SOVIET-FRENCH ECONOMIC COOPERATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700030010-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: January 5, 2010
• Sequence Number: 10
• Publication Date: January 1, 1972
• Content Type: IM

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C 1'1 d,'p l X,Y! 1.1-IC) 00C-1,5-E i
Confidential
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Soviet - French Economic Cooperation
Confidential
ER IM 72-10
January 1972
Copy No.
63
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amr nded.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
GROUP 1
Excluded from ,ulo"clk
downgrading and
declonifcollan
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Page
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Early Soviet-French Cooperation Agreements . . . . . . . . . . 2
Soviet-French Trade, 1960-65 . . . . . . . . . . . . . . . . . 3
The Soviet-French 1966 Agreement . . . . . . . . . . . . . 3
Results of the 1966 Agreement . . . . . . . . . . . . . . . . 6
Trade Problems . . . . . . . . . . . . . . . . . . . . . . 10
Soviet-French Agreement in 1971 . . . . . . . . . . . . . . 12
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tables
1. Soviet Trade with Selected Western Countries . . . . . . . . . 4
2. French Share of Soviet Trade with the Developed West . . . . . . 7
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
January 1972
INTELLIGENCE MEMORANDUM
SOVIET-FRENCH ECONOMIC COOPERATION
Introduction
I. The USSR has spent billions of dollars in the period since F orld
War 11 in its quest to acquire Western equipment and technology to help
modernize its economy. As an additional means of obtaining Westert,
techn,.)logy, it also nas concluded government-to-government scientific,
technical, and industrial cooperation agreements* with a number of
industrial Western countries. These agreements generally have been
concluded on Soviet initiative, but Western countries, particularly France,
the United Kingdom, and Italy, readily acceded in an effort to tap what
they believed to be a huge market for their goods.
2. Soviet-French cooperation agreements were more numerous and
generally began earlier than those the USSR made with other Western
countries. The French were particularly interested in concluding cooperation
agreements to gaio an edge over their Western competitors in the Soviet
market and give F:_:nce a preferred economic and political position. The
French also are better situated politically to enter into extensive
government-to-government agreements because they have more instruments
of control to manipulate resource allocations than most other Western
governments, such as national industries and government financing of
* In this memorandum, cooperation agreements are referred to in a variety of
specialized ways. The broad scientific, technological, and economic cooperation
agreements -- such as the Soviet-French one in 1966 -- are the type of general,
government-to-government agreement the USSR has encouraged all nations to sign in
recent years. The many subagreements within this overall framework are the specific
scientific, technical, and industrial pacts negotiated to carry out the aims of tine overall
agreement. Considerable overlap occurs between technical and industrial in this context,
but for the purposes of this memorandum technical refers to the exchange of technical
information or personnel and industrial refers to the exchange of equipment, data, or
know-how involved in an industrial product or process. Also, trade agreements are the
general expression of willingness to trade and/or the products to be traded, and trade
contracts are the firm orders for particular products in particular amounts at particular
prices and terms.
Note: This memorandum was prepared by the Office of Economic Research
and coordinated within the Directorate of Intelligence.
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investment. The USSR, for its part, has been willing to accommodate the
French, not only to obtain Western technology and equipment but also
to use France in its efforts to disrupt the Western alliance.
3. Both sides have expressed dissatisfaction with the progress
achieved thus far under this agreement, and France in recent years has been
falling behind some of its Western competitors in the quest for a larger
Soviet market. The new ten-year agreement signed during Brezhnev's recent
visit to Paris has stirred hopes for a revival in cooperation and for
achievement of the trade goals set forth in the Soviet-French 1970-74
long-term trade agreement. This memorandum assesses the achievements of
Soviet-French cooperation to date, the prospects for future cooperation,
and the impact of these agreements on Soviet-French trade. It is, in effect,
a case study of the influence of political factors on economic relationships
between the USSR and a Western country.
Discussion
Early Soviet-French Cooperation Agreements
4. In the early 1960s a number of small-scale industrial and scientific
exchange agreements were concluded between the USSR and France. Among
the industrial exchanges, a 1960 patent exchange provided French industry
with a Soviet process for continuous casting, and the French automotive
industry concluded a number of agreements to help the USSR modernize
its motor vehicle industryy . Several French chemical and 'electronics firms
also concluded industrial exchange arrangements with comparable Soviet
production facilities. Finally other French-Soviet technology exchange
accords involved governmental agreements to exchange information in the
fields of color television, space, and aircraft. These informational exchanges
provided an ongoing dialotue, which was instrumental in the eventual overall
agreement reached in 1966.
5. In the field of scientific exchanges there was one major agreement.
In May 1965 the French Comissariat a l'Energie Atomique (CEA) and the
Soviet State Committee for the Application of Atomic Energy signed an
agreement for cooperation in nuclear energy. A practical result of these
negotiations was the French undertaking to install a bubble chambc r at
Serpukhov - the Soviet high energy research institute - in return for the
right to have some 50 French scientists work with the hrge p2rticie
accelerator' there. This stationing of a large group of Western scientists in
the USSR for an extended period of time constituted a unique precedent:
Under this arrangement, however, th:; Soviets obtained at practically no
cost a sophisticated research device worth approximately $10 million.
COP- F DENTIAL
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Soviet-French Trade, 1960-65
6. During the early 1960s Soviet-French trade turnover fluctuated,
largely because of changes in French exports. Soviet exports to France rose
steadily, while French exports to the USSR fluctuated violently. French
exports dropped sharply in 1963 and 1964 and did not recover to the
1962 level until 1966, in large part because of a decline in machinery and
equipment exports. This poor French showing was similar to the experience
of West Germany and Italy (see Table 1), and reflected, inter alia, the
decline in Soviet imports from Western Europe during the period when
the USSR bought substantial quantities of wheat from Canada, the United
States, and Australia.
7. What effect, if any, cooperation agreements had on the trade of
these countries with the USSR in the first half of the decade is difficult
to assess. French, Italian, and British organizations and firms negotiated
most of the cooperation deals in the early 1960s, but Japan and West
Germany - neither of whom had bilateral cooperation agreements - had
much larger exports of machinery and equipment in some of the lean years
of the early 1960s than did France or the United Kingdom. In short,
cooperation agreements then in force thus appear to have had little effect
on trde.
8. F;ance had made a number of concessions in an attempt to
capture more Soviet trade. At the time of the signing of the French-Soviet
1965-69 trade agreement in 1964, the French government announced that
long-term (seven-year) credits could cover one-half of the $700 million in
Soviet capital equipment orders proposed in the agreement. This
announcement of a general relaxation of credit terms came after the United
Kingdom and Italy had made numerous ad hoc exceptions to the so-called
Berne Agreement to limit credits to Communist countries to five years.
The Soviets for their part agreed to place important orders for French capital
equipment. The French also made special efforts to keep their interest rates
competitive with those of other Western countries, and in January 1966
France, ,long with other Western countries, liberalized quantitative
restrictions on imports from the USSR and Eastern Europe.
The Soviet-French 1966 Agreement
9. General De Gaulle's trip to the USSR in Tine 1966 -- the
culmination of a series of moves toward rapprochemenc since 1964 and
the beginning of the "special" Soviet-French relationship - was also an
effort to gain some practical benefits for France. The USSR at that time
was discussing a number of lucrative contracts with Western firms, and
French business leaders were anxious to secure a preferred position in the
Soviet market. For example, the French electronics industry and RCA of
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1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970
Total Developed West
Exports 983 1,069 1,115 1,218 1,282 1,438 1,711 1,886 2,051 2,230 2,345
Imports 1,080 1,093 1,283 1,400 1,734 1,601 1,742 1,782 2,144 2,495 2,780
Of which:
Machinery and
equipment 456 470 602 589 621 510 560 670 896 1,118 1,099
France
Exports 74 79 85 104 106 111 130 145 137 161 140
Imports 130 120 154 71 69 114 160 188 294 323 319
Machinery and
equipment 63 69 88 34 42 28 55 102 193 104 174
West Germany V
Exports 119 139 136 133 126 146 189 196 275 229 257
Imports 199 179 208 151 202 136 144 176 242 350 375
Machinery and
equipment 96 91 62 75 139 73 100 61 105 175 139
Italy
Exports 103 130 131 137 134 148 155 233 232 232 212
Imports 90 96 99 136 98 102 95 154 208 317 313
Machinery and
equipment 30 43 33 81 52 39 38 83 110 201 197
United Kingdom
Exports 192 227 213 215 239 291 330 303 367 427 465
Imports 108 128 117 130 103 152 169 197 273 240 248
Machinery and
equipment 58 77 62 64 47 71 102 94 134 126 110
Exports
Imports
Machinery and
equipment
76 113 113 124 165 185 239 353 391 s'7 379
62 67 146 165 193 177 224 ?66 185 264 345
a. Exports are f.o.b. Soviet ports. Imports are f.o.b. foreign port or country border. Soviet
exports to and imports from the indicated trading partner.
b. West Germany includes West Berlin, except for 1980-61 when the USSR did not report trade with
West Berlin.
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the United States were both seeking to equip the USSR with a modern
color television capability, a contract promising $300 million over a ten-year
period. Other Western firms were bidding on large orders for ships and
for chemical and other industrial plants. Even though the competitive
position of French firms in many sectors of industry did not seem
particularly strong, it was hoped that De Gaulle's relationship with the USSR
would be translated into additional Soviet business for France.
10. On 30 June, General De Gaulle and his hosts signed an agreement
providing for broad Soviet-French scientific, technological, and economic
cooperation. The accord set forth broad principles of cooperation, especially
in those fields offering the prospect of industrial exchanges. This agreement
was not hastily negotiated during the De Gaulle visit. Rather, the idea grew
from the ongoing talks on space cooperation, Soviet adoption of the French
SECAM television system, the 1965 atomic energy covenant, and other
industrial cooperation negotiations. In addition, the agreement was an
attempt to give concrete evidence of the Soviet-French political
rapprochement. As such, the agreement was very general and was designed
to permit the maximum flexibility by providing a framework under which
more specific accords could be worked out. The types of cooperation
envisioned included exchanges of scientific and technical delegations,
experts, and documentation; bilateral conferences; joint research on basic
and applied scientific problems with a view toward industrial applications;
development of new technological processes for industry; and studies of
industrial organization and productivity.
11. This agreement included a number of novel arrangements. The
establishment of a permai;ent intergovernmental organization was an
innovation; most previous Soviet exchange accords were concluded with
firms or trade associations in the West. Moreover, the administrative
apparatus to implement the agreement was and is the most elaborate ever
established between the USSR and a Western country. The Soviet-French
agreement also was more inclusive in coverage of activities than the usual
cooperation agreements at that time, which were usua-uy limited to a single
industrial sector or scientific endeavor.
12. Under this agreement a joint standing committee - the Grande
Commission - was set up as a high-level governmental group to oversee
a structure of bilateral accords and was originally scheduled to meet twice
a year. The retite Commission, a preparatory body and the executive arm
of the Grande Commission, was formed to supervise the industrial
cooperation agreements. In addition, a number of semi-independent
subordinate organizations were created, such as the Joint Commission on
Commercial Accords, the Joint Commission for Color Television, and three
working groups on space matters: (1) the Group for the Scientific Study
of Space; (2) the Space Telecommunications Group; and (3) the Group
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for Meteorology and Aerology. Most of the actual work, however, was left
to the dozen working groups formed under the Petite Commission and
staffed by government and industry people.* Other joint groups created
by the Petite Commission include the Joint Working Group for the Exchange
of Economic Information, which provides both countries with technical
data, and the Franco-Soviet Chamber of Commerce, organized in February
1967 with offices in Paris and Moscow.
Results of the 1966 Agreement
13. The meetings of the various commissions and working groups have
since 1966 produced volumes of claims for ever-increasing Soviet-French
cooperation with great benefits for each side. During the initial stages of
organization and operation - 1967-69 -- many industrial and scientific
cooperation subagreements were signed. However, complaints about the
operation of these agreements increased just as rapidly. The French members
of many of these commissions and working groups soon became convinced
that the Soviets were more interested in securing technical data and
processes cheaply than in any meaningful exchanges or purchase contracts.
Some French members resigned in protest against the one-way exchange,
including the head of Renault. The USSR also complained as its trade
balance with France worsened; it accused the French government of failure
to follow through on agreements to purchase more Soviet products,
particularly manufactured products. In this period, Soviet exports still
consisted primarily of raw materials and semifinished products. On the other
hand, French exports to the Soviet Union nearly tripled between 1965 and
1969, compared with a gain of less than 50% in such exports by the balance
of the Developed West. As a result, the French share of total Soviet imports
from the Developed West nearly doubled, rising from 7% in 1965 to 13%
in 1969 (see Table 2). To the extent that the De Gaulle-Soviet accord of
1966 facilitated the rapid rise in French exports, the agreement was
successful.
14. The French obtained the first trade benefit from the June
agreement in October 1966, when the USSR agreed to purchase 12
refrigerator ships from France, although the $93 million order was not
finally concluded until 1968. During 1967-68, France led all Western
countries in obtaining Soviet orders for plant and equipment. In addition
to the large order for ships, French manufacturers received substantial orders
* The working groups are: chemical industry and equipment, aeronautical industry,
heavy mechanical and electrical equipment, electrotechnical industry, metallurgy of iron
and other metals, household equipment, clothing manufacturing and related equipment,
food industry and related equipment, gas and oil industries, tractors and agricultural
machinery, machine tools, forges, presses and related equipment, and wood-processing
industry.
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French Share of Soviet Trade
with the Developed West
Soviet Exports To
Soviet Imports From
Developed
France
Developed
France
WC,st
West
Percent of
Percent of
Year
Million
US $
Million
US $
Developed
West
Million
US $
Million
US $
Developed
West
1960
983
74
7.5
1,080
130
12.0
1961
1,069
79
7.4
1,093
120
11.0
1962
1,115
85
7.6
1,283
154
12.0
1963
1,218
104
8.5
1,400
71
5.1
1964
1,282
106
8.6
1,734
69
4.0
1965
1,438
111
7.7
1,601
114
7.1
1966
1,711
130
7.6
1,742
160
9.2
1967
1,886
145
7.7
1,782
188
10.5
1968
2,051
137
6.7
2,144
294
13.7
1969
2,230
141
6.3
2,495
323
12.9
1970
2,345
140
6.0
2,780
319
11.5
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for chemical plants and automotive vehicle manufacturing equipment. These
orders were reflected in the sharp upsurge in French exports of machinery
and equipment in 1967 and 1968, which averaged almost $150 million in
those years, compared with the 1960-66 average of about $50 million. Other
French exports also increased sharply during this period. At the autumn
1968 meeting of the Grande Commission, the USSR agreed to make a special
purchase of French consumer goods in 1969 over and above the existing
Soviet commitment to purchase some $30 million in consumer goods that
year. As a result, sales of these goods in 1969 reached $43 million, up
from only $ 1 million in 1964. Thus, French manufactures profited for the
first few years following the cooperation agreement. There is no indication
that France succeeded in expanding exports because of any competitive
advantages, particularly with respect to machinery. France's competitive
position in virtually all machinery manufacturing industries is relatively
weak. *
15. In many ways, however, industrial cooperation has been
disappointing for both sides. For some time the USSR had been interested
in obtaining advanced Western technology and equipment used in oil
exploration, drilling, transfer, and storage. A French geophysical firm,
SERCEL, was a participant in one of the agreements negotiated under the
1966 accord and has over the succeeding years sold various types of seismic
equipment to the Soviets. The French and the Soviets, however, have been
unable to d:vise a complete system for processing seismic data, even though
the French allegedly utilized embargoed US technology to improve the
jointly developed system. The Soviets have found it necessary to order more
than $5 million worth of seismic data acquisition systems from US
manufacturers in 1970 and 1971.
16: Soviet experience with the agreement involving French color
television also has been disappointing. As a direct result of the De Gaulle
visit, the Soviet Union announced in 1966 that it had agreed to adopt
the French-sponsored SECAM III color television process and that it would
"encourage" Eastern Europe to do the same. Under a number of supporting
agreements, the USSR procured French-designed studio color equipment,
agreed to base the entire Soviet system on French-designed equipment, and
agreed to the joint development of video recorders. The expected large
Soviet orders from French television manufacturers have not been
forthcoming, however. In early 1967 the French firm Compagnie Francaise
" Frances shT are, for example, of total OECD (Organization for Economic
Cooperation and Development) exports of machinery and equipment in the OECD
market in 1969 wa? 6.4%. In those categories which accounted for the major share
of the increase in French exports to the USSR during 1966.68 -- for example, chemical
equipment and machine tools -- France's share was no greater. France's share of total
OECD exports in the OECD market in 1969 was 8.1%.
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de Television (CFT) secures a contract to build a pilot facility in the USSR
for the production of maskless picture tubes. This experimental plant was
to be followed by a la.i-ger facility for industrial-scale production. However,
CFT apparently encountered major problems in developing technology for
this scale of production, and in 1968 the USSR turned to a US manufacturer
for a picture tube production facility. The Japanese also were given a
contract for a ceramic capacitor plant, the output of which is to be used
for the production of color television receivers.
17. A number of industrial, technical, and scientific cooperation
agreements seem to have had some degree of success. Among the successful
projects have been the joint development of a process foi making isoprene
and its subsequent joint sale to the Japanese in 1969. Another successful
project has been the use by the French specialty steel producer, CAFEL,
of a Soviet-developed electreslag remelting process and its l;itest innovations.
Also, the French machine tool firm, Alcatel, signed a cooperative production
agreement with the USSR under which Alcatel will pi vide numerical
control de vices for Soviet machine tools, and the French will market some
of the tools in hard currency co:intries. By 1973, the joint venture is
expected to produce about 800 of the machine tools.
18. Little is known about the amount of technology exchangeu or
the direction of the technology flows under the agreement for exchange
of technical information. Compagnie General d'Electricite, a leading ; rench
electrical equipment manufacturer, entered i7to a number of joint .?esearch
and development projects for the transmission of electricity. Other
agreements were for standardization of electrical equipment to permit
interchangeability, a broad patent exchange, and methods to protect
industrial secrets. The Soviets sought and obtaine'J agreements in two other
areas of special interest to them - industrial mi nagement and economic
planning. Exchanges under these latter agreements were set up in such areas
as computer usage, mathematical methods in managr ment, the m;asurement
of labor productivity, and the development of n ore efficient planning
methods.
19. On balance, the overall effectiveness of s -ientific cooperation
agreements is impossible to measure, but some of the agreements seem to
have yielded some mutual benefits. Many of the benefits, however, again
seem to accrue to the Soviets. For example, the French -designed Mirabellc'
liquid hydrogen bubble chamber is now installed at t1 e Serpukhov High
Energy Physics Institute, and French technicians are working with the
Soviets
Similarly, an agreement on oceanogr;.phy has given the
Soviets access to the work and design of Jacques Cousteau's Center f,r
Advanced Maritime Study; and, as a result of the space cooperation
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agreement, the Soviets obtained access to French microelectronic
components and instruments. The Soviets supplied the rocket boosters, but
have gained from using French technology in scientific satellites.
Trade Problems
20. Almost from the time the 1966 agreement was signed, the USSR
was disappointed with the French government's inability to ensure that the
private sector would implement the undertakings agreed to by the various
commissions, especially in terms of accepting increased Soviet exports. To
still Soviet criticism, the French government instituted measures to
encourage French industry to cooperate in this area. For example, in
connection with Renault's sale of machinery to modernize the Moskvich
automobile plant in the USSR, the government guaranteed assistance to
French importers in the disposal of some 1,500 Moskvich cars taken in
partial payment. The government also helped by making available long-term,
low-interest credits. The French government, moreover, encouraged ten
leading import houses to form a syndicate - Commetorg - i dispose of
Soviet goods taken in barter.
21. In other cooperative measures, two joint Franco-Soviet marketing
companies were established in France to promote the sale of Soviet goods:
one, SOGO, will promote the sale o: Soviet chemicals; the other, Russo-Bois,
wi!l specialize in selling Soviet wood, pulp, and paper. Also, a joint company,
Actif-Avto, was formed by the French firm Actif and the Soviet export
organization Traktoreksport to sell and service Soviet tractors on the French
market. Actif-Avto has made special efforts to ensure a good reception for
Soviet equipment, including glowing and exaggerated reports in French
newspapers attesting to the high quality of Soviet tractors. Actif-Avto also
was the first organization to sign a long-term contract within the framework
of the Soviet-French agreement on trade and economic cooperation for
1970-74. By 1975, Soviet tractor exports to France are to increase to about
5,000 units, almost four times the quantity exported in 1969.
22. These efforts appear to have had little effect on Soviet exports
to France, which have stagnated for four years and not kept pace with
imports. Consequently, the USSR has had substantial trade deficits with
France for 1968-70 - $157 million in 1968, $182 million in 1969, and
$179 million in 1970.* This problem was formally recognized in the
five-year trade and economic cooperation pact signed in May 1969, which
called not only for a doubling of trade over the period but also for new
* Using non-Communist trade statistics, the French trade surplus for 1968, 1969,
and 1970 would be only $73 million, $59 million, and $70 million, respectively ?- Soviet
exports, f.o.b., and imports c.i.f. One-third to one-half of the difference is transportation
charges. The remaining difference is unexplained but may be related to French
classification of re-exports and differing definitions of what is included in commodity
trade.
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measures to stimulate Soviet exports to France, especially niZ-.-ufactured
goods. The French, however, have stressed at recent meetings of the Grande
and Petite Commissions, as well as at meetings of the Franco-Soviet Chamber
of Commerce and elsewhere, that the USSR must improve the quality and
variety of its products and assure service after the sale if it is to increase
its sales of manufactured goods in the West.
23. In in attempt to stimulate sales of machinery and equipment,
the Soviet Minister of Ferrous Metallurgy and the French Minister of
Finance and Economic Affairs signed a memorandum in Paris in 1970
proposing Soviet participation in the erection of an integrated steel plant
costing some $1 billion to be built at Fos-sur-Mer near Marseilles. The USSR
was expected to supply know-how and equipment and to give credit on
terms similar to those granted by the French exporters of capital equipment.
A delegation of French steel manufacturers, returning from meetings in the
USSR in 1971, however, was less than enthusiastic about Soviet technology
and equipment, and the expected Soviet participation was reduced
substantially. The Soviets again expressed disappointment at the inability
of the French government to force French industry to assume undertakings
negotiated by the government. On 7 December 1971 the USSR and France
signed a contract for the USSR to supply $2 million in cooling equipment
for the blast furnaces at the billion dollar plant. Although both sides still
talk about further Soviet participation, no other equipment contracts for
the USSR seem imminent.
24. In another attempt to stimulate Soviet exports of machinery and
equipment, the Soviets and the French have discussed cooperation in
building a refinery at Le Havre utilizing Soviet equipment. The USSR for
some time has been interested in obtaining access to refining capability
in the West to process Soviet crude oil and thus increase its value before
sale in the West. Earlier discussions with the Belgians about building a
refinery at Antwerp indicated that the Soviets were interested in a
hydrocracking refinery, but neither the Soviets nor the French have a
commercially proven hydrocracking process. French oilmen, who are
familiar with Soviet refinery technology because they are assisting the USSR
in building a large hydrocracking refinery at Ufa in th? USSR, have
expressed doubts about the quality of Soviet equipment for use in the Le
Havre refinery.
25. The French and the Soviets have found one novel way to help
increase Soviet exports to France. The French have agreed to deliver to
the USSR in 1973 some 450 tons of natural uranium already converted
to uranium hexafluoride at Pierrelatte. The uranium will be enriched in
a Soviet gaseous diffusion plant and will be returned for use as fuel in
the French power reactor at Fessenheim. The accord foresees production
of 75 tons of enriched uranium at an announced cost of between $5.4
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million and $7.2 million, probably slightly below US Atomic Energy
Commission charges for the same work. The enrichment deal permits the
USSR in effect to export relatively cheap Siberian electric power to Western
Europe without erecting transmission lines, since electric power is the major
cost - 70% to 75% - of the enriching process. In addition, the Soviet
gaseous diffusion plants apparent;y have excess capacity.
Soviet-French Agreement in 1971
26. The ten-year cooperation agreement signed in Paris during Soviet
Communist Party Chief Brezhnev's visit continues and expands the original
cooperation agreement begun in June 1966. Once again the governments
will provide the push for mutual participation in the other country's
development plans, and they will act through the previously established
commissions. This agreement and the tentative agreement with Renault for
participation up to $240 million in engineering, equipment, and technology
for the Kama River truck plant project were unexpectedly large economic
developments from a visit that was heavily weighted with political objectives.
Renault thus far has only one firm contract - $10 million for engineering
design for the engine plant -- with the contracts for technology and
equipment subject to later negotiations. Both sides have hailed these
economic agreements as evidence of the revitalization of the special
Soviet-French relationship and the beginning of an expanding era of
economic cooperation.
27. An upsurge in Soviet-French economic activity began even before
Brezhnev's trip. In August 1971 the USSR and France initiated a pipe-for-gas
agreement whereby the French would supply $200 million in large-diameter
pipe with repayment being tied to an agreement by the Soviet Union to
supply 2.5 billion cubic meters of natural gas annually for 20 years starting
in 1975.* Just before the Brezhnev visit, Moscow also broadcast a report
that caviet-French trade for 1971 would exceed $600 million, an increase
of more than 30% from the 1970 trade turnover. Again, any large increase
would be in French exports as deliveries are being completed on a number
of orders dating back to the peak years of this cooperation, 1967-69. The
report also claimed increased Soviet exports to France of machinery and
equipment and said that France would participate in building a number
of enterprises in the Soviet Union - possibly involving a pulp and paper
complex in Siberia and development of mineral deposits in the same area -
with part of the output of these enterprises being exported to France. The
new agreement (and French officials) stressed again Soviet participation in
the construction of the French steel works at Fos-sur-Mer and the French
refinery near Le Havre. However, early Western trade statistics do not
* This agreement reportedly had a December 1971 deadline, which has expired, but
negotiations are expected to continue, and a firm contract is expected eventually.
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support the reported large growth in trade, and thv new trade proposals
would not affect 1971 trade.
28. Despite the official glow about trade and cooperation, the real
problems, which were not overcome in the 1966-70 period, still thrc-:-ten
the future of the new agreement. Trade will rise and cooperation will
expand, but the basic imbalance in favor of France will not be redressed
by signing agreements. Soviet exports to France of manufactured goods
will depend on real improvement in quality and marketing ability. Continued
growth of French exports to the USSR will also depend on quality, price,
credit terms, and Soviet need for political leverage in France. Some of the
latter seems likely to be a factor for some years to come, but it has often
been served as much by appearance and promise as by performance.
Conclusions
29. Soviet-French economic cooperation has been one facet of a
special Soviet-French relationship extending over a long period of time. Each
side has sought its own ends in the relationship. The USSR has wanted
sophisticated Western technology and equipment and has hoped to weaken
the Western alliance by encouraging French independence. France had
sought to gain a larger share of the Soviet market for Western capital goods,
to bolster its position among the major powers of the world, and to further
its efforts for East-West detente. Before the mid-1960s, trade and
cooperation agreements brought little satisfaction to either side, and neither
side gave much more than lip service to those accords. Despite the low
level of this activity, a continuing dialogue was begun, and some cooperation
was achieved.
30. The extensive Soviet-French scientific, technological, and
economic cooperation agreement signed in 1966 established a permanent
intergovernmental organization with an elaborate administrative apparatus
to further the goals of the two partners. Despite the signing of a number
of industrial and scientific agreements and the rapid growth of trade between
France and the USSR, neither partner was particularly satisfied. On balance,
however, each side achieved at least part of its major objectives. The USSR
benefited from the acquisition of industrial equipment and technology and
from access to some of the best Western scientific knowledge and
equipment. For its part, France did improve its exports to and overall trade
with the Soviet Union. French trade with the USSR probably would have
grown during this period, but French exports certainly were more than
they would have been without the 1966 agreement.
31. Both countries took advantage of the signing of a new five-year
trade pact in 1969 to call for increased measures to fulfill the goals of
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the trade pact - a doubling of trade in the 1970-74 period compared with
1965-69 - and to revive the overall cooperation agreement. The trade pact
pointed up the need for measures to stimulate Soviet exports to France,
but the French stressed that the USSR must improve the quality, variety,
and service of its products if its sales of manufactured goods in the West
were to increase. Still, Soviet-French trade in 1970 declined for the first
time in eight years.
32. Party Chief Brezhnev's visit to Paris in 1971 was primarily political
in its objectives, but apparently it was also designed to instill new life into
economic cooperation with the signing of a ten-year extension and
expansion of the original cooperation agreement. Closely preceding,
following, and coincident with the Brezhnev visit came the signing of a
number of Soviet-French industrial agreements. Renault signed an agreement
for about $240 million worth of engineering design, equipment, and
technology for the Soviet Kama River truck plant, although the only firm
contract is for just $10 million with the balance subject to future
negotiation. Also signed were agreements for French pipe worth $200
million in exchange for Soviet natural gas and for Soviet equipment for
a French steel complex. These economic agreements have been hailed in
both countries as evidence of the renewed growth in Soviet-French relations
and economic cooperation. Trade and cooperation will expand in the '.year
future, but any dramatic long-range growth will continue to depend on
the political as well as the economic needs of each government.
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