USSR-MIDDLE EAST: A SURVEY OF ECONOMIC RELATIONS

• Document Type: CREST
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• Document Page Count: 31
• Document Creation Date: December 27, 2016
• Document Release Date: February 7, 2013
• Sequence Number: 1
• Publication Date: October 1, 1988
• Content Type: REPORT

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Directorate of
Intelligence
MASTER FL
DO MOT GIVE GU
tb MARZ, ON
IL
USSR-Middle East:
A Survey of Economic Relations
A Research Paper
PROJECT NUMBER_ Saio tie, 7 41 cPy
IWWWK
PAGE NUMBERS
TOTAL NUME3ER OF
DISSEM DATE
EXTRA COPIES
RECORD CENYER
JOB NUMBER
COPIES
JJ//n
4/75--5-03
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Secret
SOV 88-10071X
October 1988
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00,-.4v-4t,l, Directorate of Secret
Intelligence
Reverse Blank
USSR-Middle East:
A Survey of Economic Relations
A Research Paper
This paper was prepared by Office of
Soviet Analysis, with a contributiii
Office of Near Eastern and South Asian
Analysis. Comments and queries are welcome and
may be directed to the Chief, Economic
Performance Division, SOVA
Secret
SOV 88-10071X
October 1988
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Scope Note
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USSR?Middle East:
A Survey of Economic Relations
This paper reviews the USSR's economic interaction with the Middle
East.' Utilizing Soviet trade data and CIA estimates of Soviet military
deliveries and economic aid, we have derived a fairly accurate picture of bi-
lateral trade flows. This paper does not address the broader political
dynamics influencing and influenced by such overtures.
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'For the purposes of this paper, the "Middle East" encompasses Moscow's traditional arms
clients (Algeria, Libya, Iraq, Syria, North Yemen, and South Yemen), the moderate Arab
states (Egypt, Jordan, Kuwait, Saudi Arabia, the United Arab Emirates, Oman, Bahrain,
and Qatar), and Iran. 25X1
iii Secret
SOV 88-10071X
October 1988
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Summary
Information available
as of 4 August 1988
was used in this report.
USSR?Middle East:
A Survey of Economic Relations
As part of an effort to expand its role in the world economy, Moscow has
stepped up its economic overtures to the Middle East. While the Soviets
are focusing largely on boosting trade?both commercial and military?
with the region, they are also seeking to expand technical assistance,
financial links, and new forms of economic cooperation such as joint
ventures. Moscow's efforts extend beyond its traditional clientele; ap-
proaches have been made to more conservative Arab regimes and to other
Third World regions, notably Southeast Asia and Latin America.
Overall, we believe that Moscow's total exports?military and civilian?to
the Middle East over the next few years will be $6.5-7.0 billion annually,
some $1.5 billion better than average 1985-86 sales figures but considera-
bly less than the $8.2 billion registered in 1983. Arms sales will continue to
dwarf all other areas of cooperation in the Middle East over the near term.
The high priority Moscow's traditional arms clients?Iraq, Syria, Algeria,
Libya, North Yemen, and South Yemen?assign to military procurement
probably ensures that weapon purchases will continue to account for
roughly 80 percent of Soviet business in the Middle East. We believe,
however, that a substantial growth in arms exports to the region is unlikely
and that annual arms exports are likely to exceed only slightly the 1987
level of $5.1 billion.
Moscow will also have to continue dealing with its customers' inability to
pay for arms with hard currency. For example, we estimate Moscow
financed 45 percent of its sales in 1980, but the portion of arms exports
covered by credits had risen to 60 percent by 1986. Much of the increase in
credits can be attributed to Iraqi purchases made since 1985. The
expanded use of credits, coupled with delinquent military debts, has taken
a toll on Soviet hard currency earnings: we estimate that, of the $5.6 billion
due Moscow in 1986 for both arms deliveries that year and scheduled
payments for earlier arms purchases, some $2.9 billion went uncollected.
To help offset this lost income, Moscow is now somewhat more accommo-
dating in accepting alternative repayment schemes for past credits. Oil
deliveries, in particular, have picked up in recent years, increasing from
about 150,000 barrels per day (b/d) in 1982 to 300,000 b/d in 1986-87. At
the same time, Moscow appears to be taking a tougher line both with
respect to the disbursement of new credits and in its efforts to obtain
payment for those delinquent military debts where it feels the customer?
for example, Libya?has the ability to make good on its debt.
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The Soviets' nonmilitary forays in the region will have little payoff over the
next few years; civilian exports are projected to average roughly $1.3
billion annually. In particular, Moscow's commercial sales to its arms
clients will remain small. The published economic development plans for
these countries indicate a continued demand for traditional Soviet machin-
ery and equipment on the order of $600-800 million annually, mostly in
support of large projects. The end of the Iran-Iraq war could provide
Moscow with some additional orders from these countries. Various reports
indicate that a number of economic projects in both countries for which the
Soviets were to provide assistance have been on hold because of the war.
Outside of Soviet assistance in economic development projects, however,
the traditional arms clients are showing little enthusiasm for Soviet goods
in general.
We expect only limited success from Moscow's current efforts to woo the
moderate Arab regimes. The USSR's best chance for boosting trade and
economic cooperation lies with Egypt, where severe economic problems and
Mubarak's desire for more balanced foreign relations provide some
opportunities for the Soviets. Moscow hopes to make sortie inroads by
boosting sales of machinery and equipment to Egyptian factories originally
built with Soviet help in the 1950s and 1960s.
There are a few other openings in the region that Moscow is trying to
exploit:
? The moderate Gulf Arab states are paying a bit more attention to Soviet
trade proposals because they are unhappy with what they perceive to be
growing trade protectionism in the developed West.
? Jordan's difficulties in securing financing to purchase Western military
hardware could make it receptive to attractive Soviet offers, and the US
Government's refusal to supply certain weapon systems has lead regimes
such as those in Kuwait and the United Arab Emirates to seek similar
weapons from Moscow.
? The region's international financial institutions and gold markets are also
of growing interest to Moscow because they are markets that the Soviets
have not tapped to a great extent. Moreover, Soviet transactions in this
region may be less publicized than similar deals in Western Europe, thus
helping the Soviets obscure, to some extent, the level of their indebted-
ness.
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Moscow will be lucky to secure more than a marginal increase in economic
ties with this group of countries. Most moderate Arab leaders remain
worried that an expanded Soviet economic presence and political meddling
go hand in hand. In addition, the severe drop in oil revenues has already re-
duced the region's demand for imports. To the extent they are still buying,
the moderate Arab states will continue to look to the West for a host of
reasons, including familiarity with capitalist marketing and financing
procedures, a preference for Western goods and technology, and the
availability of aftersales services and spare parts. At the same time,
however, the expanded Soviet presence in these states caused by increased
economic dialogue will provide the Soviets with increased opportunities for
building political influence, obtaining access to COCOM-controlled tech-
nology, and conducting intelligence activities.
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Contents
Page
Scope Note
111
Summary
Dominance of Military Trade
1
Burgeoning Arms-for-Oil Partnership
3
Economic Aid and Civilian Trade
4
Moscow's Current Game Plan
7
Carrot-and-Stick Approach to Traditional Arms Clients
7
The Special Case of Iran
11
Courting the Moderates
11
The Middle Eastern Response
13
Business as Usual With the Traditional Arms Clients
13
Limited Inroads With the Moderates
14
Implications for the West
16
Appendixes
A. Estimating Soviet Military and Commercial Exports to the
Middle East
19
B. USSR: Estimated Nonmilitary Trade With the Middle East
21
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Figure 1
Chronology of Soviet-Middle Eastern Arms Trade
Billion US $
Soviet arms
exports
=I Soviet hard
currency revenues a
Second oil
price shock
Beginning of
Iran-Iraq war
Resupply of
Syria
Large credit
extensions to Iraq
Oil prices
began to fall
First oil
price shock
0
1973 74 75 76 77 78 79 80 81 82 83 84 85 86
a Hard currency revenues are defined as the actual inflow of
dollars and the value of oil received as compensation in that year
as a result of new contracts and payments on past military debts.
Arms exports are the CIA estimates of Soviet arms deliveries less
grants and discounts.
b Preliminary.
b
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USSR?Middle East:
A Survey of Economic Relations
Dominance of Military Trade
Moscow discovered early on that arms transfers were
its most direct route to influence in the Middle East,
particularly because many newly independent states
in the region could not obtain desired military assis-
tance from the West. Offering a wide assortment of
weaponry?along with rapid delivery, training, and
generous repayment terms?the USSR parlayed its
initial secretive deals with Syria and Egypt in the
mid-1950s into arms agreements with other Middle
Eastern countries such as Iraq and Algeria by the
mid-1960s. The Arab-Israeli wars of 1967 and 1973
and rising oil prices throughout the 1970s spurred still
more military deliveries to the region. When faced
with competition from other suppliers, Moscow has
bolstered its supplier credentials by making sophisti-
cated and expensive weapon systems available to its
customers on short notice?even at the expense of
deliveries to its own forces and Warsaw Pact partners.
As a result, estimated Soviet arms exports?less
grants and discounts?to the region climbed from
$400 million in 1971 to almost $6 billion in 1979 (see
figure 1 and appendix A).
The rising oil revenues of Moscow's Middle Eastern
arms customers after the 1973 OPEC price explosion
prompted the Soviets to seek more from their military
program than the expansion of political influence.
Through a number of initiatives such as increased
prices, demands for advance payments, larger hard
currency downpayments, and tighter credit, Moscow
put its military program on a more profitable footing.
These measures helped boost estimated hard currency
earnings from Middle Eastern arms sales from rough-
ly $100 million in 1973 to $3.2 billion in 1979.
The USSR's military sales program during the early
1980s continued to be the largest and most profitable
element in Moscow's relationship with the Middle
East, with estimated arms deliveries averaging 80
1
percent of total Soviet exports to the region (see figure
2). Sales remained brisk because of the relatively high
world price of oil, the continuation of the Iran-Iraq
war, and the need to resupply Syria following its 1982
losses during the Israeli invasion of Lebanon. By the
middle of the decade, however, financial difficulties
for many of Moscow's Middle Eastern customers in
the wake of weakening oil prices, combined with
difficulties in assimilating the vast amount of Soviet
weaponry already purchased, began to weaken de-
mand for Soviet arms. Estimated arms exports to the
Middle East plunged in 1985 to just $4.3 billion, the
lowest level since 1978. The dollar value of arms
deliveries climbed to nearly $5 billion in 1986 and
remained high in 1987, in part because of the depreci-
ation of the US dollar, but also because Moscow was
willing to prop up sales through additional credits. For
example, we estimate the portion of Soviet arms
exports covered by credits rose from 45 percent in
1980 to 60 percent in 1986. Much of the increase in
credits can be attributed to Iraqi purchases made
since 1985.2
In addition to earning less cash up front, Moscow also
found it increasingly difficult to obtain payment for
past sales. The Soviets initially took a tough stance,
holding back the delivery of some arms purchases to
customers with mounting arrearages. Failing to se-
cure sizable repayments through these heavyhanded
'Soviet military contracts, while payable in dollars, are priced in
rubles, and the ruble has appreciated more than 25 percent against
the dollar since 1985, according to the rate set by the Soviet State
Bank. Estimated Soviet military sales valued in constant 1987
dollars show that deliveries to the region declined in I986-87.
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Figure 2
Composition of Soviet Exports to the Middle East
Percent
1=1 Commercial exports I=1 Arms exports
100
80
60
40
20
1973
74
75
76
77
78
79
80
81
82
83
84
85
86
87
tactics, Moscow has within the last few years resched-
uled the military debts for almost all its arms custom-
ers in the Middle East: Iraq, Syria, Egypt, Algeria,
North Yemen, and South Yemen. In the case of
Syria, repayment prospects were so bad that Moscow
canceled some of that debt to improve the political
relationship
We believe that even Libya, long thought to be a
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strictly cash customer, had run up a $1-2 billion
Soviet arms tab by 1986, resulting in serious payment
disputes with Moscow.
The impact of these developments on arms earnings
has been quite dramatic. For example, we estimate
that, of the $5.6 billion due Moscow in 1986 for both
2
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USSR: Imports of Middle Eastern Oil a
Thousand barrels per day
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
Total
121
168
136
77
86
153
244
290
262
298
283
Iraq
92
128
76
36
0
2
46
77
65
63
194
Libya
21
31
59
34
34
119
118
125
96
92
52
Iran
0
0
0
0
45
18
44
25
15
0
4
Saudi Arabia b
0
0
0
0
0
0
21
38
48
58
0
Syria
8
9
1
6
6
14
15
10
9
17
7
Algeria
1
0
0
15
29
68
26
Quantities for 1977-85 were estimated on the basis of Soviet
foreign trade value data and collateral.
b Saudi Arabia has sold crude oil to the USSR on behalf of Iraq.
arms deliveries that year and scheduled payments for
earlier arms purchases, some $2.9 billion went uncol-
lected.' Thus, hard currency arms earnings from the
region in 1986?including the value of oil received as
compensation?were only $2.4 billion, a decline of
almost 45 percent from the 1982 peak level of $4.4
billion.
Burgeoning Arms-for-Oil Partnership
Moscow had traditionally demanded cash payments
for arms, but eventually agreed to arms-for-oil swaps
as a means to avoid long payment delays?or perhaps
even a downturn in arms sales. It signed its first large
agreement with Libya in 1982, and in the following
' Difficulties in obtaining payment for arms sales is not unique to
Moscow's Middle Eastern customers. Severe hard currency short-
ages for virtually all its arms clients worldwide have forced Moscow
to restructure or reschedule many of its military debts in the last
few years. Negative financial developments in the Middle East
arms market, however, are of particular concern to Moscow
because of the region's relative importance?it has accounted for an
estimated 70 percent of total arms sales and some 80 to 90 percent
of total hard currency arms earnings in recent years.
3
year Saudi Arabia began supplying oil to the USSR
as payment for Soviet arms deliveries to Iraq (see
table for Soviet imports of Middle Eastern oil). We
believe other large arms-for-oil arrangements have
been reached with Algeria and Iraq. This arms-for-oil
connection averaged almost 300,000 barrels per day
(b/d) between 1984 and 1987?despite a sharp drop in
Libyan deliveries in 1987 due to volume and pricing
disputes. Of the total, about 95 percent was reexport-
ed to third countries, and the rest?roughly 15,000
b/d of Libyan oil?was imported directly into the
USSR.
Reexports of Middle Eastern oil have played an
important role in Moscow's oil export strategy in
recent years, accounting for 7 to 8 percent of total oil
exports in 1986-87. Should Moscow prove unwilling
to continue increasing investment in its domestic oil
industry and allow oil production to decline within the
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next few years, we believe that the share in total oil
exports of reexported Middle Eastern oil could climb
to 10 to 15 percent in the 1990s.
Moscow has reexported about one-third of its Middle
Eastern oil allotment over the last three years to the
developed West for sizable hard currency earnings.
We estimate that reexports of Middle Eastern oil to
the Western markets in 1985 earned the Soviets $1.1
billion or 10 percent of total hard currency oil reve-
nues. Although the drop in world oil prices beginning
in 1986 has cut these earnings in half, the resale of
Middle Eastern oil remains an important asset to
counter Moscow's precarious hard currency balance-
of-payments position
Moscow has also used Middle Eastern oil to reduce
the substantial transportation costs associated with
deliveries to India of Soviet-origin oil. On occasion, it
has also used Middle Eastern oil to offset shortfalls in
deliveries of Soviet-origin oil to Eastern Europe. In
1987, for example, Moscow fulfilled about 5 percent
of its East European oil supply obligations in this way.
Economic Aid and Civilian Trade
Moscow's economic links to the region developed
largely?with the exception of Iran?as a follow-on to
its military supply relationship. The Soviets, by and
large, targeted a few areas in the domestic economies,
often through project assistance on more favorable
terms than the West would provide. In retrospect,
Moscow gained considerable recognition from a hand-
ful of highly visible economic projects in Egypt, Syria,
and Iran during the 1960s and 1970s. Soviet assis-
tance helped establish national petroleum industries
in Syria and Iraq and a natural gas industry in Iran.
It also furnished one-half of Egypt's and nearly all of
Syria's electric power capacity and provided irrigation
potential for a million hectares of land in the region.
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The basic characteristics of Soviet economic aid in the
Middle East, as with other Third World countries,
include:
? Focusing on large heavy industrial projects in the
public sector and developing natural resources.
? Tying of practically all commitments to purchases
of Soviet equipment.
? Providing very favorable terms: 12-year credits and
2.5- to 3-percent interest rates with repayment in
local currency or the output from plants built with
Soviet assistance.
Moscow's economic aid program progressed along the
same lines as its arms sales program, initially provid-
ing nontangible political rewards but soon paying off
economically. During the 1970s, for example, Moscow
received a total of 120,000 to 130,000 b/d of crude oil
from Iran, Iraq, and Syria, mostly in return for
project assistance. Similarly, Tehran delivered 9 bil-
lion cubic meters of gas annually to the USSR for
help on pipeline construction. By the late 1970s,
repayments from Algeria, Iran, and Iraq exceeded
extensions of new economic aid credits in some years.
With less affluent states in the region, such as North
Yemen and South Yemen, Moscow continued to seek
"political gains" to offset costs throughout the 1970s.
Over the last decade, however, Moscow has tried,
with mixed success, to replace economic aid with
commercial deals in its economic dealings in the
region. Although the areas targeted for trade were
much the same as those provided under the aid
program, Moscow's commercial contracts were pro-
vided on less concessionary terms and often required
payment in hard currency. We believe commercial
contracts, which made up no more than 30 percent of
total economic development assistance in 1973, con-
stituted 80 percent of the total in 1979 (see figure 3).
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Figure 3
Soviet Economic Development Assistance to the Middle Easta
Millibn US $
M On favorable terms I On straight commercial terms
900
800
700
600
1973 74 75 76 77
78 79
a Values for total economic development assistance are from
official Soviet trade statistics. Values for assistance on favorable
terms are from the CIA's data base on Soviet aid to the Third World.
80 81 82 83 84 85 86 87
The USSR has also earned large amounts of hard
currency from the technical services of Soviet person-
nel?mostly administrators, teachers, doctors, engi-
neers, and geologists?provided in conjunction with
its aid program and, more recently, from commercial
contracts. This effort, which employed only a few
hundred Soviets in the 1960s, had evolved into a high-
visibility program involving 20,000 Soviet technicians
and professionals in the Middle East by 1980 (see
figure 4). Although the oil-producing countries of
Algeria, Libya, and Iraq have traditionally been the
5
318963 10-88
primary recipients of these services?in part because
of their ability to pay hard currency?Moscow also
provides some services to such moderate countries as
Egypt, Jordan, and Kuwait. We believe that, at the
program's peak in the mid-1980s, 22,000 Soviet eco-
nomic specialists were in the Middle East, earning
Moscow as much as $200 million annually. We
estimate that the number of Soviet specialists has
dropped dramatically in the past two years because of
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Figure 4
Soviet: Economic Specialists in
the Middle Easta
Thousands
Moderate Arab IIIII Iran Traditional arms
states
customers
24
1970 75 80 85 87
'Soviet economic specialists in the Middle East are primarily
administrators, teachers, doctors, engineers, and geologists.
318964 10-88
hard currency shortages in Middle Eastern countries,
the completion of a large nuclear project in Libya,
and increased fighting in South Yemen, Iran, and
Iraq.
Moscow's involvement in the economic development
of a number of Middle Eastern countries is reflected
in Soviet trade statistics: Soviet commercial exports
expanded 150 percent between 1973 and 1983 (see
figure 5). In the early 1970s, the composition of these
exports to the Middle East was rather diverse, consist-
ing of both capital goods and consumer goods (see
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figures 6 and 7). Increased Soviet domestic demand
for consumer goods and the region's growing prefer-
ence for Western consumer products, however, have
led to an increasingly higher concentration of machin-
ery and equipment in total exports. Moscow's imports
from the Middle East showed quicker growth, rising
from $1 billion in 1973 to $3.5 billion in 1983. The
bulk of the rise, however, can be attributed to oil used
to pay for arms purchases. Nonoil imports from the
region over the 10-year period increased only about
$100 million from the 1973 level of $700 million.
Moreover, the USSR remains a very small player in
the region's trade picture; Moscow's average annual
commercial trade turnover with the Middle East,
estimated at $4 billion for 1979-86, was dwarfed by
the region's average annual two-way trade with the
developed West of some $200 billion for the same
time period.
As with its arms program, the profitability of Mos-
cow's commercial ties took a beating in the mid-
1980s. The need to adjust to the worsening financial
situation that was developing throughout the region
forced Moscow to revise the contract terms for many
of its Middle Eastern customers just to make sales.
For example, Iraq, which previously had paid immedi-
ately for most purchases of Soviet equipment and
services, received a nearly $2 billion credit line from
the Soviets in 1983-84. Moscow's $800 million credit
allocation to Syria in 1984 was the largest ever to that
country. Nonetheless, Soviet nonmilitary exports to
the Middle East began to decline in the mid-1980s,
dropping from a peak of $1.6 billion in 1983 to less
than $1 billion in 1986. (The decrease in sales to the
Middle East could not have come at a more inoppor-
tune time for Moscow, as the value of Soviet exports
to other regions of the world?notably Western Eu-
rope, South America, and Southeast Asia?was also
falling.) Moscow was able to reverse this decline
somewhat in 1987, exporting some $1.3 billion to the
region that year. Much of the turnaround in Mos-
cow's export picture last year can be explained by
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Figure 5
USSR: Estimated Trade With the Middle East
Billion current US $
Arms exports to the
Middle East
1=1 Commercial exports to Oil imports from Nonoil imports from
the Middle East the Middle Easta the Middle East
10
9
8
7
6
5
4
3
2
1-1-1111-
0
1973 75
77 79
a A large percentage of which represents partial payment for arms
deliveries
81 83 85
NT.
86 87
increased Soviet involvement in Iraq's and South
Yemen's oil and gas industries and large oil product
sales?just under $100 million?to Iran.
Moscow's Current Game Plan
Carrot-and-Stick Approach to Traditional
Arms Clients
Returning arms and commercial deals to a more
profitable foundation is the cornerstone of Moscow's
current economic policy toward its traditional arms
7
318965 10-88
customers. In particular, Moscow has proved flexible
in seeking new arrangements for repaying past credits
when the prospects for payment in hard currency are
dismal:
? According to reports from the US Consulate in
Oran the key to the
rescheduling of Algeria's military debt last year was
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Figure 6
USSR: Exports to Middle Eastern Arab States
Percent
Traditional Arms Customers'
Nonmilitary
27
Military
73
1974 Total: $ 1.4 billion
Machinery and
equipment
50
Raw materials
and metals
16
Wood and wood
products
14
Consumer goods
13
Construction
materials
7
a The traditional arms customers are Algeria, Libya, Iraq,
Syria, North Yemen, and South Yemen.
Nonmilitary
13
Military
87
1987 Total: $ 5.6 billion
Machinery and
equipment
91
Other
9
Moderate Arab Statesb
Nonmilitary
69
Military
31
1974 Total: $ 0.4 billion
Machinery and
equipment
41
Wood and
wood products
20
Fuels
15
Ferrous metals
12
Consumer goods
3
Other
9
b The moderate Arab states are Egypt, Jordan, Kuwait, Saudi
Arabia, the United Arab Emirates, Oman, Bahrain, and Qatar.
Secret
Nonmilitary
59
Military.
41
1987 Total: $ 0.7 billion
Machinery and
equipment
33
Wood and
wood products
39
Fuels
11
Ferrous metals
2
Consumer goods
8
Other
7
8
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Figure 7
USSR: Imports From Middle Eastern Arab States
Percent
Traditional Arms Customers'
1974 Total: $0.6 billion
Raw cotton
and fabric
15
Consumer goods
4
Other
16
Oil
65
a The traditional arms customers are Algeria, Libya, Iraq, Syria,
North Yemen, and South Yemen
1987 Total: $2.1 billion
Raw cotton
and fabric
4
Consumer goods
8
Other
2
Oil
86
Moderate Arab Statesb
1974 Total: $0.6 billion
1987 Total: $0.5 billion
Other Essential oils
29 and cosmetics
33
Household
goods Food products
2 18
Food products Textile raw
15 material
42
Essential oils
and cosmetics Other
5 4
Textile raw
material
49
b. The moderate Arab states are Egypt, Jordan, Kuwait, Saudi
Arabia, the United Arab Emirates, Oman, Bahrain, and Qatar.
Household
goods
3
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the inclusion of a commercial arrangement whereby
the USSR would accept finished goods as partial
debt repayment, superseding traditional demands
for hard currency or oil.
Syria's severe repayment problems have prompted
Moscow to pursue a number of payment schemes to
reduce a military debt that/ press articles
have reported to be in the
$13-15 billion range. The Soviets are constructing a
naval repair and maintenance facility at Tartus in
exchange for some debt reduction
and would like the Syrians to
construct hotels and factories in the USSR, accord-
ing to the US Embassy in Damascus. In addition
Moscow has re-
cently agreed to supply selected Syrian industries
with technicians, spare parts, and raw materials to
help increase the likelihood of some form of repay-
ment in the future.
increased competition and continued Arab financial
difficulties. Having recently allowed Iraq to join the
ranks of its long-term military debtors, Moscow may
be on the verge of allowing Libya to follow suit.
However, Moscow has sometimes pushed a harder
line regarding delinquent military debts. For example,
the Soviets have sought to obtain overdue hard cur-
rency arms payments from Syria, Iraq, and Algeria,
in some cases sending banking delegations to press
their claims. Moscow has reserved some of its tough-
est treatment for Libya, a policy that is, perhaps,
indicative of the growing importance of. commercial
considerations in its relationship with the Middle
East. In a series of bilateral meetings held in 1987 to
resolve Libya's mounting arrearages to the USSR,
Moscow was adamant that future economic coopera-
tion?particularly arms sales?would be contingent
on Libya making arrangements to pay for projects
and goods already delivered, according to US Embas-
sy reporting from Moscow. Moscow also made it clear
to the Iraqis in March 1988 that, in the future, no
aircraft engines or other material would be repaired
until payment for past services was received.
Moscow's carrot-and-stick approach has carried over
to the disbursement of new credits?both military and
economic?to these states. Moscow has realized it
must continue to provide credits to keep its share of
the Middle Eastern arms market in the face of
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Moscow appears to be providing military
credits to those countries where some form of compen-
sation can be reasonably assured. Iraq's and Libya's
oil wealth and Algeria's past good repayment record
make them good credit risks over the long term in
Moscow's eyes.
Moscow is showing signs that it is increasingly ready
to play hardball when repayment cannot be assured.
Such is the case with Syria, where repayment pros-
pects look extremely bleak for the forseeable future.
Moscow's tougher stance with some countries also
applies to the disbursement of new economic develop-
ment credits. We estimate that the percentage of
economic development assistance provided on the
more profitable commercial terms during 1984-86 did
not exceed 20 percent. By 1987 that percentage had
risen to 40 percent largely because of the increased
accountability Moscow demanded from South Yemen
and Iraq in return for assistance in developing their oil
and gas industries. In some cases Moscow has refused
to provide economic credits under any circumstances.
A Syrian trade delegation seeking construction mate-
rials on credit for projects slated for 1989-90 returned
from the Soviet Union emptyhanded.
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In addition to its efforts to bring Middle Eastern debt
under control, Moscow has made some initiatives in
other areas designed to expand and improve its eco-
nomic ties to traditional arms clients. The Soviets are
increasingly participating in turnkey projects where
they manage all phases of project implementation,
including the acquisition of labor, materials, equip-
ment, and technical services. Economic development
projects for which the Soviets have recently been
designated general contractor include the Shabwah?
to?Bi'r 'Ali oil export pipeline in South Yemen, the
An Nasiriyah?to?Al Musayyib gas pipeline in Iraq,
and surface installations at the West Qurnah oilfield
in Iraq.
To procure more sizable contributions?such as up-
front capital?from the host country than turnkey
projects generally provide, Moscow is seeking to enter
into joint-venture agreements.
The Soviets reportedly have also shown some interest
in Western-style oil and gas production sharing agree-
ments whereby they would be paid only if they
discovered oil. Moscow reportedly has proposed such
an arrangement to Syria, according to the US Embas-
sy in Damascus. If concluded, such deals would be a
departure from the past Soviet practice of providing
equipment and services for an agreed price before-
hand, payable regardless of whether oil or gas was
discovered.
The Special Case of Iran
Moscow and Tehran have used the recent increase in
economic dialogue largely as a vehicle for improving
overall communications between the countries, in
addition to gaining useful propaganda from the ap-
pearance of closer ties. Little of economic conse-
quence has occurred to date. Tehran has given much
positive public gloss to cooperating with Moscow on
such projects as exporting its oil through the USSR
via the Iranian gas trunklines (IGAT I and II) and
the large-scale swapping of Iranian crude oil for
11
Soviet refined products. Moscow has allowed these
economic discussions to move ahead slowly, apparent-
ly using the prospect of expanded economic ties as an
inducement for Iran to soften its political animosity.
The Soviets apparently view these proposals as com-
plicated and of little near-term economic value, how-
ever, and are dragging their feet on negotiations.
Some less grandiose arrangements for economic co-
operation may eventually take place.
Iran and the USSR may soon estab-
lish a joint shipping line in the Caspian Sea. Other
promising areas include Soviet participation in con-
struction of an alumina factory, expansion of steel
mills and power plants, and some cooperation in
energy areas. For example, press reports indicate that
the USSR is likely to continue to provide technical
assistance for Iranian oil exploration of the Caspian
Sea.
Courting the Moderates
Although Moscow is expending a lot of energy to
shore up economic ties to its traditional Arab clients,
it is not overlooking improving relations with the
moderate regimes in the region. The Soviets are
focusing largely on boosting exports?both commer-
cial and military?to these countries, but also are
seeking to expand technical assistance and financial
links (see inset for brief discussion of military trade).
While some receptivity on the part of Egypt, Kuwait,
and the United Arab Emirates has made them prime
targets, the Soviets are also holding discussions with
most of the other moderate Arab states.
Moscow is seeking, in particular, to renew the exten-
sive ties to Egypt developed in the 1950s and 1960s.
The rescheduling of Cairo's military debt in the
spring of 1987 and the signing last winter of a three-
year trade protocol?the first multiyear Soviet-Egyp-
tian trade agreement in a decade?attests to Mos-
cow's efforts. In addition, a high-ranking Egyptian
delegation was in Moscow in May and signed a
bilateral economic cooperation agreement. Part of the
agreement calls for the establishment of an Egyptian-
Soviet Joint Economic Committee (JEC) to oversee
the future course of economic ties (see inset on Soviet
use of JECs).
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Arming the Moderates?
The recent flurry of contacts between Moscow and
the moderate Arab states has included expanded
sales of Soviet military equipment.
Jordan has increas-
ingly turned to the Soviets for military equipment
because of declining foreign assistance from the Gulf
Arab states and shrinking military sales from the
United States, developments that are depriving King
Hussein of his most important sources of both financ-
ing and equipment.
Some increase in Soviet arms sales to Egypt also is
likely in the wake of the rescheduling of Cairo's
military debt last year. Indeed, estimated Soviet
arms exports to Egypt of $100 million in 1987 were
about 40 percent higher than average annual sales in
1983-86. We believe trucks and spare parts for past
deliveries of major Soviet weapon systems have prob-
ably made up the bulk of the increase so far/
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Negotiating USSR-Middle East Trade:
The Role of Joint Economic Committees
Economic interchange between the USSR and the less
developed countries is typically managed by intergov-
ernmental mixed commissions on economic and sci-
entific-technological cooperation (joint economic
committees or JECs). These commissions include
officials of the planning, finance, production, and
foreign trade ministries and agencies of both coun-
tries, as well as representatives of scientific organiza-
tions. Subcommittees and working groups of special-
ists are set up in principal areas of cooperation such
as trade, economic aid, commercial contracts, and
joint ventures, and to work on current and long-term
problems. In addition to preparing draft cooperation
agreements, the functions of JECs include evaluating
the results achieved, handling problems as they arise,
and exploring new areas for future cooperation. The
first JECs between the USSR and the LDCs were
created in the 1960s, and by 1986 there were about 20
such committees operating.
JECs are currently overseeing commercial and eco-
nomic cooperation between the USSR and all of its
traditional Arab arms clients. Of the moderate Arab
states, Kuwait has established a JEC with the USSR,
and both Egypt and Jordan have agreed to form one.
The Soviets have shown particular interest in using
these committees to promote long-term commercial
contracts in the Middle East
In contrast to ordinary commercial contracts
between firms that are used primarily to trade com-
modities on an annual basis, long-term agreements
are concluded as part of intergovernmental agree-
ments and often include credits and the provision of
technical assistance in construction and engineering,
in addition to the delivery of machinery and equip-
ment.
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Moscow hopes to use new trade and economic cooper-
ation agreements to boost sales of machinery and
equipment to Egyptian factories originally built with
Soviet help. Other areas of economic cooperation the
Soviets are likely to pursue during Egypt's second
five-year plan (1987-92) include the construction of
thermal power stations, power transmission lines, and
a coal unloading port. Moscow is also proposing the
assembling of Soviet-designed products such as small
arms, tractors, and automobiles in Egypt for sale both
within Egypt and in third countries.
Moscow has also shown interest in expanding its
diplomatic and economic presence in the conservative
Gulf states in recent years and has experienced some
success. Capitalizing on these states' desire to show
some balance between East and West in their rela-
tionships, Moscow has been able to conclude a few
modest economic agreements that have benefited both
sides. For example, an oil and petrochemical swap
agreement signed last year between the USSR and
Kuwait saves both countries transportation costs. In
addition, the Kuwaitis have reported that the one
concrete result of the Soviet-Kuwaiti joint economic
cooperation commission formed last October is the
legal groundwork it provides for developing future
cooperation in various economic areas, including oil
production, bilateral trade, and joint investment in the
USSR, Kuwait, and third countries.
The Soviets have also had some recent success with
the UAE. A visit to the UAE by a Soviet trade
delegation in October 1987?the first in four years?
included discussions with UAE officials and several
private firms on plans for a joint Soviet-UAE trading
company to service the Gulf region. A second Soviet
delegation reportedly visited the UAE later in the
month to discuss technical cooperation in energy and
water management. In November, Moscow set up a
major exhibit at UAE's Sharjah International trade
fair, according to press reports.
Other Soviet economic demarches to the Gulf area
include:
? Soviet trade officials meeting with Bahraini busi-
nessmen in Kuwait to discuss the import of Soviet
commercial vehicles into Bahrain.
13
? The visit of a Soviet Foreign Ministry official to
Saudi Arabia last February?the first visit of a
ranking Soviet official in 50 years?with offers to
increase trade and provide assistance in the areas of
construction, industrialization, agriculture, and in-
frastructure.
The Soviets are going beyond their traditional bilater-
al trade deals and are also seeking to tap the region's
financial and commodity markets. Hoping to build on
its success in obtaining Kuwaiti and UAE loans
within the last 12 months, Moscow is attempting to
secure additional hard currency loans from various
banks in the Gulf area. These banks not only offer
Moscow a relatively new source of funding, but also,
in some instances, provide a degree of secrecy since
few Arab banks report their loans.
The Middle Eastern Response
Business as Usual With the Traditional Arms Clients
The high priority the traditional arms clients assign to
military procurement, combined with Moscow's will-
ingness to provide financing, probably ensures a con-
tinued strong Middle Eastern demand for Soviet arms
over the near term:
? Iraq's military requirements are not likely to dimin-
ish soon, and, even with the current cease-fire in the
Iran-Iraq war, Iraq will need to rebuild its inven-
tories and modernize its weapon systems.
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? Although Syria is not likely to persuade Moscow to
bankroll its almost phobic goal of reaching military
parity with Israel, the Syrians probably can count
on Moscow to furnish the roughly $1 billion per
year in arms necessary to maintain their current
level of military proficiency. The level of purchases
could go even higher if Syria is able to come up with
the hard currency probably required to get Moscow
to provide advanced equipment not currently in
Syria's inventory.
? The clout of Algeria's military leadership and the
country's overwhelming reliance on Soviet weap-
ons?some 95 percent of Algeria's war materiel is of
Soviet origin?should continue to provide Moscow
with a market worth some $400-600 million annual-
ly, despite attempts by Algiers to diversify its arms
suppliers.
The published economic development plans for these
countries also indicate a continued demand for sales
of traditional Soviet machinery and equipment and
technical assistance:
? Moscow reportedly will continue to play a large role
in the development of both Syria's and Iraq's oil and
gas extraction industries, irrigation projects, and
electrical power generation and transmission
facilities.
? Soviet assistance in the areas of agriculture, irriga-
tion, construction and modernization of iron and
steel projects, geological prospecting, civil engineer-
ing, and in training specialists are envisaged in
Algeria's second five-year plan.
? South Yemen's budding oil industry is being devel-
oped almost entirely by the USSR and should
provide a long-term market for Soviet technical
services and equipment. Aden's newfound oil wealth
may also provide Moscow with some additional
opportunities in other areas of the South Yemen
economy.
Secret
The traditional arms customers will probably continue
to look to Moscow for large-scale project assistance,
mostly because of the favorable financing arrange-
ments, but also because of Soviet flexibility to satisfy
their concerns. For example, the Soviets are more
willing to consider "hybrid" projects that utilize
Soviet planning and technical services competitive in
quality with the West but also allow for inputs of
Western machinery and equipment of better quality.
Limited Inroads With the Moderates
For the most part, Moscow's greatest economic links
are being forged with Egypt, where severe economic
problems and Mubarak's desire to balance Egyptian
foreign relations provide a fortuitous opportunity for
the Soviets
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Most moderate Arab leaders, however, remain wor-
ried that an expanded Soviet economic presence could
lead to increased political meddling. Other major
political obstacles include Moscow's stance on the
Iran-Iraq war, Soviet treatment of the USSR's Mus-
lim minority, and opposition from increasingly active
domestic Islamic fundamentalist groups opposed to
close relations with atheistic, Communist states. Mos-
cow's decision to withdraw from Afghanistan is help-
ing to deflate one contentious issue, but most states
will remain concerned until the withdrawal is com-
plete and Moscow's postwar role becomes clearer.
But even in an atmosphere of reduced political ani-
mosities Moscow is likely to face an uphill battle in
securing more than a marginal increase in economic
ties to the moderate Gulf states. The depressed state
of the region's economy brought about by the severe
drop in oil revenues has already reduced demand for
total imports from OECD countries by one-third in
recent years. For other purchases, the region contin-
ues looking to the West for a host of reasons, includ-
ing familiarity with capitalist marketing and financ-
ing procedures, a preference for Western goods and
technology, and the availability of aftersales service
and spare parts. Indeed, the last point remains a
major headache for Soviet traders. For example, US
Embassy reporting from Riyadh indicates that the
quality of imported Soviet tractors and well-drilling
equipment was satisfactory, but that servicing prob-
lems eventually spelled the end to continued customer
loyalty.
There may be a slight crack in the door, however,
given that the Gulf states are unhappy with what they
perceive to be growing trade protectionism in the
developed West for their ex sorts
Indeed, continued large purchases of Saudi
grain?the Soviets purchased one-third of Riyadh's
15
grain exports in the first quarter of 1988?might
facilitate the opening of a mission. Increased contacts
elsewhere are likely. For example, US Embassy re-
porting from Abu Dhabi indicates that the UAE
would not put its own security at risk by ignoring the
Soviets as long as there was a shadow of doubt about
US and Allied steadfastness in the Gulf. Along the
same lines, the Bahraini Foreign Minister remarked
to US officials in March 1988 that to ignore the
Soviet Union was unrealistic. OPEC is also likely to
continue its contacts with Moscow, but we believe it
will avoid any formal link to the USSR (see inset).
Trade gains elsewhere are likely to be slim in the near
term, but Moscow's prospects for increased financial
ties and other forms of economic cooperation look
more promising.1
Some countries are also taking more than a passive
role in the Soviets' search for joint ventures. The
Kuwaiti oil minister made a proposal to the Soviets to
hold a seminar for the Gulf states to present the laws
governing joint ventures and the areas of investment
interest in the USSR, pointing out that the objective
of this was to enable government and private compa-
nies to familiarize themselves with Soviet activity in
this arena. Another Kuwaiti official told the US
Ambassador that Kuwait was interested in supplying
capital for Soviet petroleum exploration, but a stum-
blingblock to a joint venture was its concern about
profit repatriation. Kuwait has also shown a willing-
ness to discuss cooperation in a joint project designed
to transport water from Iraq to Kuwait.
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The USSR and OPEC: Mostly Talk
The USSR's recent contacts with OPEC enhance
Moscow's standing with members of the oil cartel and
provide a forum for Moscow's efforts to better rela-
tions with the moderate Gulf oil producers. Under the
auspices of consultation with OPEC, Moscow has
been able to gain access to moderate Arab officials,
such as the Saudi Arabian oil minister. Moscow
occasionally has even espoused cooperation with
OPEC to encourage cartel policies to strengthen
prices; the Soviets are the world's largest oil exporter
and share an interest in higher oil prices with OPEC
countries. Aside from verbal support for OPEC,
however, Soviet cooperation has been nonexistent.
Past Soviet pledges to OPEC members Iran and
Saudi Arabia to reduce oil exports by small amounts
were largely symbolic because monthly fluctuations
in Soviet oil exports and the lack of data made
verification impossible.
In the present oil-surplus situation, we believe that
OPEC members probably favor further contacts with
the USSR. But we also believe that only in the most
dire circumstances would OPEC push hard for a
more formal arrangement with the USSR. On the
Soviet side, short-term needs to maximize hard
currency earnings will probably prevent Moscow from
entering into any deal to curtail the quantity of
Soviet oil exports to the West.
Overall, we believe that Moscow's total exports?
military and civilian?to the Middle East over the
next few years will be $6.5-7.0 billion annually; some
$1.5 billion better than the average for 1985-86 but
considerably less than the $8.2 billion registered in
1983:
? Arms sales to the region over the next few years are
likely to be slightly above the 1987 level of $5.1
billion, primarily because of the increase expected in
exports to Libya and Kuwait, and the sale of more
costly weapons to Iraq, Syria, and Algeria. The
profitability of the arms program will depend large-
ly on the future oil revenues of Moscow's traditional
Secret
arms clients. In particular, Iraq's and Libya's in-
ability to pay cash for their purchases could keep
total arms earnings from the region below $3 billion
annually over the near term.
? The Soviets' nonmilitary forays will also have little
payoff over the next few years; civilian exports are
projected to average roughly $1.3 billion annually.
Indeed, much of what Moscow is likely to try will be
directed toward maintaining existing economic links
to traditional trading partners in the region and
cutting the losses it has suffered in recent years.
? Despite a $300 million increase in 1987 over the
1986 level of $1 billion, nonmilitary sales are still
some 20 percent less than they were in the early
1980s. Some stepped-up trade with more moderate
regimes is likely, but real progress will come slowly
for the numerous reasons already mentioned.
The end of the Iran-Iraq war could provide Moscow
with some additional nonmilitary sales to these coun-
tries as well as the return of some technical and
economic specialists, a
number of economic projects in both countries for
which the Soviets were to provide assistance have
been on hold because of the war. Should Moscow be
able to regain its prewar share of economic assistance
to both these countries, nonmilitary exports to the
region over the next few years could be almost 20
percent higher than we are currently estimating.
Implications for the West
Despite some successes, Moscow's increased economic
overtures to the Middle East are unlikely to impinge
on Western economic interests in the near term. Some
moderate regimes may turn to Moscow for weapon
systems not available from the United States, but
deals are likely to be on an "ad hoc" basis and thus
only marginally cut into Western sales. Moscow also
will probably not be able to take advantage of the
conservative Gulf states' concerns over growing trade
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protectionism in the West for their petrochemicals.
Low Soviet demand for the type of petrochemicals the
Gulf states have for sale?mostly moderately refined
bulk products?combined with likely demands for
cash-on-the-barrel would deter any appreciable in-
crease in Soviet purchases. Indications of the areas
where Moscow may be able to broaden its economic
links to the moderate Arab states may become more
apparent over the next year should JEC meetings take
place as planned.
Moscow's traditional arms customers will probably
continue to exhibit little enthusiasm for Soviet goods
in general. Despite substantial purchases of Soviet
weapons, their commercial trade is predominantly
with the West. In 1986 these countries as a group
imported $16 billion in nonmilitary goods from
OECD countries compared with nonmilitary imports
from the USSR that year of just $500 million.
Preliminary data for 1987 suggest a similiar trade
orientation.
In fact, near-term concerns for the West should be
less economic than political. While actual business
agreements are likely to progress slowly, Soviet
Reverse Blank
17
contacts and visits with Middle Eastern officials and
businessmen will continue to pick up. We estimate
there were 54 Soviet trade and aid officials posted to
the moderate Arab states in 1986, the first year such
estimates were made.' As business ties increase?even
at a slow pace?Moscow is likley to expand this
nonofficial presence and seek to boost its official
business representation. In particular, an increased
Soviet presence in the region is likely in conjunction
with new or expanded JEC meetings, increased finan-
cial dealings, and even more direct enterprise-to-
enterprise discussions as a result of ongoing Soviet
foreign trade reforms. Such an expanded role for the
Soviets will provide them with new opportunities for
building political influence, obtaining COCOM-con-
trolled technology, and gathering intelligence.
Trade and aid officials are those Soviets not on the diplomatic list
but associated with trade missions, trading companies, joint ven-
tures, commercial companies, and economic assistance programs.
This category does not include technicians and professionals in the
field.
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Appendix A
Estimating Soviet Military
and Commercial Exports
to the Middle East
Official Soviet trade statistics and CIA estimates of
Soviet military deliveries form the starting point for
estimating the USSR's exports?less discounts and
grants?of both military and civilian goods to the
Middle East. Although these estimates represent a
"first crack" at a difficult problem, we believe they
provide a more realistic accounting than was previous-
ly available of Moscow's economic fortunes in the
Middle East.
Estimating Nonmilitary Sales
CIA and academic studies of Soviet foreign trade
statistics indicate that Soviet data on trade with
Reverse Blank
19
Middle Eastern states?as with other arms custom-
ers?include some military sales, thereby rendering
the data inadequate for determining Soviet nonmili-
tary exports to those countries.' Moreover, the same
studies show that the Soviets do not report all of their
arms sales by country, but lump about 80 percent of
total sales into "trade not specified by partner coun-
try," causing Soviet-reported total exports to individ-
ual countries to understate actual sales. In an attempt
to circumvent these problems, we have developed a
methodology for estimating both the total and the
civilian component of exports
The value of nonmilitary sales to an individual coun-
try is calculated by taking the difference between the
Soviet-reported export total to that country and the
estimated arms portion of reported exports. Drawing
from previous CIA research in this area, we found
that the military component could be estimated rea-
sonably well using a specified share of trucks, planes,
and indeterminate goods in total Soviet exports to
each country.
For a discussion of estimating Soviet arms exports using Soviet
trade statistics, see
25X1
25X1
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25X1
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Developments in Soviet Arms LOA I
Exports and Imports, 1980-83, Wharton Econometric Forecasting
Associates' Newsletter, Volume IV, Number 62 (August l984) 9)(1
25X1
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Secret
Appendix B
USSR: Estimated Nonmilitary Trade
With the Middle East a
Million US $
1973
1975
1980
1983
1985
1986
1987
Total
Exports
646
1,058
1,389
1,576
1,127
988
1,320
Imports
977
1,676
1,625
3,517
3,287
2,733
2,679
Balance
?331
?619
?237
?1,940
?2,159
?1,745
?1,359
Algeria
Exports
80
109
84
126
95
27
72
Imports
70
187
96
16
327
340
179
Balance
10
?79
?12
110
?232
?313
?107
Iran
Exports
165
338
310
667
239
82
174
Imports
188
317
116
509
173
26
78
Balance
?23
20
194
158
66
56
96
Iraq
Exports
85
186
239
117
104
107
276
Imports
257
452
398
516
668
491
1,246
Balance
?172
?267
?159
?399
?564
?384
?970
Libya
Exports
18
24
200
79
24
17
8
Imports
41
0
443
1,368
1,053
987
403
Balance
?23
24
?243
?1,290
?1,029
?971
?395
North Yemen
Exports
4
4
51
8
9
5
10
Imports
0
1
0
0
0
0
0
Balance
3
3
51
8
9
5
10
South Yemen
Exports
6
13
54
138
122
110
145
Imports
0
0
8
7
10
7
4
Balance
6
13
46
131
112
102
141
Syria
Exports
60
73
93
110
198
244
235
Imports
63
96
236
405
231
252
301
Balance
?3
?22
?143
?295
?33
?8
?66
Egypt
Exports
210
290
264
283
302
371
377
Imports
356
623
325
482
369
381
468
Balance
?146
?333
?61
?199
?67
?10
?91
21
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Declassified in Part- Sanitized Copy Approved for Release 2013/03/05: CIA-RDP89T01451R000600710001-1
3ecret
USSR: Estimated Nonmilitary Trade
With the Middle East a (Continued)
Million US $
1973
1975
1980
1983
1985
1986
1987
Jordan
Exports
3
6
21
24
11
0
2
Imports
0
0
0
0
0
0
0
Balance
3
6
21
24
11
0
2
Kuwait
Exports
11
5
23
7
4
0
0
Imports
0
0
2
1
0
0
0
Balance
11
5
21
6
4
0
0
Saudi Arabia
Exports
4
8
47
17
18
26
20
Imports
0
0
0
211
455
249
0
Balance
4
8
47
?194
?436
?222
20
United Arab Emirates
Exports
0
3
0
0
0
0
0
Imports
0
0
0
0
0
0
0
Balance
0
3
0
0
0
0
0
, Export numbers are estimated using the methodology discussed in
appendix A. Import numbers are reported in Soviet foreign trade
statistics.
Secret
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Declassified in Part- Sanitized Copy Approved for Release 2013/03/05: CIA-RDP89T01451R000600710001-1
Secret I - 4
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