COMMUNIST AID TO THE LESS DEVELOPED COUNTRIES OF THE FREE WORLD, 1976

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000602070003-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 37
• Document Creation Date: December 27, 2016
• Document Release Date: March 8, 2012
• Sequence Number: 3
• Publication Date: August 1, 1977
• Content Type: REPORT

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Communist Aid to the Less Developed
Countries of the Free World, 1976
ER 77-10296 t,.
August 1977
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In this report the term Communist countries refers to the USSR, the People's
Republic of China, and the following countries of Eastern Europe-Bulgaria,
Czechoslovakia, East Germany, Hungary, Poland, and Romania.
The term less developed countries of the Free World includes the following:
(1) all countries of Africa except the Republic of South Africa;
(2) all countries of East Asia except Hong Kong and Japan;
(3) Malta, Greece, Portugal, and Spain in Europe;
(4) all countries in Latin America except Cuba; and
(5) all countries in the Middle East and South Asia.
The term extension refers to a commitment to provide goods and services either on
deferred payment terms (five or more years with maximum 8 percent interest) or as
grants. Assistance is considered to have been extended .when accords are initialed and
constitute a formal declaration of intent. The term drawings refers to the delivery of
goods or the use of services. Estimates of the value of Communist military agreements
and deliveries are in Soviet trade prices.
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Page
Aid Patterns ................................................................................................................. 1
The Military Program ................................................................................................. 2
A Banner Year .................................................................................................... 2
Major Clients ........................................................................................................ 3
Technical Services ............................................................................................... 4
LDC Trainees in Communist Countries ........................................................... 5
Economic Aid .............................................................................................................. 5
The Soviet Program: Continuing Large Agreements with Traditional Cli-
ents .................................................................................................................... 5
Eastern Europe's Expanding Business Interests .............................................. 8
Personnel: Communist Technicians ................................................. :................ 8
Technical Training ............................................................................................. 8
Academic Training ............................................................................................. 8
A. Communist Economic Credits and Grants Extended to Less Developed
Countries ............................................................................................................. 11
B. Country Sections .................................................................................................... 14
1. Communist Military Agreements and Deliveries to Less Developed
Countries .............................................................................................................. 2
2. Communist Economic Agreements and Deliveries to Less Developed
Countries .............................................................................................................. 7
3. Distribution of Soviet Aid .................................................................................. 8
4. Africa: Communist Agreements, 1954-76 ......................................................... 15
5. East Asia: Communist Agreements, 1954-76 ................................................... 23
6. Latin America: Communist Agreements, 1954-76 .......................................... 24
7. Middle East and South Asia: Communist Agreements, 1954-76 ................ 27
1. Communist Military Agreements and Deliveries to Less Developed
Countries .............................................................................................................. 3
2. Soviet Military Deliveries to the Third World .................................................. 3
3. Communist Military Technicians in Less Developed Countries, 1976 ........... 4
4. Military Personnel from the Less Developed Countries Trained in Communist
Countries, 1955-76 ............................................................................................ 6
5. Communist Economic Aid to Less Developed Countries, Extensions and
Drawings .............................................................................................................. 7
6. Communist Economic Technicians in Less Developed Countries, by Country,
1976 ...................................................................................................................... 9
7. Academic Students from Selected Less Developed Countries Being Trained in
Communist Countries, December 1976 ........................................................ 10
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Communist Aid to the Less Developed Countries
of the Free World, 1976
Central Intelligence Agency
Directorate of Intelligence
Aid Patterns
Soviet economic and military aid, by far the
largest Communist program in the Third World,
continued to reflect Moscow's international politi-
cal interests in 1976 while also enhancing its
commercial position. The Soviet venture into
Africa, Moscow's readiness to provide sophisti-
cated weapons systems on favorable terms to
Peru, and accelerated military and economic aid
to Iraq dramatized again Moscow's use of aid in
pursuing its foreign policy objectives in the Third
World. As in most recent years, military sales
were the USSR's most powerful instrument. The
value of Soviet military commitments was almost
triple economic pledges.
The Soviet political decision to establish a
strong presence in Africa was supported by
military assistance programs in Angola and
Mozambique; arms and technical assistance (in-
cluding Cuban technicians) to national liberation
movements in southern Africa; and continued
military aid to Uganda and Somalia. Moscow also
provided most of these countries with small
amounts of economic aid. Other significant
politically motivated developments include:
? An expanded Soviet role in Lima's military
establishment as a result of Moscow's first
sale to Peru's air force, which made Moscow
Peru's principal arms supplier.
? Unprecedented military support to Iraq-
possibly to guarantee a Soviet presence in
the Middle East-that made Iraq Moscow's
largest current Middle East arms client. Iraq
also received a new commitment of
economic aid.
? Sharply reduced arms shipments to Syria
and failure to sign a new Soviet-Syrian
military agreement because of Soviet dis-
pleasure over Syria's foreign policy.
? A continuing embargo on arms to Egypt
after the cutoff in mid-1975.
At the same time, the USSR used military and
economic programs to expand commercial inter-
ests in the Third World. Hoping to share more
heavily in the new oil wealth and to reduce
unprecedented global hard-currency deficits,
Moscow sought cash sales and often exacted
harder terms than before for economic aid as well
as military sales. The large hard-currency earn-
ings and additional assured supplies of certain
strategic raw materials have put Moscow actively
into the arms merchant class.
Moscow parlayed its arms deals into a $2.5
billion business in 1976. Fast delivery, a willing-
ness to sell sophisticated weapons systems to
almost any LDC, and somewhat smaller price
tags than for comparable Western equipment
earned Moscow large amounts of hard currency
or equivalent goods on its 1976 deliveries. These
derived mostly from deliveries to major Arab
clients, most of them believed to be cash
customers.
As in every year since 1970, arms sales kept
Moscow's trade with LDCs out of the red in 1976.
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Such sales, which have accounted for about a half
of Moscow's total exports to LDCs in some recent
years, underpin Soviet trade surpluses with the
Third World. Preliminary estimates for 1976
indicate that had it not been for arms exports, the
Soviet trade surplus of $1.2 billion with the Third
World would have been a deficit.
In contrast with arms sales, Soviet economic
aid has become a static program focused on a
handful of recipients. No major new initiatives
emerged in 1976, and the $900 million aid
package contained no surprises. A few large
credits went to Moscow's traditional clients, and
once again the program was commercially
slanted. Both the USSR and Eastern Europe
provided most of their aid in the form of trade
credits, which have shorter repayment periods
and carry higher interest rates than traditionally
allowed under development agreements. Some
agreements-especially those with Latin
American countries-were associated with for-
mal trade accords and were open-ended. Eco-
nomic aid continued to dominate East European
and Chinese programs. Most new agreements in
1976 appeared designed to gain access to
strategic raw materials, such as oil and
phosphates.
At the end of 1976, LDCs had taken delivery
of about $30 billion of the $46 billion in
Communist economic aid and military commit-
ments made them over the past two decades. The
delivery figure is heavily weighted by the
military, for which deliveries have been far
larger and more rapid than for economic aid.
Nonetheless, large repayments of principal and
interest continue to erode the flows. Repayments
for economic aid in 1976 are estimated at about
half of the $950 million in total Communist
disbursements. In the case of Soviet economic aid,
Moscow's former major clients-Egypt and In-
dia-sustained negative flows.
military activities to heights reached only in
1973-74 when the USSR replenished client
inventories in the Middle East during and after
the October war (figure 1).
Moscow accounted for about 90 percent of the
$2.6 billion of new accords and of the $2.5 billion
in deliveries. China's $100 million in agreements
was a third above any previous year, while East
European military contracts fell to $75 million,
their lowest level since 1970.
Arms deliveries in 1976 surged, as Moscow
rushed to fill orders that had accumulated as a
result of heavy commitments that began in 1973
(see tables. 1 and 2). The near record was
somewhat below expectations, however, because
of Moscow's reduced deliveries to Syria.
Problems in Egypt and a faltering relationship
with Syria did not alter Moscow's preoccupation
with the Middle East/North Africa. Although this
area still claims the largest share of total
Communist Military Figure!
Agreements and Deliveries
to Less Developed Countries
e;iiion US $
China
Eastern
Europe
The Military Program
A Banner Year
Despite the recent cooling of Soviet relations
with a number of favored clients, Communist
military supplies to the Third World rose to a
near peacetime record in 1976. Massive arms
agreements reported with Iraq and major new
deliveries to Iraq and Libya pushed Communist
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Communist Military Agreements and Deliveries to Less Developed Countries
Total
Agreements
USSR
Agreements
Eastern
Agreements
Europe
China
Agreements
Concluded
Deliveries
Concluded
Deliveries
Concluded
Deliveries
Concluded
Deliveries
Total ...................................
23,525
19,470
20,875
17,215
1,950
1,655
700
600
1955-66 ...........................
5,350
4,300
4,500
3,575
675
625
175
100
1967-76 ...........................
18,175
15,170
16,375
13,640
1,275
1,030
525
500
1967 .............................
675
550
525
500
100
25
50
25
1968 .............................
575
600
500
500
50
75
25
25
1969 .............................
475
525
350
450
125
50
Negl
25
1970 .............................
1,275
1,100
1,150
1,000
50
75
75
25
1971 .............................
1,800
1,000
1,600
850
125
75
75
75
1972 .............................
1,725
1,360
1,500
1,205
150
70
75
85
1973 .............................
2,950
3,200
2,800
3,010
125
120
25
70
1974 .............................
3,900
2,400
3,500
2,250
325
130
75
20
1975 .............................
2,175
1,965
2,000
1,685
150
210
25
70
1976 .............................
2,625
2,470
2,450
2,190
75
200
100
80
Soviet Military Deliveries to the Third World
Total ......................................
1,205
3,010
2,250
1,685
2,190
Africa .................................
55
75
235
600
1,070
Latin America .................
0
10
25
55
80
Middle East ......................
970
2,655
1,785
850
830
South Asia ........................
180
270
205
180
210
Communist arms supplies, the distribution is
changing, and the more radical Arab states have
emerged as major recipients. This shift has
advantages to Moscow in that Iraq, Libya, and
Algeria can afford to pay cash even though they
may not serve the same Soviet interests as Egypt
and Syria had before. Moscow also built a
military presence in sub-Saharan Africa by
consolidating its position in Angola and giving
increased support to insurgent groups in southern
Africa.
The dollar values cited for military goods
throughout the paper represent an update and
revision of data previously used for Soviet arms
exports and agreements in 1972-75 made possible
by recent information on Soviet prices for major
items of equipment and the conversion of ruble
prices into current dollars.
Major Clients
The most significant development in Moscow's
military diplomacy with LDCs in 1976 was the
cooling of the Soviet-Syrian relationship. The
Soviets reduced the flow of arms and failed to
sign a new arms accord, thereby showing
displeasure over Syria's Lebanon adventure.
Communist relations with other major Arab
clients-except Egypt-continued apace. An esti-
mated $1 billion Soviet agreement in principle
with Iraq had previously been equaled only by a
similar agreement with Libya in 1974. The new
accord propelled Baghdad into first place among
current Soviet arms recipients. Aircraft to support
Baghdad's modernization plans have bulked
heavily in Soviet shipments and include MIG-23s
and advanced MIG-21s,
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Libya received sophisticated land armaments,
jet fighters, and bombers under the $1 billion
1974 agreement. Libya's military establishment
can neither absorb nor maintain the vast quanti-
ties of arms that have deluged its inventories over
the past two years. Despite extensive Soviet
training of Libyan nationals-1,100 Libyans in
the USSR and many more in Libya-Tripoli still
relies heavily on foreign technicians. In 1976, 800
Communist advisers were in residence to support
Libya's Communist-supplied inventory. Tripoli
continues to stockpile arms, possibly for use by
other states as well as for its own defense.
In 1976, Moscow also made large sales to Peru.
The record $250 million sale to Peru marks the
first placement of Soviet jet fighters in the
Western Hemisphere outside of Cuba. The sale
establishes Moscow as Lima's principal arms
supplier.
Buoyed by its success in establishing a major
presence in southern Africa in 1975, Moscow
moved rapidly to sign new agreements with
clients in the region. In contrast to commercially
oriented policies elsewhere, favorable financing
terms were undoubtedly offered in sub-Saharan
Africa.
The USSR's relationship with Angola was
enhanced by a Twenty-Year Friendship Agree-
ment that provided for more military equipment
to upgrade Luanda's military establishment.
Deliveries to Angola introduced new weapons
systems including jet fighters, modern tanks, and
guided antiaircraft missiles. Moscow also in-
creased shipments of military equipment through
established African governments to support insur-
gent groups in southern Africa. Mozambique also
signed a new agreement in 1976. In a surprise
move, Moscow offered Ethiopia large credits for
arms, while assuring Somalia-a rival of Ethio-
pia-of continuing heavy support.
Technical Services
In addition to the large new deliveries of
military equipment in 1976, some 21,700 Com-
munist personnel were stationed abroad to
assemble and maintain equipment and train local
units in the operation and maintenance of the
new weapons (see table 3). Soviet and East
Table 3
Communist Military Technicians in Less Developed Countries,' 1976
Total
USSR and
Eastern Europe
Cuba
Total ................................................................................
20,730
9,080
11,650
Africa ..........................................................................
15,050
3,900
11,150
of which:
Angola .....................................................................
10,500
500
10,000
Equatorial Guinea .................................................
125
25
100
Guinea .....................................................................
375
75
300
Guinea-Bissau .........................................................
75
50
25
Libya .......................................................................
800
800
0
Mozambique ...........................................................
400
50
350
Somalia ....................................................................
1,100
1,000
100
Sudan .......................................................................
90
90
0
Uganda ....................................................................
300
300
0
Latin America ..........................................................
30
30
0
Peru .........................................................................
30
30
0
Middle East and South Asia ...............................
5,650
5,150
500
of which:
Afghanistan .............................................................
350
350
0
India ........................................................................
300
300
0
Iran ..........................................................................
120
120
0
Iraq ..........................................................................
1,000
1,000
0
Syria ........................................................................
2,500
2,500
0
' Minimum estimates of the number present for one month or more. Numbers are rounded to the
nearest five. Excluding personnel from China and North Korea.
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European technicians-traditionally accounting
for about 90 percent of the total-were outnum-
bered by almost 12,000 Cubans, all in Africa and
the Middle East. Cubans were most heavily
concentrated in Angola, where an estimated
10,000 were assigned to all levels of the military.
According to rumors, Libya also has requested a
large contingent of Cubans to help alleviate its
military manpower shortage.
Moscow's use of Cuban troops as an adjunct to
its military supply program first received wide-
spread attention during the Angolan conflict in
1975, when up to 16,000 Cuban troops were
deployed to MPLA forces in connection with an
airlift of Soviet military equipment. Cuban
personnel trained Angolans in the operation and
maintenance of their new Soviet inventory, and
Cuban combat support was credited with turning
the tide in favor of the Soviet-supplied forces.
Although the conditions of Cuban military
technical assistance are not known, the USSR has
probably shouldered at least part of the financial
burden. This may have involved only transport
costs, but it could have included subsistence and
salaries as well. In any case, there were savings to
the LDCs because Cubans are believed to come
at lower prices than Soviet or East European
technicians. We estimate that salaries for Soviet
and East European personnel run as high as
$15,000 to $20,000 a year each and are paid for
on a current basis. If other allowances and costs
are added, this figure might be doubled. The use
of Cubans probably also was calculated to have
had fewer political and social repercussions.
The number of Soviet and East European
military advisers in LDCs increased 10 percent in
1976, while the Chinese presence declined by
more than 30 percent. The largest increases were
in Angola, Libya, Uganda, and Iraq. Soviet
military technical programs in Egypt and Syria
were sharply curtailed, as neither renewed
service contracts that expired.
Third World personnel departing for training
in the USSR also are a reflection of Moscow's
large new arms deals that require more sophisti-
cated technical training than can be given in less
developed countries. Of the 2,500 personnel that
went for advanced training at Soviet installations
in 1976, about three-fourths were from Afghan-
istan, Iraq, Libya, Peru, and Syria-all large
clients with recent orders or deliveries of modern
weaponry (see table 4). Most were trained to
operate and maintain aircraft and air defense
systems, which their countries had purchased
under recent supply contracts. By the end of
1976, some 47,000 Third World military person-
nel had trained in Communist countries, more
than four-fifths in the USSR.
Economic Aid
Communist aid pledges were more conserva-
tive in 1976 than in most recent years, although
our estimates probably understate such commit-
ments because values of some agreements are not
known. At the end of 1976, the USSR was
negotiating agreements with Latin American
countries and Indonesia that could easily provide
$550 million in additional credits.
The $1.5. billion actually pledged was a half
billion dollars below the annual average of
commitments in the five preceding years (see
table 5). While Soviet aid commitments, which
accounted for 60 percent of the total, maintained
the 1971-75 average, Eastern Europe's commit-
ments fell almost 20 percent. Chinese aid
dropped even more precipitously.
Peking's $100 million program was one-fourth
of the previous five-year annual average. None-
theless, Chinese aid continued as the most
concessionary program. More than half of
Peking's aid was given as outright grants for cost
overruns on the Tan-Zam railroad, while com-
modities and cash outlays (mostly to African
countries) absorbed another fourth.
Communist aid deliveries of $950 million
recovered somewhat from the 1975 slump,
although Soviet shipments dropped to only about
$420 million* (figure 2).
The Soviet Program: Continuing Large Agreements
with Traditional Clients
Arab countries remained the largest recipients
of Soviet aid, taking 95 percent of Moscow's new
extensions. Large commitments to these countries
confirmed Moscow's policy of selectively provid-
* For details on total Communist economic aid pledges and
deliveries to individual LDCs, see appendix A.
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Military Personnel from the Less Developed Countries Trained in
Communist Countries,' 1955-76
Total
USSR
Eastern
Europe
China
Total ..................................................
47,225
39,950
4,375
2,900
Africa ............................................
14,075
10,775
775
2,525
Algeria .......................................
2,250
2,025
200
25
Benin .........................................
25
25
0
0
Burundi .....................................
75
75
0
0
Cameroon ..................................
75
0
0
75
Chad ..........................................
75
75
0
0
Congo ........................................
825
325
75
425
Equatorial Guinea ...................
200
200
0
0
Ghana ........................................
175
175
0
0
Guinea .......................................
1,250
850
50
350
Guinea-Bissau ...........................
100
100
0
0
Libya .........................................
1,125
1,100
25
0
Mali ...........................................
250
200
Negl
50
Morocco .....................................
150
75
75
0
Mozambique .............................
375
300
25
50
Nigeria ......................................
525
500
25
0
Sierra Leone ............................
150
0
0
150
Somalia ......................................
2,500
2,400
75
25
Sudan .........................................
525
300
25
200
Tanzania ...................................
2,350
1,325
Negl
1,025
Togo ..........................................
50
0
0
50
Uganda ......................................
900
700
200
0
Zaire ..........................................
75
0
0
75
Zambia ......................................
50
25
0
25
East Asia .....................................
9,275
7,575
1,700
0
Cambodia ..................................
25
25
0
0
Indonesia ...................................
9,250
7,550
1,700
0
Latin America ............................
550
550
0
0
Peru ...........................................
550
550
0
0
Middle East and South Asia
23,325
21,050
1,900
375
Afghanistan ...............................
3,975
3,725
250
0
Bangladesh ................................
450
450
0
0
Egypt .........................................
6,250
5,675
575
0
India ..........................................
2,250
2,175
75
0
Iran ............................................
325
325
0
0
Iraq ............................................
3,600
3,250
350
0
North Yemen ...........................
1,100
1,100
0
0
Pakistan .....................................
425
50
0
375
South Yemen ...........................
800
775
25
0
Sri Lanka .................................
Negl
Negl
0
Negl
Syria ..........................................
4,150
3,525
625
0
' Rounded to the nearest 25 persons. Data refer to the number of persons departing for or in training
but not necessarily completing training.
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Total USSR Eastern Europe China
Extended Drawn Extended Drawn Extended Drawn Extended Drawn
Total ...................................
22,19
7
10,71
0
11,769
1954-66 ...........................
7,98
5
3,16
5
5,065
1967-76 ...........................
14,21
2
7,54
5
6,704
1967 ........
............
.........
47
3
52
5
291
1968 ........
............
.........
63
8
50
5
379
1969 ........
............
.........
93
3
52
5
494
1970 ........
............
.........
1,12
2
58
5
198
1971 ........
............
.........
2,17
1
79
5
1,125
1972 ........
............
.........
2,18
8
82
5
802
1973 ........
............
.........
1,57
3
89
5
661
1974 ........
............
.........
. 1,64
1
1,11
5
580
1975 ........
............
.........
1,99
4
82
5
1,299
1976 ........
............
.........
1,47
9
95
0
875
Communist Economic Figure 2
Agreements and Deliveries
to Less Developed Countries
Billion US $
Eastern
Europe
6,560 6,475 2,200 3,953 1,950
2,245 2,013 565 907 355
4,315 4,462 1,635 3,046 1,595
310 132 115 50 100
310 205 125 54 70
355 426 100 13 70
385 196 130 728 70
440 484 165 562 190
430 828 140 558 255
490 484 175 428 230
690 789 185 272 240
485 422 200 273 140
420 496 300 108 230
ing assistance to countries with which the USSR
hopes to expand or consolidate political, eco-
nomic, or commercial ties. Repeating the pattern
of 1975, large agreements with two countries
(Algeria and Iraq) absorbed a large share of new
pledges. While all of these agreements are
expected to yield economic benefits to Moscow,
the two countries also have longstanding political
ties with the USSR, which Moscow is anxious to
maintain. Soviet aid, mostly designated for
continuing development programs, included:
? A $290 million credit to Algeria for an
aluminum plant.
? At least $150 million in new assistance to
Iraq for continuing projects, complemented
by $1 billion of commercial contracts for
four major power and irrigation projects.
? Smaller agreements with Tunisia and South
Yemen, which totaled about $80 million,
largely for water and power development.
Assistance to major clients again emphasized
development of heavy industrial and power
facilities, sectors in which Moscow has some
advantage. Over the course of its 23-year aid
program, the USSR has put about three-fourths of
its total aid into these development activities
(figure 3).
Moscow's aid to sub-Saharan Africa generally
responded to the needs of former Portuguese
colonies for technical assistance and infrastruc-
ture development. Mozambique received pledges
of aid for irrigation, mining, transportation, port
management, construction, and public health.
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Distribution of Soviet Aid Figure3
Total US $12 Billion
Education, Science,
Culture, and Health
Agreements with Angola and Guinea-Bissau
provided .similar assistance.
Eastern Europe's Expanding Business
Interests
Eastern Europe's $500 million program, which
was spread somewhat more widely than the
USSR's, was largely to support East European
efforts to expand machinery and equipment sales
in the Third World. Romania again set the pace
by allocating $200 million in 10-year credits for
construction of an oil refinery in Turkey.
Czechoslovakia extended a $100 million credit to
Brazil for equipment purchases. Other East
European aid was distributed among 10 countries
spread throughout the Third World.
Meanwhile, the USSR and Eastern Europe,
anxious to expand their sources of foreign
exchange financing, continued to try to attract
funds directly from oil producers. These efforts
were backed by vigorous competition for com-
mercial contracts for heavy industrial projects,
particularly in the Gulf emirates. Romania
continued to negotiate for Kuwaiti financing for
49 percent of a $1 billion petrochemical complex
in Romania.
Personnel: Communist Technicians
The Communist technical presence in the
Third World soared from about 55,000 in 1975 to
70,000 in 1976, despite a 25 percent decline in
the number of Chinese personnel in Africa after
the completion of the Tan-Zam railroad (see table
6). The total was swelled by an inflow of 4,400
Cubans, mostly to Africa, but more significantly
by a doubling of the number of East European
technicians. All in all, 26,000 East Europeans
worked in LDCs, including some 10,000 working
in Libya under commercial contracts (see
table 6).
East European personnel were concentrated in
the Middle Eastern and North African oil and
phosphate producing states that can afford to pay
cash or its equivalent. The estimated 21,000 East
European personnel working in these countries
resulted in an estimated $200 million flow (at an
average salary of $15,000) of hard currency or
equivalent goods to Eastern Europe in 1976.
Almost half of the Soviet technicians were
concentrated in Algeria, Iran, Iraq, and Syria,
where major new construction projects are
starting. Afghanistan and India employed
another 2,350. Rekindled Soviet interest in sub-
Saharan Africa brought almost 250 economic
technicians to Angola, Guinea-Bissau, and Mo-
zambique for an overall increase of 650 in the
area. Most of the new personnel were employed
in administration, public health, and training.
Technical Training
On-site instruction continued to spearhead
Soviet project personnel training in 1976. Accord-
ing to Moscow, its domestic training activity in
Third World countries had yielded 300,000
skilled workers and 150,000 managerial, adminis-
trative, and research personnel for Soviet-built
projects by the end of 1976. Major Soviet
industrial development contracts now call for
construction of permanent associated training
facilities, which guarantee a continuing supply of
skilled personnel for a given project at lower costs
than overseas training. These centers are usually
staffed with Soviet instructors for five or six years
until teaching positions can be filled with Soviet-
trained local professionals.
Most of the 4,250 trainees who went to the
USSR in 1976 were from Middle East and South
Asian countries that have major plants scheduled
to begin operations before the required number
of specialists can be trained domestically.
Academic Training
In 1976 the USSR and East European countries
expanded their already substantial academic
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Communist Economic Technicians in Less Developed Countries,'
by Country, 1976
Total
USSR
and
Eastern
Europe
China
Cuba
Total ..................................................
70,145
45,345
20,415
4,385
Africa ............................................
49,340
27,320
17,915
4,105
Algeria .......................................
6,835
6,625
200
10
Angola .......................................
3,525
525
0
3,000
Ethiopia .....................................
250
150
100
0
Ghana .........................................
175
50
125
0
Guinea .......................................
950
550
400
0
Kenya ........................................
30
25
5
0
Libya .........................................
10,000
10,000
0
0
Mali ...........................................
650
300
350
0
Mauritania ................................
250
50
200
0
Nigeria ........................... ...........
300
200
100
0
Somalia ......................................
3,500
1,500
2,000
0
Sudan .........................................
850
50
800
0
Tanzania ....................................
1,350
150
1,000
200
Tunisia .......................................
475
400
75
0
Uganda ......................................
175
75
100
0
Zambia ......................................
5,925
225
5,700
0
Other .........................................
14,100
6,445
6,760
895
East Asia .....................................
105
65
40
0
Burma ........................................
65
25
40
0
Indonesia ...................................
15
15
0
0
Other .........................................
25
25
0
0
Europe ..........................................
400
0
400
0
Malta .........................................
400
0
400
0
Latin America ............................
1,135
750
105
280
Bolivia .......................................
50
50
0
0
Jamaica ......................................
280
0
0
280
Peru ...........................................
315
300
15
0
Other .........................................
490
400
90
0
Middle East and South Asia.
19,165
17,210
1,955
NA
Afghanistan ...............................
1,125
1,000
125
0
Bangladesh ................................
225
225
0
0
Egypt .........................................
1,725
1,700
25
0
India ..........................................
1,500
1,500
0
0
Iran .............................................
3,500
3,500
0
0
Iraq ............................................
5,300
4,900
400
0
Nepal .........................................
275
25
250
0
North Yemen ...........................
600
200
400
0
Pakistan .....................................
500
300
200
0
South Yemen ...........................
800
400
400
0
Sri Lanka .................................
150
50
100
0
Syria ...........................................
1,650
1,600
50
0
Turkey .......................................
450
450
0
0
Other .........................................
1,365
1,360
5
0
' Rounded.to the nearest five. Data are minimum estimates of the number of persons
present for one month or more.
training effort for nationals of the Third World. represents a one-third increase in LDC student
The estimated 8,000 new enrollees increased the places in USSR academic institutions and a
Third World student population in Communist doubling of East European Third World student
countries to a record 36,450 (see table 7). This capacity in the past three years. Scholarship
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Academic Students
Being Trained in
from Selected Less Developed Countries
Communist Countries, December 1976
Total
36,450
Zambia
325
Africa
18,395
Other
2,490
Algeria
1,560
East Asia
300
Angola
445
Laos
190
Benin
115
Other
110
Botswana
25
Latin America
4,200
Burundi
160
Bolivia
220
Cameroon
255
Brazil
125
Central African Empire
305
Chile
200
Chad
370
Colombia
400
Congo
880
Costa Rica
320
Equatorial Guinea
85
Ecuador
385
Ethiopia
1,255
El Salvador
95
Gambia
50
Guatemala
25
Ghana
430
Mexico
100
Guinea
815
Nicaragua
60
Ivory Coast
140
Peru
550
Kenya
345
Venezuela
60
Madagascar
450
Other
1,660
Mali
515
Middle East and South Asia
13,555
Mauritania
240
Afghanistan
950
Mauritius
210
Bangladesh
1,285
Morocco
270
Cyprus
920
Nigeria
1,175
Egypt
705
Rwanda
245
India
465
Senegal
275
Iraq
630
Sierra Leone
535
Jordan
650
Somalia
600
Lebanon
465
Sudan
1,740
Nepal
370
Tanzania
570
North Yemen
700
Togo
185
Pakistan
190
Tunisia
350
South Yemen
420
Uganda
235
Sri Lanka
125
Upper Volta
285
Syria
3,420
Zaire
465
Other
2,260
awards to Africans accounted for half of the total
program, down from 60 percent in earlier years.
The 20-year-old academic program remained the
most concessionary Communist aid effort in
1976. Soviet scholarships provide all-expense
training, including room, board, living expenses,
and transportation.
By the end of the year, an estimated 48,500
students had returned from Soviet and East
European training. Their reception has been
mixed. In many countries, Communist diploma
holders are isolated by deeply entrenched West-
ern influences, especially since most LDCs accept
Western patterns of education and professional
success as ideals. Nevertheless, most Communist-
trained students, with the exception of doctors,
appear to be trained adequately for the jobs they
perform and are moving into responsible posi-
tions, especially in countries with endemic skilled
manpower shortages. We believe this trend will
accelerate as broadening development efforts in
the Third World require ever larger numbers of
skilled personnel.
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APPENDIX B
COUNTRY SECTIONS
Summary
Moscow's heavy military support to the victori-
ous MPLA in Angola, which captured headlines
in 1975, and Soviet help to established govern-
ments and insurgent groups throughout sub-
Saharan Africa confirmed Moscow's new com-
mitment to the region (figure 4).
Hoping to capitalize on success in Angola and
to expand influence in southern Africa, the
Soviets boosted military deliveries to sub-Saharan
Africa in 1976, particularly to Angola to replace
wartime losses and to consolidate the new
government's position against scattered rebel
forces.
In its dealings with traditional client states,
Moscow concentrated on maintaining access to
strategic facilities (ports in Somalia and Guinea
and aircraft landing rights in Congo and Mali)
and building the momentum of insurgent group
activities in southern Africa. Buoyed by the
victory in Angola, black nationalist forces operat-
ing against Rhodesia and Namibia hardened their
stance against near-term peaceful settlement, and
threats of open hostilities over control of the
French Territory of Afars and Issas escalated as
the date of French withdrawal drew nearer.
Destabilizing effects of the Soviet arms trade also
were evident in heightened tensions between
Sudan and Libya and between Somalia and
Ethiopia.
An influx of Communist personnel into former
Portuguese colonies was spearheaded by more
than 500 East European administrative and
service personnel who replaced fleeing Western
experts. Cubans continued to move into southern
Africa in increasing numbers to train guerrillas
and local militia personnel and in some cases to
assist in economic development. China was less
active in the political arena than in the past
several years, although it-signed its first economic
agreements with two small African nations
(Botswana and the Comoro Islands) and contin-
ued to provide training and support to insurgent
groups. Peking maintained its low-key economic
programs in Africa and in 1976 made new
commitments of about $100 million, all to old
recipients.
Moscow's responsiveness to economic and
military needs in Arab Africa was reaffirmed in
1976 by continuing arms deliveries to Algeria and
Libya. For the second consecutive year, Libya is
believed to have received more Soviet arms than
any other Third World client. Shipments to
Algeria stirred fears in the Maghreb of a possible
Algerian attack on Moroccan and Mauritanian
troops in Western Sahara. The USSR also made a
$290 million commitment to Algiers for an
aluminum plant-a record for that country-
which together with $55 million to Tunisia
absorbed more than 90 percent of Moscow's 1976
African economic commitments.
Most of the rest of Soviet economic aid went to
Angola and Guinea-Bissau, where Moscow sought
to consolidate its presence. Despite somewhat
greater interest in economic assistance to sub-
Saharan Africa, the $60 million pledge to Somalia
in 1975 was Moscow's largest to the area since
1969, and its tropical African aid program still
accounts for less than 10 percent of the $12
billion global Soviet commitment.
Algeria
Soviet-Algerian relations were strengthened in
1976 by Moscow's support for Algeria's position
on Western Sahara and Algerian cooperation in
making the Algiers airport available during the
Angola crisis. Recent Soviet military deliveries to
Algeria have included MIG-21 jet fighters and
tanks to support Algeria's position on Western
Sahara.
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Africa:
Communist Agreements, 1954-76 Figure4
Middle East
and
South Asia
77%
Africa
16%
Communist Technicians Present'
Number of Persons
70,000
'Minimum estimates of persons present for one month or more
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Although Algeria's commercial and economic
ties remained more closely linked to the West,
Algiers accepted in April a record credit from
Moscow, its first major new Soviet assistance since
1971. The $290 million in 10-year, 4-percent
credits was allocated for an aluminum plant at
M'Sila, on which design work had already begun
at the end of the year. The 140,000-metric ton
plant will also include a 600-megawatt power
plant, training facilities, and possibly a rail line
from the port of Bejaia to the construction site.
Negotiations began almost immediately on plans
to double the plant's capacity when the first stage
is completed in 1982.
An Algerian-Soviet joint commission, which
met in January, also suggested consideration of
Soviet assistance for a heavy machinery and
electrical complex, a dam, a steel mill in western
Algeria, and a railroad. Late in the year Moscow
announced that it was studying possible construc-
tion of a number of oil refineries.
Until now, Moscow's most important contribu-
tion to Algeria's economic development had been
$300 million in credits for a 2-million-ton steel
mill at Annaba. The 1978 target for capacity
operations at the plant may not be met because
work on a blast furnace and coke batteries fell
slightly behind schedule in 1976.
Although East European countries made no
new economic aid commitments to Algeria in
1976, activities under the $500 million worth of
development assistance pledged Algeria in the
past six years accelerated.
? East Germany began surveys for a foundry
complex to be built at Tiaret with $90
million in East German credits.
? East Germany and Czechoslovakia inaugu-
rated construction of a joint $67 million
pump plant at Medea.
? Bulgaria will expand the 115,000 hectares of
land already reclaimed by its contractors
with waters from a major dam it is building
at Mitidja.
? Hungary completed a technical school in
Oran, and Poland agreed to establish 10
state farms.
? Romania began delivery of petroleum rigs
and designed a university center in
Constantine.
China agreed to construct a rice-processing
plant and several small agricultural projects.
Since the departure of the French in the 1960s,
Algeria has relied heavily on Communist techni-
cians not only for project assistance but also in
administrative and professional roles. In 1976 the
number of East European technicians rose above
4,100, while the number of Soviet technicians
remained at 2,500.
Angola
Angola's new government moved quickly to
formalize its new Soviet relationship with a
Twenty-Year Friendship Agreement and large
contracts for additional Soviet military supplies.
To take advantage of the MPLA victory and
Moscow's enhanced image among radical black
African states, the USSR is believed to have
allocated a large share of its sub-Saharan African
military aid to Angola in 1976 as Moscow
replenished stocks depleted during the fighting
and stepped up deliveries of new weapons
systems, including jet fighters, modern tanks, and
missiles.
Small Soviet economic aid allocations to
Angola were outshone by East Germany's $10
million donation of relief assistance. Moscow
contributed one-half million dollars of medical
supplies and equipment and agreed to 10-year
credits for training centers, geological explora-
tion, and agricultural development, the total
value of which is not expected to exceed $10
million. Bulgaria and Romania are studying
agricultural and industrial projects, for which
they may extend credits.
Ghana
Soviet-Ghanaian relations moved somewhat
closer in 1976 with the first exchange of military
attaches in more than a decade and resumption
of several Nkrumah-era Soviet aid projects.
In October, Ghana and the USSR agreed to
abandon the bilateral clearing ? arrangements
established in 1961 in favor of hard-currency
payments. The USSR agreed to resume activity at
a concrete panel plant, a gold refinery, and a
reactor for which Soviet equipment was provided
before 1966. Moscow may now agree to reinstate
an estimated $60 million in expired credits for
new projects.
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China's small, but effective, agricultural pro-
gram is dominated by the $13 million Afife
irrigation project, which is being built under $42
million in reactivated credits.
Hungary, having completed a three-year study
of Ghana's bauxite reserves, is studying participa-
tion in aluminum industry development. Roma-
nia agreed to study possible assistance for a brick
and tile plant, a cement factory, road construc-
tion, and urban development, possibly under an
old credit.
Libya
Libyan President Qadhafi's December visit to
Moscow promoted a further warming of the
Soviet-Libyan relationship. While Moscow views
the Libyan connection as a means of putting
pressure on Egypt, it also values Libya as an
important cash customer. Discussion of further
Soviet arms deliveries probably topped the
agenda at the December meeting, and Libya's
continuing requirements for technical assistance
and training received priority treatment. East
European contractors, with 10,000 personnel in
the country, accelerated development activity in
1976.
Soviet interest continues high in Guinea.
Conakry continued to give Moscow access to its
airfields, oil storage, and naval facilities to
support growing Soviet military operations in
southern Africa in return for Soviet military
deliveries, which totaled almost $10 million last
year.
Friction over the price Moscow pays Guinea
for bauxite persisted throughout the year; and
after preliminary agreement in August, negotia-
tions were resumed in December. Moscow
removed a major source of dissension, however;
by agreeing to pay the Guinean export tax on
Kindia bauxite, which Western producers had
been paying for 2 years. Some 90 percent of
Kindia's annual production of 2.5 million tons
goes to the USSR, half as repayments on a $92
million construction loan for the Kindia facility.
Meanwhile the USSR continues a small program
of technical assistance for agriculture, port
development, and geological surveys.
Although work on Chinese projects was not
disrupted, Peking's political relations with
Guinea have not recovered from the falling out
over support of the Soviet role in Angola. Two
fishing trawlers were delivered in July under a
1972 Chinese credit. Technical assistance contin-
ued for agriculture, port development, and a
match factory built with Chinese assistance.
Guinea maintained a low profile in its relations
with East European countries. Trade with these
countries continued the precipitous decline that
began in 1974 and was aggravated by Conakry's
cancellation of bilateral clearing agreements with
them in 1975.
A Major Soviet Arms Client
Moscow has accelerated deliveries under its
1974 $1 billion military agreement with Libya.
Receipts have included MIG-23 fighters, TU-22
medium bombers, surface-to-air and SCUD
missile systems, and an array of modern ground
equipment.
Qadhafi has made the Libyan armed forces the
most heavily equipped in North Africa. Although
Libya has already received more arms than its
military can absorb, substantial amounts remain
to be delivered under the 1974 agreement. The
rapid growth in Libya's arms inventory has not
been matched by an equivalent advance in the
number or capability of its personnel. The
undermanned, poorly trained Libyan military
remains ineffective as a combat force and is
unable to maintain its modern weaponry.
Economic Relations on the Upswing
During President Qadhafi's Moscow trip, the
USSR agreed to construct $1 billion worth of
projects in Libya, probably all for cash. These
include a nuclear power station (a project that has
been under discussion for several years), a 600-
kilometer gas pipeline from Brega to Misuratah
to supply a proposed 1.7-million-ton iron and
steel complex, a unified power grid, and three
major training centers; the USSR also agreed to
formulate a 25-year natural gas development
plan. The USSR had agreed previously to
construct an atomic research center near Tripoli
and had signed a $22 million contract to install
two powerlines between Tripoli and outlying
agricultural areas.
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Present plans call for a sharp increase in the
Russian technical presence in Libya, which
previously was limited to a few oil advisers and
doctors. Moscow expects to bring in hundreds of
personnel to work on the atomic research center
alone. While Qadhafi would prefer Libyan
technicians in strategic sectors of the economy, he
believes that he can isolate the Soviets and
minimize their ideological influence. Qadhafi's
fears of Soviet subversion apparently have been
allayed to some extent by two years of Russian
military presence.
Eastern Europe: Economic Presence Doubles
The East European countries' major interest in
Libya lies in commercial activities and the supply
of technical personnel. Libya's cash payments for
East European equipment and services make
such contracts exceedingly attractive.
Libya has hired large numbers of East
European technicians over the past decade. In
1976 their number rose to about 10,000, the
largest work contingent in any LDC, employed
on at least half a billion dollars worth of
development projects. Polish personnel were
employed on road construction, port work, and
agricultural development projects, while Roma-
nians continued work on housing construction, oil
and petrochemical development, roadbuilding,
and animal husbandry. Hungarians made engi-
neering studies for two railroads, and Czechoslo-
vakia completed a geological study of coastal
areas. Bulgaria worked off $100 million in
outstanding contracts for petroleum exploration
and other development projects. East Germany
joined the roster of East Europeans in Libya with
an October contract to construct electric power
and transportation projects.
Morocco's concern that Soviet weaponry pro-
vided Algeria might be used against it in Western
Sahara clouded the Rabat-Moscow relationship in
1976. China's neutrality in the Saharan dispute,
however, enhanced its standing. Rabat signed
new economic accords with Czechoslovakia and
Poland.
Chill in Economic Relations
King Hassan's refusal to negotiate major new
economic projects with the Soviets especially
affected the Meskala phosphate project, for
which a preliminary agreement had been drafted
in 1975. At the end of the year, Moscow was still
pressing for finalization of the $5 billion, 20-year
agreement, the largest the USSR has ever
negotiated with a Third World country. Nonethe-
less, it was agreed that Moscow should continue
geological prospecting, and the annual oil-for-
citrus barter agreement, which called for a 40
percent increase in Soviet oil shipments in 1976,
was renewed.
Rabat's relations with East European countries
reflected the stability of their trade relationships.
Poland, one of Morocco's major phosphate
markets and its largest Communist trading
partner, signed a protocol to continue assistance
to the chemical and transportation sectors.
Czechoslovakia provided a line of credit of
unknown value in May for complete plants and
possibly technical services. Power, sugar, cement,
and textile plants were mentioned as possibilities
for Czech financing. Romania began port devel-
opment at Nador under a 1976 agreement,
possibly a commercial accord, and Bucharest and
Rabat agreed to joint ventures in copper
development.
Chinese technicians began preliminary work
on China's only aid project in Morocco, a sports
stadium near Rabat being built under a $32
million .1975 credit.
Mozambique
Following a decade of Communist political
and financial support, the revolutionary govern-
ment of Mozambique has continued to rely
heavily on Communist aid since independence in
mid-1975. , Although the Communists were slow
to provide financial assistance, they sent several
hundred nonmilitary technicians to fill the
technical gap left by the departure of Western
specialists. Chinese and North Korean personnel
worked mainly in agriculture, Cubans surveyed
Mozambique's sugar estates, and Soviets and East
Europeans were employed as doctors, teachers,
agricultural technicians, and administrators.
The USSR provided further guarantees of
reconstruction aid under a June agreement.
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Contracts for iron ore, coal, and bauxite surveys
were signed, and Moscow agreed to dispatch
irrigation experts, harbor pilots, and transporta-
tion and cement experts.
Communist countries increased their military
commitments of men and material following
Mozambican President Machel's call for help in
defending Mozambique against Rhodesian cross-
border operations. Supply agreements were
signed with the USSR, but their values are not
known. The influx of Communist personnel was
heavy throughout the year, allowing Mozam-
bique the services of at least 500 military
technicians. Most of these advisers came from
Cuba to train the regular army and the militia.
Somalia
Soviet military and economic support and a
large contingent of Soviet personnel have given
Moscow an important foothold in Somalia and
the use of a naval base and airfield as well as port
facilities on the Red Sea. Moscow's military
supply operation in the past several years and its
continuing heavy technical assistance (at least
1,000 technicians spread through all levels of the
military) have enabled Somalia to develop one of
the most formidable fighting forces in sub-
Saharan Africa. (In early 1977, however, Soviet
arms supplies to Ethiopia began to erode
Mogadiscio's longstanding relationship with
Moscow. )
Confident that the momentum of the military
supply program and 1975's record $60 million
commitment for economic development would
sustain economic relations, Moscow was not
responsive to Somali requests for new develop-
ment projects.
The. most important project under way is the
Giuba Dam, which will generate 5,000 kilowatts
of electric power and irrigate 8,300 hectares of
land when completed. The project, however, will
never live up to its advance billing as "Somalia's
Aswan Dam," with only $19 million allocated to
it and work continuing at a snail's pace. The
1,000 Soviet economic technicians in Somalia
provide medical and advisory services, give
assistance to the fishing industry, install oil
storage tanks at Somali ports, and furnish support
to problem-ridden, Soviet-built food processing
plants. Soviet personnel are also helping settle
130,000 nomad refugees from drought-stricken
areas into fishing villages and agricultural settle-
ments along the coast.
East European countries and Cuba were
increasingly visible in supporting Soviet objec-
tives. Bulgaria, Romania, and possibly Hungary
signed agreements for possible project assistance
to Somalia. Bulgaria already is providing assis-
tance for tin mining. Arab states pledged $250
million in development assistance to Mogadiscio
in 1976 in hopes of weaning Somalia away from
the Soviets.
Meanwhile, China continued the unobtrusive
support that has won it praise from Somali
officials. In June, a 360-km section of the Belet
Uen-Burao Road, built under a 1971 credit, was
opened to traffic. The 970-km road project will
have drawn $67 million from Chinese credits
when it is completed in 1978. In 1976, China also
completed a hospital and continued work on a
sports complex under the 1971 credit.
Sudan
The thaw in Soviet-Sudanese relations of late
1975 was reversed in July when Libyan-sup-
ported dissidents, using Soviet arms, tried to
overthrow the Numayri regime. The abortive
coup followed Moscow's gift of MIG jet fight-
ers-the first such Soviet aircraft to Sudan since
1971. Sudan is now pushing ahead with plans to
modernize its military establishment with West-
ern arms financed by Saudi Arabia.
Khartoum and Moscow did, however, sign a
contract in October to continue a Soviet manga-
nese and iron ore survey under a small 1969
credit that had already financed other mineral
surveys.
China, whose economic assistance program has
earned it the highest marks among Communist
donors, accelerated activity under $82 million in
credits extended in the early 1970s. The Chinese
completed a section of the Wad Medani-Gedaref
Highway, and a textile mill and conference hall
in Khartoum were inaugurated.
Tanzania continued to shift its dependence for
military supplies from China to the USSR. A part
of the Soviet deliveries were for insurgent groups
operating out of Tanzania, and Communist
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military advisers in Tanzania also helped train
such groups.
The USSR's military presence in Tanzania has
been accompanied by a renewed interest in
economic cooperation-a marginal effort until
now. The USSR signed an agreement in July for a
$24 million hydropower project at Kiwira Falls,
its largest such undertaking in sub-Saharan
Africa.
Wrapping up five years of construction activ-
ity on the Tan-Zam railroad, China handed the
system over to the Tan-Zam Railroad Authority
in July and announced that it would absorb $55
million in cost overruns. This brought Peking's
contribution to the project to $455 million. With
about a fourth of Tan-Zam's 20,000-ton-a-day
scheduled freight capacity currently being car-
ried, the railroad is easing transportation bottle-
necks in Zambia caused by closure of routes
through Angola and Rhodesia. China allowed
1,000 railroad technicians to remain in Tanzania
for another two years to assist in operations,
maintenance, and training. Some Chinese that
had worked on the railroad were shifted to iron
and coal development work and to building a
spur line. Meanwhile, Zanzibar is phasing out
Chinese assistance, until recently its most active
aid program, and turning to non-Communist
sources for assistance to light industry.
Other African Countries
Moscow signed protocols to implement a $5.3
million credit to Benin, apparently extended in
1974, allocating $2 million to geological research.
Other projects under study include establishment
of a bus system and fisheries development. China
completed a rice project, which it took over from
Taiwan in 1973, and began work on a sports
complex and an experimental farm under a 1972
$44 million credit. Romania signed an economic
agreement, but the terms are not known.
Botswana, in a major policy switch, concluded
its first Communist economic accord with China
in 1976. A team of Chinese technicians, which
arrived in September to assess Botswana's devel-
opment needs, will recommend commitments to
specific projects. Credits for agriculture and light
industry probably will be made available.
The Cape Verde Islands signed a general
economic and technical cooperation agreement
with the USSR in November, its first with a
Communist country.
The Central African Empire's resumption of
diplomatic relations with China in August was
followed by agreement to reinstate Peking's
economic program that probably will initially
involve agricultural and medical technical assist-
ance projects that Taiwan had been operating.
Romania, the only Communist country with
ongoing projects, increased its joint participation
in lumber, mining, and cotton ventures.
The Comoro Islands signed an agreement for
economic and technical cooperation with China
in June, making Peking the first Communist
country to establish formal economic ties with the
island nation. The visit of a Comoran trade
delegation was followed by a Comoran visit to
Peking in September to arrange for commodity
imports to generate local funds for projects under
the agreement.
In Equatorial Guinea, the number of Chinese
is expected to increase when construction begins
on a power station and transmission lines that
China agreed to build in May.
Moscow extended its first project assistance to
Guinea-Bissau in September, a $13 million, 12-
year interest-free credit allocated partly to
bauxite development. The agreement also pro-
vides $3 million for commodities. The USSR had
previously given Guinea-Bissau a $500,000 fish-
ing trawler as a gift.
The Ivory Coast signed its first Communist
economic cooperation agreement with Romania
in June. The general accord calls for cooperation
in agriculture, forestry, mining, and other indus-
tries, possibly on a joint venture basis.
Kenya has shown receptivity to Chinese offers
and is studying a Chinese proposal to supply
equipment and technical expertise for textile
plants, a rice mill, a brick plant, and a small
hydroelectric plant under UN Development
Program auspices.
Liberia moved gradually to enhance its African
and nonaligned credentials by upgrading rela-
tions with Hungary and Cuba. A Romanian joint
venture for rubber processing-Liberia's first
Communist project-was completed, and similar
joint ventures for a tire plant and agriculture
were being planned. A 1974 Soviet proposal to
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build a port and a technical school has not been
acted on.
Madagascar's radical socialist government still
relies on Western suppliers, but new Communist
economic agreements in 1976 helped move it
closer to Communist countries. China agreed to
construct a sugar refinery, a farm implements
plant, a porcelain factory, and a model farm and
to improve a 150-km road for all-weather travel
between Tananarive and the port of Tamatave.
Moscow moved to provide personnel and equip-
ment for a merchant marine school, for the
University of Tananarive, and for geological
surveys agreed to under a December 1975
accord. Soviet technical personnel also studied
possible 10-year credits for prefabricated hous-
ing, a cement plant, a flour mill, a hydropower
plant and irrigation works, a cotton plantation,
and three university centers. Romania sent
technicians to operate Madagascar's only oil
refinery at Tamatave after its surprise national-
ization in June.
Mali received sophisticated aircraft for the first
time, reflecting Soviet interest in maintaining
access to Mali's military support facilities for its
southern African ventures. Previously MIG-17s
had been the most advanced aircraft in Mali's
inventory. Following the visit of Mali's Minister
of Defense to Moscow late in August, the USSR
airlifted MIG-21 fighters. Although the USSR and
China have each delivered about the same
amount of economic aid ($65 million) over the
past 15 years, China has played a more active role
in Mali's economic development, especially in
agriculture. In 1976, China agreed to build a
third sugar mill at Sikasso and to expand a
recently completed Chinese-built rice mill at
Sevare. Peking is also continuing an expansion of
the Chinese-built textile mill at Segou and has
installed new equipment for Radio Mali. Mos-
cow's only active project is the gold mine at
Kalana, for which the USSR has provided $17
million in credits.
A Nigerian delegation went to Moscow in
December to resume negotiations on Soviet
participation in the Ajaokuta steel mill, which
was opened to international bidding earlier in the
year because of the inability of the two sides to
reach agreement. Nonetheless, Nigeria awarded
Moscow a $137 million contract to act as general
contractor for 800 km of oil pipeline. Poland
agreed to a four-month geological survey, which
may draw on a $24 million 1971 credit. In 1976,
some 100 Chinese personnel provided technical
assistance to rice projects, water-well drilling, and
a small industrial training center. This activity is
governed by a 1974 technical assistance agree-
ment, provisions of which were never announced.
In Rwanda, Chinese personnel continued work
on the $16 million Kigali-Rusomo Road and
turned over to Rwandan management a rice
project at Kigali, which was completed in 1976.
These activities are being financed under $22
million in credits extended in 1972.
Sao Tome and Principe signed a general
agreement on economic and technical coopera-
tion with the USSR in October, similar to one
signed last year with China. No activity was
noted under either agreement.
Senegal, calling on Communist nations for
more support to LDC development programs,
concluded new agreements with Poland and
Romania in 1976. Poland agreed to provide $35
million in fisheries assistance over a 10-year
period, $17 million of which will be allocated for
trawlers, refrigerator boats, and port and process-
ing equipment. Romania's agreement was for
cooperation in mining, industry, and rural
development, but no credits are known to have
been provided. China, still the only active
Communist donor in Senegal, continued work on
dams, rice projects, and an athletic stadium under
a 1973 $49 million credit.
Sierra Leone signed its first fisheries agree-
ment with the USSR early in 1976. Moscow will
provide research ships and trawlers as well as
training. Joint ventures for fish processing indus-
tries may be arranged later. China completed the
Mangeh Bridge, financed under a 1971 $30
million credit, and turned over eight agricultural
stations it has established in the country.
The USSR promised Tunisia its first new
economic aid in almost a decade. The $55
million commitment will be used for dam and
irrigation projects and expansion of the Soviet-
built technical institute in Tunis. Commodity
shipments allowed under the credit should
facilitate construction by generating local funds.
Czechoslovakia also extended new 10-year credits
totaling $30 million for equipment purchases.
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Uganda received MIG-21 jet fighters from the
USSR in 1976 as replacements for MIGs damaged
or destroyed by the Israeli raid on Entebbe in
July. The deliveries presumably brought Ugan-
dan inventories back to their preraid comple-
ment.
Upper Volta took over the Kou Valley rice
project from China early in 1976. The 250-
hectare project, for which Peking assumed
responsibility from the Republic of China in
1973, had been financed under a $48 million
credit. Late in the year, China agreed to build a
cement factory and a road under credits remain-
ing from the 1973 agreement.
In Zaire, Peking accelerated work on projects
under a $100 million aid package. Preliminary
work on a sports stadium proceeded, and
technical assistance continued at several experi-
mental farms, a sugar plantation and refinery,
and a hospital. China's influence as a develop-
ment model remained strong, even though Zaire's
deteriorating economic situation forced the gov-
ernment to rescind some of the more radical
"Chinese-like" nationalization measures insti-
tuted after Mobutu's 1974 trip to China.
Zambia shared equally with Tanzania in the
$55 million in Chinese aid to cover cost overruns
on the Tan-Zam railroad. With railway construc-
tion completed, most of the large contingent of
Chinese workers will probably work on rural
development schemes and on the Serenje-Samfua
Road being constructed under a 1974 agreement.
Little other Communist activity took place in
Zambia in 1976. The USSR continued work on
diesel power plants under a 1967 credit, while
Czechoslovakia completed geological surveys in
northern Zambia.
East Asia
Communist-East Asian contacts expanded in
1976 as both the USSR and China pursued
broader commercial ties with businessmen in the
region and Moscow sought new port facilities to
support its fishing fleet.
Tonga and Papua New Guinea were among
the, island nations that received Soviet offers to
improve port and fishing facilities in return for
services to the Soviet fleet. Western Samoa
signed an economic assistance agreement with
China that eventually may provide credits.
Moscow's most dramatic overture was a $300
million offer to Indonesia for a 600,000-ton
alumina plant on Bintan Island. The plant would
supply the Asahan aluminum smelter being
constructed by the Japanese and still allow
150,000 tons annually for repayment of the Soviet
loan. Moscow also offered to construct two
associated power plants at a cost of $120 million.
Establishment of Soviet-Philippine diplomatic
relations and the signing of Manila's first trade
agreement with Moscow had little effect on their
economic relations in 1976. The trade agreement
calls for settlement in convertible currency and
mentions possible Soviet credits to be negotiated
separately. Hard bargaining with Romania pro-
duced a $5 million credit for trucks and other
vehicles, and China continued oil sales under a
1974 five-year agreement. A Chinese-Philippine
trade committee was formed to help redress the
trade imbalance, which in 1975 was more than
$20 million in China's favor.
Singapore's first joint fishing company with
the Soviets (Marissco) started operations in 1976.
The company plans to build processing and
storage facilites at Jurong to accommodate the
Soviet fleet's Southeast Asian catch. The new
facilities would make Singapore the largest fish
processor in the area. Singapore also signed an
agreement with Romania for a joint commission
to study increased economic exchanges.
Summary
Moscow moved to exploit the Latin American
arms market with offers.in 1976 to Argentina and
Colombia. While these deals were not consum-
mated during the year, the Soviets made further
important inroads into Peru's market to become
Lima's principal arms supplier. A $250 million
order by the Peruvian air force was Moscow's
first sale of jet aircraft to Latin America.
The Communist economic program in Latin
America retained its commercial thrust as a
means of cutting recent billion-dollar trade
deficits with the area. Last year, the Soviet-Latin
American deficit alone topped $850 million.
Communist countries have hinted that failure to
redress the huge imbalances of recent years could
force Communist grain and food buyers into
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East Asia:
Communist Agreements, 1954-76
Middle East
and
South Asia
77%
Africa
16%
Communist Technicians Present I
Number of Persons
1,000 1
0 1 f 1 1 1 1
1970 1971 1972 1973 1974 1975 1976
1Minimum estimates of persons present for one month or more
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Latin America: Figure6
Communist Agreements, 1954-76
Military , Economic
Africa
16%
Middle East
and
South Asia
77%
East Asia
5% i
Communist Technicians Present
1,400
Latin
America
2%
1Minimum estimates of persons present for one month or more.
Africa
24%
Middle East
and
South Asia
63%
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other markets. As a followup, they offered $300
million in trade credits to Latin American raw
materials suppliers in 1976. Some $155 million of
new agreements were signed, despite Latin
America's traditional preference for Western
machinery and equipment that has left $1.5
billion of previous Communist credits unspent.
Communist officials hope that credits will be
drawn on as the deficits of major Latin American
traders persist with the rest of the world.
Open-ended trade credits, for which limits and
terms have not been set, were the only kind of
Communist credits provided in 1976.
? Peru signed an agreement with the USSR
that could result in commitments to finance
up to a third of Peru's $300 million Olmos
hydroelectric project.
? Mexico signed general economic agreements
with most Communist states that may
eventually provide credits.
? Bolivia and Peru were offered Polish aid for
coal development.
? Chile and Peru were promised aid for their
petroleum industries by Romania.
Argentina
Trade continued to dominate Argentine-Com-
munist relations in 1976 as Soviet trade went
farther into the red with larger purchases of
Argentine meat and grain. East European coun-
tries also ran huge deficits with Argentina
because of grain purchases required to offset the
effects of the European drought. As part of a
Soviet drive to balance its trade accounts, Moscow
offered assistance to fisheries and coal mining
and offered to participate in the $2 billion Parana
Medio hydroelectric project.
The USSR already has signed contracts valued
at $175 million to construct four power plants in
Argentina.
Colombia
Offers of Communist assistance to Colombia
approached the $200 million mark in 1976,
following Bogota's announcement that it would
welcome association with the Council for Mutual
Economic Cooperation (CEMA). Until ' then,
Colombia had received only $15 million in
credits from this group of countries.
Moscow made the largest offer-assistance for
oil development, transportation, and public
health as well as a $140 million equipment credit
for the $400 million Alto Sinu power project. The
10-year credits probably would be provided
under a March 1975 agreement, on which no
credit limit had been placed.
East European activity was spearheaded by a
$50 million East German equipment credit,
apparently negotiated late in 1975, and by Polish
and Romanian general economic cooperation
agreements. Financial details on the latter agree-
ments were not announced. The September pact
with Warsaw calls for assistance in building a
sulfuric acid plant, sugar mills, and textile plants.
The Romanian agreement, reached after two
years of negotiations, calls for joint oil field
development and coal exploration.
The Soviets are moving to improve their
position in Peru, where they already have a
substantial investment. Military agreements esti-
mated at $250 million in 1976 placed Peru
among the Soviet big-10 arms clients and made
Moscow a ranking supplier of Lima's defense
establishment.
Lima's order for 36 SU-22 supersonic fighter-
bombers is Peru's largest military agreement with
Moscow and its first order for jet aircraft from
the USSR. Before 1976, Lima confined its arms
purchases in the Soviet Union to sophisticated
land armaments and helicopters for the army.
Economic Relations Accelerated
Clearly designed to close Moscow's large trade
deficit with Peru ($85 million in 1976), an
economic agreement signed in November pro-
vides 10-year credits at 4 to 5 percent interest for
unlimited purchases of Soviet goods. The first
contract under the agreement was for electric
generators for the Olmos hydroelectric project,
which eventually could absorb $100 million in
Soviet financing. Credits also may be drawn for
constructing a steel plant at Nazca and a
machinery and equipment plant at Arequipa,
both of which are currently under survey.
Meanwhile, Soviet technicians are working at the
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Paita fishing complex and the Andean fuel
storage project under a $25 million 1970 credit.
Late in 1976, Hungary agreed to provide
equipment for some power plants under $60
million worth of outstanding credits extended in
1972 and 1974. New agreements with Bulgaria,
Czechoslovakia, Poland, and Romania also call
for faster use of $90 million in old credits.
China agreed to provide irrigation equipment
under a 1971 $42 million credit reinstated late
last year. Peking also agreed to import $57
million worth of metals and fishmeal and to sell
$23 million of rice and kerosene.
Other Latin American Countries
A Soviet agreement in March 1976 extended
10-year credits bearing interest up to 5 percent to
Bolivia for machinery and equipment. The
credits probably will cover cost overruns at the
Soviet-built Potosi tin processing plant, for which
a 1970 agreement had allocated $7 million. A
second tin plant at Marchamarca, also to be
financed from the 1970 credit, now has the go-
ahead signal. Moscow agreed to provide a power
plant for a $120 million lead and silver foundry
at Potosi, although the extent of the USSR's
involvement is not clear. Poland began work on a
$5 million sheet glass factory agreed to in 1973
and signed new long-term trade and economic
cooperation agreements, with assistance sched-
uled for the coal and chemical industries and for
transportation. Romania sold locomotives under a
$16 million commercial agreement signed in
August, and Czechoslovakia began work on a $2
million iron alloy foundry under a 1975
agreement.
Brazil received the second largest East Euro-
pean credit in 1976, $100 million from Czecho-
slovakia to finance equipment purchases. Brazil's
relations with Communist countries are confined
largely to trade, and failure to eliminate the large
Soviet and East European deficits ($385 million
for the USSR alone in 1976) continues to cause
friction. Communist countries have been largely
unsuccessful in expanding machinery and equip-
ment sales on credit to reduce these imbalances.
. Cuba has been Jamaica's largest and most
active Communist aid donor. In 1976, more than
280 Cubans were working on education, housing,
and medical projects as well as six small dams
provided under a technical assistance agreement
signed early in the-year. Most of the Cuban
assistance is grant aid. Jamaica's only other
Communist aid is a $9 million 1976 Chinese
allocation under a 1974 agreement for a polyester
and cotton textile plant and a $1 million six-year
credit extended in 1976 for 15,000 tons of Chinese
rice.
Mexico signed its first economic cooperation
agreements with Communist countries in 1976.
Most of the accords are agreements in principle
for which actual credit allocations await further
technical studies. An October agreement with the
USSR offered hydroelectric, coal mining, and
petroleum equipment, while a pact with Poland
calls for construction of Latin America's largest
coal mine. A Mexican-Romanian accord was for
the exchange of petroleum technology and
Mexican construction of an offshore drilling rig to
be installed in the Black Sea. In July Mexico
ratified the CEMA agreement it had negotiated
in 1975, and in August a delegation from CEMA
arrived to discuss cooperation in fishing, petro-
chemicals, telecommunications, and light indus-
try. Subsequent negotiations in October did not
produce any agreements.
Venezuela and the USSR signed their first
economic cooperation agreement in November,
calling for the development of projects suitable
for Soviet participation. In July, a Soviet delega-
tion had discussed assistance for developing
heavy oil deposits in the Orinoco region.
Summary
Moscow faced strong competition in the
Middle East from wealthy Arab states that used
their financial power to keep neighboring states
out of the Communist camp. This policy was
especially successful in Egypt, which abrogated
its friendship treaty with the USSR in March, and
in Jordan, where a Soviet air defense system was
turned down in favor of a more costly US
package financed by Saudi Arabia. Syria, pur-
suing a more independent policy than before,
ignored Soviet displeasure with its course in
Lebanon. Hoping to keep a foothold in a major
Middle East country, Moscow promised Iraq an
unprecedented amount of military equipment,
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Middle East and South Asia: Figure?
Communist Agreements, 1954-76
Military / I Economic
Africa
16%
Middle East
and
South Asia
77%
Africa
24%
Middle East
and
South Asia
63%
East Asia
Communist Technicians Present 1
Number of Persons
70,000 r
Military
Economic
0 1 1 1 I 1 I 1
1970 1971 1972 1973 1974 1975 1976
1Minimum estimates of persons present for one month or more
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including the newest weapons systems, and
expanded development assistance.
Moscow again used arms to try to manipulate
LDC political positions by cutting arms ship-
ments to Syria sharply and keeping shipments to
Egypt at only a trickle. Moscow, however,
continued to provide economic assistance and to
trade actively with countries that had drawn
away from Soviet influence.
By the end of 1976, the Middle East, long the
favored Soviet client area, had received Soviet
commitments of almost $4.6 billion in economic
aid and $13 billion in military commitments.
Moscow's more than $1 billion military agree-
ment with Iraq in 1976 was backed up with
economic credits and over $1 billion in commer-
cial contracts for water and power development.
The Soviet-Iranian relationship was marked in
1976 by expanding commercial ties and the
largest contingent of Soviet economic technicians
in any LDC. Because of the long border they
share, Iran's large exports of natural gas to the
USSR, and more recently Iran's oil wealth,
Tehran has become Moscow's largest customer
for machinery and equipment in the Third
World.
The South Asian scene is dominated by
Moscow's continuing economic and military
relationship with India. For over a decade,
Moscow has cultivated its South Asian neighbors,
which rank with Middle Eastern states as major
recipients. New economic pacts with India,
including an oil barter deal, helped clear away
some differences that have plagued relations for
several years.
Afghanistan
Despite Afghanistan's recent success on attract-
ing $800 million in new development commit-
ments from OPEC members, the USSR continues
as Afghanistan's most important source of eco-
nomic and military aid and its principal trading
partner. Moscow's $1.3 billion economic aid
program created Kabul's natural gas and petro-
leum industry and is responsible for a large part
of Kabul's modern infrastructure.
Sustained Economic Relations
A five-year Soviet-Afghani trade agreement
(their first long-term trade accord) set the tone
for Moscow's continuing close relationship with
Kabul in 1976. The new accord is designed to
increase trade 65 percent by 1980. Protocols
signed during the year will also expand Moscow's
already substantial contribution to Afghanistan's
petroleum, gas, power, and agricultural develop-
ment, with credits to be drawn mostly from $425
million of aid extended in 1975 for Afghanistan's
Fifth Plan (21 March 1977 to 20 March 1982).
Soviet aid to Kabul's oil and gas industry
topped $200 million with the signing of a $56
million contract for a gas desulfurization plant at
Jeraqduq. The Russians will expand their contri-
bution to the industry as the oil deposits at Angot
are developed and construction of a 200,000-ton
oil refinery at Shibarghan gets under way.
The Soviets moved ahead in 1976 with
irrigation work along the Amu River, which
eventually will bring 100,000 hectares under
cultivation, and began surveys for a dam and
power project at Kelagay. Moscow also initiated
surveys for two chemical plants during the year.
Among other Communist countries, China was
most active. Peking completed an irrigation
project in the Parwan area and made plans to
expand the program. It also continued work on a
hospital at Kandahar and a textile mill at Bagram
and signed a protocol to build a paper mill.
Czechoslovakia was awarded contracts for coal
mining and for building a cement plant at Herat,
which it will undertake with credits extended in
1973.
Egypt
Although the Soviets did not resume major
arms deliveries to Egypt in 1976 and provided
no new economic aid, Moscow continued to
fulfill its commitments under existing economic
agreements.
Military Relations
The cutoff of virtually all Soviet arms ship-
ments to Cairo is going into its third year, with
only a small trickle of Soviet arms still coming in.
Deliveries in 1976 consisted mostly of Egyptian
equipment being returned after servicing. Turn-
ing to other Communist countries, Egypt signed
an agreement with China for aircraft and tank
engines. Egypt also tried unsuccessfully to obtain
spares from India.
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Soviet economic personnel continued to work
on projects that were under construction before
the Friendship Treaty was abrogated in March.
The USSR continued to provide fisheries aid,
expanded assistance to agriculture and rural
electrification, and proceeded with work on
cement plants and textile mills. Expansion of the
steel mill at Hulwan and the Naja Hammadi
aluminum plant-Moscow's largest ongoing proj-
ects in Egypt-were on schedule, boosting steel
and rolled iron production in 1976. According to
Soviet claims, electrical output at Aswan also
increased, providing more than half of Egypt's
electricity. Soviet assistance also has been respon-
sible for electrification of more than 2,000
Egyptian villages.
The April Soviet-Egyptian trade protocol
called for $500 million worth of Egyptian exports
and $320 million worth of imports in 1976, with
the $180 million surplus used to service Egypt's
economic and military debt with the USSR.
Although for several years the trade protocols
have been used for de facto annual debt
settlement, Moscow is now demanding that Cairo
sign a formal 20-year rescheduling agreement,
with repayment of the $5 billion military and
economic debt to begin immediately. Egypt has
requested a 10-year moratorium. Stretching into
their third year of negotiations, debt questions
remained unresolved as Moscow canceled a
delegation visit to Cairo late in December.
Soviet-Indian agreements in 1976 paved the
way for closer economic ties despite Moscow's
sagging development aid program.
Following several years of hard bargaining
with the USSR, New Delhi won a major
negotiating victory in 1976 with the signing of a
four-year agreement under which 5.5 million
tons of Soviet crude oil will be bartered for pig
iron, steel, and other nontraditional Indian
exports. The advantage was clearly India's, which
will save about $100 million worth of foreign
exchange annually while receiving about 10
percent of its petroleum requirements in ex-
change for products that are often difficult to sell
on world markets.
Also of importance are several contracts under
which the output of Soviet-built plants in India
will be used in Soviet-financed projects in third
countries. One such contract covers equipment
purchases from the Soviet-built foundry at
Ranchi for a metallurgical project in Egypt.
Other agreements call for Indian shipments to
Soviet projects in Bulgaria, Cuba, and Yugoslavia.
The new agreements will help expand Soviet-
Indian nonpetroleum trade to over $1 billion
annually by 1980, as envisioned in the five-year
agreement signed in March.
Soviet aid deliveries for India's economic
development have been small for over a decade.
No new development credits have been extended
since 1966, and $475 million remains to be drawn
on the $1.6 billion worth of aid extended between
1955-66. The near doubling of Soviet project aid
disbursements to $40 million in 1976 is still only
half the mid-1960s peak and has done little to
stem the growing net outflow of Indian resources
to the USSR in repayment for economic aid. A
sharp rise in India's debt service in 1976, because
of additional payments due for Soviet grain
shipments under a 1973 agreement, resulted in a
reverse flow approaching $100 million. The 1976
trade agreement calls for Indian service pay-
ments of $325 million annually by 1980 on its
combined economic and military debt to the
USSR. India claims that Soviet proposals for
devaluation of the rupee in terms of the ruble
would add $500 million to its repayment burden.
The USSR and Iran signed industrial accords of
greater values than in any previous year.
Negotiations throughout the year set the stage for
further Soviet-Iranian cooperation in building
large new heavy industrial projects in both
countries. Major transport bottlenecks at Gulf
ports and along the Soviet-Iranian border, how-
ever, continued to delay Soviet shipments to aid
projects in Iran.
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Soviet Economic Relations: Growing Commercial
Transactions
Iran has become Moscow's largest LDC cus-
tomer for machinery and equipment, largely as
an outgrowth of the aid relationship. The aid
program, which began in 1963 with a joint
border irrigation and power project, has led to
commitments totaling $750 million and trade
that skyrocketed from $30 million in 1963 to
$700 million in 1975.
Commercial relations moved into the forefront
in 1975 with the signing of a $3 billion industrial
cooperation plan for enterprises in both the USSR
and Iran. Tehran is considering funding a paper
plant in the USSR to be paid for from the plant's
output. In 1976, Iran awarded Moscow more than
$1 billion worth of commercial contracts, includ-
ing purchases of equipment for a heavy machin-
ery complex at Esfarayan and a foundry forge
complex at Kerman (the largest of its type in the
world). The USSR also began work on a second
dam on the Aras River to irrigate 120,000
hectares on each side of the Soviet-Iranian border
and provide each country with 100 MW of
electricity. Moscow also plans to expand to 8
million tons annually the capacity of the steel
mill at Isfahan built with $500 million of Soviet
aid; it also will build a 600-MW thermal power
station at Ahwaz, possibly a $500 million alumi-
num plant, and is expected to participate in the
construction of a second gas pipeline.
East European Relations
Bulgaria, Hungary, and Poland concluded a
series of agreements in 1976 that increased aid
allocations to Iranian agriculture, irrigation, and
food processing under existing credits. Bulgaria
contracted to build a 100,000-ton cold storage
facility; Hungary will continue assistance for
state farms; and Poland is to build new sugar
mills and other food processing plants.
East Germany's commitment to supply cold
storage plants, railway equipment and mainte-
nance shops, heavy industrial machinery, and
optics involved new credits of unknown amounts.
Romania financed a new Iranian purchase of
railway cars and agreed to proceed with new
joint ventures in petrochemicals and cement. A
$2.5 billion 20-year contract for the supply of 3.6
billion cubic meters of gas annually to Czechoslo-
vakia is Prague's largest agreement ever signed
with a Third World country. The contract is part
of an Iranian-Soviet-West European triangular
gas deal.
East European countries also took other steps to
expand their trade with Iran. A Czech agreement
would raise 1977 exchanges to $100 million, 25
percent above the 1976 level. Romania's agree-
ment would result in a tripling of 1975 trade, to
$1 billion a year by 1980. The $780 million in
Iranian credits extended to Bulgaria, Poland, and
Romania in 1975 for agricultural development
schemes will begin to pay off over the next few
years as these countries send the produce of these
enterprises to Iran. For example, Bulgaria will
deliver $100 million worth of agricultural prod-
ucts annually in the next five years.
Iraq
During Soviet Premier Kosygin's visit to
Baghdad in May, Iraq and the USSR concluded
a military agreement and a series of economic
accords that will expand Moscow's supplier role.
Record Military Transactions
The $1 billion military deal, matched only by
Moscow's 1974 sale to Libya, places Iraq first
among current recipients of Soviet military
hardware, surpassing by a half billion dollars the
1974 Soviet accord. The agreement is to include
large numbers of MIG-21 and MIG-23 jet
aircraft, surface-to-air missile equipment, radar
equipment, T-62 tanks, BTR and BMP armored
vehicles, and coastal artillery (probably 130 mm).
Baghdad may also receive its first MIG-25 jet
aircraft, probably the reconnaissance version.
Meanwhile, Soviet deliveries to Iraq already
include MIG-23s, MIG-21s, T-62 medium and
PT-76 light tanks, and SCUD missiles.
Economic Relations: New Focus on Power and
Water Development
A May agreement reportedly will triple Soviet
economic assistance in the next five years,
compared with the last five. The agreement, like
most recent Soviet economic accords with LDCs,
probably calls for separate negotiation of credits
for individual projects. Firm commitments in
1976 under the agreement-mostly for power
and irrigation projects-are conservatively esti-
mated at $150 million.
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Soviet specialists are also preparing a compre-
hensive land and water use program as a guide
for development over the next 25 years. The
program will include $1 billion in contracts
signed in December for four major irrigation and
power projects-the Haditha and Habbaniyah
dams on the Euphrates River and two canals
linking irrigation areas in western and northern
Iraq. Additional projects under negotiation in-
clude the $1 billion Hindia and Fallujah dams.
Ongoing Activity Accelerates
During 1976 the USSR completed the 42-km
Tharthar irrigation canal and the Baghdad-
Basrah petroleum products pipeline (although the
pipeline was not yet in operation at yearend).
About 2,900 Soviet technicians were present in
Iraq during the year. Priority was given to raising
output at the Soviet-developed Rumaila oilfield
to the 800,000 b/d rate originally scheduled for
the end of 1975. Water injection equipment
ordered in August under the new economic
agreement is intended to raise output substan-
tially by 1978. Work continued at other fields as
part of Moscow's 20-year oil development plan
for Iraq.
The first meeting of the Iraq-CEMA Joipt
Commission, established in 1975, ended in
November with the establishment of working
groups to recommend suitable projects for multi-
lateral cooperation. Areas under study include
petroleum, agriculture, and light industry. While
some observers feel that the CEMA connection
will only provide integrated planning for Iraqi
projects, in fact the administrative framework to
disburse multilateral aid funds has been created
through Baghdad's association with CEMA.
Eastern Europe: New Contracts for the Five-Year
Plan
Baghdad's apparent willingness to barter oil
for industrial equipment and services makes Iraqi
projects particularly attractive to East European
countries faced with rising oil import bills.
Romania signed a new economic agreement in
May that identified petroleum development,
land reclamation, agriculture, and inland fisher-
ies as priorities.
Czechoslovakia will continue to expand the
Basrah refinery, which was completed in 1974
with Czech credits. East Germany will partici-
pate in construction of a railroad between
Baghdad and the Syrian border, while Bulgaria
will complete food processing and livestock
projects in 1977. Hungary has expanded oil
exploration under a 1969 credit and agreed to
construct several housing projects.
Financing arrangements for new projects have
not been announced; it is likely, however, that
most East Europe countries are allowing faster
drawdowns of their outstanding credits.
Pakistan continued to depend on China for
military goods while the USSR remained the
ranking Communist economic aid donor. Despite
its heavy support of Pakistan's military establish-
ment, China has been cautious in providing
additional assistance for Islamabad's development
program. Nevertheless, Pakistan has accepted
$650 million worth of aid from the Soviets. This
includes a $425 million commitment to the
Karachi steel mill-Pakistan's largest industrial
undertaking. Construction on the 1.1-million-ton
plant was begun in 1974, and completion is
scheduled for 1980. Pushing ahead with its other
aid ventures in Pakistan in 1976, the USSR
completed equipment deliveries to the 330-MW
Guddu power plant and continued work on
associated power lines. Despite reports that
Pakistan would terminate Soviet oil exploration
contracts, Soviet geologists arrived in December
to extend prospecting into new areas. According
to Pakistani officials, two new Soviet-developed
wells are now producing 2,000 barrels per day.
Romania-the only important East European
contributor to Pakistan's development-con-
cluded a new economic agreement in October
possibly to cover an additional expansion of the
state-owned Karachi petroleum refinery already
being expanded under a $56 million Romanian
credit agreement. East Germany extended a $10
million equipment credit in 1976.
Syria
Despite Moscow's displeasure with Syrian
military operations in Lebanon, a new economic
agreement was signed, and military deliveries
continued although they apparently were cut
back from planned levels. Deliveries included
MIG-21 and MIG-23 jet fighters.
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Economic Relations in High Gear
As an expression of Moscow's continuing
interest in Syria, Kosygin promised new petro-
leum development assistance during his June visit
to Damascus.
Soviet economic activity continued at previous
levels. Work on land reclamation was begun in
1976 at Meskene, and additional power gener-
ators were installed at the Euphrates power
station, increasing the plant's capacity to 500
MW. The Soviets continued to string power lines
from the dam, and extensive work on rail lines
continued as part of a major Soviet effort to
reconstruct the Syrian rail system.
The centerpiece of the Soviet program has
been the $2 billion Euphrates dam complex, for
which Moscow has provided $185 million in
credits. With completion of the first stage in
1977, 800 MW of electric power can be
generated, and the dam will eventually add 1
million hectares of irrigated land. Other facilities
associated with the project include experimental
farms, research stations, and a new city at Tabqa.
The USSR together with East European coun-
tries has also been responsible for developing
Syria's national oil industry. Syria is now a net
exporter of oil, with 1977 export revenues
estimated at about $500 million. Soviet explora-
tory work has yielded new reserves of almost 9
billion barrels of oil according to Soviet news
reports. The refinery at Homs, built with Czech
credits and now being expanded, satisfies most
domestic demand for petroleum products.
Turkey
At the end of the year, Turkey was discussing
Communist participation in $2.2 billion worth of
industrial projects under a series of broad
economic agreements that assure Communist
countries a growing role in Ankara's development
plans.
The USSR: Seeking a Major Contractor Role
The USSR and Turkey signed a protocol in
December that spelled out projects to be support-
ed by Moscow under the 1975 agreement, which
had propelled Turkey into fourth place among
Soviet aid recipients. The new protocol, signed
during the first annual meeting of the Soviet-
Turkish Joint Economic Commission, gave the
go-ahead for studies on projects with a reported
total cost of $1.2 billion, for which Moscow had
agreed in principle to furnish at least $600
million to $700 million. Under the protocol,
initial engineering contracts are to be drawn up
for expanding the capacity of the Iskenderun
steel complex to 4 million tons annually from its
present 1 million tons and for increasing alumi-
num capacity at the Seydisehir complex. Moscow
will also construct two power plants (with a total
capacity of 800 MW) and two heavy electrical
equipment plants.
Dramatic Upswing in Relations with Eastern
Europe
Ankara expanded relations with Eastern Eu-
rope through wide-ranging economic agreements
with Czechoslovakia, Hungary, and Romania.
Previously, East European activity had been
confined to light industrial projects and a power
plant for which commercial-type credits had
been allocated.
In 1976, Romania extended $200 million in 10-
year, 5-percent credits for the $500 million,
100,000 b/d petroleum refinery to be built north
of Ankara. Additional Romanian credits also are
expected for petroleum drilling and production
equipment. We do not have details of the Czech
and Hungarian agreements that may also have
provided credits, nor for the 1976 Czech contract
for a 330-MW power plant near Izmir. Ankara
reportedly asked Prague to study industrial
projects with a total cost of about $900 million.
These included a $650 million electromechanical
complex, steelworks equipment, and power
plants. The Hungarian agreement is more gen-
eral, calling for cooperation in metallurgy,
power, food, and textiles.
Other Middle Eastern and South Asian Countries
Bangladesh turned to China for military and
economic assistance for the first time in 1976 as
ties with the USSR deteriorated. China also
agreed to consider support for the Bangladesh Air
Force. Despite strained relations, the Soviets
fulfilled commitments to ongoing economic
projects, including the 100-MW Ghorosal power
plant that was completed during the year.
Progress was also made on the electrical equip-
ment plant at Chittagong, and oil and gas
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exploration was undertaken. Negotiations for
Chinese aid to agriculture and the textile industry
were in process at the end of the year.
Cyprus received its first aid from Eastern
Europe in June-a $5 million Czech credit for
equipment purchases, repayable in eight years at
2.5 percent interest. In July, Nicosia signed a
10-year economic cooperation pact with Bulgar-
ia, which may provide financing for imports of
Bulgarian equipment and machinery.
A November Soviet agreement with Greece
settled a two-year dispute over Greek cancella-
tion of the $89 million contract for the Philippi
power project. Under the new agreement, Athens
will purchase $69 million worth of Soviet
equipment for two power plants, with some of
the equipment taken from deliveries already
made for the Philippi project. Greece also
contracted to buy 500,000 tons of Soviet crude oil
for $42 million. Part of the payment will be in
agricultural goods.
Consistent with a policy of accepting aid from
all sources for its new development plan
(1976-80), Jordan was studying Soviet assistance
for technical schools, petroleum exploration, and
rural electrification. Previously Romania had
been Jordan's only Communist contractor, having
expanded the Zarqa refinery at Amman and built
a pipeline to the refinery, presumably under
commercial contracts. Agreements were signed in
1976 for an additional $180 million expansion of
the refinery's capacity to 60,000 b/d, reportedly
enough to satisfy Jordan's domestic requirements
through 1985. Financing was not announced.
Jordan also concluded its first economic coopera-
tion agreements with Hungary and was consider-
ing one with Czechoslovakia. Prague completed
hydrological prospecting for a dam on the Zarqa
river, probably as a commercial deal. A Soviet air
defense system, offered as an alternative to a
more costly US system, was turned down in favor
of the US package, which Saudi Arabia agreed to
finance.
Kuwait's reported purchase of Soviet artillery
and SA-7 surface-to-air missiles was not con-
firmed during the year, but an agreement in
principle for the purchase of missiles was signed
early in 1977. At the end of 1976, Kuwait had not
yet finalized an agreement on a jointly owned $1
billion petrochemical complex in Romania stipu-
lated under a 1975 agreement.
Nepal is expected to receive additional eco-
nomic aid from the USSR under an agreement
signed in November after feasibility studies on
paper, pharmaceutical, and glucose plants are
completed. China agreed in 1976 to proceed with
a $4 million irrigation project at Pokhara and the
65-km Naranghar-Gurkha road, both financed
under a $35 million grant.
China provided $27 million worth of new aid
to North Yemen for industrial plants and
continuation of a road construction program.
South Yemen received $24 million in new
Soviet economic assistance for transportation,
fisheries, and agricultural development.
Sri Lanka accepted a Chinese loan of $3
million for budget support and concluded its
traditional concessionary rice-rubber barter
agreement with China during 1976. Peking also
began work on the Gin Ganga flood control
project and on a textile mill at Mineriya. These
projects will bring about 200 Chinese technicians
into Sri Lanka.
The Soviets, whose aid program has been
smaller, began work on the Samanalawewa
hydropower project (under a $57 million .1975
credit) and expanded a Soviet-built steel mill.
East European activity during the year included
a Romanian agreement for joint ventures in
industry, agriculture, and transportation; an East
German agreement to furnish rice and textile
mills (probably under a $42 million credit); a
Czech contract for equipment and technical
assistance to a refractory works; and transmittal
of plans for a small alumina plant to be built with
a $10 million Hungarian credit extended in 1972.
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