ROMANIA AND THE UNITED STATES: THE COMMAND ECONOMY LOOKS FURTHER WEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700030035-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 19
• Document Creation Date: December 22, 2016
• Document Release Date: January 18, 2011
• Sequence Number: 35
• Publication Date: March 1, 1972
• Content Type: IM

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Confidential
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Romania and the United States; The Command Economy
Looks Further West
DOCUMENT C A
SERV!Ct 5BRANCH
FILE ) Confidential
Ct: r
ER IM 72-35
HIlT March.1972
D
0 ?'
DESTROY Copy NO.
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WARNING
This document contains information affecting the naticmal
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revclatioi of its contents to or re-
ceipt by an nianthori?r.ed person is prohibited by law.
GROUP I
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[K)WNI:NA LIIUO ANII
Ul:I'I.AH?IYIC:A IIUN
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
March 1972
ROMANIA AND THE UNITED STATES:
THE COMMAND ECONOMY LOOKS FURTHER WEST
Introduction
1. During 18-29 March, Romania's top economic official, Vice
President Manea Manescu, will visit the United States as the guest of the
President's Council of Economic Advisors. Manescu will meet with President
Nixon, US Government officials, and business and banking leaders in several
major US cities. The purpose of the visit is to discuss the further
development of US-Romanian economic and political relations and to
provide Manescu with a glimpse of US techniques in economic planning
and forecasting, marketing, and corporate management. Manescu's visit is
the latest in a growing series of contacts, highlighted by reciprocal visits
of Presidents Nixon and Ceausescu in 1969-70. Romania, having a larger
share of its total trade with the West than any other country of the Council
of Mutual Economic Assistance (CEMA), has been seriously negotiating for
improved economic relations with the United States off and on since 1964.
This r-:emorandum examines Romania's economic position on the eve of
Manescu's visit and prospects for trade and cooperation with the United
States.
Summary and Conclusions
2. The United States is seen by Romania as a potential source of
markets for Romanian products, advanced machinery and technology, and
long-term credit. Interest in US machinery and credit undoubtedly has been
heightened by Romania's mounting debt burden in Western Europe.
Note: This memr randum was prepared by the Office of Economic Research
and coordinated within the Directorate of Intelligence.
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3. Increasing foreign exchange constraints have recently caused a
slowdown in Romania's trade with the West, although the Western share
of total trade (45%) still is larger than in any other East European country.*
Romanian exports to the West - primarily grain, petroleum products, and
lumber - face uncertain and fluctuating demand and in some cases severe
import restrictions. Romania has gone deeper into debt in the Industrial
West (about $900 million) than any other East European country.
Consequently, its future exports are heavily mortgaged to the point where
even moderate increases in imports from the West over the next few years
will result in rising hard currency indebtedness, which could reach $1.2
billion to $1.9 billion by 1975.
4. Romania's exports to the United States have been insignificant --
only $13 million in 1971. Although sales of a few commodities can probably
be expanded, especially with the benefits that would be derived from lower
tariffs if MFN status were granted, Romanian exports are not expected
to grow dramatically in t1-.e next few years. The narrow range of Romania's
saleable, Drn i-~cts,, the distance to the US market, and differences in US
and West"' Eu-iopean consumption patterns are all seen as factors limiting
the market potential for Romanian exports in the near future.
5. Imports from the United States in 1971 totaled $53 million, a
sharp increase from only $17 million as recently as ! 967, but still a very
small share of Romania's total imports from the West. To continue rapidly
expanding their imports, however, the Romanians will require credit terms
comparable to those available in Japan and Western Europe - seven to ten
years at 6%-7% interest. US government guarantees of such US commercial
bank financing would probably bring a surge in Romanian purchases of
machinery.
6. US-Romanian economic contacts probably will expand in spite
of mediocre trade prospects. The upcoming vis;t of Manescu is another link
in an expanding series of business exchanges, joint venture explorations,
and high-level political talks - not all with the sole aim of expanding the
volume of trade. Manescu, for example, at least seems as interested in US
marketing techniques as in the market itself.
* Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and Romania.
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Discussion
The Romanian Economy
7. Romania's economy is fashioned along Soviet lines, heavily
centralized and emphasizing rapid development of heavy industry at the
expense of consumer goods and services. Spurred by large investments, and
by imports of Western equipment, industrial output tripled in the 1960s.
Even faster growth was achieved in chemicals, machine building, electric
power, and ferrous metallurgy - the areas of highest priority. This
expansion was mainly responsible for an average growth of 6% a year in
Romania's gross national product (GNP) GNP per capita is now about
$1,200, more than in Cr'ece or Yugoslavia, but still much less than in
the USSR or the more advanced East European countries.
8. Agricultural output has increase''. about 2% a year in the 1960s,
enough to supply a slow improveme it in the diet and a substantial surplus
of grain and other products for export. Weather disturbances, however, still
cause sharp fluctuations in output, and supplies are often inadequate to
support rising exports.
9. Romania's better-than-average endowment of natural resources is
an important factor contributing to economic growth while providing a
means for minimizing economic dependence upon the USSR and Eastern
Europe. Excluding the USSR, Romania has the largest deposits of petroleum
and the second largest natural gas deposits in Europe. Romania also has
substantial reserves of timber, coal, and hydroelectric power potential.
Annual production of gold, while about 1% of world production, probably
is greater than in any other country in Europe except the USSR.
10. Romania has traditionally had a tightly controlled economy -
even by East European standards. Furthermore, Romania's role as a
''maverick" among CEMA nations since the early 1960s, although not
resulting in any damage to its economy, has undoubtedly worked to inhibit
certain forces for economic decentralization which were at work in some
East European countries before the mid-1960s. By maintaining nationalistic
policies in the face of opposition from the USSR and other CEMA members,
Romania has lived with fears of possible retaliation, ranging from trade
boycotts to armed invasion. Under such conditions, the leadership likely
has viewed tight central economic controls as an essential part of maintaining
national security.
11. As Romania has industrialized, its economic policy has become
increasingly concerned with raising productivity, increasing exports of
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processed goods, reducing dependence on industrial imports, and improving
the terms of trade. Like other Communist countries, it has tinkered with
the system of planning and management in order to raise economic
?fficiency. In the late 1960s the Romanians began to experiment with
administrative decentralization.
12. A major feature of the decentralization is the establishment of
about 200 economic units - industrial centrals, combines, and groups --
between the ministerial and enterprise level, similar to those in East
Germany and Poland. These units have replaced and taken over the functions
of many of the general directorates of the ministries. They have broad
control over groups of enterprises and over many of the planning and
management functions previously exercised by the ministries. Typically, one
of the new units directs several enterprises grouped by product - vertically,
horizontally, or territorially. Many Romanian officials have been moved
from the ministries to the new centrals and even to enterprises and
agricultural units.
13. In keeping with earlier traditio;i, Romania's reorganization of
economic administration is not intended as a move away from central
control but, to the contrary, to help in carrying out cents alized decisions.
Romania, in its turn, is trying to introduce "scientific" planning. In
principle, plan directives are based on solutions of programs at each
bureaucratic level. The constraints become narrower as the planning process
goes from ministries down to enterprises, or sections of enterprises. The
centrals filled a supposed gap in the bureaucratic decisionmaking process,
both in planning and in m,inagement.
14. The Romanian foreign trade conference held in early 1971 has
resulted in some changes in the conduct of foreign trade. Industrial centrals
and even certain large enterprises appear to have acquired some additional
responsibility for foreign sales and purchases, and producers are to be paid
for export shipments only when the Foreign Trade Bank has received
payment from abroad. Also, Ceausescu reemphasized in a recent speech
that imports will require greater justification than in the past, and approval
of import applications has become increasingly contingent upon a firm's
ability to offset imports with exports.
Trade and Indebtedness, 1959-71
15. Romania carries on 45% of its trade with non-Communist
countries, while the average for the other East European countries is about
one-third. This unique trade position is explained in part by Bucharest's
desire to become less dependent on the USSR and on the more developed
East European countries. Romania in the early 1960s shifted a substantial
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part of its exports from East to West. Still, in order to finance rising imports,
Romania willingly went deeper into debt to the West, relative to exports,
than any other CEMA country. Between 1959 and 1967 the share of the
non-Communist countries in total Romanian trade rose from 20% to 48%.
This share slipped to 45% in 1968 and has changed little since then, for
two principal reasons. Exports of foodstuffs declined because of unfavorable
agricultural developments in 1968 and 1970, and imports of machinery were
reduced after having assured fulfillment of the investment plan for 1966-70.
16. Romania has incurred continuous deficits in its commodity trade
with the Industrial West totaling $1.5 billion in 1960-70 (see Table 1).
Million US $
Year
Turnover
Imports
Exports
Balance
1958
153.8
74.4
79.4
5.0
1959
150.1
74.5
75.6
1.1
1960
293.0
147.5
145.5
-2.0
1961
406.5
221.4
185.1
-36.3
1962
438.9
255.5
183.4
-72.1
1963
473.3
264.8
208.5
-56.3
1964
545.0
314.7
230.3
-84.4
1965
601.3
347.2
254.6
-92.6
1966
781.4
445.4
336.0
-109.4
1967
1,118.6
707.2
411.4
-295.8
1968
1,087.3
672.6
414.7
-257.9
1969
1,172.0
711.4
460.6
-250.8
1970
1,303.9
755.8
548.1
-207.7
In the same period there were cumulative surpluses of some $400 million
in trade with the less deve.oped countries and a small surplus in trade with
Communist countries.
17. Little information is available on current account transactions
other than trade. Romania has a small merchant fleet and incurs sizable
deficits on freight and insurance. Income from tourism, although small, has
risen rapidly. Total hard currency tourist earnings in 1959-70 amounted
to between $150 million and $200 million. The value of earnings from
transportation of and ransoms for Jewish and German emigrants to the
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Free World is unknown but may have been sizable. Overall the current
account deficit with the Industrial West was probably not much smaller
than the trade deficit of $1.5 billion. These deficits have been covered
largely by credits from West European countries.
18. Romania's outstanding indebtedness to the Industrial West at the
end of 1970 amounted to an estimated $900 million. Estimated drawings
on medium-term and long-term credits during 1959-70 totaled about $1.8
billion and repayments some $865 million. Repayment periods on these
credits go up to ten years. In addition, cumulative interest payments totaled
approximately $215 million. Of credits drawn from industrial Western
countries by Romania since 1959, West Germany accounts for the single
largest share - perhaps as much as two-fifths. Other countries which have
extended sizable credits are France, Italy, the United Kingdom, and Japan.
19. The Romanians have received some hard currency loans from
Western banks, other Communist countries, and Soviet banks in the West.
For example, the Soviet-owned Moscow Narodny Bank in London, together
with Manufacturers, Hanover Ltd., have granted a $7.7 million loan to
Romania for financing aluminum technology and know-Low to be purchased
from American Metal Climax, Inc. In late 1970 the People's Republic of
China extended a hard currency loan to the Romanians
This was probably used to help defray
the cost of repayments to the Free World.
20. The hard currency balance-of-payments situation has become
increasingly difficult. Trade deficits, which ran below $100 million a year
before 1966, had grown to $200 million-$300 million a year during 1967-70.
At the same time, debt service obligations, very small in the early 1960s,
had built up to around $210 million by 1970.
Trade Prospects Through 1975
21. Concern over their heavy indebtedness with the Industrial West
has led the Romanians to plan a slow growth in hard currency imports
curing 1971-75. Total turnover is to increase about 50% to 55%, with
exports rising 32% and i-,sports growing only about 25% to 35%. The
Romanians would like to increase hard currency exports more rapidly than
total exports and hold hard currency imports under the growth in total
imports. The tomanians will, however, encounter great difficulties in
meeting these goals. They cannot possibly increase hard currency earnings
fast enough; while allowing some rise in imports, to avoid incurring deficits
on current account through 1975. Thus indebtedness will continue to rise,
out at a slower pace than in 1966-70
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22. Because of the large trade deficit and the growing debt service
burden, and even though its exports to the Industrial West should increase
at least 10% per year in 1971-75, Romania will have to draw on credits
almost as much in 1971-75 as in 1966-70 to permit any growth in imports.
Bucharest will probably increase imports from the West by 4% to 8% a
year; the credits required will increase to perhaps $1.4 billion to $2.2 billion
over the five-year period' , Romania's hard currency indebtedness at the end
of 1975 would then ra,,be between. $1.2 billion and $1.9 billion. Romania
probably will try to keep indebtedness near the lower end of this range.
23. Among approximately $250 million worth of installations and
technology already contracted for by the Romanians for delivery during
1971-75 are know-how and equipment for two large irrigation projects
(United Kingdom); an ammonia and synthetic gas installation based on
natural gas (West Germany); a polyethylene plant (Japan); a nitrophosphate
fertilizer plant (United States and Norway); a- dimethylterephthalate plant
(West Germany); and machinery and equipment for the Renault automotive
plant (France). The Romanians also are interested in importing from the
West a 600-megawatt natural uranium reactor (Canada); a vinyl chloride
plant; know-how and equipment for expansion of the aircraft industry
(France, United Kingdom, and the United States); computers and computer
technology; and a bearings plant.
24. Besides attempting to increase exports by traditional methods,
the Romanians are looking into the possibility of getting Western firms
to take as partial payment a share of the output of plants they install
(compensation :ontracts). Also, they are trying to make barter arrangements
in obtaining strategic raw materials -- particularly crude oil and metals --
from the less developed countries. In 1969, for example, Romania signed
an agreement with India for the importation of 22 million m.-Itric tons of
iron ore during 1971-80 in exchange for ore carriers, refinery technology,
and industrial equipment.
Trade with the United States
25. Between the early postwar years, when Romania received
substantial credits and grants from the United States, and the early 1960s,
US-Romanian economic relations were at a minimum. With the conclusion
in March 1960 of an agreement covering certain US claims against Romania,
the two countries signed a statement signifying that both countries wanted
to expand trade. As a result an Office of the Commercial Secretary of
tha Romanian Legation was opened in New York in 1961. No other action
followed until 1963, when the United States, encouraged by the assertion
of Romanian independence, took several steps toward relaxing export
controls.
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26. As a result of trade talks held in Washington in 1964, the US
Government agreed to establish a procedure under which most nonstrategic
commodities could be exported to Romania without an individual license.
In addition, the United States agreed to grant licenses for a number of
individual industrial facilities containing advanced technology in which
Romania is interested. Both countries agreed to raise their respective
legations to embassies. The United States did not agree to grant tariff
concessions, all of which had been withdrawn from Romania in 1952, but
did agree to facilitate the financing of Romanian purchases in the United
States. The Export-Import Bank was authorized to guarantee US commercial
credits to Romania. In March 1968 this authority was withdrawn in
compliance with the Fino Amendment to the Export-Import Bank Charter
legislation, which denied the Bank's services to Communist countries
supplying North Vietnam. The Romanians have provided military as well
as economic aid to North Vietnam.
27. For this and othe, reasons, the results of the 1964 agreement
have been meager. To be sure, total Romanian trade with the United States
more than tripled during 1965-69 and doubled in 1970 alone, largely as
a result of large Romanian grain imports necessitated by the floods. In
1970, trade reached a total turnover of about $80 million; Romanian
imports ran $66.4 million compared with only $13.4 million worth of
exports. As shown in Table 2, Romania sells mainly fuels and consumer
goods in return for industrial materials and agricultural products. The trade
has been volatile, dropping by 20% to $65 million in 1971.
28. Clearly, the United States has not played the part envisioned in
1964 in supplying Romania with technology and equipment. At the time
of the trade talks, Romania had expressed the hope of importing from
the United States $200 million of the $1 billion worth of machinery and
equipment it had hoped to purchase from the Industrial West during
1966-70. Actually, imports of machinery from the United States have
amounted to only a fraction of those hoped for and in 1970 represented
only 2% of Romania's total imports of machinery and equipment from
the Industrial West.*
29. Romania incurred a cumulative trade deficit of about $160 million
with the United States during 1959-71 (1971 data are from US reporting).
Of this, about $50 million was incurred in 1970 and about $40 million
in 1971. Known sources of financing ao not begin to account for the deficit.
The only Export-Import Bank-guaranteed loan was the $16.2 million credit
extended in 1965 by the Continental Illinois Bank and Trust Company
* For a list of some US exports to Romania in recent years, see Appendix A. For
two examples where the United States has failed to go along with Romanian wishes,
see Appendix B.
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Romanian Trade with the United States f
1970
Exports to the US
Imports from the US
Million
Million
US $
Percent
US $
Percent
Agricultural and
raw materials
1.3
10
31.9
48
Fuels
5.5
41
15.5
23
Chemicals
1.4
11
1.5
2
Intermediate and
semimanufactures
1.2
9
11.3
17
Machinery and
equipment
--
--
5.6
9
Consumer
manufactures
Total /
13.4
100
66.4
100
a. US Department of Commerce trade statistics.
b. Because of rounding, components may not add to totals
shown.
of Chicago to cover the purchase of a catalytic cracking plant from Universal
Oil Products. Drawings on Commodity Credit Corporation (CCC) credits
amounted to $10.9 million in fiscal year 1969/70 and $40.5 million in
fiscal year 1970/71. (For a description of CCC credits extended to Romania,
see Appendix A.) This leaves roughly $90 million of financing to account
for, which would have had to come from Western banks outside the United
States and from surpluses on hard currency transactions with other
individual Western countries. For example, foreign banks are providing the
financing for a contract signed in 1970 with American Metal Climax, Inc.,
which is supplying Romania with aluminum manufacturing technology and
know-how (see Appendix A).
30. In an attempt to boost relations with the United States, Romania
has sent several missions to this country for purposes similar to those
espoused for Manescu's visit, including one in 1967 to study economic
planning and management. This group was headed by Trofin Simedrea, then
First Vice President of the Romanian State Planning Committee. A
technical-scientific delegation, led by Deputy Premier Alexandru Birladeanu,
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toured the United States from 19 June to 9 July 1968. Party Chief Nicolae
Ceausescu came to the United States in October 1970 to discuss, among
other things, economic matters with government officials and to tour US
businesses.
31. In late 1969 the Romanians submitted to the US Government
a list of equipment they might wish to purchase from the United States.
The value of the proposed imports could run as high as $200 million to
$300 million. Among the items on the list are a heavy water plant for
a nuclear power station, facilities for coating steel plates, equipment for
cold rolling of electrical sheet, a plant for production of aluminum foil
and sheets, and a share of the extensive irrigation projects planned. So far,
the Romanians have signed a contract only for aluminum technology. Since
1969 they have also expressed interest in purchasing a polypropylene plant,
a flat glass plant, Boeing 707s, assistance in building up the aircraft industry,
and licenses for the production of diesel locomotives.
32. The Romanians have stressed that a decision to purchase any large
pieces of equipment from the United States is dependent upon the
availability of suitable credit. Romania has been able to obtain from Western
Europe government-guaranteed private credits with maturities ranging up
to ten years and 5% to 7% interest rates. Without US Government
guarantees, it is highly improbable that US commercial banks would extend
loans at interest rates less than 8.5%. The recent liberalizing of
Export-Import Bank regulations to include medium-term credit guarantees
and insurance to Romania could lead to growth in US sales of machinery
and equipment. This growth, however, may well be limited in the near
term by a possible negative reaction by the US financial community to
Romania's extremely tight credit position.
33. Furthermore, it is unlikely that the Romanians can export large
amounts to the United States to repay such credits. Romanian sales certainly
would be helped by MFN status, which would cut the average tariff
incidence on Romanian goods from the present level of about 29% to
perhaps as low as 10%. (For a run-down on US tariff rates applicable to
selected imports from Romania, see Table 3.) However, Romania's export
commitments to West European countries leave little slack for expanding
sales to the United States. Also, a large part of Romanian sales to Western
Europe could not be shifted to the United States because of the distance
to the US market, quota restrictions, and differences between West
European and US tastes and preferences. The Romanians may, therefore,
continue to find it more expedient to buy only the know-how for a
particular line of equipment from a US firm and to purchase the machinery
from a West European firm. The M.W. Kellogg company of Houston, for
example, won a large contract for an ammonia pant for which the
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US Tariff Rates Applicable to Selected
Actual and Potential Imports from Romania
US Imports
Applicable US Tariff Rates
from Romania
in 1970 a/
MFN: Kennedy
(Million us $)
1930
Round Rate, 1972
Meat in airtight containers
for example, ham
--
30 b/
30
Cheese and curd
0.5
35% c/
9% to 15%
Sunflower seed oil
--
4.50 to 4.50+20% b/
0.90 to 0.90+4% 1
Oilseeds, oil nuts
kernels
0.2
Free to 30 b/
Free to 1.50 b/
Lumber, sawn, planed, etc.
Conifer
$4 d/
Non-Conifer
$3 d/
Plywood, including veneer
panels
Residual fuel oils
5.4
0.50 e/
0.1250
Nitrogenous and phosphate
fertilizers
N.A.
Free
Free
Wine
Insiy.
1.25 , f/
37.50 e/ f/
Furniture
1.1
40% to 43%
5% to 12%
Clothing and accessories
1.0
35% to 90%
8% to 35%
Footwear
1.3
20%
8% to 17%
Cotton fabrics, woven
0.3
30% to 45%
3% to 25%
Glassware
0.3
60%
10% to 30%
a. Total US imports from Romania in 1970 or,me to $13 mi ion.
b. Per pound.
C. Cheese.
d. Per thousand board feet.
e. Per gallon.
f. Wine of fresh grapes.
g. Subject to quotas.
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Romanians are purchasing equipment from the United Kingdom and West
Germany because financing terms available from abroad were more favorable
than from the United States.
34. The Romanians are interested in getting US firms to participate
in joint ventures. Only three joint venture agreements are known to have
been imp' mented. One of these involved an ag'eement to bottle Pepsi Cola
for sale in Romania. Another was an arrangement with Intercontinental
Hotels for the construction of a tourist hotel in Bucharest which wa
completed in 1970. June 1971, a joint 25X1
American-Romanian company (Romanda Co., Ltd.) has been created to
serve as a conduit for large-scale trade programs, financial services, joint
ventures, licensing agreements, management know-how, and technological
transfer programs. This company will be set up under the laws of the
Bahama Islands and will be financed jointly by the Romanian foreign trade
enterprise Terra and Robert B. Anderson Co. Ltd. of New York. The
Anderson firm is also negotiating a joint venture to drill for oil in the
Black Sea and hopes eventually to finance and construct refineries in
Romania in an agreement similar to an existing 50-50 partnership with a
group of Yugoslav enterprises. The Romanians have approached both Ford
and Coming Glass with joint venture proposals, but neither of the US firms
has been willing to accept Romanian terms. Other areas in which the
Romanians hav? suggested U`' help are the wood processing industry and
irrigation projects. In all likelihood, they would insist on paying foi a sizable
portion of such projects with goods, an arrangement US suppliers probably
would not find very attractive, unless convenient reexport or at least resale
arrangements could be made in advance and at predetermined prices.
35. To sum up, the outlook for Romanian trade with the United
States appears less bright than for its trade with Western Europe. The US
financial commuri t, v represents Romania's last major untapped source of
hard currency credit, but Romania will not make heavy use of it unless
US financing becomes competitive with that of Western Europe. The United
States has been unwilling for the most part to offer long-term credit (more
than five years) to Romania. Western Europe and Japan, on the other hand,
are ready sources of bank credits of six to eight years, and in some cases
ten years. In the absence of such credit, the limited prospects for growth
of Romanian exports to the United States in the next few years may well
act to hold down trade turnover between the two countries.
36. The Manescu visit, then, comes at a time of rather limited
prospects for short-term expansion of US-Romanian economic relations.
Romania is heavily indebted to developed Western countries, and the current
five-year plan, now in its second year, has already generally earmarked the
country's resources and import requirements for the time being. Even so,
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US unilateral moves in areas of finance, joint ventures, and other areas
are always possible, and such moves could greatly alter the course of future
US-Romanian relations.
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Selected US Exports to Romania
In 1959, Romania signed a contract with the United States, France,
Italy, and West Germany for the delivery of a catalytic reforming installation
to be installed at the Brazi petrochemical combine. Work on this plant
was completed in 1961.
In 1965, Romania signed a contract with Universal Oil Products for
the delivery of a catalytic cracking plant to be installed at the Brazi
petrochemical combine. An Export-Import Bank guaranteed loan of $16.2
million was extended by the Continental Illinois Bank and Trust Company
of Chicago at 6% interest. Repayments were to start in 1968 and were
to extend over a five-year period. The total value of the plant provided
by the United States was $22.5 million. Most or all of the equipment was
delivered to Romania in 1966 and 1967.
Corning Glass International supplied technical data ($6.5 million) and
part of the equipment ($2.8 million) for a plant designed to produce, under
a Corning license, glass envelopes (bulbs) for black and white television
picture tubes. The plant, located near Iasi, was to have an annual capacity
of 500,000 to 800,000 bulbs. Construction of the plant began in June 1968
and was completed in 1970.
In August 1969 a line of CCC credit for $2.5 million covering US
exports of cotton, tallow, and tobacco to Romania was established. The
Romanians failed to make use of a previous line valid for the period April
1966 through April 1967. In late 1969 the CCC line was increased from
$2.5 million to $7.5 million. The authorization period ran through August
1970; nearly all of the credit line was used. In early 1970 a $2 million
line for seeds was extended, and a $10 million line for barley was made
available. After the 1970 flood, the CCC lines of credit were greatly
expanded. By the end of 1970 the line available for wheat, cotton, tallow,
and tobacco had been raised to $44 million, the line for barley had been
raised to $24 million, and the line for seeds had been raised from $2.0
million to $3.5 million. Thus, since July 1969 a total of $79 million in
CCC credits has been authorized for Romania. As of 7 February 1972,
$21 million was still unused. This residual remains available until 30 June
1972.
Romanian requirements for metallurgical coke have risen sharply with
the putting into operation in 1968 and late 1969 of two 1,700 cubic meter
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blast furnaces at the Galati iron and steel combine. Because coke is in short
supply throughout the world, the Romanians have encountered difficulties
in obtaining sufficient coke supplies. In late September 1969 the Romanian
ambassador requested the aid of the US State Department in purchasing
coke. He sought 180,000 tons of coke for immediate delivery and 300,000
tons a year during 1970-79. The United States shipped 176,000 tons of
coke to Romania in 1969, 351,000 tons in 1970, but only 28,000 tons
in the first nine months of 1971. In addition, the United States shipped
65,000 tons of coking coal in 1965 and 63,000 tons in 1970.
American Metal Climax, Inc. is supplying Romania with the
manufacturing technology and know-how for a $10 million aluminum sheet
rollin lint.
The plant is scheduled to go into operation
by the end of 1972 and is to produc^ 113,000 tons of aluminum sheet
and foil a year.
In 1971, Wellman-Power Gas Inc., a US subsidiary of the British firm
Davy-Ashmore, was awarded the contract for engineering, construction, and
start-up of four nitrophosphate fertilizer plants to be constructed in
Romania. The proprietary equipment is to be supplied by Norsk Hydro
of Norway whose NPK (nitrogen phosphorus potassium) process is to be
employed in these plants.
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Failures in US-Romani in Negotiations: Two Examp'es
In April 1965 the Firestone Tire and Rubber Company, yielding to
public pressure within the United States, broke off negotiations for the
sale to Romania of a polybutadiene rubber plant. The Romanians were
upset by this development, for they had considered the plant an important
part of their five-year plan for 1966-70.
On 3 March 1970 Romanian embassy officials in Washington made
the highly unrealistic request that the United States permit Romania to
export to this country an aggregate of 58.6 million square yards of cotton
textiles. On being told that the United States could not consider this
proposal, they came back on 4 March with the suggestion that the aggregate
level be 31 million square yards. US officials told the Romanians that this
figure appeared totally unreasonable and excessive as a basis for discussion.
These officials advised the Romanians that they could not expect significant
expansion of cotton textile exports to the United States. Romanian exports
of cotton textiles to this country totaled 1.3 million square yards in 1968
and 5.6 million square yards in 1969.
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