POSSIBLE YUGOSLAV IMPLEMENTATION OF SOVIET-FINANCED PROJECT IN EGYPT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001700090001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: November 16, 2016
• Document Release Date: April 6, 2000
• Sequence Number: 1
• Publication Date: August 8, 1963
• Content Type: BRIEF

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SECRET
NO FOREIGN DISSEM
Current Support Brief
POSSIBLE YUGOSLAV IMPLEMENTATION
OF SOVIET-FINANCED PROJECT IN EGYPT
CIA/RR CB 63-64
8 August 1963
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
NO FOREIGN DISSEM
SECRET
GROUP I
Excluded from automatic
downgrading and
declassification
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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.
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 Approved For Release 2000/05/12 : CIA-RDP79TO1003AO01700090001-3
POSSIBLE YUGOSLAV IMPLEMENTATION
OF SOVIET-FINANCED PROJECT IN EGYPT
Recent reporting from Cairo states that the new Alexandria shipyard
will be built by Yugoslavia under the $175 million Soviet line of credit of
1958. 1/ If actually undertaken, this would be the first known instance
of Yugoslav implementation of a Soviet-financed economic project in an
underdeveloped country. A recent report from Ethiopia that the Soviet
Counselor there has invited a Yugoslav firm to participate in the con-
struction of a Soviet-financed oil refinery in Assab is supporting evidence
of a probable new economic relationship between the USSR and Yugoslavia
in regard to the underdeveloped countries. 2/
A January 1959 protocol to the 1958 Soviet-Egyptian credit agreement
specifically committed the USSR to draw up blueprints and provide ma-
chinery and equipment, as well as technical assistance, for a shipyard
project in Alexandria. 3/ Initiation of the project has been reported and
denied alternately for several years, but now an announcement has been
made that the ceremony for laying the cornerstone is scheduled for Octo-
ber 1963. 4/
Implementation of projects in Egypt by European Satellites under
Soviet credits has become commonplace in the past few years; the involve-
ment of Yugoslavia in such a subcontract may be a concrete example of
the "specialization and cooperation in production" promised in a USSR-
Yugoslav protocol of 10 April 1963. Shipbuilding was one of the fields
specified in the agreement, and Yugoslav shipyards figured prominently
in the itinerary of the Soviet delegation that formulated the accord. 5/
It is conceivable that the USSR would pay Yugoslavia for Egyptian projects
in hard currencies. Perhaps more likely, however, the USSR would pro-
vide Yugoslavia with commodities it normally imports from the West
thereby reducing any further growth in the considerable short-term and
medium-term debt of Yugoslavia to hard currency countries.
Economic and political ties between Egypt and Yugoslavia have been
notably close throughout the period of changing Yugoslav-Soviet relations.
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Yugoslav involvement in a Soviet-sponsored project, however, could be
a new phase in the development of Egyptian-Bloc relations. President
Nasser and Marshal Tito held their 13th meeting in May of this year,
and a Yugoslav newspaperman alleged that one of Nasser's chief pur-
poses was to seek Tito's advice on obtaining assistance from the Bloc. 6/
The Nasser-Tito meeting immediately followed the third session of the
UAR-Yugoslav Mixed Committee for Economic Cooperation which re-
sulted in (a) a supplementary trade protocol calling for increased trade
and industrial cooperation, (b) a new agreement on cooperation in the
peaceful uses of nuclear energy, and (c) an accord on a common approach
to the forthcoming UN Conference on Trade and Development.
Developments in Yugoslav-Egyptian trade provide evidence of growing
cooperation. In 1962, Yugoslav exports to Egypt were valued at $21 mil-
lion, an increase of 26 percent over 1961; Egyptian exports to Yugoslavia
totaled $11.8 million, or 49 percent more than in 1961. 7/ Yugoslav ex-
ports to Egypt include large quantities of transport equipment, motors,
well-drilling equipment, and other machinery. Much of this material ap-
parently represents drawings on Yugoslav credits to Egypt, and this pro-
cedure would account for the bulk of the trade imbalance. 8/ The Central
Exchange Control in Cairo reported $12. 4 million obligated as of 28 Feb-
ruary 1963 under the $20 million Yugoslav credit extended in January
1961. 9/ Belgrade currently is engaged in a number of irrigation and
construction projects in Egypt and is reported to be providing both equip-
ment and technicians for the Egyptian missile-development program. 10/
Yugoslavia assisted in construction of the nuclear research facilities at
Inchas, and Yugoslav technicians are continuing to assist the Egyptians
in their nuclear program. 11/
Educational assistance to Egypt also has been forthcoming. For
example, Belgrade Radio reported the arrival of 160 Egyptian technical
trainees on 10 March 1963, and one Egyptian reportedly is working at a
Yugoslav missile testing center in preparation for a similar assignment
at home. 12/
The Yugoslav-Egyptian accord on the UN Conference on Trade and
Development consisted of a common draft reply to the Secretary General
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containing measures and solutions recommended for adoption at the forth-
coming conference. This draft is to be submitted to all developing coun-
tries, along with suggestions for a meeting of experts from the develop-
ing countries prior to the world conference. A major Yugoslav policy
aim in recent months has been to persuade developing countries of the
merits of a common policy on the agenda items of the conference. Agree-
ment with the Egyptians is expected to strengthen the Yugoslav position
with other nonaligned Asian and African countries on this question. 13/
Although none of the above relationships is a completely new de-
parture, they all indicate a growing closeness between the Egyptian and
Yugoslav regimes. Implementation by Yugoslavia of a Soviet aid project,
however, would inject a wholly new factor into this relationship.
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Analyst:
25X1A
1. State, Cairo. Airgram A-609, 7 Feb 63. C.
2.
3. State, Cairo. Dsp 669, 9 Mar b9. U.
4.
5. State, Belgrade. Airgram A- 052, 13 Apr 63. OFF USE.
6. Ibid. , Airgram A-121 2, 22 May 63. OFF USE.
7 . Ibid. , Airgram A-1145, 8 May 63. OFF USE.
FDD. No 4741, Insurgency 34, 17 Jun 63. C.
8. FDD. No 4329, 21 Feb 63. C.
FDD. No 4483, 3 Apr 63. C.
FDD. No 4536, 17 Apr 63. C.
9. State, Cairo. Airgram A-821, 11 May 63. OFF USE.
State, Belgrade. Dsp 459, 16 Jan 61. C.
10.
STATSPEC 11.
STATSPEC 12.
13. State, Belgrade. Airgram A-1145, 8 May 63. OFF USE.
STATSPEC
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25X1 C
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SECRET
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 Analyst: I/NEA
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CIA/RR CB 63-64
8 August 1963
Hand carried to AD/RR
Hand carried to DAD/RR
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SICRET
NO FOPElGN DISSEM
7 Aug 63
11
GROUP 1
Excluded trem automatic
dowegrading and,
4eclaeclllcatlaa ,
9 Aug 63
25X1C 11 /3 6
25X1A
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 % Approved For Release 2000/05/ C -RDP79T01003A001700090001-3
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SECRET
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 Approved For Release 2000/05/1 KRDP79T01003AO01700090001-3
r ji4' ction r.-, ?X13 or. K,:'rre r.,.
Yugoslav Implementation-of-.Soviet-financed
Possible_
Project in Egypt --- 6 August 1963 (Sec ret/Ni3_FOREIGN .DISSEM)
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