QUARTERLY REPORT TO THE COUNCIL ON FOREIGN ECONOMIC POLICY SINO - SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000100210005-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 23, 2016
• Document Release Date: June 5, 2013
• Sequence Number: 5
• Publication Date: October 1, 1957
• Content Type: REPORT

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N? 54
QUARTERLY REPORT
to the
COUNCIL ON FOREIGN ECONOMIC POLICY
SINO - SOVIET BLOC
ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
1 October 1957-31 December 1957
PREPARED JOINTLY BY
THE CENTRAL INTELLIGENCE AGENCY
AND
.THE DEPARTMENT OF STATE
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WARNING
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, U.S.C., SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
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SINO-SOVIET BLOC ECONOMIC ACTIVITIES
.IN UNDERDEVELOPED AREAS
1 OCTOBER - 31 DECEMBER 1957
1. Principal Developments.
With new boldness, the Sino-Soviet Bloc attempted, during the quar-
ter ending 31 December 1957, to exploit its prestige in the underdeveloped
countries, a prestige heightened by recent Soviets cientific achievements.
These attempts were climaxedinlate December at the unofficial Asian-
African -Solidarity Conference held in Cairo, where the USSR made a
dramatic offer of economic assistance to underdeveloped countries. This
offer was as much a challenge to the economic superiority of the US as
it was a proposal that economic development in Asia and Africa should
be supported by the USSR. The principal Soviet speaker at the confer-
ence also recommended that other underdeveloped countries follow the
lead of Indonesia and. Egypt in nationalizing foreign-owned industry in
order to obtain funds needed for economic development. The conference
established permanent headquarters in Cairo.. With Russians and Chines e
Communists represented in its secretariat, this organization may well
become a center for further Communist permeation of Asia and Africa.
The- Soviet Bloc has not slackened its efforts to move forward with
its economic aid program. In addition to expanding its efforts in coun-
tries that have already accepted considerable Bloc aid, the USSR made
attractive new offers to countries that have heretofore been reluctant to
take assistance from Communist nations. The USSR presented a pro-
posal for a general development program to Iran. as well as a plan for a
joint company for the exploitation of petroleum resources in. Northern
Iran. Khrushchev suggested to the Ceylonese Ambassador in Moscow
that Soviet technicians could be used to expand rubber output in Ceylon
and that the USSR would take all of the increase in production. The
USSR offered economic assistance to Sudan and indicated a willingness
to make large purchases of Sudanese cotton ata time when Sudan's sales
to Westernbuyers were lagging. Evenin Latin America, where the Bloc
previously has had little success, attractive offers were made to Brazil
and Uruguay.
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2. Egypt.
During a November visit to Moscow the Egyptian Minister of De-
fense tentatively arranged an economic aid agreement in which the USSR
is to provide a credit of about $175 million to be used in. Egypt's 5-year
industrial development program. In addition, new arrangements have
been made under which the USSR will continue sending military items to
Egypt. Also in November, it was announced that a Czechoslovak loan
of $56 million had been. extended to Egypt in September. This loan will
be used to finance projects that are included in the industrial develop-
ment program of Egypt.
Syria.
The USSR agreed in October to furnish on credit to Syria additional
military supplies and equipment worth $30 million.. It is believed that
by late December virtually all of the new military items had been.de-
livered. Progress has been made in implementing the earlier., Soviet-
Syrian economic aid agreement, and plans for specific projects are under
way.
Indonesia's attempt to unify its many dissident elements by seizing
Dutch-owned property has intensified already serious economic, politi-
cal, and military problems. The Indonesian government claims that its
armed forces must have large quantities of military items and has ap-
proved a decision to seek arms worth about $250 million wherever they
can be obtained. A purchasing team left Indonesia on 31 December 1957
to visit several prospective supplying countries, including. Egypt, Yugo-
slavia, Poland, and Czechoslovakia as well as some countries in Western
Europe. Soviet Foreign Minister Gromyko is reported to have told the
Indonesian Ambassador that the USSR would extend all types of assist-
ance if a break with the Netherlands should result in financial and eco-
nomic difficulties.
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5. US and Bloc Foreign Aid.
In over-all terms the US aid program to underdeveloped countries
of the Free World is substantially larger than that of the Sino-Soviet
Bloc. Since the first Bloc aid was extended about 2-1/2 years ago, the
countrie.s in the Sino.-Soviet Bloc have extended credits and grants for
military and economic uses amounting to nearly $1. 9 billion. In com-
parison, aid by the US Government (including PL 480, MSP, and. Ex-Im
Bank) committed to the underdeveloped countries of the Free World dur-
ing this period amounted to about $8 billion. The US program also was
broader in scope, with 50 underdeveloped countries receiving assistance
compared with 17 underdeveloped countries receiving Bloc aid.
Appraisal in total terms alone, however, provides an inadequate
basis for comparison of the two programs. In nearly all countries where
the Sin.o-Soviet Bloc is competing with US aid programs, the Bloc is
currently committed to larger amounts of aid than is the US. With the
exception of Syria, all of the nine underdeveloped countries* which are
the principal recipients of Bloc aid .also have been receiving funds from
the US. These 9 countries have received credits or grants from the
Sino-Soviet Bloc amounting to about $1.8 billion during the last.2-1/2
years. Over the .same period, about $1 billion i.n.assistance of all types
was recei.vedfrom the US.ana governmental basis. Although exact com-
parisons are not available, it is estimated that Bloc technical. personnel.
in these 9 countries number more than 2, 000 compared with less than
1, 000 under programs financed by the US Government.
One characteristic of the Bloc aid program worthy of note is its in-
dependence from military pacts. The contrast with the US is quite ap-
parent: the bulk o f US .aid to underdeveloped countries goes to . those with
which the US is allied in military pacts, but no underdeveloped country
receiving Bloc assistance is a member of a Bloc military alliance.
* Afghanistan, Burma, Cambodia, Ceylon., Egypt, India, Indonesia,
Syria, .and Yugoslavia.
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