CFEP DRAFTING GROUP ECONOMIC DEFENSE POLICY REVIEW PROMOTION OF SOVIET BLOC DISUNITY THROUGH FLEXIBLE APPLICATION OF STRATEGIC TRADE CONTROLS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP63-00084A000100050002-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: November 9, 2016
• Document Release Date: July 10, 1998
• Sequence Number: 2
• Publication Date: June 28, 1955
• Content Type: REPORT

Sanitized - Approved For Release : CIA-RDP63-00084A00010
aL,
C1 EP DRAFTING GROUP
ECONU 'IIC DEFENSE POLICY R VIEV;
r
r /r
r
05QQ0=9t"
Staff study No. L. (Revised)
Draft of June 28, 1955
Promotion of Soviet Bloc Lisunity T rough Flexible
Application of ~tretc:gic Trade Controls
This draft of Staff Study No, 4 (Revised), "Promotion of
Soviet Bloc Disunity Through Flexible Application of strategic Trade
Controls", is transmitted for your use in connection with the work
of the CFE..P Drafting Group on Economic Defense Policy Review.
In compliance with the request of the Chairman of the
Drafting Group, the rcecutive Secretary, ELAC, is providing repro-
duction and distribution facilities as a service to further the
work of the CFE' Drafting Group.
25X1A9a
Executive Secretary
Distributions
CFEP Drafting Group
Sanitized - Approved For Release : CIA-RDP63-00084A000100050002-9
 Sanitized - Approved F .ease : CIA-RDP63-00084A000100050002-9
This document consists of
5 pages. No. dof S
CFEP DRAFTING GROUP copies, Series G.
ECONOMIC D., SE POLICY . - ..,
Staff Study No. 4
(Draft of June 28, 1955)
Promotion of Soviet Bloc Disunity Through Flexible
Application of Strategic Trade Controls
Problem:
To appraise the experience under, and the presently apparent utility of,
the policy concept expressed in subparagraph 19 (e) of NSC 152/3, namely,
"To decrease, through skillful flexibility in applying controls, the
political and economic unity of the Soviet bloc".
Discussiont
1. The concept of the use of "skillful flexibility" in the application
of export controls has to date been applied only unilaterally by the United
States. On only one occasion was this flexibility used in connection with
strategic export controls, eg,, the relaxation of controls toward Yugoslavia
in 19499 following Yugoslavia's expulsion from the Cominform in 1948. On
other occasions, United States export policies were relaxed, but not as re-
gards strategic controls, ege the food distribution to East Germany (against
the expressed will of the Last German government) in 1953, and the food and
drug shipments to three 'astern European satellites as flood relief in the
summer of 1954. No flexibility in controls or policies has been manifested
with regard to Communist China, except in a few instances where import
controls were relaxed for specific commodities to improve the U.S.
stockpile position.
2. "The political and economic unity of the Soviet bloc," as used in
Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
 Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
Gomm"
the abovementioned NSC directive, is taken to apply primarily to the inter-
relations of governments and only secondarily, if at all, to the attitudes
of populations within the various Soviet bloc countries. Creation of
"disunity" could be taken to mean the fostering of "Titoism" or any tendency
in that direction within the regime of Communist China or any of the Eastern
European satellites. Experience in the case of Yugoslavia indicates that
this tendency arose from an inter-governmental conflict which was influenced
neither by (1) any extra-Soviet bloc activities of any kind or (2) the
attitudes of the Yugoslav population. There has been no subsequent demon-
stration that new opportunities have arisen which would make Soviet bloc
regimes more susceptible to either of these influences-as a determinant of
decisions on intea bloc political or economic relationships.
3. The relaxation of controls toward Yugoslavia in 19119 strengthened
the position of Yugoslavia after its breach with the Soviet bloc had already
occurred and undoubtedly helped prevent punitive subjugation of the Yugoslav
regime by the Soviet bloc. This experience demonstrates the value of
"flexibility" in the application of strategic controls as a means of exploit-
infi and enhancing disunity that had already arisen from internal conflicts
within the bloc. It demonstrates ,iothing regarding the ability of the West
to initiate any such disunity. Its principal lesson would appear to be the
pointing up of the need for alertness in detecting the early portents of
disunity, arising from causes independent of Western policy, which might
then be exploited and enhanced by Western trade policies at an earlier stage
than was the case with Yugoslavia.
Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
 Sanitized - Approved For Release: CIA-RDP63-00084AO00100050002-9
-3-
4. Food distribution to Fast Germany and flood relief shipments to Fast
Germany, Czechoslovakia and Hungary were useful as a means of demonstrating
to Soviet bloc populations the continued friendship of the United States, in
tempering their feeling of isolation from the Western world, and in reinforcing
their already existing hostility to their present regimes. It must be assumed,
however, that the satellite regimes had little fear that these actions would
operate to "decrease the political and economic unity of the Soviet bloc,"
The examples of Fast German (1953) and Albanian (1955) refusals of U.S. food
shipment offers suggests that satellite governments decide., probably under in-
structions from the U.S.S.R., when and whether it would be in their interests
to accept such offers. Acceptance under such circumstances can be taken to
signify an over-all Soviet bloc Judgment that the shipments involved would not
have adverse repercussions for the bloc's political or economic unity. Non-
acceptance,, on the other hand, might well indicate some degree of fear of
enhancing the populations' low regard for the regimes through a demonstrations
of the regimes' inability to cope with supply problems, but it may also be
an oblique indication of the regimes' security, in that they feel able to dis-
regard the dissatisfactions engendered by knowledge of a Western offer which
the regime has rejected. In either case, the regimes hold the trump card
in that they can decide on acceptance or nonacceptance, and thereby neutra-
lize any approach that might, in their minds., have a chance of creating
disunity'
5. In the case of commodities in short supply within the bloc, trade
allowed by a relaxation of controls might well be accepted by a single member
Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
 Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
mom
of the bloc, depending ultimately, of course, on that country's foreign ex-
change position and the financial terms covering a trade offer' But it would
be very difficult in such a case to estimate whether acceptance of such trade
would work toward creating a breach between this single member and the rest
of the bloc or whether it would in fact signify this member's intention,
acting in concert with the rest of the bloc, to secure supplies for re-export
within the bloc. Even if a commodity could be identified which was in short
supply in only one bloc country, relaxation of control on that commodity to
that country alone could merely serve to solve a bottleneck in intra-bloc
trade r1eg. total bloc supply), thereby possibly enhancing rather than de-
creasing bloc unity. The key quastion remains that of the pre-existing
situation with regard to unity. At present Soviet control over satellite
political and economic affairs is sufficiently effective that it is hard to
conce+ve of its being weakened to any appreciable degree by Western economic
approaches.
6. Communist China stands in a different relationship to the U.S.S.R.
than do the European satellites. The Sino-Soviet alliance is based on a
mutuality of interests rather than on Soviet control of Chinese economic and
political affairs. Furthermore, the relative severity of western trade con-
trols with regard to Communist China allows more scope for the application of
flexibility. However, possible areas of conflict between the USSR and
Communist China are probably not now at a stage where they are susceptible
to exploitation or enhancement through flexibility in western trade controls.
While grants of Soviet economic aid may not have met initial Chinese Communist
Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
 Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9
r
-5m
hopes, the U.S.S.R. has apparently provided goods essential to Peiping's
economic development program in adequate quantities and on acceptable
terms. Flexibility in Western trade controls might serve to ease the
supply situation or provide more favorable terms for specific commodities,,
thus eliminating points of possible minor differences between Peiping and
Moscow, but without affecting the basic relationship between the two
regimes. Even completely free access to Western sources of supply
would not, at present, significantly affect the orientation toward the
Soviet bloc of the Chinese Communist economy or the mutuality of economic,
political, and military interests between Peiping and Moscow.
Sanitized - Approved For Release : CIA-RDP63-00084AO00100050002-9