COMMUNIST AID AND TRADE ACTIVITIES IN LESS DEVELOPED COUNTRIES, APRIL 1975

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01098A000500060002-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: November 16, 2016
• Document Release Date: February 28, 2000
• Sequence Number: 2
• Publication Date: May 1, 1975
• Content Type: REPORT

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Secret
No Foreign Dissem
'D, YUl Aawr
Communist Aid and Trade Activities
in Less Developed Countries, April 1975
Secret
ER RP 75.15
May 1975
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Copy . _ 0
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 015319
Exempt from general declesslfkation schedule
of E.O. 11862, exemption category:
468(1), (2). and (3)
Automatically declassified on:
Date Impossible to Determine
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CONTENTS AND SUMMARY OF EVENTS
(April 1975)
Pte
Note: A study of recent Soviet fisheries development in LDCs places Soviet aid
allocations to these industries at more than $115 million since 1959. Soviet aircraft
sales were in the news during April; Peru will become the first Latin American
country to receive military aircraft under a contract signed recently for -
helicopters. The Central African Republic ordered two passenger aircraft for civil
use. Brazil was considering a Soviet offer of helicopters, and Burma inquired about
Soviet military aircraft prices. MIG deliveries continued to Uganda and Egypt.
A review of Communist trade with less developed countries in 1973 will be
distributed to recipients of the monthly publication as a separate Research
Publication.
Recent Developments in Soviet Fisheries Aid . . . . . . . . . . . . . . . . 1
Since 1959, the USSR has pledged more than $115 million in fisheries
development assistance to 30 countries. Recent fisheries agreements have
stressed the formation of joint fishing ventures and the provision of technical
assistance, in contrast to earlier pacts that called for financing equipment
and construction of onshore facilities.
Africa
USSR Sells Aircraft to the Central African Republic . . . . . . . . . . . . .
The CAR purchased two Soviet passenger-cargo aircraft at a cost of about
$2 million each.
Soviet Gold Extraction in Mali . . . . . . . . . . . . . . . . . . . . . . . .
The USSR and Mali signed contracts to go ahead with gold extraction at
the Kalana mines-a site which the USSR has been prospecting for several
years.
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Communist Credits to Mozambique . . . . . . . . . . . . . . . . . . . . . 5
Communist countries have offered a total of $25 million in credits to
Mozambique, with agreements to be formalized after independence on 25
June.
Soviet Military Construction Activity in Somalia . . . . . . . . . . . . . . 5
The USSR has resumed work on an ammunition plant near Mogadiscio
and is constructing a new airfield that is expected to be operational at the
end of the year.
Soviet MIG-21 Deliveries to Uganda . . . . . . . . . . . . . . . . . . . . . 5
Soviet MIG-21 deliveries to Uganda continued with the arrival of
aircraft in April.
Burmese Inquiry About Soviet Military Aircraft . . . . . . . . . . . . . . . 5
Burma has requested price and delivery information on several types of
Soviet aircraft, reportedly to be used in a comparative study on aircraft
replacement possibilities.
Europe
Portugal Negotiating an Aid Agreement with Moscow . . . . . . . . . . . . 6
Negotiations are reported nearing completion on Soviet aid for an
aluminum smelter and development of the cement industry in Portugal.
25X1 B
Latin America
Peru Buys First Soviet Military Aircraft . . . . . . . . . . . . . . . . . . . 6
Peru became the first Latin American country to purchase Soviet military
aircraft under a contract for- helicopters signed recently.
25X1 B
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Romanian President Tours Islamic States . . . . . . . . . . . . . . . . . . 7
Jordan and Tunisia signed agreements on Romanian participation in
development projects and to expand trade during visits by President
Ceausescu.
Moscow Pledges New Development Aid to Bangladesh . . . . . . . . . . . .
The USSR signed an agreement early in April to provide $51 million in
additional credit to Bangladesh.
Greece Cancels Philippi Power Project . . . . . . . . . . . . . . . . . . . .
Greece has canceled the controversial Philippi power project, which
would have used peat as fuel for three steam power generators to be
provided by the USSR.
Iranian-Soviet-West European Gas Contract Signed . . . . . . . . . . . . . 8
The USSR and a West European consortium have concluded a contract
with Iran on the delivery of 1.3 billion cubic feet of gas per day to the USSR
and West European consumers.
Results of Iraqi Leader's Visit to Moscow . . . . . . . . . . . . . . . . . . 8
The increasing strains in Iraq's military relations with the USSR, as well as
Baghdad's dispute with Syria over the allocation of Euphrates river waters,
probably were major topics of Iraqi discussions in Moscow in April.
Iraq Signs Protocols with East European Countries . . . . . . . . . . . . . 9
Iraq signed protocols on trade expansion and utilization of outstanding
credits with Bulgaria and East Germany andl signed an agreement on
Hungarian assistance to poultry farms costing $145 million.
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Other Activities
Economic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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COMMUNIST AID AND TRADE ACTIVITIES
IN LESS DEVELOPED COUNTRIES
April 1975
General
Recent Developments in Soviet Fisheries Aid*
Introduction
Since 1959 the USSR has concluded fisheries assistance agreements with 30
less developed countries (LDCs) and pledged approximately $115 million to support
fisheries development programs in LDCs (see Table 1). Most of this aid has been
channeled to African and Middle Eastern states. Although initially the program
was concerned with provision of equipment, in recent years it has emphasized
technical and research support. Moscow also is seeking client states adjacent to
major or potentially major fishing grounds. It hopes to establish joint companies
that will provide a modicum of security for continued Soviet exploitation of marine
resources throughout the world, regardless of future decisions that may emerge
from Law of the Sea deliberations.
Recent Developments
Since 1973, Moscow has added two new clients, Argentina and Portugal, as
fisheries assistance recipients. The amount of assistance will be determined after
agreement is reached on the character of the projects, but a large part of the
assistance certainly will be for technical services and training.
The USSR also has actively followed through on prior agreements with at
least 14 nations, including assignment of approximately 1,000 fisheries personnel
in LDCs. Among the most notable developments was the proposal to Indonesia in
December 1974 to reestablish the fisheries aid program abandoned in 1965. Moscow
25X1A
Note: The substance of this publication has been coordinated with the Bureau
of Intelligence and Research of the Department of State, with the Defense
Intelligence Agency, and with the Agency for International Development.
Comments and queries regarding this publication are welcomed. They may be
directed to of the Office of Economic Research, Code 143,
Extension 5291.
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has offered not only trawlers, crews, and training but also help in developing port
facilities.
Moscow encourages joint ownership of fishing companies and has approached
at least 14 LDCs about such ventures (see Table 2). It has joint agreements with
Egypt, Somalia, and South Yemen. Generally, these agreements provide for the
following:
? The ships used are of Soviet origin and are leased to the firm or purchased
by the LDC.
? Proceeds of the operation are used first to cover expenses of fishing
operations, and any residual profits are then divided equally by the two
parties.
? Ships used are jointly manned and are also used for training and research
purposes.
? A portion of the catch is delivered to the LDC for local distribution,
and the remainder is frozen and shipped to other markets.
Data on joint operations indicate that leasing and depreciation charges are
inordinately high, limiting profitability.
Moscow's interest in joint venture arrangements reflects the uncertainties of
pending decisions on a global Law of the Seas and the subsequent need for a
buffer position. Moscow, in concert with the world's other major fishing nations,
continues to push for inclusion of an optimum utilization clause* in any treaty
defining a new Law of the Sea fishing regime. LDCs with embryonic fishing
capabilities would be disadvantaged by such a provision; most at the outset would
have to permit foreign fleets to operate in their coastal water to optimize their
fishing activities through licensing arrangements, royalty payments, or joint
ventures. The Soviets view the latter as the more secure and profitable position
from which to operate.
Moscow's reliance on technical services as a major part of its assistance program
emphasizes basic economic considerations. Technical assistance is critical to
successful LDC fishing operations. It is less costly for Moscow to provide than
* Achieving maximum sustainable yield over time, consistent with certain environmental and economic
factors,
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Estimated Soviet Aid Extensions
for Fisheries Development
in Less Developed Countries
January 1960 - April 1975
Soviet Joint Fishing Venture Agreements
with Less Developed Countries
Recipient
Current Status
Total
Million
US $
115.6
Argentina
Bangladesh
Letter of Intent
Under negotiation
Africa
47.0
Egypt
Joint fishing venture under
Algeria
4.5
way in central Atlantic
Equatorial Guinea
Gambia
N.A.
N.A.
Gambia
Under negotiation
Ghana
11.2
Guinea
6.3
Indonesia
Offer
Kenya
Mauritania
N.A.
N.A.
Iraq
Agreement signed
Mauritius
5.0
Morocco
N.A.
Liberia
Offer under consideration
Senegal
6.7
Sierre Leone
N.A.
Mauritania
Company formation
Somalia
9.8
approved in April
Sudan
2.0
Tanzania
0.9
Mauritius
Offer pending
Tunisia
0.6
Middle East
37.7
Morocco
Protocol signed
Egypt
7.0
Iran
6.3
Peru
Under negotiation
Iraq
11.0
North Yemen
7.8
Somalia
Joint fishing venture
South Yemen
5.6
in operation
Syria
South and East Asia
N.A.
12.1
South
Joint fishing venture
Bangladesh
8.0
Yemen
in operation
India
2.2
Indonesia
0.3
Sri Lanka
Negotiations in limbo
Pakistan
1.6
Sri Lanka
Latin America
N.A.
18.8
Argentina
Chile'
N.A.
17.0
Peru
1.8
Europe
Portugal
N.A.
N.A.
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is equipment or onshore facilities which it furnished heretofore. Technical assistance
provides a higher return to Moscow in terms of fishing information as well as
an immediate return in profits from the ventures. Since the planned expansion
of Moscow's own fleet apparently is not being met, technical assistance in lieu
of equipment transfers places no additional strain on the USSR's overloaded
production capabilities.
The major fisheries centers have moved gradually southward in recent years,
with important implications for fisheries aid and Soviet fishing in general. Moscow
has used earlier fisheries aid to extend research on the southern reaches of the
Indian, South Atlantic, and Pacific Oceans, where over the past 18 months new
fisheries aid, including offers of joint ventures, has been extended. With the Soviet
fishing fleet already topheavy in support ships and with the need for repair facilities
closer to major fishing grounds, these joint ventures may well be the most
economically feasible way for the USSR to expand its exploitation of the world's
southern fisheries.
Prospects
Soviet fisheries aid is profitable and low cost and may be an important element
in effective fisheries exploitation in the, future. Joint ventures and technical
assistance will continue to keynote the program, which will concentrate on
recipients with access to lucrative fisheries areas.
USSR Sells Aircraft to the Central African Republic
The Central African Republic purchased two Soviet AN 24/26 passenger-cargo
aircraft, following demonstration flights conducted in Bangui early in March. The
cost of each plane probably was in the $2 million range and undoubtedly required
a substantial downpayment. Under the contract the USSR reportedly will install
fuel supply depots at outlying airports in the CAR. (Secret No Foreign Dissem)
Soviet Gold Extraction in Mali b K
The USSR and Mali have signed a contract allocating $5.7 million from earlier
credits for production of gold at the Kalana mines - a site at which the USSR
has been prospecting for several years. The new agreement provides for construction
of wells, shafts, and, presumably, a processing plant. Annual output from the mine
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is projected at 25,000 tons of ore initially, rising to 60,000 tons on completion
of the second stage (estimated to cost an additional $8.2 million). Capacity
operation will yield about 1 ton of gold annually which has a current market
value of about $5 million. (Unclassified)
Communist Credits to Mozambique
A Soviet economic delegation arrived in Mozambique at the end of March
to discuss economic cooperation, presumably a follow-up on Frelimo leader
Machel's December trip to Communist countries. He was reported to have received
firm pledges of assistance during his trip, which will be formalized into agreements
after 25 June, when Mozambique becomes independent. Some $25 million in aid
was promised - $10 million from the USSR, $5 million from East Germany, and
a total of $10 million from Czechoslovakia, Hungary, and Poland. All of the
prospective Communist donors but Hungary also agreed to provide military
hardware and training support. (Secret No Foreign Dissem)
Soviet Military Construction Activity in Somalia
25X1 B
25X1 B
The USSR has resumed work on an ammunition plant northwest of Mogadiscio
under an agreement concluded during President Podgorny's July 1974 visit to
Mogadiscio. Moscow also is constructing a new airfield. Although only recently
begun, the airfield could be operational by the end of the year, if the current
rapid rate of construction is continued. The new facility should be able to
accommodate jet fighter and transport aircraft. (Secret No Foreign Dissem)
Soviet MIG-21 Deliveries to Uganda
Uganda received - MIG-21 fighters in April, bringing the number
delivered thus far in 1975 to- The aircraft, ordered under a major arms
accord concluded with the USSR last year, are the first supersonic planes in the
Ugandan air force inventory. Moscow previously had supplied Uganda with a small
number of MIG-17s. (Secret No Foreign Dissem)
Burmese -Inquiry About Soviet Military Aircraft
In late April, Burma asked the Soviet military attache in Rangoon to provide
prices, delivery schedules, and full technical data on several types of Soviet aircraft
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(including fighters, transports, and helicopters). The information was to be used
for a comparative study of replacement possibilities for aircraft currently in use
by the Burmese air force. Burma last' signed a military contract with the USSR
in 1970, when a small amount of support equipment was ordered. (Secret No
Foreign Dissem)
Europe
Portugal Negotiating an Aid Agreement with Moscow
The Soviet press reported in late April that negotiations were almost complete
on economic aid to Portugal for an aluminum smelter and cement industry
development. Lisbon also is interested in Soviet aid in coal mining and nuclear
power generation. Earlier this year, Moscow and Lisbon signed a fisheries agreement
under which the USSR will supply equipment and training to Portuguese fishermen.
The terms and value of the Soviet aid proposals were not released. (For Official
Use Only)
Latin America
Peru Buys First Soviet Military Aircraft
25X1 B
Following Peru's failure to reach agreement on aircraft purchases from the
United States, Peru's army recently bought _helicopters from the USSR.
Although Moscow previously had supplied MI-8s to Peru for commercial use, the
recent deal represents the USSR's first sale of military aircraft to any Latin
American country. (Confidential No Foreign Dissem)
25X1 B The value of the. new contract is roughly which includes some
training, technical assistance, and spare parts. Each MI-8 reportedly
25X1 B costs about - comparable to the price charged other developing countries.
25X1 B
(Confidential No Foreign
Training will be a major element in the agreement because the army has few
qualified helicopter pilots. Some personnel already have begun a 15-week training
program in the USSR, but both Lima and Moscow are uncertain that this short
period of training will be sufficient. (Confidential No Foreign Dissem)
25X1 B
25X1 B
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The USSR hopes to follow the MI-8 deal with sales of 65-passenger MI-6
helicopters. Since mid-1973, when Moscow first sold T-55 tanks and other ground
equipment to Peru, it has tried to interest Lima in a wide range of military
equipment. Until now, only land armaments have been sold. (Confidential No
Foreign Dissem)
Near East and South Asia
Romanian President Tours Islamic States
Romanian President Ceausescu's mid-April visit to Pakistan, Jordan, and
Tunisia produced new economic agreements with Amman and Tunis. Bucharest
will increase its imports of Jordanian phosphates, conduct oil exploration, and build
an oil refinery in Jordan on a joint venture basis. Romania also agreed to participate
in agricultural projects and to study Jordan's request for vocational training schools.
Details of these accords are to be worked out during the June meeting of their
joint economic committee, established last year. (Confidential)
A joint communique with Tunisia mentions a Romanian agreement to
participate in joint ventures in oil refining, water distribution, and agriculture. The
two sides also signed an agreement to increase their trade above the $14 million
level of 1974. (Unclassified)
Moscow Pledges New Development Aid to Bangladesh
For the fourth consecutive year the USSR has provided large amounts of
new aid to Bangladesh. A $51 million agreement for Soviet assistance to
development projects was signed in Moscow early in April. The credits, repayable
over 15 years, including 3 year's grace, at 2% interest, are somewhat easier than
those usually associated with Soviet agreements. (For Official Use Only)
Moscow has allowed $7 million of the credits for commodities to finance
local costs, a departure from standard practice. The rest of the credit --
$44 million - was allocated for constructing a cotton spinning mill, a gas
liquefaction unit, an experimental cotton farm, and continued geological
prospecting. Soviet aid pledges to Dacca now total approximately $300 million,
two-thirds of which was provided after Bangladesh's independence late in 1971.
(For Official Use Only)
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Greece Cancels Philippi Power Project
Greece has scrapped its plans for a power project at Philippi because of local
farmer opposition. The original project was intended to use peat deposits at Philippi
as fuel for three 125-megawatt steam power units to be provided by the USSR.
About one-quarter of the equipment has arrived for the plant under an $89 million
contract signed in 1973. Alternative use of the equipment was allowed for in the
original contract should plans for Philippi fall through. The equipment now may
be diverted to a lignite-burning unit presently under discussion. (Unclassified)
Iranian-Soviet- West European Gas Contract Signed
The USSR, Iran, and a West European consortium have concluded a 23-year
switch arrangement for the sale of natural gas to. West Germany. Iran contracted
to deliver 1.3 billion cubic feet of gas per day to the Soviet border beginning
in 1981. The USSR will consume the gas in the Caucasus and, in turn, will deliver
approximately 1.1 billion cubic feet of Soviet gas at the Western terminal. West
Germany plans to use one-half of the gas and reexport the rest to Austria, Italy,
and France. (Confidential)
Gas prices will be linked to the price of oil at the time of delivery. The
West Europeans probably will pay Tehran directly in hard currency. The difference
in volume between the Iranian and Soviet gas deliveries probably represents a transit
fee to the USSR. (Confidential)
Iran will deliver the gas through a second pipeline to be built by Iran to
the Soviet border. Compressors for the project will be purchased from the USSR,
probably on a commercial basis. (Confidential)
Results of Iraqi Leader's Visit to Moscow
The increasing strains in Iraq's military relations with the USSR probably were
a major issue of mid-April talks held in Moscow by Iraq's Saddam Husayn. Baghdad
appears to be displeased with the performance of its Soviet MIG-21 s. Iraq reportedly
has canceled some if its Soviet military contracts and in at least one instance refused
to accept a delivery of Soviet military cargo. There is no indication that these
differences were resolved during the April meeting. (Secret No Foreign Dissem)
Iraq's dissatisfaction with the volume of Euphrates River waters flowing from
Syria undoubtedly was discussed in the mid-April talks. Moscow apparently refused
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to play an active role in settling the dispute between the two major Soviet aid
clients. Last year, the USSR attempted to mediate the dispute at the technical
level, but Soviet recommendations on division of water were rejected by both Syria
and Iraq. Husayn's visit also was designed to reduce Soviet-Iraqi tensions caused
by Iraq's growing preference for Western materials and expertise. An agreement
on the peaceful uses of atomic energy was signed, but details were not announced.
(Confidential)
Iraq Signs Economic Protocols with East European Countries
The seventh session of the joint Iraqi-Bulgarian economic committee meeting
ended with the signing of a protocol on the uses of some $23 million still
outstanding under credits provided in 1967 and 1970. Most of the aid will go
for food production and processing. The two sides also signed an agreement to
increase trade turnover to $140 million annually. Crude oil as in the past probably
will bulk large in Iraq's exports to Bulgaria. In 1974, Sofia took $50 million worth
of Iraqi oil. (Secret)
A similar meeting with East Germany led to an agreement to increase activity
under East Germany's $84 million 1969 credit to Iraq. A new 5-year trade
agreement was signed, as well as an oil agreement. In 1974, East Germany agreed
to import 40,000 b/d of Iraqi oil during 1974-76, and the new agreement probably
set the price and delivery schedules for 1975. (Secret No Foreign Dissem) ~.-
In addition, Hungary signed an agreement to build poultry farms in Iraq at
a total cost of $145 million. Financing arrangements were not announced.
(Unclassified)
OTHER ACTIVITIES
Economic
Africa
General. Soviet Foreign Minister Kosygin is scheduled to visit Libya and
Tunisia in May. (Confidential)
Algeria. The Algerian Minister of Agriculture traveled to China at the invitation
of Chinese officials, probably to discuss further Chinese assistance to agricultural
and forestry development. China is. providing limited agricultural assistance under
a $50 million aid agreement. (Unclassified)
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Gambia. President Jawara is scheduled to visit China in June to discuss
allocation of the $16 million Chinese credit extended earlier this year. Peking has
tentatively agreed to finance road construction, agricultural development, a hospital,
and a sports complex. (For Official Use Only)
Guinea. Guinea's Minister of Mines and Geology announced in April that the
USSR is to build a hydroelectric complex and to assist in establishing a new bauxite
mine and aluminum plant at Gaoual, near the Equatorial Guinea border. This is
the first indication that the USSR was considering financing a second aluminum
project in Guinea. There is no evidence that a formal agreement has been signed
on these projects. (Confidential)
Under the Soviet-Guinean trade protocol for 1975, Guinea will substantially
increase bauxite exports to the USSR from the Soviet-financed Kindia complex.
In April, bauxite exports from Kindia reached one million tons. (Unclassified)
Libya. A Romanian deputy minister of foreign trade was in Tripoli to discuss
the establishment of joint projects in Arab and African countries. (Unclassified)
Libyan Prime Minister Jallud signed agreements on long-term trade and
economic and industrial cooperation during a visit to East Berlin in April. No details
were announced. (Unclassified)
Morocco. A Chinese mission composed of experts in equipment and industrial
machinery was in Casablanca to explore possibilities of sales to industrialization
projects in Morocco. (Unclassified)
The Czech Minister of Foreign Trade arrived in Casablanca on 26 April.
(Unclassified)
Togo. During April, China agreed to provide agricultural equipment valued
at $0.5 million as a grant. A similar gift of equipment worth $0.4 million was
made in December 1973. (For Official Use Only)
Tunisia. Bulgaria and Tunisia signed a protocol calling for Bulgarian assistance
to an agricultural complex in Matior to produce grain, vegetables, and livestock.
(Unclassified)
The Tunisian Prime Minister traveled to Peking in April to discuss a speedup
in implementation of a $40 million credit extended by China in 1972. The two
sides agreed to begin construction of an irrigation canal, already surveyed by the
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