AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD, 1967

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010026-5
• Release Decision: RIPPUB
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• Document Page Count: 41
• Document Creation Date: December 19, 2016
• Document Release Date: January 25, 2006
• Sequence Number: 26
• Publication Date: March 1, 1968
• Content Type: REPORT

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Secret
USIB
UNITED STATES
INTELLIGENCE
BOARD
Economic Intelligence
Committee
Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free World, 1967
Secret
EIC R14-S22
March 1968
Copy N2 759
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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 on 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 1967, constitutes the twenty-second report of the EIC-R14
series. The present report updates the previous annual report and
includes the more significant developments during the reporting period.
It also covers noteworthy noneconomic activities, including military
aid and student exchanges. Data have been revised to include new
information, and figures 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 Intelligence 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 8 February
1968.
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.
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 of the Far East except Japan; (3) Portugal
and Spain in Europe; (4) all countries in Latin America except Cuba;
and (5) all countries in the Near East and South Asia.
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CONTENTS
Page
Summary I
.. ...........................
1. Communist Activities in Less Developed Areas, by Type
of Activity ............
... ...........................
7
A. Major Trends ......
...
B. Economic Assistance
...........................
8
1.. Credits and Grants
... ......................... .
8
a. Extensions ... .
... ...........................
8
b. Drawings ...
... ...........................
10
2. Technical Assistance .. ...........................
10
a. Economic Technicians ..........................
10
b. Academic Students and Technical Trainees ........
11
C. Military Assistance . ... ........... ............ 12
1. Credits and Grants
..............
12
2. Technical Assistance ..
16
a. Military Technicians
...........................
16
b. Military Trainees from Less Developed Countries ...
16
D. Trade ............
1. Value ......... .
2. Direction ........ ... .... ...................... 19
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AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD, 1967
SUMMARY
Major Trends
During 1967 the Communist countries continued to expand their
presence in the less developed countries by delivering large amounts
of military and economic goods and services, primarily from aid agree-
ments made in previous years. New aid commitments emphasized
military assistance, which rose sharply compared with 1966. Thi.
decline in new extensions of economic aid followed three years of
record high commitments in 1964-66, and in part reflected the lack of
opportunities for new aid extensions and the large backlog of un-
expended credits (see Figure 1).*
Soviet aid undertakings during 1967 were highlighted by military
assistance to the Arab states, which had lost $400 million to $500
million worth of military equipment in the war with Israel. Sub-
stantial deliveries of military equipment were quickly made to the
UAR, Syria, and Iraq after June as Moscow sought to shore up the
military capabilities of these countries and to restore its prestige in
the Middle East. Political considerations also were dominant in Soviet
arms aid to Yemen, where the Soviet-supported Republican regime
was threatened. Nigeria, which traditionally has relied on the West
for its military supplies, signed its first arms agreement with the USSR.
A large arms credit to Iran in January 1967 was of economic as well
as political value to the Soviet Union. Under its terms, Iran will
make repayment in natural gas, which the USSR will use to meet
expanding industrial needs in the Transcaucasus region. In summar,,..
the use of economic and military aid continues to be an important
facet of Soviet foreign policy in Free World less developed areas.
* 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 have been extended
when accords are initiated and constitute a formal declaration of intent. The term obligation
refers to our tentative estimate of the allocation of Communist aid to end uses. The term
drawings refers to the delivery of goods or the use of services.
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The Eastern European countries also lowered new aid commitments
(luring the year compared with 1966. As in the past, these commit-
inents were primarily economic rather than military, and were directed
largely to the countries of the Near East and South Asia. Notable
progress was made in East European aid relations with Latin America,
where there were increased signs of reciprocal interest during 1967.
East European aid and trade delegations to Latin America concluded
at least two new credits (Ecuador and Uruguay) as well as a number
of trade agreements.
Communist China's new aid commitments were also considerably
smaller than in recent years and consisted exclusively of economic
credits and grants. The major outlay during the year was to the UAR,
where, in an effort to continue some Chinese influence following the
June war, the Chinese provided the Nasser regime with a $21 million
grant in wheat and foreign exchange. Peiping also made some head-
way in its aid efforts by adding Mauritania and Zambia to its expand-
ing list of recipients in Africa. In Burma, however, the Chinese pro-
gram sustained a major setback when Rangoon dismissed Chinese
technicians because of serious political differences with Peiping.
Economic Credits and Grants
The Communist countries extended approximately $215 million
of new economic aid to the less developed countries of the Free World
in 1967, bringing total extensions since 1954 to more than $9.3 billion.
This is the smallest amount of new commitments in any year since
1955. The largest decline occurred in new commitments by the USSR,
which fell from about $1.3 billion in 1966 to about $90 million in 1967.
About two-thirds of the new Soviet aid went to Chile in the form of a
$55 million credit for industrial projects and machinery and equip-
ment. The East European countries extended about $75 million in
economic aid, with Bulgaria and Rumania being the major sources.
The UAR, after Chile, was the major recipient of economic aid during
1967, accounting for about 30 percent of East Europe's new commit-
ments and about 40 percent of Communist China's $50 million in new
aid.
Drawings on Communist economic aid of about $500 million in
1.967 were virtually the same as the average annual level of the past
four years. Drawings on Soviet credits, representing about 60 percent
of the total, declined for the third consecutive year while those on
East European and Chinese credits rose slightly in 1967. Cumulative
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COMMUNIST ACTIVITY IN LESS DEVELOPED COUNTRIES
OF THE FREE WORLD*, 1954-67
ECONOMIC AND MILITARY TECHNICIANS
IN LESS DEVELOPED COUNTRIES
Thousand Technicians
E Military
Economic
LL1
Fl Communist China
Eastern Europe
USSR
Million US Dollars
STUDENTS DEPARTING FROM LESS DE`/ELOF?E '=
COUNTRIES FOR TRAINING
IN COMMUNIST COUNTRIES
WE Military
? Technical
IM Academic
'Dnto o a revs=ed perindmdly to inc&de n information and
d,ere%re mq ,,,r 6e corn ,arobie with data pre,,-sly presented.
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drawings since the inception of the program in 1954 have amounted
to somewhat more than $3.6 billion, or almost 40 percent of total aid
extended by the Communist countries.
Economic Technicians
The number of Communist economic technicians employed in less
developed countries declined by about 3 percent to approximately
21,900 in 1967. By the end of the year, the number fell to some 20,500,
as Communist economic technicians left Burma and various countries
in Africa and the Near East: either because of political considerations
or because of the completion of their work on various projects. Of
the total in less developed countries in 1967, about one-half were from
the USSR, about one-fifth from Communist China, and the remaining
30 percent from Eastern Europe. As in the past, the largest share of
Communist technicians (about 50 percent in 1967) were employed in
Africa, notably in Algeria, Guinea, Mali, and Tunisia. The next
heaviest concentration (about 45 percent of the total) was in the Near
East and South Asian countries, with Afghanistan, India, and the UAR
having the largest numbers.
Academic Students and 'Technical Trainees
The number of academic students who departed for training in
Communist institutions in ]_967 was about 1,700-somewhat less than
in 1966. The total in training at the end of the year was about
14,400, somewhat less than in 1966, which may indicate a leveling off
in the program. Of the new enrollees, about 58 percent came from
Africa, 25 percent from the countries of Near East and South Asia,
13 percent from Latin America, and 4 percent from the Far East.
The USSR continued to receive the largest number of new students,
about 85 percent of the total, with Eastern Europe accounting for the
remainder in 1967.
Technical trainees who departed for Communist countries in 1967
are estimated to have numbered 1,250, or approximately the same as
in 1966. About 13,500 have undertaken such training since 1956, and
about 2,100 were being trained at the end of 1967.
Military Credits and Grants
The Communist countries extended an estimated $480 million worth
of military aid to the less developed countries during 1967-an in-
crease of about 40 percent over the level in 1966 and the largest
amount committed since 1964. Total military aid extended during
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1955-67 amounted to about $5.5 billion. About 90 percent of the new
arms aid came from the USSR, which completed new agreements with
a number of the Arab countries and a sizable $110 million pact with
[ran-that country's first with a Communist state. Czechoslovakia
and East Germany provided the remaining new arms aid from the
Communist countries in 1967. Deliveries of military aid in 1967 con-
tinued at about the same high level-roughly $400 million-as in
recent years. The Arab states of the Near East received about 60
percent of the total, or about $250 million, which in turn represented
at least half of the total value of their military equipment losses during
the Tune war. Remaining deliveries were to Afghanistan, Algeria,
India, and various African states.
Military Technicians and Trainees
The number of Communist military technicians in less developed
countries rose to about 6,100 in 1967, nearly double that in 1966. The
increase was due almost entirely to the large influx of Soviet tech-
nicians and advisers to the Arab states following the June war.
I uring 1967, a total of about 1,200 nationals from eleven less
developed countries enrolled in military training programs in Com-
inunist countries, about 80 percent of the number who departed for
training in 1966. At the end of the year, about 3,500 were being
trained in Communist countries-94 percent in the USSR.
'Trade
There appeared to be very little change in both the value and
direction of Communist trade with the less developed countries during
the first half of 1967. In 1966, total trade turnover was about $4.8
billion, 7 percent more than in 1965. East European trade with the
lass developed countries expanded in 1966 and exceeded that of the
USSR-$1.9 billion versus $1.8 billion. Communist China's trade with
the less developed countries also increased in 1966 to about $900
million. Communist exports to the less developed countries continued
to exceed imports in 1966, but the trade surplus which has decreased
in recent years remained about the same as in 1965.
'file geographic distribution of Communist trade with the less de-
veloped countries in. 1966 continued to follow the pattern of recent
years. Thus the Near East and South Asian countries accounted for
the major share (57 percent) of the total, while Africa and the Far
Eastern countries each accounted for .13 percent, Latin. America 12
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percent, and Europe-Portugal and Spain-5 percent of total Com-
munist trade with the less developed countries. Although trade with
the Communist countries represents a small (6 percent) share of the
total trade of the less developed countries, it nevertheless forms a
comparatively important segment of the trade of individual countries.
Thus, in the case of Afghanistan, Syria, and the UAR, trade with the
Communist countries accounted for more than one-fifth of individual
imports and exports in 1966.
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1. Communist Activities in Less Developed Areas,
by Type of Activity
The Communist countries during 1967 continued to expand their
presence in the less developed countries by delivering large amounts
of military and economic goods and services. New aid commitments
in 1967 emphasized military assistance, which rose well above that in
1966, and for the first time in several years exceeded economic assist-
ance. New extensions of economic aid dropped sharply in 1967 after
three years of record high commitments in 1964-66. This decline is
attributed partly to the lack of opportunities for new aid extensions
and partly to the large backlog of unexpended credits still available
to the less developed countries.
The war in the Middle East was largely instrumental in shaping the
predominantly military character of new Soviet aid undertakings in
1967. Following the June defeat of the Arab states, the USSR quickly
delivered substantial quantities of military equipment to the UAR,
Syria, and Iraq in an effort to shore up the military capabilities of
these countries and to restore Soviet prestige in the Middle East.
By the end of the year the USSR had replaced at least half, by value,
of the estimated $400 million to $500 million worth of military equip-
ment lost by the Arab states during the war. Political considerations
also were dominant in Soviet arias assistance to the hard-pressed
Republican regime in Yemen as well as to the Federal Military Gov-
ernment of Nigeria. The USSR succeeded in signing its first arms
agreement with Nigeria, which traditionally has relied on the West
for its military supplies. A large arms credit to Iran-the first Soviet
military pact with this CENTO country-was of both political and eco-
nomic value to the Soviet Union. Under its terms the USSR will
receive payments in natural gas which it will use to meet expanding
industrial needs in the Transcaucasus region.
The Eastern European countries, in contrast to the USSR, made
most of their new commitments in the form of economic rather than
military aid. Although less than in 1966, these commitments continued
to be directed largely to the countries of the Near East and South
Asia. Notable progress was made in East European aid relations
with Latin America, where increased signs of reciprocal interest
were evident during the year. East European aid and trade delega-
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tions to Latin America concluded at least two new credits (Ecuador
and Uruguay) as well as a number of trade agreements.
Communist China's new aid commitments were considerably smaller
than in 1966 and consisted entirely of economic credits and grants.
Its major outlay was to the UAR where, in an effort to continue some
influence with the Nasser regime, it granted $21 million in wheat
and foreign exchange. Peiping also made some headway in its aid
efforts by adding Mauritania and Zambia to its expanding list of re-
cipients in Africa. In Burma, however, the Chinese program sustained
a major setback when Rangoon dismissed Chinese technicians because
of serious political differences with Peiping.
B. ECONOMIC ASSISTANCE
1. Credits and Grants
a. Extensions
The Communist countries extended approximately $215 million of
new economic aid to the less developed countries of the Free World
in 1967. bringing total extensions since 1954 to more than $9.3 billion
(see Figure 2 and Table 1).* Although new commitments in 1967
were lower than in any year since 1955, the decline does not appear
to signify any fundamental change in Communist attitudes toward
foreign aid. As in the past, the Communist nations continued to make
large credit offers in 1967. At least $500 million in offers were not
accepted by the less developed countries during the year.
The USSR accounted for most of the decline in new extensions of
Conirnunist aid as its new commitments fell from about $1.3 billion
in 1.966 to only about $90 million in 1967. About two-thirds of the
USSR's new aid went to Chile in the form of a $55 million credit
for industrial projects and machinery and equipment. The remainder
consisted of a $16.7 million credit to Guinea and smaller extensions
to five other less developed countries. In spite of its involvement in
the Arab states, the USSR did not extend new economic assistance
to any of these countries following the outbreak of hostilities in June.
Moscow provided the UAR with only a short-term (2-year) com-
mercial. credit for wheat. The East European countries extended
about $75 million in economic aid with Bulgaria and Rumania supply-
ing about two-thirds of the total. The UAR, after Chile, was the major
* For a summary of specific credits and grants by Communist countries to less developed
t:ountries, see Tables 26 through 29, Appendix B.
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ECONOMIC CREDITS AND GRANTS
BY COMMUNIST COUNTRIES
O LESS DEVELOPED COUNTRIES OF THE FREE WORLD
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recipient of Communist economic aid during 1967, accounting for
about 30 percent of East Europe's new commitments and about 40
percent of Communist China's $50 million in new aid.
1). Drawings
Drawings on Communist economic aid of about $500 million in
1967 were virtually the same as the average annual level of the past
four years (see Table 14*). Drawings on Soviet credits, representing
about 60 percent of the total, declined for the third consecutive year,
while those on East European and Chinese credits rose slightly in
1.967. The decline in Soviet drawings in 1967 largely reflected the
sharp drop in aid deliveries to India, where domestic economic prob-
lems affected the utilization of project aid. Cumulative drawings
since the inception of the aid program in 1954 have amounted to some-
what more than $3.6 billion, or almost 40 percent of total aid extended
by the Communist countries.
2_ Technical Assistance
a.. Economic Technicians
l )wring 1967, approximately 21,900 economic technicians from Com-
munist countries were employed in less developed countries-a de-
cline of 3 percent from the 22,400 employed in 1966 (see Table 15**).
This decline is attributed to reduced numbers of Chinese and Soviet
technicians; the number of East European technicians in less developed
countries rose by about 15 percent in 1967. By the end of 1967, how-
ever, the total number of Communist technicians present in less de-
veloped countries had declined to about 20,500, as a result of the
exit of economic technicians from Burma and. various countries in
Africa and the Near East. About 450 Chinese technicians were ex-
pelled from Burma because of serious political differences; and 400
left Guinea after their completion of work on the Kinkon dam. There
were also declines in the number of Communist technicians in the
UAR. Ethiopia, and Tunisia.
Five new countries were added in 1967 to the ranks of less devel-
oped countries that employ Communist technicians: Cameroon, Chad,
Mauritania. Uruguay, and Zambia.
As in most recent years, Africa received the largest share of Com-
munist technicians sent to less developed countries. Eastern Europe
and. Communist China each assigned about two-thirds of their total
1'. 60.
1'. Bl..
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technicians who were sent abroad to African countries in 1967. Only
about 35 percent of Soviet personnel were in Africa, however. By
far the largest number of Chinese were in Mali and Guinea. East
Europeans were most heavily concentrated in Tunisia and Libya and
Soviet technicians in Algeria. A large proportion of the Communist
personnel assigned to Africa were engaged in nonproject activity as
doctors, teachers, advisers, and planners.
The second largest concentration of Communist technicians in the
less developed countries was in the Near East and South Asia, where
about 45 percent of the total number of Communist personnel were
assigned. The overwhelming proportion of these were Soviet tech-
nicians who, as in 1966, were concentrated in Afghanistan, India, and
the UAR. These three countries accounted for 4,100 of the 11,000
Soviet technicians in all less developed countries during 1967. An
additional 2,500 were present in four other Near East-South Asian
countries-Iran, Iraq, Syria, and Yemen.
b. Academic Students and Technical Trainees
During 1967 an estimated 1,700 students departed from the less
developed countries for training in Soviet and East European aca-
demic institutions (see Table 17*). Of some 26,100 students that
have departed for such training since 1956, about 14,400 were being
trained at the end of 1967. This is somewhat less than the number
being trained at the end of 1966. The number of departures during
1967 also was somewhat less than in 1966 and was much lower than
the average departures of over 4,000 per year during 1961-63. The
decline since 1964 is attributed partly to the more stringent standards
for admission and to the full capacity conditions in some institutions.
The average period of training for students pursuing academic work
is about five years, including one year of Russian-language training.
Unless facilities are expanded beyond present capacity, in the future
the number of new enrollees will be limited to vacancies left by those
who have completed their training.
In 1967, African academic students continued to account for the
largest number of departures to Communist countries. Algeria and
Sudan, which together sent 270 students, made up about 16 percent of
total departures in 1967. Students from Latin America and the Near
East and South Asia accounted for an additional 13 percent and 25
percent, respectively.
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'There were some changes in the composition of the student body
during 1967, partly because of internal problems of the less developed
countries and partly because of changes in international political rela-
tions. In the wake of the June war with Israel, some Arab students
were brought home by their governments before completing their
studies. Thus all 68 Syrians studying in Bulgaria left for home at the
beginning of June. As many as 300 Indonesian students, who were
supporters of the former Sukarno regime, prematurely terminated their
studies in the USSR and went to Communist China. No additional
Ghanaian students have gone to the USSR since 1965.
UI the 26,100 students that have undertaken academic training
in Communist countries since 1956, about two-thirds have gone to the
USSR, more than 30 percent to East European countries, and the rest
to Communist China. The USSR continued to receive the largest
proportion of academic students departing from less developed coun-
tries for Communist countries, about 85 percent of the total. The
remainder went to East European countries in 1967. There were no
known departures of academic students to Communist China during
the last two years.
About 1,250 personnel from less developed countries departed for
Communist countries during 1967 to undertake training for jobs as
skilled laborers and technical and managerial personnel (see Table
16* ). Most of these positions related to Communist-aided projects.
This is approximately the same number that went for technical train-
ing in. the previous year and slightly above the average level of annual
departures recorded since 1956, when the program began. A total
of about 13,500 have undertaken such training since 1956, and about
2,100) were in training at the end of 1967. Trainees from Near East
and South Asian countries have accounted for almost 70 percent of
total technical trainees that have gone to Communist countries, and
the LIAR and India have been the principal countries that have sent
personnel.
C. MILITARY ASSISTANCE
1. Credits and Grants
'1'te- Communist countries extended about $480 million of military
aid to less developed countries during 1967-an increase of about
40 percent over the level in 1966 and the largest amount since 1964.
Total military aid extended during 1955-67 amounted to $5.5 billion
(see Table 2). The USSR continued. to be the major Communist
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Military Aid Extended by Communist Countries to Less Developed Countries of the
Free World,- 1955-67
Year
Total
USSR
Eastern
Europe
Communist
China
1955
....................
115
115
1956
....................
236
117
169
1957
....................
238
238 .....
.......
1958
....................
473
281
171
1959
....................
:;fi
30
1
1960
....................
569
556
6
1961
....................
8.17
832
15
1962
....................
371
371 .....
....... .....
.......
1963
....................
339
384
5 .....
.......
1964
....................
1,003
984
15
4
1965
....................
362
2:73
45
44
1966
....................
314
322
15
7
1967
....................
1'i(1
435
45
Sep 1955-Dec 1967 .......
5,513
4,823
602
88
s Values based on Communist foreign trade prices. For an enumeration of military
aid agreements, see Table 18, p. 68.
supplier of arms aid, accounting for more than 90 percent of the total
in 1967. The remainder was provided by Czechoslovakia and East
Germany.
Most of the USSR's arms agreements in 1967 were concluded with
Near Eastern countries. In January the USSR signed a $110 million
accord with Iran, the first such Communist agreement with that
country and the second (after a Chinese agreement with Pakistan)
with a member of the Central Treaty Organization. Following the
June war with Israel, the USSR made new military commitments to
Iraq, Syria, and the UAR. In addition, the USSR concluded minor
arms agreements with Guinea, Indonesia, Morocco, Nigeria, and Ye-
men and reportedly made offers to the Congo (K), Jordan, Lebanon.
Libya, South Yemen, and the Sudan. Several of the USSR's new
arms clients or prospective clients have been exclusively Western-
oriented in arms supply.
During the year, Czechoslovakia signed small agreements with Iraq,
Morocco, Nigeria, Syria, and the UAR.
Military aid deliveries in 1967 continued at about the same high
level (roughly $400 million) as in recent years (see Tables 19 and
20*). Soviet deliveries under the program largely were to the Arab
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states, where sizable quantities of Communist-provided equipment
were lost during the June war. Even before the cease-fire, Soviet
transport aircraft began an emergency resupply operation. This large-
scale airlift involved largely defensive materiel-jet interceptors and
antiaircraft guns-to replace some of the heavy losses in these cate-
gories. When it ended in midsummer, the airlift had included some
300 flights. A substantial number of ships also delivered artillery,
armored vehicles, and a broad range of other military equipment, but
the pace of deliveries slowed toward the latter part of the year, By
the end of the year, total military deliveries to the Arab states of the
Near East were estimated at about $250 million, or at least 50 percent
of the estimated value of Arab losses of military equipment during the
June war.
The USSR is believed to have replaced most of the fighter aircraft,
about half of the bombers, and some of the artillery, tanks, and vehicles
lost during the conflict. In Algeria, the USSR probably has replaced
all of the fighters and most of the light bombers, tanks, and artillery
that were transferred to the UAR in June. Besides replacing the few
aircraft that Iraq lost, the USSR expedited the delivery of MIG-21
fighters, SU-7 fighter-bombers, and ground forces equipment ordered
under a previous agreement. A new Si::)viet-Iraqi arms agreement in
July provided for additional quantities of aircraft and land armaments.
Soviet deliveries to Syria are believed to have replaced a substantial
portion of the air and ground forces equipment lost during the war.
The supply of additional aircraft and land armaments was agreed to by
the USSR, Czechoslovakia, and East Germany under new pacts with
Syria in 1967.
Developments in Yemen during 1967 resulted in a significant change
in the character of the Soviet arms aid program in that country. In
September the USSR negotiated a military aid agreement with the
Republican regime which provided for direct deliveries of military
equipment, in contrast with former aid channeled through the UAR.
1,'ollowing the 5 November 1967 coup, arrangements were made with
the successor Yemeni government to accept the Soviet arms aid pre-
viously negotiated. Deliveries began in mid-November in the form of
an airlift of disassembled jet fighters and other equipment. More
than 100 AN-1.2 transport flights have been made to Yemen, with at
least 10 MIG-17 let fighters, and possibly as many as 24, having been
delivered by the end of 1967, plus considerable quantities of ammuni-
tion, spare parts, and ground equipment. In addition, Soviet pilots in
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early December flew a number of combat missions in support of
Yemeni Republican forces.
Another important Soviet arms aid agreement in 1967 was the $110
million pact with Iran, long a holdout against Soviet military assistance,
for certain types of selected ground equipment. The agreement pro-
vides for Iran to make repayment initially in goods and later in natural
gas. In mid-1967 the USSR began the delivery of arms under this
agreement.
Soviet military aid deliveries to Algeria continued at a moderate
level during 1967. These deliveries were highlighted by the introduc-
tion of three Osa-class guided missile patrol boats and three additional
SO-1 class submarine chasers and by an increase in MIG fighter and
light bomber inventories prior to the June war. In June, Algeria trans-
ferred 41 Soviet-built jet fighters and 12 IL-28 jet light bombers to the
UAR air force as replacements for aircraft destroyed in the war with
Israel. It is believed that the USSR replaced the jet fighters last
summer during its large-scale airlift to the Arab countries and is in the
process of replacing the light bomber aircraft.
Morocco concluded its first sizable Communist military assistance
agreements since January 1962. Faced with a growing military equip-
ment imbalance in comparison with Algeria and unable to obtain
desired equipment from Western nations, Morocco negotiated an arms
agreement with Czechoslovakia for an estimated $20 million of ground
forces equipment in July. Deliveries under this agreement in 1967
included at least 40 T-54 tanks and 74 armored personnel carriers.
The USSR signed a pact for four AN-12 military transport aircraft in
August. While ostensibly for the civil airlines, these military-type
transports will effectively serve to augment Morocco's military airlift
capability.
Deliveries of Soviet military equipment to India in 1967 were at
a significantly lower rate than in 1966. Shipments included a small
number of helicopters, a few patrol boats, some artillery and medium
tanks, and the first consignment of SU-7 fighter-bombers under a 1966
agreement for 127 SU-7's and 12 trainers. Additional SU-7's as well
as some submarines and other naval craft are scheduled for delivery
in 1968. The MIG airframe factory at Nasik, which opened in late
1966, had assembled as many as 78 MIG-21 aircraft from imported
Soviet components by the end of 1967. The program for assembling
MIG's is still lagging, and the indigenous manufacture of complete
aircraft is not expected to begin before 1970. Soviet arms aid to
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India now has reached the point where it constitutes the dominant
source of supply for the Indian armed forces.
With its substantial relationship with India apparently in mind, the
USSR has moved slowly in Pakistan. Under an agreement publicized
as "commercial," it has supplied several thousand trucks and other
vehicles for the Pakistani armed forces and delivered the first of six
large MI-6 transport helicopters on order. Moscow, however, has
thus far refused Pakistan's request for other major military equipment.
Other new Communist arms agreements have been of token size.
As the result of negotiations with an Indonesian military mission in
September, the USSR agreed to provide $10 million worth of spare
parts on a cash basis to the Indonesian navy and air force. It is esti-
mated, however, that both services require more than $50 million
in spare parts to restore inventories to pre-coup levels.
In 1967, Nigeria received its first deliveries of Communist military
equipment, consisting of eight Soviet MIG-17 jet fighters, two
U-MIG-15 trainers, and eight Czechoslovak L-29 jet trainers. Afghan-
istan. Congo (B), Guinea, and Uganda also received small deliveries
of aircraft, patrol boats, and land armaments. The despatch of mili-
tary delegations from Mali to the USSR and China may presage new
arms agreements with that country.
2. Technical Assistance
1. Military Technicians
The estimated number of Communist military technicians in less
developed countries rose to about 6,100 in 1967, nearly double the
number present in 1966 (see Table 21*). The increase is due almost
entirely to the large number of Soviet technicians and advisers des-
patched to the Arab countries following the June war. Indications
are that approximately 2,000 were present in the UAR, about 1,100
in Syria, 850 in Algeria, and 200 in Iraq. Some of the new arrivals
were involved in the assembly and flight check of newly arrived air-
craft, and some probably have returned to the USSR.
Military Trainees from Less Developed Countries
During 1967 a total of 1,200 nationals from eleven less developed
countries enrolled in military training programs in Communist coun-
tries, about 80 percent of the number that departed for similar training
in 1966 (see Table 22**). The largest reductions in departures oc-
q' 77.
V.78.
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curred in Indonesia and the UAR. With the virtual suspension of the
Soviet arms aid program in Indonesia, no trainees were sent from that
country to Communist countries in 1967, compared with about 345 in
1966. The number of departures from the UAR fell from 235 in 1966 to
155 in 1967, apparently because of cost considerations. Algeria, India,
and Iraq were the only countries sending somewhat more students
for military training in 1967 than in the previous year.
At the end of 1967, about 3,500 military trainees from less developed
countries were being trained in Communist countries. About 94 per-
cent of these trainees were in the USSR, while the remaining 6 percent
were divided between Communist China and East Europe. Algeria.
Afghanistan, and India had the largest contingents of military trainees
in the Communist countries at the end of 1967. Since November 1955
a total of about 23,500 military personnel from less developed countries
have been sent to Communist countries for training-approximately
85 percent to the USSR. Although Indonesia has accounted for 39
percent of the total number of military trainees sent to Communist
countries since 1955, it had only 7 percent, or 235, of the total in
Communist countries at the end of 1967. The UAR, which has ac-
counted for 17 percent of total trainees to date, had only 4 percent
of those in training at the end of the year. Algeria, Afghanistan, Iraq,
and Syria also are among those who have sent leading numbers of
military personnel to the Communist countries for training during
1955-67.
Preliminary data indicate that there was very little change in either
the value or the direction of Communist trade with the less developed
countries during the first half of 1967. The only notable exceptions
were (1) a large decline in Communist imports from Argentina and
(2) a significant increase in both Communist exports to and imports
from Pakistan. Communist imports from Argentina fell from about
$185 million in the first six months of 1966 to about $40 million during
the first half of 1967, largely as a result of the virtual cessation of
Communist wheat purchases. The value of Communist trade with
Pakistan., on the other hand, rose from less than $70 million during
the first half of 1966 to about $120 million in the first six months of
* The commodity composition of Communist trade with the less developed countries in 1966
will be covered in a forthcoming article in the 1-:IC Biweekly Report.
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1967, as Pakistan continued to expand its trade with most of the
Communist countries.*
Total Communist trade with the less developed countries rose from
about $4.5 billion in 1965 to almost $4.8 billion in 1966-alt increase
of about 7 percent (see Figure 3).** This compares with au increase
of about 17 percent in 1965 and is the smallest annual percentage gain
since 1962. The reduced rate of growth in 1966 trade primarily was
attributed to lower levels of Chinese imports and of Soviet expo:?ts.
Communist exports to the less developed countries continued to ex-
ceed imports in 1966, but the trade surplus, which has decreased in
recent years, remained about the same as in 1965.
Eastern Europe's total trade and Communist China's exports rc-
counted for almost all of the increase in the value of Communist trade
with the less developed countries in 1966. Soviet trade with the less
developed countries remained at approximately the 1965 level of $1.8
billion, although Soviet exports to these countries declined for he
first time since 1958. The decline in Soviet exports of about 3 per-
cent was caused by a drop in exports to Ghana and Indonesia. folk: w-
ing political changes in those countries, as well as by a drop in Sox iet
exports to India and the UAR. Soviet economic aid deliveries f ad
contributed to the rapid acceleration of exports to less developed
countries during 1958-64; since then, aid deliveries have leveled off
and have declined as a percent of exports to the less developed calm-
tries, from 47 percent in 1964 to 38 percent in 1965 and 37 percent
in 1966.
In 1966, East European countries as a group had a larger tr..de
turnover with the less developed countries than did the USSR. East
European trade with the developing countries was almost $ L9 bill on
in 1966, an increase of 10 percent over 1965. Imports showed he
larger gains. Increased purchases from Argentina and other Latin
American countries largely offset the sharp drop in grain imports fr, )m
Mexico. Imports from Spain and Greece also increased substantially
* Because of a lack of complete data for 1967, the remainder of this section anal.'zes
developments during 1906. The value data on Soviet foreign trade with the less devekped
countries are from comprehensive official Soviet foreign trade handbooks. For Eastern Eur?)pe,
Communist China, and other Communist countries, the trade returns of the less develc: ped
countries have been used. It should be noted that the figures used for Soviet trade are the
sum of the figures given in the Soviet trade handbook for trade with each less developed
country and this sum amounts to $1,790 million. This handbook also gives a total figure for
trade with the Free world which contains an unexplained export residual of s369 minion.
This residual could include Soviet deliveries of military items, which are excluded from the
country breakdowns and also from this section.
* *For detailed data on Communist exports to and imports from individual less develc peel
countries, see Tables 23 and 24, pp. 79 and 83, respectively.
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during the year. East Europe's exports to Syria, Turkey, and the UAR
together rose almost $80 million in 1966, which more than offset the
$40 million decline in exports to Ghana.
Communist China's trade with the less developed countries rose to
about $900 million in 1966, as a 27-percent growth in exports more
than offset the 13-percent decline in imports. Imports from Indo-
nesia, Pakistan, Uganda, and the UAR fell considerably. China's
exports to Ceylon, Malaysia, Singapore, and the UAR rose substan-
tially during the year. Communist China's trade in 1966 continued
to be concentrated mainly with its Asian neighbors-Ceylon, Indo-
nesia, Malaysia, Pakistan, and Singapore. Because of large grain
purchases from Argentina again in 1966, this country continued as
a major Chinese Communist trading partner.
The relative shares of Communist countries' trade with the less
developed countries were roughly the same in 1966 as in 1965.* The
Soviet share was 37 percent, Communist China's 19 percent, and East-
ern Europe's 40 percent. Other Communist countries-North Korea,
North Vietnam, Mongolia, Cuba, and Albania-accounted for the re-
mainder of the trade with less developed countries in 1966.
In 1966, as in 1965, the less developed countries accounted for about
10 percent of total Communist trade, and the Communist share of the
less developed countries' total trade was 6 percent. Communist trade
continued to be concentrated in a few less developed countries, where
it formed a major share of the total trade of these countries. In 1966
the Communist countries accounted for more than one-fifth of the
total imports of Afghanistan, Cambodia, Ceylon, Iraq, Mali, Syria,
and the UAR and for more than one-fifth of the total exports of Afghan-
istan, Greece, Syria, and the UAR.
Communist trade with the less developed countries during 1966
followed the geographic pattern of previous years. The Near East
and South Asian countries continued to account for the largest portion
of this trade, with most of the remainder divided into about equal
shares among the Far East, Latin America, and Africa. Europe's share
remained minimal.
Near East and South Asian countries' trade with the Communist
world rose by 11 percent in 1966 and accounted for 57 percent of total
* For data on the Communist share of the total exports and imports of selected less
developed countries, see Table 25, p. 86.
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Communist trade with the less developed countries. Communist ex-
ports to the Near East and South Asia rose by 17 percent and con-
tributed heavily to this trade gain, while imports expanded only 3
percent. India and the UAR remained the principal Communist
trading partners, and they accounted for 41 percent of the USSR's
total trade with the less developed countries during the year. These
two countries also account for a large share of Eastern Europe's
trade with the less developed countries. This concentration reflects
in part the trade momentum generated by deliveries under long-term
economic credits and by repayments in commodities for both economic
and military credits. It also reflects the desire of these countries to
continue exchanges with bilateral trading partners as their foreign
exchange holdings were reduced.
The Far Eastern countries' share of total Communist trade with
less developed countries fell slightly in 1966 as the value of their
total trade declined. This decline was attributable largely to the
cutback in Indonesian and Burmese trade with the Communist coun-
tries following the abortive coup by the Indonesian Communist Party
(PKI ) in September 1965.
The value of Communist trade with Africa also fell in 1966. The
decline of about 7 percent from 1965 was caused chiefly by a $78
million drop in Communist trade with Ghana. Africa's share of total
Communist trade with the less developed countries fell from 15
percent in 1965 to 13 percent in 1966.
Latin America's share of Communist trade with the less developed
countries in 1966 remained at the same level as in 1965, about 12
percent, despite a 9-percent increase in the value of its trade with
Communist countries. Increased Soviet purchases of Argentine wheat
during the first half of 1966 accounted for most of the trade gain
during the year.
Communist trade with the less developed countries of Europe-
Portugal and Spain-increased by 31 percent in 1966. The $58
million increase was almost entirely the result of increased East Euro-
pean and Cuban imports from Spain. In spite of the rapid rate of
growth in this trade, the absolute amounts continued to be small and
Europe accounted for only 5 percent of total Communist trade with the
less developed countries in 1966. This compared with 4 percent in
1.965.
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Secret
USIB
UNITED STATES
INTELLIGENCE
BOARD
Economic Intelligence
Committee
Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free World, 1967
MIDYEAR SUPPLEMENT, 1 January-30 June 1968
Secret
EIC R14-S22
July 1968
Copy No
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WARNING
This material contains information affecting the national
defense of the United States within the meaning of the
espionage laws, Title 18, USC, Secs. 793 and 794, the
transmission or revelation of which in any manner to an
unauthorized person is prohibited by law.
Representatives of the Department of State; the De-
fense Intelligence Agency; the Departments of the Army,
Navy, and Air Force; the National Security Agency; and
the Central Intelligence Agency are members of the
Economic Intelligence Committee. Representatives from
the Office of the Secretary of Defense; the Departments
of the Treasury, Agriculture, and Commerce; the Federal
Reserve Board; the Agency for International Develop-
ment; and several other departments and agencies of the
Government are associate members of the Committee.
Printed and Disseminated by the
Central Intelligence Agency
GJIGUP I
=
Prepared by the Working Group on Communist Aid and Trade Activities
in Less Developed Areas of the Free World
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The attached summary and tables, covering
the six months from 1 January through 30 June 1968,
constitute the midyear supplement to EIC-R14,
Aid and Trade Activities of Communist Countries in
Less Developed Areas of the Free World, and update
the data contained in EIC R14-S22, dated March 19-58.
Data have been revised to include new information,
and figures in the current supplement supersede
those in previous issues. The tables were prepared
by the Central Intelligence Agency and were
reviewed and coordinated by a Working Group of the
Economic Intelligence Committee, which includes
representatives of the Department of State, the
Defense Intelligence Agency, the Departments of
Commerce and Agriculture, the Agency for Inter-
national Development, the National Security
Agency, and the Central Intelligence Agency.
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, Hungary, Poland,
and Rumania.
The term less developed countries of the Free
World includes the following: (1) all countries in
AArica except the Republic of South Africa; (2)
Portugal and Spain in Europe; (3) all countries
in the Far East except Japan; (4) all countries
in Latin America except Cuba; and (5) all countries
in the Near East and in South Asia.
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Summary . . . . . . . . . . . . . . .
1. Economic Aid Extended by Communist
Countries to Less Developed Coun-
tries of the Free World, January-
June 1968 . . . . . . . . . . . . .
2. Communist Economic Credits and Grants
to Less Developed Countries,
Extended, Obligated, and Drawn,
1954 - June 1968 . . . . . . . . . .
3. Communist Economic Credits and Grants
to Less Developed Countries, by
Communist Area and Country, 1954 -
June 1968 . . . . . . . . . . . . .
4. Drawings on Communist Economic
Credits and Grants to Less Developed
Countries, by Communist Area and
Country, 1954 - June 1968 . . . . .
5. Communist Economic Technicians in
Less Developed Countries, January-
June 1968 . . . . . . . . . . . . .
6. Military Aid Extended by Communist
Countries to Less Developed
Countries of the Free World,
September 1955 - June 1968 . . .
Paele
7. Major Communist Military Equipment
Delivered, by Recipient, January-
June 1968 . . . . . . . . . . . . . 9
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8. Communist Military Technicians in
Less Developed Countries, 1967 and
January-June 1968 . . . . . . . . . 10
9. Military Personnel from Less
Developed Countries Trained in
Communist Countries, November 1955 -?
June 1968 . . . . . . . . . . . . . 11
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AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIE.
IN LESS DEVELOPED AREAS OF THE FREE WORLD
1 JANUARY-30 JUNE 1968
After declining sharply in 1967, Communist
extensions of economic aid to the less developed
countries rose during the first half of 1968 to
$483 million, bringing the total since 1954 to
almost $10 billion (see Tables 1, 2, and 3). The
USSR provided the bulk of new aid commitments
during the first half of 1968 while the major
recipients were Iran and Afghanistan.
The USSR contributed $327 million of the total
extended in the first half of 1968, bringing its
commitments since the inception of the aid program
to $6.3 billion. Soviet credits were provided to
only two countries, Afghanistan and Iran, for
implementing their current five-year plans. East
European credits were $156 million with Iran
accounting for almost half of the total. Communist
China's credits were confined to possible commit-
ments in connection with the agreement to constrict
a railroad between Mali and Guinea.
Economic aid deliveries by all donors continzed
to lag in the first half of 1968. At an annual
rate, they amounted to about $350 million, or about
30 percent below the 1967 level (see Table 4). The
largest decline was in Chinese deliveries, which
lost their momentum because of a drop in foreign
currency and commodity transfers.
The number of Communist economic technicians
present in less developed countries since the end
of 1967 increased by about 1,000 to 22,000 in the
first half of 1968 (see Table 5). Most of the
change is attributed to the large influx of Last
Europeans to Libya for work on new construction and
on reconstruction following the earthquake.
During the first half of 1968, the Communist
countries extended an estimated $87 million in
military assistance to less developed countries,
the USSR providing about 70 percent, and Czecho-
slovakia and Bulgaria supplying the remainder
(see Table 6). Sudan signed an estimated $20 mis
lion agreement with the USSR -- its first military
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aid agreement with a Communist country. In addition,
the USSR concluded agreements with India ($25 mil-
lion), Iraq ($9 million), Cambodia ($6 million), and
South Yemen (amount undisclosed). Czechoslovakia
signed a $15 million agreement with Iraq, and Bul-
garia concluded agreements for $10 million with
India and $2 million with Iraq.
Soviet deliveries of equipment to the Arab
states during the first half of 1968 were down
considerably from those in the second half of 1967
and approximated the pre-war level. Soviet shipments
to India, however, were up in value over those in
1967, primarily because of the delivery of 27 ex-
pensive SU-7 fighter bombers during the period
(see Table 7). China, having made no known military
aid deliveries to less developed countries in 1967,
resumed aid shipments to Cambodia and Tanzania in
1968 under existing agreements.
An estimated 6,450 Communist military technicians
were present in less developed countries during the
first half of 1968, roughly the same number as in
1967 (see Table 8). During the period, 890 military
personnel departed for training in Communist coun-
tries, compared with. 595 during the first six months
of 1967 (see Table 9). All. of these military per-
sonnel have gone to the USSR. Some 3,980 personnel
were being trained in Communist countries in June
1968, an increase of about 15 percent.
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Secret
Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free Iorld
MIDYEAR SUPPLEMENT, 1 JANUARY-30 JUNE 1968
Secret
October 1'J(,H
Copy No.
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 Approved For Release 2006/02/0' .q - P92B01090R000400010026-5
The attached summary and tables, covering the
six months from 1 January through 30 June 1968,
constitute the midyear supplement to Aid and T'rad,:
Activities of Communist Countries in Less Developed
Areas of the Free World, dated June 1968. Data
have been revised to include new information, and
figures in the current supplement supersede those
in previous issues.
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, Hungary, Poland.. and
Rumania.
The term Less developed countries of the Free
World includes the following: (1) all countries
in Africa except the Republic of South Africa;
(2) Portugal and Spain in Europe; (3) all countries
in the Far East except Japan; (4) all countries in
Latin America except Cuba; and (5) all countries
in the Near East and in South Asia.
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AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS OF THE FREE WORLD
1 JANUARY-30 JUNE 1968
After declining sharply in 1967, Communist
extensions of economic aid to the less developed
countries rose during the first half of 1968 to
$483 million, bringing the total since 1954 to
almost $10 billion (see Tables 1, 2, and 3). The
USSR provided the bulk of new aid commitments
during the first half of 1968 while the major
recipients were Iran and Afghanistan.
The USSR contributed $327 million of the total
extended in the first half of 1968, bringing its
commitments since the inception of the aid prograri
to about $6.4 billion. Soviet credits were pro-
vided to only two countries, Afghanistan and Iran,
for implementing their current five-year plans.
East European credits were $156 million with Iran
accounting for almost half of the total. Communist
China's credits were confined to possible commit-
ments in connection with the agreement to construct
a railroad between Mali and Guinea.
Economic aid deliveries by all donors continued
to lag in the first half of 1968. At an annual
rate, they amounted to about $350 million, or about
30 percent below the 1967 level (see Table 4). The
largest decline was in Chinese deliveries, which
lost their momentum because of a drop in foreign
currency and commodity transfers.
The number of Communist economic technicians
present in less developed countries since the end
of 1967 increased by about 1,000 to almost 21,000
in the first half of 1968 (see Table 5). Most of
the change is attributed to the large influx of
East Europeans to Libya for work on new construc-
tion and on reconstruction following the earthquake.
During the first half of 1968, the Communist
countries extended an estimated $87 million in
military assistance to less developed countries,
the USSR providing about 70 percent, and Eastern
European countries supplying the remainder. The
USSR signed agreements with several Arab countries'.
Cambodia, and Sudan -- this country's first military
aid agreement with a Communist country.
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Soviet deliveries of equipment to the Arab
states during the first half of 1968 declined to
approximately the pre-war level while those to
India showed an increase over 1967 deliveries.
China, having made no known military aid deliveries
to less developed countries in 1967, resumed aid
shipments to Cambodia and Tanzania in 1968 under
existing agreements.
An estimated 6,500 Communist military tech-
nicians were present in less developed countries
during the first half of 1968, roughly the same
number as in 1967. During the period, 900 military
personnel departed for training in Communist coun-
tries -- all to the USSR. About 4,000 personnel
were being trained in Communist countries in June
1968.
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Approved For Release 2006/02/07 : CIA-RDP92BO109OR000400010026-5