SINO-SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A008400030010-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 27, 2016
• Document Release Date: January 14, 2014
• Sequence Number: 10
• Publication Date: April 30, 1956
• Content Type: REPORT

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BIWEEKLY REPORT
SINO - SOVIET BLOC
ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
EIC?WGR-1/6
30 April 1956
PREPARED BY THE WORKING GROUP
? ON SINO-SOVIET BLOC ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
ECONOMIC INTELLIGENCE COMMITTEE
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WARNING
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
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CONTENTS
I.
Sumnia.ry of Events, 10 - 23 April 1956
Sino-Soviet Bloc . . . . ...... .....
Page
1
2
A. New Soviet Tactics at a Session of ECE
. ?
?
?
2
B. International Trade Fairs
III.
South and Southeast Asia ........
?
?
5
A. India
1. Polish Trade Agreement . ?? ..
...
5
2. Bulgarian Trade Agreement
5
B. Cambodia - Communist China
6
IV. Middle East and Africa 6
A. Egypt
?
. .......
. . .
6
1. Resales of Cotton 6
2. Soviet Barter Agreement ... ? ?
B. Sudan
1. Soviet Technical Assistance
2. Sino-Sudanese Trade
C. Iran-Polish Agreement
D. Soviet Tanker Chartered to Carry Aruba Oil
to Israel '
E. Soviet Arms Offer to Lebanon 0 ? ? ? ? ? ?
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V. Latin America . . .... ........
A. East Germany- Chile ....... .
13. Czechoslovakia-- Pa.raguay . . . . . .
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SINO-SOVIET BLOC ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS*
I. Summary of Events, 10 - 23 April 1956.
Sino-Soviet Bloc efforts to expand economic relations with under-
developed areas in the Free World during the period from 10 to 23
April 1956 were concentrated largely in the negotiation of trade agree-
ments. An additional tactic of Bloc policy that was significant, al-
though not concerning an underdeveloped area, was the Soviet offer
to aid Western Europe which was voiced at a session of the United
Nations Economic Commission for Europe (ECE) on 9 April.
The attempt to use the ECE as a means of disrupting current
international agreements included an imiolicit offer to supply coal and
petroleum to Western European countries, a resolution to expand
economic cooperation on an all-European basis, and a proposal to
establish a special committee to study peaceful uses of atomic energy.
The implementation of the recently reported trade agreement be-
tween Poland and India underlines the sharply increased trade be-
tween these countries wherein Indian imports from Poland have in-
creased about tenfold in 2 years. Also in South and Southeast Asia,
a trade and payments agreement was signed between Communist
China and Cambodia on 24 April.
In the Near East the new Soviet-Egyptian barter agreement, signed
on 17 April, was concluded despite the inability of the Egyptians to ob-
tain assurances from Czechoslovakia that Egyptian cotton purchased
by the Bloc would not be resold in the West. The Egyptian government
* Although the main emphasis of the Biweekly is on economic
activities of the Sino-Soviet Bloc in underdeveloped areas of the
Free World, significant Bloc activities of this nature in areas
not considered underdeveloped also will be discussed.
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apparently is not too disturbed by the resale of cotton, because the ex-
port of cotton to the Bloc has jumped from 10 percent of total exports
during 1953-54 to an expected 33 percent during 1955-56.
Other Sino-Soviet Bloc economic activities in the Near East and
Africa during the period included a reported offer of technical assistance
by the USSR to the Sudan and further trade talks between Communist
China and the Sudan, the signing of a trade agreement between Poland
and Iran on 16 April, a Soviet offer to supply arms to Lebanon,- and the
reported chartering by Israel of a Soviet oil tanker to carry fuel oil
from Venezuela to Israel.
In Latin America an East German trade delegation established a
permanent office in Santiago, Chile. The delegation was in Chile. to
discuss the implementation of a barter agreement previously concluded
between the two countries. In addition, equipment for a flour mill was
shipped to Paraguay by Czechoslovakia, a,transaction presumably
within the framework of the trade agreement signed between the two
countries in October 1953.
II. Sino-Soviet Bloc,
A. New Soviet Tactics at a Session of ECE.
At the recently completed eleventh plenary session of the ECE
in Geneva, the Sino-Soviet Bloc made a strong attempt to use the ECE
as a major vehicle both to disrupt existing international arrangements
in Western Europe and to further Soviet economic relations with
Western Europe. In his address to the Commission on 9 April, the
SOviet delegate offered to help the Western European countries over-
come their economic problems as US aid disappeared, specifically by
supplying large quantities of coal and petroleum to meet the growing
need for sources of energy in Western Europe. In addition, the USSR
introduced several resolutions for the expansion of ECE activity in
promoting European economic cooperation. The two most important
resolutions called upon the ECE to draft an all-European agreement
on economic cooperation and to establish a special committee o'n
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peaceful uses of atomic energy through which all European countries
would cooperate. The USSR envisaged the cooperation agreement as
a means of increasing trade, organizing joint use of resources, ex-
changing technical information, and facilitating international banking
and credit. The proposal of the atomic energy committee was to
provide for the 'study of the economic aspects of peaceful uses of
atomic energy and for the promotion of exchanges of information
and visits.
These tactics are in sharp contrast, to the previous behavior
of the Russians at the ECE meetings, although considerable changes
in attitudes were evident in the two previous annual meetings. Be-
fore 1954 the USSR had followed a policy of noncooperation, refusing
to participate in committee and technical work, abstaining from
voting, supplying little data, and using the ECE primarily as a forum
for propaganda attacks on the West, particularly against strategic
trade controls.
? The tactics at the session in April 1956 placed the USSR for
the first time in the role of advocate of a major forward movement
in an all-European economic cooperation. The West was placed in
a defensive position because the Soviet resolution's were aimed at
disrupting much of the progress which had been made through pri-
marily Western European organizations such as the Organization
for European Economic Cooperation (OEEC), the Coal and Steel
Community (CSC), and the proposals for further economic integration
among the community of six nations. The Soviet proposal for an
ECE nuclear energy committee disregarded the facts that a, draft
statute for an atomic energy agency in the UN is now being prepared,
that the UNESCO agenda calls for consideration of nuclear energy
as a factor in economic development, and that the electric power and
coal committees of the ECE have begun studying the impact of nuclear
power on traditional energy sources.
By calling attention to problems of duplication and coordina-
tion with existing international organizations and by pointing out the
lack of data from Soviet Bloc countries on the various subjects, the
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West managed to modify the various Soviet resolutions to a basis
which first would require submission of adequate and comparable
data from all governments as a prerequisite for referring the Bloc
proposals to governments or to ad hoc working groups for study and
reply in the next (twelfth) session of the ECE. Nevertheless,
Western European delegations felt that the West must be willing to
explore possibilities arising from Soviet offers. In the face of
apparently "practical and reasonable" Soviet proposals, the Western
Europeans did not believe it desirable to take a negative position at
the outset, although they were well aware of Soviet intentions.
B. International Trade Fairs.
A recent study of Sino-Soviet Bloc participation in inter-
national trade fairs and exhibits shows that Bloc trade fair expen-
ditures in 1955 were most sizable in those areas where Bloc credit
offers to the Free World have been concentrated. Bloc participation
in trade fairs in India involved an aggregate expenditure of nearly
$3 million, a sum greater than that spent in any other. Free World
countr?k. Sizable outlays also were expended in the trade fairs of
Pakistan; Indonesia, and Syria.
Information about Bloc plans for participation in 19:56 trade
fairs indicates increased expenditures in such countries as Syria,
Turkey, Greece, Italy, Yugoslavia, Tunisia, French Morocco,
Uruguay, Brazil, and Japan. Bloc participation comparable in mag-
nitude to Bloc exhibits in India, Pakistan, and Indonesia during 1955
has not been announced for 1956, but a substantial Bloc effort is
expected in this year's Industrial and Trade Fair in Afghanistan.
Bloc participation in international trade fairs during 1955
showed a significant increase over 1954. In 1954, Bloc countries
together had 108 exhibits in trade fairs in the Free World, spending
an estimated $7.7 million. In 1955 the Bloc offered 196 exhibits in
the Free World, with an estimated expenditure of $18 million. Czecho-
slovakia was the most active participant in Free World trade fairs in
* Unless otherwise specified, all dollar values in this report are in
terms of US dollars.
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1955, with 61 exhibits costing nearly $6 million, followed by the USSR,
East Germany, and Communist China, with expenditures of approxi-
mately $4.4 million, $2.8 million, and $2.7 million, respectively.
II-I. South and Southeast Asia.
A. India.
1. Polish Trade Agreement.
On 11 April, India and Poland implemented the general
trade agreement signed by the two governments on 3 April. - In ne-
gotiating the agreement of 3 April both India and Poland agreed to
increase further trade between the two countries, and the Polish govern-
ment has indicated willingness to supply oceangoing vessels to India.
Specifically, over the next 3 years, India proposes to supply Poland
with 300,000 long tons of iron ore and to receive from Poland 300,000
long tons of iron and steel products and 100,000 long tons of cement.
During 1956, India will sell 100,000 long tons of iron ore to Poland,
and Poland will sell 50,000 long tons of iron and steel to India. The
government of India has announced that this is n.ot a barter agreement
and that terms are specific for the sale and purchase of the comi-nodi-
ties. The terms of the agreement have not been made public.
The value of Indo-Polish trade has increased sharply
during 1955. The value of Indian imports from Poland increased 10
times, from about $236,000 in 1954 to about $2.3 million during the
first 10 months of 1955. Indian exports to Poland increased only
from about $560,000 in 1954 to about $719,000 in the first 10 months
of 1955. Thus Poland's import surplus has shifted to a very sizable
export surplus.
2. Bulgarian Trade Agreement.
On 18 April, India and Bulgaria signed a bilateral trade
agreement which will bel valid until 31 December 1959. Under the
terms of the agreement, India will export to Bulgaria a wide range
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of commodities, including iron and manganese ores, raw cotton, jute,
? and handicraft products and,will import from Bulgaria various kinds
of machines, chemicals and drugs; and electrical instruments:
This agreement is a renewal of a previous Indo-Bulgarian
trade agreement which expired on 31 December 1955. Although settle-
ment of accounts in Indian rupees is provided for, it is expected that
the exchange of commodities will be as Inuch as possible on a barter
basis.
B. Cambodia - Communist China.
The Cambodian economic mission which arrived in Peiping
on 8 April signed a trade and payments agreement with Communist
China on 24 April. No details of the agreement have been announced.
The' mission was presented also with an aid agreement, which accord-
ing to the Cambodian foreign minister, will be carefully studied be-
fore it is accepted by his government. There have been no reliable
reports on its magnitude ot other details.
IV. Middle East and Africa.
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2. Soviet Barter Agreement.
Reuters has reported
Soviet-Egyptian barter agreement.
ment, which involves the exchange
kerosine for Egyptian products, is
the signing on 17 April of a new
The stated value Of the agree-
of 100,000 metric tons of Soviet
LE 1 million (about $2.8 million).
This agreement may presage renewal of the formal
Soviet-Egyptian trade agreement which was to have expired on
26 March. Although Egypt has formal trade agreements with nearly
every Sino-Soviet Bloc country, specific barter deals such as this
are common. Egypt has been Oonducting an increasing volume of
trade with the Bloc, with which it has maintained a large export sur-
plus as compared with a large import surplus with the world as a
whole. The principal reason for Egypt's export surplus with the
Bloc has been the large sales of Egyptian cotton to that area. The
Bloc, which took only about 10 percent of Egypt's cotton exports
during the 1953-54 crop ,year; increased this amount to 30 percent
in 1954-55 and is expected to take 33 percent for the 1955-56 crop
year.
B. Sudan.
L. Soviet Technical Assistance.
Sudanese Premier El Azhari is reported to have stated
on 15 April that his government is willing to accept the technicil
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assistance offered by the USSR. It is understood that the Soviet
Ambassador in Cairo is expected to arrive in Khartoum with the de-
tails of the Soviet offer. \
2. Sino-Sudanese Trade.
An official statement issued in Khartoum on 14 April
disclosed that the Sudan and Communist China have reached an under-
standing on the development of trade between the two countries. The
statement did not indicate, however, that a formal trade agreement
had been signed.
The Sudanese invitation to the Chinese Communists to
-,visit the Sudan to discuss trade possibilities and subsequent state-
ments by the Chinese Communist Minister of Foreign Trade would
indicate that the Chinese Communists had hoped to conclude a formal
trade agreement with the Sudan during 'their stay in Khartoum. These
statements indicated that the purpose of the visit was to purchase
? "large quantities" of Sudanese cotton which China "needs" in return?
for Chinese machinery and complete factory equipment, to be paid
in installments. Over the past 12 months, Chinese delegations have
succeeded in concluding trade agreements with Egypt, Syria, and
Lebanon during visits to those countries. The issuance of such a
general statement of intentions to develo-p trade suggests that per-
haps the Chinese were not so successful in dealing with the Sudanese
as they had hoped.
C. Iran-Polish Agreement.
According to Radio Warsaw, a trade and payments agree-
ment between Poland and Iran was signed in Tehran on 16 April.
The agreement covers a period of 1 year and was to be effective
on the day of signing. It is understood that each signatory will
export up to $10 million (equivalent) of products to the other
annually under this agreement.
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Poland will export to Iran industrial equipment, railroad
rolling stock, motor cars, trucks, tractors, chemical and pharma-
ceutical products, metal goods, ceramic goods, cement, textiles,
and other products. Iran will export to Poland cotton, raw hides,
zinc and lead ores, dried fruit, rice, and other products. Trade
between the two countries has not been significant in the past. In
1954, total trade between Iran and Poland amounted to less than
percent of total Iranian trade, and in 1955 it declined to less
than 0.2 percent. Thus it appears unlikely that a turnover of $20
million can be attained in the near future.
This is believed to be the first time that a Bloc tanker has
been cha.rtered to transport a cargo of Western fuel oil. ,The sale
of the Leningrad's services rovides the Leningrad with a
payload for her return trip from the Antarctic, where she has been
refueling the Soviet whaling fleet. In the past, Soviet tankers re-
turning from similar voyages occasionally have taken on cargoes
of edible oils at Latin American pOrts.
The Bloc traditionally has been short of tanker tonnage and
is in fact heavily engaged in the charter of Western tankers for em-
ployment on all routes except the Black Sea - Far East run. In view
of this fact, the charter of the Leningrad appears to be the oppor-
tunistic response of the USSR to a chance to earn Western exchange.
E. Soviet Arms Offer to Lebanon.
In early April, General Chehab, the Lebanese chief of staff,
reported that the Soviet military attache in Beirut offered to supply
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Lebanon with antitank weapons, tanks, and planes. Chehab stated
that he had declined the offer by saying that Lebanon did not have
funds for this purpose.
On 13 April, Chehab informed the US military att4che that
Lebanon urgently needed 24 recoilless 105- or 106-mm antitank guns
and 50 to 100 rounds of ammunition per gun. He indicated that price
was no Object, as the Lebanese military budget for this year had just
been increased by LI, 7 million to permit additional procurement of
armaments and munitions.
V. Latin America.
A. East Germany.- Chile.
A permanent office,- purportedly representing the East
German Chamber of Commerce, has been established in Santiago
by two members of the East German trade delegation which arrived
in Chile during December 1955. The delegation was sett to Chile to
discuss the implementation of a $10-million barter agreement con-
cluded between the East German export monopoly and a private
Chilean association at the Leipzig Fair in the fall of 1955. The East
Germans reportedly are offering to Chile industrial, agricultural,
and tra.nspOrt equipment, chemical and electrical products, and
optical instruments. Chilean goods considered for export include
agricultural products and nitrate. Chile recently has announced ?
agreements with Czechoslovakia and Hungary which provide for
Chilean exports of 60,000 tons of nitrate in exchange for $6. 1 mil-
lion worth of Hungarian and Czechoslovak equipment.
There was no Chilean.- East German trade'reported in 1954
and the first half of 1955, and Chilean trade with the Soviet Bloc as
a whole -- carried out on an ad hoc basis -- has been insignificant.
Total trade with the Bloc in 1954 amounted to only $2.2 million --
with Poland, $1 million; with Czechoslovakia, $0.6 million; and with
Hungary, $0.5 million.
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B. Czechoslovakia Paraguay.
Equipment for a flour mill has been shipped to Paraguay by
the Mill Machines Factory of Czechoslovakia. Two Czechoslovak
workers are to travel to Paraguay to aid in assembling the machinery.
This transaction probably has taken place within the -frame-
work of the Paraguayan-Czechoslovak trade agreement originally
signed on 16 October 1953, which included provision for Czechoslovak
shipment of agricultural machinery. Although probably, small by
? Czechoslovak standards, the plant, which has an estimated annual
output of 10,500 metric tons of wheat flour, will be the second largest
flour mill in Paraguay. The installation of this plant may permit re-
duction of flour imports into Chile by as much as one-third.
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