collaboration as
the USSR reestablished personal ties with Prime Min-
ister Indira Gandhi.F_ -1 25X1
Military Supply Relationship Reaffirmed. In May, 25X1
Gandhi's government accepted a year-old Soviet offer
of a $2.4 billion arms package that will increase the
level of sophistication of India's air, ground, and naval
forces. Included in the package are more T-72 tanks,
armored reconnaissance vehicles, guided-missile sys25X1
tems, and advanced aircraft (including MIG-23s,
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Figure 8
South Asia: Communist Military and Economic Agreements, 1955-80
India
2,407
800
Afghanistan
148
240
Economic agreement
Eastern Europe
Afghanistan
25
114
Military agreement
China
76
66
Military and economic agreement
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MIG-25s, and AN-32 transports). The agreement also
may lead to licensed production of the MIG-23.
New Delhi, using its preferred status with the USSR
as leverage in the negotiations, exacted exceptionally
easy repayment terms-amortization over 17 to 20
years, in inconvertible rupees, as 2.5-percent interest.
The terms, together with assurance of rapid delivery
(beginning in August) and possible licensing privileges
have delayed, if not scuttled, the arms purchase diver-
sification plans that had begun to emerge in 1977
under the Janata party government. During 1980,
India also received the first of three Kashin-class
guided-missile destroyers purchased in 1975-
Moscow's first export of the Kashin.
Economic Relations Expanded. The most important
outcome of the Brezhnev visit was a Soviet agreement
to extend $800 million of economic aid, bringing the
Soviet commitment to India to more than $3 billion.
The new credits carry the highly concessional repay-
ment terms of the 1977 agreement-17 years after a
three-year grace, at 2.5-percent interest. A large part
of the new aid probably will be used to finance a 3.4-
million-ton integrated steel plant at Visakhapatnam on
the east coast of India, and other allocations made in
1980 may also draw on the $800 million credit line.
These include:
? Constructing concrete dams.
? Oil exploration in Tripura.
? Development of ferrous powder metallurgy.
? Construction of two thermoelectric power stations.
? Increasing Indian coal production.
? Mineral exploration.
With India deprived of nearly two-thirds of its crude
oil supplies from Iran and Iraq after the cutoff in
October, energy ranked high on the list of topics dis-
cussed with Brezhnev during his visit. A five-year
agreement committed the USSR to supply 170 million
barrels of crude oil and products. In an exchange of oil
for grain and other Indian products in 1980, the USSR
provided India with 34,000 b/d of Iraqi crude and
44,000 b/d of products-nearly half of India's annual
requirements.
Pressure also had built up for more Soviet imports of
Indian raw materials and industrial goods. The USSR
tried to satisfy some Indian demands with ad hoc 25X1
orders and has agreed to counteract the higher oil
prices and resulting trade imbalance by buying more
output from Soviet-assisted plants in India for Soviet
enterprises abroad. Extensive discussions were held on
possible Indo-Soviet cooperation in Soviet projects be-
ing built in third countries-including the steel mill in
Nigeria, a nuclear power plant in Libya, and irrigation
projects in Libya and Iraq. The USSR also expressed
interest in constructing a steel plant at Mangalore and
announced that the 120,000 b/d Mathura oil refinery,
built with $20 million of Soviet credits, would come on
stream in a few months. 25X1
25X1
Other Communist countries moved to close economic
deals with India, including Hungary's contracts for
building sections of the Calcutta subway, a flourescent
lamp plant, and a high-voltage power transmission
system. Romania offered equipment for thermal and
hydroelectric power plants and aid to the iron and steel
industry.
Other South Asia
Despite small disbursements of Soviet aid and
Moscow's agreement to supply limited amounts of
diesel oil, Soviet relations with Bangladesh deterio-
rated in 1980 because of Bangladesh's alarm over the
invasion of Afghanistan. For the most part, Com-
munist aid to Bangladesh was a Chinese show. Beijing
pledged $35 million in new 20-year credits even though
a $60 million 1977 credit had not been drawn. Earlier
in 1980, China had signed its first long-term trade
agreement with Bangladesh, calling for $150-250 mi1.25X1
lion of trade in each direction over the next five years
($75 million in the first year). China also agreed to
provide 48 T-59 tanks, artillery, mortars, and ammuni-
tion.
The Chinese finished work on another road in Nepal,
the Naranghar-Gurkha road, that feeds into the Chi-
nese-built ring road system. China again delayed initi-
ating work on the Pokhara-Surkhet road for which
Beijing had extended $80 million in 1975.
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Despite Pakistan's continuing concern over Soviet
intervention in the region and new tension over
Islamabad's alleged support to the Afghan resistance,
the number of Soviet technicians at work on the Soviet-
assisted Karachi steel mill and the second stage of a
thermal power plant at Guddu increased to 750 from
650 in 1979. Pig-iron production at the mill was sched-
uled for December 1980 and steel in 1981-two years
behind the original schedule. The Soviet-assisted
Guddu power plant went into operation in 1980.
The Chinese, whom the Pakistanis view as a coun-
terweight to the USSR, have provided far smaller
amounts of development assistance (except for exten-
sive intercountry road building). China has concentrat-
ed instead on military aid. A new $100 million credit,
billed as military assistance, allocated $35 million for
economic projects-possibly for expanding and mod-
ernizing several military-related industrial facilities
built earlier with Chinese aid. The military credits
probably went for China's first sale of F-7 interceptor
aircraft, and additional armor. The Chinese completed
an F-6 rebuild facility at the Chinese-built Taxila
complex, giving Pakistan's Air Force an expanded
maintenance and overhaul capability; however, Paki-
stan's F-6s still must be shipped to China for major
overhauls. Beijing also completed work at a foundry-
forge facility at Taxila and began work on a cement
plant, drawing on Chinese credits extended in 1972
and equipment produced at the Taxila complex.
Sri Lanka announced that it would not draw the
balance of a 1975 Soviet credit (estimated at $52
million) to construct the Samanalawewa hydropower
project, apparently because of dissatisfaction with the
terms of the aid-a 12-year, 2.5-percent loan.
25X1
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The USSR undertook no bold new military or eco-
nomic initiatives in Sub-Saharan Africa in 1980 and
failed to acquire desired air and naval base rights
privileges-especially in the Congo, Guinea, and
Madagascar. Even Ethiopia did not formalize Soviet
control of the small naval facility Moscow has been
using at Dahlak.
Only about $435 million in new Communist military
agreements (the lowest amount since 1975) and $400
million of economic pacts were signed-the latter
pushed up by large new Soviet aid to Ethiopia. The
Communist military presence in black Africa-still
the largest in the Third World-dropped for the sec-
ond straight year to 35,200, largely because of the
estimated 3,000-man reduction of Cubans in Angola
and Ethiopia and despite a 75-percent rise in Soviet
personnel in Ethiopia, Madagascar, and Zambia. At
the same time, the number of economic technicians
increased to 31,500 because of 3,000 additional East
Europeans and Cubans in Angola and Ethiopia.
important link. Cuban military personnel-by far the
most numerous of the teams in Angola since the Popu-
lar Movement for the Liberation of Angola seized
control in 1975-dropped by several thousand to about
17,000 in 1980, while the number of Soviet personnel
remained at about 1,000. 25X1
25X1
Slow Movement in Economic Projects. Despite can-
cellation of the Angolan-Cuban fishing agreement and
reported efforts by Luanda to replace Cuban civilian
advisers with European personnel, Havana actually
increased its civilian team in 1980. Of the 8,000
present, most were engaged in public health, teaching,
and civil works and rehabilitation. A 1980 protocol
allocated $25 million of Cuban credits extended in
1979 for road paving, a cold storage plant, and a dam.
25X1
About 3,000 East Europeans were assigned to admin-
istrative jobs, agricultural development, and light
infrastructural development. Some 500 Soviets were
spread throughout the economy, from the highest 25X1
Angolan ministries to the fishing fleet. 25X1
Moscow's economic pledges reflected its highly
selective interest in Africa and a continued indiffer-
ence to the continent's development needs. Virtually all
of the $180 million of Soviet aid to Sub-Saharan
Africa in 1980 went to Ethiopia for oil subsidies and a
cement plant. The $65 million of East European cred-
its-declining 40 percent from 1979-were divided
almost equally between Madagascar and Zambia, with
token aid to Ethiopia. Despite continued stringencies
at home, Chinese assistance rebounded to more than
$160 million-a five-year high. Beijing provided aid to
Djibouti and the Republic of Zimbabwe-each coun-
try's first aid from a Communist donor-along with
credits to five of China's traditional clients.
Angola: Relationship in Low Key
Soviet military aid to Angola, which had fallen off
immediately after the postindependence surge, de-
clined even further in 1980. The Soviets provided
about $15 million of new arms assistance and contin-
ued to deliver small amounts of military equipment-
including MI-8 helicopters, MIG-21s, Zhuk patrol
boats, and armored personnel cars. Technical support,
although somewhat reduced, continued as the most
Angola continued the slow drawdown of the $15 mil-
lion of Soviet credits extended for agriculture and
fisheries development in 1976-77. Poland agreed to
cooperate in fisheries development and training. An
East German protocol, probably under a $10 million
1976 agreement, allocated aid to agriculture, mining,
road and rail transport, and port development. Hun-
gary agreed to implement its 1979 agreement at the
joint Hungarian-Angolan economic commission's first
session. Hungary will (a) set up an assembly line in
Angola for 9,000 Hungarian buses; (b) construct and
outfit two complete hospitals, and (c) reconstruct poul-
try farms and build fish hatcheries.F -225X1
Ethiopia: Economic Dependence on Moscow Increases
Soviet economic relations with Ethiopia's Marxist re-
gime were strengthened in 1980 as Moscow came
through on years of promises with $175 million of new
economic assistance. The USSR, which had already
approved $200 million of project aid under earlier
credit lines, provided $75 million credits for building a
cement plant. Most important, Moscow extended a
discount (equivalent to grant aid) on the purchase of
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Figure 9
Sub-Saharan Africa: Communist Military and Economic Agreements, 1955-80
Cape Verde
Economic agreement
Military agreement
Military and economic agreement
Ethiopia
126
Other
126
Eastern Europe
Tanzania
46
Other
111
China
Kenya
Other
175
4
0
63
48
113
Boundary re pre entation is
not necessarily author M1at,ue
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recent deficits observed in Ethiopia's trade with the
Soviets persisted into 1980 with settlement unlikely-
adding signficantly to the Soviet aid total.
Cuban economic technicians maintained a near 1,000-
man level, working on agriculture, education, and
infrastructural development projects, but little activity
was noted on the $300 million East European pro-
grams. The only new work was that initiated by Cuban
contractors on a cement plant financed by East Ger-
many. A protocol to the 1978 Bulgarian accord spelled
out the details of assistance to agricultural and indus-
trial projects.
Military Assistance Continues. Despite continued So-
viet use of Dahlak Island for supporting Moscow's
Indian Ocean operations, Ethiopia did not formalize
Soviet control over the naval facility. Nor did the
USSR gain desired control over other facilities.
Moscow added $126 million to its $2 billion military
commitment to the Mengistu regime, however, and
increased its military presence to some 1,500 men.
Nonetheless, the 12,000-man Cuban contingent re-
mained the principal military force. Under the new
accords, Moscow will provide (a) MI-24 helicopters;
and (b) three replacement craft for OSA II missile
attack boats delivered earlier.
Mozambique: A Restrained Communist Effort
Mozambique was disappointed by European Com-
munist failure to provide heavy economic support for
its development plans and CEMA's failure to admit it
as a full member.
The only important Communist initiative in 1980 was
a Soviet promise eventually to provide $75-100 million
in credits for (a) the construction of a rail line from
Beira to the coal mines at Moatize, and (b) commodity
aid. Under credits extended in 1977, the Soviets deliv-
ered four fishing boats to the joint Soviet-Mozambican
fishing company.
Bulgaria signed an economic and technical cooperation
agreement for aid to agriculture, industry, and trans-
portation, while Czechoslovakia and Hungary agreed
to projects (Czechoslovakia for a medical school) that
will require additional aid. Meanwhile, Romanian-
Mozambican cooperation in oil refining was temporar-
ily shelved because of a disagreement over the plans25X1
25X1
East Germany and Hungary extended new military
assistance: East Germany, a five-year, $30 million
grant of outdated aircraft, tanks, field guns, patrol
craft, and ground naval training; Hungary, a grant of
12 MIG- 17 aircraft and air defense weapons. Mozam-
bique also considered a Bulgarian bid for a small arms
plant. 25X1
25X1
Nigeria: The Soviets Lose Ground in 1980
Nigeria's new civilian government in Lagos expressed
disappointment with the slow pace of Soviet programs
and concern over maintenance problems with military
equipment. I __1 25X1
At yearend, the Ajaokuta iron and steel mill com- 25X1
plex-Moscow's largest and most prestigious project in
black Africa-was still in a preliminary stage. Delays
have already pushed the project's total estimated cost
upwards of $3.7 billion, three times the early-1970
estimates. At the same time, the Nigerians were
pleased with the completion of a 600-km Soviet-built
pipeline. 25X1
Nigeria expanded its limited economic relations with25X1
East European countries, with the signing of a $500
million Polish-Soviet-Cuban accord for cultivating and
processing sugarcane beginning in 1981. The Cubans
will cultivate sugarcane, the Soviets will handle the
irrigation, and the Poles will build the sugar mill.
Poland also signed a $34 million contract for electrif'25X1
ing 58 Nigerian villages and delivered five of the 45
trawlers it had agreed to in an earlier $5.3 million
contract. The Poles also continued to train Nigerian
fishermen and provided technical services for coal ex-
ploration. Bulgarian accords provide for building a
pharmaceutical plant and a fertilizer plant.
Tanzania: Military Aid 25X1
25X1
Despite Dar es Salaam's continued opposition to
Moscow's invasion of Afghanistan and its suspicion of
Soviet aims in Africa, Soviet-Tanzanian relations re-
main rooted in Tanzania's dependence on the USSR
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for arms. Moscow agreed to $54 million in new arms
sales in 1980, under typically lenient repayment terms.
Tanzania accepted Soviet offers of MIG-21 aircraft,
medium tanks, field artillery pieces, and other ground
equipment, but turned down other modern hardware
(including FROG-7 surface-to-surface rocket launch-
ers) because of financial concerns
No new Soviet economic aid activity was noted, al-
though plans for starting work on a hydroelectric plant
on the Kiwira River were under way and small
amounts of assistance were disbursed for agriculture
and mining development. All in all, only about $10
million of the nearly $40 million of Soviet economic aid
extended in 1966 and 1977 had been drawn by
yearend.
Chinese Still Have a Presence. The Chinese main-
tained a close relationship with Tanzania even though
in 1974 China lost Tanzania as its second largest arms
customer. In 1980 Dares Salaam turned down China's
offers of additional F-6 (MIG- 19) fighters and F-9
strike aircraft, B-5 (IL-28 copy) bombers, and naval
craft. China agreed to repair a bridge on the Tan Zam
railroad for which it extended a $15 million credit (split
evenly between Tanzania and Zambia). Beijing also
signed a contract for work on the Tanzanian national
assembly headquarters in the new capital, Dodoma,
under a 1974 line of credit, and agreed to provide
services for iron and coal development under that
credit line.
Zambia: Limiting Moscow's Role to Military Supply
Zambia, which served as a training ground for insur-
gents operating against white-ruled governments in
southern Africa, turned to the USSR in the late 1970s
for military equipment because of Rhodesian incur-
sions and Western refusal to supply equipment. Under
a $10 million 1980 agreement the USSR delivered
MIG-21 fighters, SA-3 surface-to-surface missiles and
launchers, other air defense weapons, assorted ground
weapons (including tanks), and support equipment (un-
der a 1979 accord valued at more than $200 million),
and five MI-8 helicopters. The USSR also had 40
technicians in Zambia in 1980, mostly to assemble and
deploy some of the new hardware. Nonetheless, the
Zambians refused Moscow permission to build and
control a training base for MIG-21 pilots near the
Zambian-Mozambican border.
In 1980, some 35 East German military advisers also
arrived to help deploy and train the Zambian National
Defense Forces, while the Cuban military mission,
which had supported ZAPU activities in Rhodesia
before Zimbabwe's independence, was deactivated in
June.
The only important Soviet-Zambian nonmilitary
connection in 1980 was 270 Soviet teachers and
administrative personnel in Zambia. Zambia's Presi-
dent Kaunda took a month-long tour in Bulgaria,
Czechoslovakia, East Germany, Poland, and Romania
to discuss economic and technical cooperation. East
Germany came through with $32 million of aid for
Zambian agriculture, and Romania agreed to
Zambia's use of credits extended in 1972 for
(a) improving the agro-industrial structure in Zambia;
(b) constructing plants for copper sheets, textiles, and
light industrial goods; and (c) improving the trans-
portation and forestry sectors.
Beijing resumed its most important assistance effort in
Burundi-construction of the 115 km Bujumbura-
Rutovo road-after resolving questions on the number
of Chinese technicians that will work on the project.F-
Despite Soviet pressures on Cape Verde, the island
government again denied military bases to the USSR
and refused, for the third time, to sign a fisheries
agreement with Moscow.
Relations between the USSR and Congo cooled over
Congo's denial of base rights to the Soviets at Pointe
Noire and Brazzaville's disappointment with
Moscow's minuscule economic aid commitments. The
final straw was Soviet cancellation of the Congolese
President's trip to Moscow. This action prevented
(a) the signing of a friendship treaty, (b) a possible
Soviet agreement to build 4,000 km of roads in Congo,
and (c) an agreement to give Moscow fishing rights in
Congolese waters. Moscow had agreed earlier to ex-
pand the Soviet-built Brazzaville hospital and con-
struct an additional 200-bed hospital in Louboumo
under a 1975 credit
25X1
25X1
25X1
25X1
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China extended $30 million of development assistance were reports that nearly 200 Cuban security advisers
to Djibouti, the country's first Communist aid commit- also arrived in October.
ment.
Moscow lost its most important West African fishing
base in Equatorial Guinea in January when the new
Western-oriented government refused to renew a six-
year-old fisheries accord.
The USSR signed its first economic cooperation agree-
ment with Gabon after more than five years of negotia-
tions. Romania discussed cooperation in agriculture
and infrastructual development despite Gabon's fail-
ure to act on Romania's 1978 $300 million offer to
construct the trans-Gabon railway. Romania had
asked for oil and other strategic materials as repay-
ment.
Despite earlier failure in Moscow's economic and mili-
tary programs in Guinea, Conakry apparently ac-
cepted a gift of MIG-21 fighters, several transport
aircraft, and an MI-8 helicopter, and Soviet replace-
ment of $3.3 million worth of equipment lost in a 1979
accident on the Soviet-built Kindia-Conakry railroad.
The Soviets refused, however, to supply military spare
parts and petroleum products on the usual conces-
sionary terms. Meanwhile, Guinea maintained good
relations with the Chinese, who extended $34 million
of additional credits for expanding projects begun ear-
lier.
China moved to consolidate already strong relations
with Kenya with a $48 million credit for a stadium in
Nairobi and other development projects.
Despite Madagascar's mistrust of Soviet intentions
and resistance to Soviet pressures for access to naval
facilities at Diego Suarez and the nearby airfield,
Antananarivo became even more dependent on Mos-
cow for weapons and military personnel in 1980. The
$29 million of deliveries under 1978-79 arms accords
gave Madagascar its first MIG-21 fighters, the first of
four AN-26 transports, and air defense artillery. In
1980, the USSR agreed to provide MI-8 helicopters
and a second YAK-40 aircraft. Because of the need for
advisers to train local personnel in operating and main-
taining the new hardware, the number of Soviet mili-
tary personnel in Madagascar shot up to 300. There
25X1
25X1
Economic relations with Madagascar were marked by
a $30 million Romanian credit for mining, agriculture,
and road building and an East German commercial
agreement signed at the first session of the joint East
Germany-Madagascar economic commission. Discus-25X1
sions were held with Czechoslovakia on implementing
a 1974 economic cooperation agreement.
25X1
The USSR moved to repair its faltering relationship
with Mali with a $150 million arms offer, but refused
to budge on the $10 million annual repayments due,
beginning in 1980, on Mali's $100 million military
debt. The Soviets have demanded payment in gold
from the Soviet-built Kalana mine, still being operatec25X1
by Soviet technicians. In March, Mali signed its first
economic and technical cooperation agreement with
Cuba, and in May China completed reconstruction of
the Markala dam. 25X1
Cuba opened an Embassy in Rwanda in 1980, follow-
ing the establishment of diplomatic relations the year
before. China, still Rwanda's favored Communist
partner, began building the Cyangugu cement plant
under a 1972 $22-million credit. It also continued work
on rice projects. North Korea completed a $2.4 million
youth palace. 25X1
25X1
Cuba agreed to construct 1,300 housing units in Sao
Tome-Principe in 1981-86. 25X1
Chinese technicians in Senegal began construction of 25X1
60,000-seat stadium in Dakar with a $12 million allot-
ment under a 1973 line of credit.25X1
Chinese economic aid to Sierra Leone continued as the
largest and most active Communist program in the
country, with work initiated on government office
buildings, and an access road and power transmission
lines for the Kenema hydroelectric dam. Moscow re-
newed its joint fishing venture with Sierra Leone,
providing the country with three fishing boats and a
patrol craft.) 25X1
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In 1980 Cuba signed an economic and technical
cooperation agreement covering agriculture, educa-
tion, public health, and training of Seychelles
nationals in Cuba. North Korea rewarded Victoria's
break in relations with South Korea with a gift of 1,000
tons of cement, trucks, tractors, and other agricultural
equipment. The USSR donated $40,000 worth of
drugs and medical equipment and agreed to create a
Soviet-Seychelles maritime commission.
Somalia strengthened its already close relations with
China while continuing to keep its distance from the
USSR. China worked on Soviet projects, unfinished at
the time of the Soviet expulsion in 1977 and delivered
20 F-6 (MIG-19) fighters under a $40 million 1979
accord for 40 of the aircraft. Somalia turned down
China's bid to overhaul 10 Soviet-made MIG-21s,
accepting instead an Egyptian offer.
Romania was the only East European country to sign a
major economic agreement with Somalia-a $31.5
million contract (on unknown terms) for developing
Somali livestock herds. Romania also gave Somalia
300 tons of rice (worth $200,000) and spelled out
principles for possible joint commercial ventures.
Romania signed a friendship accord with Zaire and
agreed to extend agricultural and industrial
cooperation while Bulgaria and East Germany each
signed their first economic and technical cooperation
agreements with Zaire
Zimbabwe established diplomatic relations with Bul-
garia, China, Cuba, and Romania shortly after in-
dependence, but Moscow-still under the cloud of not
supporting ZANU (Prime Minister Mugabe's guer-
rilla forces in Zimbabwe's fight for independence)-
did not gain diplomatic accreditation until February
1981. China cemented relations with the Mugabe gov-
ernment with a $26.5 million credit for constructing a
sports stadium and possibly developing coal mines and
hospitals. Chinese small arms and other simple weapon
systems, valued at $10 million, are being stored in
Mozambique until they can be integrated into
Zimbabwe's armed forces. Cuba's offers of free medi-
cal services were not accepted.
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The USSR and Cuba were the most active among the
Communist countries in Latin America despite dif-
ferent policies. Moscow's trade promotion was re-
warded with a major contract with Peru for power
development-the Kremlin's largest single project in a
Latin American country to date. Cuba, on the other
hand, concentrated on gaining influence in targeted
countries in the Caribbean through technical assist-
ance and aid to development projects.
The USSR lost ground in its struggle to reduce tradi-
tional deficits with large traders in the area because of
the US grain embargo. The cutoff of US sales in
January forced Moscow to buy nearly 10 million met-
ric tons of grain from Argentina, pushing its deficit up
to $1.7 billion.
25X1
Soviet trade credits extended to Argentina in 1974 and
1978 have had a slow drawdown. In 1980, the largest
drawings were for power-plant equipment at the Salto
Grande hydroelectric project as the fourth of 14 25X1
turbines was shipped to the plant. Moscow also moved
closer to signing a contract for supplying equipment to
the multibillion-dollar Parana River power project.
Argentina reluctantly signed a draft fisheries accord 25X1
for a joint Argentine-Soviet fishing company and
exploration of Argentine fishing grounds. Final agree-
ment awaits resolution of problems on Soviet construc-
tion of land facilities, which Buenos Aires is demand-
ing as grant aid rather than under credits as suggested
by Moscow. The agreement is expected to meet strong
opposition from anti-Communist government officials-25M
Cuba's growing penetration of the Caribbean was
supporting insurgent groups in El Salvador and con- Only the Chinese, among the Communist nations,
centrated 3,900 Cuban economic technicians and 200 broke important new ground with the Argentine
military advisers in Grenada, Jamaica, and Nicara- Government in 1980, with a technical cooperation
gua. accord in medicine and industry, marking a first step 25X1
toward such collaboration. China also agreed to buy
1.5 million tons of wheat, corn, and soybeans annually
in the next three years-possibly $900 million worth.
25X1
Total
205
3,940
Grenada
5
265
Guyana
25
Jamaica
650
Nicaragua
200
3,000
Argentina
Communist-Argentine relations remained narrowly
trade oriented, as the anti-Communist Argentine
Government attempted to restrict relations to the
commercial sector. The Argentines delayed a serious
response to Soviet offers of military aid but grasped the
opportunity to expand export earnings from the USSR
in 1980 after the US grain sales embargo. In 1980,
Argentina sold 9.2 million tons of grain and soybeans
to the Soviets at a minimum cost of $1.8 billion (over
80 percent of Argentina's total exportable surplus). A
five-year sales agreement signed at midyear provided
for annual shipments to the USSR of almost 5 million
tons of grains, excluding wheat.
Brazil
The USSR and East European Communist countries
stepped up their overtures to Brazil's military govern-
ment as Brasilia tried to broaden its relations with
countries outside the Western Hemisphere. Already a
major supplier of agricultural products to East Eu-
ropean Communist countries, Brazil is studying possi-
ble increases in the participation of these countries in
Brazilian development to help balance their trade.P
The most important development was a $150 million, 25X1
10-year Polish credit (to finance, among other things,
12 ships for the merchant marine). Warsaw, in turn,
accepted a $150 million Brazilian credit, on less
concessionary terms than Poland's, to finance
Brazilian exports of equipment for exploiting Polish
sulfur mines. 25X1
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Figure 10
Latin America: Communist Military and Economic Agreements, 1955-80
Agreements, 1980 (million US $)
USSR
Peru
135
Other
0
Eastern Europe
Brazil
0
Other
0
250
1
150
10
Dominican
Republic
Economic agreement
0 Military agreement
Military and economic agreement
Boundary representation is
not necessarily authoritative.
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JCCI CL
Czechoslovakia offered to expand the Jorge Lacerda
hydropower plant, originally built with $15 million of
Czech credits extended in 1961. East Germany offered
to barter port and railroad equipment for agricultural
and other raw materials.
delegation talked to the Dominicans about building
power plants, exploring for petroleum, and establishing
a petrochemical industry, while Czechoslovakia of-
fered assistance for upgrading hotel accommodations
and pharmaceutical industries. 25X1
25X1
Despite its growing courtship of Brazil, Moscow's pres-
ence was little changed in 1980, revolving almost en-
tirely around Soviet supply and installation of equip-
ment for hydropower facilities-a specialty area for
the USSR in Latin America. Moscow delivered its last
turbine for the Sobradinho hydroelectric plant, under a
$53.5 million 1975 trade credit, and was preparing
bids on billion-dollar contracts for equipment and tech-
nical assistance to hydropower plants at Xingu and
Ilha Grande. The USSR also discussed credits for:
? Plants to make ethanol from wood.
? Coal gasification projects.
? A steel rolling mill.
As a friendly gesture, the USSR provided about
24,000 b/d of crude oil to Brazil during the last
quarter, but refused to sign a long-term agreement to
revive the mid-1970s oil trade, which involved the
Soviet supply of crude from Iraq.
Because it fears subversion, the Belize government
rejected Cuban offers of economic assistance early in
19801
Costa Rica agreed to sell 6,000 tons of coffee to the
USSR over the next five years-one-half of which will
be exchanged for machinery, complete plants, and
industrial equipment. Another 25 percent of the cof-
fee's value will be repaid with Soviet technical services.
Costa Rica also agreed to consider the renewal of a $15
million Soviet equipment credit, extended in 1971.
Meanwhile, Romania renewed a 1977 agreement to
study the feasibility of bauxite exploitation and agreed
to (a) build fruit and vegetable processing plants, and
(b) provide assistance for a 1,750-MW hydropower
plant.
After a seven-year hiatus, the Dominican Republic
and the USSR renewed trade relations in May with a
Soviet purchase of 10,000 tons of sugar. A Romanian
Grenada's fledgling leftist government received a $1
million gift of machinery and equipment from the
USSR and 10-year, low-interest credits on equipment
purchases. More than 200 Cuban technicians contin-
ued work on Grenada's $45 million airport, which
Havana had agreed to build in 1979 and for which it
had extended $10 million in credits.0 25X1
The only other developments of note in 1980 were (a) a
Bulgarian trade agreement and economic accord for
building a canning plant, two ice factories, and a power
plant; (b) a Czech agreement to study cocoa, nutmeg,
and mace processing; aid to small hydropower station25X1
and assistance for pig and poultry farming; and (c) a
Hungarian agreement to build a bicycle factory con-
ditioned on Grenadian agreement to remit to Hungary
40 percent of the hard currency generated by the
bicycle sales. 25X1
25X1
Yugoslavia opened consular relations with Guatemala
and sold Guatemala 22 105-mm howitzers.
25X1
The leftist regime in Nicaragua increased its reliance
on Cuban economic personnel in 1980-from 1,600 in
1979 to 3,000-while military personnel held steady 25X1
200. Nicaragua is the only Caribbean nation that has
given Havana a key role in military training and secu-
rity assistance-weapons training, counsel to all serv-
ices, and aid in constructing training sites. Cuba signed
its first significant arms agreement with Nicaragua,
probably for use against insurgents, although some
arms may have been earmarked for the guerrillas in El
Salvador. Evidence mounted that some Soviet and
Cuban arms arriving in Nicaragua were being chan-
neled to other Central American states, especially El
Salvador. 25X1
The Soviets signed an open-ended economic agreement25X1
and offered $300 million financing for the 300-MW 25X1
Copular power plant and associated dam, although
Managua rejected a Soviet offer of a joint fishing
venture. Havana donated $1.5 million worth of trac-
tors and extended credits of $50 million to cover
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(a) purchase of a cargo ship and 22 fishing boats, and
(b) technical assistance in agriculture, construction,
fishing, trade, and transportation. Nicaragua ap-
proached Bulgaria and Romania for economic and
technical assistance, and began discussions with China
on the possible supply of crude oil.
East Germany led the Communist effort in Mexico by
agreeing to (a) provide a new telephone system and
broadcasting center; (b) establish chemical, steel, and
machine tool plants; and (c) refurbish Mexico's fishing
fleet. The terms were not announced. A Soviet protocol
to a 1976 agreement called for cooperation with the oil
industry.
The Panamanian National Assembly refused to ratify
the Soviet-Panama trade agreement signed in 1979
because of private-sector opposition to a large Soviet
trade mission in the country.
Peru
The USSR and Peru continued to expand their mili-
tary relationship in 1980 with Lima's order of $135
million worth of Soviet military equipment and tech-
nical assistance including (a) a facility for the licensed
production of spare parts for SU-22 fighter-bombers,
(b) the overhaul of Peruvian Air Force AN-26 trans-
ports, and (c) the purchase of six MI-24 helicopter
gunships. The 1980 agreement put Peru's purchases of
Soviet military hardware over the $1 billion mark. On
the delivery side, Peru received an additional squadron
(14 aircraft) of SU-22s last year, bringing Lima's
inventory to 50.
Soviet agreement to extend 10-year credits to Peru for
the purchase of $250 million worth of equipment and
technical assistance for the first stage of the $1 billion
Olmos hydroelectric power project is Moscow's largest
single economic deal with a Latin American country.
Until now, the Soviet-Peruvian connection has been
primarily military.
Lima allowed its fishing agreement with Cuba to lapse
in 1980; it reopened discussions with Romania on
Bucharest's possible participation in the $300 million
Antamina mining projects and was discussing possible
assistance to Peruvian mining development with Po-
land that eventually could entail up to $300 million of
credits.
Other Latin America
The only new Communist aid to Bolivia to 1980 was a
$10 million East German credit for building two hos-
pitals. East Germany also offered technical assistance
for agriculture.
Colombia signed economic and technical cooperation
agreements with the USSR, East Germany, Cuba, and
Yugoslavia in 1980. The Soviet agreement calls for
assistance in mining, oil studies, and nuclear and solar
energy, while the others were more general.
Ecuador refused a Soviet offer of assistance to educa-
tion because of concerns over possible subversion. A
$35 million agreement for Soviet oil storage tanks was
under study at yearend, and Quito still was interested
in purchasing equipment for the Toachi hydroelectric
project, which would involve $150 million in credits.
East Germany and Hungary offered to construct a
railroad from the interior to Ecuador's coast, and
Czechoslovakia offered aid for power plants, water
purification facilities, irrigation projects, and technical
training. Prague already is providing Ecuador with the
services of two agricultural experts who arrived at
midyear, and Hungary has contracted to supply equip-
ment for technical schools in Ecuador.
25X1
25X1
25X1
25X1
25X1
25X1
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vccca
Relations between the USSR and Guyana have
deteriorated because of Moscow's failure to provide
assistance for Guyanan development and because the
USSR is too closely tied to politicians opposing the
government. Romania, however, established a joint
commission in 1980 to coordinate trade and consider
aid to Guyana for (a) a tractor assembly plant,
(b) equipment for the long-awaited Upper Mazuruni
hydroelectric power project.
Suriname-still the recipient of large amounts of
assistance from the Netherlands-declined offers of
Cuban assistance.
The USSR made little headway in trying to sell Ven-
ezuela cement plants and hydropower installations,
fish factory ships, and equipment for vocational train-
ing schools. Nor did Caracas accept a joint Soviet-
Hungarian offer to construct a bicycle factory in Ven-
ezuela.
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Figure 11
East Asia: Communist Military and Economic Agreements, 1955-80
S.Ko ea
Agreements, 1980 (million US $)
Burma 0 40
China
Thailand 1
Total 1
Economic agreement
Military agreement
Military and economic agreement
Western
Somoa
Boundary representation is
not necessarily authoritative
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region actually increased.
Uneasiness over Soviet intentions in East Asia was
heightened by (a) the Afghan invasion, (b) Moscow's
support of Vietnam's aggression in Kampuchea, (c) the
June incursion into Thailand by Vietnamese troops
and continuing tension on the Thai-Kampuchean bor-
der, and (d) the growing Soviet presence at Vietnamese
air and naval facilities. Even though China's economic
and political ties with Burma, the Philippines, and
Singapore may have been strengthened somewhat at
Soviet expense, Moscow's trade with countries in the
bridge, and a textile mill
Soviet relations with Burma did not improve despite
Moscow's resurrecting its offer of grant aid for 24
trawlers and technical assistance to the Burmese fish-
ing industry (in return for Soviet port rights on
Burma's offshore islands). The Czechs and North
Koreans, however, concluded new agreements-each
valued at $40 million-for Czech assistance in build-
ing a brewery and North Korean aid for a tin smelter.
A protocol to a $64 million 1961 Chinese credit gave
Beijing the go-ahead for constructing six rice mills, a
offered under a 1974 agreement
A further decline in Moscow's diplomatic relations
with Indonesia during 1980 did not affect Soviet-
Indonesian trade, and Soviet designs for a hydroelec-
tric power plant at Mrica in Central Java were handed
over late in the year. Moscow was disappointed that
Jakarta turned down $150 million of equipment credits
more Philippine goods
The USSR increased its imports of coconut oil and
sugar from the Philippines, but Manila continued to
discourage Soviet efforts to establish a closer relation-
ship through economic aid. China continued the an-
nual shipments of $100 million worth of crude oil
agreed to under their five-year trade agreement,
though it failed to live up to its commitment to buy
Despite Singapore's condemnation of the Soviet inva-
sion of Afghanistan, Moscow and Singapore expanded
their trade dramatically in 1980 and Singapore contin-
ued to repair Soviet commercial vessels under $20
million of contracts. Chinese-Singaporean trade also
rose, even though Singapore would not grant the PRC
diplomatic recognition. 25X1
Thailand's fears over Soviet activities in the area did
not affect Bangkok's attitude toward trade. For exam-
ple, Thailand sold 1 10,000 tons of corn and other 25X1
grains to the USSR in June-violating its informal
commitment to the US grain embargo. Thailand also
bought 20,000 b/d of crude oil and petroleum products
from China, reflecting closer commercial and political
relations with Beijing. 25X1
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Secret
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