SINO-SOVIET BLOC ECONOMIC ACTIVITIES IN UNDERDEVELOPED AREAS 1 SEPTEMBER -31 DECEMBER 1956

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010003-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 19, 2016
• Document Release Date: January 25, 2006
• Sequence Number: 3
• Publication Date: February 21, 1957
• Content Type: REPORT

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SECRET
SINO - SOVIET BOLO , CONOMIC ACT
UND;EDEVELO'ED A1EA
1 SEPTEMBER - 31 DECEMBER 1c 554
E1C- 14- 2
21 February 1 057
ECONOMIC INTELLIGENCE COM&I
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S-E-C-R-E-T
ECONOMIC INTELLIGENCE REPORT
SINO-SOVIET BLOC ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
1 SEPTEMBER - 31 DECEMBER 1956
ECONOMIC INTELLIGENCE COMMITTEE
S-E-C-R-E-T
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FOREWORD
The EIC-R-14 series of reports on "Sino-Soviet Bloc Economic
Activities in Underdeveloped Areas" provide periodic summaries and
analytical interpretations of significant developments in the economic
relations of Sino-Soviet Bloc countries with underdeveloped countries
of the Free World. These developments are reported on a current,
factual basis in the Biweekly Reports in the EIC-WGR-1 series, und_-,r
the same title.
This report, covering the 4 months from 1 September through
31 December 1956, constitutes the second periodic supplement to
EIC-R-l4, the background paper on Sino-Soviet Bloc Postwar Lconomi
Activities in Underdeveloped Areas, 8 August 1956, SECRET. ft was
prepared by a Working Group of the Economic Intelligence Committee,
including representatives of the Departments of State, the Army, the
Navy, the Air Force, Commerce, and Agriculture; the International
Cooperation Administration; the Office of the Secretary of Defense;
and the Central Intelligence Agency. It was approved by the -3conenic
Intelligence Committee on 7 February 1957.
For purposes of this report, the term "underdeveloped areas" ic.-
eludes the following Free World countries: (1) all countries S)uth
and Southeast Asia; (2) all countries in the Middle East, including
Egypt, Sudan, Turkey, and Greece; (3) the independent countries of
Africa, except the Union of South Africa; (4+) in Europe only YugosLavii
Iceland, Spain, and Portugal; and (5) all independent countries in
Latin America.
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EIC -R14-S2
SING-SOVIET BLOC ECONOMIC ACTIVITIES
IN UNDERDEVELOPED AREAS
1 September - l December 1956
Introduction
Developments within the Soviet Bloc from 1 September to ;$L December
1956, particularly the upheaval in Poland and the Hungarian uprisin_r
and its suppression by the USSR, have had a perceptible, thou~fri min Dr,
impact and will undoubtedly have further impact on the Bloc economi,
offensive in Free World underdeveloped areas. The extent of .;-ranch i?n-
pact, however, was not clear at the end of 1956. Actually, it is
not to be expected that appreciable effects would be apparent so soon
after the economic and political dislocations resulting from these
developments.
Events in the Middle East during the period also have bee7:rro-
ducing repercussions on the economic relations of the Bloc wi7.1 the
underdeveloped countries in this area. Thus far, economic derlLngs
between the Bloc and Israel have been practically eliminated, and
economic and military relations between the Bloc and the Arab coun-
tries -- particularly Egypt, Yemen, and Syria -- have become signifi.-
cantly closer. In the light of the recent Soviet-Communist Chinese
communique on the Middle East, continued expansion of Bloc assistance
to Middle Eastern countries can be expected.
The implications of the above international developments fcc Blcc
economic activities in other regions are not yet apparent. In rrny
case, the economic capabilities of the USSR are adequate to take up
essentially any shortfalls in deliveries on existing Satellite- .on-
tracts. The total of approximately US $1.4 billion in Bloc credits
extended to underdeveloped countries -- to be utilized over a pnrior
of years -- since the beginning of the economic offensive in 192+
amounts to less than 1 percent of the current annual gross national
product of the USSR. Thus, within fairly wide limits, the USSR is
in a position to fulfill existing Bloc aid commitments or even to
expand economic assistance to the underdeveloped areas, should _Soviet
policymakers consider that such steps are in the national interest
of the USSR.
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Summary
Sino-Soviet Bloc Economic Offensive in Underdeveloped Areas.
Credits and Grants Extended.
During the last 4+ months of 1956 the Soviet Bloc extended new
credits to underdeveloped countries in the Free World amounting tce
about US $260 million.* Most of these credits were provided by
the USSR. India obtained $126 million for economic development
purposes, and Indonesia $100 million. Syria and Yemen obtained
arms credits totaling about $35 million.
These new credits raised the total extended by the Soviet Bloc
since the beginning of the offensive in 195+ to over $1.4 billion.
About 75 percent of the credits extended so far have been for eco?
nomic development, with the remainder for arms purchases. The
USSR has been the major supplier of credit for economic development,
whereas the arms agreements have been negotiated principally with
Czechoslovakia. The three principal recipients of Bloc aid --
Yugoslavia, India, and Egypt -- have received a total of more than
$1 billion in credits in the 3-year period ending 31 December 1956.
Indonesia, Afghanistan, and Syria also received significant ;credit;
from the Bloc. Communist China has made no loans to Free World
countries. In June, however, it made a grant of $22.4 million to
Cambodia, and in October it made a further grant of $12.6 million
to Nepal.
Technical Assistance.
In conjunction with Sino-Soviet Bloc assistance programs, at
least 1,1+00** Bloc specialists were in the underdeveloped areas
during 1956. Of these, over 1,100 were industrial or agricuu,tural
technicians who assisted in economic planning, worked on project
construction, aided in the operation of plants, or provided technic:
All value figures in this report are given in US dollar eauiva.ent ,
x In this report the numbers given for Bloc specialists in under,
developed areas and for trainees from underdeveloped areas who have
gone to the Bloc have been computed in terms of individuals involv(?d
for at least 1 month in 1956. These numbers, particularly totals,
should generally be considered as minimum estimates.
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training for local personnel. Relatively few of these had been con-
cerned with agriculture, however, before the arrival of a Soviet
agricultural mission to Burma in December 1956. The USSR has pro-
vided more than one-half of the nonmilitary technicians from the
Bloc. The majority of the nonmilitary technicians have gone to
Afghanistan, India, or Egypt. About 250 of the Bloc specialists
sent to the underdeveloped areas in 1956 have been military experts.
Egypt has been the principal recipient of this type of assistance,
but Syria, Afghanistan, and Yemen have also received military ad-
visers.
During 1956 the underdeveloped countries sent more than,1,200
persons to countries in the Soviet Bloc for training under military
or technical assistance programs. Nearly 1,000 Egyptians went to
Czechoslovakia, Poland, or the USSR for military training. About
200 persons from various underdeveloped countries have gone to the
Bloc for industrial training under technical assistance programs.
India sent 85 industrial trainees to the USSR, Yugoslavia also
sent a small group there, and Egypt sent a total of 4+0 to the USSR,
East Germany,.a d,Hungary. This part of the economic offensive may
well be further expanded in the future. India has fairly definite
plans for sending 600 additional persons to the USSR for training
in connection with the expanding Indian steel industry. No personnel
have gone to Bloc countries for agricultural training.
Trade Promotion and Arrangements.
Promotion of the Bloc economic offensive was carried on by means
of trade fairs, by advertising, and by negotiating new or expanded
trade agreements. Bloc countries participated in trade fairs in 21
underdeveloped countries during 1956. Extensive advertising campaigns
were conducted in most of the underdeveloped regions. By the end of
195b, BLoc countries had 129 trade agreements in force with these
countries . Of those in force during at least part of the year, 76
were either new agreements or were reinstated after having lapsed for
more than v months.
Retorted 1956 trade of underdeveloped countries with the Bloc
(coverint for the most part the first 6 to 9 months of the year) was
at an annual rate of $1.4 billion, about 25 percent above the level
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of 1955.* The European Satellites, concentrating in the Middle Erst
and Africa (and to a lesser extent in Latin America), accounted fir
about one-half of all :Bloc trade with the underdeveloped countries.
The USSR and Communist China accounted for approximately equal poitiors
of the remainder. Communist China's trade with the underdevelopet
countries of the Free World was largely with those in South and South-
east Asia, whereas Soviet trade with the underdeveloped countries was
distributed largely among other regions.
During the period of 1956 for which data are available, commerce
between Bloc countries and those in the Middle East and Africa rose
to levels corresponding to an annual rate of approximately $525 mil-
lion, an increase of about 20 percent over 1955. Ne8Lrly fourths of this trade was conducted by the European Satellites. F?r
this same period, Bloc trade with South and Southeast Asia wa., at
levels equivalent to an. annual. rate of about $430 million, or 50
percent above the level of 1955. Although Communist China accounti~d
for nearly 60 percent of total. Bloc trade in this area, the USSR
significantly increased the level of its trade with some of t,Lc coun-
tries in South and Southeast Asia.
Trade between the Bloc and Latin America declined through the
summer of 1956 to an annual rate of about $260 million -- only
three-fourths the level of 1955. This decline primarily reflected
a sharp decrease in Argentine-Bloc trade for the first 8 months of
1956. Cuban sugar exports to the Bloc also fell sharply. The Eurr-
pean Satellites accounted for the major share of Bloc trade with
Latin America.
Bloc trade with the underdeveloped European countries of yago_
slavia, Iceland, and Portugal doubled over the levels of 1955.
Statistics on most of this trade are available through August and
indicate an annual rate of trade of about $200 million during this
Discussion of trade levels in 1956 is necessarily less up t,u date
than other portions of this report because there is some months' la;
in the availability of trade statistics. Returns for the entire
year of 1956 will not be generally available until May or Jun, 1957.
Caution should be exercised in using the annual levels of 195tc trade
discussed in the present report, because of important influenci