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

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500230019-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 9, 2016
• Document Release Date: February 14, 2000
• Sequence Number: 19
• Publication Date: July 1, 1975
• Content Type: RP

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Secret
No 1%nr1jIUn Dltte!Ini
Communist Aid and Trade Activities
in Less Demlop d Countries, May 1975
Secret
ER RP 75.20
July 1975
Copy N2 Approved For Release 2000/09/14: CIA-RDP86T00608R0005002300 ~9
19-3
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure S041tct to Criminal Sanctions
Clacclfled by 013319
txe:Npt from Oene-al Declassification Schedule
of 1.0. 11699, exemption( categoryt
Auloma calirf dec aulfled ont
dale Irnpocclble to determine
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No Foreign Dinetn
CONTENTS AND SUMMARY OF EVENTS
(May 1975)
Highlights
Significant Soviet activity in the Third World in May focused on North Africa,
During a visit to Libya, Soviet Chairman Kosygin apparently signed a military
agreement valued at about $500 million. Kosygin flew on to Tunisia, where he signed
an agreement in principle to construct two dams, a Soviet specialty In the area. Soviet
officials arrived in Morocco to resume negotiations on a deal to develop phosphate
deposits in return for a long-term Moroccan contract to supply phosphate rock. China
signed its first direct trade contracts with Bangladesh and was negotiating its first
long-term iron ore purchase ugrrement with an LDC. The Philippines received its first
Communist aid, from Ru-,nania, while Bucharest was the beneficiary of a bond issue
sponsored by Kuwait on behalf of the Romanian Foreign Trade Bank.
Page
Summary of ER IR 75-16, Communist Aid to Less Developed
Countries of the Free World, 1974 .. .... .. .. ...... . . .. .
Africa
Soviet Chairmra Kosygin Visits North Africa .. . ... ....... . 3
Chairman of the USSR Council of Ministers Kosygin signed agreements with
Libya and Tunisia during visits to the two countries in May.
Soviet MIG-23 Deliveries to Libya . . ... . ... ....... .... 4
The USSR del:'vcred the first MIG-23 to Libya during May under an arms
agreement concluded last year.
USSR and Morocco Resume Discussions on Phosphate Agreement ..... 4
Soviet and Moroccan officials resumed discussions on a draft agreement
calling for Soviet assistance for exploitation of phosphate deposits at
Miskalas in return for long-term phosphate rock deliveries from Morocco.
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No VorrII;n hlAAri-i
Ia15i Asin
Em e
Ii onesin Proposes Projects for Comnrimist Financing . . . . . . . .... .
4
The Induiidsian National Planning Board has compiled it list of project
proposals for Soviet and Last European financing valued at $825 million,
Philippines Receives First Communist Credits . . . . . . . . . . . . , . .
5
Romania became the Philippines first Communist aid donor with it pledge
of $31 million in credits for a thermal powerplant.
Latin America
Brazil and China Negotiate Iron Ore Contract . . . . . . . . . . . .... .
During May, China was negotiating a long-term iron ore purchase contract
with Brazil, its first major deal with an LDC iron ore producer.
Peru Signs $95 Million in Contracts with Hungary .... . .... .... .
Peru signed contracts in May to deliver $75 million in Penrvicm commod-
itics to Hungary over the next five years and to purchase $20 million in
Hungarian equipment under credit.
Near East and :south Asia
Bangladesh Signs First Trade Contracts with China
Bangladesh and China established their first formal trade links with the
conclusion of four contracts in May.
Egypt and USSR Sign Economic Agreements .. .. ... . . .. ..... 7
Egypt and the USSR signed contracts to go ahead with construction of a
cement plant, expansion of an aluminum plant at Naja Hamadi, and other
projects.
it
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No I orelp D!Mrm
Romania Negotiates Kuwaiti Financing . . . . . . . . . . . . . . . . . . . 7
During May, Romania's Oil Minister visited Kuwait to discuss the joint
ratublishummt of a billion dollar petroehe:nicul complex In Romania to use
Kuwaiti oil. In addition, Kuwait sponsored a second bond issue, valued at
$40 million, on behalf of the Romanian Trade Bank.
Other Activities
Economic ....... . ... . . ... . ...... . . . . . . . . . .
Militsty . .... .. .. . .. . ... . ...... . . . . . . . .. . . . 12
Annex
Communist-LDC Trade Continues To Rise in 1973 .. . . . .. .. . . . A-1
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NO l ura1go sa~rn
rOMMUNIST AID AND TRADE ACTIVITIES
IN LESS DEVELOPED COUNTRIES
MAY 1975
General
Summary of ER IR 75-16, Communist Aid to Less Develo2ed
Countries of the Free World, 1974
New Communist military and economic aid to the less developed
countries (LDCs) of the Free Wai Id dropped to US $2.7 billion In 1974, Its
lowest level In three years. In spite of the reduced program, there was no
apparent change in Communist aid policy. Programs under way continued at
roughly the same pace as in most recent years, and the number of
Communist military and economic personnel stationed in LDCs increased.
Most of the ' -cline In 1974 was In military aid, which dropped sharply
from the abnormally high crisis levels of 1973. Military aid, always more
politically oriented than economic aid, although 30% smaller In 1974,
demonstrated again the extent of the Soviet and East European commitment
to the Middle East. For Iraq It was a record year; for Syria, second only to
1973. Reflecting the strains in Soviet-Egyptian political relations, Egypt
received no new military aid, while aid to Iraq and Syria accounted for more
than 60% of the USSR's and Eastern Europe's $1.2 billion of new military
assistance to the LDCs. Iraq and Syria also hati the largest contingents of
Communist military advisers. Most significantly, Moscow's new deliveries of
equipment to Iraq and Syria surpassed In sophistication the equipment
furnished to any other LDC. The supersonic MIG-23 jet fighters, shipped to
Note: The substance of this publication has been coordinated with the
Bureau of Intelligence and Research of the Department of State, with the
Defense Intelligence Agency, and with the Agency for International
Development. Comments and queries regarding this publication are
welcomed. They may be directed to of the Office of
Economic Research, Code 143, Extension 5291. 25X1 A
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Iraq and Syria, have not been provided to Warsaw Pact countries. Also
reflecting political overtones, Iran was the only other country to receive a
large new military commitment in 1974 -- a $250 million credit for ground
forces equipment, military support, and engineering equipment.
Moscow and Eastern Europe continued to use economic aid to advance
and protect their commercial and long-term economic interests. Again, in
1974, the formation of joint Industrial and commercial ventures with LDCs
Increased, and joint committees for economic cooperation were operating in
a number of LDCs as coordinating and aid planning bodies. New Soviet and
East European economic commitments in 1974 totaled $1.2 billion, about the
same as In 1973 but 25% below the 1971-72 records. The failure to furnish
large blocks of new aid reflected mostly the continuing slow drawdown of
previous aid. Although drawings against unused economic credits in 1974
reached a new high of $930 million, they were propelled by a record $265
million Soviet grain shipment to India. Otherwise, drawings would have
approximated recent annual levels.
The commercial motivation for economic aid was highlighted by the
large Communist credits to Argentina, intended to correct the imbalance in
Soviet and East European trade with Argentina. Other major Soviet and East
European economic aid went largely to ongoing projects, such as Moscow's
new credit ($216 million) to Pakistan for a steel mill being built with $210
million of Soviet aid extended in 1971. In an unusual move, Moscow agreed
to provide one-half of its $28 million budget support credits to Bangladesh in
hard currency.
China's $200 million of new economic aid in 1974 marked a significant
drop from its $575 million annual commitments since the Cultural
Revolution. Although still pursuing an active aid program in Africa, Peking
reduced its new economic airs pledges, mostly because of a lack of
opportunities and because outflows still were heavy for completing the Tan-
Zam Railroad, China's largest single aid project in the Third World.
Nevertheless, Peking's area of interest was unchanged, and except for a $25
million credit to Laos, its major effort continued on the African continent.
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Peking's two major clients -- Tanzania and Zambia -- again took the lion's
share (65%) of China's total economic aid. Its only significant military
commitment ($61 million) was to Its chief military client -- Pakistan.
(Secret No Foreign Dissem)
Soviet Chairman Kosygln Visits North Africa
Chairman of the USSR Council of Ministers Kosygin visited Libya and
Tunisia during May for wide-ranging talks on economic and political matters.
Kosygin probably negotiated a new military agreement with Libya In the
$500 million range. (Confidential)
As a result of discussions In Libya, the two sides signed an economic and
technical assistance agreement, whose provisions will be further elaborated
during the annual meeting of the Soviet-Libyan joint economic commission
in June. Libya has requested Soviet assistance for an iron and steel plant
and a nuclear powerplant, but it is unlikely that agreement on these projects
was reached. There was no public reference to discussions of Libyan oil
sales to the USSR. On the military side, Moscow has denied Egyptian press
allegations that a multibillion dollar military agreement was signed during
the visit, but the USSR probably signed a military supply agreement valued
at around $500 million. Libyan Chairman Qadhafi accepted the Soviet
leader's invitation to visit the USSR, presumably in the near future.
(Confidential)
In Tunis the Soviet delegation studied Tunisian requests for Soviet
assistance to Tunisia's new five-year plan. The USSR announced agreement
in principle to construct two dams under some $18 million of previous Soviet
credits and offered to expand Tunisia's fishing industry. (Confidential)
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Soviet MIG-23 Deliveries to Libya
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The USSR delivered as MIG-23s to Libya in May, the first
MIG-23s in Tripoli's Inventory. The shipment moved under an arms
agreement concluded with the USSR last year. Libya becomes the fourth
Arab country to receive the advanced MIG-23. (Secret No Foreign Dissem)
USSR and Morocco Resume Discussions on Phosphate Agreement
Soviet and Moroccan officials resumed talks in Rabat on Soviet
development and exploitation of the Miskalas phosphate deposits. The draft
agreement calls for Soviet financing and construction of a phosphate mine at
Miskalas, construction of a 20-mile railroad to the port of Essouira, and
installation of phosphate handling facilities at the port. Under the proposal,
the USSR would buy 3-5 million metric tons of phosphate rock a year in
1980-90 and 10 million tons annually for a subsequent 15-20 years.
Negotiations which have gone on for more than a year foundered because
Morocco refuses to permit the USSR to reexport Moroccan phosphates or to
use them to raise exports of Russian-produced phosphates. Morocco also
wants a shorter term contract. Recent softening in demand for Moroccan
phosphates may strengthen the Soviet bargaining position. (Confidential)
East Asia
Indonesia Proposes Projects for Communist Financin
The Indonesian National Planning Board has compiled a list of projects
suitable for Soviet and East European financing valued at $825 million. The
proposals concentrate on development of ports, inland waterways, inter-
island transport, and Indonesia's oceangoing fleet. Construction activity and
ship procurement carry a total price tag of more than $500 million. An
additional $95 million is for power development and $35 million for the
rehabilitation of railroad and motor transport facilites. The remaining
projects are scattered over agricultural processing and manufacturing
industries. (Secret No Foreign Dissem)
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During a tour of the USSR and Eastern Europe last fall, Indonesian
Foreign Minister Malik received assurances that Indonesian aid requests
would receive favorable conpideration. The USSR signed a new economic
and technical assistance agreement In December. The magnitude of credits
will be set after Soviet review of Indonesian project suggestions. (Secret No
Foreign Dissem)
Indonesia's Interest in following up on aid requests to Communist
countries may have cooled since Western countries pledged over $900 million
In new aid at their annual consortium meeting in May. This level was higher
than pledges in 1974. Jakarta's Initiatives In seeking aid from Communist
countries last year were prompted by fears of a sharp decline in Western aid
attendant on Indonesia's Increased oil earnings. (Secret No Foreign Dissem)
Philippines Receives First Communist Credits
During a state 'isit tp the Philippines in April, Romanian President
Ceausescu signed an agreement to provide $31 million for construction of a
thermal powerplant on Cebu. The terms of the credit agreement, Manila's
first with a Communist country, were not announced. Romania also agreed
to buy $65 million worth of nickel over the next six years. For Its part, the
Philippines signed contracts to purchase offshore oil drilling equipment,
valued at $3.6 million, and 500 Romanian tractors. (Confidential)
Latin America
Brazil and China Negotiate Iron Ore Contract
Negotiation of a 10-year contract with Brazil marks China's first
attempt to conclude a long-term iron ore agreement with an LDC producer.
A Brazilian firm has offered 6.9 million tons of ore to be shipped at a rate of
about 700,000 tons annually through 1984. Prices would be negotiated each
year, but the current market value of the agreement is estimated at a
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minimum of $80-$90 million. The new agreement is consistent with Chinese
initiatives over recent years to assure long-term supplies of basic raw
materials for Chinese Industry. Brazil, with Its abundant supplies of
agricultural and other primary products, has become a particularly import-
ant trading partner for China over the past three years. (Secret No Foreign
Dissem)
Peru Signs $95 Million in Contracts with Hungary
During May, Peru signed a $20 million contract with Hungary for
expanding the Canon del Pato hydroelectric plant as the final allocation
under a $38 million credit extended in 1972. Lima previously has drawn on
the credit to finance purchases of power generating and distributing
equipment and educational materials, Long-term trade contracts signed at
the same time are valued at about $75 million. Among other items, Peru
will, export 40,000 tons of fishmeal annually (1976-78), worth $30 million at
current prices, as well as an estimated $36 million of copper and other
metals during 1975-80. Hungary Is Peru's major East European trading
partner. In 1974, trade between the two countries totaled $19 million, of
which only $5.5 million represented Peruvian exports. (Unclassified)
Near East and South Asia
Bangladesh Signs First Trade Contracts with China
The Dacca press reported in May that Bangladesh established its first
formal direct trade links with China during the visit of a four-n,,.-An
delegation to the Canton Trade Fair. Four contracts reportedly were signed,
but the goods to be traded were not announced. The agreements were hailed
as a prelude to the establishment of diplomatic relations. (Unclassified)
Bangladesh has been seeking new markets for its jute products and
views China as a potentially important source of cheap consumer goods
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imports. In addition, Dacca probably hopes that China might agree to
persuade Pakistan to adopt more favorable policies on the division of assets
and repatriation of Bangladesh nationals, questions outstanding since
Bangladesh achieved independence in 1971. Pakistan is the largest recipient
of Chinese economic and military aid In the Third World. (Unclassified)
Egypt and USSR Sign Economic Agreements
(Egypt and the USSR concluded a number of economic agreements during
May which should heighten activity at existing Soviet project sites in Egypt.
The USSR signed final contracts valued at $105 million to go ahead with a
600,000-ton cement plant at Asyut, to Increase the capacity of the Soviet-
assisted Naja Hamadi aluminum complex to 166,000 tons annually, and to
expand a machinery plant. The USSR will take 35% of Egypt's aluminum
output. The two sides also discussed third-stage expansion at the Helwan
iron and steel complex, an undertaking that will require new credits.
Second-stage activity now in progress will raise steel capacity to 1.5 million
tons a year by 1976. (For Official Use Only)
The two countries also signed protocols on electrification projects
valued at $15.6 million. Projects include installation of transformers in
upper Egypt, renovation of the Suez power station, and improvements to the
Aswan power station. (For Official Use Only)
Romania Negotiates Kuwaiti Financing
Romania's Oil Minister visited Kuwait in May for talks which reportedly
covered joint participation in a petrochemical complex in Romania at a total
cost of $1 billion. Kuwait would supply 49% of the equity as well as the
crude oil feedstock for the venture. (Unclas;ified)
Romania already is importing small amounts of Kuwaiti crude under an
agreement signed in 1974. The new complex may come under an economic
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cooperation pact signed last year which e,his for development of joint
projects In the chemical, petroleum, and construction Industries over the
next five years. (Secret No Foreign Dissem)
In addition, the Kuwait International Investment Company was arrang-
ing a second bond issue on behalf 'i Romania during May. The $40 million
issue was to carry the same terms as a $60 million nrtc negotiated In March,
which was fully subscribed by the Kuwait Ministry of Finance on behalf of
the Romanian Bank of Foreign Trade. Repayment Is scheduled for eight
years at 9.5% interest. ('6c' ret No Foreign Dissem)
Kuwait and other OPEC countr1Lcs are likely to Increase economic
contacts with Eastern Europe in search of new sources of raw materials and
outlets for surplus funds. East European countries, in turn, are seeking
means to finance higher oil end other Import costs. Budapest will send an
economic delegation to Kuwait in dune, most likely to follow up an earlier
Hungarian request for a $300 million line of credit from Kuwait. (Confi-
dential)
OTHER ACTIVITIES
Economic
Africa
Angola. The Secretary General of the Front for the National Liberation
of Angola (FNLA) intends to travel to Peking In the near futurc- to request
Increased Chinese military and financial assistance to his movement. China
currently is providing military instructors for the FNLA army. (Secret No
Foreign Dissem)
Gabon. Gabon signed an agreement on economic and technical
cooperation with Romania in May, Gabon's first such pact with a Communist
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country. A trade agreement was signed at the same time. The two sides
agreed to set up a joint committee to identify areas suitable for Romanian
assistance. Projects mentioned Include a petroleum refinery and petrochem-
ical complex, agricultural development, and medical centers. (Unclassified)
Ghana. China and Ghana signed a protocol to their 1972 trade
agreement calling for a trade turnover of $21 million during the next year.
Ghana will export timber, minerals, cocoa, and other agricultural products in
return for agricultural machinery, ferrous metals, and textiles. (Unclassi-
fied)
Mozambique. Frelimo leader Machel reportedly departed for a week's
stay in the USSR In mid-May. The USSR has offered economic and military
support to Mozambique following Independence on 25 June. (Confidential)
Somalia. A high-level Somali agricultural official departed for Peking
at the invitation of Chinese officials to discuss assistance to animal
husbandry, the development of water resources, and aid to the forestry
Industry. China has been providing agricultural assistance to Somalia for
more than 10 years under an $18 million credit agreement. (Unclassified)
East Asia
Indonesia. The Indonesian government has approved the direct sale of
up to 10,000 metric tons of rubber to Bulgaria, with dt!ivery to begin within
three months. The transaction could be worth up to $5.3 million.
(Unclassified)
Philippines. Hungary and the Philippines began formal negotiations on
their first trade agreement on 19 May. (Unclassified)
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Latin America
Brazil. Brazil Is studying a Poll,-th proposal to purchase ships of 20,000
to 50,000 tons from Brazil and to sell ships of up to 200,000 tons to Brazil.
Earlier this year, the two countries signed a $1 billion agreement for the
exchange of polish coal for Brazilian iron ore. (Unclassified)
Ecuador. Construction is scheduled to start in June on a Iolnt
astronomy research station to be manned by Soviet and Ecuadorean
scientists. (Unclassified)
Mexico. During May, China agreed to buy 1,000 tons of Mexican coffee
valued at $1 million. Trade between the two countries has been active since
the conclusion of their first trade agreement two years ago, and in 1973
exchanges approached $40 million. (Unclassified)
Mexican officials have responded cooly to an East German offer of $10
million in credits for the purchase of communications equipment. The offer
reportedly Involved discounts of up to 30% on the German equipment, which
could be paid for under a barter agreement. (For Official Use Only)
The USSR and Mexico signed a technical protocol on 20 May calling for
cooperation in machine building, energy, agriculture, geology, and other
fields. A joint committee will oversee technical exchanges under the
agreement. (For Official Use Only)
Trinidad and Tobago. Peking agreed to purchase sugar, cocoa, and
coffee and to consider purchases of other traditional products during the
visit of a trade mission from Trinidad in May. It is not known whether the
two sides considered a recent Chinese proposal to exchange oil industry
technicians. (Unclassified)
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Near East and South Asia
Bangladesh. Bangladesh and East Germany concluded their annual
barter trade protocol on 30 April calling for the exchange of $5 million of
East German medical and pharmaceutical goods, fertilizers, and typewriters
for jute goods and other products. (Unclassified)
Cyprus. Bulgaria signed an agreement to employ Cypriot personnel on
construction projects in Bulgaria. The number of workers involved was not
disclosed. (Unclassified)
The USSR will supply equipment for sulfuric and phosphoric acid plants
In Cyprus under the provisions of a trade contract to be signed In the near
future. The USSR already has delivered port equipment and a cement plant
to Cypru,;, probably under an agreement signed earlier this year. (Unclassi-
fied)
Egypt. The Romanian-Egyptian trade protocol for 1975, signed in mid-
May, calls for a total turnover of $156 million, a slight increase over 1974.
(Unclassified)
India. The USSR has allocated $7 million for the preparation of
engineering studies for development of coal fields at Singravii and Ranlganj.
(Unclassified)
A Soviet delegation led by the Deputy Foreign Trade Minister arrived in
India to continue negotiations on a new long-term trade agreement for 1976-
80. The two sides have announced plans to double the present level of
exchanges by 1980. In 1974, Soviet-Indian trade totaled $812 million.
(Unclassified)
Iran. Czechoslovakia and Iran signed a protocol to double trade in 1975
to $80 million. (Unclassified)
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Irac. The PRC will purchase 50,000 tons of sulfur from Iraq under a
contract signed on 28 May. Deliveries will be completed in six months.
(Unclassif led)
The joint Romanian-Iraqi economic commission signed trade and
economic agreements during a session held in Bucharest early in May.
Romania agreed to provide assistance to agriculture and the petroleum
industry. Romania extended $35 million in credits to Iraq for oil
development In 1971. Little activity has taken place under this agreement.
(Unclassified)
South Yemen. China signed a formal agreement in May to build a 140-
mile road, probably with funds from a 1972 agreement. (Unclassified)
Turkey. The USSR and Turkey concluded an agreement to expand the
capacity of the Soviet-financed Iskenderun steel mill from 1 to 2 million
tons of steel. In 1972 the USSR extended $158 million for second stage
expansion at the plant, bringing total commitments to the project to $421
million. (Unclassified)
Turkey's National Assembly has endorsed an agreement with the USSR
for joint construction of a dam on the Arpa Cayi River. Turkey's
contribution to the project, which will irrigate 40,000 acres on the Igdir
plain, totals $2 million. (Unclassified)
United Arab Emirates. A Romanian delegation to Abu Dhabi outlined
proposals to purchase crude oil in exchange for Romanian equipment and
expertise for the petroleum industry. (Unclassified)
Military
Africa
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Congo. The PRC delivered - patrol boat helicopters
to Pointe Noire in March. - patrol boat is scheduled for delivery some 25X1 B
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time before midyear. These deliveries are part of a $5 million grant
military aid program which has been under way since late 1964. (Secret No
Foreign Dissem)
Somalia. In early May a 16-member Somalian military delegation left
for a 10-day visit to the USSR. The delegation was expected to hold talks on
bilateral military relations with the Soviet government. (Unclassified)
Sudan. A Chinese military delegation left Peking on 19 May for Sudan,
to take part in the sixth anniversary celebration of the 29 May Revolution.
China has previously provided some $7 million worth of military equipment
to Sudan, Including jet fighters and tanks. Although no major Chinese
deliveries have occurred since 1973, about $1 million In arms remains to be
delivered. The delegation may discuss delivery schedules for the remaining
equipment. (Secret No Foreign Dissem)
Zaire. North Korea has made Its first delivery of artillery to Zaire. In
late March, North Korean artillery pieces were observed being
unloaded from a ship in Matadi. A North Korean-Zaire arms accord covering
this delivery was concluded last year when military delegations were
exchanged. Additional deliveries will probably Include the range of weapons
common to a North Korean infantry division -- machineguns, antitank
missile launchers, recoilless guns, mortars, and artillery. (Confidential)
25X1 B
Near East and South Asia
25X1 B
Afghanistan= Kraz-255 prime movers were shipped from the USSR
to Afghanistan in late March and an additional- delivered in early 25X1 B
April. These are the first known military deliveries since November 1974,
when deliveries stopped because of the winter weather. Tanks are expected
to be delivered soon;
(Confidential) 25X1 D
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COMMUNIST AID AND TRADE ACTIVITIES
IN LESS DEVELOPED COUNTRIE,3,
MAY 1975
ANNEX
COMMUNIST-LDC TRADE CONTINUES TO RISE IN 1973
Summary
1. Communist-LDC trade made unprecedented gains in 1973, over-
shadowing the record performance of the previous year. Price inflation and
changes in the values of currencies, however, contributed substantially to
the increase.
2. The dollar value of Communist-LDC trade turnover rose by almost
50%, to more than $13 billion, compared with a growth In total world trade
during the same period of about 40%. Still, LDC trade accounted fa;' less
than 15% of total Communist trade, and for the LDCs this trade was only
5% of their total turnover.
3. All Communist countries participated In the Increase, but the rise
in Chinese trade was proportionately greater than for others. The jump in
trade with the LDCs reflected Peking's more vigorous Initiatives to expand
Its markets and its need to augment raw material supplies to support Its
expanding industrial effort. China continued to show a surplus of more than
$200 million in Its LDC trade, in spite of a large deficit with Latin American
partners.
4. The overall Communist surplus in trade with the LDCs rose by $900
million in 1973, to almost $2.4 billion. Although much of the surplus cannot
be distributed among LDC trading partners, the undistributed element
A-1
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almost certainly includes Soviet military exports* as well as East European
exports under military contracts and economic aid agreements.
Discussion
Rising Prices Have Major Impact
5. Far higher prices for the food, metals, minerals, and other primary
products that constitute the bulk of Communist purchases from LDCs
contributed heavily to the overall increase in Communist-LDC trade. In
1973, for example, the USSR paid 30% more for rubber and 40% more for
sugar, and the price for raw wool more than doubled. The world market
price of other major Communist Imports, such as Latin American copper,
grain, and fishmeal, rose 60%-90% In 1973 compared with 1972. Throughout
the year, prices for primary products rose faster than those for manufac-
tures. The Increase in prices of Soviet exports, dominated by machinery and
equipment deliveries, reportedly Increased by about 10% In 1973.
6. As world demand and prices rose for primary products In 1973 some
LDCs began to take a hard look at the profitability of their long-term barter
arrangements with Communist countries. LDC producers became less
willing to accept Communist machinery and equipment for hard currency
earning exports. By 1974, several LDC exporters of petroleum, phosphates,
metals, and agricultural raw materials had renegotiated some of their
agreements with Communist countries to require payments in hard currency.
Notable among these were Iran, Iraq, Syria, Ghana, Morocco, Nigeria, Sudan,
and Tunisia. This phenomenon was less evident among sub-Saharan African
countries than elsewhere. A large proportion of their imports from the
USSR and China, are shipped under aid agreements. Communist countries
often take less desirable commodities that do not find a ready market
* For a more detailed discussion of Soviet-LDC trade see ER IR 74-29,
Reccrd Soviet-LDC Trade in 1973 November 1974, Confidential.
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 Approved For Release 2000/09/14: CJA-RDP86T00608R000500230019-3
cret
elsewhere. Communist countries probably do not press for annual
settlements on barter account if African partners are facing severe payment
difficulties.
Direction of Trade
7. Although Latin American countries emerged as major raw mater-
ials suppliers during 1973, they did not challenge the dominance of Near
Eastern and South Asian countries in Communist trade (see the table).
8. The Importance of the Near East and South Asian area was
bolstered by a doubling in the value of Communist fuel Imports to more than
$600 million. This increase reflected expanded volume, as well as price
Increases. Moscow almost tripled the volume of Its crude imports from Iraq,
but the price rose only 20%. Iraq, Iran, and Afghanistan were the source of
r;iost of the $400 million of Soviet fuel purchased from the Third World. The
volume of Eastern Europe's direct purchases of crude oil from LDC
producers rose almost 80% in 1973.
9. Latin America's Increased Importance as a raw materials supplier
reflected a rising demand in Communist economies for basic commodities to
satisfy agricultural shortfalls and to expand Industrial production. Latin
America accounted for the largest relative gain -- more than 60% -- In
Communist-LDC trade turnover. Most of the Increase came from a near-
doubling in the value of Communist Imports of food, hides, and minerals.
The hefty Communist deficit In Latin American trade, experienced by all
Communist trading partners, doubled in 1973 to over $800 million.
iu. In an attempt to stem the rapid deterioration in their trade
-positions, all Communist countries Intensified their sales campaigns In Latin
America. These were accompanied in 1974 by liberal Soviet and East
European offers of credits for sales of machinery and equipment. The USSR
was negotiating several large contracts for sales of power equipment to
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Argentina and agreed to sell $160 million of petroleum products to Brazil.
However, most Communist trade activity was still on the buying side, with
additional new contracts In 1974 for sugar and other products from Brazil;
meat, grain, and hides from Argentina; and minerals and metals from Chile
and Peru.
Commodity Composition
11. Communist countries remain primarily a market for LDC raw
materials and agricultural products In spite of LDC attempts to Increase
their sales of manufactured goods. For the USSR, raw materials and
foodstuffs still represented 5.56 of its total Imports from the LDCs in 1973.
Although the share of manufactures has doubled since 1960, It accounted for
only 13% of total Soviet Imports from the Third World. The most significant
change in the composition of Soviet-LDC trade Is the large Increase of fuel
as a share of total Soviet Imports. It accounted for 17% of total Soviet
Imports from LDCs in 1973, compared with 12% in 1972 and only 7% In 1971.
12. Machinery and equipment dominate Soviet exports to the Third
World, having accounted for 50%-55% of Soviet exports to LDCs for more
than a decade. These sales have been maintained to some extent by credits
provided under the Soviet aid program. The ruble value of Soviet crude oil
sales to Third World customers dropped 15% in 1973, to only 6% of total
exports. Manufactured goods and other crude materials, however, main-
tained their usualdshares for most recent years of about 10% each.
13. The composition of East European trade is believed to follow the
Soviet pattern with a somewhat heavier weight to crude materials and fuels
in the Import totals
14. Almost all of China's Imports from LDCs were raw materials and
food. Developing countries provided 45% of China's crude materials imports
in 1973, including all of China's rubber, half of its cotton, and 45% of its
nonferrous metals imports.
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15. Light manufactures accounted for one-half of the PRC's exports to
LDCs while food made up most of the remainder. Among Peking's world
exports in 1973, 80% of its grain (mostly rice) exports, 70% of its iron and
steel exports, and 30% of Its textiles went to the Third World. (Confidential)
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S.cnt
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.,
,r Nil
;311 11)lparlll from Selected Lem
1972
1973
Lllpurlll Inlpor111
'I'n01ll...... 3,II14 :1.010,2 7,710,5 5,312,11 2, 1113,0 1,1197.3
?1.003,$
2,4110,1
Alriea ..................... 732.2 582,7 994,7 828,5 249,3 241,2
283,8
271.0
1311
I) 1:11
7 171
:
I
.
,
,
A
gerht ..................
I
Angola,,,,,,,,,,,,,,,,,, 1,5
N.It,n N.H.
N,IL
N.H.
Burundi ................. 2,7
N.H. N.It,
N, It,
N. 11,
II
11
1) 111
2 11
I ?I
('
,
,
,
.
anleruou , , ,
('rutntl A(rIeatl Itepuhilr, . 0,I 0,5
0,1
(1,5
Chad ................... 0,8 1.11 1.1
N.H.
114.11.
N. it,
IN. It,
('oligo. . ............... . 2.I 2.2 1,0 :1,13
0,1
1 .2
I ,II
3,3
Unhotney,,,,, 2.7 2.8
Isquulorlnl (1ulniat,,,,,.,, I), I 1,2
0,1
.,,
,,,
4,2
I?;thlupht , . , , , , , , , . . Ii.11 8,0 I5,0 13,?1
I'll
2,5
2,2
:1,1)
(htbuo .................. (Ili 1.5 II, 1 1,4
IN, It.
N.H.
N,It.
N.111
?1, ?1 11,7
1
N. It.
N.H.
N,It,
N, It,
23,:1 511,
5 31,0 711,0
11,1
:17,1
13.1
:17.8
(iulnen ............... 51,3 0,8 50,4 2.11
111,11
Ivory ConIt ............ 7,7 111,11 11.11
51,:1
2,1
11.8
1.3
511, ?1
11,3
2,11
8,4
Keuyn .................. I8,)) 7.8 15,13 12.2
(I,8
11.8
0.3
Liberia .................. 5,b 12.1
N. It.
N. It.
N. It.
N. It,
I.Ibya..... ..I ........ 80 , ?I 55.7 1:39, it 1.55. 13
W. 11
:lll,:3
111,11
I I .11
IInlagany I{cgwbil........ \e?1, 1,5 10.1 0 , 8
,...
1 . ?1
..,.
11. .1
Mali .................... 5,0 1,1 11,:3 0.7
113
1 . 1
3.0
0.7
Mgurllanla.. I,1 1.7
I,8 2.11
N.R.
N. It,
N.H.
N.H.
Miturltio, .............. . 1.3 0
,4
N. It.
N. It.
....
,..
NIn11110 ................. 1
1,5 Negi,
N.H.
N. It,
Morocco ..... I ... I .... I . 79.2 77.7 7r
i. ?1 102.1)
38.1
28,7
38.2
33,2
Mozantbiyuo ...... . ... . 11,2 Neel. 0
.2 11,1
N.H.
N. It,
....
Niger ................... 11.1 NegI.
N. It,
N.It.
N. It.
N.H.
Nigeria .................. 135.0 35.1) 01
.1) 51.11
10,0
21.1)
11.8
311.11
Iteunlon ................. 7
,8
$cnegnl ................. 10.3 I.1) 12
.4 NvgI,
1.7
.1
It'll
Sirrnt Loon. ............. 11.7 2.2 11
1.2 2.1
1.0
I .11
].6
2.0
Somalia ................. 17.0 5.3 :1
1.?1 2.4
1.1.2
3.5
15.5
1.5
Sudgn ................... 1111.2 (it). )) 11'
1.7 85.3
20.7
1 .3
3.4
....
Ton7,8(Iiit ............... . 77.1) 23.0 111
.2 22.0
0.7
1.0
11.8
:1. ?I
'I'ugo .................... 8.2 11.3 5
.1 2.0
1.7
4.7
1.11
....
Tuni?la ................. 15.2 23.13 27
.1 27.:)
3.:3
8.:3
7.8
7.3
Ugundn ................. 13,5 2.1.2 ?1
.M 17.11
?1.1
0.8
1.2
3.2
Upper Volta ..... . ....... 1.3 2
.5 20,0
N.R.
N.H.
N.R.
N. It.
Zairee .................... 8
.3 ll.I
N.H.
N.H.
N. It.
N.it.
%nrtthig ................. 22.4 21.1 20
.6 30.11
Nit.
N. It,
N?11.
N.H.
Europe................. 170.3 117.5 247
.5 130.0
26.9
27.7
42.0
1.3.3
\Inlta ................... 0.7 0,8 1.1
.0 0.8
1 .6
NtgI.
1.111
....
Portugal ................ 10,11 7.11 3
0.3 10.3
....
....
N. It.
N.R.
Spain ................... 108.8 203
.2
l:gt