SOVIET TRADE WITH EASTERN EUROPE THROUGH 1965: PATTERNS AND PROSPECTS

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• Sequence Number: 2
• Publication Date: November 1, 1962
• Content Type: REPORT

I
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L-It-E-T, N?
Economic Intelligence Report
SOVIET TRADE WITH EASTERN EUROPE THROUGH 1965:
PATTERNS AND PROSPECTS
CIA/RR ER 62-32
November 1962
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
'c--RErx,
GROUP I
Excluded from automatic
downgrading and
declassification
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SECRET
Economic Intelligence Report
SOVIET TRADE WITH EASTERN EUROPE THROUGH 1965:
PATTERNS AND PROSPECTS
CIA/RR ER 62-32
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
SECRET
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FOREWORD
This report covers planned Soviet trade with the European Satellites
during 1961-65 with the exception of Albania. Albania has been excluded,
for its current status in Soviet economic plans for the Satellite area
is uncertain, partly as a result of politico-ideological disagreements
with the USSR.
Data have been rounded
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Summary and Conclusions
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CONTENTS
I. General Survey of Soviet-Satellite Trade
Page
1
5
A. Direction 6
B. Composition 9
1. Soviet Exports to the European Satellites . . . 9
2. European Satellite Exports to the USSR . . ? ? 13
3. Impact of Soviet-Satellite Trade on the Econo-
mies of the USSR and the European Satellites . 15
4. Effect of Soviet-Satellite Trade on Economic
Integration and Division of Labor in Eastern
Europe
16
II.
Trade with Individual European Satellite Countries
17
A.
East Germany
17
1. Soviet Exports
18
2. East German Exports
20
B.
Czechoslovakia
25
1. Soviet Exports
26
2. Czechoslovak Exports
27
C.
Poland
32
1. Soviet Exports
33
2. Polish Exports
35
D.
Bulgaria
39
1. Soviet Exports
1+0
2. Bulgarian Exports
42
E.
Hungary
2+3
1. Soviet Exports
44
2. Hungarian Exports
45
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F. Rumania
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1. Soviet Exports
2. Rumanian Exports
Appendix
Page
51
52
53
Tables
1. Estimated Soviet Trade with the European Satellites,
1956-60 and 1961-65
7
2. Soviet Share of European Satellite Trade and Satellite
Share of Soviet Trade, 1960 and 1965 8
3. Commodity Composition of Soviet-Satellite Trade,
1960 10
4. Selected Soviet Exports to the European Satellites,
1956-60 and Planned for 1961-65 12
5. Selected Soviet Exports to East Germany, 1956-60
and Planned for 1961-65 19
6. Selected Soviet Imports from East Germany,
21
1956-60
7. Selected East German Exports of Machinery and Equipment
to the USSR, 1956-60 and Planned for 1961-65 23
8. Selected Soviet Exports to Czechoslovakia, 1956-60
and Planned for 1961-65 26
9. Selected Soviet Imports from Czechoslovakia,
1956-60 28
10. Selected Czechoslovak Exports to the USSR, 1956-60
and Planned for 1961-65 30
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11.
Selected Soviet Exports to Poland, 1956-60
Page
and Planned for 1961-65
34
12.
Selected Soviet Imports from Poland, 1956-60
36
13.
Selected Polish Exports to the USSR, 1956-60
and Planned for 1961-65
37
14.
Selected Soviet Exports to Hungary, 1956-60
and Planned for 1961-65
46
15.
Selected Hungarian Exports to the USSR, 1956-60 .
?
?
48
16.
Selected Soviet Exports to Rumania, 1956-60
and Planned for 1961-65
53
17.
Selected Rumanian Exports to the USSR, 1956-60
and Planned for 1961-65
55
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SOVIET TRADE WITH EASTERN EUROPE THROUGH 1965: PATTERNS AND PROSPECTS*
Summary and Conclusions
The sizable increase in Soviet-Satellite trade projected through
1965 reflects the maturing of an important aspect of a Soviet policy
initiated late in 1956 that seeks to perpetuate Soviet hegemony over
the European Satellite countries through the establishment of some
measure of mutuality of economic interests as the basis for continued
Satellite economic growth.** Through a series of interlocking 5-year
trade agreements, coextensive with their mutually coordinated national
economic plans, the USSR and the European Satellites are jointly evolv-
ing a pattern of production and intra-Bloc trade that strives for
greater efficiency in the utilization of area-wide resources through
the implementation of the program for coordinated economic development
in EaStern Europe fostered by the Council for Mutual Economic Assist-
ance (CEMA). The planned expansion in and the pattern of Soviet-
Satellite trade, however, will not necessarily result in the optimum
allocation of the available resources in the Satellites or in the
most rational development of the Satellite economies in any abstract
sense. Rather, given the current political division between East
and West -- a division that finds the Satellite countries completely
under Moscow's away -- there appears to be no realistic or practical
alternative to Satellite economic development focused on and consonant
with the requirements of the Soviet Bloc.
Aggregate Soviet-Satellite trade is expected to exceed $9,000 mil-
lion*** by 1965, increasing more than 50 percent above the level of
$5,900 million in 1960. Thus the average annual rate of growth in
trade during 1961-65 is expected to approximate 9 percent, generally
equaling the planned annual increases in gross industrial production
in the countries of the Soviet Bloc. At the same time, Soviet-Satellite
trade is expected generally to increase at a somewhat more rapid pace
than the total trade of the CEMA countries, so that by 1965 the share
of this trade in aggregate Soviet and Satellite turnover will increase
compared with 1960.
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 September 1962.
** The terms European Satellites, Satellites, and Satellite coun-
tries as used in this report refer to all the European Satellites
except Albania.
*XX All dollar values in this report are given in terms of current
US dollars.
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Reflecting the continuing priority accorded by the Soviet Bloc to
the expansion of its basic industries, Soviet-Satellite trade in certain
key commodities essential to these industries is scheduled to grow more
rapidly than the aggregate turnover. Thus Soviet shipments of ferrous
and nonferrous ores and metals and of semimanufactures, petroleum, and
petroleum products are to be increased substantially in line with the
rapidly growing demands of industrial expansion in the Satellites. At
the same time, in support of recommendations by CEMA calling for ex-
pansion of production of raw materials in the Satellites, the USSR is
committed to supply significantly increased quantities of machinery
and equipment, particularly for the extractive and metallurgical in-
dustries in the Satellite countries. The total Soviet exports of
machinery and equipment to the Satellite countries, generally keyed
to major industrial development projects, reportedly are scheduled to
increase from $350 million in 1960 to nearly $1,400 million in 1965.
Satellite industry, which in the past has been the principal sup-
plier of Soviet imports of capital goods (deliveries in 1960, valued
in excess of $1,200 million, provided more than 70 percent of Soviet
imports in this category), is expected to enlarge significantly the
volume and product mix of its exports to meet the requirements of the
Soviet Seven Year Plan (1959-65). Aggregate shipments during 1961-65
are expected to range between $8,000 million and $9,000 million (ap-
proximately doubling shipments during 1956-60 that totaled approxi-
mately $4,500 million). By 1965, Satellite deliveries of machinery
and equipment to the USSR are expected substantially to exceed $2,000
million annually, constituting more than 50 percent of the total
Satellite exports to the USSR compared with about 43 percent in 1960.
Although still only marginal in comparison with aggregate Soviet
production, imports from the Satellite countries fill a number of
priority needs and supply a substantial share of the total Soviet re-
quirements for the plan goals of certain sectors of the economy. For
example, fulfillment of the targets for the maritime fleet under the
current Soviet plan appears to be heavily dependent on the large-scale
Imports of merchant ships that are scheduled from the Satellite coun-
tries. Similarly the achievement of the planned product mix in Soviet
output of iron and steel appears to be contingent on Satellite de-
liveries of rolling mill and related finishing equipment, which are
expected to equal about 20 percent of Soviet output of metallurgical
equipment during 1961-65. Other important Satellite exports of ma-
chinery and engineering products include chemical equipment, vital to
the achievement of the large expansion programed for the Soviet chemical
industry; railroad rolling stock; power-generating equipment; electronic
instruments and installations; machine tools; and equipment for light
industry and the food industry.
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The rapidly expanding volume of imports of machinery and equipment
from the Satellite countries underscores the importance to Soviet plans
for economic growth of the increasing complementarity between the econo-
mies of the USSR and the Satellite countries. In view of current Soviet
difficulties in generating additional exports to countries of the Free
World to pay for vital imports of machinery and equipment from the in-
dustrial West, it appears reasonable to assume that the over-all import
requirements for machinery and equipment posited by the Seven Year Plan
could not be met without the decisive contribution made by the Satel-
lite countries.
Thus Soviet-Satellite trade agreements are a key factor in the over-
all plans for economic development of the Soviet Bloc through 1965. Of
significance in this respect is the fact that within the arrangements
for coordinating the basic features of the long-term economic plans of
the entire Soviet Bloc are provisions in the plans of the member coun-
tries to assure that the most important mutual import requirements dur-
ing the plan period will in fact be met. With the major share of import
requirements thus secured and export markets for the output of key indus-
tries substantially guaranteed, Soviet and Satellite production can be
scheduled to make more efficient use of available manpower and produc-
tion facilities. Thus the greater predictability of trade should enable
Bloc planners to avoid prolonged periods of underemployment of men and
machinery that, particularly in the Satellite countries, have impeded
economic progress in the past and, as a result, to achieve generally
greater output throughout the Soviet Bloc.
Finally, the substantially increased level of Soviet-Satellite
trade and the growing Bloc-focused orientation of Satellite economic
development that it entails will heighten the interdependence among
the CEMA countries and, as a likely consequence, strengthen the
political ties that bind them. As an initial result of current trade
planning, the share of the USSR in the total trade of the Satellite
countries -- already at a high level in 1960 -- will show further in-
creases, especially in the trade of Czechoslovakia, Poland, and Hungary,
countries that had previously maintained the most extensive Satellite
trade contacts with the West. Inter-Satellite trade, supplementing
Soviet trade with individual Satellite countries as an assured supplier
of import requirements and a market for export availabilities, also is
expected to increase its share of total Satellite trade, particularly
as CEMA plans for the economic integration of Eastern Europe are fur-
ther implemented. To an increasing extent, therefore, the continued
growth and development of the Satellite countries depends on and is tied
to the growth and development of the entire Soviet Bloc, as determined
in its broader outlines by the policy objectives of the USSR.
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I. General Survey of Soviet-Satellite Trade
The Soviet "Declaration on the Principles for Developing and Further
Strengthening the Friendship and Collaboration Between the USSR and
Other Socialist States," issued in October 1956 at the height of the
Hungarian revolt, marked a significant turning point in Soviet-Satellite
relations. This declaration renounced the exploitative economic poli-
cies characteristic of the Stalinist approach to the Satellites and in
effect heralded a Soviet commitment to underwrite the economic develop-
ment of the Satellite countries in return for their continued support
of broader policy objectives of the USSR. Pursuant to this commitment,
Soviet and Satellite planners, working bilaterally and through CEMA,
began as early as 1957-58 to lay the groundwork for area-wide coordi-
nated economic growth, focusing initially on the sectors producing raw
materials as well as on the key industrial sectors of the countries
of the Soviet Bloc. The Soviet Seven Year Plan, adopted late in 1958,
set the tone and provided the general framework for economic develop-
ment in the Bloc through 1965, and Satellite economic plans, which
generally are scheduled to run concurrently during 1961-65, have been
extensively geared into it.
Unlike earlier years, however, when the activities of numerous
Soviet advisers attached to key Satellite industries as well as the
frequent intervention of Soviet ambassadors accredited to the Satel-
lite capitals enabled the USSR to exercise a significant measure of
control over the direction of Satellite economic planning, there is
little evidence (other than in East Germany, which presents a unique
political problem for the Soviet leaders) that current plans for pro-
duction in the Satellites are in any direct sense dictated by Moscow.
Rather, it appears that as long as Satellite planners generally observe
the broad policy outlines of the Soviet plan (for example, the emphasis
on accelerated development of the chemical, machine building, metallur-
gical, and power-generating industries), they enjoy virtual autonomy
in working out the details of their plans in conformity with the pro-
duction capabilities and resources of their respective countries, sub-
ject to modifications needed to comply with agreements reached through
CEMA coordination or bilateral negotiations. Thus, although Soviet
import requirements continue to play an important and in certain cases
perhaps even a decisive role in determining the allocation of Satel-
lite resources, these requirements generally are not unilaterally im-
posed by the USSR (as often happened during the Stalinist period) but
rather are agreed on in the course of bilateral negotiations.
In support of mutually coordinated long-term plans and to facili-
tate the realization of the ambitious industrialization programs set
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forth therein, the USSR during 1959-60 negotiated for the first time
5-year trade agreements with each of the Satellites, in effect guaran-
teeing to supply the major share of their import requirements for in-
dustrial raw materials and fuels as well as substantial quantities of
investment goods required to implement major industrial development
projects. In exchange the Satellites are committed to supply increas-
ing quantities of machinery and equipment as well as manufactured con-
sumer goods to help meet the import requirements of the Soviet long-
term plan.
A. Direction
Based on the long-term trade agreements between the USSR and
the European Satellites, which reportedly account for approximately
90 percent of their reciprocal trade, Soviet-Satellite trade turnover
during 1961-65 and in 1965 is estimated as shown in Table 1.*
Soviet trade with the Satellite countries is expected to in-
crease more rapidly than Soviet trade generally, suggesting a further
strengthening of Soviet ties with the CEMA market struCture. Indeed
the actual increase in Soviet-Satellite trade may exceed substantially
the estimates in Table 1. Trade data for 1961 show a turnover of
nearly $6,500 million, an increase of 10 percent above 1960. 2j**
Soviet-Satellite trade agreements for 1962 suggest a further increase
in mutual trade of about 12 percent to approximately $7,300 million,
a goal that should be attained readily if the rapid increase in the
total Soviet foreign trade announced for the first 6 months of 1962
(13 percent above the trade in the corresponding period in 1961) is
maintained throughout the year. 2/ Even if such a rapid rate of
growth is not maintained over the entire 5-year period, a level of
Soviet-Satellite turnover approaching $10 billion in 1965 does not
appear to be out of reach.
In spite of the tenuous nature of long-range trade forecasts,
this pattern of increases in Soviet-Satellite trade through 1965 can
be viewed as a determined move on the part of the USSR to strengthen
further its commanding position in the trade of the Satellite coun-
tries and, as a corollary, to weaken further the influence of the
industrial West. Thus the increase in the Soviet share of total
Satellite trade appears to be at the expense of the Free World, whose
share in trade generally is to be reduced to about 25 percent. Inas-
much as Satellite plans call for continued rapid expansion of trade
with the underdeveloped countries, trade with the industrial West --
and therefore Western influence -- would appear to be primarily
Table 1 follows on p. 7.
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Table 1
Estimated Soviet Trade with the European Satellites
1956-60 and 1961-65
Million Current US $
Increase
(Percent)
Million Current US $
Increase
(Percent)
Total
Average
Annual
1956-60
1961-65
1960
1965
Total Soviet trade
45,900
70,000
53
11,200
16,000
43
7
Soviet-Satellite trade
24,000
38,000
6o
5,900
9,100
54
9
Of which:
East Germany
8,340
12,000
44
1,980
2,900
46
8
Czechoslovakia
5,130
8,500
66
1,280
2,100
64
10
Poland
3,650
6,000
64
880
1,400
59
10
Bulgaria
2,200
3,800
73
630
goo
43
7
Hungary -
1,990
4,000
101
560
goo
61
lo
Rumania
2,400
3,700
54
540
900
67
11
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affected. The anticipated changes in the Soviet share of Satellite
foreign trade and the Satellite share of Soviet foreign trade between
1960 and 1965 are shown in Table 2.
Table 2
Soviet Share of European Satellite Trade
and Satellite Share of Soviet Trade
1960 and 1965
Percent
Soviet Share Satellite Share
of Satellite Trade of Soviet Trade
Country
1960
1965
1960
1965
East Germany
43
45
18
18
Czechoslovakia
34
38
11
13
Poland
30
34
8
9
Bulgaria
53
55
6
6
Hungary
29
36
5
6
Rumania
40
44
5
6
Total
37
40
52/
57W
a. Because of rounding, components may not add to the totals shown.
The extent to which Satellite trade can be oriented further
toward the Soviet Bloc will depend in large measure on the success of
the CEMA specialization program. For the immediate future the indus-
trial West continues to be a highly important source of Bloc imports
of complex machinery and equipment, special steels, selected chemicals,
and, perhaps most significantly, advanced production technology.
Dependence on the West for these imports can be reduced only if the
CEMA program, in addition to raising the over-all level of industrial
output to afford the savings derived from economies of scale, enables
Bloc industries to undertake the extensive research and development
effort required to make continuing qualitative and technological im-
provements. It is likely that the growth of the European Common
Market -- viewed with considerable apprehension by the Satellite coun-
tries as a direct threat to their trade with the West -- will act as
a spur to implementation of the CEMA program.
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B. Composition
In its wider framework the composition of the substantially
enlarged volume of Soviet-Satellite trade during 1961-65 is expected
to follow traditional lines. The USSR will continue to export pri-
marily industrial raw materials, fuels, and foodstuffs to the more
developed Satellites -- East Germany, Czechoslovakia, and, to a lesser
extent, Hungary and Poland -- in exchange for machinery and equipment
and (increasingly in recent years) manufactured consumer goods while
exporting machinery and equipment and semifabricated goods to the less
developed Satellites -- Bulgaria and Rumania -- in exchange principally
for raw materials and foodstuffs. This dual pattern of Soviet-Satellite
trade is clearly shown in Table 3.*
Within this over-all framework, however, available information
suggests that the pattern of Soviet-Satellite trade will undergo some
noteworthy changes. Reflecting the growing industrialization of the
Satellite economies, machinery and equipment and manufactured consumer
goods will comprise an increasing share of the total exports to the
USSR. At the same time, the USSR apparently will greatly step up its
own exports of machinery and equipment to the Satellites, sending an
increasing share of such exports to East Germany and Czechoslovakia,
which in the past few years imported only negligible quantities of
Soviet investment goods. The traditional Communist emphasis on in-
vestment in heavy industry is nowhere more apparent than in these
trade plans, which furnish little or nothing in the way of specific
quantities of foodstuffs and other consumer items while offering the
most detailed specifications for movement of capital equipment and in-
dustrial raw materials.
1. Soviet Exports to the European Satellites
Soviet raw materials are the lifeblood of Satellite indus-
try. In spite of substantial investments in indigenous production of
these commodities, the raw materials base of the Satellite countries
is becoming less adequate in terms of the growing requirements of its
processing industries. The Satellite countries will be forced to im-
port vastly increased quantities of key primary goods to implement their
current long-term plans. The current Soviet shares of the total Satellite
imports of essential raw materials are shown in the following tabulation:
Commodity Percent of Total
Crude oil 96
Iron ore 74
Pig iron 88
Raw cotton 62
Grains 71
Table 3 follows on p. 10.
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Table 3
Commodity Composition of Soviet-Satellite Trade
1960
Percent of Total
Category
Soviet Exports
Soviet Imports
To the Developed
Satellites 1./
To the Less Develpped
Satellites 11/
From the Developed
Satellites a/
From the Less Developed
Satellites b/
Machinery and equipment
9
28
51
13
Fuel, mineral raw ma-
terials, and metals
40
35
20
28
Chemical products, fer-
tilizer, and rubber
3
5
4
2
Raw materials of plant
and animal origin
14
10
1
13
Food products and raw
materials for the
manufacture of food
products
19
4
2
22
Manufactured consumer
goods
2
6
18
16
Other
13
12
4
6
a. East Germany, Czechoslovakia, Hungary, and Poland.
b. Bulgaria and Rumania.
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A comparison of Soviet exports of selected raw materials and fuels
to the European Satellites during 1956-60 and planned exports during
1961-65 is given in Table 4.*
In addition to supplying the bulk of Satellite import re-
quirements for essential raw materials and fuels, the USSR is com-
mitted (in part under long-term credits extended during 1959-60) to
support Satellite industrial and agricultural investment plans through
the delivery of substantially increased quantities of machinery and
equipment. Indicating the seriousness with which Soviet leaders regard
the need for continued rapid economic growth in the Satellite countries,
Soviet exports of machinery and equipment to the Satellites reportedly
are scheduled to increase 300 percent, totaling almost si,400 million
in 1965 compared with $350 million in 1960 and comprising almost one-
third of the total exports compared with little more than 10 percent at
the present time. 3/
The significance of this vast increase in Soviet exports
of capital equipment is enhanced by the fact that Soviet deliveries
generally are designed to assist the implementation of key development
projects in the Satellites. Thus the USSR is to play a major role in
the expansion of the Satellite iron and steel industries (the mainstay
of Satellite industrial growth) by furnishing not only major items of
metallurgical equipment but also technical assistance and monetary
credits. 4/ The USSR, with the cooperation of Czechoslovakia and East
Germany, will furnish much of the equipment required for the Kremikovtsi
Metallurgical Combine, reportedly Bulgaria's most important investment
project during 1950-65. Soviet rolling mills are to be installed in
the East Slovak Ironworks at Kosice, the major new construction project
of the Czechoslovak iron and steel industry. The expansion of the
Lenin Steel Plant in Krakow, which is to furnish the bulk of the in-
creased output of iron and steel products in Poland, also involves
the installation of additional Soviet rolling mill and finishing equip-
ment. Finally, the USSR will furnish the majority of the rolling mills
for the integrated steel plant at Galati, the paramount industrial
objective of the Rumanian Six Year Plan (1960-65).
The USSR also will supply a substantial share of the elec-
tric power generating equipment -- particularly large-size power
generators -- required for the expansion of electric power output in
the Satellite countries during the next few years as well as much of
the power transmission equipment for the construction of high-voltage
lines. These lines, to be integrated by 1965 into a Bloc-wide high-
voltage power grid, will greatly increase the efficiency of electric
power generation and distribution, particularly in the Satellite area,
* Table 4 follows on p. 12.
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Table 4
Selected Soviet Exports to the European Satellites pi
1956-60 and Planned for 1961-65
Commodity
1961-65 Increase 1965 Increase
Unit 1956-60 Plan (Percent) 1960 Plan (Percent)
Total Soviet exports Million current US $ 12,700
Soviet exports to the European
Satellites
18,500 46 3,100 4,500 45
Coal
Million metric tons
27.3
39.6
45
7.1
9.0
27
Crude oil
Million metric tons
21.8
56.2
158
6.2
15.0
142
Iron ore
Million metric tons
59.7
100.0
68
13.2
25.0
89
Pig iron
Million metric tons
4.o
8.5
112
0.9
2.2
144
Rolling mill products
Million metric tons
8.2
12.0
46
2.1
2.2
5 12/
Apatite concentrate
Million metric tons
4.8
8.0
67
1.2
2.5
108
a. Inasmuch as supplementary long-term trade agreements with the European Satellites reportedly provide for
increased Soviet deliveries of selected raw materials, fuels, and capital equipment, the quotas shown here may
be minimal.
b. Soviet deliveries to the Satellites are expected to reach a peak about 1963-64 and then fall off as Satel-
lite production facilities are put into full operation. By 1965 the Satellite countries intend to be nearly
self-sufficient in output of rolling mill products.
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and will reduce the local power shortages that in the past have ham-
pered the development of Satellite industries.
Other Soviet exports of engineering products to the Satel-
lites are to include machinery and equipment for the machine building,
chemical, and petrochemical industries as well as tractors and agri-
cultural implements to assist the conversion to mechanized agricultural
production.
The USSR also will continue to supply substantial quanti-
ties of agricultural raw materials for industrial and consumer use.
Whereas such exports will continue to be of great importance to coun-
tries chronically experiencing food deficits such as East Germany,
their over-all share in the total Soviet exports is expected to decline
significantly.
2. European Satellite Exports to the USSR
Satellite exports to the USSR during 1961-65 will consist
increasingly of machinery and equipment as well as of manufactured
consumer goods, as the Satellite countries will continue to supply the
preponderant share of aggregate Soviet import requirements for these
products. Whereas total Soviet-Satellite trade is expected to increase
by more than 50 percent in 1965 compared with 1960, Satellite exports
of machinery and equipment are expected to increase by about 75 percent,
substantially exceeding $2,000 million in 1965 and accounting for more
than one-half of the aggregate Satellite exports to the USSR in that
year compared with approximately 43 percent in 1960.
Satellite exports represent an important and integral part
of planned domestic availabilities in the USSR and therefore are re-
quired to meet the projected goals of the Seven Year Plan. In com-
parison with the aggregate volume of machinery and equipment produced
by Soviet industry, imports from the Satellites will continue, with
few exceptions, to be relatively marginal in quantity. These imports,
however, will play a significant role in facilitating the moderniza-
tion of inventories of capital equipment in certain industries, in
speeding the development of production of new types of products, and
in assisting the introduction of new techniques. Of particular im-
portance in terms of quantity and quality are continuing large-scale
imports of transportation equipment, which in 1960 accounted for ap-
proximately 30 percent of the total imports of machinery and equipment.
The major share of the expanding Satellite production of merchant and
fishing vessels is earmarked for export to the USSR and represents a
significant part of planned accessions to the Soviet merchant and fish-
ing fleets. Similarly, extensive imports of railroad equipment --
diesel and electric locomotives from Czechoslovakia, freight and tank
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cars from Poland, self-propelled diesel-electric trains from Hungary,
and modern refrigerator trains and cars as well as passenger cars
from East Germany -- will contribute significantly to the moderniza-
tion and increased efficiency of the Soviet railroad network. Im-
ports of automotive equipment are expected to be small, and their
importance lies primarily in providing special-purpose vehicles not
generally produced in the USSR.
Imports of equipment for the chemical industry from the
Satellite countries, notably Czechoslovakia and East Germany, are
scheduled to exceed $700 million during 1961-65, more than tripling
imports during 1956-60. These planned imports represent a sizable
share of the total Soviet import requirements for chemical equipment
and are essential if the USSR is to succeed in its priority expansion
program for the chemical industry. Important also are scheduled im-
ports of Satellite metalworking machine tools. Shipments from East
Germany, Czechoslovakia, and Hungary are expected approximately to
double, and although the total quantity to be imported remains small
relative to the total domestic production in the USSR, these imports
provide high-quality special-purpose tools not being produced in large
quantities within the USSR. To a considerable degree, Satellite ma-
chine tool industries, specializing increasingly on high-precision
equipment that requires a high ratio of skilled labor to material
input, complement the Soviet machine tool industry, which has concen-
trated on mass production of general-purpose tools. Imports from the
Satellite countries, therefore, serve to provide some of the tools and
advanced technology essential to implement Soviet plans for improving
the quality of the metalworking machinery base of the USSR.
Other priority imports include metallurgical equipment, again
mostly advanced special-purpose types of rolling mills and equipment for
the construction industry, for electric power generation (mostly small
and mobile types of equipment), and for the electronics industry -- espe-
cially industrial control and regulating instruments and civilian tele-
communications equipment. Substantially increased quantities of machinery
for food processing and light industry also are included.
In addition to these imports of machinery and equipment,
Soviet-Satellite trade agreements provide for steadily rising imports
of manufactured consumer goods in line with Soviet objectives for in-
creasing the standard of living in the USSR. Traditional imports of
industrial and agricultural raw materials from the Satellite countries
also are scheduled to increase, but their share in the total imports
from the Satellite countries is expected to show a substantial decrease.
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3. Impact of Soviet-Satellite Trade on the Economies
of the USSR and the European Satellites
The impact of this substantially enlarged Soviet-Satellite
trade program on the internal economy of the USSR is difficult to assess.
Generally speaking, it is believed that the increase scheduled in ex-
ports of raw materials will not impose a significant strain on supplies
required for the domestic economy and will not delay priority projects.
Planned exports of certain types of machinery and equipment -- for
example, metallurgical, power generating, and chemical equipment --
may have required some adjustments in domestic programs. The nature
and extent of such adjustments cannot be readily determined, as it is
the purpose of long-term economic planning and plan coordination to
allocate available resources in accord with over-all policy objectives,
including in this instance the economic buildup of the Satellite coun-
tries. Moreover, Soviet exports to the Satellites cannot be considered
independently of Soviet imports from the Satellites. Because the USSR
remains a substantial net importer of machinery and equipment from the
Satellites, it is believed that the Soviet industrial potential is
strengthened rather than weakened as a result of intra-Bloc trade in
this field.
From the point of view of the Satellite countries, the
substantial expansion in trade with the USSR must be considered the
sine qua non for continued rapid economic (particularly industrial)
growth. The expansion and the pattern of Soviet-Satellite trade,
however, will not necessarily result in the optimum allocation of
Satellite resources or the best development of their economies in any
abstract sense. Rather, given the current political division between
East and West, which finds the Satellite countries completely under
Moscow's sway, there appears to be no realistic or practical alterna-
tive to Satellite economic development focused on and consonant with
the requirements of the Soviet Bloc. Within this framework the USSR
is necessarily the major supplier of Satellite import requirements
for raw materials and certain investment goods as well as the prin-
cipal market for the output of key Satellite industries. The expan-
sion of Soviet-Satellite trade, therefore, appears to be the basic
requisite for insuring an increasing flow of raw materials to the
Satellite countries and for obtaining additional markets for their
industries. The actual pattern of Soviet-Satellite trade currently
evolving appears to give substantial scope to the economic develop-
ment of the Satellite countries in conformity with their natural and
human resources. Satellite export commitments generally are in keep-
ing with production capabilities, although exports compete with domestic
requirements to a greater extent than in the USSR. Nevertheless, it
appears that, unlike the past, there are relatively few instances where
planned export commitments demonstrably impede the achievement of
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domestic plan goals.* On balance it is believed that the volume and
pattern of Soviet-Satellite trade through 1965 will contribute sub-
stantially to the implementation of Satellite plans and will assure
rapid development of the Satellite economies.
4. Effect of Soviet-Satellite Trade on Economic Integration
and Division of Labor in Eastern Europe
The long-term trade agreements between the USSR and the
European Satellites, supplemented by long-term trade agreements be-
tween the Satellite countries, are expected to contribute signifi-
cantly to the growth of a more interdependent Eastern European economy.
Insuring, for the plan period, the supply of a major share of the im-
port requirements of the Soviet Bloc countries and at the same time
guaranteeing the principal markets for their export commodities, these
trade agreements should provide not only the element of economic sta-
bility and predictability necessary for expanding output but, more
significantly, a motivation for the reallocation of resources in accord
with the pattern of intra-Bloc specialization agreed on. Such a re-
allocation provides an opportunity to secure economies of scale in
production and, to the extent that reallocation avoids 114jor disecono-
mies of location with respect to markets or access to the factors of
production, also provides a basis for a territorial division of labor
that both reduces the costs of production and strengthens the cohesive
forces in the Soviet Bloc.
After a rather slow beginning during 1958-59, the Satel-
lite countries now appear to be making considerable progress in the
implementation of this CEMA program. It is not yet clear, however,
to what extent the USSR will actively participate. Soviet spokesmen
have repeatedly stressed the fact that, possessing vast and diverse
resources and the domestic market necessary to exploit them, the USSR
will intensively build up all sectors of its highly complex economy.
Such comprehensive economic development, however, is not incompatible
with extensive participation in the CEMA program, particularly in view
of the fact that the pattern of industrial specialization provided for
therein generally is of an intraindustry nature -- that is, specializa-
tion assignmehts are made for particular types and models of machinery
and equipment or for specific components rather than for an entire
range of production. On the basis of assignments already made, the
USSR is to specialize in production of certain larger and sometimes
technologically more advanced types of machinery not generally pro-
duced in the Satellite countries, so that, in addition to meeting its
* It is not unlikely, however, that shortfalls in Satellite produc-
tion will lead to curtailments in Satellite programs rather than to
reductions in exports to the USSR.
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own requirements for these types of machinery, the USSR assumes re-
sponsibility for increasingly supplying Satellite needs. Available
information on planned Soviet deliveries of industrial products to the
European Satellites (including the metallurgical, power-generating,
and power-transmission equipment already briefly discussed) suggests
that the pattern of Soviet exports generally conforms to these special-
ization assignments.
Similarly the pattern of Soviet imports of machinery and
equipment from the Satellite countries appears to conform generally to
the CEMA specialization program. In spite of the rapid industrial
expansion maintained in the USSR during the current Seven Year Plan
(and quite possibly because of it), imports of selected engineering
products for nearly all sectors of the Soviet economy must be substan-
tially increased. Moreover, the dynamics of Soviet industrial expan-
sion, which is expected for the foreseeable future to tax available
resources, suggests that the USSR will continue to rely on Satellite
industries to supply increasing quantities of selected machinery,
equipment, and manufactured consumer goods to augment domestic pro-
duction. As a result, it appears reasonable to expect that Soviet-
Satellite trade will be an effective force for promoting and inten-
sifying intra-Bloc division of labor and, in a larger sense, intra-Bloc
economic integration.
II. Trade with Individual European Satellite Countries
A. East Germany
East Germany, the most important trading partner of the USSR
in 1960, is expected to maintain its leading position in Soviet trade
throughout the current plan period. Soviet - East German trade has
expanded rapidly during the past few years, with Soviet exports (prin-
cipally industrial raw materials, fuels, and foodstuffs) increasing
about 120 percent, from $480 million in 1955 to 31,050 million in 1960,
and Soviet imports (principally machinery and equipment and manufactured
consumer goods) increasing 82 percent, from $510 million in 1956 to
930 million in 1960. The over-all rate of growth of Soviet - East
German trade during this period, about 100 percent, exceeded the rates
of growth of the total Soviet foreign trade and the total East German
foreign trade, respectively. With trade turnover totaling $1,980 mil-
lion in 1960, Soviet - East German trade accounted for nearly one-
fifth of Soviet foreign trade and for more than two-fifths of East
German foreign trade. 5/
Current indications are that Soviet - East German trade during
1961-65 will expand more rapidly than originally anticipated, although
still not so rapidly as during 1956-60. The original 5-year Soviet -
East German trade agreement, negotiated in 1959 to coordinate long-term
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economic plans during 1961-65, envisaged an aggregate turnover of
approximately $10.6 billion. 6/ Considering the fact that annual
trade protocols were expected to raise this total by 10 percent, the
resulting 5-year turnover of $11.7 billion would exceed the turnover
of the preceding 5-year period by 4o percent. 7/ At the same time,
the initially planned turnover for 1965 (approximately $2.6 billion
to $2.7 billion) would exceed the level of trade in 1960 by approxi-
mately 35 percent, representing an average annual rate of growth of
about 6 percent, less than one-half of that prevailing during the
preceding 5-year period.
Since the signing of the basic trade agreement in 1959, how-
ever, East Germany has been forced to revise its overly ambitious
long-term economic plan and seek closer economic ties with the USSR
to insure fulfillment of its priority production and export program.*
A supplementary trade agreement was negotiated to cover the period
1962-65 providing for additional mutual deliveries of key raw materials,
semifabricates, and machinery and equipment. Moreover, the USSR re-
portedly agreed to extend a long-term credit of approximately $475
million to East Germany, presumably to ease the adjustments attending
the revisions of the economic plan.** 8/ As a result of the new trade
and aid agreements, Soviet - East German trade is expected to develop
an accelerated pace during the remainder of the current plan period
and should reach a level of almost $3 billion by 1965. The implied
average annual rate of growth in this trade, about 8 percent, slightly
exceeds that estimated for the total Soviet and the total East German
foreign trade.
1. Soviet Exports
Soviet exports to East Germany have traditionally comprised
primarily industrial raw materials, fuels, semifabricates, and food-
stuffs, for the bulk of which the highly industrialized East German
* East Germany's campaign to reduce the vulnerability of its indus-
tries to possible Western embargo action, threatened in connection with
the Berlin crisis, undoubtedly is another reason behind East German
efforts to develop closer ties with the USSR. Although recent proposals
by East Germany to expand interzonal trade imply a modification of its
"invulnerability" campaign, they may have been motivated largely by a
Bloc decision (for both economic and political reasons) to exploit the
unique potential of interzonal trade as an entry into the Common Market.
** The $310 million Soviet credit to East Germany announced in connec-
tion with the signing of the Soviet - East German trade agreement in
February 1962 is believed to be a part of, rather than an addition to,
the earlier credit of 475 million.
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economy, operating on a very narrow domestic natural resources base,
depends on the USSR. The far-reaching extent of this dependence is
clearly reflected in the following statistics on the share of the
USSR in total East German imports of selected commodities in 1961:
crude oil, more than 90 percent; hard coal and coke, more than 50 per-
cent; iron ore, more than 100 percent; rolled ferrous metals, 80 per-
cent; chemical products, 60 percent; cotton, 80 percent; and grain,
100 percent. 9/
The extensive ties of East German industry to the Soviet
natural resources base are expected to continue and may even become
stronger as the production programs of the two countries are being
progressively coordinated. Under the terms of the Soviet - East
German Five Year Trade Agreement (1961-65), the USSR is committed sub-
stantially to increase its exports of industrial raw materials and
fuels as required to meet the production goals of the East German
economy. Although the quotas stipulated in the long-term trade agree-
ment reportedly have since been increased, they are listed in Table 5
as indicative of likely minimum levels of trade.
Table 5
Selected Soviet Exports to East Germany
1956-60 and Planned for 1961-65
Commodity
Unit
1956-60
1961-65
Plan
Increase
(Percent)
Coal
Million metric tons
19.60
27.15
39
Coke
Million metric tons
4.74
8.00
69
Crude oil
Million metric tons
6.26
15.58
149
Iron ore
Million metric tons
8.52
10.19
20
Pig iron
Million metric tons
2.50
6.50 a/
160
Rolling mill products
Million metric tons
4.37
7.14
63
Apatite concentrate
Million metric tons
1.94
3.00
55
Lumber and lumber
products
Million cubic meters
3.94
7.56
92
Cotton
Million metric tons
0.41
o.47
15
a. Estimated.
Other exports of raw materials provided for in the agree-
ment (although no specific quotas were announced) included aluminum,
copper, lead, zinc, and diverse ferroalloys. Exports of Soviet
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machinery and equipment, which had never provided a large share of
the total Soviet exports to East Germany, are to increase also. Here
again, specific exports reflect the priority needs of East German in-
dustry under its Seven Year Plan, for chief emphasis is placed on
metallurgical equipment, equipment for the chemical industry, oil well
drilling equipment, materials handling equipment, excavators and road-
building equipment, machine tools, ball bearings, and navigation in-
struments. Exports of foodstuffs, previously comprising almost 30
percent of Soviet exports to East Germany, are scheduled to increase
somewhat in absolute amounts but are expected to decline as a share of
total Soviet exports. 10/
As already stated, the actual level of Soviet exports may
be expected to exceed the quotas initially set. The supplementary
long-term trade agreement for 1962-65, signed after prolonged nego-
tiations and apparently including a thorough Soviet review of East
German production and investment plans, reportedly commits the USSR
to additional deliveries of rolling mill products, nonferrous metals,
chemicals, nonmetallic minerals, lumber, ores, and foodstuffs. In
addition, the USSR is committed to increase deliveries of machinery
and equipment, including the types of equipment (machine tools,
metallurgical equipment, and chemical equipment) required to assist
East German industry in reducing its vulnerability to Western eco-
nomic pressures.
2. East German Exports
Apart from the political considerations involved, the
Soviet decision to underwrite further economic growth in East Germany
(manifested by the commitment to supply in increasing quantities the
raw materials and fuels essential to the achievement of East Germany's
long-term plan goals and the extension of additional credits) was most
likely motivated also by the desire to insure an increasing flaw of East
German counterdeliveries (primarily machinery and equipment), which in
the past have provided a significant share of Soviet import require-
ments. East Germany's importance as a supplier of machinery and equip-
ment to the USSR is reflected in Table 6,* in which are listed selected
East German exports to the USSR during 1956-60 with an indication of
their share in the total Soviet imports in 1960.
Further enhancing the importance of the already substan-
tial share of East German industry in Soviet imports of engineering
products is the fact that East German deliveries provide advanced,
specialized types of machinery and equipment, including automated and
semiautomated installations. Deliveries of ships and marine equipment
* Table 6 follows on p. 21.
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Table 6
Selected Soviet Imports from East Germany
1956-60
Commodity
Soviet Imports
from East Germany
1956-60
(Million Current US
East German Share
in Total Soviet Imports
1960
$) (Percent)
Total imports from East Germany
Of which:
4,000
18
Machinery and equipment
2,360
4o
Of which:
Machine tools
190
51
Ships and marine equipment
470
32
Power-generating equipment
110
35
Equipment for light industry
and the food industry
230
31
Chemical equipment
8o
20
Construction equipment
250
76
Rolling mill equipment
loo
61
Railroad equipment
310
46
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account for nearly one-eighth of the total annual volume of additions
to the Soviet maritime, fishing, and inland waterway fleets, including
more than 25 percent of the additions to the oceangoing merchant fleet
of the USSR.
East Germany furnishes about 60 percent of the total Soviet
imports of railroad passenger cars and accounts for nearly 25 percent
of annual additions to the Soviet passenger car park. Very important
also are East German deliveries of refrigerated freight cars, for which
East Germany is the sole foreign source of supply, accounting for at
least 30 percent and perhaps as much as 50 percent of the total annual
deliveries to the Soviet railroads. 12/
As a traditional producer of high-grade machine tools,
East German industry supplies many machines of types and qualities
not produced in sufficient quantities in the USSR, such as certain
types of gearmaking machines, precision lathes, and specialized forg-
ing and pressing tools, which help to modernize and increase the effi-
ciency of the Soviet machine tool inventory. East German deliveries
of chemical equipment, which in 1955 accounted for about one-half of
the total Soviet imports of chemical plant and installations, have not
kept pace with rapidly mounting Soviet requirements, in part as a re-
sult of the East German effort to expand production of chemicals.
Nevertheless, East Germany remains an important supplier of oxygen-
producing equipment, electrolytic cells, and refrigeration equipment.
The USSR also relies on East Germany for significant sup-
plies of power equipment, such as transformers, rectifiers, and cable.
In 1960, more than one-third of Soviet imports of this equipment came
from East Germany. Also, more than one-half of Soviet imports of
scientific apparatus are supplied by East German industry, including
particularly hi -precision optical and electronic instruments for
research. la/
The long-term Soviet - East German trade agreement en-
visages substantial increases in over-all East German deliveries of
machinery and equipment to the USSR during 1961-65, even though in
specific categories -- notably construction equipment, ships, and
marine equipment -- the deliveries initially agreed on are markedly
below actual deliveries during 1956-60. Although subsequent agree-
ments between the USSR and East Germany reportedly call for addi-
tional deliveries above the quotas stipulated in the long-term
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agreement, these quotas are listed in Table 7 as indicative of a pos-
sible minimum level of East German deliveries to the USSR during the
current plan period.
Table 7
Selected East German Exports of Machinery
and Equipment to the USSR
1956-60 and Planned for 1961-65
Commodity
Million Current US $
Increase
or Decrease
(Percent)
1956-60
1961-65
Plan
Machinery and equipment
2,360
3,500
48
Of which:
Machine tools
190
320
68
Ships and marine equipment
470
380
-19
Equipment for light industry
and the food industry
230
360
57
Chemical equipment
80
180
125
Construction equipment
250
110
-56
Refrigerator cars and trains
4o
110
175
Railroad passenger cars
210
380
79
Chemicals
280
450
61
Manufactured consumer goods
45o
620
38
According to the terms of the supplementary trade agreement
for 1962-65, East Germany is committed to make additional deliveries to
the USSR of machinery and equipment, including presses, diesel engines
and diesel generating plants, pumps and compressors, railroad cars,
trucks, ships, agricultural machinery, and installations for radio and
telecommunications. Deliveries of chemicals, especially plastics and
synthetic fibers, also are to be increased above the quotas initially
agreed on in the long-term agreement. 1LV
The pattern of planned East German deliveries to the USSR
during 1961-65 appears to be favorable to a rational development of
the East German economy. In conformity with specialization assignments
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by CEMA* and with the objectives of East German foreign trade, it provides
for substantial increases in deliveries, primarily of those engineering
products in the manufacture of which East Germany has traditionally
specialized and presumably reached a fairly high level of production
efficiency -- notably machine tools, specialized railroad equipment,
refrigeration equipment, textile mills, and optical and communications
equipment. Deliveries of such more skilled-labor-intensive, high value-
added types of machinery and equipment are to increase substantially,
enabling East Germany to capitalize on its major "natural" resource,
skilled labor, but deliveries that may be classified generally as
more material-intensive (low value-added) are scheduled to decline --
notably equipment for the building industry and ships, which consume
large quantities of iron and steel products, most of which must be
either imported or manufactured from imported raw materials. Although
additional contracts for ships and marine equipment to be let under
the supplementary trade agreement may bring the level of their de-
liveries to that attained during 1956-60, the combined share of con-
struction equipment, ships, and marine equipment in the total East
German deliveries of machinery and equipment to the USSR (about 30
percent during 1956-60) is expected to be no more than 15 to 20 per-
cent during 1961-65. Similarly the increase in deliveries of chemicals
is to be concentrated primarily on plastics and synthetic fibers --
that is, on the more complex and skilled-labor-intensive chemicals --
and durable consumer goods are expected to provide an increasing share
of the total deliveries of consumer goods. To sum up, planned East
German deliveries to the USSR during 1961-65 are expected to concen-
trate increasingly on skilled-labor-intensive commodities in production
of which East Germany has achieved a fairly high level of efficiency,
permitting the East German economy to exchange the high skill of its
labor for essential raw materials, fuels, and foodstuffs, which gen-
erally are in short supply.
To the extent that the planned increase in trade between
the USSR and East Germany during 1961-65 materializes, the East German
* East German specialization assignments reportedly include certain
types of rolling mill equipment, certain types of ships, equipment for
cement factories, certain types of metalcutting tools as well as forg-
ing and pressing tools, textile machinery, equipment for the chemical
industry, elevator and transport equipment, railroad rolling stock,
geological prospecting equipment, trucks, tractors, and so on. At the
same time, East Germany reportedly has been assigned sole responsibility
for supplying the import requirements of CEMA countries for double-
decker railroad passenger cars, refrigerator cars with mechanical cool-
ing installations, and continuous and semicontinuous wire drawing and
foil rolling mills. 12/
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economy will become still more dependent on and more closely tied
into the Soviet economy. Such closer economic ties, reflected also
in greater scientific and technical cooperation as well as in the
East German decision to adopt Soviet GOST production norms in place
of traditional German DIN norms (Deutsche Industrie Normen), have
long been a political goal of the East German regime, which realizes
that the future of an independent East Germany can be guaranteed only
through the strong political and economic backing of the USSR. The
advantages accruing to the USSR from this arrangement will not be
entirely economic. Although the East German industrial plant will
provide an important adjunct to Soviet industrial capabilities, the
maintenance of a military and political stronghold in west-central
Europe affords the USSR an important position of strength in the con-
tinuing struggle between East and West.
B. Czechoslovakia
Czechoslovakia, the second largest trading partner of the
USSR, is expected to plan an increasingly important role in Soviet
foreign trade as CEMA specialization assignments and bilateral Soviet-
Czechoslovak cooperation agreements forge closer links between the
Soviet and Czechoslovak economies. Soviet trade with Czechoslovakia
rose 73 percent from 1955 to 1960, when Soviet exports (consisting
primarily of industrial raw materials, fuels, and foodstuffs) in-
creased 75 percent, from $360 million in 1955 to $630 million in 1960,
and Soviet imports (consisting primarily of machinery and equipment,
uranium ore, and manufactured consumer goods) increased 67 percent,
from $390 million in 1956 to $650 million in 1960. The aggregate
turnover increased from $740 million to $1,280 million. 16/
In spite of an anticipated slowdown in its rate of growth dur-
ing 1961-65 compared with 1956-60, Soviet-Czechoslovak trade is expected
to increase at a rate substantially in excess of either Soviet or Czecho-
slovak foreign trade generally. The turnover in 1965 is expected to ex-
ceed $2,100 million, representing an increase of 64 percent above 1960,
or an average annual rate of growth in trade of 10 percent compared with
12 percent during the earlier period. In view of the fact that Soviet
and Czechoslovak foreign trade is expected to increase by only 43 and 47
percent, respectively, during this period, 1// the expansion in mutual
trade is expected to result in a further strengthening of the economic
ties between the two countries -- the Czechoslovak share of total Soviet
foreign trade probably will increase from about 11 percent to 13 percent
and the Soviet share in Czechoslovak foreign trade from about 34 percent
to 38 percent.
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1. Soviet Exports
The Soviet-Czechoslovak Five Year Trade Agreement (1961-65),
the first long-term trade agreement to be based on and integrated into
both Soviet and Czechoslovak long-term national economic plans, estab-
lishes the over-all framework for the pattern and growth of trade be-
tween the two countries during the next few years. Signed in April
1960 after prolonged technical discussions designed to coordinate re-
lated national production programs, this agreement provides for sig-
nificant increases in Soviet deliveries of industrial raw materials
and fuels that already supply the bulk of the rapidly growing import
requirements of Czechoslovak industry. The singular importance of
these commodities for the further development of the Czechoslovak econ-
omy is demonstrated by the fact that 1 out of every 2 tons of steel
produced in Czechoslovakia is made from Soviet iron ore and that half
of the cotton textiles produced are made from Soviet cotton. 18/ The
share of Soviet deliveries in the total Czechoslovak imports of se-
lected raw materials and fuels in 1960 was as follows (in percent):
Iron ore, 75; pig iron, 64; nickel, 94; copper, 60; crude petroleum,
almost 100; coal, 44; cotton, 48; and sawn lumber, 79: 19/ Czechoslovak
dependence on the USSR for the supply of some of these materials is
expected to increase further during the next few years, particularly
in the iron and steel industry -- the heart of Czechoslovakia's machine
building industries -- where Soviet deliveries by 1965 will supply 85
percent of the total imports. 20/ Similarly the expansion of the
Czechoslovak chemical industry, particularly the development of plastics
and production of synthetic fibers, will be based primarily on Soviet
supplies of crude petroleum. 21/ In Table 8 are compared planned Soviet
deliveries of selected raw materials to Czechoslovakia during 1961-65
with actual deliveries during 1956-60.
Table 8
Selected Soviet Exports to Czechoslovakia
1956-60 and Planned for 1961-65
Million Metric Tons
1961-65 Increase
Commodity 1956-60 Plan (Percent)
Coal
4.01
8.50
112
Crude oil
7.48
22.00
194
Iron ore
19.87
38.00
91
Apatite concentrate
0.62
1.18
90
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The long-term trade agreement also provides for a substan-
tial growth in Soviet exports of machinery and equipment, which re-
portedly have been accelerated by the CEMA specialization program.
These exports in 1961 increased 37 percent above the level of $60 mil-
lion in 1960, and a further increase of 28 percent is scheduled for
1962. ?1,/ Deliveries of Soviet tractors are scheduled to increase
from 6,081 units shipped during 1956-60 to 15,000 during 1961-65, an
increase of 147 percent, and Soviet excavators from 425 units shipped
during 1956-60 to 1,240 during 1961-65, an increase of nearly 200 per-
cent. 23./ In addition, the USSR is scheduled to supply metallurgical
equipment (notably a continuous wide-plate rolling mill for the Eastern
Slovak Ironworks at Kosice, the major investment project of the Czecho-
slovak iron and steel industry during 1961-65); specialized metalcutting
and metalforming machine tools not produced either in Czechoslovakia or
in the other Satellite countries; equipment for the Rumania-Czechoslovakia
high-voltage electric power transmission line; oil well drilling equip-
ment; telecommunications equipment; and various measuring instruments
for geological surveys, including gravimeters, seismic sets, and other
specialized types of equipment. 24/ As a result of planned increases
in deliveries, the share of machinery and equipment in aggregate Soviet
exports to Czechoslovakia is expected to rise from 10 to about 15 per-
cent.
2. Czechoslovak Exports
Influenced primarily by its far-reaching dependence on the
USSR for the supply of essential raw materials and fuels, Czechoslovakia
to a considerable extent patterned the postwar development of its heavily
export-oriented industries to meet the requirements of the Soviet mar-
ket and has become second only to East Germany as a supplier of machinery
and equipment to the USSR. Whereas Czechoslovakia supplies in the
aggregate nearly one-fifth of the total Soviet imports of machinery
and equipment, it supplies a substantially larger share of selected
commodities. Thus in recent years (1956-60), Czechoslovakia has pro-
vided one-third of Soviet imports of metalcutting machine tools; nearly
one-half of Soviet imports of power-generating equipment, including all
of the mobile steam-power units especially designed for use in the
Soviet Far East, and about two-thirds of all diesel-electric powerplants;
about one-half of Soviet imports of sugar refinery equipment; nearly
one-third of all rolling mill equipment; most of the mainline electric
locomotives; and almost all of the heavy-duty trucks. The principal
Czechoslovak exports of machinery and equipment to the USSR in recent
years, reflecting the contribution of Czechoslovak industries to Soviet
economic development, are shown in Table 9.*
* Table 9 follows on p. 28.
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Table 9
Selected Soviet Imports from Czechoslovakia
1956-60
Commodity
Soviet Imports
from Czecho-
slovakia
1956-60
(Million Current
US $)
Czechoslovak
Share in
Total Soviet
Imports
1960
(Percent)
Total imports from Czechoslovakia
2,500
11
Of which:
Metalcutting machine tools
70
31
Forging and pressing equipment
30
18
Power-generating equipment
160
46
Electrical engineering equipment
20
13
Equipment for the food industry
90
24
Chemical equipment
70
16
Rolling mill equipment
50
28
Electric locomotives
6o
46
Automotive equipment
loo
56
CEMA specialization assignments -- generally according
official recognition to the traditional specialized production capa-
bilities of the Soviet Bloc countries -- are expected to strengthen
further the role of Czechoslovakia as a major supplier of heavy in-
dustrial equipment to the USSR (second in importance only to East
Germany). Although sharply reducing the wide assortment of machinery
and equipment previously produced, Czechoslovak industry is to concen-
trate on production of advanced types of metalcutting machine tools
(including semiautomatic and automatic types of lathes, milling ma-
chines, horizontal and vertical boring mills, and grinding machines);
certain types of chemical equipment; metallurgical equipment; main-
line diesel-electric and electric locomotives; heavy-duty trucks;
specialized transportation equipment; certain types of electrical and
power-generating equipment; textile machinery; equipment for the shoe
and leather-processing industry; and specialized complete plant in-
stallations. 2
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These specialization assignments generally are reflected
in the pattern of planned Czechoslovak deliveries to the USSR during
1961-65, which are expected to increase by about 65 percent compared
with the total for 1956-60. At the same time, deliveries of machinery
and equipment are expected to increase by more than 160 percent, total-
ing perhaps as much as $2,500 million compared with $950 million during
the earlier period, reflecting the scheduled increase in the share of
machinery and equipment in the total Czechoslovak deliveries to the
USSR from 45 percent in 1960 to more than 60 percent in 1965. 26/
Particularly significant are the planned increases in
Czechoslovak exports of chemical equipment, railroad equipment, ma-
chine tools, and metallurgical equipment. Although Czechoslovak in-
dustry traditionally has produced equipment of high quality in these
fields, CEMA specialization assignments may account in part for the
sizable increases scheduled in Czechoslovak production and deliveries
to the USSR. 27/ Combined deliveries of this type of equipment are
scheduled to exceed $1,000 million during 1961-65, more than four
times the level of the preceding period (see Table 10*). Also, these
deliveries will account for more than 4o percent of the total deliv-
eries of machinery and equipment to the USSR, a substantially larger
share than the 25 percent during the earlier period.
Equipment for the chemicals and synthetics industries will
be perhaps the most important Czechoslovak export to the USSR. De-
liveries during 1961-65 are scheduled to reach about $400 million
(nearly four times the total of deliveries during the preceding 5-year
period) as Czechoslovak production, slated for priority expansion under
the Czechoslovak Five Year Plan, becomes the principal Satellite source
of equipment and installations for the Soviet chemical industry.**
Czechoslovak metallurgical equipment, primarily rolling mills and
associated finishing equipment, is essential for the achievement of
Soviet plans for volume and product mix of the iron and steel industry.
Deliveries are scheduled to increase almost threefold, totaling per-
haps as much as $150 million and representing about 40 percent of the
total planned Czechoslovak output. 29/ Metalcutting machine tools,
* Table 10 follows on p. 30.
** According to Pravda (16 October 1958), Czechoslovakia agreed to
deliver to the USSR during 1959-65 chemical equipment valued at $462.5
million, including equipment made of carbon steel, high-pressure equip-
ment for the manufacture of synthetic fibers, refrigeration equipment,
compressors, machinery for the manufacture of plastic articles, and
equipment for the rubber industry. To the extent that they can be
identified, deliveries of these types of equipment during 1959-60 were
valued at S65.3 million, presumably leaving deliveries of approximately
Wo million for 1961-65. Li/
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Table 10
Selected Czechoslovak Exports to the USSR
1956-60 and Planned for 1961-65
Commodity
Unit
1956-60
1961-65
Plan
Increase
(Percent)
Machinery and equipment
Million current US $
950
2,500
163
Of which:
Metalcutting machine tools
Million current US $
70
220
214
Equipment for the chemical and
synthetics industries
Million current US $
110
400
264
Rolling mill equipment
Million metric tons
0.04
0.12
200
Diesel locomotives
Units
91
760
735
Electric locomotives
Units
104
623
499
Cable
Sugar
Thousand kilometers
Million metric tons
23
0.52
25
0.72
9
38
Leather footwear
Million pairs
51
63
24
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especially automated and semiautomated types designed for installation
in small and medium-size workshops, also are scheduled for substantially
increased deliveries. With shipments expected to increase in value more
than two times, reaching a level reported at $220 million, Czecho-
slovakia will remain second only to East Germany as a supplier of the
imports required to effect the planned modernization of the Soviet ma-
chine tool inventory. 32/ Main-line diesel and electric locomotives
also will become a major Soviet import from Czechoslovakia. Planned
deliveries include 760 diesel and 623 electric locomotives, about
eight and six times, respectively, the deliveries made during the pre-
ceding 5-year period. 21/
In addition to the above, Czechoslovakia will continue to
export large (although unspecified) quantities of machinery and equip-
ment for cement plants and sugar refineries; also ships and marine
equipment, largely passenger boats and barges for river traffic, suc-
tion dredges, and ships' diesels; power generating equipment, includ-
ing rail-mounted mobile powerplants; and specialized transport equip-
ment, especially heavy-duty dump trucks and refrigerator trucks. 32/
Exports of foodstuffs and manufactured consumer goods. are to be in-
creased slightly, possibly reflecting both the lower priority accorded
investments in agriculture and light industry in Czechoslovak plans
and the increasing domestic requirements for products of agriculture
and light industry. Available quantitative information on planned
Czechoslovak exports to the USSR during 1961-65 is compared with
actual exports during 1956-60 in Table 10.*
The emerging pattern of Soviet-Czechoslovak trade clearly
reflects the fact that Czechoslovak industrial development, within
the CEMA program for Bloc-wide industrialization, is being even more
closely oriented toward the requirements of the USSR. Closer integra-
tion of Czechoslovak industries with those of the USSR also has been
the avowed purpose of the Soviet-Czechoslovak Committee for Economic
Cooperation, which was formed in the late 1950's to promote the more
rational exploitation of industrial capabilities in the two countries.
Incorporating the recommendations both of CEMA and of the bilateral
Committee .for Economic Cooperation, the current Czechoslovak Five Year
Plan specifies the priority allocation of investment resources to the
further rapid expansion of heavy machine building industries, notably
those producing chemical and metallurgical equipment, railroad loco-
motives, and machine tools. At the same time, Czechoslovak export
commitments during 1961-65, as previously indicated, provide for a
more than threefold increase above 1956-60 in the delivery of such
equipment to the USSR. 22/
* P. 30, above.
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The significant expansion scheduled in Czechoslovak ex-
ports of heavy machinery and equipment to the USSR (and to a lesser
extent to the other CEMA countries) Should provide Czechoslovakia
with the extensive markets required to obtain economies of scale
and to expand research and development in its heavy industry, tradi-
tionally the bellwether of its economic growth. Given the politico-
economic status quo in Eastern Europe, Soviet-Czechoslovak trade as
currently scheduled should promote more rational industrialization
programs in the two countries and provide for better utilization of
available plant and resources.
C. Poland
Poland continues to be the third ranking trading partner of
the USSR among the European Satellite countries, although its share
in the total Soviet foreign trade declined from about 11 percent in
1955 to 8 percent in 1960. The level of Soviet-Polish trade fluc-
tuated considerably during 1956-58 while the Polish leadership, in-
tent on pursuing more independent domestic and foreign economic poli-
cies, made a determined effort to expand Polish trade with the West.
In spite of extensive Western credits, however, trade with the Free
World failed to develop as anticipated -- primarily because of Poland's
inability to generate the necessary volume of exports acceptable to
the industrial West -- and the Gomulka regime decided to shift course
again and redirect a significant portion of Polish trade back to the
Soviet Bloc. This decision was clearly reflected in Soviet-Polish
trade, which began to show a steady growth in 1959 and which reached
a level of $880 million in 1960, 38 percent above the level of $64o mil-
lion in 1956. Preliminary data for 1961 show a further substantial in-
crease for Soviet-Polish trade to a level of about $975 million.1)ii
Long-range prospects, based on the Five Year Soviet-Polish
Trade Agreement (1961-65), signed in March 1960 after prolonged nego-
tiations, are for continued rapid growth in trade in support of mu-
tually coordinated long-term economic plans. Aggregate turnover dur-
ing the 5-year period, according to the agreement, is planned to ex-
ceed $5,500 million, representing an increase of 50 percent above the
actual trade during 1956-60, with the level of trade in 1965 scheduled
to be more than $1,250 million and exceeding the level in 1960 by more
than 40 percent. 12/
The volume of Soviet-Polish trade stipulated in the long-term
trade agreement is expected to be increased substantially in the course
of the implementation of annual trade protocols.* Moreover, a
* The trade increases stipulated in Soviet-Polish trade protocols for
1961 and 1962 -- 12 percent and [footnote continued on p. 33]
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supplementary long-term trade agreement for 1962-67, signed in May 1961,
provides for an increased level of trade including additional Soviet ex-
ports of machinery and equipment, with a large part of deliveries to be
effected by 1965. Ei With these various factors being taken into ac-
count, it may reasonably be assumed that Soviet-Polish trade during
1961-65 will reach, if not exceed, a level of at least $6,000 million
and that the mutual turnover in 1965 will reach a level of $1,400 mil-
lion. On this basis, Soviet-Polish trade through 1965 will grow at
an average annual rate of about 10 percent, a figure substantially in
excess of the average annual rate of growth of 7 percent estimated for
the total Soviet and the total Polish foreign trade. Whereas this
growth differential is not sufficient to increase significantly the
Polish share in the total foreign trade of the USSR beyond the current
level of 8 percent, it will increase the Soviet share in the total
foreign trade of Poland from 30 percent in 1960 to 34 Percent in 1965.
1. Soviet Exports
The postwar industrialization program of Poland is largely
predicated on the USSR as the principal supplier of key raw materials
and the principal market for industrial exports. Soviet deliveries of
iron ore, manganese, and various alloying materials as well as of en-
tire iron and steel plants made the establishment and expansion of
Polish heavy industry possible, and substantial Soviet orders for
engineering products (primarily ships and railroad equipment) made its
operation feasible. Whereas Polish dependence on Soviet machinery and
equipment has shown a marked decline in recent years, dependence on
Soviet raw materials has continued in spite of efforts to develop
alternate sources of supply. Thus, according to the Polish newspaper
Trybuna ludu, the USSR in 1960 supplied 100 percent of Polish imports
of crude oil, 75 percent of petroleum products, 78 percent of iron ore,
90 percent of nickel, 74 percent of chromium, 68 percent of zinc, 90
percent of apatite, 73 percent of timber, and 65 percent of cotton. 38/
Under the extensive industrialization program scheduled in
the current Five Year Plan, Polish dependence on imports of raw mate-
rials from the USSR is expected to increase further. Thus, according to
the Polish economic weekly Zycie gospodarcze, the implementation of the
current Polish Five Year Plan will require an increase of 36 percent
in imports of raw materials, production materials, and fuels (compared
with import requirements during 1956-60), and the concurrent Five Year
Trade Agreement with the USSR provides for an increase of 52 percent in
such imports. 22/ The sizable increases scheduled in Soviet deliveries
18 percent, respectively -- exceed substantially the average annual
rate of growth implicit in the long-term trade agreement. 36/
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of key raw materials and fuels are shown in Table 11, in which planned
Soviet exports to Poland during 1961-65 are compared with actual ex-
ports during 1956-60.
Table 11
Selected Soviet Exports to Poland
1956-60 and Planned for 1961-65
Commodity
Unit
1956-60
1961-65
Plan
Increase
(Percent)
Crude oil
Million metric tons
3.07
8.50
177
Petroleum products
Million metric tons
4.46
7.70
73
Iron ore
Million metric tons
20.80
35.50
71
Pig iron
Million metric tons
0.06
0.50
733
Apatite concentrate
Million metric tons
1.00
1.67
67
Timber
Million cubic meters
0.54
1.00
85
Soviet deliveries of machinery and equipment, the principal
source of Polish imports of engineering products, also are scheduled to
increase substantially during 1961-65. The basic quotas established in
the long-term trade agreement have recently been expanded further within
the framework of the Soviet-Polish agreement of May 1961 on broadened
economic and technical cooperation. Of particular importance are sub-
stantial Soviet deliveries of metallurgical equipment, which will permit
the rapid expansion of Polish ironmaking and steelmaking capacity re-
quired to support the growth projected for Polish engineering industries
and for Polish exports of engineering products to the USSR. The USSR
also is scheduled to deliver complete plant installations for a contact
coking plant, for two petroleum cracking plants, for a rolling mill for
production of aluminum and aluminum alloy sheets, and for two plants
producing building materials. In addition, the USSR will supply several
turbogenerators rated at 200 megawatts each, the largest and most up-to-
date power-generating equipment to be installed in Poland during the cur-
rent plan period. Other Soviet deliveries of equipment include petroleum
drilling rigs; geological research instruments; machine tools; tractors
and agricultural implements; and machinery for the textile, chemical, and
food industries.21-2/ The share of machinery and equipment in Soviet ex-
ports to Poland is expected to increase from slightly more than 25 percent
of the total in 1960 to more than one-third of the total by 1965.
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2. Polish Exports
Heavily dependent on Soviet deliveries of raw materials,
machinery, and equipment, Poland's postwar industrialization program
was dictated not only by the requirements of the domestic economy but
also by those of the USSR. The Soviet orientation of Polish industry
is especially pronounced in its transportation equipment sector, which
was built primarily to supply Soviet requirements and continues to rely
heavily on Soviet orders. Thus in 1960 the USSR accounted for 72 per-
cent of the total Polish exports of ships, 63 percent of the exports
of railroad freight cars, and 88 percent of the exports of railroad
passenger cars. 41/ Polish deliveries of engineering products in-
creased by two-thirds during 1956-60 but comprised only about 30 per-
cent of the total Soviet imports from Poland in 1960. Raw materials
and semifabricates -- primarily coal (including large quantities de-
livered to East Germany on Soviet account) and rolled ferrous metals --
comprised approximately one-third of imports, while agricultural prod-
ucts and the rapidly increasing consumer manufactures accounted for
the remainder.
Although small in comparison with aggregate Soviet imports,
representing only about 7 percent of the total, Polish deliveries sup-
ply significant shares of Soviet imports of selected commodities. In
1960, Poland was the sole exporter of railroad freight cars to the
USSR and also provided approximately one-fourth of railroad passenger
cars. Polish shipyards delivered 16 percent by value of ships and
marine equipment imported by the USSR, and the machine building indus-
try delivered 15 percent of the sugar-refining equipment. The prin-
cipal Soviet imports from Poland during recent years are shown in
Table 12.*
The substantial expansion and diversification of Polish
industries scheduled during the current Five Year Plan will support a
rapid increase in Polish deliveries of machinery and equipment to the
USSR. Under the terms of the basic Soviet-Polish Trade Agreement
(1961-65) and the supplementary long-term agreement (1962-67) since
negotiated, Poland is committed to deliver machinery and equipment
valued at $1,250 million to the USSR during 1961-65, more than 2.5
times the value of deliveries during 1956-60. Although a considerable
part of these deliveries will be comprised of traditional exports,
notably ships and railroad rolling stock, for which CEMA specializa-
tion assignments to Poland have merely confirmed already existing
production patterns, the influence of the CEMA program on the Polish
production profile is reflected in the broader assortment of engineer-
ing products included in the export schedule. Thus, in conformance
* Table 12 follows on p. 36.
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Table 12
Selected Soviet Imports from Poland
1956-60
Commodity
Total imports from Poland
Of which:
Machinery and equipment
Of which:
Soviet Imports
from Poland
1956-60
(Million Current US $)
1,500
48o
Polish Share
in Total
Soviet Imports
1960
(Percent)
7
7
Ships and marine
equipment
210
16
Railroad freight cars
80
100
Railroad passenger
cars
100
24
Sugar refineries
20
15
Coal
370
96
Coke
80
100
Rolling mill products
and pipe
80
6
Zinc and zinc products
60
70
Calcined soda
lo
53
Sugar
30
45
with CEMA specialization assignments, Polish exports to the USSR are
to include 15 sugar refineries; several plants for the manufacture of
bone glue; 10 plants for the manufacture of fiber boards; plants for
production of yeast; and machinery and equipment for the manufacture
of paper and paper products, machine tools, and roadbuilding machinery
as well as certain types of electronics and telecommunications equip-
ment, electrical equipment, and surveying instruments. 42/
The planned growth in Polish exports to the USSR is shown
in Table 131* in which Polish deliveries scheduled for 1961-65 are
* Table 13 follows on p. 37.
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Table 13
Selected Polish Exports to the USSR
1956-60 and Planned for 1961-65
Commodity
Unit
1956-60
1961-65
Plan
Increase
or Decrease
(Percent)
Machinery and equipment
Of which:
Million current US $
48o
1,250
160
Ships (oceangoing)
Railroad freight cars
Million deadweight tons
Thousand units
0.45
11.50
0.83
15.00
84
31
Railroad tank cars
Thousand units
5.90
N.A.
Railroad passenger cars
Thousand units
2.31
1.75
-24
Coal
Million metric tons
21.53
23.80
11
Coke
Million metric tons
2.94
3.00
2
Rolling mill products
Million metric tons
0.30
0.56
87
Zinc alloys and sheeting
Million metric tons
0.22
0.30
36
Calcined soda
Million metric tons
0.28
0. 6o
114
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compared with actual deliveries during 1956-60. In addition to those
shown in Table 13, Polish exports to the USSR will include increasing
quantities of agricultural and food products as well as manufactured
consumer goods such as wool, cotton, and linen textiles, clothing,
shoes, and miscellaneous consumer durables.
Planned Polish deliveries to the USSR during 1961-65 re-
flect a number of changes in the export pattern that, on the whole,
appear to correspond to planned economic development. In line with
Poland's growing industrial capabilities, the share of machinery and
equipment in the total exports is to be increased.
deliveries of investment goods (primarily machinery
and equipment) to the USSR during the current Five Year Plan period
will be more than 160 percent above similar deliveries during 1956-60,
and their share in the total Polish exports to the USSR will increase
from 4o percent in 1960 to more than 57 percent in 1965. 43/ The
importance of this shift in the export pattern is enhanced further by
the fact that, within the machinery and equipment category, exports
will focus increasingly on deliveries of more complex and technically
advanced types and models which, requiring a larger input of skilled
labor per unit of output, generally possess a higher value per unit.
Exports of industrial consumer goods, which have become
sizable only in recent years, also are to increase by more than 100
percent compared with 1956-60. As in the case of machinery and equip-
ment, the export assortment is scheduled to become more diversified,
featuring a range of consumer durables not previously exported in
quantity. 44/
The increase in the share of machinery and consumer manu-
factures in the total Polish exports to the USSR appears to be pri-
marily at the expense of coal,* which during 1956-60 accounted for
more than 25 percent in value of the total Polish exports to the USSR.
According to the quota stipulated in the long-term trade agreement,
exports of coal during 1961-65 will be only 11 percent above the volume
reached during 1956-60 and, as a result, will decline to less than 15
percent in value of the total exports.**
The changing pattern of Polish exports to the USSR, char-
acterized by an enlarged share of capital equipment as well as indus-
trial and consumer manufactures, appears to have considerable advan-
tages for the development of the Polish economy. In providing a ready
* Although carried in Polish and Soviet statistics as a Polish export
to the USSR, this coal is primarily exported to East Germany on Soviet
account.
XX Based on 1960 prices.
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market for increased and diversified Polish deliveries of engineering
and industrial products, which in many cases are not readily marketable
in the West, the USSR probably affords Poland the most effective and
perhaps the only means for rapidly generating the high volume of ex-
ports required to repay past Soviet credits and to support the higher
level of imports necessary to implement Poland's long-term economic
plan.
Although Poland may have a greater comparative advantage
in production of coal than in the manufacture of most industrial prod-
ucts, coal does not appear to provide an alternative to manufactures
as the basis for greatly increased exports. In the absence of sizable
reallocations of capital investments and labor, which would require
extensive revisions in plans for diversified industrial growth of the
Polish economy, output of coal could not be increased substantially
in the short run. The future market for fuels, moreover, is so un-
certain that additional investments in the coal industry would face
a greater risk than those in the industries selected.
The USSR, of course, also will derive benefits from this
new pattern of Polish exports, although, inasmuch as the Soviet econ-
omy is essentially self-sufficient and therefore far less dependent
on foreign trade than is Poland's, the economic impact of these exports
will be largely marginal. Even at the expanded volume now scheduled,
Polish deliveries of industrial products will continue to be small rela-
tive to aggregate Soviet import requirements for all but a few selected
commodities -- for example, maritime and rail transport equipment. Never-
theless, the expansion and diversification of Polish industrial capabili-
ties provide an alternate source for an increasing range of manufactured
goods and thus should afford Soviet planners an added measure of flexi-
bility, enabling them better to allocate domestic resources. More im-
portant in the long run, however, appears to be the fact that the evolv-
ing pattern of trade and economic cooperation is identifying increasingly
Poland's economic growth with that of the USSR.
D. Bulgaria
Bulgaria, the fourth ranking trading partner of the USSR among
the European Satellites, accounted for 6 percent of the total Soviet
foreign trade in 1960. Soviet-Bulgarian trade has developed very
rapidly in recent years, increasing by more than 150 percent from 1955
to 1960, from $250 million to $630 million. Soviet exports increased
by 154 percent during this period, from about $130 million to $330 mil-
lion, while imports increased by 150 percent, from $120 million to about
$300 million. 15../
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Soviet-Bulgarian trade will continue to grow rapidly during the
next few years, although the exceptionally high rate of growth achieved
during 1956-60 (more than 25 percent per year) will not be maintained.
The long-term Soviet-Bulgarian trade agreement for 1961-65, signed in
November 1959, provided for a total turnover of $3,250 million for the
5-year period, with reciprocal trade in 1965 set at $640 million, about
60 percent above the level in 1958.21?./ However, as a result of the
substantially above-plan growth of trade during 1959 and 1960, which
already in 1960 practically achieved the level of turnover initially
planned for 1965,* a supplementary trade agreement for 1962-65 was
signed in 1961 that raised the level of planned turnover during 1961-65
to nearly $3,800 million, more than 70 percent above the total achieved
during the previous 5 years. 47/ With annual trade protocols providing
for increases of 16 and 13 percent for 1961 and 1962, respectively, it
is not unlikely that Soviet-Bulgarian trade will reach $1,000 million
in 1965, nearly 60 percent above the annual level in 1960. 1.1.Y At that,
the Bulgarian share in the total Soviet foreign trade would remain at
approximately its current level of 6 percent, whereas the Soviet share
in the total Bulgarian foreign trade would show a slight increase from
53 percent in 1960 to 55 or 56 percent in 1965.
1. Soviet Exports
Soviet-Bulgarian trade has been one of the most important
factors shaping the development of the Bulgarian economy in the post-
war era. Soviet deliveries of capital equipment have provided the
basis of Bulgaria's industrial development program and continue to play
a decisive role in assisting the implementation of the industrial ex-
pansion and diversification scheduled in the current Bulgarian Five
Year Plan (1961-65). Thus in 1959 the USSR reportedly supplied 58 per-
cent of Bulgaria's imports of machinery and equipment, including 73
percent of imports of complete plant installations, so important to
the industrialization of the Bulgarian economy, and nearly 100 percent
of imports of steam and hydroelectric power generating plants.** 49/
The USSR also supplies most of the machinery and equipment required
to mechanize Bulgarian agriculture (still the dominant sector of the
Bulgarian economy), including (in 1959) more than 80 percent of the
* The actual turnover in 1960 was $630 million compared with the
$640 million planned for 1965.
** The Soviet share of Bulgarian imports of machinery and equipment
in 1960 is not known. Soviet deliveries of capital equipment in-
creased 24 percent from 1959 to 1960, from $88 million to $109 mil-
lion, and deliveries of complete plant installations increased 67 per-
cent during this period, from $21 million to $35 million, representing
80 percent of Bulgarian imports in this category.
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tractors as well as all grain combines and harvesters. 50/ In the
aggregate, Soviet deliveries of machinery and equipment to Bulgaria
increased by about 175 percent from less that $40 million in 1956 to
nearly 3110 million in 1960.
In addition to providing the major share of Bulgarian
imports of investment goods, the USSR is the principal supplier of a
number of key raw materials and semifabricates required by Bulgarian
light and heavy industry. The Soviet share of the total Bulgarian im-
ports of these commodities is approximately as follows: petroleum
products, 85 percent in 1960; pig iron, 75 percent in 1960; ferroalloys,
95 percent in 1959; rolled ferrous metals, 53 percent in 1959; rubber,
60 percent in 1960; and cotton, 60 percent in 1960. 51/
Unlike Soviet long-term trade agreements with other Satel-
lite countries, the Soviet-Bulgarian trade agreement for 1961-65 (since
augmented by the supplementary trade agreement for 1962-65) provides
no quantitative information on reciprocal commodity shipments. The
announcement issued at the signing of the agreement simply stated:
... The Soviet Union will considerably increase the deliveries of
goods needed by the Bulgarian national economy, inclUding industrial
equipment, tractors, agricultural machinery, motor cars, ferrous and
nonferrous metals) petrol products, cotton, fertilizers, blue vitriol,
and other goods. Crude oil also will be supplied for the oil process-
ing plant which will be constructed in Bulgaria." 22/
The Soviet intention to speed the further industrializa-
tion of the Bulgarian economy under the Fourth Five Year Plan is shown
in the 3160 million credit extended in 1960 to finance Soviet deliv-
eries of metallurgical equipment to the Kremikovtsi Metallurgical
Combine and power-generating equipment for the Maritsa-Vostok electric
power station. 53/ (The relative magnitude of this industrial develop-
ment credit is reflected in the fact that it is equivalent to 50 percent
of the total Soviet deliveries of machinery and equipment to Bulgaria
during 1956-60.) The Kremikovtsi combine is the key project in Bul-
garia's plans for expanding and diversifying the productive capacity of
the Bulgarian iron and steel industry, and Soviet deliveries are being
counted on to provide a substantial share of over-all equipment require-
ments. Similarly the Maritsa-Vostok electric power station is the key
project in Bulgarian plans for increasing electric power generating
capacity as one of the requisites for continued economic growth. This
plant also is to be outfitted primarily with Soviet equipment, and when
it is completed (probably by 1967), it will have a generating capacity
almost equaling that of all Bulgarian power stations combined in 1961.
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2. Bulerian Exports
The expansion and diversification of the Bulgarian economy,
which has been greatly facilitated by increasing Soviet exports of
capital equipment and essential raw materials, has enabled Bulgaria to
increase substantially the volume and to broaden the commodity composi-
tion of its exports to the USSR. Reflecting the emphasis on industrial
development, Bulgaria's still small machine building industries, which
are highly oriented toward the Soviet market, increased their exports
from $6 million in 1956 to nearly $50 million in 1960, thereby raising
their share in the total exports from 4 percent to more than 16 per-
cent. Electrical equipment, agricultural implements, automotive spare
parts, and small merchant ships comprise the principal export commodi-
ties. Consumer goods industries also have achieved a substantial
growth in exports. Comprising primarily readymade clothing and furni-
ture, deliveries increased from $27 million in 1956 to nearly 380 mil-
lion in 1960, raising their share in the total exports from 18 to 27
percent.
Among the more traditional Bulgarian exports, only food-
stuffs maintained their previous share (approximately 30 percent),
increasing in value from 1956 to 1960 from more than $4o million to
nearly $90 million. Exports of raw tobacco, while remaining at a
value of $25 million, declined in this period from 17 to 8 percent
of the total exports, and exports of nonferrous ore concentrates de-
clined from $32 million to $25 million, currently providing only 8
percent of the total exports compared with 21 percent in 1956.*
The communiques on trade agreements referred to above,
while announcing a substantially higher level of trade, provide no
detailed information on planned Bulgarian exports to the USSR during
1961-65. 22/ Nevertheless, it appears clear from the general com-
modity listing included that the over-all pattern of exports will not
differ essentially from that established in the recent past. Because
of the increasing Bulgarian industrial capabilities (recognized in part
by CEMA specialization assignments), it is probable that exports of
machinery and equipment will continue to increase in value and perhaps
also as a share of the total Bulgarian exports to the USSR. Aggregate
industrial output in Bulgaria is scheduled to increase about 75 per-
cent during the current Five Year Plan, and more rapid growth appears
to be scheduled for machinery and equipment (for which Bulgaria has
received CEMA specialization assignments and for which the necessary
* Data on the growth of Bulgarian exports to the USSR during 1956-60
and on the share of these exports in the total Soviet imports of the
respective commodities are taken from or based on official Soviet
foreign trade statistics. 54/
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domestic raw materials base exists) -- for example, electric motors,
transformers, storage batteries, electric cable cars (industrial),
electric carts, automatic telephone switchboards, and certain types of
ships. 56/ Most of these products are primarily for export, and the
USSR, which has a large, unsatisfied demand for then, should continue
to provide their principal market.
A further increase in the share of manufactured products
in the total Bulgarian exports to the USSR also may result from addi-
tional deliveries of products of light industry and the food-processing
industry. In conformance with CEMA specialization assignments (which
here once again confirm traditional production patterns), Bulgaria has
scheduled a substantial increase in horticultural output and plans to
double its exports of canned vegetables while increasing its exports
of canned fruit by 50 percent above 1960. 57/ The USSR has been the
principal market for these products in the past, and contracts for the
current 5-year period reportedly call for large increases in Bulgarian
deliveries. No information is available on Bulgarian plans for increas-
ing production of readymade clothing and furniture, two of the major
sectors of Bulgarian light industry. Inasmuch as exports of these
products to the USSR increased very rapidly during the past few years
(deliveries of clothing increased five times and those of furniture three
times during 1956-60), it is not unlikely that, pursuant also to Soviet
goals for increasing the availability of consumer manufactures, pur-
chases from Bulgaria will be increased further.
In the absence of quantitative information on the composi-
tion of planned Soviet-Bulgarian trade during 1961-65 and also on
production goals of the Bulgarian current Five Year Plan, it is not
possible to draw any detailed conclusions on the likely impact of this
trade on the development of the Bulgarian and Soviet economies. (The
impact on the latter is not likely to be significant in any case.) It
appears certain, however, that Bulgaria's future economic and particu-
larly its industrial growth will continue to depend to a great extent
on the growth of its trade with the USSR. Recognizing this, Bulgarian
leaders apparently are content to follow the Soviet lead in political
as well as economic matters.
E. Hungary
Hungary, the fifth ranking trading partner of the USSR among
the European Satellites, currently accounts for about 5 percent of the
total Soviet foreign trade. In the wake of the Hungarian revolt of
October 1956 the USSR pledged itself to extend large-scale assistance
to Hungary in the restoration of its economy and, beyond that, to sup-
ply increasing quantities of raw materials, fuels, machinery, and
equipment necessary for the expansion of Hungarian industry. As a
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result, Soviet-Hungarian trade, which actually had declined during
1953-56, began to increase very rapidly, reaching a turnover of $560
million in 1960, 124 percent above the level achieved in 1956, which
for all practical purposes was the last year before the revolt. Much
of this growth was due to the sharp increase in Soviet exports, which,
pursuant to the pledge made in 1956, rose 138 percent from 1956 to 1960,
from $130 million to $310 million. 2/ Soviet imports from Hungary dur-
ing the same period increased somewhat less rapidly, by 108 percent,
from $120 million in 1956 to $250 million in 1960. Preliminary data for
1961 indicate that althouei the volume of trade stipulated in the annual
protocol ($625 million) was not quite achieved, the Soviet-Hungarian
trade turnover reached approximately $610 million, 9 percent above the
level in 1960. 22/
Long-range prospects for Soviet-Hungarian trade during 1961-65
are for continued rapid expansion, although the exceptionally high
rate of growth prevailing during 1956-60 (which reversed the earlier
downward trend in this trade) will not be maintained. According to
the provisions of the long-term trade agreement signed on 6 May 1960,
Soviet-Hungarian trade during 1961-65 will exceed $3,000 million, an
increase of about 50 percent above such trade during 1956-60. 6o/
This volume subsequently was increased as a result of a supplementary
long-term trade agreement (1962-65) signed in August 1961, which calls
for additional reciprocal deliveries that should bring total Soviet-
Hungarian trade during 1961-65 to a level of approximately 34,000 mil-
lion, doubling the volume of trade generated in the earlier 5-year
period.* 61/ In line with these trade plans the Soviet-Hungarian trade
turnover in 1965 is estimated to reach about 3900 million, more than
60 percent above the level in 1960, representing an annual average rate
of growth of 10 percent. Inasmuch as this projected rate of growth ex-
ceeds the rates apparently planned for the total trade of both the USSR
and Hungary, the share of mutual trade in the total trade of these coun-
tries is expected to rise -- the Hungarian share of Soviet trade from
5 percent in 1960 to 6 percent in 1965 and, more significantly, the
Soviet share in Hungarian trade from 29 percent in 1960 to 36 percent
in 1965. Lq/
1. Soviet Exports
As Hungary's most Important trading partner and source of
long-term credits, the USSR has exerted a far-reaching influence on
Hungarian economic development. Soviet exports have provided the
major share of Hungarian import requirements of key raw materials as
* The effects of this supplementary trade agreement apparently are
already reflected in the 1962 Soviet-Hungarian protocol, which calls
for a 14-percent increase in trade above 1961.
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well as substantial quantities of machinery and equipment required for
industrial expansion. At the same time, the USSR is the principal mar-
ket for Hungary's diversifying industries, currently accounting for
more than 50 percent of Hungarian exports of machinery and equipment. 63/
Acknowledging Hungary's dependence on Soviet deliveries of key raw ma-
terials, the share of the USSR in selected 50X1
Hungarian imports for 1961 as follows: crude oil, 93 percent; iron
ore, 95 percent; ferroalloys, 98 percent; timber, 83 percent; and cotton,
74 percent. 64/
Under the requirements of the Hungarian Five Year Plan
(1961-65), the USSR is committed to supply Hungary significantly in-
creased quantities of raw materials as well as machinery and equipment
for key industrial expansion projects. Although the quotas initially
agreed on in the long-term trade agreement of 1960 reportedly have
since been increased (according to the terms of the supplemental trade
agreement signed in 1961), they are given in Table 14* as presumably
indicative of minimum Soviet deliveries.
The very significant increase in planned Soviet deliveries
of engineering products will supply a substantial part of the machinery
and equipment required to implement key targets of Hungary's industrial
expansion and diversification program. Included is the rolling mill
equipment for the hot and cold strip mills being installed at the Danube
Iron Works at Dunaujvaros (formerly Sztalinvaros), which is the most
important project in Hungary's plan to increase sharply the finishing
capacity of its iron and steel industry. 65/ Large quantities of chemical50X1
equipment, notably complete plants for production of polyethylene,
methanol, and polyvinylchloride, also are listed.
Soviet deliveries will supply 70 percent of the machinery and 50X1
equipment required to implement current plans for increasing production
of the Hungarian chemical and synthetics industries. 66/ The USSR
also will supply complex machinery and equipment to improve and modern-
ize Hungary's machine tool and precision instruments industries as well
as oil drilling and transporting machinery, tractors, roadbuilding ma-
chinery, and agricultural machines. 67/ As a result of the large in-
creases in deliveries planned, the share of machinery and equipment in
the total Soviet exports to Hungary in 1965 is expected to increase to
nearly one-third (compared with not quite 25 percent in 1960), further
streneLhening the Soviet position as the principal foreign supplier of
investment goods for Hungarian industry.
2. Hungarian Exports
The direction of postwar industrial development in Hungary
was dictated to a considerable extent by the requirements of the USSR,
* Table 14 follows on p. 46.
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Table 14
Selected Soviet Exports to Hungary
1956-60 and Planned for 1961-65
Commodity
Machinery and equipment
Coal
Coke
Crude oil
Iron ore
Apatite concentrate
Timber
Cotton
Unit
Million
Million
Million
Million
Million
Million
Million
Million
current US $
metric tons
metric tons
metric tons
metric tons
metric tons
cubic meters
metric tons
1956-60
190
1.72
2.69
4.91
7.11
0.52
4.36
0.16
1961-65
Plan
Increase
or Decrease
(Percent)
500
163
1.00
-42 a/
2.80
4 --
6.6o
34
9.04
27
0.80
54
5.73
31
0.19
19
a. The volume of coal shipments during 1956-60 was exceptionally large as a result of emergency deliveries
made in 1957 in the amount of 1.2 million tons. Discounting these emergency deliveries, coal shipments in
1961-65 are to double those of the previous period.
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and the Soviet market continues to take more than 50 percent of the
total Hungarian exports of machinery and equipment. Soviet orders
insure a solid basis for some of the more important branches of the
engineering industry, such as the shipbuilding, machine tool, rolling
stock, precision instrument, and electrotechnical industries. Thus,
about two-thirds of the output of
Hungarian shipyards, 80 percent of railroad rolling stock, 25 percent
of machine tools, 17 percent of buses and undercarriages, and 15 per-
cent of telecommunications equipment are being delivered to the
USSR. 2./
Accounting for less than 5 percent of the total Soviet im-
ports, Hungarian deliveries nevertheless have provided a substantially
larger share of Soviet imports of selected types of machinery and equip-
ment. Thus Hungarian industry in 1960 supplied almost one-third of all
cranes imported by the USSR; one-fourth of the industrial refrigeration
equipment; more than 20 percent of the equipment for the food industry;
and more than 10 percent of the railroad and automotive equipment, in-
cluding 75 percent of all buses. At the same time, the well-developed
Hungarian drug industry supplied almost 50 percent of Soviet imports
of pharmaceuticals. The over-all composition of Hungarian ex-
ports to the USSR during 1956-60 is shown in Table 15.*
The lack of precise data prevents a detailed comparison of
Hungarian exports to the USSR scheduled for 1961-65 with actual exports
during 1956-60. Official announcements, however, indicate that the
over-all pattern of exports will remain essentially unchanged, with ma-
chinery and equipment again accounting for the major share. No infor-
mation has been released on the total value of planned shipments of ma-
chinery and equipment, but a conservative estimate places it at about
$1,000 million -- that is, double the value during 1956-60.
Planned exports of machinery and equipment generally appear
to reflect the priorities of Hungary's long-term economic plan, which
(reportedly pursuant to CEMA recommendations) is shifting the center
of gravity within the engineering industry to production of telecom-
munications equipment, precision instruments, diesel-electric trains
and engines, and food-processing and chemical equipment. 70/ Appar-
ently scheduled for the largest increases are deliveries of the tele-
communications equipment and precision instruments industries. Given
Hungary's most important CEMA specialization assignments, these in-
dustries are slated for the highest rates of growth of all sectors of
the Hungarian engineering industry. 11/ The long-term Soviet-Hungarian
trade agreement established delivery quotas of approximately $160 mil-
lion for telecommunications equipment and $40 million for precision
* Table 15 follows on p. 48.
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Table 15
Selected Hungarian Exports to the USSR
1956-60
Commodity
Total Exports
1956-60
(Million Current US $)
Percent of Total
Exports
Total exports to the USSR
800
100
Of which:
Machinery and equipment
500
62
Of which:
Machine tools
30
Ships and marine equipment
90
Hoisting and conveying equipment
50
Equipment for the food industry
60
Industrial refrigeration equipment
20
Railroad rolling stock
100
Automotive equipment
4o
Manufactured consumer goods
150
19
Pharmaceuticals
30
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instruments, and the value of these deliv- 50X1
eries in 1965 will be 10 times the value in 1958.* As a result, the
share of telecommunications equipment and precision instruments in the
total Hungarian deliveries of engineering products to the USSR should in-
crease from what was probably no more than 5 percent during 1956-60 to
about 20 percent during 1961-65.
Corresponding to the planned expansion in Hungarian pro-
duction, exports of food-processing and chemical equipment also are
scheduled for sizable increases, with basic delivery quotas for 1961-65
being set at about $160 million and $40 million, respectively, compared
with actual deliveries of $60 million and $10 million during the pre-
vious 5-year period. No announcements have been made on planned over-
all shipments of railroad equipment during 1961-65. Their value also
is expected to increase substantially, however, with the addition of
193 complete diesel trains, produced under CEMA specialization assign-
ments, to traditional exports of passenger coaches.
Official announcements on planned exports of machine tools,
cranes, ships, and automotive equipment have been rather uninformative.
Such exports accounted for more than 4o percent of the total Hungarian
exports of engineering products to the USSR during 1956-60 but are ex-
pected to decline somewhat in their share of the total during 1961-65.
A basic quota of 5,500 metalcutting machine tools has been set, which
suggests average annual exports somewhat above those during 1956-60
but substantially below annual exports in 1959 and 1960. With the in-
creasing emphasis on the delivery of modern, high-precision tools de-
signed for toolroom use, the over-all value of these deliveries is
expected to increase. A combined delivery quota has been set at 360,
and deliveries of portal and floating cranes during 1961-65 should
about equal actual deliveries during 1956-60. Similarly, planned ex-
ports of 122 oceangoing and river vessels during 1961-65 should main-
tain the level of deliveries during 1956-60. This conclusion is sup-
ported by the fact that the Hungarian shipbuilding industry, almost
exclusively producing for the Soviet market, is not scheduled for
expansion during the current plan period. 73/ No information is avail-
able on planned exports of automotive equipment, although presumably
there will be continuing deliveries of buses, for which Hungary holds
a CEMA specialization assignment.
* Data on planned Hungarian exports to the USSR during 1961-65 and
comparisons of such exports with those made during 1956-60 are based
on Soviet and Hungarian statements issued at the signing of the Soviet-
Hungarian Five Year Trade Agreement and on official Soviet foreign
trade statistics. 2.21
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Exports of manufactured consumer goods also are scheduled
to grow substantially during 1961-65, although here again available in-
formation is relatively sparse. Delivery quotas have been announced
for cotton textiles, 122 million meters compared with 66 million meters
delivered during 1956-60, and for clothing and knitwear, $70 million
compared with almost $50 million during 1956-60. No information is
available on planned shipments of pharmaceuticals, although in view
of the fact that the industry is expanding and that exports in recent
years have increased rapidly, deliveries during 1961-65 are expected
to show a sizable increase above those in the previous 5-year period.
The evolving pattern of Soviet-Hungarian trade appears to
offer significant advantages to the economies of both countries. Sub-
stantially assisted by Soviet deliveries of raw materials and indus-
trial installations as well as by expanding Soviet markets, Hungary
appears to be able to develop such of its industries as are best suited
to its material and labor resources. In view of the fact that Hungary
possesses few raw material resources other than bauxite, the planned
expansion of industries that generally are characterized by a high
ratio of labor to material inputs permits the country to make better
use of its extensive reservoir of skilled labor and should enable it
to increase considerably the unit value of exports, generally increas-
ing the contribution of foreign trade to the development of the Hungarian
economy.
The economic advantages to the USSR of this evolving pat-
tern of trade with Hungary again reside primarily in the fact that
imports provide specialized types of machinery and equipment that fre-
quently better meet specific Soviet requirements than domestically
produced general-purpose equipment. Where the domestic requirement
for such specialized equipment is not sufficiently large to warrant
the investments necessary for its production, the availability of an
assured source of supply in a friendly country is of considerable
advantage to the USSR because in effect it broadens the production
experience and plant capacity on which Soviet planners can rely in
drafting their over-all production programs. This advantage will be
increased to the extent that CEMA specialization assignments are effec-
tive in permitting the selected industries not only to expand produc-
tion sufficiently to realize the economies of scale but also to under-
take the extensive research and development efforts required to make
continuing qualitative and technological improvements. More important
than the immediate economic advantages to the USSR appears to be the
longer run consideration that the evolving pattern of Soviet-Hungarian
trade, in providing ample scope for Hungarian economic growth, pre-
disposes Hungary to seek close economic ties with the USSR and the
other CEMA countries.
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F. Rumania
Rumania, currently the sixth ranking trading partner of the
USSR among the European Satellites, accounts for about 5 percent of
the total Soviet foreign trade. It is interesting to note that whereas
Soviet trade with the other Satellite countries increased rapidly dur-
ing 1956-60, trade with Rumania remained almost at a standstill.*
The turnover in 1960 reached a level of $540 million, only about 12
percent above the level of $48o million in 1955, and this modest growth
was entirely recorded in 1960, the first year of the current Rumanian
Six Year Plan. However, inasmuch as aggregate Rumanian foreign trade
in 1960 increased by more than 30 percent (including an increase of
4o percent in trade with the other Satellite countries and 75 percent
in trade with the West), the Soviet share in this trade, which had
long been close to 50 percent, declined to 40 percent. 74/
Although currently overshadowed by the significant increases
in Rumanian trade with the Satellites and with the West, Soviet-
Rumanian trade during 1961-65 is expected to show substantial growth.
The long-term Soviet-Rumanian Trade Agreement (1961-65) signed in
November 1960, almost a year after the inception of Rumania's Six
Year Plan, envisages a turnover of $3,250 million, which is approxi-
mately 35 percent above the actual trade during 1956-60. 75/ As in
the case of Soviet long-term trade agreements with the other Satel-
lite countries, this appears to be a minimum level of trade that
should be exceeded substantially in the course of implementation of
annual trade protocols. Trade in 1961 reached a level of approximately
$610 million, 13 percent above the level in 1960, and the recently
signed protocol for 1962 calls for a further 10-percent increase. 1.Y
Taking into account these "above long-term agreement" increments in
annual protocols, the aggregate Soviet-Rumanian trade during 1961-65
* The reason for this situation appears to be in part the fact that,
unlike the other Satellites, Rumania has an extensive and well-
diversified resources base and therefore in the past generally has
been less dependent on foreign trade to generate the material requi-
sites for economic and industrial growth. Of relevance also is the
fact that,-particularly since the inception of its current Six Year
Plan (1960-65), Rumania has sought to lessen its still substantial
dependence on the USSR by significantly increasing its trade with the
other Satellite countries and with the industrial West. Certain of
the equipment requirements of current industrial plan targets --
notably in the metallurgical, chemical, petrochemical, plastics, and
rubber industries -- made such a partial reorientation of trade manda-
tory, as Soviet capabilities to supply the necessary plant installa-
tions are severely circumscribed by greatly increased domestic re-
quirements.
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may be expected to reach a volume of 83,500 million to $4,00o million,*
about 54 percent above that during 1956-60. At the same time, the
Soviet-Rumanian turnover in 1965 may be expected to come close to
$900 million, 67 percent above the level in 1960. The implied average
annual rate of growth in Soviet-Rumanian trade, about 11 percent, ex-
ceeds that estimated for the total Soviet and the total Rumanian for-
eign trade during 1961-65 and consequently should result in some in-
crease in each country's share of the other's total trade.
1. Soviet Exports
As is the case with the other European Satellite countries,
the USSR is the largest trading partner of Rumania, and for most of the
postwar period Soviet exports have been the primary source of Rumanian
imports of industrial raw materials, semifabricates, and machinery and
equipment. Thus in 1960 the Soviet share of Rumanian imports of key
materials was as follows: iron ore, 90 percent; rolled ferrous metals,
6o percent; steel pipe and tubes, 33 percent; ferroalloys, almost
100 percent; industrial coke, more than 60 percent; apatite concentrate,
100 percent; synthetic rubber, 65 percent; and cotton, about 60 per-
cent. Of substantial importance to Rumanian industrial development
were Soviet deliveries of complete plant installations, which in 1960
accounted for about 30 percent of Rumanian imports in this category. IV
In accord with the requirements of the Rumanian Six Year
Plan, Soviet exports to Rumania during 1961-65 will show substantial
increases. Of perhaps greatest significance are the planned shipments
of machinery and equipment, which at $500 million exceed the volume
previously delivered during 1956-60 by 140 percent. 78/ Included are
a number of plants and installations of key importance to the achieve-
ment of Rumanian industrial plan targets. Thus the USSR is to assist
in the expansion and diversification of the Rumanian iron and steel
industry, in the construction of an aluminum plant scheduled to produce
50,000 metric tons annually, and in the construction of a factory for
the secondary processing of nonferrous metals. The USSR apparently
also will deliver power-generating equipment required for a series of
thermal-electric powerplants generating 550,000 kilowatts, approximately
25 percent of new capacity to be installed during the period through
1965. In addition, the USSR is to supply metalcutting machine tools,
forging and processing equipment, road construction machinery, machinery
for the food industry, textile mills, transportation and hoisting equip-
ment, and agricultural machinery. 79/
Soviet deliveries of industrial raw materials and fuels also
are scheduled to increase substantially. Most important are the planned
* For purposes of computation, the figure of $3,700 million is used in
Table 1, p. 7, above.
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increases in shipments of coking coal, iron ore, and pig iron, on
which the Rumanian iron and steel industry will depend increasingly,
as its domestic resource base is insufficient to support the planned
expansion in output. Planned Soviet exports to Rumania during 1961-65
are compared with actual exports during 1956-60 in Table 16, which re-
flects the continuing importance of Soviet deliveries to Rumanian eco-
nomic growth.
Table 16
Selected Soviet Exports to Rumania
1956-60 and Planned for 1961-65
Commodity
Unit
1956-60
1961-65
Plan
Increase
(Percent)
Machinery and equipment
Million current
208
500
140
US S
Coal
Million metric
tons
0.16
0.95
497
Coke
Million metric
tons
2.07
2.90
40
Iron ore
Million metric
tons
3.36
7.10
111
Pig iron
Million metric
tons
0.03
0.66
21 times
Rolling mill products
Million metric
tons
2.28
2.80
23
Apatite concentrate
Million metric
tons
0.29
0.52
79
Cotton
Million metric
tons
0.15
0.15
0
2. Rumanian Exports
With the possible exception of petroleum products, Rumanian
exports have contributed only marginally to the fulfillment of Soviet
import requirements.* Petroleum products, traditionally a high-quality
Rumanian export commodity, provided about 40 percent of the total
Rumanian exports to the USSR during 1956-60 ( )48o million) and accounted
* Data on Rumanian exports to the USSR through 1960 are based on offi-
cial Soviet statistics. 80/
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for more than 80 percent of the total Soviet imports of these products.
However, inasmuch as a substantial share of these shipments is believed
to have gone to third countries (including the other Satellites and
Communist China) on Soviet account, their direct contribution to the
satisfaction of Soviet import requirements cannot be readily measured.
Wood and wood products, also traditional Rumanian export
commodities, provided about 15 percent of the total exports to the
USSR ($170 million) and accounted for about one-third of the total
Soviet imports in this category. Deliveries of machinery and equip-
ment ($80 million), although representing a substantial share of the
exports of the still modest Rumanian machine building industries, ac-
counted for less than 7 percent of the total exports and provided only
slightly more than 1 percent of Soviet imports of machinery. Deliv-
eries of petroleum pipe ($60 million), which quadrupled between 1958
and 1960, currently supply more than 150,000 metric tons of pipe and
account for nearly 80 percent of Soviet imports of petroleum pipe.
Rumanian deliveries, however, do not include the large-diameter trans-
mission pipe, which is in most critical supply within the Bloc. Other
Rumanian exports to the USSR include cement, selected chemicals, agri-
cultural products, and, in recent years, increasing quantities of
manufactured consumer goods.
Planned Rumanian exports to the USSR during 1961-65 re-
flect a decline in the share of traditional export commodities,
notably petroleum products, cement, and lumber. Scheduled for sub-
stantial increases, on the other hand, both in absolute value and
as a share of the total exports, are deliveries of machinery and
equipment, produced in part in conformance with CEMA specialization
assignments but in part also on direct Soviet orders. Generally
oriented to Soviet investment priorities, these deliveries are to
include for the first time substantial quantities of chemical and
petroleum refining equipment as well as greatly increased quanti-
ties of drilling installations, electric transformers, and ocean-
going and river ships. Substantial increases also are scheduled
for exports of petroleum pipe, selected chemicals, and industrial
and consumer manufactures. Planned Rumanian exports to the USSR
during 1961-65 are compared with actual deliveries during the pre-
ceding 5-year period in Table 17,* which reflects some of the in-
cipient changes in the Rumanian export pattern.
The substantially increased Soviet deliveries of raw ma-
terials and capital equipment will assist Rumania in further expanding
its basic industrial structure. Simultaneously, increased Soviet
orders -- particularly for oil well drilling installations and pipe,
* Table 17 follows on p. 55.
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Table 17
Selected Rumanian Exports to the USSR
1956-60 and Planned for 1961-65
Commodity
Unit
1956-60
1961-65
Plan
Increase
or Decrease
(Percent)
Machinery and equipment
Of which:
Ships and marine equipment
Million current US $
60
8o/
30
Power transformers
Million kilovolt-amperes
0.73
2.05
181
Chemical and petroleum
refining equipment
Million metric tons
Negl.
0.16
N.A.
Oil well drilling equipment
Million current US $
10
50J
400
Petroleum pipe
Million metrit tons
0.30
0.94
213
Petroleum products
Million metric tons
14.62
9.50
-36
Cement
Million metric tons
3.15
2.70
-14
Soda
Million metric tons
0.08
0.60
711
Beech lumber
Million cubic meters
0.83
1.06
28
Furniture
Million current US $
0.03
0.12
287
a. Estimated.
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chemical equipment and selected chemicals, and consumer manufactures --
will insure the further expansion of those specialized machine building
and processing industries that most effectively utilize Rumania's pro-
duction experience and natural resources.
The singular importance of further expanding these indus-
tries derives mainly from the fact that, in the face of declining
prospects for petroleum products* and timber, traditionally the prin-
cipal Rumanian export commodities and foreign exchange earners, new
export industries must be sought to generate the increasing volume of
exports necessary to pay for the constantly rising import requirements
of the planned industrialization program.
The advantages inherent in this new pattern of Soviet-
Rumanian trade extend beyond their respective long-range production
plans. Again, as in the case of other less developed Satellite coun-
tries, the immediate economic advantages accruing to the USSR from
Soviet-Rumanian trade may be secondary to political considerations,
in particular to the overriding objective of assuring the development
of a viable Rumanian economy which will recognize that its future
growth is indissolubly linked to that of the USSR and the entire
Soviet Bloc.
* The cutback in planned Soviet purchases of Rumanian petroleum prod-
ucts may well result in an over-all decline in Rumanian markets, for
it appears unlikely that Rumania will succeed in expanding its sales
to other areas sufficiently to compensate for the decline in the Soviet
market.
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