AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD, JUNE 1975

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01098A000500120006-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 15, 2016
• Document Release Date: February 25, 2004
• Sequence Number: 6
• Publication Date: July 1, 1975
• Content Type: REPORT

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Secret
Aid and Trade Activities of Communist Countries
in Less Developed Areas of the Free World June 1975
Secret
ER RP 75-21
July 1975
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CONTENTS AND SUMMARY OF EVENTS
(June 1975)
Highlights
Communist-OPEC contacts accelerated during June. East Germany, Poland,
and the USSR concluded their first economic agreements with Kuwait; the Soviet
agreement 'reportedly provided a large Kuwaiti loan. Iran transferred US $580
million in funds pledged earlier this year to Bulgaria and Romania as advance
payments for agricultural products. Brazil received its record Communist aid
commitment-$150 million from Romania for steel industry development.
Page
General
Supplement to ER IR 75-16 (1 January-30 June 1975) . . . . . . . . . . . 1
Communist-LDC Petroleum Activities in First Half 1975 . . . . . . . . 5
Africa
Zaire Receives First Chinese Military Equipment . . . . . . . . . . . . . . 13
China delivered tanks, antiaircraft guns, and other equipment to Zaire
under a military grant aid agreement signed earlier this year.
Europe
Portugal Concludes First Agreements with Romania . . . . . . . . . . . . . 13
Portugal's first economic cooperation agreement with Romania envisions
Romanian assistance to Portuguese industry, and a trade accord calls for the
delivery of grain and provision of agricultural technicians.
Romania's President Ceausescu Tours Latin America . . . . . . . . . . . . 13
The highlight of the Romanian presidential tour was the conclusion of a
$150 million credit agreement and two large commercial contracts with
Brazil.
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Mexico Negotiating First Long-Term Soviet Credit . . . . . . . . . . . . . 14
A Mexican official will go to Moscow soon to negotiate 10-year Soviet
credits for hydroelectric equipment.
Near East and South Asia
Status of Iranian Credits to Eastern Europe . . . . . . . . . . . . . . . . . 14
By late June, Iran had made advance payments totaling $580 million to
Romania and Bulgaria for agricultural products.
Kuwait Signs Economic Agreements with Communist Countries . . . . . . 14
The USSR, East Germany, and Poland concluded economic agreements
with Kuwait during June.
Other Activities
Economic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Military ................................... 18
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AID AND TRADE ACTIVITIES
OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS
OF THE FREE WORLD
Supplement to ER IR 75-16 (1 January-30 June 1975)
During the first half of 1975, Communist countries extended new economic
and military assistance totaling about $955 million to less developed countries -
about $575 million in economic aid and $380 in military aid. East European
economic commitments, bolstered by $193 million in new Romanian credits,
exceeded the Soviet effort.' Aid was distributed more widely than during the
comparable period last year, as China turned from its traditional preoccupation
with Africa to conclude aid agreements with countries in all Third World areas.
Funds from wealthier oil producers began to flow into Communist economies
during the first half of the year. Iran transferred $580 million to Bulgaria and
Romania against future delivery of products needed by Iran, and Kuwait sponsored
bond issues on behalf of Romania and Hungary to the value of $140 million.
Iran also agreed in principle to finance a paper complex in the USSR, and Kuwait
apparently agreed to a large loan to the USSR. The Communist search for OPEC
financing, which began late in 1974, intensified during the first six months of
the year. Hungary, East Germany, and Poland, encouraged by their Communist
partners' success, directed financial appeals to Kuwait. Budapest is negotiating for
$300 million of Kuwaiti assistance, and Poland and East Germany concluded
agreements that may result in the provision of Kuwaiti oil funds. Kuwait also was
considering equity participation in a $1 billion petrochemical complex in Romania.
Egyptian and Indian disenchantment with Moscow's economic policies
intensified during the year. Cairo has criticized Soviet delays on rescheduling
repayments on military debt, while New Delhi has protested a Soviet decision to in-
crease the value of the ruble relative to the rupee. New Delhi estimates that the
Soviet action will mean a $500 million increase in repayments for previous aid.
In spite of these frictions, India signed its largest military accord ever with
the USSR, valued at $200 million. Moreover, Moscow also resumed fighter aircraft
1. Negotiations under way with Argentina and Turkey at the end of June, however, should quadruple Soviet
commitments above the half-year level.
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deliveries to Egypt in February and finalized a major military agreement with Libya
during Soviet Premier Kosygin's visit in May.
Communist countries pledged $575 million in new economic aid to 20 Third
World countries during the first six months of 1975 (see Table 1), almost matching
last year's first-half commitments.
Communist Economic Aid Extended to Less Developed Countries
1 January-30 June 1975
Eastern Europe
Bul- Czecho- East Hun-
Total USSR China Total garia slovakia Germany gary Poland Romania
Total 574.7 188.0 164.7 222.0 .... 7.4 5.0 13.3 3.3 193.0
Africa 158.9 73.1 58.8 27.0 .... 3.4 5.0 3.3 3.3 12.0
Chad 0.8 0.8 .... .... .... .... .... ....
Congo 12.0 N.A. .... 12.0 .... .... .... .... .... 12.0
Ethiopia 0.1 0.1 .... .... .... .... .... .... .... ....
Gambia 16.1 .... 16.1 .... .... .... .... .... .... ....
Guinea Bissau 0.5 0.5 .... .... .... .... .... ....
Mali 2.4 .... 2.4 .... .... .... .... .... ...
Morocco 35.0 .... 35.0 .... .... .... .... .... .... ....
Mozambique 29.3 10.0 '4.3 15.0 .... 3.4 5.0 3.3 3.3 ....
Somalia 62.2 61.7 0.5 .... .... .... .... .... .... ....
Togo 0.5 .... 0.5 .... .... .... .... ....
East Asia 46.9 .... 15.9 31.0 .... .... .... .... .... 31.0
Laos 1.2 .... 1.2 .... .... .... ....
Philippines 45.7 .... 14.7 31.0 .... .... .... .... .... 31.0
Latin America 164.0 .... 10.0 154.0 .... 4.0 .... .... .... 150.0
Brazil 150.0 .... .... 150.0 .... .... .... .... .... 150.0
Ecuador 4.0 .... .... 4.0 .... 4.0 .... .... .... ....
Guyana 10.0 .... 10.0 .... .... .... .... .... .... ....
Near East and
South Asia 204.9 114.9 80.0 10.0 .... .... .... 10.0 .... ....
Bangladesh 61.0 51.0 .... 10.0 .... .... 10.0 .... ....
India 6.8 6.8 .... .... .... .... .... .... ....
Nepal 80.0 .... 80.0 .... .... .... .... .... .... ....
Pakistan 0.1 0.1 .... .... .... .... .... .... .... ....
Sri Lanka 57.0 57.0 .... .... .... .... .... .... .... ....
East European commitments at midyear once again surpassed those of the
USSR, sparked by continued Romanian use of its aid program to develop new
markets for machinery and equipment, as well as to secure new sources of raw
materials. Romania accounted for more than 85% of new East European aid pledges
so far in 1975.
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Romania's initiatives took the form of a $150 million credit to Brazil for
steel industry development, a commercial contract to sell Brazil $30 million worth
of petroleum exploration equipment, and a $31 million credit agreement with the
Philippines for delivery and installation of a thermal powerplant. The Romanian
credit accord is Manila's first with a Communist country. Total Romanian pledges
to the Third World now exceed $1.5 billion, most for financing equipment
purchases. Hungary made available its first credit to Bangladesh.
Moscow's economic aid focused on old clients. Somalia received the largest
Soviet assistance package to sub-Saharan Africa since 1969 - $60 million for
refugee resettlement and fisheries development. An unspecified portion of this aid
is to be provided as grants. A further $1.7 million worth of grain was delivered
to Somalia as a gift. Bangladesh and Sri Lanka obtained credits in the $50 million
range for industrial projects. The agreement with Bangladesh contains provisions
for some local cost financing, a departure from standard Soviet practice.
Mozambique was promised $10 million for development activity after 25 June,
its independence day.
In February, Iran and the USSR concluded a major economic agreement, under
which the USSR may accept its first development credit from an LDC. Tehran
agreed in principle to provide credits for a paper complex in the USSR. Iran will
take paper products in repayment. In turn, the USSR will continue work under
its current construction program in Iran and will participate in a number of new
projects under existing agreements.
Chinese pledges were somewhat higher than last year's first-half level and
were more widely distributed. Four countries accepted their first Chinese assistance.
China became Nepal's major development aid donor in February with an $80
million grant for construction of a 250-mile highway. China has been active in
Nepalese economic development for more than 20 years. Peking rounded out its
North African aid effort with its first credit to Morocco - $35 million for
construction of a sports complex in Rabat. Gambia and Mozambique also joined
China's aid roster, accounting for most of the remainder of Peking's African
commitments. The balance was for commodity shipments to old clients.
The Philippines received its first assistance from China in the form of a 33%
reduction from the world market price of Chinese oil to be imported by Manila
this year. This subsidy will amount to almost $15 million in 1975.
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Military Aid
The $382 million in Communist military aid extended to the LDCs during
the first half of 1975 (see Table 2) raised military aid commitments since the
beginning of 1955 to more than $14 billion.
Table 2
Communist Military Aid Extended to Less Developed Countries
January-June 1975
Million US $
Total
Total
382
USSR
342
China
2
Total
38
Bul-
garia
N.A.
Czecho-
slovakia
8
Hungary
13
Poland
17
Africa
22
22
....
....
....
....
....
....
Congo
17
17
....
....
....
....
....
Nigeria
Negl.
....
....
....
Negl.
....
....
Somalia
5
5
....
....
....
....
....
....
Latin America
30
30
....
....
....
Peru
30
30
....
....
Near East and
South Asia
330
290
2
38
N.A.
8
13
17
Afghanistan
85
85
....
....
....
....
....
Ept
2
....
....
2
....
1
1
India
216
200
....
16
....
....
....
16
Iran 5 .... .... 5 .... S .... ....
Iraq 13 .... .... 13 .... 12 1
North Yemen 5 5 .... N.A. N.A. .... .... ....
Pakistan 2 .... 2 .... .... ....
Syria 2 .... .... 2 .... 2 .... ....
The USSR remained the top Communist donor, accounting for 90% of new
military commitments. India, Afghanistan, and Peru were Moscow's principal clients.
In February, the USSR and India signed a record $200 million agreement for naval
equipment, tanks, surface-to-air missiles, antisubmarine-warfare aircraft, artillery,
and spares. Afghanistan initiated an agreement for $85 million for tanks, armored
personnel carriers, surface-to-air missiles, small arms, artillery, and support
equipment to modernize Kabul's Soviet-equipped military forces. A $30 million
deal to supply helicopters to the Peruvian army represents Moscow's first sale of
military aircraft to Latin America. Peru, which had purchased Soviet T-55 tanks
and other ground forces equipment in 1973, remains the USSR's only Latin
American arms customer.
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In addition to agreements to provide military equipment on credit, the USSR
negotiated additional arms sales to Libya, bringing the value of contracts under
a 1974 agreement to $730 million. Libya purchases Soviet arms on commercial
terms.
The value of Communist deliveries of military equipment to the Third World
during the first half of 1975 totaled about $625 million, up somewhat from the
same period last year. Aircraft deliveries highlighted Communist arms transfers.
Moscow resumed shipment of fighter aircraft to Egypt, and the first Soviet MIG
aircraft moved into the inventories of the radical regimes in Libya and Uganda.
Since February, 50 aircraft have been delivered to Egypt
including 26 MIG-23s, 18 SU-20s, 5 MIG-21s, and one helicopter. Deliveries are
expected to total 68 aircraft and should be completed soon. Libya became the
fourth Arab country to receive the advanced MIG-23 jet with the arrival of up
to 21 of the aircraft in May. The USSR also shipped antiaircraft guns and possible
surface-to-air missiles to Tripoli. Iraq received additional MIG-23s, along with
Osa-class guided missile patrol boats and Zhuk-class patrol boats. Uganda received
25 Soviet MIG-21 jet fighters this year, the first supersonic aircraft in the Ugandan
air force inventory. The aircraft were ordered under a major arms accord concluded
last year.
Communist-LDC Petroleum Activities in First Half 19752
By the end of June 1975, the USSR and Eastern Europe had committed
$1.6 billion of aid to 27 LDCs for development of their national oil industries.
About one-half of this aid. has been drawn. More than 85% has gone to Middle
Eastern and South Asian countries, particularly India, Iraq, Syria, and Afghanistan.
Among Communist donors, the USSR topped the list, accounting for about
two-thirds of the total. (see Table 3).
The thrust of the aid programs varies widely among the donors. Moscow has
concentrated its aid on exploration and production; East European countries have
stressed construction of processing facilities. To support these aims, technicians
have been sent to recipient countries - at least 3,000 are stationed abroad in 1975.
Most come from the USSR; Algeria and Iraq have the largest contingents.
2. For Communist-LDC activities in 1974, see the Monthly Report dated February 1975. Comments and
queries regarding this article are welcome. They may be directed to f the Office of Economic
Research,
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Estimated Communist Aid to Third World Oil Industries
1956-June 1975
Total
USSR
Eastern
Europe
Total
USSR
Eastern
Europe
Total
1,573.2'
1,051.3
521.9
780.0
642.8
137.2
Africa
48.9
37.0
11.9
31.7
29.4
2.3
Algeria
18.6
18.6
....
15.2
15.2
....
Ethiopia
11.7
11.7
....
11.7
11.7
....
Ghana
0.9
....
0.9
0.9
....
0.9
Mali
2.0
2.0
....
1.0
1.0
....
Morocco
1.7
0.7
1.0
1.5
0.5
1.0
Nigeria
6.0
2.0
4.0
1.0
1.0
....
Somalia
2.0
2.0
....
....
....
....
Sudan
3.0
....
3.0
0.4
....
0.4
Tunisia
3.0
....
3.0
....
....
....
East Asia
29.8
....
29.8
....
....
....
Indonesia
29.8
....
29.8
Latin America
122.5
64.0
58.5
47.3
39.3
8.0
Argentina
88.3
43.3
45.0
36.9
33.9
3.0
Bolivia
0.7
0.7
....
0.4
0.4
....
Brazil
13.0
5.0
8.0
10.0
5.0
5.0
Chile
20.5
15.0
5.5
....
Middle East
823.4
438.0
385.4
367.6
264.8
102.8
Egypt
138.3
87.3
51.0
103.3
81.3
22.0
Iran
81.0
77.0
4.0
77.0
77.0
....
Iraq
299.4
195.7
103.7
100.6
64.0
36.6
Jordan
2.0
2.0
....
....
....
North Yemen
1.0
1.0
....
0.5
0.5
....
South Yemen
3.0
1.0
2.0
0.6
0.5
0.1
Syria
274.5
49.8
224.7
61.4
17.3
44.1
Turkey
24.2
24.2
....
24.2
24.2
....
South Asia
548.6
512.3
36.3
333.4
309.3
24.1
Afghanistan
149.6
149.6
....
119.3
119.3
....
Bangladesh
16.2
16.2
....
12.4
12.4
....
India
321.7
300.6
21.1
161.4
142.3
19.1
Pakistan
59.6
44.4
15.2
40.1
35.1
5.0
Sri Lanka
1.5
1.5
....
0.2
0.2
....
1. In addition, China has provided credits totaling under $5 million to the Congo, Nepal, Somalia, and
South Yemen for oil surveys.
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Aggressive Soviet and East European action to locate and develop additional
sources of crude supplies through the provision of aid repayable in oil has tapered
off since 1973. With wider marketing opportunities and higher oil and gas prices,
LDC oil producers have been resisting long-term barter arrangements. Consequently,
no new agreements for Communist-LDC oil development aid were signed in 1975.
The USSR and Lebanon continued to negotiate their first oil and gas prospecting
accord.
Against this background, Communist countries are focusing on implementing
earlier accords, particularly those with Iraq. For example, the USSR began work
in January on the 375-mile Baghdad-Basra petroleum products pipeline. Moscow
is providing $11 million worth of technical assistance for the project under 1971
credits. In resource development, work on expanding the capacity of Iraq's North
Rumaila oilfield to at least 800,000 barrels per day (b/d) will be completed later
this year. This work is being done under 1969 credits. In South Asia, oil was
struck at the first Soviet exploratory well sunk in Sri Lanka. About 100 Soviet
technicians are conducting oil and gas exploration in that country under a 1973
credit.
Among East European countries, Romania is the most active donor of oil
development aid. Bucharest now accounts for nearly three-fourths of the $520
million committed by Eastern Europe. Romanian technicians arrived in January
to start work to augment refinery capacity at Banias in Syria under a $180 million
credit extended in 1972. Earlier in 1975, Bucharest gained an oil concession from
Syria - the first known Communist entry into this Western-type arrangement.
Romania also has applied for an oil concession from Lebanon, where it has been
conducting surveys on a commercial basis.
The diversified character of Romania's programs is underscored by an April
agreement with Jordan to explore for oil and to build a refinery on a joint venture
basis. At the same time, 60 Romanian technicians began to install an additional
pipeline to carry crude to Jordan's only refinery. Romania and Ecuador completed
agreements in June for a joint oil exploration company to operate at several
locations in Ecuador. The company also plans to participate in future pipeline
construction. Similar proposals have been presented to several Latin American
countries, but Ecuador is the first to take up the Romanian joint venture offer.
Bucharest also agreed in June to send Brazil oil equipment under a $30 million
commercial credit.
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China, which has provided several LDCs with small amounts of oil development
aid, is now pressing to acquire Western oil technology from the Third World. In
January, a high-level Chinese delegation visited Venezuela, Mexico, and Trinidad
and Tobago to discuss the exchange of oil industry technicians skilled in offshore
oil exploration and development.
Communist Purchases of LDC Oil and Gas
In the first six months of 1975, Communist purchases of crude from LDCs
dropped to about 120,000 b/d, continuing the decline that began in 1974 (see
Table 4). The fall-off reflects higher oil prices and LDC demands for hard currency
payment. A sharp drop in East European imports to only about 70,000 b/d
accounted for all of the decline. If this trend continues in the second half, East
European purchases in 1975 will be 50% below those in 1974.
Faced with hard currency shortages, Eastern Europe probably will rely on
the Middle East for less than 15% of its 1975 oil requirements. Soviet oil, which
is sold to Eastern Europe3 at an equivalent of about $7 per barrel, is still less
costly than the nearly $11 per barrel charged by Middle Eastern countries. If East
European purchases from the Middle East continue to be cut back, Moscow
probably will be forced to make up the shortfalls at the expense of its lucrative
hard currency oil trade with the West - $2.6 billion in 1974.
Soviet oil purchases from the Middle East - mainly on a barter basis from
Iraq - amounted to only about 50,000 b/d in the first half of 1975. To help
meet East European needs, imports on Soviet account probably will increase later
this year beyond the 88,000 b/d4 of oil bought from Arab states in 1974. Moscow
also is seeking long-term suppliers for Eastern Europe. Kosygin probably pressed
the Libyans on this subject during his May visit. Price disputes with Libya have
precluded deliveries under sizable barter accords signed with most East European
countries in 1974. At the same time, the USSR may have reached preliminary
agreement with Tripoli to buy large amounts of Libyan crude in 1975 in exchange
for military and industrial equipment. Tripoli is more likely to accept barter accords
to boost oil sales now that oil revenues have fallen. Moscow also has offered to
barter military equipment for Kuwaiti oil.
The volume of Soviet gas imports from Afghanistan and Iran in 1975 will
rise slightly, to nearly 450 billion cubic feet. In the wake of 1974 price increases,
3. Romania, a net oil exporter until this year, does not import on from the USSR.
4. Including 78,000 b/d from Iraq, 6,000 b/d from Syria, and 4,000 b/d from Egypt.
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Communist Oil Purchase Agreements
Signed with Middle Eastern and North African Countries
January-June 1975
Supplier/Buyer
Month
Signed
Duration
of Agree-
ment
F.O.B.
Price
per Barrel
(US $)
Barrels
per Day
in 1975
Payment Terms
Total
121,970
Algeria
13,000'
Bulgaria
N.A.
1975
N.A.
5,000
N.A.
USSR (for
May
1975
11.75
8,000
Under a $54 million Soviet
Yugoslavia)
credit to Yugoslavia.
Egypt
8,400
Bulgaria
N.A.
1975
N.A.
5,000
N.A.
USSR
Apr
1975
N.A.
3,400
N.A.
Iran
11,2602
Czechoslovakia
Feb
1975
N.A.
2,000
Possible repayment for 1969
Hungary
Apr
1975
10.45
1,200
Czechoslovak credit.
N.A.
Romania
Feb-
1975
N.A.
8,060
N.A.
Iraq
May
62,6603
Czechoslovakia
Jan-
1975
11.12
3,800
Part of which is aid repay-
May
Feb
1976
N.A.
....
ment for Czechoslovak-built
Basra refinery.
6,000 b/d for delivery in 1976.
Mar
1975
11.00
1,600
Hard currency.
East Germany
Feb
1975
10.43
6,000
Under a 3-year agreement con-
Hungary
Jan-
1975
10.40
- 10.95
9,660
cluded in 1974.
Barter under a 5-year trade
Romania
Apr
Jun
1975
N.A.
1,600
agreement concluded in 1974.
N.A.
USSR
Jan
1975
10.88
40,000
Shipments on Soviet account
Kuwait
20,000
to third countries; initial arrange-
ments made under 1972 barter
contract.
Romania
Jan-
1975-77
10.36
20,000
Hard currency, 60-day credit,
Apr
purchases of 22 million barrels
of oil over a 3-year period.
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Communist Oil Purchase Agreements
Signed with Middle Eastern and North African Countries
January-June 1975
(Continued)
Supplier/Buyer
Month
Signed
Duration
of Agree-
ment
F.O.B.
Price
per Barrel
(US $)
Barrels
per Day
in 1975
Payment Terms
Libya
N.A.
Jun
1975
N.A.
N.A.
Barter for equipment and serv-
Syria
6,650
ices for oil development.
Bulgaria
N.A.
1975
N.A.
5,000
N.A.
Romania
Feb
1975
10.00
1,650
Probable downpayment under
1974 aid agreement to build
Banias refinery.
1. In 1975 the PRC is scheduled to receive 2,000 b/d of Algerian crude at $12.20 per barrel under their 1974 accord.
2. Bulgaria plans to import 10,000 b/d of Iranian crude in 1975, but an agreement apparently has not been reached.
3. The PRC is scheduled to receive 1,200 b/d of crude from Iraq in 1975 under their 1974 agreement; Bulgaria plans to
import 20,000 b/d of Iraqi crude in 1975, but an agreement apparently has not been reached.
the Soviet import bill for natural gas should increase 20%, to approximately $240
million. In April the USSR, Iran, and a West European consortium concluded an
arrangement for gas sales to West Germany and several other West European nations.
Iran will provide an additional 470 billion cubic feet of gas annually at the Soviet
border beginning in 1981. Deliveries will be made through a new pipeline to be
built by Tehran to its border with the USSR. Moscow will consume at least part
of the Iranian gas, substituting Soviet gas at the Western terminal.
Communist Oil Sales to the LDCs
In the first half of 1975, Moscow sold 105,000 b/d of oil to 14 LDCs -
already surpassing the 100,000 b/d shipped to these countries in 1974. India
(24,000 b/d) and Brazil, Greece, and Portugal (20,000 b/d each) are the largest
purchasers. In its oil trade with the LDCs, Moscow is increasingly using Middle
Eastern crude obtained under barter arrangements. This oil is resold at world market
prices for hard currency.
The People's Republic of China is negotiating to expand its small LDC oil
market outside East Asia to include Brazil. Oil provides Peking with a desirable
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commodity to balance its large trade deficit with that country. Laos, the Philippines,
and Thailand, China's only other commercial Third World oil clients, will receive
a total of 16,000 b/d of oil in 1975 on a concessional basis. China's total oil
exports in 1975 should grow to 195,000 b/d from 135,000 b/d in 1974, with
Japan taking the lion's share. This would provide hard currency earnings of about
$800 million, up from $450 million last year. These earnings have helped to offset
the impact of shrinking world markets for traditional Chinese exports and rising
prices for imported machinery.
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Monthly Report, June 1975
Zaire Receives First Chinese Military Equipment
China delivered six tanks, antiaircraft guns, and other equipment to the Zairian
armed forces in early June. These are the first deliveries under a military grant
aid agreement signed earlier this year
Europe
Portugal Concludes First Agreements with Romania
Portugal concluded its first economic cooperation and trade agreements with
Romania in mid-June. The economic agreement envisions Romanian assistance for
the development of the Portuguese mining, metals manufacture, power, and
transportation industries. Under the trade accord, Romania will deliver 400,000
tons of corn to Lisbon during the remainder of 1975 as well as provide agricultural
technicians. Portuguese exports under the new agreements were not announced.
Although export of Romanian military equipment was discussed no agreement
was signed.
Romania's President Ceausescu Tours Latin America
Romania's President Ceausescu visited Brazil, Mexico, and Venezuela in June
for wide-ranging discussions on a number of economic and commercial matters.
Several agreements were signed with Brazil that will substantially upgrade economic
relations between the two countries. The major agreement calls for $150 million
in Romanian credits for the purchase of equipment for the Brazilian steel industry.
The credits are repayable over 12 years at 8%. Commercial contracts signed at
the same time should also contribute to a sizable increase in trade over the current
$45 million level. Brazil signed contracts to purchase $30 million worth of
Romanian oil exploration equipment on short-term credits and to sell 25 million
tons of iron ore over 10 years, beginning in 1976. At current prices the ore contract
is worth well over $300 million. The two sides also signed a long-term trade and
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payments agreement, a maritime transport accord, and an economic agreement
specifying Romanian assistance to the mining and pharmaceutical industries.
Negotiations in Venezuela and Mexico produced less dramatic results.
Agreements signed in Caracas called for cooperation in petroleum development and
mining, with details to be announced later. Discussions in Mexico centered on the
development of nuclear power and joint venture tourism projects.
Mexico Negotiating First Long-Term Soviet Credit
Mexico is considering a Soviet offer of credits for hydroelectric equipment,
repayable over 10 years at 3% interest. A Mexican official was due in Moscow
in late June to negotiate final arrangements. Any agreement would crown years
of Soviet efforts to interest Mexico in the use of Soviet credit facilities for financing
power generation equipment.
Status of Iranian Credits to Eastern Europe
By late June, Iran had made advance payments of $580 million to Romania
and Bulgaria for commodities needed by Iran. About $420 million went to
Bucharest under an agreement signed in December 1974 - Iran's first major
economic assistance to a Communist country. The credit is to be repaid in
agricultural and other products. Sofia received $160 million for development of
agricultural and livestock industries to produce goods for export to Iran. Both
credits probably carry commercial-type terms.
Tehran is pursuing other credit arrangements with East European countries.
The Polish-Iranian industrial subcommittee held talks in mid-June on expanding
economic cooperation. Iran's recent offer of a $100 million credit to help establish
a paper plant in Poland probably was discussed as was implementation of $100
million of outstanding Polish credits to build sugar mills, textile plants, and other
projects in Iran. Repayment will be largely in oil.
Kuwait Signs Economic Agreements with Communist Countries
During June, Kuwaiti officials negotiated several economic agreements that
will result in an increased flow of Kuwaiti funds to Communist countries.
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early in the month arranged a large
a Soviet banking delegation which arrived
By mid-month, Poland signed an economic and technical cooperation
agreement. Polish officials later expressed satisfaction at the loan negotiated with
Kuwait during the visit, although the value and terms were not announced. The
success of other East European countries in negotiating Kuwaiti and Iranian
financing has sharpened Warsaw's interest in competing for surplus Arab funds.
East Germany announced the conclusion of long-term trade and economic
agreements on 20 June. Under the trade accord, equipment will be delivered for
Kuwait's electrification program; the economic agreement calls for cooperation in
industry and investment. At the end of the month, Kuwait was still studying a
Hungarian request for a $300 million loan.
Over the past year, East European countries have received almost $720 million
in OPEC funds. Kuwait has provided $140 million of this amount in the form
of bond subscriptions on behalf of Hungary and Romania. Kuwait also has
discussed participation in a $1 billion joint-venture petrochemical complex in
Romania.
OTHER ACTIVITIES
Economic
Africa
Congo. Romania will deliver tractors and other agricultural machinery to
Congo to assist in mechanization of agriculture under a protocol signed recently.
Romania also is providing financial assistance for iron ore exploitation in Congo.
Libya. Consultations between the Polish Deputy Premier and high-level Libyan
officials resulted in an agreement on increased Polish participation in Libyan
development projects and the sale of Libyan oil to Poland. Details on the new
agreement were not announced. Among Communist countries, Poland is the most
actively involved in Libyan development projects, with an estimated 2,500 Polish
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laborers and technicians present in Libya. To date, Libya has paid cash to Polish
contractors, but the new oil agreement suggests that these services will now be
paid in oil. Decreased oil production and sales to all customers have cut heavily
into Libyan revenues and have forced Tripoli to seek outside financing for
development.
Gambia. The Gambian President traveled to Peking to discuss specific projects
to be financed under a $16 million Chinese credit extended earlier this year.
Somalia. Romania signed a protocol to assist Somalia in the development of
animal husbandry and fodder processing. The terms of the agreement were not
announced.
Tanzania. China signed a two-year agreement to train Tanzanians in the
operation of machinery used by China during a recently completed program of
water well drilling.
Argentina. A Soviet mission arrived in Argentina in mid-June to continue
studies of a hydroelectric project on the Middle Parana River. Moscow hopes to
obtain a contract to supply turbines for the $2 billion project.
Colombia. Bogota broke into the Cuban market with the sale of 10,000 tons
of rice in June. Additional sales to Cuba were to be discussed by a Colombian
mission that departed for Havana late in June.
Ecuador. Ecuador announced plans to send its first trade mission to China
in July. The delegation is to sign a trade agreement and negotiate the establishment
of reciprocal missions. The trade agreement has been under negotiation for almost
a year.
Trinidad and Tobago. A petroleum mission from Trinidad and Tobago arrived
in China, presumably to discuss the exchange of expertise between the petroleum
industries of the two countries. Earlier this year, Peking proposed the exchange
of oil technology, presumably with the aim of improving the Chinese performance
in exploration and exploitation of offshore deposits.
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The Prime Minister of Trinidad and Tobago arrived in Moscow late in June
for discussions with Soviet officials on technical cooperation in the oil industry,
fisheries, agriculture, and trade.
General. The Arab-Soviet Chamber of Commerce held its first meeting in
Moscow on 2 June to examine cooperation in the irrigation and development of
and lands. The organization was established in 1973 under an agreement between
the Soviet Chamber of Commerce and Industry and a union of Arab Chambers
of Commerce to promote expansion of commercial cooperation.
Egypt. East Germany completed work on a transformer station that will
provide the industrial region of Alexandria with power from Aswan. East Germany
has completed 30 transformer stations in Egypt since the early 1960s, probably
under credit.
India. The USSR and India have reached agreement on Soviet construction
of a subway in Calcutta, a project which has been under negotiation for several
years.
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Iran. Iranian trade turnover with Hungary and East Germany is planned at
$225 million over the next year under protocols signed in June. Although Iran
is capable of expanding non-oil exports to meet this goal, prospects are not bright
that the two East European countries, particularly East German will increase
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Iraq. Iraq has ratified a protocol calling for the establishment of a ioint fishing
company with the USSR.
Sri Lanka. Sri Lanka's Minister of Irrigation discussed further Chinese
assistance to the Gen Ganga irrigation and flood control project during a visit to
Peking. Chinese activity on the project is being financed under a 1972 credit of
$44 million. F
Syria. In mid-May, Syria announced the ratification of a $20 million credit
agreement with the USSR for agricultural and petroleum development projects.
The agreement probably covers allocation of funds under 1972 and 1974
agreements.
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Military
Congo. Congo and East Germany signed a military cooperation agreement in
Brazzaville at the conclusion of a visit by an East German military delegation in
late May. In 1973 the two countries signed a small agreement for 500 East German
rifles, delivered to the Congo later that year.
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