COMMUNIT AID ACTIVITIES IN NON-COMMUNIST LESS DEVELOPED COUNTRIES, 1979 AND 1954-79

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000601960001-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 52
• Document Creation Date: December 22, 2016
• Document Release Date: March 14, 2012
• Sequence Number: 1
• Publication Date: October 1, 1980
• Content Type: REPORT

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National
Foreign
Assessment
Center
Communist Aid Activities
in Non-Communist
Less Developed Countries,
1979 and 1954-79
ER 80-10318U
October 1980
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National
Foreign
Assessment
Center
Communist Aid Activities
in Non-Communist
Less Developed Countries,
1979 and 1954-79
A Research Paper
Research for this report was completed
on 15 April 1980.
Comments and queries on this paper are welcome
and may be directed to:
Director of Public Affairs
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ER 80-10318U
October 1980
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Figure 1
Communist Countries: Aid Agreements With Non-Communist LDCs
1955-69
Average
China
Eastern Europe
USSR
Deliveries
East Asia
Latin America
6 Sub-Saharan
Africa Ethiopia
Indonesia
South Asia ('
India L'
China
Eastern Europe
L USSR
Deliveries
Middle East and
North Africa
Middle East and
North Africa
6 Sub-Saharan
Africa
Abbbb,
Pakistan
Afghanistan
1955-69 70
Average
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Summary
Communist Aid Activities
in Non-Communist
Less Developed Countries,
1979 and 1954-79
In 1979, Communist economic and military aid programs continued as a
major means of penetrating the military establishments and influencing the
governments of key Third World countries. Arms sales rebounded from a
five-year low in 1978 to $8.8 billion last year, and new economic aid
commitments stood at $2.6 billion.
The Arab states accounted for nearly 90 percent of the $8.4 billion of Soviet
contracts for military hardware. Soviet military deliveries rose to $6.6
billion. The high dollar values for orders and deliveries reflect the greater
sophistication of the equipment being supplied to LDCs, the higher ruble
price tags and the increased value of the ruble in terms of dollars.
In contrast to the rise in Soviet sales last year, East European arms sales fell
to a six-year low of $250 million, and China garnered only $140 million of
new orders. The Cuban technical and troop contingent, especially important
in Sub-Saharan Africa, made up two-thirds of the 51,000 Communist
military personnel in the Third World in 1979.
Communist countries followed the record $4.9 billion of economic aid
commitments to LDCs in 1978 with a still substantial $2.6 billion of new
pledges in 1979 (see figure 1). East European aid of $730 million went
mostly to five countries in all major regions, and Chinese aid of $135 million
was allocated largely to Burundi.
NOTE: 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.
The terms less developed countries and the Third World include 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.
Kampuchea (Cambodia), Laos, and Vietnam, which became Communist cou,itries in 1975,
are reported on for prior.years for historical reasons.
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Communist economic aid disbursements fell to $910 million in 1979, a
seven-year low, because of slower drawdowns of Chinese and East European
aid. Deliveries of Soviet aid continued at the $500 million level of the past
four years. Despite a 10,000-man reduction in the number of Chinese in
Sub-Saharan Africa, the number of nonmilitary personnel stationed abroad
remained at 107,000, largely because of the increase in Soviet technicians in
Iraq and Afghanistan.
In the 25 years since 1954, the Soviet Union has responded to aid oppor-
tunities in 76 countries, extending $18 billion of economic aid and $47
billion of military aid. The USSR has trained 68,000 LDC nationals from
100 developing countries at Soviet academic institutions, another 33,000 in
technical skills, and about 46,000 in military skills. Eastern Europe has
supplemented the Soviet effort with $10 billion of economic aid extensions
and $4 billion of military commitments, supplying large numbers of eco-
nomic and military technicians.
These long-term military and economic aid programs have enabled the
USSR to forward important strategic, geopolitical, and commercial objec-
tives at low cost-particularly in the Middle East, North Africa, and South
Asia.
Having earlier supplied outmoded weapons, the USSR in recent years has
demonstrated a willingness and ability to deliver sizable quantities of
modern aircraft and ground equipment on a fast schedule to favored clients.
The aid programs have given Moscow strategic bases, established depend-
ence on Soviet sources for military and industrial equipment, earned much-
needed hard currency from military hardware and technical services, built
up trade relations with the LDCs, and penetrated the military power
structures in key Third World nations.
The Chinese, in their separate and sometimes competing effort, have
mounted an inexpensive, down-to-earth economic aid program that fits the
needs of the poorest LDCs.
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Summary
iii
Military and Economic Aid to LDCs in 1979
1
Military Transactions Bounce Back in 1979
Economic Agreements: Continuing Strong in 1979
2
Perspective on 25 Years of Communist Aid
The Economic Program: A Persistent Penetration Effort
6
B.
A Quarter Century of Communist Aid: Regional Developments
27
1.
USSR: Military Agreements With Major Non-Communist LDCs
5
2.
Communist Countries: Military Technicians in
Non-Communist LDCs
Cuban Military Technicians in Non-Communist LDCs, 1979
6
4.
USSR: Economic Aid Agreements With Major Non-Communist
LDC Clients
7
Communist Countries: Economic Technicians in
Non-Communist LDCs
Academic Students From Non-Communist LDCs in
Communist Countries
11
A-1.
Communist Countries: Military Aid to Non-Communist LDCs
13
A-2.
Communist Countries: Soviet Military Relations With LDCs, 1979
14
A-3.
Communist Military Technicians in LDCs, 1979
A-4.
Communist Training of LDC Military Personnel in Communist
Countries
16
A-5.
Communist Countries: Economic Aid to Non-Communist LDCs
17
A-6.
Communist Countries: Economic Aid Extended to Non-Communist
LDCs
18
A-7.
Communist Economic Technicians in Non-Communist LDCs, 1979
21
A-8.
Academic Students From Non-Communist LDCs Being Trained in
Communist Countries as of 31 December 1979
23
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A-10.
Eastern Europe: Civilian Trade With Non-Communist LDCs
24
B-1.
Middle East and North Africa: Communist Economic Aid
Commitments
28
Algeria: Communist Economic Aid Commitments
29
B-3.
Iraq: Communist Economic Aid Commitments
B-4.
Syria: Communist Economic Aid Commitments
B-6.
Egypt: Communist Economic Aid Commitments
1.
Communist Countries: Aid Agreements With
Non-Communist LDCs
2.
Employment of Soviet Economic Technicians in Non-Communist
3
LDCs, 1979
3.
USSR: Sectoral Distribution of Aid to Non-Communist LDCs,
7
1954-79
4.
Middle East and North Africa: Communist Military and
Economic Assistance, 1955-79
27
South Asia: Communist Military and Economic Assistance,
34
1955-79
6.
Sub-Saharan Africa: Communist Military and
Economic Assistance, 1958-79
38
7.
Latin America: Communist Military and Economic Assistance,
41
1958-79
8.
East Asia: Communist Military and Economic Assistance, 1.955-79
43
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Communist Aid Activities
in Non-Communist
Less Developed Countries,
1979 and 1954-79
Military and Economic Aid
to LDCs in 1979
Military Transactions Bounce Back in 1979
Large orders from a handful of Arab customers pushed
Soviet sales of military hardware to the Third World
to $8.4 billion in 1979, up from $2.5 billion in 1978.
Soviet arms deliveries climbed to an alltime high of
$6.6 billion. In contrast, East European arms sales fell
to a six-year low ($250 million) in 1979, and China
garnered only $140 million in new orders.
Arab States: The Big Buyers. Brisk Soviet sales in 1979
were largely the product of heightened political unrest
across North Africa and the Middle East. The Arab
states accounted for nearly 90 percent of Soviet arms
sales. Moscow concluded major new arms agreements
with Iraq for additional T-72 tanks and MIG-25
fighter aircraft. Syria also arranged for new arms.
More Expensive Equipment. The dollar value of Soviet
arms trade over the last several years has been driven
up by substantially higher ruble prices for Soviet
equipment, the increased value of the ruble in terms of
the dollar, and Moscow's willingness to supply expen-
sive advanced weapon systems on short notice. In the
1950s and 1960s the USSR supplied mostly post-
World War II types of equipment; in recent years,
Moscow has been replacing the older equipment with
more sophisticated, expensive weapons.
High Profile Military Presence. Cubans made up
two-thirds of the 51,000 Communist military advisers,
instructors, technical personnel, and troops posted in
the Third World in 1979. Soviet personnel abroad
(excluding Soviet invasion troops in Afghanistan) grew
by one-third as Moscow beefed up the number of
technicians to Afghanistan in anticipation of its late-
year invasion.
Almost three-fourths of the total Communist person-
nel abroad were in Sub-Saharan Africa, with 32,000
Cuban troops still stationed in Angola and Ethiopia.
The region has a heavier concentration of technicians
per dollar of equipment delivered compared with the
Middle East-North Africa and South Asia because of
the sizable combat contingents in Angola and
Ethiopia.
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Economic Agreements: Continuing
Strong in 1979
Communist countries followed the record $4.9 billion
of economic aid pledges to LDCs in 1978 with a still
substantial $2.6 billion of new commitments in 1979.
The USSR accounted for two-thirds of the total, East-
ern Europe for nearly 30 percent, and China for the
remainder.
Most of the Soviet aid was extended to cover Turkish
projects-including expansion of the Soviet-built
Aliaga refinery, construction of a dam on the Arpacay
River, and, possibly, a nuclear power plant-under the
1975 Soviet-Turkish framework agreement. (Moscow
has been increasing its use of longer term framework
agreements under which terms are subsequently nego-
tiated for each individual contract.) Other Soviet aid
commitments in 1979 were to Ethiopia ($95 million)
and Afghanistan ($25 million) amounts far below
the large-scale industrial assistance expected by each
country. The aid to Ethiopia featured agricultural
development; Afghanistan received wheat as a grant.
Eastern Europe's $730 million in new aid commit-
ments in 1979 included: Hungary's $250 million to
Jamaica for an alumina plant; Poland's $90 million to
Pakistan for eight merchant ships, to be delivered in
the early 1980s; and Czechoslovakia's $75 million to
Nigeria for machinery and equipment.
China extended $135 million of new assistance, its
smallest commitment of economic aid since 1969. In-
deed, China itself accepted $300 million of develop-
ment credits from Argentina and Brazil. The only
substantial extension in Sub-Saharan Africa was a $40
million credit to Burundi.
Disbursements Decline. Communist economic aid
disbursements fell to $910 million in 1979, a seven-
year low in absolute terms and less than 5 percent of
global economic aid disbursements. South Asian coun-
tries accounted for more than one-half of the $500
million in Soviet disbursements in 1979 because of
heavy support for Afghanistan's Marxist regime and a
steel mill project in Pakistan. Middle East recipients
accounted for most of the remainder.
In 1979, the USSR established the Research Institute
of Economic and Technical Cooperation within the
Soviet aid organization, the State Committee for For-
eign Economic Relations (GKES). The new institute is
charged with improving the implementation of aid
projects as well as with the marketing and after-sales
service of Soviet machinery and equipment provided
under the aid program.
Marketing Communist Technical Skills. About
107,000 Communist economic technicians were work-
ing in 78 LDCs in 1979, sustaining the overall high
levels set in 1978. East Europeans numbered 48,000,
the Soviets 33,000, and the Cubans and Chinese about
13,000 each. A 7-percent increase in the number of
East Europeans and a 20-percent gain in Soviet
personnel in 1979 roughly offset the nearly 10,000
reduction in China's African contingent. The number
of Cubans in Angola dropped by 2,000 last year,
balanced by sharply increased numbers in Latin
America.
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Nearly two-thirds of the Soviet technicians worked in
Middle East and North African countries, with
employment on development projects outnumbering
administrative jobs three to one (see figure 2). In Sub-
Saharan Africa almost as many Soviets were employed
as teachers and doctors as on project work.
As many as one-half of the Communist technicians in
LDCs were under commercial contracts. These in-
cluded: 23,500 East Europeans and Soviets in Libya,
working largely on public works and agriculture; 5,500
in Sub-Saharan Africa, mostly in Angola and on an oil
pipeline in Nigeria; 5,500 in Iraq and Kuwait; 2,350
Cubans in Iraq and Libya; and several thousand
Communist doctors, teachers, and administrators scat-
tered elsewhere under various contracts. About one-
half of the East Europeans were in Libya alone in
1979. Another 11,200 worked for other major oil-
producing countries, while only about 16,300 Soviets
worked for oil-producing nations.
Chinese technical services impose the smallest drain on
LDC economies because no hard currency payments
are required; LDCs pay only the local subsistence costs
(the equivalent of about $1,200 a year) for housing,
food, and transportation. In 1979 the PRC set up the
China Civil Engineering Construction Corporation
(CCECC) to sell its technical services to developed
country contractors, especially for work in the Third
World. The Chinese are asking $5,400 annually for
skilled laborers, and up to $15,000 for other skilled
personnel.
Student Programs: Academic and Technical. The in-
flux of more than 4,500 Afghan students into Soviet
and East European academic institutions in 1979
pushed Communist training programs to record
heights. The 14,000 Third World students departing
for study during the year brought the cumulative total
of LDC academic trainees to 120,000; the Communist
countries have greatly expanded their facilities for
foreign nationals over the past five years. In 1979,
8,000 students went to the USSR and 5,800 to Eastern
Europe; at yearend, more than 55,000 were studying in
Communist universities. About 40 percent were from
Sub-Saharan Africa and 20 percent from South Asia.
The Chinese, whose own educational system has been
racked with conflict since 1966, are now hosting only a
few hundred LDC students.
Figure 2
Employment of Soviet Economic Technicians in
Non-Communist LDCs, 1979
Teachers
(19%)
Communist countries also accepted 3,000 technical
personnel for project-related training, bringing the cu-
mulative number to 51,000. About 2,300 came from
Arab countries and South Asia, where the major
Communist projects are located. As an adjunct to the
academic and technical programs, Communist coun-
tries have trained about 550,000 LDC nationals in on-
site facilities and have provided at least 180 establish-
ments for academic and technical training in the
LDCs.
Perspective on 25 Years of
Communist Aid
Military Aid 1955-79:
Foundations of Soviet Influence
In the 25 years since Moscow's first consignment of
military goods to Egypt-through Czechoslovakia-
the USSR has extended $47 billion of military assist-
ance to 54 LDCs, with 85 percent going to nine key
target countries. Eastern Europe has provided an addi-
tional $4.3 billion, largely to major Soviet clients, and
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China $1.1 billion, mostly to Pakistan and selected
African nations.
The USSR, originally willing to supply arms to almost
any LDC at low prices and on good repayment terms,
parlayed its initial $250 million Egyptian deal into a
half-billion-dollar-a-year program by the mid-1960s.
Ten years later Moscow was selling LDCs $5 billion
worth of arms annually. Soviet military aid was espe-
cially attractive to newly independent countries that
hoped to modernize their outmoded colonial arms in-
ventories. The USSR offered fast delivery, free train-
ing, maintenance services, and such financial induce-
ments as large discounts off list prices, 8- to 10-year
deferred payments at 2-percent interest, and accept-
ance of local goods in repayment. (These conditions
have been largely eliminated except as political
concessions.)
At the start the Soviets exploited Arab-Israeli tensions,
Yemen's conflict with the United Kingdom over Aden,
Afghanistan's border dispute with Pakistan, the India-
Pakistan crisis, and Indonesia's territorial conflict with
the Netherlands and Malaysia. In addition to exploit-
ing the large new financial returns from military sales,
the Kremlin has continued to give overriding weight to
political/military considerations-as in aiding
nationalist movements in Angola and elsewhere in
Africa, in plucking Ethiopia out of the Western camp
(albeit at the loss of Somalia), and in making Afghani-
stan ripe for takeover.
Top priority has gone to Arab countries in the Middle
East and North Africa-initially Egypt,' Iraq, and
Syria, and later Libya, Algeria, and South Yemen.
Afghanistan has been a smaller but steady buyer since
1956; India and Indonesia 2 became big buyers in the
mid-1960s; and Ethiopia is Moscow's only major new
arms customer since 1974.
Upward Trend in Military Sales. The rapid growth in
Soviet arms sales has been stimulated by three major
developments: the 1967 and 1973 Middle East wars,
which triggered unprecedented Soviet supply oper-
ations to the Arab belligerents; the opening of Mos-
cow's modern weapons arsenal to LDCs as a reaction
to Israel's deep penetration raids of Egypt in 1970; and
the emphasis on raising commercial and financial re-
turns from arms sales following the rise in oil prices in
1973/74.
Moscow's willingness to sell its most modern weapons
set the stage for full-scale Soviet competition with
Western suppliers in the lucrative Middle East arms
market. Moscow no longer could be identified as a
seller of last resort purveying outmoded, reconditioned
equipment. The $750 million arms deal with Egypt in
1970 provided advanced SA-2 and SA-3 surface-to-air
The ouster from Egypt was started with Sadat's expulsion of Soviet
troops in 1972 and was completed soon after the October 1973 War.
2 The $880 million Soviet arms program in Indonesia ended abruptly
with the abortive Communist coup in October 1965.
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missiles (previously deployed only in the USSR and
Eastern Europe) and 7,500 soldiers to man them. This
deployment was the first important example of the
Soviets providing combat units to operate modern
equipment in Third World countries. From the mid-to-
late 1970s, the Cubans, often acting as surrogates for
the Soviets, entered into active combat.
Escalation ofArms Sales in 1974-79. Higher prices,
more complex weapons, and Arab oil wealth sent
Soviet sales soaring to more than $34 billion in 1974-
79, giving the USSR one-fourth of the world arms
market and second rank behind the United States as a
supplier (see table 1).
Because of the October 1973 War, Arab orders for
Soviet arms escalated and were five times as great in
1974-79 as in 1967-73. The Soviet policy of greatly
expanding hard currency earnings from arms sales
affected even politically prized customers, such as
Ethiopia. Four major Arab clients accounted for more
than 70 percent of the total sales in 1974-79. Sales to
India and Ethiopia together accounted for another 15
percent of the total.
Moscow's sales of expensive late-model equipment-
which sometimes predated exports of this equipment to
CEMA allies-has recently included sales of MIG-25
and MIG-27 jet fighters, IL-76 transports, SA-9 sur-
face-to-air missile systems, and T-72 tanks.
These advanced weapons have required more extensive
training and maintenance and a larger number of
Soviet and East European military technical advisers.
The few hundred advisers sent to Egypt, Syria,
Afghanistan, and Indonesia in the mid-1950s had
grown to about 3,600 by the mid-1960s, posted in 16
LDCs; the number had more than doubled 10 years
later and went up sharply again in 1979 to nearly
16,000 persons (see table 2). The USSR provided most
of the supporting services needed for assembling equip-
ment, training LDC personnel in use and maintenance,
and advising LDC commanders. Since 1975 large
numbers of Cuban troops have been used for combat in
Angola and Ethiopia and for training of local combat
units (see table 3).
USSR: Military Agreements With
Non-Communist LDCs
8,665
34,155
Successes and Failures. Moscow's failures are well
known. The debacles in Indonesia and Egypt, in
particular, caused severe political embarrassment and
economic loss to the USSR. Even so, in the case of
Egypt, Moscow could take comfort in a relationship of
nearly 20 years that had given it clout as a world
power, had established its bona fides in the Third
World, and had provided a base for spreading Soviet
influence in the Middle East and North Africa.
Among the successes of the military assistance pro-
gram, Moscow can number the obtaining of base rights
in several countries; the use of port facilities in Syria
and Ethiopia; the use of airports in Mali and Guinea
during its venture into Angola; and use of facilities in
South Yemen (and previously in Somalia) for naval
and air intelligence operations. In 1975 when the
USSR was denied port and repair privileges for its
Mediterranean fleet in Egypt, Moscow gained access
to facilities in Algeria and Tunisia. After being ex-
pelled from Red Sea naval and air reconnaissance
facilities at Berbera in 1977, Moscow transferred oper-
ations to Aden and later Ethiopia.
Moscow also has profited economically from its arms
sales program:
? By 1970 and in every year until 1978, arms exports
kept the USSR's trade with LDCs out of the red.
? Moscow has expanded its hard currency receipts
from arms sales as a result of convertible currency
requirements for payments on almost all orders in
recent years.
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Communist Countries:
Military Technicians in Non-Communist LDCs'
USSR and
Eastern Europe
3,635
10,125
8,220
15,865
North Africa
605
1,020
1,005
2,835
Sub-Saharan Africa
400
965
1,580
3,990
East Asia
520
0
0
0
Latin America
0
0
35
110
Middle East
1,500
7,820
4,900
4,780
South Asia
610
320
700
4,150
95
510
1,205
375
Sub-Saharan Africa
70
410
1,165
305
East Asia
25
0
0
0
Middle East
0
75
0
0
South Asia
0
25
40
70
' Minimum estimates of number present for one month or more.
Numbers are rounded to nearest five.
Although LDCs sometimes have become disenchanted
with heavy-handed Soviet methods, the customer list
continues to grow. Sales have increased as the advan-
tages of fast delivery, practically free technical ser-
vices, and access to advanced equipment have over-
shadowed drawbacks in the program.
From time to time, Moscow has withheld vital spare
parts, technical services, and ordnance to exact conces-
sions, or punish Third World clients, causing major
clients to diversify sources of arms to reduce depend-
ence on the USSR.
The Economic Program: A
Persistent Penetration Effort
In the 25 years since the USSR extended small eco-
nomic credits to Afghanistan for municipal works,
Moscow has extended a cumulative $18 billion of aid
to 67 countries and has built up nonmilitary trade with
the LDCs to a two-way figure of $9 billion.
Commitments have moved up erratically, recently
averaging about $1.5 billion a year and peaking in
Cuban Military Technicians
in Non-Communist LDCs, 1979'
Total 34,315
North Africa 15
Sub-Saharan Africa 33,045
Latin America 255
Middle East 1,000
' Minimum estimates of number present for one month or more.
Numbers are rounded to nearest five.
1978 at more than $3 billion. In years of heavy
commitment, a small number of countries have ac-
counted for the bulk of the pledges-a billion dollars or
more went to India, Iran, and Syria in 1966; to Egypt,
Iraq, Pakistan, and Algeria in 1971; to Turkey and
Afghanistan in 1975; and to Morocco and Turkey in
1978. Most of these countries have received substantial
Soviet military aid as well. The basic characteristics of
Soviet economic aid are:
? Concentration of aid offers on neighbors in South
Asia (more than 25 percent of aid commitments) and
on strategically located countries in North Africa
and the Middle East (60 percent).
? Focus on large heavy industrial projects in the public
sector (65 percent of aid total), with development
of natural resources gaining in importance (see
figure 3).
? The tying of practically all commitments to pur-
chases of Soviet equipment, the USSR seldom
providing hard currency or commodity assistance.
? Provision of extensive technical assistance to help
overcome the lack of local skills in the construction
and operation of projects.
? Provision of 12-year credits at 2.5 to 3 percent in-
terest, with special concessions to a few clients, such
as Afghanistan and India.
? Allowance for repayments in local currency or the
output of Soviet-aided plants.
The Khrushchev Era (1955-64): A Growing Sense of
Failure. Party Chairman Khrushchev set the early
style for the Soviet economic aid program-big prom-
ises, showy projects, and a poor implementation record.
A $118 million credit in 1955 for building India's
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Figure 3
USSR: Sectoral Distribution of Aid to
Non-Communist LDCs, 1954-79
USSR: Economic Aid Agreements With
Major Non-Communist LDC Clients'
Other
(1 1 %)
Bhilai steel mill set the stage for large industrial cred-
its, especially to Algeria and Egypt for steel mills;
Egypt for building Moscow's showpiece, the Aswan
Dam; India to create a public sector industrial base;
Afghanistan for agriculture and road development and
a gas pipeline to the Soviet border; and Iraq and Syria
for assistance on a wide range of industrial projects.
The Era of Conservatism (1965-74): Repairing the
Damage. By 1965, the Soviet bureaucracy had begun
to question the program's performance. A series of
difficulties-such as the buildup of large unallocated
credits, long delays in completing projects, and Soviet
failures to establish viable programs in Africa and
Indonesia-generated opposition to the program at
home. The fall of Khrushchev and subsequent de-
mands for a more conservative aid policy resulted in
the elimination of unallocated umbrella credits, more
care in conducting feasibility studies, and a more pre-
cise tailoring of projects to LDC needs. Though conser-
vative in approach, the new policy was accompanied by
an increase in economic aid commitments. Moscow
Middle East
1,450
2,520
3,895
7,870
Egypt
1,000
440
0
1,440
Iran
65
725
375
1,165
Iraq
185
370
150
705
Syria
100
360
310
770
Other
100
625
3,060
3,790
230
195
290
715
0
100
2,000
2,100
20
5
75
105
South Asia
1,440
2,355
1,185
4,980
Afghanistan
530
300
450
1,290
India
810
1,130
340
2,280
Pakistan
40
655
225
920
Other
60
270
170
490
Sub-Saharan Africa
490
380
335
1,200
extended more trade-related credits with shorter
repayment periods, higher interest rates, and
downpayments.
Middle Eastern countries were still the favored clients,
and Moscow continued its overtures to India. The
Soviets initiated new aid projects in the neighboring
states of Iran, Pakistan, and Turkey-all members at
that time of the Western-sponsored Central Treaty
Organization (CENTO). Of the $6.3 billion of aid
extended in 1965-74, about 80 percent went to coun-
tries in North Africa, the Middle East, and South
Asia, largely for heavy industry (see table 4). Soviet
commitments in this period included $1.7 billion for
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steel mills or their expansion and an additional $1.3
billion for other heavy industrial plants.
Even though 20 additional African states became
Soviet clients after 1964, average annual commitments
fell by 25 percent and Africa's share of the total Soviet
aid package fell even more. Meanwhile, the USSR
extended trade credits to five Latin American coun-
tries in hopes of balancing its larger imports from these
countries.
The New Pragmatism (1975-79). Despite the loss of
much of the early political dynamism of its program,
Moscow still considers economic aid as an important
instrument for expanding Soviet influence in the Third
World. The average annual value of aid extensions has
risen substantially in the second half of the 1970s. The
Soviets have been focusing on projects and countries
that promise the greatest returns, for example, raw
materials needed by the Soviet economy. This had
meant a growth of Soviet commercial ventures abroad
and broader long-range programs to dovetail with
Moscow's economic plans. As early as 1969, the USSR
had taken steps to supplement CEMA resources with
various LDC raw materials. The new emphasis on
CEMA requirements is apparent in Soviet-LDC (and
East European-LDC) joint economic committees that
try to synchronize LDC production plans with
Moscow's.
At the same time, Moscow has pressed for broad long-
term cooperation agreements, such as the 15-year ac-
cord with Iran in 1975 that is to involve $3 billion of
development programs on both sides of the border.
This kind of framework agreement represents an
important new development in the Kremlin's approach
to economic aid. The openended, nonbinding agree-
ments' supposedly will provide a firmer base for long-
term planning by client countries, while increasing
Moscow's assurance of stable trade and supply pat-
terns in the future. The $2 billion framework agree-
ment with Morocco in 1978 for exploiting Moroccan
'The openended features of framework agreements, as well as the
lack of details on the pacts, complicate the task of recording Soviet
aid extensions to LDCs. In our recordkeeping, we enter and adjust
figures only as specific contractual amounts are confirmed; addi-
tional funding for an established project is recorded in the year that
the funds are allocated.
phosphates is the most recent accord. The USSR is to
receive 5 million tons of phosphates a year from 1980
to 1990 and 10 million tons in the following 20 years.
The escalation in commitments in 1975-79 under the
framework agreements results from the great size of
multiyear pledges, which tend to bunch commitments
and prolong the period of drawdown. Aid deliveries in
1975-79 averaged $500 million annually, not much
higher than in the previous 10-year period. At yearend
1979, Moscow's largest traditional aid clients-
Afghanistan, Egypt, India, Iran, Iraq, Pakistan, Syria,
and Turkey, which together accounted for 65 percent
of the $18.2 billion Soviet commitment-had received
75 percent of the $8.2 billion total of aid deliveries.
Slow implementation has continued to plague the aid
program; in January 1979 the USSR established the
Scientific Research Institute as a special research arm
of the State Committee for Foreign Economic Rela-
tions (GKES) to look at aid problems. The 120-mem-
ber staff will study Soviet economic aid programs in 10
to 12 of the largest recipient countries and will assess
new aid opportunities, especially in the energy and
metallurgical fields. The staff also is tasked with
improving the methodology for evaluating progress in
the aid program.
Program Returns: Moscow Looks at Balance Sheet. In
the quarter century of its aid program, Moscow has
recruited few adherents to its ideology. The Soviet
program has suffered the difficulties plaguing most aid
programs in the Third World. In some cases important
Soviet aid clients have switched allegiance to the West.
The Kremlin nonetheless must view the returns from
its program as satisfactory, possibly even good, in
relation to cost. Economic aid has imposed a negligible
drain on Soviet domestic resources, even considering
that aid requirements must be wedged into an already
overcommitted economy. Aid disbursements are run-
ning at the equivalent of less than one-tenth of 1
percent of Soviet GNP.
Soviet aid provides only about 1 percent of worldwide
official development assistance to the Third World. It
was never meant to compete with other aid programs
on a global scale. Rather, it was designed to compete in
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a few target areas, often through project assistance not
available from other donors. In general, Moscow has
succeeded in maximizing the political impact of its
comparatively small effort; for example, it has gained
considerable recognition from a handful of highly vis-
ible large industrial projects, notably in India, Egypt,
and Syria.
Another important spinoff from the aid programs has
been the rapid expansion in Soviet-LDC trade. The
programs opened new markets for Soviet capital goods;
machinery and equipment exports now account for
one-half of Moscow's civilian exports to the Third
World. Soviet-LDC two-way trade amounted to $13.4
billion in 1978, compared with $260 million in 1955;
the share of LDCs in Soviet global trade rose to almost
15 percent. Meanwhile, annual receipts from Soviet
project assistance include these important
commodities:
? 13 billion cubic meters of natural gas transported
through Soviet-built pipelines in Afghanistan and
Iran (natural gas deliveries have recently been inter-
rupted by the turmoil in the area).
? 120,000-130,000 b/d of crude oil from Syrian and
Iraqi national oil industries which the USSR helped
to create.
? 2.5 million tons of bauxite from Guinea's Kindia
deposits, and alumina from a Soviet-built plant in
Turkey.
LDCs have grumbled about delays in construction, and
Moscow's failure to cover local costs and to provide
turnkey projects; they nonetheless continue to accept
Soviet proffers of economic assistance. Most, but not
all, Soviet economic programs have managed to sur-
vive LDC political change, discontent with the
progress of the program, weaknesses in local infra-
structure, and a general insufficiency of local labor
skills and material resources.
Other Returns. The USSR has earned large amounts
of hard currency from the technical services provided
along with the aid program and, more recently, from
commercial contracts. In 1978-79 these earnings
soared to over $100 million a year because of the rise in
salaries LDCs were charged for administrators, teach-
ers, doctors, and technicians, and the contract workers
whose skills Moscow has begun to market.
Soviet educational programs have added considerable
numbers to the ranks of professional and skilled work-
ers in 100 LDCs. Returning students, however, appar-
ently have not greatly increased Soviet influence in the
countries to which they return; few seem to have
changed their political persuasions after four to five
years of residence in the USSR; indeed, some have
become intensely anti-Communist. Only a handful of
these Soviet-trained individuals have attained cabinet-
level status, mostly because they compete with the
better trained and more numerous professionals who
were educated in the West.
The Kremlin seems to see its educational program for
LDCs in a more favorable light. It has continued to
expand the number of places for LDC students (8,000
in 1979) at increasing cost (over $5,000 a year per
student at present, compared with about $2,000 in
1960); in most instances, the Soviets pick up the tab.
About 40 percent of the 70,000 academic students
have come from Sub-Saharan Africa; another 25
percent from the Middle East (especially Syria, Iraq,
Egypt, and Jordan); and nearly 15 percent from South
Asia (largely Afghanistan, India, and Bangladesh).
Eastern Europe: Long-Term Support for Moscow's
Economic Aims. The economic aid programs of the
East European nations are complementary to the
Soviet effort. The USSR, without assuming formal
control over its partners' programs, strongly influences
the selection of targets and the timing of commitments.
East European nations have extended $9.8 billion of
economic assistance to 58 LDCs; the USSR has ex-
tended aid to all but seven of these. The eight largest
Soviet recipients that accounted for 75 percent of the
USSR's commitments in 1955-79 received one-half of
Eastern Europe's.
The first East European economic assistance was a
Czech credit to Afghanistan in 1954, which followed
by a few months the initial Soviet extension of aid to
the same country. In 36 out of the 54 countries receiv-
ing aid from both the USSR and Eastern Europe, the
credits were extended within 12 months of each other.
In most instances, Eastern Europe's aid was in support
of a Soviet area offensive (such as in Africa in the late
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USSR
4,245
9,285
10,645
17,975
32,635
North Africa
0
885
2,420
3,110
7,450
Sub-Saharan Africa
300
1,735
1,585
2,995
5,640
East Asia
180
395
150
25
35
Latin America
5
5
30
355
340
Middle East
1,470
3,705
3,935
8,400
13,785
South Asia
2,290
2,560
2,525
3,090
5,385
Eastern Europe
1,080
4,070
5,215
14,870
48,195
North Africa
0
1,755
2,285
9,915
30,395
Sub-Saharan Africa
190
765
755
1,235
4,800
East Asia
90
115
65
30
55
0
0
10
Latin America
65
70
150
275
255
Middle East
560
800
1,295
3,025
12,120
South Asia
175
565
665
390
560
China
960
4,365
8,070
25,485
12,860
North Africa
0
80
465
595
930
Sub-Saharan Africa
55
2,535
6,505
22,625
9,325
East Asia
190
425
100
35
160
Europe
0
0
0
70
125
Latin America
0
0
0
70
155
Middle East
700
435
745
1,310
1,135
South Asia
15
890
255
780
1,030
' Minimum estimates of number present for a period of one month or
more. Numbers are rounded to nearest five.
1950s and early 1960s) or a comprehensive Soviet-
assisted development effort (such as India's and
Egypt's).
In the early period, East Europeans also subcontracted
goods and services for Soviet aid projects, especially in
the Middle East. The practice apparently continues
where an East European country specializes in the
manufacture of equipment needed for an industrial
project. East European support-either directly or on
Soviet account-has been typical in major aid efforts,
such as in Iran, where the USSR built a basic steel mill
and East Germany the rolling mill and in India, where
the Czechs built a foundry forge and the Soviets the
heavy machine building plant.
The establishment of the International Bank of Eco-
nomic Cooperation (the CEMA Bank) in January
1964 was a first step toward coordinating CEMA
economic assistance to LDCs. The International
Investment Bank (IIB) was set up under CEMA bank
auspices in 1974 and provided with a special ruble fund
worth about $1 billion; however, this new organization
has yet to finance its first LDC aid project.
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Number of Persons in the mid-1960s with assistance to key Middle East-
ern states, often at more concessional terms.
Academic Students From Non-Communist LDCs
in Communist Countries'
USSR
10,435
12,695
17,920
30,970
North Africa
170
610
1,555
1,825
4,895
6,260
8,040
12,865
East Asia
1,250
270
220
25
Europe
0
0
0
15
Latin America
Middle East
2,125
2,790
3,615
6,745
South Asia
1,060
1,125
2,300
6,635
Eastern Europe
5,025
8,720
10,410
24,025
North Africa
325
680
1,040
1,605
Sub-Saharan Africa
2,475
3,445
4,230
10,795
East Asia
720
375
115
10
Europe
Latin America
Middle East
955
2,985
3,410
6,405
South Asia
245
105
350
North Africa
15
0
0
35
Sub-Saharan Africa
260
0
70
205
0
0
0
5
Latin America
0
0
10
0
Middle East
5
0
15
10
South Asia
100
0
10
95
' Numbers are rounded to nearest five. Most are estimates based on
scholarship awards.
Small Trade-Oriented Program. East European aid
made a slow beginning, with extensions of less than
$125 million a year in the first decade of the program.
The credits were usually extended on favorable
commercial-like terms (eight to ten years to repay with
3 to 3.5-percent interest), mainly for promotion of the
sale of machinery and equipment for light industrial
plants. Czech credits to India for heavy industrial
installations late in the 1950s were an important excep-
tion. The East European program gained momentum
By yearend 1979, Romania, Czechoslovakia, and East
Germany had each committed more than $2 billion in
aid, with the others trailing well behind. We estimate
that East European countries have delivered only one-
third of their total commitments; although this es-
timate could be low because of the difficulty in dif-
ferentiating between aid and trade flows.
China: Effective Competition on Low Budget. China's
$5 billion economic aid commitment to 61 LDCs has
competed with, rather than complemented, other
Communist programs. Originally designed to establish
China's credibility as a responsible spokesman for the
Third World, Beijing's aid has fluctuated widely in
response to political upheavals at home and vacillating
attitudes toward the costs and benefits of foreign eco-
nomic assistance.
China began its program in 1956 with a few scattered
commitments to East Asian neighbors. The program
gained momentum early in the 1960s, with Nepal, Sri
Lanka, Burma, and Cambodia as the chief recipients.
By 1964, aid peaked at $315 million. At this time,
China extended aid to African countries that gained
their independence, about $140 million being allocated
to six countries. Egypt and Pakistan received nearly as
much ($135 million).
Following internal political difficulties in the late
1960s, Chinese interest in foreign aid revived. In 1970,
China extended a record $780 million in aid, high-
lighted by a $400 million commitment to build the
Tan-Zam Railroad. This railroad project was com-
pleted ahead of schedule, in July 1976. Through 1973,
the Chinese maintained annual commitments of about
$640 million, with 55 percent going to Africa. Eco-
nomic aid again fell victim to domestic political and
economic problems, plunging to an average $175 mil-
lion a year in 1976-79 (largely in Africa).
China has competed effectively with simple and low-
cost programs, which have proved more relevant to
many LDC's needs, and have provided more tech-
nicians per aid dollar than any other Communist do-
nor. Furthermore, the Chinese have won kudos be-
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cause of the frugal living style of their technicians and
workers.
About 15 to 20 percent of total Chinese aid has been
extended as grants, the remainder in interest-free cred-
its with at least 10 years for repayment, after 10 to 30
years grace. The Chinese programs, with their em-
phasis on simple construction projects and light indus-
trial facilities, are implemented faster than the Soviet
heavy industry projects. The Chinese provide ser-
vices-notably medical services at a cost of only about
$100 a month per Chinese (for local costs); these costs
are mostly covered by Chinese commodities provided
under credit.
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Total
1955-69
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
Appendix A
Total
USSR
Eastern
Europe
China
52,770
47,340
4,285
1,145
7,075
5,875
935
265
1,265
1,150
50
65
1,790
1,590
120
80
1,925
1,690
155
80
3,045
2,890
130
25
6,460
5,735
635
90
4,000
3,325
635
40
6,035
5,550
345
145
9,260
8,715
475
75
3,155
2,465
555
135
8,750
8,365
250
140
Total
USSR
Eastern
Europe
China
39,670
35,340
3,405
920
6,110
5,060
840
210
1,095
995
75
30
1,050
865
125
60
1,365
1,215
75
80
3,340
3,135
130
80
2,460
2,225
210
25
2,425
2,040
285
100
3,520
3,085
330
100
5,125
4,705
345
75
5,965
5,400
470
95
7,205
6,615
525
70
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Communist Countries:
Soviet Military Relations With LDCs'
Total Agreements
47,340
18,925
3,325
5,550
8,715
2,465
8,365
North Africa
10,960
2,805
535
0
4,650
770
2,200
Sub-Saharan Africa
4,635
715
220
840
1,510
980
370
East Asia
890
890
0
0
0
0
0
Europe
30
0
0
0
0
0
30
Latin America
970
205
70
335
110
0
250
Middle East
24,445
11,980
1,195
4,105
1,735
325
5,105
South Asia
5,410
2,330
1,305
270
705
390
410
Total Deliveries
35,340
13,495
2,040
3,085
4,705
5,400
6,615
North Africa
7,165
665
450
1,010
1,265
1,685
2,090
Sub-Saharan Africa
3,530
410
270
285
550
1,400
615
East Asia
885
885
0
0
0
0
0
Latin America
675
30
70
95
370
95
15
Middle East
18,675
9,375
1,080
1,235
1,720
1,890
3,375
South Asia
4,410
2,130
170
460
800
330
520
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Communist Military Technicians
in LDCs, 1979'
Total
USSR
Cuba'
China
Total
USSR
Cuba' China
and
and
Eastern
Eastern
Europe
Europe
Africa
40,190
6,825
33,060
305
Middle East
5,780
4,780
1,000
Iraq
1,065
1,065
North Africa
2,850
2,835
15
Kuwait
5
5
Algeria
1,030
1,015
15
North Yemen
130
130
Libya
1,820
1,820
South Yemen
2,100
1,100
1,000
Syria
2,480
2,480
Sub-Saharan Africa
37,340
3,990
33,045
305
Angola
20,400
1,400
19,000
South Asia
4,220
4,150
Equatorial Guinea
340
40
200
100
Afghanistan
4,000
4,000
Ethiopia
14,250
1,250
13,000
Bangladesh
30
Guinea
135
85
50
India
150
150
Guinea-Bissau
110
60
50
Pakistan
40
Mali
185
180
5
Mozambique
755
525
215
15
Other
1,165
450
530
185
'Minimum estimates of the number of persons present for a period of
one month or more. Numbers are rounded to the nearest five.
2 Including more than 30,000 Cuban troops in Angola and Ethiopia.
' Excluding more than 50,000 Soviet troops.
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Communist Training of LDC Military Personnel
in Communist Countries'
Total USSR Eastern China
Europe
Total 55,080 45,585 6,345 3,150 East Asia
Indonesia
Africa 18,900 14,420 1,760 2,720 Kampuchea
North Africa 4,150 3,580 555 15 Latin America
Algeria 2,410 2,195 200 15 Peru
Libya 1,595 1,310 285
Other 145 75 70 Middle East
Egypt
Sub-Saharan Africa 14,750 10,840 1,205 2,705 Iran
Angola 60 55 5 Iraq
Benin 30 30 North Yemen
Burundi 75 75 South Yemen
Cameroon 125 125 Syria
Congo 1,005 505 85 415
Equatorial Guinea 200 200 South Asia
Ethiopia 1,790 1,290 500 Afghanistan
Ghana 180 180 Bangladesh
Guinea 1,305 885 60 360 India
Guinea-Bissau 100 100 Pakistan
Mali 420 360 10 50 Sri Lanka
Mozambique 480 400 30 50
Nigeria 825 790 35
Sierra Leone 150 150
Somalia 2,585 2,395 160 30
Sudan 550 330 20 200
Tanzania 3,005 1,970 10 1,025
Togo 55 55
Zaire 175 175
Zambia 250 190 60
Other 1,385 1,085 290 10
' Data refer to the estimated number of persons departing for
training. Numbers are rounded to the nearest five.
Total
USSR
Eastern
Europe
China
9,300
7,590
1,710
9,270
7,560
1,710
30
30
780
780
780
780
18,875
16,370
2,505
6,250
5,665
585
315
315
4,400
3,710
690
1,360
1,360
1,095
1,075
20
5,455
4,245
1,210
7,225
6,425
370
430
4,010
3,725
285
485
445
40
2,285
2,200
85
430
45
NA
385
15
10
..
5
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Total
1954-69
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
Total
USSR
Eastern
Europe
China
32,980
18,190
9,830
4,960
10,395
6,565
2,790
1,040
1,175
200
195
780
2,190
1,125
485
585
2,180
655
920
605
1,920
715
605
600
1,915
815
820
280
2,810
1,935
510
365
1,930
980
800
150
1,030
425
405
195
4,850
3,060
1,575
220
2,585
1,720
730
135
Total
USSR
Eastern
Europe
China
14,500
8,170
3,590
2,740
4,720
3,225
910
590
605
390
145
70
795
420
190
190
860
430
170
260
960
500
220
240
1,190
705
230
255
940
505
250
185
1,160
465
375
320
1,250
545
470
235
1,110
485
380
240
910
500
255
160
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Communist Countries: Economic Aid
Extended to Non-Communist LDCs'
Total USSR Eastern China Total USSR Eastern China
Europe Europe
North Africa 4,230 2,920 980 330 45 45
Algeria 1,330 715 525 90
Mauritania 105 10 10 85
Morocco 2,320 2,100 170 55
Tunisia 425 95 230 95
Other 45 45 45 45
Sub-Saharan Africa 5,090 1,200 1,445 2,445 225 95 90 40
Angola 115 15 100
Benin 50 5 NA 45
Burundi 60 60 40
Cameroon 110 10 100
Cape Verde 20 5 NEGL 15
Central African Republic 20 5 15
Chad 75 5 70
Ghana
280
95
145
40
Guinea
405
210
110
85
Guinea-Bissau
25
10
NA
15
Madagascar
110
20
NEGL
90
Mali
215
90
25
100
Mauritius
40
5
35
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Table A-6 (continued)
Total USSR Eastern China Total USSR Eastern China
Europe Europe
1,150
260
550
335 65
275
15
175
85
555
215
290
45
135
25
15
90
2,990 965 1,870 155 265 265 NEGL
515 220 295
120 70 50
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Table A-6 (continued)
Communist Countries: Economic Aid
Extended to Non-Communist LDCs'
Total USSR Eastern China
Europe
Iran 1,850 1,165 685
Iraq 1,245 705 495 45
Jordan 25 25 NA
North Yemen 310 145 40 130
South Yemen 350 205 65 80
Syria 1,785 770 955 60
Turkey 3,725 3,330 395
Other 285 75 195 10
South Asia 7,410 4,980 1,245 1,185
Afghanistan 1,500 1,290 135 75
Bangladesh 590 305 210 75
India 2,735 2,280 455
Nepal 210 30 180
Pakistan 1,755 920 215 620
Sri Lanka 475 160 95 220
Other 150 .. 140 10
' Because of rounding, components may not add to totals shown.
Totals represent the sum of known values.
Total
USSR
Eastern
Europe
China
25
25
1,600
1,600
..
360
25
305
30
50
25
25
50
50
110
90
20
150
..
140
10
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Communist Economic Technicians
in Non-Communist LDCs, 1979'
Total
USSR
China
Cuba
Total
USSR
China
Cuba
and
and
Eastern
Eastern
Europe
Europe
North Africa
39,875
37,845
930
1,100
Algeria
11,900
11,500
300
100
Europe
135
10
125
Libya
24,505
23,500
5
1,000
Malta
135
10
125
Mauritania
455
55
400
Other
3,015
2
790
225
East Asia
250
90
160
Sub-Saharan Africa
28,150
,
10,440
9,325
8,385
Latin America
3,225
595
155
2,475
Angola
9,270
2,760
10
6
500
Bolivia
215
215
Ethiopia
2,250
1,500
300
,
450
Jamaica
650
50
600
Gabon
70
20
50
Nicaragua
1,600
1,600
Gambia
105
20
85
Peru
120
110
10
Ghana
195
75
120
Other
640
270
95
275
Guinea
1,070
645
225
200
Middle East
28,690
25,905
1
135
1
650
Guinea-Bissau
140
50
50
40
,
,
Egypt
775
750
25
Kenya
20
20
Iran
2,200
2
200
Liberia
105
5
100
,
Iraq
12,900
11,275
275
1
350
Madagascar
370
110
235
25
,
North Yemen
495
160
335
Mali
885
485
400
South Yemen
2,030
1,280
450
300
Mauritius
15
15
Syria
6,025
6,000
25
Mozambique
1,500
800
100
600
Other
4,265
4,240
25
Niger
190
15
175
Nigeria
1,835
1,725
100
10
South Asia
6,975
5,945
1,030
Rwanda
55
15
40
Afghanistan
3,775
3,700
75
Sao Tome and Principe
315
15
100
200
Bangladesh
145
115
30
Senegal
515
115
400
India
1,285
1,285
. .
Sierra Leone
420
20
400
Nepal
335
10
325
Somalia
1,050
50
1,000
Pakistan
1,025
750
275
Sudan
460
10
450
Sri Lanka
410
85
325
Tanzania
1,320
140
1,100
80
'Minimum estimates of number present for a period of one month or
more. Numbers are rounded to nearest five.
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Academic Students From Non-Communist
LDCs Being Trained in Communist Countries
as of 31 December 1979'
Total USSR Eastern China
Europe
North Africa
3,465
1,825
1,605
35
Algeria
1,950
950
1,000
Mauritania
305
220
75
10
Tunisia
625
300
300
25
585
355
230
Sub-Saharan Africa
23,865
12,865
10,795
205
Angola
1,145
395
750
Benin
275
255
20
Botswana
25
25
Burundi
310
105
200
5
Cameroon
140
115
25
Cape Verde
395
350
45
Central African Republic
485
230
250
5
Chad
375
305
60
10
Comoro Islands
25
25
Congo
1,330
800
530
Djibouti
10
10
Equatorial Guinea
270
270
Ethiopia
3,400
1,600
1,800
Gabon
510
10
500
Gambia
45
45
Ghana
920
500
420
Guinea
1,000
575
410
15
Guinea-Bissau
440
225
215
Ivory Coast
940
240
700
Kenya
715
575
140
Lesotho
50
25
25
Liberia
125
45
80
Madagascar
1,165
1,000
165
Mali
600
400
200
Mauritius
185
150
35
425
275
150
Niger
230
155
50
25
Nigeria
2,575
1,030
1,545
Rwanda
165
125
40
Senegal
315
210
75
30
435
380
40
15
Total USSR Eastern China
Europe
Somalia
20
20
Sudan
1,605
410
1,140
55
Tanzania
965
525
415
25
Togo
420
360
40
20
Uganda
400
270
130
Upper Volta
330
330
Zaire
420
35
385
Zambia
340
255
85
Other
340
230
110
Latin America
5,010
2,860
2,150
Bolivia
150
95
55
Brazil
70
35
35
Colombia
1,035
505
530
Costa Rica
610
360
250
Dominican Republic
260
165
95
Ecuador
890
335
555
El Salvador
120
30
90
Guatemala
25
25
Guyana
95
20
75
Nicaragua
170
130
40
Peru
635
610
25
Venezuela
135
65
70
Other
815
485
330
Middle East
13,160
6,745
6,405
10
Egypt
250
125
125
Iraq
1,015
250
765
Lebanon
490
450
40
North Yemen
555
455
100
South Yemen
910
660
250
Syria
3,830
2,135
1,695
Other
6,110
2,670
3,430
10
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Table A-8 (continued) Number of Persons
Total
USSR
Eastern
Europe
China
South Asia
9,780
6,635
3,050
95
Afghanistan
6,430
4,000
2,430
Bangladesh
1,000
660
325
15
India
1,160
1,000
160
Nepal
585
550
35
Pakistan
205
125
70
10
Sri Lanka
400
300
65
35
' Numbers are rounded to nearest five. Most of the estimates
are based on scholarship awards.
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Exports
Imports
Exports
Imports
Exports
Imports
Exports
Imports
Total
850
810
1,255
1,260
2,695
4,130
4,155
4,100
North Africa
35
20
125
85
250
255
305
310
Sub-Saharan Africa
85
60
95
140
185
325
385
440
East Asia
65
160
20
160
30
220
55
315
Latin America
50
110
10
80
205
1,060
140
770
Middle East
310
230
785
445
1,400
1,570
2,380
1,470
South Asia
305
230
220
350
625
700
890
795
' Because of rounding, components may not add to the totals shown.
Data are from Soviet foreign trade yearbooks.
Exports
Imports
Exports
Imports
Exports
Imports
Exports
Imports
Total
820
780
1,150
960
3,640
2,865
5,370
4,365
North Africa
40
30
95
60
610
455
1,105
555
Sub-Saharan Africa
115
70
70
40
175
65
405
335
East Asia
45
45
15
25
105
65
110
140
Latin America
75
190
135
240
380
530
550
1,125
Middle East
380
300
605
370
1,940
1,375
2,840
1,885
South Asia
165
145
230
225
430
375
360
325
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Exports
Imports
Exports
Imports
Exports
Imports
Exports
Imports
Total
425
430
455
305
1,775
875
2,380
1,415
North Africa
0
0
30
30
80
60
110
50
Sub-Saharan Africa
90
75
95
80
390
130
485
215
East Asia
195
75
160
65
680
155
960
295
Latin America
NEGL
115
10
5
45
250
75
485
Middle East
65
80
90
40
420
180
615
240
South Asia
75
85
70
85
160
100
135
130
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Appendix B
A Quarter Century of
Communist Aid:
Regional Developments
Moscow's Middle Eastern aid offensive of the mid-
1950s was the USSR's first important challenge to
Western interests in the Third World. Soviet willing-
ness to provide support to Arab military establish-
ments and to undertake large industrial ventures, often
turned down by the West, gave the USSR and its
European allies entree into several strategically
located Arab states.
At yearend 1979 the Middle East-North African re-
gion remained the principal target of European
Communist penetration, having received commitments
of $15.5 billion of economic aid and $38.7 billion of
military aid from the USSR and Eastern Europe.
These amounts represented 55 percent of the Soviet-
East European economic aid commitment to the Third
World and 75 percent of military aid. LDCs in the area
also accounted for more than one-half of CEMA trade
with LDCs in 1978.
Foundations of the Relationship, 1966-73
The USSR had gained a foothold in the Middle East-
North African area and influence in regional political
affairs by yearend 1973 with a cumulative $10.4 bil-
lion of Soviet-East European military commitments
and $7.7 billion of economic aid commitments.
Figure 4
Middle East and North Africa: Communist' Military and
Economic Assistance, 1955-79
Military
Economic
Military and
Economic
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AS] 40 million military package for Egypt in 1955 had
set off the chain of events that led to Soviet construc-
tion of the Aswan Dam, Egypt's nationalization of the
Suez Canal, and a nearly $8 billion Communist-
Egyptian economic/ military connection. The spillover
of Soviet influence into other Arab states had intensi-
fied Middle East tensions and had created a large new
market for Communist arms. Meanwhile, assistance to
Algeria in its war of independence helped to lengthen
the arc of Soviet influence which now extended from
India to Algeria.
By 1974, Soviet-East European military aid had pro-
vided the Arabs equipment and supplies in two Middle
East wars, had underwritten Soviet-type military
establishments in five Arab countries, and had fur-
nished more than 3,000 military advisers and tech-
nicians for those countries. Except in Iran and Turkey,
Moscow's economic relations with large Middle East-
ern and North African clients had developed as a
follow-on to the military supply relationship.
Moscow also had provided Middle Eastern and North
African nations with prestigious industrial facilities
such as aluminum plants, machine tool plants, and
multipurpose dams for power generation, flood control,
and irrigation. The aid helped establish national petro-
leum industries in Syria and Iraq and a natural gas
industry in Iran. It furnished half of Egypt's and nearly
all of Syria's electric power capacity and provided
irrigation potential for a million hectares of land in the
region.
The CEMA countries in this early period dispatched
6,400 civilian specialists to the area, including eco-
nomic advisers, technical instructors, geological and
industrial surveyors, plant designers, installation en-
gineers, and plant managers. Furthermore, the USSR
and East European countries trained on site more than
15,000 Middle Eastern and North African personnel
in technical skills and nearly 18,000 in academic dis-
ciplines. In 1973, Soviet-Egyptian trade was almost
four times the 1960 level, Soviet-Iraqi trade was 18
times as great, and Soviet-Syrian trade eight times. In
1973 the region absorbed nearly 15 percent of Soviet
exports of machinery and equipment and supplied most
of Soviet energy and cotton imports.
Middle East and North Africa:
Communist Economic Aid Commitments'
Total
16,295
4,635
3,065
8,590
Middle East
12,065
4,115
2,400
5,550
USSR
7,870
2,580
1,190
4,100
Eastern Europe
3,735
1,345
995
1,395
460
190
215
55
2,920
315
240
2,365
330
55
105
170
Moscow's most serious setback-the loss of Egypt as a
major client in 1973-marked a new chapter in rela-
tions between the Communists and the Middle East.
The Soviet reaction was to cultivate stronger ties with
other countries in the area, especially Syria, and to
capitalize on the sudden tide of oil wealth in the area.
Expansion of the Relationship, 1974-79
In 1974-79, the European Communists exploited the
region's wealth by arranging $28 billion in military
sales, helping to fill labor deficits (especially in Libya)
with 23,000 technicians a year, and winning several
billion dollars worth of commercial contracts.
The new sales initiatives paved the way for: Moscow's
first military order from Kuwait, for missiles in 1977;
negotiations with Libya (still under way) on huge
commercial contracts; agreement with Iraq on con-
tracts reaching into the billions for electric power
development; expansion (before the Islamic revolu-
tion) of commercial ties with Iran on a broad new
front; and a $2 billion, 30-year agreement in 1978 for
the exploitation of phosphates in Morocco. By 1978,
Communist nonmilitary exports to the area had nearly
doubled, creating a combined billion-dollar trade sur-
plus for the USSR and Eastern Europe. The loss of
Egypt as a major arms client was more than com-
pensated for by the unprecedented sales to Libya, Iraq,
and Syria.
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Even so, the expansion of Soviet and East European
nonmilitary trade with the region did not match the
more than quadrupling of Western trade. The Eu-
ropean Communist market share fell to a little more
than 5 percent by 1978; the most pronounced reduc-
tion, after Egypt, was in the share in Iraq's trade, down
from 22 percent in 1973 to 15 percent in 1978. By
yearend 1979 the USSR and Czechoslovakia had lost
Egypt as their major source of raw cotton, and Moscow
was forced to abandon the repair base for its Medi-
terranean fleet at the Alexandria shipyard.
At the same time, massive framework agreements with
Turkey, Morocco, Algeria, and Iraq were expanding
the Soviet Union's long-term connection with the Mid-
dle East and North Africa. The $8.4 billion of eco-
nomic aid committed to these countries in 1974-79
($6.5 billion from the USSR and $1.9 billion from
Eastern Europe) accounted for nearly one-third of all
Soviet and East European aid pledged to LDCs in the
first quarter century of the aid program.
Moscow's Favorite Partners: The Radical Arabs
Algeria. The Algerian-Soviet relationship has centered
on military aid, which by 1973 had made Algeria the
strongest power in the Maghreb. Practically all of the
country's defense equipment has been supplied by
Moscow-including some of the latest and most costly
equipment exported by the USSR. The Algerian-
Moroccan dispute over Western Sahara in the mid-
1970s triggered an even closer relationship with the
USSR, and a huge increase in commitments of Soviet
arms. Algeria has moved up to fourth place among
Moscow's Third World arms clients.
Economic Support, a Lesser Response. The $1.2 bil-
lion of European Communist aid has been important to
the development of Algeria's public sector industry.
Moscow's hand was most visible during the 1970-73
Algerian plan, a centrally directed program of heavy
industrial investment. Despite the general failure of
the plan, Soviet-East European aid provided Algeria
with its only steel mill; an expanded program of min-
eral prospecting and exploitation; and assistance for
agricultural and light industrial development.
Under a framework agreement signed in 1976, the
USSR will build an alumina complex, including a 600-
MW power plant and rail spur; a heavy machinery and
Algeria: Communist
Economic Aid Commitments'
Total
1,330
855
470
USSR
715
425
290
Eastern Europe
525
340
180
electrical complex; a dam and irrigation works; a sec-
ond steel mill in western Algeria, to process iron ore
from Gara Djibilet; and oil refineries. The USSR
already has committed $290 million to the aluminum
plant.
Lackluster Trade Performance. Outpaced by the
expansion of Algeria's trade with the West, Soviet
trade bottomed out at $200 million in 1978, Soviet
equipment and building materials being exchanged for
Algerian wine. East European trade was double the
Soviet, at $430 million; oil was Eastern Europe's major
import.
Iraq: The USSR's Largest Arms Buyer. Soviet military
aid to Iraq has outrun economic aid nearly 15 to I and
has made Baghdad the USSR's largest arms buyer.
The Communist military supply program has trans-
formed the Iraqi military from a counterinsurgency
force after the July 1958 coup into a large, well-
equipped military establishment capable of sizable
modern military operations.
Iraq: Communist Economic
Aid Commitments
Total
1,245
1,045
200
USSR
705
555
150
Eastern Europe
495
445
50
China
45
45
0
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Iraq: Dukan Hydropower
Station (USSR)
Iraqi-Soviet relations blossomed in 1972 with the sign-
ing of a Friendship Treaty, and were strengthened two
years later when Iraq was admitted to observer status
in CEMA. Relations have faltered periodically, how-
ever, because of differences over a Middle East settle-
ment, and, most recently, the USSR's invasion of
Afghanistan. The recent worsening of political rela-
tions comes at a time when Iraq's oil wealth gives it
greater independence of action. The economic connec-
tion has become less important to Baghdad as its
wealth has multiplied, and Iraq itself has become an
important aid donor.
Until the mid-1970s, when Iraq began to diversify its
supplier base, Communist countries had supplied
nearly all of Iraq's weapons and military training. The
initial agreement in 1958 was followed in 1960-61 by
pacts for aircraft and ground equipment for infantry
divisions and an armored brigade to quell the Kurdish
rebellion. By June 1967 (the Arab-Israeli war), Mos-
cow had provided aircraft, light and medium tanks,
armored personnel carriers, and naval craft. Although
Iraq's war losses were small, late-model fighter air-
craft were airlifted to Iraq as part of an overall Arab
resupply operation. Deliveries since the 1973 war have
brought in the most modern Soviet military equipment
ever supplied an LDC.
A Profitable Partner. Recurring political strains not-
withstanding, Moscow puts high priority on good rela-
tions with Iraq. The Soviets earn hard currency from
sales of arms and machinery and equipment to Iraq;
Iraqi supplies of crude oil enable Moscow to sell more
oil in the West.
Moscow's most important contribution (with the help
of Hungary, Romania, and Czechoslovakia) under the
$700 million of economic development credits to Iraq
was in the establishment and support of an Iraqi
national petroleum industry in the late 1960s. The
USSR filled the gap left by the withdrawal of Western
technicians and provided an outlet for Iraqi oil when
Baghdad's traditional markets in the West were in
disarray. With $175 million of Soviet credits (and $75
million from Eastern Europe), Iraq was able to explore
and exploit highly productive areas of the North
Rumaila, Nahr Umar, and Luhais fields in southern
Iraq, build new pipelines, and add 100,000 b/d to
refinery capacity.
Eastern Europe pledged $325 million for light indus-
trial, food-processing plants, and transportation facili-
ties, but it has not been as successful as Moscow in
pulling down profitable commercial contracts in Iraq.
In the mid-1970s, the USSR bid on and won $1 billion
of commercial contracts for four major irrigation and
power projects. Soviet interest had already focused on
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power and water development in 1971 under a $220
million line of credit. The Soviet-aided 840 MW
Nasiriyah power plant will be the largest thermal plant
in the Middle East when it reaches capacity operation.
In 1978, Communist trade with Iraq reflected the
expanded commercial relations. Two-way trade had
doubled compared with 1973, to nearly $3 billion, the
Soviets accounting for $1.6 billion. The USSR, none-
theless, fell from top rank to fourth place as a trading
partner, its share of Iraq's trade falling from 10
percent to 9 percent.
Syria: Moscow's Longstanding Arab Partner. A Soviet
credit to Syria for arms purchases in 1956, extended
through Czechoslovakia, had grown into a multibillion
dollar program by yearend 1979. By the time of the
first Arab-Israeli war in 1967, Soviet arms aid in-
cluded large quantities of modern fighter aircraft,
tanks, and personnel carriers. In the wake of the expul-
sion of the Soviet military mission from Egypt, Mos-
cow expanded the range of weapons supplied to Syria
and increased its technical advisory contingent.
Syria: Communist Economic Aid
Commitments
Total
1,785
380
450
955
USSR
770
235
85
450
Eastern Europe
955
140
310
505
China
60
5
55
0
Communist Presence in Syria. Communist aid was
Syria's only sustained source of economic assistance
until 1974, when OPEC governments began to extend
nearly $1 billion a year for balance-of-payments
support.
Syria has signed nearly $1.8 billion of economic agree-
ments with Communist countries. East European
countries have assumed responsibility for oil refineries,
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a phosphate plant, land reclamation, power, and light
industrial plants, while Moscow's showpiece was the
Euphrates Dam. The USSR also contributed to oil
development, improvement of the railroads, and
expansion of ports.
The 800-MW power station at the half-billion-dollar
Euphrates Dam (completed in March 1978) qua-
drupled Syria's electric power capacity, according to
the Syrians, and produces 95 percent of Syria's elec-
tricity. Powerlines are being strung the full length of
Syria; a recent Syrian order for 50 East German
transformer stations will help in power distribution.
Irrigation and reclamation projects associated with the
dam eventually will make 700,000 hectares of land
available for cultivation.
By 1979 Soviet and Syrian railroad construction teams
had completed 100 kilometers of the Damascus-Horns
railroad; Syria's national oil industry, established
largely with Soviet and East European aid, had be-
come a net exporter.
Iran: The Faltering Oil Giant
In 1979, many of the 4,000 Soviet economic tech-
nicians who had left in 1978 were back in place and
work had resumed on most projects begun before the
revolution. The military supply relationship remained
dormant. Perhaps Moscow's greatest concern was the
reduced delivery of Iranian gas to its Asian Republics.
Economic Program Paramount. In contrast to the
Communist connections with most other Middle East-
ern countries, the connection with Iran turned on eco-
nomic, not military, aid. Iran, the Third World's sec-
ond largest arms buyer, placed less than 5 percent of its
orders in Communist countries since early 1967 and
never hosted more than 100 Communist military
advisers.
The economic relationship also was low key, contribut-
ing only slightly to Iran's economic development.
Moscow's first development credit to Iran, in 1963,
provided assistance for a dam on the boundary river
Aras. The dam has a total generating capacity of
44,000 kW of electricity and sufficient water to ir-
rigate 90,000 to 100,000 hectares of land on each side
of the border.
Iran: Communist Economic Aid
Commitments
Total
1,850
1,330
520
USSR
1,165
790
375
Eastern Europe
685
540
145
After the 1963 credits, the USSR extended $1.1 billion
of aid, Eastern Europe $685 million. The Soviets built
Iran's first steel plant, a project turned down by West-
ern interests. The plant became one of Iran's largest
industrial enterprises, employing 10,000 Iranian work-
ers and accounting for 70 percent of Iran's steel capac-
ity. Soviet aid improved port facilities and transport
links with the USSR, provided grain storage facilities,
contributed to the development of Iranian fisheries,
increased Iran's electric power and irrigation facilities,
and made possible the annual export of 13 billion cubic
meters of natural gas which previously had been flared.
The $200 million of annual earnings from the gas was
more than enough to service Tehran's military and
economic debt to the USSR. The East European pro-
gram (largely Czech and Romanian) emphasized
agro-industrial operations.
The quadrupling of world oil prices in 1973/74 re-
sulted in an upsurge in Communist commercial rela-
tions with Iran. A joint commission for long-term
planning was established and a 15-year economic
cooperation agreement signed to promote a $3 billion
development effort on both sides of the Soviet-Iranian
border under commercial and credit arrangements.
The next year Iran awarded more than a billion dollars
worth of commercial contracts to the USSR for power
plants, a heavy machinery complex at Kerman, and
other projects.
The largest project to fall by the wayside when
Khomeini took power was the 1,500-kilometer IGAT-
II pipeline to the Soviet border, which was to have
delivered 17 billion cubic meters of gas annually from
fields in southern Iran. Under the 20-year trilateral
accord, the USSR would supply Soviet gas to Western
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Europe and would receive a roughly equivalent amount
of Iranian gas for domestic use, plus 2.4 billion cubic
meters of gas as a fee.
Although Iran was the largest Third World market for
Soviet goods in 1978, trade with the USSR never
amounted to more than 5 percent of Iran's total trade.
East European trade with Iran moved up to nearly a
billion dollars in 1978, more than one-third of Iran's
nonoil and nongas exports going to these countries.
East European countries were harder hit than the
Soviets by the turmoil in Iran because of dependence
on Iranian crude oil.
The Middle Eastern Moderates
Egypt. A few Soviet technicians and a small volume of
trade were all that. remained in 1979 of a relationship
that had brought Egypt $1.1 billion of Soviet aid for
public sector development and $4 billion of military
equipment.
The importance of Soviet aid to the Egyptian economy
started declining in 1967, when Egypt began to receive
annual cash payments from Arab states of about $160
million. This was the first substantial non-Communist
assistance Egypt had received in a decade.
Sadat's expulsion of Soviet military technicians in
1972 triggered a series of actions that culminated in
Egypt's unilateral abrogation of the Friendship Treaty
in 1976 and Cairo's cotton embargo in 1977. The
dispute over repayment of Egypt's military debt finally
destroyed the connection. The Communist legacy was
a $3-4 billion debt:, vast stores of military equipment,
and a Soviet-backed economic development program
in midstream. For the Soviets, the crumbling of the
relationship was a major foreign policy setback.
A Public Sector Showpiece. The Communist program,
which accounted for 30 percent of Egyptian capital
investment in the 1960s, was responsible for half of
Egypt's installed power capacity, all of Egypt's alu-
minum capacity, and three-fourths of the capacity at
Egypt's only steel mill. Despite the breach in Soviet-
Egyptian relations, work has continued under
outstanding credits. The 500 Soviet technicians
Egypt: Communist Economic
Aid Commitments
present in Egypt during 1979 worked on the fourth
blast furnace at the Helwan steel complex, a 60,000-
ton expansion of the Nag Hammadi aluminum plant,
rural electrification and the Suez and Aswan power
plants, and cement and pharmaceutical plants.
Soviet-Egyptian trade had declined after the cotton
embargo and Egypt's refusal to maintain the large
traditional trade surplus used to service its debts. Mos-
cow's share of Egyptian exports fell to less than 15
percent in 1978 from the 50 percent the USSR had
claimed in every year from 1970 to 1975. Egyptian
imports from the USSR fell from approximately one-
fourth of Egypt's imports to little more than 10
percent.
Eastern Europe Not Hard Hit. Except for Czecho-
slovakia, which had joined with the USSR in the arms
embargo, and Bulgaria, with whom Egypt severed
relations in 1978, Egypt has maintained economic
relations with other European Communist countries.
Eastern Europe implemented ongoing aid for elec-
trification projects, diesel equipment, and other
machinery purchases, and added $120 million of
credits to the $770 million extended before 1974. The
East Europeans also agreed to continue agricultural
development, a cement plant, prefab housing factories,
and chemical plants.
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South Asia
Moscow forged its earliest links in the Third World
with South Asian neighbors. A few million dollars to
Afghanistan in 1954 for small projects marked the first
Soviet aid venture into the Third World and a $118
million credit for a steel mill in India in 1955 the
second. Because of their location, both of these coun-
tries have remained major recipients of Soviet eco-
nomic and military aid. Pakistan has recently been
added to the list of big recipients of economic aid.
The USSR extended about two-thirds of the $7.4
billion of Communist economic aid and 85 percent of
the $6.4 billion of military aid to South Asian countries
by yearend 1979. China and Eastern Europe contrib-
uted nearly equal amounts of the remaining economic
commitment.
Figure 5
Afghanistan: A Classic Case of Soviet Penetration.
The USSR's invasion of Afghanistan in December
1979 was the culmination of 25 years of growing Soviet
economic and military penetration of this border state.
Despite Kabul's earlier determination to associate it-
self with the nonaligned nations, the USSR had be-
come Afghanistan's largest source of economic and
military assistance, an important influence on cultural
and educational programs, and its principal trading
partner. Moscow's deep interest in Afghanistan
stemmed from Afghanistan's location on the Soviet
border and as a passageway to the Indian subcontinent
and the Middle East.
Upgrading Afghan military forces beginning in 1956
and the $250 million in Soviet credits for Kabul's first
five-year economic development plan were initial steps
South Asia: Communist' Military and Economic Assistance, 1955-79
Economic
Military and
Economic
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Afghanistan: Jalalabad Power
and Irrigation Project (USSR)
in Moscow's $2.5 billion economic and military pro-
grams. The Soviet economic aid-which gave the
Kremlin a dominant role in Afghan economic develop-
ment-was supplemented by $135 million of East Eu-
ropean credits, largely for agro-industrial develop-
ment, and $75 million of Chinese credits, for irrigation,
a hospital, and light industrial plants. Soviet aid was
provided on more generous terms than allowed any
other LDC.
During the 25-year program, Soviet aid had provided
about one-half of Kabul's import requirements for
projects included in its first four economic develop-
ment plans. Aid to Afghanistan has been supported
with large contingents of Soviet and East European
personnel-3,700 in 1979 before the invasion. In addi-
tion, some 5,000 Afghan students had been trained in
Soviet academic institutions and 1,600 in technical
institutions. Moscow's position as Afghanistan's larg-
est aid donor also made it the principal trading partner.
After the late 1960s, Afghan gas exports brought
balance to the civilian trade account-until 1978 when
sharply expanded imports of food and petroleum prod-
ucts created a $100 million trade deficit.
A Soviet-Built Military Establishment. The USSR is
Afghanistan's sole source of arms, not counting a small
amount of equipment from Czechoslovakia. Poor lead-
ership and troop training and the lack of trained oper-
ational and maintenance personnel had required
continuing Soviet advisory, training, and maintenance
services. Before the 1979 intervention, the Soviet tech-
nicians in Afghanistan were spread through the armed
forces at every level of command.
India: Close Relations Weather Political Change.
The Soviet-Indian relationship has endured political
change in New Delhi and Moscow and disagreements
over the content of the aid program and its administra-
tion over the past 25 years.
From the first Soviet credit to India-for the Bhilai
steel mill in 1955-Moscow realized that India's in-
terest in developing a public sector heavy industrial
complex coincided with its own willingness and ability
to supply equipment and technology. As in Afghani-
stan, Soviet commitments to India were geared to
economic plan periods. More than one-half of the
$2.3 billion Soviet commitment and even more of
Eastern Europe's was allocated to large industrial
complexes.
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India: Bokaro Steel Plant
(USSR)
The East European program reinforced the Soviet
heavy industry pattern. As a result of the industrial
capacity created by Communist assistance, India was
able to supply two-thirds of the equipment required to
build the 6-million-ton Bokaro steel mill out of domes-
tic capacity. In addition, Moscow has placed several
hundred million dollars of orders with Soviet-built
plants in India for equipping plants in other LDCs.
Soviet aid also generated rapid increases in trade,
bringing the two-way trade level to a billion dollars. A
$100 million annual surplus in India's favor has en-
abled New Delhi to service its economic and military
debts to the USSR on schedule.
A $340 million credit in May 1977 on the most favor-
able repayment terms ever offered India by the USSR
(20-year amortization, after a 3-year grace period at
2.5-percent interest) signaled a revitalization of eco-
nomic relations which had waned after the large
credits extended in 1966. Except for a 2-million-ton
Soviet emergency wheat shipment in 1974, no new
credits were furnished until 1977, deliveries dropped to
a trickle, and debt service remained high-creating a
net outflow of resources. Soviet-built plants operated
at partial capacity during the period because of domes-
tic economic problems, and shifts in India's develop-
ment plan reduced New Delhi's need for the project aid
provided with Soviet assistance.
Deliveries, which bottomed out in 1971, resumed a
strong upward course by 1978 as work began on sev-
eral major new plants-for example a copper refinery
and an alumina plant-and as the expansion and mod-
ernization of the Bokaro and Bhilai steel mills acceler-
ated. In 1979, the USSR agreed to construct a $2.7
billion blast-furnace complex, the-financial details for
which were not spelled out.
Pakistan: Support From Both China and the USSR.
New economic commitments to Pakistan from Poland
($90 million) and China ($20 million) in 1979 brought
total Communist aid pledges to Islamabad to nearly
$1.8 billion. Until the provision of large Soviet credits
for a 1.1-million-ton steel mill beginning in 1971,
China had been the largest, most active Communist
donor.
The Chinese-Pakistani relationship, a product of re-
gional events in the mid-1960s and unending political
and military rivalry between Pakistan and India, has
been supported by the strong pro-Chinese bias among
Pakistan's ruling elite. The Chinese, viewing Pakistan
much as the Soviets had viewed Egypt, had made
Pakistan their largest recipient of economic and mili-
tary aid, with extensions totaling more than 15 percent
of their economic commitments to LDCs and nearly 60
percent of their military commitments.
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Pakistan: Communist Economic
Aid Commitments
USSR 920 200 495 225
China's interest in Pakistan surfaced in 1964 with aid
for a heavy industrial complex, Beijing's only such
assistance to a Third World nation. It was reaffirmed
in the mid-1970s when 20,000 Chinese laborers
worked on the Karakoram road built by China through
the Himalayas to link the two countries.
Soviet and East European military aid has not been
important for Pakistan. Here again the Chinese in-
terest was apparent. Even though Beijing provided
only about half a billion dollars worth of military
equipment in the past 20 years, China had rallied with
rapid delivery of arms in periods of crisis, when West-
ern nations withdrew their support for political rea-
sons. The small Chinese share made an important
contribution to the building of a military establishment
in Pakistan and remains the backbone of Pakistan's air
and ground force inventories. The dollar value under-
states the extensive volume of aid supplied because of
the relatively unsophisticated character of the
hardware.
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Sub-Saharan Africa
The half-billion dollars of Soviet economic aid to 10
countries in Sub-Saharan Africa after their independ-
ence in the late 1950s and early 1960s (and the $150
million from Eastern Europe) failed to win the sym-
pathies of the new nations on the continent. The new
states continued to rely on the larger Western pro-
grams and the simpler ($225 million) Chinese
program.
The Communist military program in the region had
more clout-$4.3 billion of Soviet-East European
arms agreements with Sub-Saharan Africa in 1975-79
(compared with $760 million in 1959-74) and 37,000
Cuban and European Communist military personnel.
The first sustained Soviet military foray into Sub-
Saharan Africa came in 1975 with supplies and
personnel furnished to Angola after the MPLA vic-
tory. It was followed by the shift in Soviet support from
Somalia to Ethiopia.
Figure 6
Implementation of the Soviet $1.2 billion economic
program bogged down from the beginning and caused
Moscow to cut the size and change the kind of its
commitments. Instead of the usual heavy industrial
program, Soviet projects began to feature improve-
ments in agriculture, geological exploration, medical
services, and help in establishing light industries. How-
ever, Moscow in most instances would not provide the
turnkey projects and the funding of local costs that
were needed by most African states.
Guinea and Ethiopia have been the largest Sub-
Saharan African recipients of Soviet economic aid-
Guinea because of the nearly $100 million project for
exploiting bauxite (which the USSR takes as repay-
ment) and Ethiopia because of a 1959 line of credit
(still not fully drawn) and additional project aid since
the renewal of their relationship-$95 million in 1979.
Sub-Saharan Africa: Communist' Military and Economic
Assistance, 1958-79
Military and
Economic
I Excludes Cuban, North Korean and Yugoslav assistance.
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Another $90 million of European Communist eco-
nomic aid was pledged to Sub-Saharan Africa in 1979.
Nigeria received almost all of Eastern Europe's new
pledges.
After the early spurt of assistance in the 1960s, Soviet
project aid played a secondary role in the Soviet offen-
sive. After 1964, Moscow concentrated instead on
training and technical assistance; by yearend 1979
almost 30,000 Sub-Saharan African nationals had
gone to the USSR and nearly 20,000 to Eastern Eu-
rope for advanced academic training. Soviet and East
European technicians were posted to Africa-10,000
in 1979-to provide administrative, health, and teach-
ing services. The number of personnel assigned to
Africa rose especially fast in the past few years because
of Moscow's new interests in Angola and Mozambique
and its growing commercial relations with Nigeria.
In 1975-79 the USSR formalized its relationship with
the new government of Angola with a 20-year Friend-
ship Treaty, military supplies, and the provision of
1,000 Soviet officers who occupy key positions in the
military command and control structure. The East
Europeans have provided ground forces equipment and
a small contingent of technicians, among whom the
East Germans have major responsibility for security
and intelligence functions. The most important support
has come from the 19,000 Cubans-largely combat
troops who are supporting the government against
insurgents, and advising and instructing Angola's
regular military and guerrilla forces.
The Communists have not yet addressed the economic
problems of Angola. The USSR has extended only
miniscule amounts of aid for fisheries and agriculture,
and Eastern Europe's $100 million for agricultural and
marine development has hardly been tapped. Nor have
the 9,000 Communist economic technicians now in
Angola been able to fill the gap left by the 100,000
Portuguese who departed at independence.
Mozambique has relied almost exclusively on the
USSR and Eastern Europe to maintain its military
establishment since its independence from Portugal in
1975. Only small amounts of the $100 million of
Soviet-East European economic aid committed since
1975 has been delivered. The 1,500-man contingent of
civilian technical personnel (40 percent of whom were
Sub-Saharan Africa: Communist
Economic Aid Commitments'
Total
5,090
865
2,480
1,755
USSR
1,200
490
380
335
Ghana
95
95
0
NEGL
Guinea
210
75
135
5
Mali
90
60
30
NEGL
Somalia
165
55
45
65
Other
410
105
170
140
Eastern Europe
1,445
150
440
860
China
2,445
225
1,660
560
Cubans in 1979) has not been able to stem the decline
of the formerly prosperous agricultural sector.
The drive into the Horn of Africa was one of Moscow's
earliest efforts in Sub-Saharan Africa. Until late in
1976, Somalia was the principal Sub-Saharan African
recipient of Soviet aid, mostly military. The USSR-
Somalia relationship began late in 1963, with an agree-
ment for ground, air, and naval equipment which grew
to total Soviet support of Somalia's military by 1976.
In return the USSR was given naval facilities at Ber-
bera on the strategic Gulf of Aden. The Soviets also
used Somali airfields for reconnaissance operations
over the Indian Ocean.
Mogadishu's refusal to moderate its position on the
Ogaden late in 1976 led to a Soviet embargo on weap-
ons and spare parts deliveries; abrogation of their 1974
Friendship Treaty and the expulsion of Soviet and
Cuban military personnel; and the termination of
Soviet airbase and naval base rights, in November
1977.
The decision to back Ethiopia and modernize and
expand its arms inventories far beyond Somalia's level
reflected the Soviet judgment that Ethiopia was the
greater strategic prize. In three years, the USSR pro-
vided Ethiopia with more military equipment than it
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provided Somalia during their entire 13-year relation-
ship. In return, Ethiopia signed a 20-year Friendship
Treaty in November 1978.
In addition to providing weapons, Moscow has begun
to modernize Ethiopia's military facilities and train its
nationals. Soviet military personnel in 1979 provided
instruction and helped to maintain equipment. Cuban
troops had assumed the major foreign combat role
when fighting was at its peak in the Ogaden in 1978.
Since then their number has dropped to 13,000, and
they are playing a support role.
China. The Sino-Soviet competition in Sub-Saharan
Africa was short-lived. Beijing could not match Soviet
arms supplies, (either in amount or sophistication),
and Moscow lost interest in economic aid after a brief
flurry of activity in the early 1960s. Tanzania's accept-
ance of Soviet weapons in 1974 ended China's domi-
nant supplier position in Tanzania, which had ac-
counted for one-third of China's $300 million arms aid
to Sub-Saharan Africa.
Beijing has gotten exceptionally good political mileage
out of its $2.4 billion economic aid program in Africa.
The competition with Moscow began with China's aid
to Guinea in 1960, the year of the Sino-Soviet rift and
the start of a Chinese challenge to Soviet domination of
the world Communist movement. Beijing competed
with Soviet economic aid to Sub-Saharan Africa, not
on a dollar-for-dollar basis, but with an effective labor-
intensive program tailored to the skills and require-
ments of the region. After the initial burst of activity,
Beijing curtailed its aid program as China wrestled
with internal political problems. Chinese aid was
revivified in 1970. A $400 million credit for the Tan-
Zam Railroad broke all previous Chinese records and
set the stage for another $1.5 billion in aid to Sub-
Saharan Africa, spread among 35 countries for light
industry and agricultural assistance. The Chinese won
high marks for the low costs of their projects, their
relevance to the immediate needs of the population,
and the spartan lifestyle of their technicians and
workers.
The $40 million Chinese commitment in 1979-
Beijing's smallest to Sub-Sahara since the Cultural
Revolution-reflected the concentration of Beijing's
limited resources on its own domestic development.
Tanzania/Zambia: The
Tan-Zam Railway (China)
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Latin America
Latin American countries have moved slowly in
accepting Communist aid. Except for a brief flurry of
activity in Chile during the Allende years (1971-73)
and the noteworthy Soviet-Peruvian military sales
connection, trade has remained the single most impor-
tant element in Latin America's relations with the
Communists.
Political changes in Central America and the Carib-
bean in 1979 gave the Communists opportunities for a
breakthrough. Cuba took the lead by establishing close
relations with the new Grenadian and Nicaraguan
regimes and providing some technical and military aid.
Jamaica also received some aid and remains close to
the Castro regime. Cuban activity was overshadowed
by $250 million in Hungarian credits to Jamaica for an
alumina plant, the largest single Communist economic
development credit ever extended to a Latin American
country. Implementation of this project, however,
probably will not take place in the near future because
of questions about its viability.
Figure 7
Latin America: Communist' Military and Economic
Assistance, 1958-79
Military
O
Economic
Military and
Economic
The History: A Trade-Oriented Credit Program.
Other than the credits to Chile and Peru in 1971, the
nearly $3 billion of Communist economic credits ex-
tended to Latin American countries since 1958 have
been largely trade related-usually requiring down-
payments, and repayable over five to 10 years, often at
near-commercial interest rates. Moscow extended the
first such credit to Argentina in 1958-a $100 million
credit on which only $29 million was ever drawn. Since
then the Soviets have extended nearly a billion dollars
of trade credits, about one-half for power development
especially in Argentina, Brazil, Colombia, and
Uruguay.
The poor drawing record on Soviet credits (about 20
percent) has done little to correct the trade imbalance
for which they were intended. The same is true of the
$1.9 billion of East European credits extended to pro-
mote machinery and equipment sales-especially in
Argentina, Brazil, Chile (never implemented because
of political change), and Colombia. As a consequence,
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East European nations made nearly $600 million of
hard currency settlements in 1978 to pay for large food
purchases.
East European countries have had some success re-
cently, however, in concluding long-term barter agree-
ments, such as the Polish $3 billion 10-year agreement
to exchange coal for Brazilian iron ore and Romania's
10-year $650 million agreement to exchange oil, fertil-
izers, and metal products for Brazilian iron ore.
A Program of Recent Vintage. By yearend 1979, 15
Latin American countries had received economic cred-
its from Communist countries, twice the number of a
decade before. Even though the amounts extended still
represent less than 10 percent of the entire Communist
aid program, and drawings less than 5 percent, Soviet
interest has remained high, especially in hydroelectric
power development. Soviet bids to build massive power
projects in Argentina and Brazil could involve credits
of up to $1 billion each.
Sizable groups of Communist technical personnel went
to Latin America as early as 1970 in connection with
equipment sales or development projects; the largest
group at that time was the hundred East European
technicians who went to Brazil to build thermal and
hydroelectric power plants. In 1972-73, Chile accepted
200 Soviet technicians for administrative and planning
services associated with the $240 million of aid ex-
tended by the USSR. The number present in 1979
reached 3,225 because of the influx of Cubans into the
Caribbean.
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East Asia
East Asian non-Communist countries have been wary
of accepting military or economic assistance from
Communist countries in recent years because of some
unsatisfactory earlier experiences and concerns over
Soviet and Chinese intentions. Thailand finally signed
an economic agreement with China in 1978 and the
Philippines accepted small credits from East European
countries at around the same time.
Most of the arrangements have been confined to trade.
The USSR and Eastern Europe depend on East Asian
countries for $400 to 500 million of rubber and other
tropical products annually, while China sells consumer
goods in the extensive East Asian markets to help
balance its trade deficits with the industrialized coun-
tries. In 1978-79, for example, China ran an annual
hard currency surplus of $600 to 700 million with the
area.'
Figure 8
Indonesia, Burma, and Cambodia ranked high on
Communist aid recipient lists at the very beginning of
the Communist aid program-Indonesia as a major
Soviet aid recipient, Burma and Cambodia as Chinese.
After Indonesia accepted large amounts of Soviet aid
(especially military) in the early 1960s, political dif-
ferences precipitated a break in relations, which cut off
practically all Soviet assistance to Djakarta. At the
same time, China was expelled from Burma.
The History. Indonesia was Moscow's first big pro-
gram failure: Djakarta ended all Communist military
and economic programs after the abortive Communist
coup in 1965. Indonesia's 10 years of Soviet and East
European aid commitments left Djakarta with half-
completed projects, a huge inventory of deteriorating
military equipment with no spare parts, in the care of
poorly trained personnel, and nearly a billion dollars of
debts to the Soviets and East Europeans.
East Asia: Communist' Military and Economic Assistance, 1955-79
Military
Economic
Military and
Economic
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Moscow had hoped to use Indonesia (the largest and
potentially the richest East Asian country) to promote
its political and strategic interests in East Asia. Soviet
and East European assistance to Indonesia amounted
to nearly 20 percent of European Communist assist-
ance to the Third World through 1965. Djakarta's
military orders from the USSR and Eastern Europe
almost equaled Communist military assistance to
Egypt, the largest recipient of Communist aid at that
time. In 1965 modern Soviet weapons gave Indonesia
one of the best equipped military forces in Southeast
Asia and allowed it to escalate the confrontation with
Malaysia over Irian.
Burma and Cambodia (later Kampuchea) were the
centers of China's early interest in the Third World.
China dominated Communist aid to Burma through
an $84 million economic assistance program for light
industry and public works. Burma canceled the aid
program in 1967, following political disagreements
and suspicions over the role of China's technicians.
Rangoon withdrew its students from China, dismissed
the 450 Chinese technicians in Burma, and suspended
trade relations. At the same time, the small programs
of other Communist countries in Burma slowed, not
recovering until 1978, when Czechoslovakia extended
a $140 million credit for automotive supplies and
equipment.
Sino-Burmese relations had begun to revive in 1971
with the signing of a trade agreement, the rein-
statement of 1961 credits that had expired. Cambodia,
China's largest aid client in the early 1960s, received
more than $90 million of light industrial project aid
commitments in 1956-66. Except for some early assis-
tance for a hospital, small amounts of reused military
equipment, and village development schemes, the
Soviet-East European program was never of any con-
sequence in Cambodia.
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Sources of Photographs
Page 30: Soviet Foreign Trade
Page 31: Soviet Foreign Trade
Page 35: Asia and Africa Today
Declassified and Approved For Release 2012/03/14: CIA-RDP08SO135OR000601960001-5