AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD -1966

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010022-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 66
• Document Creation Date: December 19, 2016
• Document Release Date: January 25, 2006
• Sequence Number: 22
• Publication Date: March 1, 1967
• Content Type: REPORT

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AID AND TRADE ACTIVITIES OF C4MMt~Nl~T
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FLEE WORLD - 196b
ECONOMIC INITELLIGENCE COMMITTEE
of th e
UNITED STATES INTELLIGENCE BOARD
Sec~~t
EIC F'~~-S1?
N`iarch I ~b7
C`'PY ~l
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4 ~e~ `~
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AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD - 1966
EIC R14-S21
MARCH 1967
ECONOMIC INTELLIGENCE COMMITTEE
of the
UNITED STATES INTELLIGENCE BOARD
SECRET
25X1
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FOREWORD
The EIC-R14 series provides periodic summaries and analytical
interpretations of significant developments in the economic relations
and military aid activities of Communist countries with less developed
countries of the Free 'World. These developments are reported c,n a
current, factual basis in the Biweekly Reports in the EIC-WGR-1
series.
This report, covering the 12 months from 1 January through 31
December 1966, constitutes the twenty-first periodic supplement to
EIC-R14, the initial report on Sino-Soviet Bloc Postwar Economic
Activities in Underdeveloped Areas, 8 August 1956, SECRET. fihe
present supplement updates the previous annual report and includes
the more significant developments during the reporting period. It
also relates noteworthy noneconomic activities, including military aid,
to economic operations of the Communist countries in less developed
areas. Data have been revised to include new information, and fig-
ures in the current supplement supersede those in previous issues.
This report was prepared by the Department of State and the Central
Intelligence Agency. The draft was reviewed and coordinated. by
a Working Group of the Economic Intelligence Committee, which
includes representatives of the Department of State, the Defense In-
telligence Agency, the Departments of Commerce and Agriculture,
the Agency for International Development, the National Security
Agency, and the Central Intelligence Agency. The final report was
approved by the Economic Intelligence Committee on 14 February
1967.
In this report the term Communist countries refers primarily to the
following countries that extend aid to less developed countries of the
Free World: the USSR, Communist China, and the following countries
of Eastern Europe-Bulgaria, Czechoslovakia, East Germany, Hun-
gary, Poland, and Rumania. For certain limited purposes the term
also may include Albania, Cuba, Mongolia, North Korea, and North
Vietnam, none of which is normally a donor of aid. Yugoslavia is
not included.
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I'he term less developed countries of the Free World :includes the
i~ollowin~;: (1) all countries of Africa except the Republic of South
~~~frica; (-2) all countries in Asia except Japan; (3) Portugal and Spain;
(4) all countries in Latin. America except Cuba; and (5) all countries
n the Middle East, including Cyprus, Greece, Syria, Turkey, and the
~.)nited Arab Republic.
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CONTENTS
Summary ...... . .
I. Communist Activities in Less Developed Areas, by Type
of Activity ...... .. ..... .....................
A. Introduction ...... ................. ..
B. Economic Assistance ............................
..
n
1. Credits and Grants
.......................... ..
S
a. Extensions
.............................
b. Terms
..........................
~~
c. Drawings ..........................
a
d. Repayments .........................
xs
2. Technical Assistance ... ....................... i 4
a. Economic Technicians ......................... ~=~
b. Academic Students and Technical Trainees ... ~ 5
C. Military Assistance ....... .................... iii
1. Credits and Grants ... .................. iii
2. Technical Assistance ... .. .. ............... ... iS
a. Military Technicians ... .................. ... t8
b. Military Trainees from Less Developed Countries ... 1S
D. Trade ... ....... ..................... .. E9
1. Value ..... ...............................
2. Direction .................................. .
3. Commodity Composition ................... .
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AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD, 1966
SUMMARY
Introduction
During 1966 the Communist countries continued to employ foreign
aid as an instrument for reducing Western influence and enhanc~iz~g
their own position in the less developed countries. For Communist
China and the USSR, these programs had the additional objective of
countering each other's influence in many of the less developed
countries.
The USSR, while continuing as in 1965 to review the feasibility of
project aid requests more critically than it had in the past, extended
a near-record level of new economic aid in 1966 (see Figure t -.'~
Its largest commitment was to India's Fourth Five Year Plan (1 .April
1966 - 31 March 1971.) . It also extended a large credit to Syria for
building the Euphrates Dam, which, together with the contirtct~tg
economic and military aid programs in other Arab countries, reaffiraned
the USSR's determination to support the "progressive" Arab countries.
In 1966 the USSR committed a larger share of its aid undertakings
than it had previously to credits that were of a more "commercial"
character. Although their terms (5- to 10-year repayment pericyds
and 2.5 to 4 percent :interest) still place them in the category of aid,
these credits are being used to strengthen the trade orientation of the
aid program and also to extend economic aid to countries, such as
Brazil, that have been reluctant to accept Soviet project aid.
The countries of I~astern Europe reduced their aid undertakings
in 1966, although Hungary extended its largest credit since the irtcep-
* In this report the term extension refers to a commitment to provide goods and services,
either as a grant or on deferred payment terms. Assistance is considered to hat~c~ been
extended when accords are initiated and constitute a formal declaration of intent. Thae term
obligation refers to a credit or grant when it has been allocated to specific end uses. The
term drawings refers to the delivery of goods or the use of services.
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ion of the aid program ($52 million to India) . The Chinese con-
i.: irrrred to commit new economic aid to countries that either are to the
?~uth of its border or in which they believe there are regimes with
e xploitable "revolutionary potential" (such as Guinea, Tanzania, and
k~'ernen) .
I?canomic Credits and Grants
"~'he high level of Communist economic aid activity in 1964 and
'9ES5 was sustained in 1966 with the extension of almost $1.3 billion
{9f n.ew economic assistance to 16 less developed countries. These
4ew commitments increased the level of Communist aid undertakings
:?uince the inception of the aid program in 1954 to more than $9 billion.
`cond consecutive year, to about $418 million. In part, the decline
teas caused by reduced project activity as construction neared com-
t~ietion or approached a new stage in countries that are major aid
r~_;cipients. The decline also is a result of the small amount of aid ex-
ta~nded in 1962 and 1963, large parts of whi.c;h would normally have
le~~en used in 1966, and because not enough time had elapsed to allow
tice initiation of major projects under the large aid commitments made
ii b 1.964 and 1965.
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CCtMMUNIST ACTIVITX IN LESS DEVELOPED COUNTRIES
OF THE FREE WORLD*, 1954-b6
Eastern Europe
ECONOMIC AND MILITARY TECHNICIANS
IN LESS DEVELOPED COUNTRIES
Thousand Technicians
D Military
O Economic
l~ l I
~ Military
f::7 Technical
? Academic
?Data ore rewsed periodically to include new information and
therefore may not be comparable with dpto previously presented.
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U Communist China
V Eastern Europa
l~ usslt
Million US Dollars
STUDENTS DEPARTING FROM LESS DEVELOPED CQUNTRIE
fOR TRAINING IN COMMUNIST COUNTRIEc
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Repayments of principal and interest due on drawings under the
Soviet economic aid program have risen from an estimated $20 million
in 1960 to approximately $115 million in 1965 and $150 million in
1966. An estimated $65 million also was due in 1966 on drawuz~s
under the East European aid programs. Because Ghana and Somalia
were unable to fulfill their debt-servicing obligations, the USSR al-
lowed them to defer some of these payments in 1966. The USSR
was reported also to have given relief to the United Arab Republic
(UAR) in making repayments on its military debt and agreed to re-
schedule Indonesia's military debt.
Economic Technicians
The number of Communist economic technicians employed in less
developed countries during 1966 increased by 11 percent over ].985, to
more than 22,430. By the end of the year, however, there were re-
ductions in the number of technicians present in Indonesia, Ghana,
Nepal, the UAR, and Yemen because of political factors or because
certain stages of major projects on which they were employed had
been completed. Africa continued to employ the largest share ~>f
Communist technicians, reflecting the heavy concentration of Chinese
in the area as well as the large group of Soviet and East European
personnel engaged in ~rctivities not related to specific projects. The
concentration of technicians in a few countries continued to charac-
terize the technical assistance program. During the year the UAR
employed an estimated 2,000 Soviet technicians, of whom 1,000 were
engaged in work on the Aswan. High Dam and related facilities. ,!~n-
other 1,500 Soviet technicians were in India and 1,340 in Afghanistan.
The heaviest concentration of Chinese technicians was in Mali, where
about 1,350 were employed.
Academic Students and Technical Trainees
The number of academic students enrolling for the first time in
Communist institutions declined for the fourth consecutive year in
1966, to 1,675, bringing the total number of enrollees since 1956 up
to 23,685. Approximately 58 percent of the new students in 1966
were from Africa, with students from Latin America and the Middle
East accounting for an additiona119 and 17 percent, respectively. 7'he
USSR continued to accommodate the largest number of new students
in 1966, about 85 percent of the total, but Communist China is nc~t
known to have admitted any new students. At the end of 1966, more
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than 16,700 students were still pursuing academic programs in Commu-
nist countries.
The number of nationals departing in 1966 from the less developed
countries for technical training in Communist countries declined by
31 percent from the previous year, to an estimated 1,205. This
b~?ought the total number who have undertaken this training during the
past decade to 12,200.
Military Credits and Grants
Communist countries extended a minimum of $231 million of mili-
tsa.ry aid to less developed countries during a9G6, bringing the total of
s~ich aid extended since 1955 to $4.9 billion. The largest commitment
iii 1966 was a $181 million Soviet credit to Iraq. The USSR also is
helieved to have agreed to extend an estimated $25 million in aid to
Syria and small. amounts to Cambodia, Mr.>rocco, and Tanzania. It
also conducted arms negotiations with Iran. Communist China ex-
tended a $4 million credit to Tanzania, and Czechoslovakia agreed to
provide an estimated $14 million worth of equipment to the UAR,
possibly under long-term credit, and extended a credit of $1 million
t~:~ Cyprus. Deliveries of military equipment under earlier agreements
iii 1966 increased beyond the high levels of the past few years. Heavy
deliveries of equipment continued to flow to the UAR, India, and
ralgeria. Iraq began to receive equipment under the 1966 arms agree-
iaient with the USSR.
Military Technicians and Trainees
In 19b6 the number of Communist military technicians in less de-
veloped countries declined to 3,435, a i0-percent reduction from the
7.965 level. Most of the drop is accounted for by the reduction in
the number of technicians in Indonesia after the attempted coup in
7.965. The number of technicians present iii the UAR, Congo (Brazza-
ville ), and Yemen also declined, but these declines were offset to
some extent by increases in the number present in most other countries.
The largest increases were in Afghanistan and Iraq.
17urir~g 1966, some 1,550 nationals from less developed countries en-
rc~lled in military training programs in Communist countries, about
S7 percent of the number who departed for similar training in 1965.
"i'he total number who have undergone this training since 1955 is
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almost 22,300, and at the end of 1966 about 3,630 still were being
trained.
Trade
Total trade turnover between the Communist countries and less de-
veloped countries during the first half of 1966 increased by about 22
percent over the corresponding period of 1965. This expansion was
accounted for primarily by increased Soviet and East European trade
with the less developed countries. In 1965, total Communist trade
with these countries increased by 20 percent over 1964 to $4.3 billion.
The USSR accounted for the largest part of the increase, rising from
$1.4 billion in 1964 to $1.8 billion in 1965. Eastern Europe's trade
with the less developed countries rose by 16 percent in 1965 to over
$1.7 billion, while Communist China's trade with these countries ~?ose
by 23 percent, from $652 million in 1964 to $802 million in 1965.
The geographic distribution of Communist trade with the less de-
veloped countries in 1.965 followed the general pattern of 1964, ::on-
centrating on Asia and the Middle East in general and on India and
the UAR in particular.,
In 1965 the commodity composition of trade between Communist
and less developed countries varied only slightly from 1964. Crude
materials and food products continued to account for about 85 t~er-
cent of Communist imports from less developed areas although the
share of food products was somewhat less in 1965 than it had been in
1964. Communist exports of machinery, transport equipment, and
manufactured goods continued in 1965 to account for more tharx t0
percent of total Communist exports to less developed countries, but
there was a decline iri the importance of machinery and equipment.
While the value of such exports to less developed countries rose, their
share of total Communist exports to less developed countries declined
from a high of 40 percent in 1964 to 36 percent in 1965.
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I. Communist .Activities in Less Developed Areas,
}~y Type of Activity
A. INTRODUCTION
During 1966 the Communist countries continued to employ foreign
aid as an instrument for reducing Western influence and enhancing;
their own position in the less developed countries. For Communist
China and the USSR, these programs had the additional objective cif
countering each other's influence in many of these countries.
Paced by large extensions of military and economic aid to Syria anzl
large new military aid commitments to Iraq, the Soviet Union can c-
tinued its support of the "progressive" Arab countries in the hope tl-r+t
it can promote the ascendancy of political forces there which ultimately
will align themselves rwith the Soviet Bloc. The Soviet leadership
also continued to push for the unification of all "progressive" forces
in the area into a common anti-imperialist front and called for the
backing of Nasser as the vanguard of these forces.
On the Indian subec-ntinent, the Soviet Union not only unclertc~c~lt
additional large economic aid commitments in India to maintain i#s
influence in that countrv but also extended sizable new credits to
Pakistan to arrest that country's pro-Chinese drift. Sub-Saharan. Africa
continued to hold a secondary position in Soviet policy in the less
developed countries during 1966. The largest Soviet credit to this
area-$20 million to Tanzania-was the culmination of negotiations can
an offer made early in 1.964. With the ouster of Nkrumah from Ghar;a
in February, the USSR lost one of its most active champions in Africa,
and its aid activities in (;liana came to a virtual standstill.
Although the USSR extended anear-record level of new economic
aid in 1966, it continued, as in 1965, to review the feasibility of proje=_~t
aid requests more critically than before. In addition, the USSR con$-
mitted alarger share of its aid untiertakings in 1966 to credits of a
more "commercial" character, although their terms still place them u ~
the category of aid. 'these trade credits generally allow repaymec~t
periods of 5 to 10 years for deliveries of equipment to small projects
and for non-project-related imports. Thus more than 40 percent ;,f
all Soviet credits extended during the year were in the form of trade
credits. These trade credits are being used by the USSR to penet~aFe
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areas that have been reluctant to accept project-type economic aid
from the USSR, such as Brazil. Trade credits, as opposed to project
ricl, are intended also to strengthen the trade orientation of the aid
I]rc:~gram and to consolidate commercial relationships with the less
dleveloped countries.
"C'he countries of Eastern Europe reduced their aid undertakings
in 1966, although Hungary extended its largest credit since the incep-
tion of the aid program ($52 million to India) .
The Chinese also continued to maintain the pattern of aid extensions
ghat has characterized their aid program in recent years. New eco-
~romic aid commitments were undertaken in countries which are either
p~c:~ripheral to Communist China (Cambodia and Nepal) or in which
the Chinese believe there are regimes with exploitable "revolutionary
,}c~tential" (such as Guinea, Tanzania, and Yemen) . The program
~ontinuecl to be oriented toward roadbuilding and small light indus-
trial and. agricultural undertakings that are labor intensive in char-