INCREASE IN BLOC AID TO NORTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001000110002-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: November 16, 2016
• Document Release Date: April 6, 2000
• Sequence Number: 2
• Publication Date: March 2, 1961
• Content Type: BRIEF

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2 March 1961
CURRENT SUPPORT BRIEF
INCREASE IN BLOC ATD TO NORTH VIETNAM
OFFICE OF RESEARCH AND REPORTS
CENTRAL INTELLIGENCE AGENCY
This report represents -the immediate views of the
originating intelligence components of the Office
of Research and Reports. Comments are solicited.
This document contains information affecting the national defense of
the United States, within the meaning of the espionage laws, Title 18
USC, Sections 793 and 794, the transmission or revelation of which
in any manner to an unauthorized person is prohibited by law.
C-O-N-F-I-D-E-N-T-I-A-L
~t111RIJ TQ (tR~1llVES & RE~t~R~S CEI`I~E~
1~4~ -ED9AIEtY AFTER 11SE
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C ~-0 ~N -F ~: I -~D -E _...N -T - I -A -L
INCREASE IN BLOC AID TO NORTH VIETNAM
The dispute between the USSR and Communist China has bene-
fited North Vietnam by encouraging a greater display of concern
far its economic well being on the part of the disputants. A
concrete manifestation of this has been the extension during the
past year by the USSR and Communist China of large new credits
amounting to $350 million for support of the first Five-Year Plan
of North Vietnam (1961-65).
Although there are no indications that either China or the
USSR is attempting to become a monopolist in pr oviding aid to
North Vietnam, it is apparent that neither is willing to leave
the field to the sale influence of the other. It is of common
interest to both the USSR and China that North Vietnam develop a
well rounded economy, and the two large Communist powers have
committed themselves to assist in a comprehensive and diversified
economic plan. But, in view of its own economic def iciencies,
the fact that China is providing any economic assistance at all
to North Vietnam indicates concern that it nat be deprived of in-
fluence in this bordering state; and the largeness of its program
suggests the degree of its concern. Thus, the new Soviet commit-
menu during 1960, even though they may have resulted from motives
to which the Chinese could not object, have prompted China to ex-
tend additional credits in order to retain a prominent economic
role in the economy of North Vietnam.
Economic assistance extended to North Vietnam by the Bloc
since 1955 has totaled about $882 million. Of this amount Com-
munist China has extended $457 million and the Soviet Union $365
million. Of the total, about 58 percent--$510 million--has been
in the form of credits, with the Soviet Union. providing about
50 percent and Communist China roughly 45 percent of the total.
These two countries have also been the major sources of grants,
supplying together about 90~percent of the total grants of $372
million. Communist China, however, has supplied about 60 percent
and the Soviet Union about 30 percent of total grants. Other Bloc
countries have given the remaining grants and credits to North
Vietnam., some in substantial amounts, others in token amounts (see
Table).
Extensions of economic aid to North Vietnam have increased
greatly in recent months. The most recent agreement was announced
on 31 January 1961 and calls for a long term credit from China
amounting to $157 million, the largest credit extended by Commis-
nist China to any Bloc or Free World country, far the construction
or expansion of 28 industrial and transport enterprises. 1/ Aid
.for a number of the enterprises covered by this agreement was pro-
vided by China under an earlier economic assistance agreement con-
cluded in February 1959. Under the new credit, to be used from
1961 to 196?, China will provide aid for raising the output of the
Thai-Ngyuen iron and steel plant to 200,000 tons per year and for
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the construction of several smaller iron and steel enterprises.
Other assistance will be provided to the chemical and cement in-
dustries and for railway and bridge installations. In the field
of light industry China will construct .three mills for the manu-
facture of sugar, paper, and cotton yarn.
In November 1960, Communist China signed its first Scientific
:and Technical Cooperation Agreement with North Vietnam. 2/ Under
the agreement China will send to North Vietnam scientists and
technicians, furnish technical data in various industrial fields,
and train Vietnamese technicians and students in China. In the
field of agriculture China had agreed in March 1960 to build
eight farms and a middle agricultural technical school. 3/
On 23 December 1960 the Soviet Union extended a credit of
$107.5 million to aid in the realization of North Vietnam's Five-
Year Plan. 4/ Under the terms of the agreement the Soviet Union
will provide economic and technical assistance over the plan per-
iod for the construction of 43 new industrial enterprises and
projects. Soviet aid will be used to expand the fuel and power
industry, lay the foundations for a modern machine-building in-
dustry, and strengthen the scientific research institutes in the
country. This aid will include the construction of eight thermal
and hydro-electric stations with a total capacity of 200,000 kilo-
watts; the expansion of the Hongay-Campha coal mines; the construe-
tion of eight machine-building factories; the construction and
equipping of three scientific and research training institutes;
and the exploration of mineral resources; as well as the planning
of other industrial works. Soviet specialists will be sent to
North Vietnam while Vietnamese workers will receive training in
the Soviet Union. In addition to this credit, the Soviet Union
extended at the same time a grant of $5 million for medicine,
insecticides and equipment, and specialists for an anti-malaria
program. Also during December 1960, the 1961 protocol of the
Soviet-Vietnamese Commission on Scientific and Technical Coopera-
tion was concluded under which the Soviet Union will provide
North Vietnam with assistance in the machine tool, electrical
equipment, automotive, construction and other industries. 5/
In mid-1960 the Soviet Union extended a credit of $87.5 mil-
lion for expanding the production and processing of tropical crops
(coffee, tea, rubber, fruits) in North Vietnam. 6/ The agreement
envisages Soviet assistance in the setting up of a State farm,
the reconstruction of existing State farms, the organization of
supporting workshop facilities, and the construction of factories
for processing tea, coffee, and fruit. Soviet specialists will be
sent to North Vietnam and Vietnamese are to be trained in the
Soviet Union so that eventually they may take over full operation
of the projects.
Although Communist China has striven to maintain as prominent
a role as the Soviet Union in the development program of North
Vietnam, there has been no apparent effort to compete directly with
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the USSR. In fact there are many indications of cooperation in
planning and administering an overall aid program that will yield
maximum benefits to the economy of North Vietnam. Aid and advice
are given in the areas most appropriate to the capabilities of
the contributing nations. The Communist Ch~.nese assumed a lead-
ing role in the early rehabilitation of North Vietnam's transpor-
tation and communications facilities as well as in the reconstruc-
tion and development of its irrigation system. In more recent
years, Communist China has undertaken the construction of several
important light industrial projects, including 10 rice husking
plants, two sugar refineries, a cigarette factory, a match factory
and a rubber-goods factory, a soap factory, and a knitted-goods
factory. A Chinese credit of $75 million, extended in February
1959, is being used to finance construction of several heavy in-
dustrial plants, including the Viet Tri and Thai Nguuen power
plants and Thai Nguyen iron and steel plant. In addition to the
material assistance provided, the Chinese have provided a large
number of technicians to install equipment, to manage operations,
and to train indigenous personnel. ?/ It is estimated that about
1,000 Chinese advisers, technicians, and laborers were working in
North Vietnam during 1960, More than 3,000 Vietnamese workers
and students have gone to Communist China for training during the
past five years .
While the Chinese have furnished large quantities of basic
materials and manpower, the Soviet Union has sent machinery and
equipment in the heavy industrial field. Soviet advisers have
been particularly active in .the mining and manufacturing indus-
tries. Soviet aid projects include the Hanoi Machine Tool Plant,
the Lao Kay apatite mine, the Tinh-Tuc Tin mine, the Long-Cam
coal mines, and the Viet Tri super-phosphate plant. 8/ In addi-
tion about 400 Soviet advisers and technicians were present in
North Vietnam during 1960, and about 2,000 Vietnamese were study-
ing at higher edueatianal institutions in the Soviet Union.
Aid from Bloc countries other than Communist China and the
Soviet Union has been small by comparison. Poland has built a
sugar refinery and several power plants; East Germany has contri-
buted a 500 -bed hospital, some modern fishing trawlers, and auto-
matic telephone equipment; and Czechoslovakia has given three ply-
wood factories, a 600-bed hospital and technical aid in the open-
ing of two zinc mines and a plant for concentrating zinc ore. 9/
The other Satellites have given lesser amounts of technical aid,
raw materials, and consumer goods.
Bloc aid to North Vietnam has averaged 12 percent of North
Vietnam's GNP aver the period 1955-59. Only because of this
continu~.ng large net inflow of goods and services from the Bloc
has North Vietnam been able to support an investment program of
increasing significance. The new credits will enable North
Vietnam to continue to develop a diversified construction pro-
gram and greatly improve the chances of success for the first
Five-Year Plan.
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Analyst:
25X1A
Coord:
Sources:
STATSPEC 1?
STATSPEC3
army, Hong Kon
State Jt. N~ka. 48, DA TN 63359, 3 Dec 60.
5. State, Moscow, Dsp 427, 23 Dec 60. OFF USE.
6. CIA. FDD, External Economic Relati,ons-of $loc Countries
(27), Sum no. Nov 0, p. USE.
?. JPRS: ?437, The Democratic Republic,_of Viet Nam Economy
and Foreign ra e, y vsenev, Jan tr, o
emo at c es aya Respublika V?"yetnam--Ekonomika i
nes nyaya orgov ya, y, _ vsenev, en ngra , 1960),
p. T - U.
8. Ibid.
9 . 3'1; i3,
2 March 1961 CIA/RR-CB-61-11
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