WEEKLY SUMMARY SPECIAL REPORT COMMUNIST AID TO THE THIRD WORLD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500050013-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 16, 2016
• Document Release Date: November 26, 2004
• Sequence Number: 13
• Publication Date: March 16, 1973
• Content Type: REPORT

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Secret
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Communist Aid to the Third World
CIA
DOCUMENT PAR
SfVICES
Elk Secret
UUFY
N4 654
DD NOT
I3ESTRIJY 16 March 1973
No. 0361/73A
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COMMUNIST AID TO THE THIRD WORLD
Summary
The Communist countries continue to employ foreign aid as a major instrument for
expanding their political and commercial interests in the Third 1AW,irld. Nearly $2.3
billion of new economic and military aid was committed in 1972. Of this figure
Moscow contributed nearly $900 million despite its setback in Egypt. The East
European countries, finding increasing commercial reasons for providing new aid,
made their largest annual commitments last year. China extended aid to a wide range
of recipients, focusing on Africa.
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Although political considerations, at least for Moscow and Peking, are the
primary motivation for dispensing aid, economic factors are becoming more signifi-
cant. Eastern European countries are using aid credits to expand exports of machin-
ery and equipment. Moscow also finds aid recipients useful as markets and as sources
of raw materials and consumer goods. Under aid and commercial agreements with
less developed countries, the quantities of nationalized oil purchased by the USSR
and Eastern Europe have risen sharply. Soviet purchases of products like steel,
industrial equipment, and general consumer goods are also increasing. Most of these
products are from Soviet-built plants in the developing countries.
Although their experience in Egypt last year will make the Soviets more
cautious, they will certainly continue to use aid in 1973 to further their political and
economic interests in the Third World. So will the East Europeans and the Chinese.
The Middle East and South Asia will be the focal point of most of this activity this
year as last.
Communist Economic and Military Aid to Less
Developed Countries (million current U.S. dollars)
Economic
$1,795 total $499 total
1972
China
$444
China
$2,873
Eastern
Europe
$4,208
East; rn
Europe \ i
U.S.S.R.
$8,320
Speci;'l Report
U.S.S.R.
$8,475
1955-1972
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Soviet-constructed Rolling Mill at Helwan, Egypt
The Communist countries extended a near-
record $1.8 billion of economic aid to the Third
World in 1972, bringing the total committed since
1954 to more than $15 billion. The Soviet share
of $580 million went to five countries, while the
East European countries, chiefly Czechoslovakia,
Poland, and Romania, extended about $655 mil-
lion to 12 countries. Peking, for the third consec-
utive year, cornmitteu more than half a billion
dollars in new credits, nearly 40 percent of which
went to Africa. This momentum has carried into
1973 with China allocating about $100 million in
aid to Zaire in January.
More than half of new Communist aid in
1972 went to five countries: Afghanistan, Chile,
Iraq, Syria, and Turkey. Chile was the largest
recipient, receiving more than $230 million.
Seven countries-Burundi, Dahomey, Guyana, the
Malagasy Republic, Malta, Rwanda, and Togo-
accepted Communist aid for the first time; all of
it came from Peking.
Communist economic aid deliveries in 1972
totaled some $620 million, down 10 percent from
1971. Drawings against Soviet credits and grants
declined about $70 million to approximately
$310 million, largely as a result of reduced con-
struction activities in Algeria, India, and Turkey.
East European deliveries declined as well. Chinese
deliveries jumped by approximately one third to
$220 million as work on the Tan-Zam Railway
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was accelerated and large commodity shipments
were made to Chile and Pakistan.
During the past ten years, net Soviet eco-
nomic aid to the Third World has been narrowed
by the rise in repayments and the leveling off of
drawings. Drawings exceeded repayments by
$315 million in 1964; the gap had narrowed to
$75 million in 1972. If military aid repayments
are added to repayments for economic aid, then
the total repayments to the USSR have for some
time exceeded Soviet aid deliveries.
Military Aid
While economic aid commitments have re-
mained high in 1972, new extensions of military
aid dropped sharply. Communist countries com-
mitted only about $500 million in military aid
last year, down frorn a high of nearly $1.3 billion
a year in both 1970 and 1971. The record 1970
and 1971 figures were largely a result of com-
mitments to Egypt for its air defenses and to
India for its military buildup against Pakistan.
The new extensions in 1972 raised to nearly $10
billion the total amount committed since 1955,
85 percent of which came from the USSR. Gf
this, an estimated $8.3 billion has been delivered.
Last year, about $310 million in military aid was
committed by the USSR, mainly to Egypt and
India, while China committed $75 million, largely
to Pakistan.
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Chinese and Local Workers on the Tan-Zam Railway
Soviet-assisted Euphrates Hydroelectric Power
Project in Syria
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Soviet SA-6 Surface-to-air
Missile Launcher
Communist military deliveries totaled $775
million in 1972, 25 percent below the annual
average for 1970 and 1971. Moscow provided
more than $650 million in military equipment,
including the first shipments to less developed
countries of the SA-6 surface-to-air missile (SAM)
system, SU-17 (Fitter B) swing-wing fiohter-
bombers, and T-62 medium tanks. Some of the
major recipients received their first SA 3 SAM
systems, OSA-class guided-missile patrol boats,
and ZSU-23-4 self-propelled antiaircraft guns.
Middle Eastern and South Asian nations con-
tinued to be the prime beneficiaries of the Com-
munist aid; they got nearly 60 percent of the
economic and almost all of the military com-
mitments in 1972. Moscow channeled almost 85
percent of its new aid to the two areas. More than
half of all Soviet aid deliveries went to the Middle
East.
In July 1972, President Sadat, at least in
part because of dissatisfaction with the nature of
Soviet military commitment to Egypt, ousted
most of the Soviet military personnel from his
country. An estimated 13,000 advisers, tech-
nicians, and personnel assigned to Soviet opera-
tional units in Egypt departed, leaving only a few
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hundred technicians to work with the armed
forces. Even so, Egypt still received about $150
million in new military commitments, including
an estimated $80 million of arms turned over by
departing Soviet forces. This setback produced no
pe?ceptible impact on Soviet economic did activ-
ities in Egypt. Work moved ahead briskly on
major projects, like the Helwan steel mill and the
Naj Hamadi aluminum plant, and discussiohs were
held on possible new aid for Egypt's new five-year
plan.
In Syria and Iraq, Communist, and especially
Soviet, influence grew as Moscow moved to offset
its losses in Egypt. Moscow provided Syria with
about $85 million for various petroleum, trans-
portation, and agricultural projects, for accel-
erated construction on existing railroad projects,
and the development of the Euphrates Valley.
The Soviets also extended more than $60 million
of new military aid to Damascus and delivered an
estimated $125 million of arms under past com-
mitments, the largest annual deliveries ever made
to Syria. In addition, Romania and China gave
Syria $93 million and $45 million respectively, in
new economic aid. Iraq signed a friendship treaty
with Moscow, obtained some $200 million of
East European economic aid, and signed an
$80-million agreement with Czechoslovakia.
Baghdad also applied for observer status with the
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Soviet-assisted Fanole Dam and Irrigation
Project in Somalia.
Geographic Distribution of Communist Economic
Aid in 1972 (million current U.S. dollars)
$215
210
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Middle East
$578 total
$103
C'-''-I $8s
Africa South Asia Latin America
.425 total $356 total $336 total
=U.S.S.R. DEasterrr Europe =China
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Soviet OSA-class Guided-Missile
Patrol Boat
Council for Mutual Economic Assistance (CEMA)
and agreed to repay most of its aid debts in crude
oil.
A Soviet credit of $158 million to Turkey to
expand the Iskenderun steel mill raised Zuviet
allocations for the project to about $420 million,
making it the costliest single Communist aid
undertaking in the Third World. Peking provided
Yemen (Aden) and Yemen (Sana) with economic
credits of about $22 million each.
Moscow continued to dominate foreign aid
activity in Afghanistan with a $121-million eco-
nomic credit that represents about 35 percent of
planned investment in Kabul's fourth five-year
development plan. Soviet aid outlays accounted
for nearly half of total investment during the first
three plans. Peking also extended $45 million of
new economic aid to Kabul.
Most European Communist countries moved
rapidly to establish diplomatic and economic ties
with Bangladesh soon after that country gained
its independence. Nearly $100 million of new aid
was made available, and about $60 million of
unused aid originally committed to East Pakistan
was reallocated. The Soviets extended about $75
million, resumed work on projects begun prior to
independence, and agreed to provide Dacca with a
squadron of MIG jet aircraft. The Soviets under-
took to clear the country's harbors of the wreck-
age of the 1971 war.
Strains in Soviet-Indian economic relations
developed over Moscow's unwillingness to real-
locate idle industrial development credits to other
uses. The major projects are nearing completion,
and while drawings have declined, aid repayments
have risen rapidly creating a resource outflow in
favor of the USSR. Moscow did, however, agree
to provide India with an additional $100 million
of arms. China, on the other hand, committed
$65 million in new arms to Pakistan and delivered
an equal amount in 1972.
Africa is the focal point of Chinese aid activ-
ities. Peking channeled about $210 million of its
1972 commitments to seven African countries.
East European countries provided about $215
million to African nations, about $150 million of
which went to Algeria and $50 million to Zambia.
The USSR did not extend new aid to Africa for
the first time since the inception of its African aid
program in 1959. It did, however, agree to build
Somalia's largest project, the Fanole Dam on the
Giuba River, and stepped up work on Guinea's
Kindia bauxite complex.
Communist aid activities in Africa are high-
lighted by the construction of the Tan-Zam Rail-
road, which is approximately one year ahead of
schedule. Last year, an estimated $110 million of
Chinese aid funds were expended, and 16,500
Chinese technicians were employed in Tanzania
and Zambia on the project. This one undertaking
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employs about three fourths of all Chinese eco-
nomic technicians in the developing countries and
more than 40 percent of all Communist technical
personnel in the Third World.
Although Libya has not received Communist
financial aid, it has obtained substantial technical
assistance. The largest contingent of East Euro-
peans (1,150) engaged in aid projects abroad are
in Libya building various port, road, housing, and
light industrial projects and working as advisers
under individual contracts. The number of Soviets
in Libya is still small, but the two countries have
signed an agreement for the USSR to undertake
oil prospecting, extraction, and refining projects;
mineral and gas surveys; and energy resource de-
velopment. Libya has also contracted to provide
the USSR, Bulgaria, and Romania with sizable
quantities of nationalized oil. In addition, Mos-
cow has agreed to build two petroleum distilla-
tion plants and to study the feasibility of inte-
grating the Libyan and Egyptian power grids.
Communist economic relations with Latin
America expanded further in 1972 as more than
$335 million of economic aid was channeled to
the area. Chile, under Allende, turned more and
more to the Communist countries for help in
stemming the rapid deterioration of its economy.
Santiago received $230 million of aid com-
mitments, far less than it needed and sought. In
particular, there was little Communist help for
Chile's balance of payments difficulties. More-
over, while Moscow extended about $145 million
of long-term aid and a short-term revolving credit
of $50 million, it made it clear to Santiago that
the Soviet Union had neither the resources nor
the inclination to underwrite the Chilean econ-
omy. Huriclary and Poland provided $78 million
in credits to Peru, and Guyana received its first
Communist aid, a $26-million Chinese credit.
Communist countries will continue to
employ foreign aid is a major instrument for
furthering their political and economic interests
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East German Housing in Chile
in the less developed countries. Opportunities and
requests for economic aid will almost certainly
increase for all major Communist aid donors. So-
viet military commitments probably ;.ill rise in
1973 because of the abnormally low level of
1972, and will no doubt be concentrated once
again in the Middle East and South Asia.
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Moscow probably will also concentrate new
economic aid commitments in the Middle East
and South Asia as opportunities open up for
participation in development plans of major aid
recipients. In Africa, Moscow may step l:p its aid
activities in areas of special Soviet interest like
Somalia and Sudan. Eastern Europe probably will
expand trade and credit ties throughout the Third
World. China will pursue its aid programs and
trade activities in most areas, but its focus will
remain on Africa.
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16 March A73'1
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