AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD 1 JULY - 31 DECEMBER 1963

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010017-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 74
• Document Creation Date: December 19, 2016
• Document Release Date: January 25, 2006
• Sequence Number: 17
• Publication Date: February 1, 1964
• Content Type: REPORT

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SECRET
AID AND TRADE jr,urI ITIES OF COQ
COUNTRIES INESS DEVELOPED AIR:,.
"TE h F FREE WORLD
1 JULY 31 DECEMBER 196:.
--IC R1-S16
Feb>ruary 1964
ECONOMIC I N TELLI-GENCE COM -U
of ie,
UNITED S r 2\TE;3 INTELLIGENCE BOARD
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SECRET
AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD
1 JULY - 31 DECEMBER 1963
EIC R14-S16
February 1964
ECONOMIC INTELLIGENCE COMMITTEE
SECRET
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FOREWORD
The EIC-R14 series provides periodic summaries and analytical in-
terpretations of significant developments in the economic and milita.:-y
relations of Communist countries with less developed countries of th',
Free World. These developments are reported on a current, factual brtsis
in the Biweekly Reports in the EIC-WGR-l series.
This report, covering the 6 months from 1 July through 31 Decemb:rr
1963, constitutes the sixteenth periodic supplement to EIC-R14, the__ni-
tial report on Sino-Soviet Bloc Postwar Economic Activities in Under-
developed Areas, 8 August 1956-. SECRET. The present supplement upda`,es
the previous semiannual report and includes the more significant devflop-
ments during the reporting period. It also relates noteworthy noneco-o-
nomic activities, including military aid, to economic operations of the
Communist countries in less developed areas. This report was ureparnd
by the Department of State and the Central Intelligence Agency. The
draft was reviewed and coordinated by a Working Group of the Economi-
Intelligence Committee, including representatives of the Department of
State; the Defense Intelligence Agency; the Departments of the Army,
Navy, and Air Force; the Departments of Commerce and Agriculture; they
Agency for International. Development; the Office of the Secretary of
Defense; the National Security Agency; and the Central Intelligence
Agency. The final report was approved by the Economic Intelligence
Committee on 12 February 1964.
In this report the term Communist countries refers primarily to l;he
following countries that extend aid to less developed areas: the U3E~R,
Communist China, and the following countries of Eastern Europe --
Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and Rumania.
For certain limited purposes the term also may include Albania, Cuba.
Mongolia, North Korea, and North Vietnam, none of which is norrla.Lly i.
donor of aid. The term does not include Yugoslavia.
The term less developed countries of the Free World includes the
following: (1 all countries of Africa except the Republic of South
Africa; (2) all countries in South and Southeast Asia; (3) Ice.a.id,
Portugal, and Spain; (4) all countries in Latin America except Cuba;
and (5) all countries in. the Middle East, including Cyprus, Grcece,
the Syrian Arab Republic, Turkey, and the United Arab Republic.
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CONTENTS
Summary . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Economic Assistance . . . . . . . . . . . . . . . . . .
A. Credits and Grants . . . . . . . . . . . . . . . .
B. Technical Assistance . . . . . . . . . . . . . . .
1. Economic Technicians . . . . . . .
2. Academic Students and Technical Trainees . . .
II. Bloc Military Assistance . . . . . . . . . . . . . . .
A. Credits and Grants . . . . . . . . . . . . . . . .
B. Technical Assistance . . . . . . . . . . . . . . . l,)
1. Military Technicians . . . . . . . . . . . . .
2. Military Trainees from Less Developed
Countries . . . . . . . . . . ? ?
A. Value . . . . .. . . . . . . . . . . . . . . . . . .
B. Direction . . ? . . . . . . . . . . . . . . . . . . i '
C. Commodity Composition . . . . . . . . . . . . . . . .}j
A. Africa . . . . . . . . . . . . . . . . . . . . . . i'
B. Asia . . . . . . . . . . . . . . . . . . . . . . . 4(
C. Latin America . . . . . . . . . . . . . . . . . . .
D. Middle East . . . . . . . . . . . . . . . . . . . .
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AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS OF THE FREE WORLD
Summary*
Economic activities of the Communist countries in the less developed
countries of the Free World during the last half of 1963 expanded over
the previous 6-month period in most sectors. Soviet and Chinese aid
commitments increased and drawings on previously extended lines of
credit accelerated, there was a continuing high level of activity in
military assistance, and the scale of training programs and the numbei
of Communist technicians in less developed countries continued to in-
crease.
The assistance extended to Algeria, the Somali Republic, and Iran
constituted the most significant new aid activity during the period.
Both the USSR and Communist China seized opportunities for extending
new assistance to Algeria and the Somali Republic. Also, by extendin{
a development credit to Iran for a joint multipurpose project, which
will provide both countries with power and irrigation, the USSR agreed
to an aid undertaking that will yield direct benefits to its own economy.
Although the levels of new economic assistance extended Ln the laL.t
half of 1963 by Communist countries were still below earlier peak
periods, such aid increased markedly over recent 6-month periods.
Credits and grants extended to the less developed countries by the
Communist countries during the last half of 1963 totaled about x;215
million, bringing aggregate economic aid extended for 1963 to $1;15
million -- slightly less than the amount provided in 1962 and less then
one-third-of the peak year extensions in 1961. The Eastern European
countries were virtually inactive during the period. The USSR and Com-
munist China accounted for almost all the new assistance provided.
For both of these countries, the new aid extended represented substan-
tial increases over 6-month totals recorded in the previous year and
a half. Soviet economic aid extensions totaled $14+2 million, and
Chinese Communist extensions totaled $72 million. This brought aggre-
gate extensions by Communist China in 1963 up to $88 million -- its
largest annual aid commitment (with the exception of 1961) since the
inception of the Chinese Communist aid program in 1956.
Although the extension of new assistance rerlectec. the continued
willingness of the USSR and Communist China to grasp new aid opportu
nities, it also pointed up the competition between the USSR and Com-
munist China in Africa. This rivalry has been apparent for several
years in the political sphere but now appears to have become more in-
tense in the economic field. The timing of credits extended to Algeria
* See the chart, Figure 1, following p. 3.
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by the USSR and the Chinese Communists, as well as the terms offered
by the latter, was indicative of the competitive nature of their under-
taki.ing:,. Similarly, in the Somali Republic, the extension of economic
assistance by the Chinese Communists was followed by military aid from
the USSR.
J'h(^ TJSSR's first development loan to Iran has political overtones,
since Iran is Western-oriented and committed to a military alliance
with the United States. The loan also is of economic importance to the
domestic economy of the USSR. The multipurpose development of facilities
along the Aras River, which forms a natural boundary between the Iranian
province of Azerbaijan and the USSR, will provide both countries with
power and irrigation.
The rate of drawings on Communist economic credits continued to
increase. Approximately $260 million of economic aid was expended
during the second half of 1963, bringing total aid disbursements for
the year to approximately $465 million, or almost 25 percent above the
level of 1962. Total cumulated drawings reached $1.6 billion by the
end of 1963, or one-third of the total of $4.9 billion in Communist
economic aid thus far extended.
New military aid agreements worth at least $90 million were con-
cluded during the last 6 months of 1963, bringing known extensions of
military assistance during 1963 to approximately $290 million. Never-
theless, new extensions of military assistance were still below the
years of peak extensions in 1960 and 1961. Soviet military assistance
to the Somali Republic and Algeria comprised over half of the total
extended during the second half of 1963, with the remainder going to
India. There is evidence, however, to indicate that additional agree-
merits may have been signed with other countries.
teiveries of Soviet military aid included MIG-21's to India,
Syria, and the United Arab Republic (UAR); Komar-class guided missile
patrol boats to Indonesia, Syria, and the UAR; and surface-to-air
missiles (SAM's) to Indonesia and the UAR. Other items of military
hardware also were delivered to Algeria to support its border conflict
with Morocco and to Yemen to fulfill earlier commitments.
Technical assistance and academic training programs, the most
dynamic components of the Communist countries' efforts in many of the
less developed countries in recent years, continued to increase. Dur-
ing the 6-month period under review the number of economic technicians
from Communist countries employed in the less developed areas rose to
about 11,940, an increase of about 6 percent over the previous 6-month
period. In spite of the adverse publicity arising out of student pro-
tests in the USSR and Eastern Europe during 1963, the number of students
enrolling in the academic institutions of Communist countries continued
to increase. Almost 2,400 students arrived in Communist countries during
the period, 50 percent of whom came from countries in Africa.
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During the first half of 1963, foreign trade turnover between Com-
munist countries and less developed countries of the Free World con-
tinued to show the moderate expansion noted in 1962. The value c:' this
trade during the period January-June 1963 amounted to more than Z:L.2
billion, or 13 percent above the corresponding period of 1962. Asia
continued to be the Communist countries' most important trading; a:'ea,
followed in importance by the Middle East. Asia's trade with Communist
countries in the first 6 months of L963 amounted to $494 million,
whereas that of the Middle East was $395 million. Trade with Latin
America remained relatively stable at about $14o'million, while Com-
munist trade with Africa increased about 36 percent. The year 19o2
brought little variation from former patterns in the commodity compose-
tion of this trade. The Communist countries continued to represent
primarily a market for crude materials and foodstuffs while supplying
manufactured goods and machinery. Although the exports of Communist
countries rose more than their imports during the 6 -month perio under-
review, the Communist area still emerged as a net importer, refLectinww
primarily the deficit position of the USSR that has been evident sine'
1955.
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SECRET
ECONOMIC ACTIVITIES OF COMMUNIST COUNTRIES
IN LESS DEVELOPED COUNTRIES OF THE FREE WORLD
Selected Years, 1954 - 63
COMMUNIST ECONOMIC ASSISTANCE
TO LESS DEVELOPED COUNTRIES
1954-63
COMMUNIST ECONOMIC AND MILITARY
TECHNICIANS IN LESS DEVELOPED COUNTRIES
1955-63
COMMUNIST MILITARY ASSISTANCE
TO LESS DEVELOPED COUNTRIES, E955-61-
STUDENTS FROM LESS DEVELOPED COUNTI E=
TRAINED IN COMMUNIST COUNTRIES 1956 A
*Since Communist milit,;ry as, u:. ce .r u ? mp z :.
cannot be distributed by y=ar .nnnaa(
ore only estimates.
SE R T
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I. Economic Assistance
A. Credits and Grants
Economic credits and grants extended by Communist countries tc
less developed areas during the second half of 1963 totaled $21`. mil-
lion (see Table 1*) and brought total extensions in 1963 to $31',rnil-
lion (see Figure 2**). Witt these new extensions the cumulative tots:
from the inception of the program in 1954 to the end of 1963 roe to
$4.9 billion. Although new commitments in the second half of 1143
were more than double those undertaken in the first half, the total
for 1963 was slightly below the low level attained in 1962 and __c?s
than one-third of the commitments undertaken in the peak year or' 1961
During the second half of 1903 the USSR accounted for approxi-
mately 70 percent of total extensions by the Communist countrie:;.
This is consistent with its contribution to the total program from
1954 to 1963, during which period the USSR extended $3.4 billion of
the $4.9 billion committed by the Communist countries. The $14;' mil-
lion of new Soviet aid extended in the last 6 months of 1963 repre-
sented a significant increase above Soviet extensions of $63 miJ_lion,
$14 million, and $65 million in the two halves of 1962 and the `Jrst
half of 1963, respectively.
In spite of the relatively large increase in Soviet extension.;,
only three countries -- A.f?hcanistan, Algeria, and Iran -- were ecipi=ants
of such aid, the lowest number to receive new Soviet aid during any
6-month period since 19514. Algeria and Iran represented significant
opportunities seized by the USSR. Apparently convinced that. the Ben
Bella regime was firmly entrenched and committed to a policy of sub-
stantially expanding the public sector and anticipating an aid o.>!'f'er ry
Communist China, the USSR overcame its year-long hesitancy to provide
aid to Algeria and extended a credit of $100 million for that country's
development program. In Iran the USSR succeeded in expanding its
political and economic relations with a country allied with the United
States in an anti-Communist military alliance. Moreover, b;:nefits will
accrue to the domestic economy of the USSR through the extension of
aid to Iran. In addition to an increase in new extensions, the `JSSR
made informal representations to both India and the UAR to indicate
that it would consider the extension of additional aid for their next
5-year plans, which are being formulated at present.
For the first time since the inception of the Communist aid
programs, the contribution of the Eastern European countries was in-
significant. East Germany extended a minor credit to a private _irm
P. 6, below.
Following p. 6.
For a summary of speciric credits and grants by Communist coun-
tries to less developed countries, see Tables 7 through 11, pp. 5
through 90, below.
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ECONOMIC CREDITS AND GRANTS
EXTENDED BY COMMUNIST COUNTRIES
TO LESS DEVELOPED COUNTRIES OF THE FREE WORLD
EXTENSIONS AND DRAWINGS, BY YEAR
1954 - 63
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As in previous years, the rate of drawings on Communist crett.s
previously extended continued to accelerate. Approximately $26r mil-
lion was expended during the period, bringing total expenditures for
the year to $465 million, an increase of almost 25 percent over the
previous year. The major drawings occurred in the UAR, Afghanistan,
and India, where pressure is being exerted to complete projects under
the recipients' Five Year Plans. The pace of implementation also was
stepped up in Ceylon, Burma, and the Somali Republic. Political in-
stability and a lack of adequate material and human resources continued
to impede the implementation of programs in most of the other countries
of Africa and Asia. By the end of 1963, $1.6 billion of the $4.q bil-
lion program had been expended.
B. Technical Assistance
1. Economic Technicians
The number of economic technicians from Communist countries
employed in less developed areas during the last half of 1963 was
about 11,9+0, an increase of about 6 percent above the previous 6-month
period (see Table 12*). The small increase reflects a levelinz off or
requirements for technicians on aid projects in countries in the MiddL.e
East and Africa and the presence of larger numbers of technician.: in
Indonesia, Mali, the UAR, and Yemen. The sizable increase in the UAF'
was a result of the quickening of the pace of activities at the lswar_
Dam. In Yemen the increase was largely in nonproject activities-
Nearly 70 percent of all economic technicians provided by
Communist governments were employed in six countries -- Afghanistan,
Guinea, India, Iraq, the UAR, and Yemen. The largest group, about
1,700, was employed at the Aswan Dam. In Yemen, about 400 Soviet con-
struction workers completed an airfield near San'a and departed by th,
end of the year. Nearly 1,200 technicians still were in Iraq d:u'ing
the last 6 months of 1963, although many had departed by the end of
the year.
Activities under technical assistance agreements not con-
nected with economic aid credits continued to increase and accounted
for about 20 percent of the economic technicians in less developed
countries. These technicians included about 830 medical personnel,
more than half of them in Algeria. In addition, 1,560 were engaged
in agricultural, educational, economic planning, urban development,
and managerial activities.
Technical assistance activity in agriculture increased
during the period as Soviet and Eastern European technicians were en-
gaged in surveys of agricultural requirements and water utilization
schemes, in water drilling, and in training native personnel to coeral,e
* P. 91, below.
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and manage state farms. India, presumably satisfied with the Soviet-
developed state farm at Suratgarh, announced plans to expand the farm
with Soviet assistance.
In other activity, organizations from the Communist area
were engaged in town planning and urban development activities in a
number of countries, particularly Africa. Both. Kenya and Tanganyika
accepted assistance for the establishing of news distribution centers
in those countries and the training of personnel in the USSR and
Czechoslovakia.
2. Academic Students and Technical Trainees
The number of nationals from less developed countries
enrolled in academic programs in Communist countries continued to
increase in spite of indications of increased student dissatisfaction
(see Table 14*). By the end of the year, there were 12,800 students
studying; in Communist countries; the USSR was host to approximately
two-thirds of the total. The largest single group from any one country,
about 2,000, continued to be the students from Iraq, in spite of an
Iraqi decree of June 1963 calling for the return of all Iraqi citizens
studying in academic institutions in Communist countries. During the
period, about 810 technical trainees from less developed countries
arrived in Communist countries to undertake technical training pro-
grams (see Table 13**).
During the last 6 months of 1963 an estimated total of
1.,580 academic students departed for training at institutions in Com-
munist countries, bringing to more than 14,500 the number who have
undertaken academic programs in those countries. The number of new
enrollees in academic institutions, however, falls far short of the
enrollment level of the previous 3 years. The decline in the rate of
increase of new enrollees may be attributable, in part, to increasing
efforts by some governments to control the number and type of individuals
studying abroad. New offers of scholarships reportedly have been re-
jected in some cases. The Sofia incident in February 1963 and the
subsequent and more frequent allegations of racial discrimination also
may tiave discouraged some governments and students from accepting
scholarships to study in Communist countries. In spite of the racial
problems, however, the largest increment of the increase in student
enrollment, about 55 percent, again was represented by students from
Africa.
Although the 12,800 students from less developed countries
in all academic training programs in Communist countries is as yet
rather modest compared with the 43,500 students in similar programs
in the United States alone, the number is substantial in absolute terms,
and the outlook for the future, in spite of periodic student incidents,
P. ,i.
Both the USSR and Communist China seized opportunities for extend.T.rig
new assistance to Algeria and the Somali Republic. Also, by extending
a development credit to Iran for a joint multipurpose project, which
will provide both countries with power and irrigation, the USSR agreed
to an aid undertaking that will yield direct benefits to its own ;rr--ononr-.
Although the levels of new economic assistance extended in the Last
half of 1963 by Communist countries were still below earlier peak
periods, such aid increased. markedly over recent 6-month periods.
Credits and grants extended, to the less developed countries by the
Communist countries during the last half of 1963 totaled about $2l-
million, bringing aggregate economic aid extended for 1963 to $315
million -- slightly less than the amount provided in 1962 and less than
one-third of the peak year extensions in 1961. The Eastern European
countries were virtually inactive during the period. The USSR and "om-
munist China accounted for almost all the new assistance provided.
For both of these countries, the new aid extended represented substan-
tial increases over 6-month totals recorded in the previous year and.
a half. Soviet economic aid extensions totaled $14+2 million, and
Chinese Communist extensions totaled $72 million. This brought aggre-
gate extensions by Communist China in 1963 up to $88 million -- its
largest annual aid commitment (with the exception of 1961) since ti,.:
inception of the Chinese Communist aid program in 1956.
Although the extension of new assistance reflected the continuoj
willingness of the USSR and Communist China to grasp new aid oppor>'a-
nities, it also pointed up the competition between the USSR and Corn--
munist China in Africa. This riva~ry has been apparent for severer'
years in the political sphere but now appears to have become more _r-
tense in the economic field. The timing of credits extended to Algeria.
* See the chart, Figure 1, following p. 3.
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by the USSR and the Chinese Communists, as well as the terms offered
by the latter, was indicative of the competitive nature of their under-
takings. Similarly, in the Somali Republic, the extension of economic
assistance by the Chinese Communists was followed by military aid from
the USSR.
h e USSR's first development loan to Iran has political overtones,
since Iran is Western-oriented and committed to a military alliance
with the United States. The loan also is of economic importance to the
domestic economy of the USSR. The multipurpose development of facilities
alor the Ares River, which forms a natural boundary between the Iranian
province of Azerbaijan and the USSR, will provide both countries with
power and irrigation.
The rate of drawings on Communist economic credits continued to
increase. Approximately $260 million of economic aid was expended
during the second half of 1963, bringing total aid disbursements for
the year to approximately $465 million, or almost 25 percent above the
level of 1962_. Total cumulated drawings reached $1.6 billion by the
end of 1963, or one-third of the total of $4.9 billion in Communist
economic aid thus far extended.
New military aid agreements worth at least $90 million were con-
cluded during the last 6 months of 1963, bringing known extensions of
military assistance during 1963 to approximately $290 million. Never-
theless, new extensions of military assistance were still below the
years of peak extensions in 1960 and 1961. Soviet military assistance
to the Somali Republic and Algeria comprised over half of the total
extended during the second half of 1963, with the remainder going to
India. There is evidence, however, to indicate that additional agree-
menLs may have been signed with other countries.
Deliveries of Soviet military aid included MIG-21's to India,
Syria, and the United Arab Republic (UAR); Komar-class guided missile
patrol boats to Indonesia, Syria, and the UAR; and surface-to-air
missiles (SAM's) to Indonesia and the UAR. Other items of military
hardware also were delivered to Algeria to support its border conflict
with Morocco and to Yemen to fulfill earlier commitments.
':Technical assistance and academic training programs, the most
dynamic components of the Communist countries' efforts in many of the
less developed countries in recent years, continued to increase. Dur-
ing the 6-month period under review the number of economic technicians
from Communist countries employed in the less developed areas rose to
about 11,940, an increase of about 6 percent. over the previous 6-month
period. In spite of the adverse publicity arising out of student pro-
tests in the USSR and Eastern Europe during 1963, the number of students
enrolling in the academic institutions of Communist countries continued
to increase. Almost 2,400 students arrived in Communist countries during
the period, 50 percent of whom came from countries in Africa.
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During the first half of 1963, foreign trade turnover between Com-
munist countries and less developed countries of the Free World con-
tinued to show the moderate expansion noted in 1962. The value of this
trade during the period January-June 1963 amounted to more than $1.2
billion, or 13 percent above the corresponding period of 1962. Asia
continued to be the Communist countries' most important trading area,
followed in importance by the Middle East. Asia's trade with Communist
countries in the first 6 months of 1963 amounted to $494 million,
whereas that of the Middle East was $395 million. Trade with Latin
America remained relatively stable at about $140 million, while Com-
munist trade with Africa increased about 36 percent. The year 1.962
brought little variation from former patterns in the commodity composi-
tion of this trade. The Communist countries continued to represent
primarily a market for crude materials and foodstuffs while supplying
manufactured goods and machinery. Although the exports of Communist
countries rose more than their imports during the 6-month period under
review, the Communist area still emerged as a net importer, reflecting
primarily the deficit position of the USSR that has been evident since
1955.
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SECRET
ECONOMIC ACTIVITIES OF COMMUNIST COUNTRIES
IN LESS DEVELOPED COUNTRIES OF THE FREE WORLD
Selected Years, 1954 - 63
COMMUNIST ECONOMIC ASSISTANCE
TO LESS DEVELOPED COUNTRIES
1954-63
COMMUNIST ECONOMIC AND MILITARY
TECHNICIANS IN LESS DEVELOPED COUNTRIES
1955-63
*Since Commune n0itary asistna. e f -r srrnf nf
connot be distributed by tear, nom;. l fivo*
are only estimates.
SECRET
COMMUNIST MILITARY ASSISTANCE
TO LESS DEVELOPED COUNTRIES, 19i5-63"
STUDENTS FROM LESS DEVELOPED COUNTRIES
TRAINED IN COMMUNIST COUNTRIES, 1156-63
Thousand Students
F'T
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SECRET
AID A ID TRADE ACTIVITIES
OF C .A UNIST COUNTRIES
IN LE`S DEVELOPED AREAS
)1 THE FREE WORLD
JULY - 3 DECEMBER
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SECRET
AID AND TRADE ACTIVITIES
OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS
OF THE FREE WORLD
1 JULY-31 DECEMBER
1963
March 1964
SECRET
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This series provides periodic summaries and analytical interpreta-
tions of significant developments in the economic and military rel.tiore
of Communist countries with less developed countries of the Free World.
These developments are reported on a current, factual basis in biieekly
reports under the same title.
This report, covering the 6 months from 1 July through 31 Deceber
1963, constitutes the sixteenth periodic supplement to a report on
Sino-Soviet Bloc Postwar Economic Activities in Underdeveloped Areas,
8 August 1956, SECRET. The present supplement updates the previous
semiannual report and includes the more significant developments during
the reporting period. It also relates noteworthy noneconomic activi-
ties, including military aid, to economic operations of the CoTnmuni t
countries in less developed areas.
In this report the term Communist countries refers primarily to the
following countries that extend aid to less developed areas: the U.3SR,
Communist China, and the following countries of Eastern Europe --
Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and qumanit.
For certain limited purposes the term also may include Albania, Cuba,
Mongolia, North Korea, and North Vietnam, none of which is no,T-mally a
donor Of aid. The term does not include Yugoslavia.
The term less developed countries of the Free World includes thf,
following: (1) all countries of Africa except the Republic o Sout},
Africa; (2) all countries in South and Southeast Asia; (3) Iceland,
Portugal, and Spain; (1+) all countries in Latin America except Cuba
and (5) all countries in the Middle East, including Cyprus, Greece,
the Syrian Arab Republic, Turkey, and the United Arab Republic.
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CONTENTS
Summary . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Economic Assistance . . . . . . . . . . . . . . . . . .
A. Credits and Grants . . . . . . . . . . . .
B. Technical Assistance . . . . . ? ? ? ? ? .
1. Economic Technicians . . . . .
2. Academic Students and Technical Trainees . . .
II. Bloc Military Assistance . . . . . . . . . . . . . . .
i
A. Credits and Grants . . . . . . ?
B. Technical Assistance . . . . . . . . . . . . . . . 16
1. Military Technicians . . . . . . . . . . . . . 10
2. Military Trainees from Less Developed
Countries . . . . . . . . . . . . . . . . . . lI
A. Value . . . . . . . . . . . . . . . . . . . . . . . ~_
B. Direction . . . . . . ? ? ? ? ? ? ? ? ? ? ? ? ? ? . l
C. Commodity Composition . . . . . . . . . . . . . . . 13-
A. Africa . . .. . . . . . . . . . . .
B. Asia . . . .. . . . . . . . . . . .
C. Latin America . . . . . . . . . . . . . .
D. Middle East . . . . . . . . . . . . ? ? ? ? .
Appendix
Statistical Appendix . . . . ? ? ?
S-E-C-R-E-T
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Next 1 Page(s) In Document Exempt
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AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS OF THE FREE WORLD
Summary*
Economic activities of the Communist countries in the less developdd
countries of the Free World during the last half of 1963 expanded river
the previous 6-month period in most sectors. Soviet and Chinese aid
commitments increased and drawings on previously extended lines of
credit accelerated, there was a continuing high level of activity ~n
military assistance, and the scale of training programs and the nugber
of Communist technicians in less developed countries continued to in-
crease.
The assistance extended to Algeria, the Somali Republic, and Iran
constituted the most significant new aid activity during the period.
Both the USSR and Communist China seized opportunities for extending
new assistance to Algeria and the Somali Republic. Also, by e:.-,tending
a development credit to Iran for a joint multipurpose project, which
will provide both countries with power and irrigation, the USSR agreed
to an aid undertaking that will yield direct benefits to its :)wn econom
Although the levels of new economic assistance extended in the Last
half of 1963 by Communist countries were still below earlier peak
periods, such aid increased markedly over recent 6-month periods.
Credits and grants extended to the less developed countries by the
Communist countries during the last half of 1963 totaled about $210
million, bringing aggregate economic aid extended for 1963 to about
$310 million -- slightly less than the amount provided in 1962 and
less than one-third of the peak year extensions in 1961. The Easterrn
European countries were virtually inactive during the period. The
USSR and Communist China accounted for almost all the new assistance
provided. For both of these countries, the new aid extended repre-
sented substantial increases over 6-month totals recorded in the pre-
vious year and a half. Soviet economic aid extensions totaled $139
million, and Chinese Communist extensions totaled $72 million. This
brought aggregate extensions by Communist China in 1963 up to $88
million -- its largest annual aid commitment (with the exception of
1961) since the inception of the Chinese Communist aid program in 1956.
Although the extension of new assistance reflected the continued
willingness of the USSR and Communist China to grasp new aid opportu-
nities, it also pointed up the competition between the USSR and Com-
munist China in Africa. This rivalry has been apparent for several
years in the political sphere but now appears to have become more in-
tense in the economic field. The timing of credits extended to Algeria
* See the chart, Figure 1, following p. 3.
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by the USSR and the Chinese Communists, as well as the terms offered by
the latter, was indicative of the competitive nature of their under-
takings. Similarly, in the Somali Republic, the extension of economic
assistance by the Chinese Communists was followed by military aid from
the USSR.
The C,OSR's first development loan to Iran has political overtones,
since Iran is Western-oriented and committed to a military alliance
with the United States. The loan also is of economic importance to the
domestic economy of the USSR. The multipurpose development of facilities
along the Aras River, which forms a natural boundary between the Iranian
province of Azerbaijan and the USSR, will provide both countries with
power and irrigation.
Th- rate of :drawings on Communist economic: credits continued to
increase. Approximately $2o0 million of economic aid was expended
during, the second half of 1963, bringing total aid disbursements for
the year to approximately $', L65 million, or almost 25 percent above the
level ,f 1962. Total. cumulated drawings reached $1.6 billion by the
end of 1953, or one-third of the total of $4.9 billion in Communist
economic aid thus far extended.
Neu ailitary aid agreements concluded with Algeria, India, and the
Somali Republic during the !ast 6 months of 1963 brought the minimum
total of` Communist military aid to less developed countries since 1955
to $3.d billion.
D.. Liveries of Soviet military aid included. MIG-21's to India,
Syria, and the United Arab Republic (UAR); Komar-class guided missile
patrol. boats.to Syria and the UAR; and surface-to-air missiles (SAM's)
to the UAh. Other items of military hardware also were delivered to
Algeraa to support its border conflict with Morocco.
Techni.cal assistance and academic training programs, the most
dynamic components of the Communist countries" efforts in. many of the
less developed countries in recent years, continued to increase. Dur-
ing the 6-month period under review the number of economic technicians
from Communist countries employed in -the less developed areas rose to
about 11..,940, an increase of about 6 percent over the previous 6-month
period. In spite of the adverse publicity arising out of student pro-
tests in the USSR and Eastern Europe during 1963, the number of students
enrolling in the academic institutions of Communist countries continued
to increase. Almost 2,400 students arrived in Communist countries dur-
ing the period, 50 percent of whom carne from countries in Africa.
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During the first half of 1963, foreign trade turnover between (tom-
munist countries and less developed countries of the Free World car.-
tinued to show the moderate expansion noted in 1962. The value of this
trade during the period January-June 1963 amounted to more than $1.2
billion, or 13 percent above the corresponding period of 1962. Asia
continued to be the Communist countries' most important trading area,
followed in importance by the Middle East. Asia's trade with Communist
countries in the first 6 months of 1963 amounted to $494 million,
whereas that of the Middle East was $395 million. Trade with Latir;
America remained relatively stable at about $140 million, whit- Com-
munist trade with Africa increased about 36 percent. The year 196'
brought little variation from former patterns in the commodity composi-
tion of this trade. The Communist countries continued to represent
primarily a market for crude materials and foodstuffs while supplying
manufactured goods and machinery. Although the exports of Communist
countries rose more than their imports during the 6-month peri)d unier
review, the Communist area still emerged as a net importer, ret`lecting
primarily the deficit position of the USSR that has been evident since
1955?
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COMMUNIST MILITARY ASSISTANCE
TO LESS DEVELOPED COUNTRIES, 1955-63
STUDENTS FROM LESS DEVELOPED COUNTR ES
TRAINED IN COMMUNIST COUNTRIES, 1956 63
`.Since Communist mfiitary assisttruc,,ion
of the Soviet-financed petroleum refinery at Assab reportedly was abut
to start, following renegotiation of an earlier agreement. A Soviet-
financed technical school. at Baherdar-Giyorgis opened during the per Lod,
and work progressed on a Czechoslovak shoe factory near Addis Ababa.
Tanganyika, which already has trade agreements with several
Communist countries, signed its first with the USSR in August. Tang~.n-
yika will exchange traditional agricultural produce for agricultural
and roadbuilding machinery. The Tanganyikan Minister for Commerce a-id
Industry, George Kahama, visited the USSR, Czechoslovakia, and 'olani
to seek economic and technical assistance and to discuss trade inatte,s.
Under an agreement of December 1963, Poland and Tanganyika will ,joinoly
construct, operate, and own a sugar factory and plantation in Tanganyika.
A Polish organization will retain 40 percent of the ownership of the
enterprise for 12 years. The Poles also discussed entrance into the
Tanganyikan fishing and fish-canning, glass, and small agricultural
tools industries. Czechoslovakia is to help Tanganyika establish a leews
agency.
The trade of Sudan with Communist countries increased substae-
tially during 1963, largely as a result of increased imports of Sudanese
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cotton, primarily by the USSR, Communist China, and Rumania. As of
November 1963, Communist purchases of Sudanese cotton were more than
double those of the previous year and accounted for about one-third of
total Sudanese exports of cotton. In December 1963 the'Sudanese press
reported that the USSR had replaced the UK as the largest single buyer
of Sudanese cotton.
Libya, Bulgaria has undertaken the first project to be built
by a Communist country -- construction of part of a large sewerage
system in Tripoli. Progress on the implementation of Soviet and Eastern
European credits to Tunisia continued to be slow. A civil air agree-
rnent, signed in October, provides for a weekly Bulgarian flight on the
route Soria-Rome-Tunis-Algiers. An inaugural. flight took place on
1l October.
Mali signed an agreement with North Korea in June, under which
the latter agreed to underake the rebuilding, of a rice mill and the
~cons;r.uction of a porcelain factory. Work on. the latter project re-
portedl,y began early in September. No new credits were announced during
the pper-iod, and the Communist countries gave no indication that they
will provide budgetary support to meet the crisis caused by the loss of
1F'renc?h hard currency support and the creation. of the Malian franc.
k:iovie-t geologists continued their explorations and, according to one
report. discovered promising evidence of gold. near the Guinean border.
The delivery of basic construction materials permitted work to begin
on tiro worts stadium project.
cainea reportedly received a second commitment of foreign
xch~:,ne from Communist China amounting to $4.2 million, which is
0ciir>ved to constitute a further obligation of the September 1960
ored-ib. Progress was made on the cigarette factory that was being
rnst.rr3c},ed with Chinese assistance; it was expected to be put into
orperatlon in 1x64. Guinean news media and officials increasingly
acknowledged Chinese Communist assistance (as well as Free World aid)
but continued to ignore or to criticize obliquely Soviet assistance.
Major Soviet construction rarojects in Conakry were stalled for 7 months
i'or? a. Lack of local workers, but after protracted discussions an agree-
nrerrt was reached, and work was resumed in September. Guinea continued
to be reluctant to permit its Soviet-built airport facilities to be
used by Aeroflot for onward flights to Cuba and presented increasingly
dising(z.enuous excuses: in December, Aeroflot was informed that landing
rights still could not be granted until the USSR agreed to guarantee
the runway for 3U years. In September, Poland and Guinea dissolved
their roartnership in the joint Guinean-Polish fishing enterprise,
although a number of Polish advisers have been retained, and some of
the Polish boats were not returned.
Ghana and the Communist countries continued to seek to surmount
the various obstacles to implementation of credits. The lack of financ-
ing or local costs remained a prime deterrent. Poland agreed to obli-
gate $%-t.4 million from its April 1961 credit to cover local costs of a
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civil engineering works at its sugar refinery near Akuse. Au agreement
signed between the USSR and Ghana in July whereby the USSR would provide
goods, under the November 1961 credit, to generate local currency for
its projects ran into various difficulties, but it appeared likely that
in time the difficulties could be ironed out. Another approacu to the
problem was illustrated by agreements that the Ghanaian Government
signed with a French firm to finance certain local construction costs
of some Czechoslovak and Hungarian projects. The USSR, under consider-
able pressure from Ghana, accepted the return of four I1-18 transports
and one An-12 transport purchased for Ghana Airways under a 1`)40 Soviet
credit.
Ghana's complaints about its trade and payments arrangements
with Communist countries, which have in the past resulted in Ghana deinr
a substantial creditor on trade accounts, reportedly resulted in an
agreement "in principle"' with all Communist trading partners i-" r a
periodic balancing of trade accounts, with settlement to be in con-
vertible currency. Only one agreement -- with Bulgaria -- was signed,
however, and it merely provided that a favorable balance could be used
to repay developmental credits extended by Bulgaria.
Poland offered Nigeria a $42 million credit in June, but no hint
more has been heard about the status of the offer. Nevertheless, two
Poles have conducted feasibility studies on the erection of factories
in northern Nigeria.
In spite of a political. climate that seemed in many A_-,an c )un-
tries to offer increased opportunities, the Communist countries undi}r-
took few new activities in the aid field during the last half of 19?3.
The presence of the Communist countries generally was maintail>d in
the area, largely through the continued implementation of pre: ous
grants and credits. Several new projects were initiated or agreed rtpon
under existing extensions, but new credits were at a low level. Si,r-
nificant developments included (1) Cambodia's renunciation of ITS all,
with a possibility of greater dependence on Communist China; (2) near
trade agreements between India and several Communist countries call ng
for expanded and diversified trade; (3) Pakistan's movement toward-t
limited increase in economic relations with the Communist countries:
and (4) Indonesia's search for material support for its confrontation
with Malaysia, with little result.
In Indonesia, Sukarno turned his attention in the latter ha:'.f
of 1963 to the confrontation with Malaysia and at the same time seemed
to shift his weight back to the foot that he keeps in the Communist
camp. The severance of 'trade and communications between Indonesia and.
Malaysia in September dealt a heavy blow to the Indonesian economy and
dimmed the possibility of carrying out the economic stabilization p^'o-
gram.
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The USSR, along with Czechoslovakia, Bulgaria, and Rumania,
has shown interest in production-sharing arrangements. A production-
sharing agreement was signed with Bulgaria in August that extended
credits of $500,000 for the construction of . citronella plant. It
is assumed that this constitutes an obligation of the May 1961 line of
credit that hitherto has not been utilized.
Cambodia, while maintaining officially its longstanding policy
rf nonalignment during the last half of 1963, showed an increased in-
clination to support Communist China on international issues. Cambodia
showed sympathy for the Chinese stand in the Sino-Soviet dispute (although
without attacking the USSR). The USSR delivered military aid to Cam-
bodia in November, and Sihanouk announced in mid-December that he had
accep ned an "important gift" of military equipment from Communist China.
A con-Lract with the USSR under a previous credit for the construction
of the Kamchay Dam was signed during the period.
E November, Prince Sihanouk demanded that US aid to Cambodia
be te;-m_nated. It appears that France will partly fill the resulting
rap, and conditions are favorable for an increase in Chinese Communist
influE~nce in Cambodia. French influence will continue because of impor-
;arrt 're:rr_,ch contributions to military and administrative training and
French interests in business and finance. The proposed nationalization
in lyn4 of foreign trade and banking, however, could, if implemented,
serve to aimini.sh French commercial influence.,
The most significant Communist involvement in Burma during the
reporting period was political in nature, with the Chinese backing the
+;i:temirt of their Communist (White Flag) proteges to achieve a legali-
s ation of their ~osi tion. The failure of the negotiations between the
government and the Communist insurgents, their return to their bases
in the jungle, and the subsequent arrest of the leadership of the White
Flag Communists precluded for a time the possibility of an accommoda-
;-ion between the government of Burma and the Burmese Communists.
^J:thouFt no new credits were reported during the period, modest
implementation of the Chinese Communist credit of $84 million continued.
:,urveys of all projects under the credit reportedly had been completed
by Ai inst. Construction of a bridge across the Salween River at Kunlong
in.t.h(e Northern Shan States is scheduled to begin in March 1964, the
i'irst oi' numerous projects under the Chinese loan actually to reach
the construction stage. Most of the equipment under the $2.6 million
soviet credit for agricultural machinery had arrived by the end of
1,963, and progress continued on the construction of the Soviet-assisted
dam at, Kyetmauktaung.
To the last 6 months of 1963 the USSR and Eastern Europe
assursd India of their continued and enhanced participation in future
indiarE E=conomic affairs. T'hese assurances were in the form of several
new credit offers for the Third and Fourth Plans -- one from Czecho-
slovaKia for $`i0 million and one from Hungary for $25 million -- and
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new trade agreements with the USSR, Czechoslovakia, and Hungary that
call for greatly expanded and diversified trade over the next yeprs.
In the trade sphere, efforts were made to expand the volume
and variety of goods traded between India and the Communist countries.
Recently concluded long?-term trade agreements with the USSR, Czechc-
slovakia, and Hungary provided for increased exchanges, including ex-
ports of goods not traditionally exported by India.
Recent political developments in Nepal have not been Favorable
to the interests of the Communist countries. King Mahendra's domestic
political base broadened while the opposition to his regime renainei
in disarray. Relations between Nepal and India also improved.
Although the political developments in Nepal may have affected
the position of the Comrrrun_ist countries in Nepal, it did not affect
their aid activities. Communist China continued with construeeti;ion ?f
the Katmandu-Kodari (Tibet) road, but the proposed cement fac'ury at
Hitaura and the paper mill at Nepalgunj have been abandoned. 'The
Chinese aid funds thus released may be channeled to other projects,
such as hydroelectric and irrigation facilities and roadbuilding in
the Terai.* The three Soviet-financed projects -- the hydroeLectri?
plant, sugar mill, and cigarette factory -- now under construction are
proceeding satisfactorily. Inasmuch as these projects probably will be
completed by the end of 1965, the USSR agreed to investigate t e po.>-
sibilities for further economic aid to Nepal, including the constru-,tioa.
of a 65-mile road from Janakpur to Simra and the establishmeri, of an
agricultural implements factory. There was, however, no announced
expansion in the current Soviet aid program.
In Ceylon, construction progressed on the Soviet-assisted iron
and steel works and the tire and tube factory -- started earl er in
the year -- and work was begun on the cold storage plant at Kandy.
The proposed flour mill and grain elevator complex was brought a step
closer toward implementation with the signing of an agreement that let
forth the Soviet contribution to the project. The USSR was to covet
foreign exchange costs, estimated at. about $1.4 million. Communist
China meanwhile agreed to supply Ceylon with 30,000 tons of rice duxing
the last quarter of 1963, the costs to be charged against the unusec
portion of the 1958 flood relief credit. Peiping also offered to set
up a fountain pen factory and to equip a second textile mill, presumably
as part of its $26.3 million grant program. The Chinese under the same
program completed delivery of $5 million worth of railroad roiling stock.
* Agreement reportedly was reached in January 1964 for the construction
of a hydroelectric plant on the Baghmati River, brick-tile and.oottery
factories in the Katmandu Valley, the Morang-Janakpur section of the
East-West Highway, five warehouses, and a tannery and shoe factrzry at
Butwal.
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Ceylonese trade relations with Communist countries we:I?e hi
lighted by the renewal in October Of the 5-year rubber-for-rise par:
with Communist China. The new agreement calls for the exch of
200, 000 tons of rice and, 000 i s of rubber at an estimate-i. valU
of $21 million each w
r'
o
l
(;Xy.
eyl
n a
so reached agreement with !;he
for the purchase of the C v Ton Petroleum Corporation's petroleum
quirements for 1964.
Pakistan continued to implement a policy of expanding its rf!la-
tions with Communist Chins.. The two countries signed an air agreement
and a $1.7 million barter agreement. An official visit by Premier rhou?
En-tai in February 1964 was announced. Pakistan appeared to be going
ahead with plans to open the civil air service to China early ii 1.9#4+
in spite of the fact that Pakistan Tnternational Airlines has been i =enij
Japanese permission to fly f Ikcviet and Eastern European aid of,er
were numerous, but aid reia ned limited to the Soviet petroleum exp )ra-
tion program. Some increase in Com hunist assistance, probably related
to heavy industrial deve'_on ent, may be forthcoming to coincide with the
initiation of Pakistan's Third ii'ive Year Plan in 1965. Thus it is
probable that Pakistan's limited ecenomic ties with the Communist cr: ,n-
tries will slowly expand, not so much as a move to weaken a, ba.3ic pr_-
Western attitude as to show displeasure with Western military sist-
ance to India.
In Af hanistan, fbe'Tl!er Prime Minister Daud's departure more
the government gave the AiFr pans somewhat more flexibility in the
international political arrra. The USSR continued to maintain t.s
preponderant position, howver, in the military and economic a;list-
ante fields in spite of Afrba,nittan's desire to moderate Soviet in-
fluence. The visit of Sov et. "President Rrezhnev to Kabul in Ci, t -,ben
was successful but produces no startling results. He brought---, Sov ,t
promise to exploit the
Kush and indicated Soviet tillirgnes's to construct a pipeline :r
to
_
Soviet Central Asia. The t,SR would then import about 1.5 -bi1Jion o
the 2 billion cubic meters' of eras thet are exile; t.eri tx-) he P t r?*A,
annually for the initial o" od of pioitation.
Afghanistan's almost exclusive dependence on the USSR for m-i i-
tary equipment and training ,onti_nueci during the period. Ernphns-i s wr
on the accelerated famili ari 'ation training of Afghan persnulne ot)',
in the USSR and in Afghanistan under the military assistance pronrarn
Commercial agreements with the USSR appear to cover the repaaee:nent
and supply needs of Afghani :,-,an , and there was no indicati oii tFlstt. net
agreements are in prospect:
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C. Latin America
The economic involvement of Latin America with the Communist
countries was relatively unchanged during the latter half of 1963.
Domestic political developments and changes in government were not
along lines that would materially increase the area's receptivity ?o
Communist trade and aid offers. Brazil remains the country most it.-
terested in developing East-West trade, but Soviet inability to meet
wheat export obligations will depress Soviet-Brazilian trade, at
least through 1964. A number of other Latin American countries have
indicated a somewhat heightened interest in developing their exports
to Communist countries. This interest is based on commercial, rather
than political, considerations.
Communist China stepped up its commercial activities in Latin
America, particularly in Argentina. Meat and grain contracts that
Communist China has been negotiating with Argentine interests >ince
mid-1963 total approximately $100 million. Mexico sold wheat and e)tto<
to Peiping, and Chile reportedly was negotiating a $6 million copper
sale. Communist China held a trade exhibition in Mexico.
In Brazil, Poland renewed its offer (dormant since November
1962) to finance construction of a $26 million thermal electric powoor-
plant in southern Brazil. Czechoslovakia offered to undertake mode-ni-
zation of the port of Recife and urged that Brazil utilize a longstand-
ing credit of $60 million for powerplant construction. None o? there
offers had been accepted by the end of 1963. In December, four Soviet
engineers, at the invitation of Brazilian officials, arrived in Brasil
to survey the feasibility of constructing a giant hydroelectric powfyr
complex at Sete Quedas in the state of Parana.
Brazil continued its efforts to expand iron ore exports to
Eastern Europe. A Brazilian trade mission visited Rumania in August
1963 to discuss an exchange of iron ore for petroleum products.
Brazil's largest iron ore producer plans to increase its exports frrm
1.5 million to 4 million tons annually, with much of the increase evr-
marked for Eastern Europe, particularly Bulgaria and Rumania.
The USSR offered Uruguay assistance in a project that would
expand Uruguay's thermal electric power capacity significantly. Allhou&N
the offer yielded some propaganda benefits to the USSR, there was no
indication that the Uruguayan Government was seriously considering the
offer. During the period, Czechoslovakia offered to purchase $12 m5l-
lion worth of Uruguayan meat in exchange for cash.
The protracted negotiations between Czechoslovakia and Bolivia
for construction of an antimony smelter continued without final agree-
ment. Although Bolivian counterproposals made during the first half
of 1963 apparently were accepted in principle by Czechoslovak negotiator..
final approval still had not been obtained from Prague.
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;birurierc al activities continued in a number of other Latin
American countries. The USSR continued negotiating with Chile for an
additional $6 million worth of copper. Poland actively pursued trade
with Mexico, Honduras, Chile, Argentina, and Haiti. Czechoslovakia
participated in a trade fair in Lima and succeeded in selling 200 buses
in Per,.?.
in the Middle East, Communist activity was highlighted by the
first major Soviet aid agreement with Iran, additional deliveries of
military equipment, an over-all decline of aid activities in Iraq, and
c-ritirueci implementation of economic aid projects in Syria and the UAR.
Atern n- , than a year of gradually improving relations, the
t..Tc_,SR cz?n Iran signed an economic aid agreement in July 1963 providing
for jci_ut construction of a multipurpose project on the Aras border
river, :i1 grain silos in Iran, and fish hatcheries on the Caspian Sea.
i i. , o, 1e c, .:ion w .. t1i the river project the USSR extended a credit of
8. n il.ion to Iran to cover the latter's share of the cost of the
The credit is to oe repaid in Iranian commodities over a
se.rio i of 12 year,-, at 3.6 percent interest. It was reported that the
dams ) br. constructed, combined with irrigation canals, will allow an
area c,i' aii;most )9.000 acres (half on each side of the frontier) to be
brought under cultivation. In addition, power to be generated by three
- iwer ] a 12 ions y 4,i 11 :3uapply trice requirements of agriculture and indus-
t ry iii ifc thern Iran and A~e.rbaydzhan SSR.
tr-ing the period, several of the Eastern European countries
L rred .t. ,rc :-tecnt credits to Iran for a variety of economic
vei P e it projects. Probably the most sign inficant of these offers
a.. C' m~ 11 c; , o+'fer by Czechoslovakia to expand Iran's sugar
indust.r,y. Poland and Hungary offered credit., of $15 million and $10
milli,; n, respe;a.,:i.vely, for other industrial projects. None of these
r fer:; known to have res ul.ted in agreements.
The second half' of 1963 witnessed a continuation of reduced
Corrtmu ,i t econuriiic aid activity in Iraq. This curtailment of these
economic efforts in Iraq, which began with the Ba'ath coup of 8 Feb-
ruary 1 kb , apparently was continued by the iiilitary junta that seized
power on L8 November 1963. By the end of the year a project-by-
pro je t eview of the entire Communist econor:iic assistance program in
Iraq was still in process. Iraqi authorities called in Western experts
to provide an assessment of the projects of -Communist countries.
The experts' advice confirmed the Iraqi regime's view that many of
the projects were poorly designed and constructed.
FFy the end of the period, eight projects had been canceled, and
efforts had been made to obtain implementation by non-Communist coun-
trie,s, through international tender. Among these are the Baghdad steel
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mill and the agricultural machinery plant. Eight additional projects
remained under study, and 27 had been completed or were expected t,, be
completed. Because of the cancellation of some projects and the dflay
in others pending decisions, the number of economic technicians from
Communist countries present in Iraq, about 1,200, declined and by 'the
end of the period was slightly more than 600.
The pace of implementation of construction activities in the
UAR continued at a relatively high level. The most important single
Soviet aid project, the Aswan Dam, moved rapidly toward completion of
the first stage in May 1964. The USSR had 1,700 technicians workirg
on the project and plans to maintain that level until completion of
the first stage. Expansion of the oil refinery at Suez was completed,
and other petroleum projects met no unusual delays. Plans were
finalized for Hungary to furnish equipment for a Soviet-financed
calcium carbide and ferrosilicon plant at Aswan, on which cons ruction
will commence in early 1.964.
In Yemen the USSR continued its aid activities and completed
the Al Rahiba International Airport and a road connecting the airfield
to the nearby town of San'a. Formal airport dedication ceremoriLes s)f
27 September 1963 were accompanied by voluminous and fulsome propag.tnda
This project was the largest single one undertaken by the USSR in Yemen
and reportedly brought Soviet prestige in that country to an all-tine
high. Considerable Soviet military and economic aid, however, has teen
provided to Yemen since the USSR decided to support the new regime.
The value of such assistance, however, is still unknown.
In Syria, Soviet policy was much the same as it has been since
the breakup of the UAR in September 1961. In spite of frequent and
violent changes in Syrian regimes, the USSR continued to implement 'ts
economic and military aid programs in that country without any -~ignsfi-
cant policy changes toward Syria. Projects under construction appa?-
ently proceeded without incident. The only reported difficulty con-
cerned a disagreement over the type of fertilizer factory to be buil'L
in Homs by the USSR. The USSR continued to deliver military equipment
to Syria.
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STATISTICAL APPENDIX
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