TALKING POINTS ON US AND SOVIET ECONOMIC AND MILITARY PROGRAMS IN LESS DEVELOPED COUNTRIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000300720001-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: March 15, 2012
• Sequence Number: 1
• Content Type: MISC

Declassified in Part - Sanitized Copy Approved for Release 2012/03/15: CIA-RDP08SO135OR000300720001-5
TALKING POINTS ON US AND SOVIET ECONOMIC AND MILITARY
PROGRAMS IN LESS DEVELOPED COUNTRIES
The following observations apply to Soviet and US programs
in general, but the specific comparisons cover transactions
over the past five years (1982-86).
Economic Aid
The USSR has never tried to compete with Western economic aid
programs. It has been targeted on a few key countries, with
the aim of supporting allies and maintaining access to
decisionmakers in a few influential LDCs.
Nearly three-fourths ($35 billion) of the USSR's eco-
nomic pledges went to Communist LDCs Over the past
five years; another 10% ($4.5 billion) went to six
LDCs with Marxist governments (Afghanistan, Angola,
Ethiopia, Mozambique, Nicaragua, and South Yemen).
Of the remaining $9 billion, some $3.2 billion went
to oil producers and other high income LDCs to finance
equipment sales; $3.5 billion was allocated to India,
which has a special relationship with Moscow; and
only about $2.3 billion was left for the other 140
Free World developing countries.
Only about $30 billion of the Soviet assistance
shown on the attached charts qualifies as aid by
international definitions: nearly 40% of the total
shown here was provided to Communist LDCs in the
form of-price subsidies -- discounts on Soviet
oil exports and other products and artificially
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high payments for Cuban sugar and nickel. The USSR
counts these subsidies into its aid totals, but this
type of flow does not enter Western aid computations,
even though many Western countries subsidize LDC
economies. Deducting the subsidies means that the
USSR has provided only about half the actual assist-
ance provided by the US over the period 1982-86
($29.5 billion compared with $62 billion in US aid).
Again leaving out subsidies, Soviet grant aid has
amounted to only $1.3 billion, compared to Washington's
$34.5 billion in outright gifts to LDCs. Grants
have accounted for less than 5% of total Soviet
economic aid transfers, and have gone mostly to
Marxist LDCs. In contrast, nearly 60% of the US
program consisted of grants to more than 85 countries.
At the same time, Soviet trade credits provided on
harder terms with the aim of selling equipment have
absorbed nearly half of Moscow's program in the past
five years. The trade credit ratio for the US program
is less than 20%. Soviet trade credits are tied exclu-
sively to the procurement of Soviet equipment, and
most require repayment in hard currency. We believe
that this tightening of credit reflects the USSR's
determination to use its economic aid to (a) remain
competitive on international hard currency equipment
arkets by funding purchases of equipment that LDCs
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generally find less desirable than that from Western
sources; and (b) boost flagging hard currency revenues
both from the initial equipment sale, and follow-on
services and spares, which are always current account
items.
Soviet technical services to projects are almost
never provided free of charge. We estimate that non-
Communist LDCs pay at least $150 million in hard
currency annually for Soviet technicians. Even
Moscow's poorest recipients are required to pay:.aome.
part of the technical services charges in hard currency.
The US, on the other hand, provides about $1.5-$2
billion worth of free technical services to LDCs
every year.
Military Transfers
Even more unflattering comparisons emerge in the area of
military transfers. Reflecting the USSR's use of military
equipment sales as its major foreign policy instrument in
LDCs, Soviet military transfers to LDCs outstrip economic
flows by substantial amounts.
In the past five years, while economic disbursements
rose somewhat above previous levels to $23.2 billion,
military transfers reached an unprecedented $77.8
billion. For non-Communist LDCs, which buy most of
the arms, the contrast was even more extreme --
$7.3 billion in economic disbursements against
$70 billion in military deliveries.
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During that same period, the US provided $62 billion
in economic aid compared with $39 billion in military
transfers. In fact, some $7 billion of the US trans-
fers were for construction projects that contributed
to infrastructural development, while Soviet deliveries
consisted almost entirely of weaponry, transport equip-
ment, ammunition, and spares.
Moscow's heavy concentration on building the military establish-
ments of non-Communist LDCs has caused some severe economic
dislocations in recipient countries.
The economies of Angola, Ethiopia, and Nicaragua, which
depend on equipment and services from the USSR are
in shambles. Long-term Soviet recipients such as
Guinea and Mali, staggering under heavy debts to
Moscow, are beginning to reorient their economies
toward the West.
According to our estimates, non-Communist LDCs owe
the USSR about $35 billion in hard currency for
weapons delivered in the last 10 years. This equals
$14.50 in arms debt for each man, woman and child in
all non-Communist developing countries. For the 20
countries that owe the most, the burden on their
populations is $34 per person.
Since Moscow began its aggressive campaign to sell arms to
developing nations in the 1950s, it has been a major supplier
to every significant- LDC military conflict: the Suez crisis,
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the Arab-Israeli wars, Afghanistan's border dispute with
Pakistan, the India-Pakistan crisis, Indonesia's conflict
with Malaysia, the Ethiopian-Somali war, the Iran-Iraq
war, and Nicaragua's military actions against its Central
American neighbors. This has permitted Moscow to inject itself
into peace negotiations all over the globe, with the price
paid in hard currency by the arms recipients themselves.
We estimate that the USSR earns up to $5 billion a year in
hard currency from arms sales, its second largest source of
hard currency after oil.
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USSR
US
(b)
USSR
US
Commitments
Gross
Disbursements
Commitments
Gross
Disbursements
Agreements Deliveries
Agreements Deliveries
1977
3,810
3,930
8,730
7,080
na
7,000
5,100
5,025
1978
7,160
4,680
10,885
8,630
na
8,500
4,490
5,635
1979
8,545
5.365
12,215
8,025
na
14,500
9,445
6,045
1980
8,175
6,510
10,115
10,955
na
13,900
8,955
4,280
1981
7,630
7,710
10,445
9,530
na
14,200
4,455
4,965
1982
8,260
8,190
11,790
12,510
na
15,950
14,310
6,680
1983
9,595
8,055
10,635
11,420
na
16,580
7,265
9,385
1984
9,785
8,175
13,255
12,600
na
16,000
12,145
7,370
1985
9,870
8,415
12,160
12,720
na
13,670
9,465
7,995
1986
11,160
9,505
12,705
(c)
12,630
(c)
na
15,560
6,735
7,750
a. Includes Communist and Non-Communist developing countries.
b. Includes an average of $2 billion (in the 1980's) of flows to multilateral organizations that have
no parallel in the Soviet program.
c. Preliminary estimate.
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25X1
USSR
US (b)
Of Which
Of Which
Total Trade
Commitments Subsidies Credits
Grants
Total Trade
Commitments Credits
Grants
1977
3,810
2,235
290
55
8,730
2.435
2,260
1978
7,160
2,810
510
80
10,885
3,945
2,590
1979
8.545
3,010
1,655
80
12,215
5,035
3,425
1980
8,175
3,240
1,375
560
10,115
3,650
3,605
1981
7,630
3,510
2,375
125
10,445
3,240
3,870
1982
8.260
3 820
2,115
250
11,790
3,560
4,660
1983
9,595
3,225
3,160
340
10,635
1,175
5,615
1984
9,785
3,630
3,050
230
13,255
2,780
6,285
1985
9,870
3,650
2,125
260
12,160
1,880
8,000
1986
11,160
4,790
3,315
215
12,705
(c)
1,835
9,870
(a) Includes Communist and Non-Communist developing countries.
(b) Includes an average of $2 billion (in the 1980's) of flows to multilateral
organizations that have no parallel in the Soviet program.
(c) Preliminary estimate.
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Of Which
Total
Commitments
Subsidies
Trade
Credits
Grants
3,375
2,235
290
50
4,160
2,810
285
50
4,745
3,010
455
50
5,555
3,240
745
50
6,785
3,510
1,795
50
6,840
3 820
1,305
50
6,410
3,225
1,415
50
6,665
3,630
1,350
50
6,965
3,650
1,525
50
8,200
4,790
3,035
50
Of Which
Total
Commitments
Trade
Credits
Grants
435
5
3.000
225
30
3,800
1,200
30
2,620
630
510
845
580
75
1,420
810
200
3,185
1,745
290
3,120
1,700
180
2,905
600
210
2,960
280
165
25X1
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