AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES IN LESS DEVELOPED AREAS OF THE FREE WORLD, 1968

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B01090R000400010027-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 93
• Document Creation Date: December 19, 2016
• Document Release Date: December 12, 2006
• Sequence Number: 27
• Publication Date: February 1, 1969
• 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, 1968
Secret
EIC R14-S23
February 1969
Copy N2 770
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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.
ECONOMIC INTELLIGENCE COMMITTEE
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
GROUP 1
Excluded from automatic
downgrading and
_ dada:. ecanon
Prepared by the Working Group on Communist Aid and Trade Activities
in Less Developed Areas of the Free World
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The EIC-R14 series provides periodic summaries
and analytical interpretations of significant de-
velopments in the economic and military aid activi-
ties 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 Jan-
uary through 31 December 1968, constitutes the
twenty-third report of the EIC-R14 series. The
present report updates and revises data in the
previous annual reports; 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 Interna-
tional Development, the National Security Agency,
and the Central Intelligence Agency. The final
report was approved by the Economic Intelligence
Committee on 10 February 1969.
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. 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 normally included.
The term Zess 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 coun-
tries in Latin America except Cuba; and (5) all
countries in the Near East and South Asia.
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Summary . . . . . . . . . . . . . . . . .
I. Communist Activities in Less
Developed Areas, by Type
of Activity . . . . . . . . . . . . 7
A. Major Trends . . . . . . . . . . 7
B. Economic Assistance . . . . . . . 9
a. Extensions . . . . . . 9
b. Drawings . . . . . . . . 11
2. Technical Assistance . . . . 12
a. Non-Military
Technicians . . . . . . 12
b. Academic Students
and Technical Trainees 13
C. Military Assistance . . . . . . . 15
1. Credits and Grants . . . . . 15
a. Extensions . . . . . . 15
b. Drawings . . . . . . . . 17
2. Technical Assistance . . . . 19
a. Military Technicians 19
b. Military Trainees from
Less Developed Coun-
tries . . . . . . . 19
D. Trade . . . . . . . . . . . . . . 20
1. Value . . . . . . . . . . . . 20
a. 1968 . . . . . . . . . . 20
b. 1967 . . . . . . . . . . 21
2. Distribution and Relative
Shares . . . . . . . . . . . 22
a. From the Communist
Standpoint.. . . . . . 22
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Page
b. From the Standpoint
of the Less Developed
Countries . . . . . . . 23
3. Commodity Composition . . . . 24
II. Communist Activities in Less
Developed Areas, by Area
and Country . . . . . . . . . . . . 27
A. Africa . . . . . . . . . . . 27
1. Algeria . . . . . . . . . . . 27
2. Congo (Brazzaville) . . . . . 28
3. Ghana . . . . . . . . . . . . 28
4. Guinea . . . . . . . . . . . 29
5. Mali . . . . . . . . . . . . 30
6. Morocco . . . . . .. . . . . . 31
7. Nigeria . . . . . . . . . . . 31
8. Somalia . . . . . . . . . . . 32
9. Sudan . . . . . . . . . . . . 32
10. Tanzania . . . . . . . . . . 33
11. Tunisia . . . . . . . . . . . 34
12. Zambia . . . . . .. . . . . . 35
B. Far East . . . . . . . . . . . . 35
1. Burma . . . . . . . . . . . . 35
2. Cambodia . . . . . . . . . . 36
3. Indonesia . . . . .. . . . . . 37
4. Malaysia . . . . .. . . . . . 38
5. Philippines . . . .. . . . . . 39
6. Singapore . . . . .. . . . . . 40
C. Latin America . . . . . . . . . . 40
1. Argentina . . . . . . . . . .
2. Brazil . . . . . . . . . . .
3. Colombia . . . . . . . . . .
4. Costa Rica . . . . . . . . .
5. Ecuador . . . . . . . . . . .
6. Peru . . . . . . . . . . . .
7. Venezuela . . . . . . . . . .
8. Other Latin American
40
41
41
42
43
43
44
Countries . . . . . . . . . 44
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D. Near East and South Asia . .
1. Afghanistan . . . . . . .
2. Ceylon . . . . . . . . .
3. India . . . . . . . . . .
4. Iran . . . . . . . . . .
5. Iraq . . . . . . . . . .
6. Jordan . . . . . . . . .
7. Nepal . . . . ... . . . .
8. Pakistan . . . . . . . .
9. Saudi Arabia . . . . . .
10. South Yemen . . . . . . .
11. Syria . . . . . . . . . .
12. Turkey . . . .. . . . . .
13. United Arab Republic . .
14. Yemen . . . . .. . . . . .
Appendix
General Statistical Tables . . . . .
Tables
Page
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44
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44
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45
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46
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47
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48
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49
. .
50
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50
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52
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52
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53
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54
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55
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56
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59
1. Economic Aid Extended by Communist
Countries to Less Developed Coun-
tries of the Free World, 1968 . . . 10
2. Military Aid Extended by Communist
Countries to Less Developed
Countries, 1955-68 . . . . . . . . . 16
3. Communist Economic Credits and Grants
to Less Developed Countries,
Extended and Drawn, 1954 - December
1968 . . . . . . . . . . . . . . . 61
4. Communist Economic Credits and Grants
Extended to Less Developed Coun-
tries, by Communist Area and
Country, 1954 - December 1968 . . . 63
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Page
5. Soviet Economic Credits and Grants
Extended to Less Developed Coun-
tries, by Year, 1954-68 . . . .
6. East European Economic Credits
and Grants Extended to Less
Developed Countries, by Year,
1954-68 . . . . . . . . . . . .
66
7. Chinese Communist Economic Credits
and Grants Extended to Less
Developed Countries, by Year,
1956-68 . . . . . . . . . . . . . .
68
8. Communist Economic Credits and Grants
Drawn by Less Developed Countries,
by Communist Area and Country,
1954-?68 . . . . . . . . . . . . . .
69
9. Communist Non-Military Technicians
in Less Developed Countries, 1968
70
10. Academic Students from Less Developed
Countries Trained in Communist
Countries, 1956-68 . . . . . . .
72
11. Technical Trainees from Less
Developed Countries Trained
in Communist Countries, 1956-68 . .
77
12. Communist Military Aid Agreements,
by Principal Recipient, 1955-68 . .
79
13. Estimated Drawings on Communist
Military Aid by Less Developed
Countries, 1955-68 . . . . . . . . .
87
14. Drawings on Communist Military Aid
by Less Developed Countries,
by Recipient, 1955-68 . . . . . . .
88
15. Major Communist Military Equipment
Delivered, by Recipient, 1.955-68 . .
89
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16. Major Communist Military Equip-
ment Delivered, by Recipient,
1968 . . . . . . . . . . . . .
17. Communist Military Technicians
in Less Developed Countries,
1967 and 1968 . . . . . . . .
18. Military Personnel from Less
Developed Countries Trained
in Communist Countries,
1955-68 . . . . . . . . . . .
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19. Communist Exports to and
Imports from Selected Less
Developed Countries, 1966-67 . 94
20. Percentage Share of the Com-
munist Countries in the Trade
of Selected Less Developed
Countries, 1966-67 . . . . .
Figure 1. Communist Activity in
Less Developed Coun-
tries of the Free
World, 1964-68 . . . .
Figure 2. Economic Credits and
Grants by Communist
Countries to Less De-
veloped Countries of
the Free World, Exten-
sions and Drawings,
1954-68 . . . . . . . .
Figure 3. Trade of Communist
Countries with Less
Developed Countries of
the Free World,
1960-67 . . . . . . . .
Following
Pae_-
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Following
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Figure 4. Soviet Exports to and
Imports from Less
Developed Countries
by Commodity Group,
1965-67 . . . . . . . .
Figure 5. Communist Economic and
Military Assistance to
Africa . . . . . . . .
Figure 6. Communist Economic and
Military Assistance to
the Far East . . . .
Figure 7. Communist Economic
Assistance to Latin
America . . . . . . . .
Figure 8. Communist Economic and
Military Assistance to
the Near East and South
Asia . . . . . . . . .
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r_ I
AID AND TRADE ACTIVITIES OF COMMUNIST
COUNTRIES IN LESS DEVELOPED AREAS
OF THE FREE WORLD, 1968
Summary
Major Trends
The growth of Communist aid and trade activity-
in the less developed countries of the Free World
has tended to level off since 1964-65 (see Figure 1).*
Annual deliveries of economic aid have declined
since 1964, although $6 billion in committed aid
remains to be delivered. Trade has grown at a
modest rate since 1965, while Communist programs
of technical assistance and academic and technical
training appear to have remained at about their 1965
levels. Drawings on Communist military aid, in
spite of the large-scale Soviet resupply of the
Arab states in 1967-68, have leveled off at some-
thing on the order of $400 million a year.
During the past several years the Soviets have
adopted a more cautious approach to both economic
and military aid. They have been more discriminating
in the selection, implementation, and terms of aid.
Greater attention is given to determining the suit-
ability of particular projects for particular
countries, and fewer large, unspecified lines of
credit are extended. Terms of Soviet credits have
hardened somewhat even for its traditionally favored
clients. While not refusing requests for some form
of military aid, the Soviets have shown increasing
concern over the amounts and types of aid provided
and, in the Middle East, have taken measures to
insure more effective use of its military aid.
* In this report the term extension refers to a
commitment to provide goods and services either
on deferred payment terms or as grants. Assist-
ance is considered to have been extended when
accords are initialed and constitute a formal
declaration of intent. The term drawings refers
to the delivery of goods or the use of services.
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The USSR also has taken a number of steps
recently to promote the growth of its trade with
the less developed countries. The conclusion of
a number of short-term commodity agreements to
purchase tropical products and agreements to im-
port products manufactured in enterprises built
with Soviet assistance are consonant with the Soviet
position that only trade can be the basis for per-
manent and growing economic ties. Such agreements
also minimize the buildup of unused payment balances
in the less developed countries.
Communist economic aid extensions of $743 mil-
lion in 1968, compared with $521 million in 1967,
were highlighted by a series of new credits to
Iran and a large Soviet commitment to Afghanistan.
Iran alone received 60 percent of total extensions
as the USSR, Czechoslovakia, Hungary, and Rumania
signed agreements providing $453 million in new
credits which will be repaid largely in Iranian
oil and natural gas. The Soviet credit to Afghan-
istan, another southern neighbor, was less remark-
able for its size, $127 million, than its terms,
which were decidedly less favorable than in the
past. Most of the new Soviet credit to Afghanistan
is repayable in 7 to 12 years after a three-year
grace period -- less than half the repayment period
for credits granted in earlier years. As in pre-
vious years, the USSR and Eastern Europe together
accounted for by far the bulk -- over nine-tenths --
of the new credits extended in 1968. Communist
China's major new extension was a $42 million credit
to Pakistan..
Deliveries of economic assistance to the less
developed countries fell slightly to about $430 mil-
lion in 1968. Since the inception of the program
in 1954, the recipient nations have drawn over $4
billion of the $10 billion in aid extended by the
Communist countries. The decline in 1968 drawings
was due largely to cutbacks in Chinese deliveries
as well as to a slight decline in East European
aid deliveries. Drawings on Soviet credits of
about $290 million were at about the same level
as in 1967.
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Communist China
Eastern Eur0Pe
USSR
COMMUNIST ACTIVITY IN LESS DEVELOPED COUNTRIE
OF THE FREE WORLD 1964-68
NON-MILITARY AND MILITARY
TECHNICIANS
IN LESS DEVELOPED COUNTRIES
Thousand Technicians
Ctor moist China
Eas1Jt:nEuro1965 1966 1967 1968
STUDENTS DEPARTING FROM
LESS DEVELOPED COUNTRIES FOR
TRAINING IN COMMUNIST COUNTRIES
Fiir
*Data are revised periodically to include new information and
therefore may not be cnmporobte with data previously presented.
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Non-Military Technicians
The number and distribution of Communist non-
military technicians in the less developed coun-
tries changed little in 1968 from previous years.
Of the 20,000 estimated to have been working in
45 countries during 1968, the USSR accounted for
about half, Eastern Europe for one-third, and
Communist China for about one-fifth. Communist
technical aid personnel were concentrated in rela-
tively few countries. Some 45 percent of all
Soviet technical aid personnel were on assignment
in four Arab states -- Algeria, UAR, Syria, and
Iraq -- while another 30 percent or more were
located in three border nations of southern Asia --
India, Iran, and Afghanistan. About 70 percent of
the East European technicians were assigned to
Africa; about half were located in Libya and
Tunisia, where they were assigned under commercial
contract as skilled laborers and medical personnel.
About two-thirds of Communist China's technicians
were located in four states of equatorial Africa:
Guinea, Mali, Tanzania, and Zambia.
In 1968 about 16,000 nationals from less
developed countries were engaged in academic
training in Communist countries. Since the first
offer of such training in 1956, Communist programs
have enrolled about 31,000 students, of which
about 70 percent have been trained in the Soviet..
Union. One-half of those trained have come from
Africa, about one-third from the Near East and
South Asia, and the remainder from Latin America
and the Far East together. The number of new
trainees accepted by the USSR has declined over
the last several years as Moscow has apparently
limited the number of those enrolled in academic
training programs to 11,000 to 12,000 -- the level
reached in 1965. Although more selective than in
the past, the Soviet program continues to accommodate
a number of those students who lack the financial
and educational prerequisites for training in the
West. Students trained in Soviet institutions
make a significant addition to the small pool of
professional manpower in some countries, especially
those in tropical Africa.
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An estimated 1,700 technical trainees under-
went training in Communist countries from the less
developed countries in 1968. This number, which
includes 1,500 new arrivals, brings to 15,000 the
total number who have gone for such training since
1956. The UAR, India, and Iran -- countries with
major Communist development projects -- accounted
for almost 70 percent of the new trainees arriving
in 1968.
Military Credits and Grants
Known Communist military aid extensions, which
amounted to something in excess of $200 million
in 1968, fell considerably below the near record
level of $600 million in 1967. The USSR continued
to account for the bulk of new commitments which
continued to go to the Middle East. In addition
to agreements with Syria for $25 million and Iraq
for $9 million, the USSR is believed to have con-
cluded an agreement with the UAR for a large but
still undetermined amount. During 1968 the Soviets
also signed agreements with four other Arab
countries -- Sudan, Yemen, South Yemen, and probably
Algeria -- and renewed offers of arms aid to Jordan
and Lebanon, both of whom refused. East European
arms aid agreements of $45 million were at about
60 percent of the level in 1967. The Chinese
signed two agreements in 1968 -- a $4 million
pact with Tanzania and a $1 million agreement with
Guinea.
Drawings of about $400 million on Communist
military aid were at about the previous year's
level. Reduced deliveries to the Arab states were
offset by increased arms supplies to other countries,
especially India. A decline in Soviet arms deliv-
eries to the Arab belligerents -- the UAR, Syria,
and Iraq -- from an estimated $275 million in 1967
to about $225 million in 1968 reflected the near
completion of resupply of the estimated half-billion
dollars in equipment lost by the Arab countries in
the June 1967 war.
Czechoslovakia was the dominant East European
supplier of military aid in 1968. Its 1968 deliv-
eries, amounting to around $40 million, do not seem
to have been delayed by the disruptions associated
with the midyear Soviet invasion. Communist China
delivered a scant $1 million in arms during the
year.
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Military Technicians and Trainees
During 1968 the number of Communist military
technicians in the less developed countries rose
by about 10 percent to a total of 7,200. Most of
these were Soviet technicians assigned to the Middle
East, where their role has been significantly
enhanced since the June 1967 war. During the year
the Soviets stepped up the size of their contingent
in the UAR from 2,000 to 2,500 while the number in
Syria remained at about 1,100. In the UAR and in
Syria, Soviet advisers and technicians have assumed
an increasingly important role in training and are
in a position to exert a somewhat greater influence
over combat preparedness and other aspects of
military activity.
The less developed countries sent some 1,500
military trainees to the Communist countries for
instruction in 1968 -- a somewhat larger number
than in 1967. At the end of 1968, about 3,800
military trainees from the less developed countries
were studying in the Communist countries. Since
1954, some 25,000 have received training in the
Communist countries. About 85 percent of the total
were trained in the USSR.
Trade
Communist trade with the less developed coun-
tries in early 1968 reversed 1967's downward direc-
tion and rose somewhat as a result of expanded
exports. Exports during the first eight months
increased by 8 percent, reflecting in large part
the jump in Chinese Communist deliveries to Ceylon
and Singapore and, to a lesser extent, the higher
level of Soviet and East European deliveries to
Syria.
During 1967 the Communist trade turnover of
$4.7 billion with the less developed countries was
marked by a further widening of the less developed
countries' unfavorable balance of trade as Communist
imports fell by 14 percent to $2.0 billion and
exports grew to $2.7 billion. Soviet trade in
1967 consisted of exports to the less developed
countries of $964 million -- a rise of 8 percent
due largely to expanded deliveries to the UAR and
Iran -- and imports of $806 million -- a decline
of 11 percent reflecting smaller purchases of
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Argentine wheat and Malaysian rubber. Almost half
of Soviet exports in 1967 consisted of machinery
and equipment while imports, by contrast, were com-
prised largely of low value-added commodities such
as rubber, cotton fibers, and food. The East Euro-
pean countries widened their normally favorable
balance of trade with the less developed countries
by expanding exports to $1.1 billion and lowering
imports to about $890 million in 1967. Communist
China's exports of about $540 million in 1967 were
at about the same level as in 1966, but its imports
declined by 35 percent to about $220 million, as a
result primarily of a cutback in grain purchases
from Argentina.
Although Communist trade accounts for roughly
6 percent of the total trade turnover of the less
developed countries, it represents a more signifi-
cant component of the trade of certain countries.
Afghanistan, Yemen, the UAR, Guinea, Syria, Mali,
Lebanon, and Ceylon transacted about one-fifth or
more of their trade with Communist countries in
1967. Aid and aid repayments have had an important
bearing on both the degree and direction of trade
for certain less developed countries, particu-
larly Afghanistan, the UAR, and Syria. Economic
and military aid deliveries together in 1967
accounted for roughly 40 percent* of Soviet exports
to the less developed countries, while scheduled
repayments by the less developed countries may
have been equivalent to a third or more of Soviet
imports from these countries.
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I. Communist Activities
in Less Developed Areas, by Type of Activity
The general level of Communist foreign aid
and trade activity in the less developed areas has
shown no appreciable annual growth since 1964-65.
Annual drawings of economic aid have steadily
declined, although $6 billion in committed aid
remains to be delivered. The value of Communist
trade with the less developed countries in 1967
reflected an increase of less than 32 percent over
1965. Moreover, neither technical assistance nor
academic and technical training have expanded
beyond their 1965 levels.
Deliveries of military assistance, which were
a dynamic element in Communist aid during the
early 1960's, appear to have leveled off at a rate
of something like $400 million a year. Although
the Soviets, who have provided 90 percent of total
Communist arms aid, so far have not denied some
form of military assistance to any country seeking
it, they have shown a growing concern over the
effective use of such aid and a greater selectivity
in the kinds and quantities of weapons supplied.
The USSR nevertheless has shown a willingness and
a capability to respond quickly to requests for
military aid: within a year of the Arab defeat by
Israel, the USSR had restored Arab inventories of
most major weapons virtually to their pre-war
levels.
Recently the Soviets also have become more
discriminating in their commitments to undertake
economic aid projects, undpubtedly reflecting their
experience either with projects in backward econ-
omies which could not absorb capital aid deliveries
on schedule or where unsuitable projects were under-
taken. Soviet specialists now usually undertake
detailed feasibility surveys before a commitment
is made. Moreover, the USSR now extends relatively
few comprehensive lines of credit covering multiple
undesignated development projects, preferring in-
stead to allocate aid for specific purposes. As a
result, Soviet credits have tended to be smaller
recently. Of the total number of new credits
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extended during the past four years, almost 70 per-
cent have been for less than $25 million, while in
the 1957-60 period fewer than half were under $25
million.
In recent years the bulk of the USSR's large-
scale capital development credits have gone to four
countries along its southern periphery: India,
Turkey, Iran, and Afghanistan. Together these
countries, which received all but one of the major
Soviet development credits extended since 1965,
account for about 70 percent of total Soviet eco-
nomic aid committed during the past four years.
The Soviets have taken a number of steps to
raise the level of trade with the less developed
countries. In 1967 and 1968 the USSR concluded
several special short-term commodity agreements
covering purchases of such tropical products as
Colombian coffee and Ecuadoran cocoa, coffee,and
bananas. The USSR also has agreed in a few cases
to purchase some of the manufactures, such as
Indian steel rails, produced by industrial enter-
prises built with Soviet aid in some of the de-
veloping countries. Concern over the slow rate
of growth of their exports to a number of less
developed nations has led Soviet spokesmen to
warn that the USSR will not tolerate large import
surpluses and that continuing Soviet purchases
from the less developed countries depend on their
purchases of Soviet goods, particularly machinery.
The interest in a greater role for commercial
relations between the USSR and the less developed
countries is further indicated by the growing
number of Soviet credits which, particularly since
1965, have been extended on something like com-
mercial terms, including 3 to 4 percent interest
and 5- to 10-year repayment periods.
In sum, while the past several years have seen
a continuing flow of Soviet economic, technical,
and military aid to the less developed countries,
a certain hardening of Soviet aid policy has be-
come evident -- not in the sense of a cutback in
aid, but rather a greater selectivity in the type
and placement of projects, a more sophisticated
concern with the absorptive capacities and repay-
ment problems of the less developed countries, an
enhanced awareness of the particular problems of
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individual countries, and a growing concern over
the long-run prospects for Soviet relations with
the less developed areas of the world.
B. ECONOMIC ASSISTANCE
1. Credits and Grants
a. Extensions
The Communist countries extended new credits
totaling $743 million to the less developed coun-
tries of the Free World in 1968, bringing total
extensions since the outset of the program in 1954
to about $10 billion (see Figure 2 and Table 1).
The USSR contributed $316 million, or 43 percent of
new aid extensions in 1968; the Eastern European
countries $371 million, or about 50 percent; and
Communist China $56 million.
More than 75 percent of the new commitments
were concentrated in two countries -- Iran and
Afghanistan. Iran, which has received substantial
quantities of Communist developmental aid during
the past several years, was extended an additional
$453 million in 1968. The USSR extended $178 mil-
lion, largely to expand steel capacity. The Czech
credit, of $200 million, also will be used to de-
velop Iranian heavy industry. Hungary and Rumania
also extended substantial new credits to Iran in
1968. Iran will repay this aid largely from its
rapidly growing output of oil and natural gas. In
1968, Afghanistan received $127 million in new
economic assistance from the USSR, maintaining its
long-term role as a major recipient of Communist
aid.
Other large aid recipients during the year
were Tunisia, Pakistan, and Syria. Tunisian and
Syrian credits of $51 million and $25 million,
respectively, were extended by East European coun-
tries. Pakistan received credits of $42 million
from Communist China and $3.7 million from the
USSR.
Aid negotiations in 1968 reflected the more
cautious Soviet approach to project aid and the
harder terms evident since 1965. In 1968, for
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Economic Aid Extended by Communist Countries
to Less Developed Countries of the Free World a/
1968
Million Current US $
Total
USSR
Total
Bulgaria
Czecho-
slovakia
East
Germany
Hungary
Poland
Rumania
Communist
China
Total
742.8
316.1
30.2
206.0
40.0
82.0
Africa
60.1
5.4
54.7
30.2
0
2.~
0
0
22.0
N.A.
Chad
2.2
2.2
Guinea
3.5
--
3.5
3.5
N.A.
Mali
N.A.
--
--
--
--
--
-
N.S..
Nigeria
Tunisia
N.A.
51.2
N.A.
--
51.2
26.7
--
2.5
--
--
22.0
--
Upper Volta
3.2
3.2
--
--
--
Far East
1.0
--
1.0
--
1.0
Near East and South Asia
664.2
308.2
300.0
0
200.0
0
40.0
0
60
0
6
0
Afghanistan
126.7
126.7
--
--
--
--
--
--
.
--
.
--
Ceylon
N.A.
N.A.
Iran
452.8
177.8
275.0
200,0
40.o
35.0
--
Jordan
Nepal
2.0
--
--
--
--
--
--
--
--
2.0
Pakistan
45.7
3.7
--
--
--
--
--
--
--
42.0
South Yemen
12.0
12.0
Syria
25.0
25.0
25.0
Latin America
11-5
2.5
15-0
2
0
5.0
0
0
Argentina
5.0
--
5.0
Chile
5.0
--
5.0
Colombia
7.5
2.5
5.0
a. All credits except for a $2 million grant to Nepal. (See Tables 3 through 7, pp. 61 through
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ECONOMIC CREDITS AND GRANTS BY COMMUNIST COUNTR
TO LESS DEVELOPED COUNTRIES OF THE FREE WORLD
EXTENSIONS AND DRAWINGS, 1954-68
Billion US Dollars
141
356
Easte rr
238 Europe
128 152 149
62 I USSR
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a. Non-Military Technicians
In 1968 some 20,000 non-military technicians
from Communist countries were employed in 45 less
developed countries. Of the total number of tech-
nicians, which was roughly the same as in 1967,
the USSR again supplied about one--half, Eastern
Europe one-third, and Communist China just under
one-fifth.
the Communist technical
assistance programs are characterized by the con-
centration of technical aid personnel in rela-
tively few areas. Of the 9,400 Soviet technicians
working in the less developed countries in 1968,
about 45 percent were located in the four major
Arab states (Algeria, UAR, Syria, and Iraq) and
more than 30 percent in three border nations of
southern Asia -- India, Iran, and Afghanistan.
More than 45 percent of Eastern Europe's technical
aid personnel were assigned to Libya and Tunisia;
Libya alone accounted for 26 percent. About two-
thirds of the Chinese technicians were located in
four countries of equatorial Africa: Guinea, Mali,
Zambia, and Tanzania.
African countries again absorbed more than
half of all Communist non-military technicians in
the less developed countries. This share of tech-
nical personnel, which far outweighs Africa's share
of total. Communist economic aid, reflects the rela-
tively large numbers of East European and Soviet
personnel involved in non-project work in North
Africa and the labor-intensive Chinese aid projects
farther south. In Libya and Tunisia the majority
of the 3,300 East Europeans were employee. on a com-
mercial contract basis as skilled laborers and tech-
nical and medical personnel. Most of the 1,700
Soviet technicians in Algeria were assigned as
medical personnel and teachers or to oil and mineral
exploration. Large contingents of Chinese carried
out survey work for the Tan-Zam railway, and others
were assigned to agricultural development projects
in Mali.
Almost 40 percent of Communist technical assist-
ance in 1968 was provided to a half-dozen countries
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in the Near East and South Asia. Well over half
of these technicians were employed on development
projects. Almost 1,800 Communist technicians
assisted the UAR, of whom an estimated 1,000 were
Soviet nationals working on the High Dam. Work
on a gas pipeline accounted for more than one-
fourth of the 900 Soviet technicians in Iran.
The Euphrates Dam in Syria employed about one-half
of the 650 Soviet technicians in that country.
Communist technicians are continuing to play
an important role in implementing assistance
projects in the less developed countries, where
shortages of skilled technical and managerial per-
sonnel are a major factor limiting the capacity to
absorb capital investments.
(1) Academic Students
About 16,000 students from the less developed
countries were engaged in academic training in the
USSR and Eastern Europe during 1968 (see Table 10*).
Of this total enrollment, which was somewhat higher
than in the year before, more than three-quarters
were being trained in the Soviet Union._ Around
2,200 students were enrolled for the first time in
the Soviet and East European programs in 1968.
China, whose academic training program has been
dormant for several years, accepted no new students
from the developing countries in either 1967 or 1968..
Students from Africa continued to make up by
far the largest regional contingent, accounting
for more than one-half the students in training
during 1968. Students from the Near East and South
Asia made up almost one-third of the total. Other
less developed areas represented less than one-fifth
of all the students being trained.
Since 1962, when the USSR accepted a record
number of new students for academic training, the
number of first-year trainees has declined each
year. This trend reflects the fact that the Soviet
program has not been expanded since 1965, when it
reached its present enrollment of 11,000 to 12,000.
Therefore, the estimated 1,600 academic trainees
who went to the USSR in 1968 filled vacancies rather
than new places.
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An estimated 31,000 students have undertaken
academic training in Communist countries since
1956, of which 68 percent studied in the USSR, 30
percent in Eastern Europe, and 2 percent in Com-
munist China. Of the 21,000 who went to the USSR,
approximately 6,000 had completed their training
by the end of the 1967-68 academic year. It is
estimated that about 2,500 of these graduates had
been trained as engineers, 1,000 as doctors, and
750 as mathematicians and scientists.
The scale of Communist academic training is
small in comparison with that offered in the advanced
non-Communist countries. In 1967, for instance, the
number of enrollees in the USSR was less than one-
fourth of the 48,000 students from the less de-
veloped countries in the United States for academic
study.
The Communist programs, though more selective
than in previous years, remain flexible enough to
accommodate a number of those students who lack the
financial and educational prerequisites for training
in the West. The Soviet program, in particular,
offers generous scholarships, including round-trip
transportation, full tuition, free medical care and
books, and a monthly allowance. For some countries,
especially those in tropical Africa, graduates
from Soviet training form a significant addition
to the supply of professional and technical manpower
which is critically needed for economic development.
(2) Technical Trainees
In 1968 about 1,700 nationals from less de-
veloped areas received technical training in Com-
munist countries (see Table 11*). This number,
which included 1,500 new arrivals, brings to over
15,000 the total number that have gone for tech-
nical training in Communist nations since the
first trainees were admitted in 1956.
The various Communist technical training pro-
grams have prepared skilled laborers, technicians,
and administrative personnel, most of whom were
trained to work on specific Communist-assisted
capital investment projects. The project-related
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thrust of the programs has meant that most trainees
have come from countries in which major Communist
development projects were being implemented. In,
1968, for example, the UAR, Iran, and India
accounted for almost 70 percent of those departing
for training in Communist countries.
In the future, Soviet-built technical training
facilities in the developing countries are expected
to play a growing role in meeting the needs of these
nations for skilled personnel. By the end of 1968
the USSR had finished building at least 20 technical
training establishments, most of which are located
in countries where major Soviet investment projects
are under way. An additional 20 such facilities
currently are being constructed. As the less de-
veloped countries themselves undertake more of the
training, the program in the USSR will lay increasing
stress on the more sophisticated and specialized
types of training which the less developed countries
will have only a limited capability to provide.
Consequently, there is little likelihood that these
countries will cut back on the number of technical
trainees sent to the USSR each year.
C. MILITARY ASSISTANCE
1. Credits and Grants
a. Extensions
New Communist military aid commitments amounted
to at least $200 million in 1968 -- considerably
below the high level of $600 million in 1967 (see
Table 2). The USSR accounted for about 75 percent
of Communist arms aid extended in 1968. The re-
mainder was extended by Czechoslovakia, Bulgaria,
and Communist China. Since 1954 the Communist
countries have concluded arms agreements totaling
almost $6 billion. The decline in 1968 reflected
smaller Soviet extensions to the Arab countries,
which had nearly restored their inventories to
pre-war levels under a series of agreements con-
cluded in the second half of 1967.
The bulk of new Soviet aid consisted of commit-
ments made to the Arab countries, as new agreements
with the UAR for a large but undetermined amount,
with Syria for $25 million, and with Iraq for $9
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Military Aid Extended by Communist Countries
to Less Developed Countries
1955-68
Million Current US$
Total
USSR
Eastern Europe
Communist China
Year
1955-58
1,112
636
455
21
1959
36
30
1
5
1960
569
556
6
7
1961
847
832
15
--
1962
371
371
--
1963
389
384
5
--
1964
1,003
984
15
4
1965
382
283
4+5
5)4
1966
344
322
15
7
1967
611
535
75
1
1968
203
153
45
5
Sep 1955-
4
1968
Dec
5,867
5,086
677
10
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million were concluded during the year (see
Table 12*). These agreements are substantially
smaller than the $305 million extended to the Arab
belligerent states in 1967. Soviet arms agreements
with other Arab states in 1968 included the first
arms accords with South Yemen and Sudan, a pact
with Yemen, and probably a new agreement with
Algeria. The Soviets also made arms offers to
Jordan and Lebanon in 1968. In addition to its
agreements with the Arab states, the USSR concluded
a sizable arms pact with India and accords of lesser
value with Cambodia and Nigeria.
In 1968 the USSR appeared to be intensifying its
close control over the requirements and use of its
arms aid, particularly in the Middle East. While
continuing to replace the arms losses of its Arab
clients, the Soviets meted out supplies with in-
creasing concern for Arab abilities to absorb and
use such equipment effectively. New agreements with
the UAR and Syria during the second half of 1968,
in contrast to those concluded immediately following
the June war, were signed only after considerable
deliberation. Both of these Arab states appar-
ently received less than requested. In the case of
Syria, which reportedly received only 5 to 15 per-
cent of its request, the USSR demonstrated its
dissatisfaction with existing use of Soviet equip-
ment by reportedly curtailing deliveries for a time
in 1968. South Yemen also was promised only a part
of its request for arms, apparently reflecting
Soviet concern over the political and economic un-
certainties in that country as well as the experi-
ence in nearby Yemen, where despite sizable doses
of Soviet military aid, the military situation is
still stalemated.
b. Drawings
Drawings on Communist military aid of about $400
million in 1968 were about the same as in 1967 (see
Tables 13 and 14**). Reduced deliveries to the Arab
states were offset by increased arms supplies to
most other countries, especially India. The USSR
accounted for about nine-tenths of the total Com-
munist aid deliveried. Most of the remainder was
P. 79.
Pp. 87 and 88, respectively.
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supplied by Czechoslovakia, while Bulgaria, East
Germany, and Communist China made small deliveries
during 1968. Since the inception of the Communist
military assistance program in 1955, the less
developed countries have drawn about $5 billion,
or 80 percent of the military aid extended by the
Communist countries. This rate, which is roughly
double that associated with drawings under economic
aid agreements, indicates the faster implementation
and more immediate impact of military aid.
The UAR, Syria, and Iraq continued to account
for the bulk of Soviet arms deliveries (see
Tables 15 and 16*). The UAR alone received an
estimated $115 million, or about one-third of
Soviet arms deliveries in 1968. The level of Soviet
deliveries to the three Arab belligerents, however,
declined from $275 million in 1967 to about $225
million in 1968 as replacement of their June losses
of an estimated half-billion dollars neared com-
pletion. At year's end, Egyptian air and ground
forces inventories of most major categories of
combat equipment were between 80 and 90 percent
of pre-war level. Syria's aircraft inventories
were above pre-war levels and its ground forces
losses had been largely replaced. Iraq's holdings
of most categories of equipment were considerably
higher than before the June war.
Indian drawings on Communist military aid
tripled and reached $90 million in 1968, as large
numbers of Soviet fighter-bombers and a submarine
and two escort vessels were delivered. This flow
is expected to continue with about half of the 107
SU-7 fighter-bombers on order, as well as substan-
tial numbers of fighter aircraft and possibly
tanks, still to be delivered. Deliveries to Iran
increased slightly to $20 million in 1968 as the
USSR moved ahead with implementation of the large
$110 million 1967 agreement.
East European deliveries came largely from
Czechoslovakia and consisted primarily of jet
trainers and land armaments for Iraq, some ground
forces equipment to Morocco, and small amounts to
the UAR and Syria. East Germany provided Tanzania
with two patrol boats and. Bulgaria made minor
* Pp. 89 and 91, respectively.
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military aid deliveries to India and Iraq. Com-
munist China's small deliveries of arms in 1968
were to Guinea, Tanzania, and Cambodia.
2. Technical Assistance
a. Military Technicians
The estimated number of Communist military
technicians in less developed countries rose to
about 7,200 in 1968, a 10-percent increase over
the high number present in 1967 (see Table 17*).
b. Military Trainees from Less
Developed Countries
During 1968, at least 1,500 nationals from
eleven less developed countries enrolled in mili-
tary training programs in Communist countries,
representing a somewhat larger number than in 1967
(see Table 18**). The largest numbers of new
trainees come from the Arab countries -- Algeria,
Iraq, Syria, and the UAR -- as a part of the inten-
sified Soviet military technical assistance program
in these countries. The Sudan sent its first
trainees to the USSR following the signing of its
P. 92.
** P. 93.
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first Communist arms aid agreement early in the
year. Afghanistan, Guinea, India, and Tanzania
sent significantly lower numbers of trainees than
in 1967.
At the end of 1968, about 3,800 military
trainees from less developed countries were being
trained in Communist countries. More than 90 per-
cent of these trainees were located in the USSR,
while the rest were divided between Eastern Europe
and Communist China.
Algeria had the largest contingent -- about 25
percent of the total -- of trainees undergoing Com-
munist military training in 1968. Other Arab coun-
tries, plus Afghanistan, Congo(B), Guinea, India,
Indonesia, Somalia, and Tanzania, also had sizable
numbers enrolled. Since 1955 a total of approxi-
mately 25,000 military personnel from less developed
countries have been sent to Communist countries
for training. About 85 percent of this number
were trained in the USSR.
D. TRADE
1. Value
a. 1968
Preliminary data suggest that the Communist
countries increased their exports to the less de-
veloped areas by perhaps 8 percent in 1968, while
imports from these areas appear to have remained
at about the 1967 level. The rise in exports was
led by a sharp jump in Chinese Communist deliveries
to Ceylon and Singapore, which increased at an
annual rate of $35 million and $68 million, re-
spectively, during the first eight months of 1968.
Higher Soviet and East European exports to Syria
were an additional factor in the rise in total
exports.
Communist imports in 1968 were highlighted by
an increase on the order of one-third in Eastern
Europe's purchases from Latin America and by a
partial shift in the source of Communist cotton
purchases. East European imports from Brazil appear
to have risen by roughly $25 million, and those from
Peru and Colombia also grew significantly. A large
share of the Egyptian cotton previously exported to
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the Communist countries was shifted to hard currency
areas, sharply reducing the level of Communist im-
ports from the UAR in 1968. Communist cotton pur-
chases were partly shifted to the Sudan, resulting
in an increase of almost 50 percent in Communist
imports from the Sudan in 1968.
Total Communist trade with the less developed
countries in 1967 declined by 3 percent below its
1966 level -- the first decline in more than 10
years (see Figure 3).* This turnaround was caused
primarily by an 11-percent drop in Soviet imports
and by a sharp fall for the second straight year in
Chinese Communist imports from these areas. Total
Communist imports from the less developed areas in
1967 fell by 14 percent to a level of $2.0 billion,
while exports increased by 6 percent to a record
total of $2.7 billion. This gain was smaller than
annual gains in the preceding 5 years, as significant
increases in Soviet and East European exports were
somewhat offset by a slight reduction in exports
from Communist China.
Soviet exports to less developed countries rose
by 8 percent in 1967, resuming a long-term upward
trend after their stagnation in 1966. The record
total of $964 million was attained in spite of the
continued decline in Soviet economic aid deliveries
that started in 1965. The increase in 1967 was
chiefly due to a $83 million rise in exports to the
UAR, which totaled $281 million, and to a doubling
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of exports to Iran. The sharp drop in Soviet im-
ports, which totaled $806 million in 1967, was
concentrated chiefly in two countries -- Argentina
and Malaysia. Imports from Argentina fell by $84
million to one-fifth of their 1966 level, reflect-
ing the cessation of Soviet grain purchases from
Argentina that was made possible by the USSR's suc-
cessful 1966-67 harvest. Soviet imports from
Malaysia fell by $29 million in 1967, almost entirely
as a result of a continued Soviet reduction in the
annual imports of crude rubber.
Eastern Europe's trade with the less developed
countries in 1967, as in 1966, was at about the
same level as Soviet trade with these areas. The
previous East European favorable trade balance with
these areas increased in 1967, with exports rising
by 11 percent, to $1,099 million, and with imports
declining by 4 percent, to $887 million. The major
factor in the export expansion was a twofold in-
crease over 1966 of $80 million in shipments to
Lebanon.
Chinese Communist exports to less developed
countries continued at about the same level in
1967 as in 1966, while imports sharply declined
by 35 percent. The drop in China's imports was
principally a result of a $78 million decrease in
imports of Argentine grain as well as smaller de-
clines in imports from Malaysia ($15 million),
the UAR ($14 million), and Syria ($12 million).
The substantial rise of $36 million in China's
exports to Singapore in 1967 resulted from a par-
tial shift away from Hong Kong as an entrepot port.
The annual level of Cuban trade with Free
World less developed countries continued to decline
in 1967. Cuban exports decreased by 8 percent,
owing largely to a decline in the world price of
sugar; imports were reduced by 52 percent. The
trade of Albania, Mongolia, North Korea, and North
Vietnam with these countries is insignificant.
a. From the Communist Standpoint
The USSR shipped about 10 percent of its total
exports to the less developed countries in both
1966 and 1967, but their share of Soviet imports
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TRADE OF COMMUNIST COUNTRIES WITH
LESS DEVELOPED COUNTRIES OF THE FREE WORLD
PERCENT DISTRIBUTION, 1967
TOTAL EXPORTS: 2,689
(Million US Dollars)
INITED ARAB REPUBLIC
SINGAPORE
TOTAL IMPORTS: 1,966
(Million US Dollars)
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declined slightly to 9 percent in 1967. The East
Europeans shipped a slightly greater share (8 per-
cent) of their exports and obtained a slightly
smaller share (6.5 percent) of their imports from
the less developed countries in 1967 than in 1966.
These countries' share of China's exports continued
at 27 percent, but their share of its imports fell
from 17 to 11 percent between 1966 and 1967.
Of the Communist countries' total trade with
less developed countries in 1967, the Near East
and South Asia together accounted for 63 percent
of their exports and 55 percent of their imports.
The UAR and India continued to take up the major
share of Communist trade with this area (see Fig-
ure 4). Africa accounted for 15 percent of Com-
munist trade, while Latin America accounted for 5
percent of the Communist countries' exports and
for 13 percent of their imports. The Far East
accounted for 12 percent of Communist trade with
the less developed countries in 1967, and Europe
(Portugal and Spain) for about 5 percent.
b. From the Standpoint of the Less
Developed Countries
The Communist countries supplied over 6 per-
cent of the total imports and took slightly less
than that share of the total exports of the
world's 120 less developed countries in 1967.
They accounted in that year for 5 percent or more
of the imports or exports of at least 45 of these
countries and for at least 20 percent of that for
eight of them -- Afghanistan, Yemen, the UAR,
Guinea, Syria, Mali, Lebanon, and Ceylon.* The
Afghan foreign trade has been traditionally domi-
nated by the USSR, which supplied 63 percent of
their imports and 38 percent of their exports in
1967. Almost one-half.of the UAR's exports and
36 percent of its imports were accounted for by
the Communists that year. If military aid ship-
ments are also included in the imports of Afghan-
istan, the UAR, and Syria, the Communist shares
of their imports would be even greater. Similar
classification of military shipments to Iraq would
* For data on the Communist countries' shares of
the foreign trade of less developed countries in
1966-67, see Table 20, p. 97. These shares may be
overstated somewhat because of the possible inflat-
ing of prices negotiated in barter agreements.
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push the Communist share of that country's imports
well over one-fourth of the total.
3. Commodity Composition
In 1967, machinery and equipment continued to
account for almost half of all Soviet exports to
the less developed countries. The major share
(61 percent) of these deliveries consisted of
machinery and materials for complete installations,
amounting to $274 million in 1967. As shown in
the following tabulation, six countries were
shipped most of the Soviet exports of machinery
and materials for complete installations in 1967:
Million US $
Total Soviet exports
of complete installa-
tions to Free World
less developed coun-
tries
244.6
273.6
India
64.3
90.5
UAR
85.4
80.7
Afghanistan
45.0
28.6
Iran
4.8
22.4
Syria
5.8
21.0
Ethiopia
2.9
16.1
The large share of Soviet exports accounted for by
shipments of such goods for complete installations
reflects in the aggregate the major emphasis the
USSR has placed on industrial plants and other
facilities in its foreign aid program.
The dramatic rise of $114 million in Soviet
exports of food to the less developed countries
in 1967 consisted largely of a $68 million increase
of wheat shipments to the UAR in that year follow-
ing the June war. Shipments of wheat to the UAR
were terminated in mid-1968. Soviet exports of
refined sugar and sunflower oil, which together
rose by $40 million, accounted for most of the
remainder of the increase in 1967 food exports.
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SOVIET EXPORTS TO, AND IMPORTS FROM
LESS DEVELOPED COUNTRIES, BY COMMODITY GROUP
1965-67
911
889
16%
1
6%.
!
7%
1'%
!8
-
15%
;14%
1 %
21%
2QS
14%
31%
?21
21%
Rolled Ferrous Metals
Wood Products
Food
Petroleum Products
Other Machinery and Equipment
Machinery and Equipment
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The drop of $28 million in petroleum exports
in 1967 was due chiefly to a sharp decline in ship-
ments to India. The reluctance of the USSR to tie
up its tanker capacity on the longer haul to South-
east Asia following the closure of the Suez Canal
contributed to this decline.
Lower Soviet imports from the less developed
countries in 1967 largely reflected cutbacks in
purchases of cotton, rubber, and wheat. Cotton
imports, mainly from the UAR, were reduced from
$140 million in 1966 to $113 million in 1967,
reflecting the shortfall in Egypt's 1966 crop ana
its need to ship cotton to the West to earn hard
currencies. Similar influences caused an even
greater reduction in Soviet imports from the UAR
in 1968. Rubber imports, mainly from Malaysia,
fell by $32 million in 1967. A decline in non-
ferrous metals imports, from $14.6 million in
1966 to $5.6 million in 1967, resulted almost
wholly from an apparent termination of copper
imports from Zambia by the end of 1966.
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II. Communist Activities
in Less Developed Areas, by Area and Country
1. Algeria
The USSR further strengthened its relations
with Algeria in 1968 by entering into a signifi-
cant long-term trade agreement and by probably
signing an additional military aid pact. These
actions were spurred in part by Algeria's renewed
emphasis on socialist goals as well as by the
Soviet and Algerian intention of further reducing
the influence of France and the West in general.
The Soviets also undoubtedly hope to use Algeria
as a propaganda model to influence other countries
to follow the socialist path.
Economic developments during the year were
highlighted by the signing in December of a Soviet-
Algerian seven-year trade pact. In return for its
equipment, the USSR agreed to purchase annually at
least 5 million hectoliters of wine -- about three-
quarters of Algeria's current annual output. By
its acceptance of this large commitment for wine,
the USSR assured Algeria of a long-term market and
replaced France as Algeria's major wine customer.
In addition to wine, the USSR agreed to purchase
at least 500,000 tons of Algerian oil annually.
This amounts to about 10 percent of the crude oil
now marketed by the Algerian state oil company
(Sonatrach). The wine purchases alone would be
worth an estimated $50 million annually at world
prices -- about three times the value of total
Algerian exports to the USSR in 1967. Algeria's
exports to the USSR in 1967 amounted to about
$16 million, of which wine amounted to about $6
million (450,000 hectoliters).
The USSR also continued projects under the
$227.8 million credit extended in 1963-64. A num-
ber of small and medium-sized dams have been com-
pleted; agricultural equipment has been delivered;
and petroleum exploration and drilling operations
are continuing. The contract for the Annaba steel
h See Figure 5.
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mill was concluded in the fall of 1967, and con-
struction is reportedly now beginning.
Soviet military aid deliveries to Algeria
continued at a reduced level during 1968, indi-
cating the near completion of the May 1965 Soviet
Algerian arms agreement. These deliveries incwuded
two T-43 class fleet minesweepers -- the largest
ships in the Algerian naval inventory -- and six
P-6 class motor torpedo boats as well as tanks._
armored personnel carriers, two MIG fighters, and
one helicopter. New Soviet military assistance
to Algeria probably was provided in the second
half of 1968 when several Soviet military deleca-
tions visited the country. Some 50 Soviet naval
technicians are now providing training for the
Algerians at Mers-el-Kebir, the former French
naval base that was turned over to the Algerian
navy in February.
2. Congo (Brazzaville)
The increasingly military-dominated regime in
Congo (Brazzaville), which by October had succeededt
in displacing the former civilian government, has
given no sign of wishing to terminate Communist
economic aid. On 2 October the Soviet Ambassador
presented an AN-24 as a gift, and the new Chief of
Staff was invited to visit Moscow in November. In
the middle of the transition, the Chinese contrsctcc:
to provide continued engineering assistance until
April 1969 for the broadcasting station they coi-
structed.
Prior to the coup, aid developments were limitcc.
In February, China agreed to help build a boatyard
for constructing small wooden boats. The agreement
covering Soviet secondary school teachers was re-
newed in June. In August, an agreement was signed
with Communist China covering establishment of a
$1 million experimental livestock farm at Kombe
to be financed under a 1964 credit.
Ghanaian economic relations with Communist
countries, virtually broken when Nkrumah was over-
thrown in 1966, appeared to be on the mend durir:g
early 1968. In October, however, strong disagree-
ment with the USSR developed from Ghanaian seizLre
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and detention of Soviet trawlers and their crews
on suspicion that they were engaged in subversive
activity. Prior to this incident, Ghana signed
in June a protocol to its 1967 trade agreement
with the Soviet Union and the USSR sent a technical
assistance team to survey three Soviet aid projects
that had been dormant since 1966. Results of the
survey were given the Ghana government by September,
but no decision on liquidation or resumption of the
projects appears to have been made.
In early 1968, Poland agreed to reschedule
Ghana's debts of over $10 million. The Communist
countries' share of Ghana's trade continued to de-
cline in 1968, constituting about 5 percent of
Ghana's imports and some 7.5 percent of its exports.
4. Guinea
The major new undertaking in Guinea was the
Guinea-Mali railroad, which the Chinese agreed to
aid during the year; however, the coup in Mali has
placed the entire project in doubt. The agreement
provided for Chinese aid in the construction of a
200-mile railroad, estimated to cost $50 million,
between Kouroussa in Guinea and Bamako, the
capital of Mali. Although details of the agree-
ment have not been disclosed, they possibly are
similar to those of the Chinese - Tan-Zam railroad
agreement (see 10, below) and may involve an
interest-free loan from China. Original plans
may also have included rehabilitation of the
existing Guinea railway and improvement of the
port at Conakry, but whether these might now be
considered as independent projects is not clear.
Chinese technicians arrived in Guinea in November
for preliminary route survey work.
The only other new development agreement was
signed with Bulgaria in January, providing for a
joint company to exploit Guinean timber, exporting
it from southern Guinea on the railway serving the
Lamco mine in Liberia. Bulgarian assistance would
amount to about $3.5 million.
During 1968, several arms shipments by the USSR
and one by China were made to Guinea. Guinea is
believed to have signed its first arms agreement
with Communist China in 1968. The agreement was
probably signed in July, and the delivery of small
arms and ammunition followed in September.
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The 19 Novvmber 1968 coup installed leaders
who apparently intend to reorient Mali's economy
toward the West. Although economic relations
have not been broken with any Communist country
and Communist technicians remain in Mali, the
future of Communist aid activities is in doubt.
The principal project likely to be affected
is the construction of a 200-mile link between
the existing rail systems in Mali and Guinea. An
agreement for the project was signed in Peking on
24 May 1968, and a Chinese rail survey team arrived
in Mali in August. The only other development
project the Chinese began during the year was con-
struction of a tannery on the outskirts of Bamako;
there were some indications that a shoe factory
is planned as an adjunct. The Chinese-built tex-
tile plant at Segou began production on 21 May.
On 23 January an agreement for continued Chinese
technical assistance was signed. In February a
19-man Chinese medical team arrived in Mali, and
most were assigned to staff a hospital at the
Niger Project, where 250 to 350 Chinese technicians
are located. Chinese technicians in Mali are esti-
mated at. 800.
Malian-Soviet disagreements arose during the
year over several aid projects. The Malians, be-
lieving signs of oil justified further exploration,
were unhappy when the USSR stopped prospecting
after drilling a second dry well. Two new AN-24's
were delivered to Air Mali to replace older Soviet
planes, but they were grounded for a month when
the Soviet pilots insisted that Malian pilots re-
cently returned from training in the Soviet Union
undertake further training before flying as co-
pilots in the AN-24's. One positive development
was a Malian-Soviet accord on cooperation in educa-
tion that was signed in June. Soviet technicians
in Mali number an estimated 350.
It is as yet unclear how the overthrow of the
Keita regime will affect Mali's Communist military
aid programs. No major items of military equipment
were delivered in 1968 by any Communist supplier.
Exchanges in 1968 of military delegations by Mali
with the USSR and Communist China raised some
speculation concerning new military agreements,
but no firm evidence of such agreements existed by
the year's end.
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In a continuing effort to find new sources of
aid and trade, Morocco signed a number of economic
scientific, and technical assistance agreements
with Communist countries in 1968. The USSR agreed
to construct a 110,000-kw thermal powerplant at
Jerada, opened a consulate general in Casablanca
and a cultural center in Rabat, and signed a new
five-year trade agreement which promises to double
the already substantial trade ($40.3 million in
1967) between the two countries.
During the October visit of Soviet fleet units
to Casablanca, the USSR is reported to have offered
a gift of spare parts for the MIG aircraft in
Morocco's inventory. These Soviet-provided air-
craft have been in storage since late 1965 because
of a lack of spare parts and trained pilots.
Czechoslovakia agreed to construct and equip
a tank training center in Morocco under the July
1967 Czech-Moroccan military aid agreement. In
January a team of Czech technicians arrived in
Morocco to assist in plans for the center. De-
liveries of major ground forces equipment under
the 1967 agreement were believed to have been com-
pleted in early 1968.
7. Nigeria
Nigeria's continuing need for military assist-
ance and political support for its efforts to crush
the Biafran rebellion led to expanded Nigerian-
Soviet aid ties during 1968.
In November, Nigeria and the USSR signed a
general agreement on technical and economic coopera-
tion, the first between the two countries. The
agreement involved a Soviet credit of an undeter-
mined amount. Specific projects to be implemented
under the agreement will be decided in future
negotiations. The Soviets also renewed an earlier
offer to build a modern teaching hospital in
eastern Nigeria and expressed interest in training
Nigerians in the petroleum industry. Czechoslovakia
offered to implement its 1965 $14 million loan.
A joint Nigerian-Hungarian company began construc-
tion of a $1.4 million drug factory in November.
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During 1968, Nigeria concluded three small
arms deals with the USSR for a. total estimated
value of $9 million. Among the items of military
equipment: delivered were 16 MIG-17 jet fighters,
wheeled vehicles of various types, small arms,
and ammunition. Payment for at least a portion
of this military equipment was to have been made
in Nigerian cocoa. Because of an unexpectedly
poor harvest of cocoa, Nigeria may have sought
other repayment terms. Czechoslovakia, which had
previously sold aircraft and other munitions to
Federal Nigeria, reversed its policy in mid-1968
and declared an embargo on all arms shipments.
Soviet, Czech, and UAR personnel continued to
assist the Nigerian air force and navy in 1968.
On 26 August the USSR agreed to a grace period
of one to two years on repayments on overdue loans
to Somalia. The Soviet Union also agreed in August
to provide technicians and to train local personnel
to operate Soviet-built fish and meat packing plants.
The 1963 loan agreement with Communist China was
finally ratified by the Somali National Assembly on
2 June 1968.
In late October the first Soviet arms delivery
since early 1967 arrived. It included at least
eight MIG-17 jet fighters, armored personnel car-
riers, field artillery, and antiaircraft guns.
Prime Minister Egal claims that these arms were
delivered under the 1963 Soviet-Somali military
assistance agreement.
In January and February 1968, Sudan signed its
first Communist military aid agreements. These
agreements, with the USSR and Bulgaria plus a naval
agreement with Yugoslavia, are said to total approxi-
mately $80 million. They call for deliveries of
MIG jet fighters, medium tanks, helicopters, trans-
port aircraft, antiaircraft artillery, patrol
boats, vehicles, construction equipment, and tech-
nical assistance. Soviet renovation of an airfield
and establishment of an air force school plus Yugo-
slav construction of a naval base also are included
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in these agreements. An unknown number of Soviet
tanks plus small arms and ammunition arrived in
August 1968. Only a few Soviet military technicians
have arrived so far. The Bulgarian agreement,
limited to providing technical assistance, has not
been implemented.
Good relations between Tanzania and Communist
China were reflected in continued expansion of
economic ties during 1968, while new foreign policy
differences with the Soviet Union developed and
Soviet aid remained limited.
The Chinese-built Friendship Textile Mill,
built with about $8 million in credits extended
in 1964, opened in July. It employs 3,000 people
and is expected to produce 24 million yards of
cotton cloth and 2 million pounds of thread a
year. On Zanzibar, the Chinese opened a leather
and shoe factory and continued the development
of the state farm at Upenja, where they have so
far constructed 90 houses. They also are building
a stadium that will seat 10,000. The USSR con-
tinued a small technical aid program in Tanzania.
East Germany's aid to Zanzibar appeared to have
been suspended during the year. About 800 Chinese
technicians are in mainland Tanzania, including
those working on the Tan-Zam railroad.
Tanzania received a small amount of Communist
military equipment in 1968. Some Chinese light
tanks of a design never previously observed outside
China and two landing craft were delivered in
January 1968 under the 1966 Sino-Tanzanian arms
agreement. Two East German patrol boats arrived
during the year, as part of deliveries under the
1964 East German-Tanzanian arms agreement. A
Tanzanian military delegation visited the USSR
in May 1968 and discussed a Soviet offer to estab-
lish an air defense system in Tanzania. The
Tanzanians, however, have not accepted the offer,
primarily because of the cost. President Nyerere
visited Communist China in June 1968 and apparently
concluded a $4 million agreement to help build a
naval base at Dar-es-Salaam and to provide four
patrol boats.
Communist China, Tanzania's major Communist
trading partner, supplied 4.1 percent of its
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imports and 3.7 percent of its exports in 1967.
Total Communist trade with Tanzania amounted to
about 7.0 percent of imports and 6.9 percent of
exports. For the first quarter of 1968, China,
the USSR, and Poland furnished about half of
Zanzibar's imports, and China and East Germany
took over one-fifth of its exports. Trade with
Communist China may soon increase considerably.
A Tanzanian mission was to visit China in November
to arrange for importing goods worth about $60
million over the next three to five years. The
imports would be covered by a credit that Com-
munist China will extend to generate funds to
cover local project costs of the Tan-Zam railroad.
Tunisia continued to expand economic and cul-
tural relations with the USSR and East European
countries despite President Bourguiba's pro-
Western foreign policy and his condemnation of
the Warsaw Pact invasion of Czechoslovakia. In
July, Bourguiba made his first. state visit to
Communist countries -- Bulgaria and Rumania --
and Tunisia signed credit agreements totaling some
$50 million with these two countries and East
Germany.
The $27 million credit from Bulgaria -- the
second largest from a Communist country -- was
signed in April. Bulgaria will supply equipment
and technical assistance for the mining industry.
The credit will be repaid mainly by the export of
275,000 metric tons of Tunisian phosphate rock
each year from 1968 to 1972 and 700,000 tons
annually during the 1972-86 period. Under the
$22 million credit signed with Rumania in July,
the Rumanians will provide mining equipment and
assistance in geological, mining, and petroleum
projects and will also assist in the creation of
a central control system for the Tunisian rail-
ways. Tunisia will repay the loan by exports of
phosphate rock, lead, zinc, and other nonferrous
minerals.
The Soviet-Tunisian trade agreement of 1962
was renewed in October to cover 1969-72, with pro-
vision for an annual increase of 12 to 15 percent.
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Except for the Tan-Zam railroad, little progress
has been made under the 1967 aid agreements with
the Soviet Union and Communist China. At the
beginning of 1968 a Chinese survey party made a
preliminary survey of the Zambian portion of the
Tan-Zam railroad, route similar to that undertaken
earlier on the Tanzanian side. In April, Communist
China, Zambia, and Tanzania signed supplementary
agreements covering the survey and design work,
the use of Chinese technical personnel, and financ-
ing and accounting arrangements. The 680 Chinese
technicians agreed upon for the survey and design
work have probably all arrived; about 350 are
thought to be in Tanzania and some 300 in Zambia.
The survey and design agreement provided that the
work is to be completed in approximately two years
after the survey teams arrived, but Chinese team
leaders have announced that they hope to finish
sooner.
The USSR agreed in January to provide four
diesel power stations for the rural electrifica-
tion project envisaged in their 1967 agreement,
but no equipment had arrived by the end of 1968.
Ten Soviet faculty members for the medical and
engineering schools at the University of Zambia
arrived, but none of the promised equipment for
the two schools. There are no known project
agreements under the 1967 Chinese economic aid
agreement, although some of the $16.8 million
credit has been used for government imports of
Chinese consumer goods to be sold locally. A
Rumanian delegation signed an economic cooperation
agreement in May and made a general offer of tech-
nical assistance and equipment for mining, forestry,
agriculture, and construction.
Since the rupture in aid relations with its
erstwhile principal aid giver, Communist China,
in 1967, Burma has been less receptive to Com-
munist proffers of assistance despite the obvious
need for external help.
.* See Figure 6.
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About $60 million is unspent from the $84 mil-
lion interest-free credit extended by the Chinese
in 1961. Trade relations with China also were
suspended with the termination. of aid projects.
However, to bolster their sagging foreign exchange
reserves, the Burmese reportedly favor the resump-
tion of trade in minerals, particularly pig lead.
Trade and aid contacts with the Soviet Union
and its East European allies remained at a low
level in .1968. The Soviet aid program was com-
pleted with the termination of the Kyetmauktaung
Dam projects in November 1967. A Soviet economic
delegation visiting Rangoon in July 1967 tried to
interest the Burmese in forming closer aid ties
with the Soviet Union. They reportedly offered
to fill the aid gap created by the Chinese depar-
ture, but the Burmese reportedly were not recep-
tive to the Soviet overtures. The Burmese are
averse to any more entanglements with big Com-
munist powers and are even more opposed to seeing
Burmese neutrality compromised. While generally
reticent about seeking external assistance, Burma
prefers to obtain aid from countries which are
less involved in big power politics.
Burma was the recipient of two small credit
extensions by East Germany and Czechoslovakia
during the fiscal year ending 30 September.
Czechoslovakia provided $1 million of credit for
tractors which the Burmese have found unsatis-
factory for their needs and East Germany agreed
to construct a printing plant, valued at $2.8
million, which it had offered previously under
its 1966 credit to Burma.
Cambodia did not sign any new economic aid
agreements with Communist countries in 1968, but
deliveries continued under prior agreements.
Communist China was the largest supplier of eco-
nomic aid, and the following Chinese aid projects
were completed during the year: a textile plant
in Battambang, a glass factory, expansion of the
airport at Siem Reap, and a laboratory at the
university in Kompong Cham. Work continued on
the expansion of the cement plant. The USSR con-
tinued to supply material and specialists for
earlier Soviet projects such as a hospital and
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COMMUNIST ECONOMIC AND MILITARY
ASSISTANCE TO THE FAR EAST
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an institute of technology. The USSR, Communist
China, and North Vietnam rushed shipments of
vaccine when a cholera epidemic threatened Cam-
bodia in midyear. Other Communist countries
such as East Germany and Rumania provided minor
amounts of aid such as agricultural pumps and
some laboratory equipment.
In February, Cambodia concluded its fourth
military assistance agreement with the USSR.
Under the agreement, valued at almost $6 million,
Cambodia is to receive a MIG jet trainer, radar
equipment, some armored personnel carriers,
artillery, antiaircraft guns, and mortars as well
as small arms and ammunition and spare parts for
equipment delivered under previous agreements.
Some of this military equipment was formally pre---
sented to Cambodia at a ceremony in Phnom Penh
on 2 December 1968. In a similar ceremony at
Pochentong airport on 4 January 1968, Communist
China formally presented Cambodia with military
equipment actually delivered in 1966. During the
year, Communist China made some minor deliveries,
probably under the November 1965 military aid
agreement.
3. Indonesia
Indonesian economic relations with the Com-
munist countries continued to mirror the dete-
rioration of political relations since 1965. No
new Communist economic credits were forthcoming
in 1968, and the Soviet economic aid program was
at a virtual standstill during the year.
However, a few East European projects were
completed during the year. The Tonasa cement
plant, for which Czechoslovakia supplied the
machinery, was opened in November, East German
printing equipment reportedly was installed in
November, and a spinning mill at Palembang, built
with East German equipment, was scheduled for
completion in December. Hungary delivered 30 rail-
way cars to Indonesia in late August. In March
1968 the Indonesians ratified the debt resched-
uling agreement concluded with the USSR in 1966
but failed to meet installments totaling $12.4
million due in 1967 and 1968 for short-term debt
under the agreement. Debt rescheduling negotia-
tions planned for the fall of 1968 were postponed
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by the USSR following the execution of several
top Indonesian Communist Party leaders in October.
In December, Indonesia concluded a debt resched-
uling agreement with Rumania, leaving Poland the
only East European Communist country which has
not rescheduled Indonesia's debts.
in 1968 the USSR continued limited deliveries
of spare parts to the Indonesian air force and
navy under the $10 million cash agreement of
September 1967. As a result of these deliveries,
some units of the Indonesian air force and navy -
almost totally inactive prior to the agreement --
have again become operational.
Indonesia's trade with the Communist countries
in the first part of 1968 was substantially below
the level in 1967. If continued, this would be
the second sharp drop in annual trade since the
coup in 1965. During 1967, trade was maintained
at about the same level as in 1966 with Indonesian
exports about $54 million and imports about $79
million. About nine-tenths of Indonesia's exports
in 1966 and 1967 were to the USSR and Eastern
Europe while the bulk of its imports were from
Communist China.
4. Malaysia
Malaysia expanded its economic contacts with
the USSR and East European countries in 1968.
In July a Soviet trade delegation visited Kuala
Lumpur in an effort to expand sales which char-
acteristically have been small in relation to
purchases from Malaysia. The USSR has been one
of the leading buyers of Malaysia's major export
commodity -- natural rubber. During the year the
Soviets also approached the Malaysians with offers
of project assistance. At least one such offer,
for assistance in constructing a highway, was
being considered by the Malaysian government.
Bulgaria and Rumania also were active in sending
trade missions to Malaysia in 1968. As a follow-
up to the March visit by a high-level Bulgarian
mission., the Malaysians signed a trade agreement.
In October the Bulgarians opened a trade office
in Kuala Lumpur and in early 1969 established
diplomatic relations with Malaysia.
Despite the absence of formal commercial
relations, Communist China continued to be a
major trading partner of Malaysia.
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5. Philippines
The official Philippine policy of not recog-
nizing or trading with Communist countries showed
continued signs of easing in 1968. In October the
Philippine Chamber of Commerce sponsored the visit
of a trade mission to several East European countries
and the USSR. Upon the return of the mission to
Manila, President Marcos convened the Foreign Policy
Council to discuss Philippine policy toward the y
Communist world. The Council recommended trade on
a "limited, ad hoc, selective, commodity-by-commodity,
case-by-case basis," but the matter of diplomatic
ties was deferred. The worsening of the Philippine
trade deficit and a sharp deterioration in the
balance of payments have given a special impetus to
the development of wider trade contacts. The Marcos
administration is expected to proceed cautiously
in formalizing contacts with East Europe and the
Soviet Union, but it would seem only a matter of
time before diplomatic and trade relations with
at least some of these countries eventuate.
A further small break with the traditional
Philippine policy of avoiding direct trade with
any Communist country was represented by the
shipment in September of lumber and coconut oil
to Yugoslavia, the first direct export from the
Philippines to a Communist nation. The opening
of trade with Yugoslavia followed the visit of a
Yugoslav trade mission to Manila, the first ever
received by the Filipinos from a Communist country.
In addition, a 50-man Czechoslovak trade mission
was scheduled to visit the Philippines during 1968,
but the Soviet invasion apparently caused these
plans to be either changed or canceled. Finally,
the Philippine government, in another departure
from the policies of the past, permitted a Soviet
delegation comprising journalists, writers, and
scientists to visit the Philippines during 1968.
There have been no significant developments
in Philippine relations with Communist China since
1967 when a potential deal involving the purchase
of Chinese rice broke down over a Chinese condi-
tion that the transaction be made through offi-
cial government channels and that a Chinese trade
mission be opened in Manila.
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6. Singapore
Singapore's long-term trend toward more trade
contacts and ties with the Communist world con-
tinued in 1968. The Soviet Union became the fourth
Communist country to reach agreement with Singapore
on the establishment of full diplomatic relations.
In 1968 the Soviet Union opened a large trade
mission and in January 1969 raised the status of
the mission to Embassy rank. Bulgaria also has
an Ambassador in Singapore. Small trade missions
were set up in Singapore during 1968 by Hungary
and Poland, and Czechoslovakia and Rumania seem
likely to establish missions within the coming
months. Singapore is determined to increase its
markets in Eastern Europe and will continue to
welcome the establishment and expansion of trade
missions so long as they are circumspect about
their activities.
Singapore's trade with the Communist countries
amounted to about $182 million in 1967, of which
about 75 percent was imports. Communist China
continued to be the dominant trading partner,
increasing its exports to Singapore by about 50
percent in 1968.
Singapore in 1968 established the Interna-
tional Trade Company (INTRACO) in an effort to
control trade and conduct trade negotiations with
the Communist countries, particularly with
Communist China. The Singapore government has
been concerned by the extent to which the Chinese
Communists channel trade through a selected
group of Singapore merchants and is fearful that
Peking might use its commercial position vis-a-vis
these firms to engage in subversion.
C. LATIN AMERICA*
1. Argentina
Trade with the Communists in 1967 and 1968
was at a low level compared with that in the
previous two years when unusually large grain
sales were made to the USSR and mainland China.
A lack of interest in initiating closer economic
See Figure 7.
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COMMUNIST ECONOMIC ASSISTANCE
TO LATIN AMERICA
10
0
MEXICO
Number of Non-military .e::rutician~
Present in 1968 for one month or tore
Argentina Brazil Chile Columbia Ecuador Uruguay
ECONOMIC ASSISTANCE, CUMULATIVE 1955-68
Million US $
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relations with Communist countries was reinforced
during the year by adverse reaction to the Czech
crisis, which led to postponement of a scheduled
visit by a Polish trade delegation. In addition,
conflict over fishing rights with the USSR brought
on the Argentine shelling of a Soviet vessel.
Soviet representatives pressed without success to
open a Moscow-Buenos Aires air route. In contrast
to these reverses for the USSR, Poland in September
1968 reportedly extended Argentina a $5 million
credit for construction materials. Czechoslovakia
had also offered Argentina a $15 million military
arms credit immediately prior to the Soviet in-
vasion.
The Communist countries continued their efforts
to expand economic relations with Brazil during
1968, but despite superficial activity in this
area, few significant achievements were noted.
In 1968, Brazil signed an agreement providing,
for the purchase of $10 million worth of Polish
machinery and equipment, apparently under a credi
agreement signed with Poland in 1962. Soviet
technicians completed a feasibility study for the
development of a shale oil deposit in Sao Paulo
State; construction of the first stage of the
complex (the pilot plant) to develop this deposit
is scheduled to begin in 1969.
Communist political and economic relations
with Colombia were expanded significantly in 1968.
After initialing a new bilateral trade agreement.
in 1967, the USSR followed up in January 1968 by
reopening diplomatic relations with Colombia
after a 20-year hiatus. In the fall the Soviets
extended a $2.5 million credit to Colombia which
will be used to purchase buses and is to be repaid
in 12 years. East European aid relations were
highlighted by the signing in January of an East
German credit for $5 million which is repayable
over 10 years. The Soviet and East German credits
were the first Communist economic aid Colombia
has received.
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East European missions in :1968 found Colombia
desirous of increased trade. New agreements were
signed with Hungary and Rumania and the existing
trade agreement with Bulgaria was extended. East
European countries actively participated in the
Colombian industrial fair, and Colombia in some
of the East European fairs.
The Colombian government took several actions
in 1968 to expand its sales of coffee to the Com-
munists and to increase domestic purchases of
Communist goods. These actions included the
allocation of large shares of Colombia's import
quotas for vehicles to Soviet jeeps and taxis
and the limiting of bidders on public contracts
to firms which can supply goods under specific
bilateral trade agreements. The Coffee Board
and the National Coffee Bank have also facilitated
the granting of credits to those importers willing
to import goods from certain countries. Colombia
has also attempted to increase its earnings of
hard currencies, as in its July 1968 agreement
with the Soviets, by tying some of its coffee
shipments to this form of payment.
Colombia's trade with the Communists, which
substantially increased prior to 1967, decreased
slightly that year and then resumed its upward
trend in 1968. The share of its imports supplied
by Communist countries was 3.5 percent in the
first third of 1968 compared with 1.4 percent in
that period of 1967; their share of Colombian
exports was also greater in 1968 (4.4 percent
compared with 2.1 percent). Coffee accounted
for most of these exports; most of the imports
were vehicles and parts, machinery, mineral fuels,
wax, and iron and steel products.
Until late 1968 no Communist nation had estab-
lished a trade or diplomatic mission in Costa Rica.
In December, Bulgaria signed an agreement which
covered the exchange of products with Costa Rica
and provided for the establishment of a commercial
delegation with diplomatic sitatus. Two years
earlier the Soviets had attempted unsuccessfully
to tie purchases of Costa Rican coffee to an agree-
ment with Costa Rica for establishment of a Soviet
diplomatic mission. Although the Soviets paid a
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relatively high price for the $5 million in coffee
purchased from Costa Rica in November 1968, there
is no indication that diplomatic concessions were
requested by the Soviets in connection with the
agreement. Deliveries under this agreement were
completed by February 1969.
There was a marked increase in 1968 in com-
mercial relations between Ecuador and the Com-
munist countries, particularly the Soviet Union.
President Jose Maria Velasco not only has con-
tinued the previous administration's policy of
maintaining trade relations with all countries
but in addition, Communist trade mission visits
and commercial overtures have multiplied under
his regime. This increased activity is in part
an attempt to eliminate the large favorable trade
surplus Ecuador has earned in its trade with
Eastern Europe. This balance had grown to $6.7
million by mid-1968. To help draw down the
surplus, the President was given authority in
July 1968 to waive a requirement for public bids
on certain public works projects when the re-
quired goods can be obtained from those countries
with whom Ecuador has a credit balance.
Soviet purchases from Ecuador, which were
insignificant in the past, sharply increased in
1968. By the end of 1968 the USSR had purchased
with hard currency $11.5 million worth of cacao,
displacing the United States as the largest buyer
of that product. It also bought $2 million of
Ecuadoran coffee that year. Ecuador made its
first direct shipment of bananas to the USSR in
November (worth $250,000) under barter agreements
reportedly providing for the exchange of $3 mil-
lion of bananas for farm machinery and cement.
The USSR and East Europeans are buying the Gros
Michel variety of bananas, which is not as popu-
lar as the Cavendish variety in Ecuador's tradi-
tional markets.
A trend toward expanding commercial and dip-
lomatic ties with Communist countries was con-
tinued by the new Peruvian military government
which seized power on 1 October 1968. Diplomatic
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relations were established with Rumania in
November and with Yugoslavia in December. A
consular agreement was signed with Poland. In
addition, commercial agreements were concluded
during the year with Czechoslovakia, Hungary,
Rumania, and Poland. Credit offers were made
to the new government by the USSR and Rumania,
but neither these nor the earlier credit offer
from Poland were accepted.
The major development in Venezuelan-Communist
economic relations in 1968 occurred in May with
the signing of a $125 million trade agreement
with Rumania. The agreements calls for Venezuela
to exchange 11 million tons of crude oil over
the next 10 years for Rumanian machinery and
equipment valued at $125 million. Implementation
of this agreement will more than double the level
of Venezuelan imports from the Communist coun-
tries and result in an even more significant
expansion in its exports to them.
8. Other Latin American Countries
In response to excessive stocks of coffee,
Guatemala and El Salvador have actively sought
in 1968 to sell large quantities of coffee to
Communist Bloc nations.
In April 1968 a credit agreement was signed
by Chile's Development Corporation providing for
purchase of $5 million in machine tools and
industrial equipment from Czechoslovakia.
D. NEAR EAST AND SOUTH ASIA*
1. Afghanistan
`t'he Soviet Union's economic credits of $127
million constituted the major aid development in
Afghanistan during 1968. The new credits, most
of which are for Afghanistan's Third Five-Year Plan,
were signed in February after lengthy negotiations.
Terms of the credit are distinctly less favorable
than those given in the past. The credits also
provide financing for uncompleted Second Plan
Se Figure 8.
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projects as well as commodity assistance. Other
Soviet aid activities during the period included
the dedication of the Soviet-assisted electric
substation at Pul-i-Charkhi, the signing of agree-
ments for the Shebarghan natural gas project and
an irrigation network near Ghazni, and a contract
to study the possibility of expanding gas extrac-
tion. The Chinese Communists signed an agreement
to establish experimental tea plantations in the
Kunar Valley, and possibly completed the Bagrami
textile plant outside Kabul.
Soviet military assistance during the year
included the delivery of T-54 tanks, armored
personnel carriers, and additional MIG-21 jet
fighters, probably under the $110 million Soviet-
Afghan military aid agreement of September 1967.
The new aircraft are to form Afghanistan's third
MIG-21 squadron. Reports indicate that Afghan-
istan's first SAM site has been operational since
late 1967.
2. Ceylon
Ceylon's relations with the Communist coun-
tries have been selectively downgraded since the
present moderate government took office in 1965,
replacing former Prime Minister Mrs. Bandaranaike's
leftist government. During the past year or so
the number of technicians from Communist countries
in Ceylon has been substantially reduced as
projects have been completed and few new ones
inaugurated.
The first new Communist aid agreement in
three years was concluded in February 1968, when
Ceylon signed an agreement for economic and tech-
nical cooperation with Rumania under which Rumania
will provide an unspecified amount of project
assistance and will purchase various products
from Ceylon.
In April, Ceylon also reached agreement
with the Soviet Union calling for use of the
remaining small balance of the 1958 credit. It
will be used for expansion of the Soviet-aided
iron and steel mill, development of the Ceylon
Institute of Scientific and Industrial Research,
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and training of Ceylonese nationals in the USSR.
East Germany's Deputy Prime Minister took part
in the ceremony to lay the foundation stone of
an integrated textile mill, a project covered by
the 1965 East German credit agreement. The 1969
rice-rubber barter arrangement with Communist
China calls for the exchange of 62,000 tons of
Ceylonese rubber (compared with 75,000 tons in
1968) for the usual 200,000 tons of rice. The
Chinese continued to agree to a premium price
for rubber and a discount price for the rice.
Trade with Communist countries continued to
account for about one-fifth of Ceylon's total
trade.
The year 1968 saw continuing close relations
in the economic and military supply spheres be-
tween India and the Soviet Union, but were
strains placed on the relationship. The Indians
are disturbed by closer ties between the Soviet
Union and Pakistan, as evidenced by the reported
Soviet agreement to supply (as yet unspecified)
military equipment to Pakistan. The Soviets, in
a meeting with the Indians, expressed consider-
able reservation about the effective use of
economic aid by the Indians while the Indians
in turn were not entirely pleased with the com-
plexion of the Soviet imports from India.
Though the Indian-Soviet relationship has
lost some of its glamor for both sides, it
remains important, especially in view of a shared
concern over the ultimate intentions of Communist
China.
A low level of government investment, attrib-
utable in part to the slow recovery of India's
capital goods industry and to budgetary stringency,
contributed to the low level of drawings on Soviet
credits in 1968. Roughly one-half of the drawings
were utilized for the Bokaro Steel Plant, the first
staqe of which is scheduled for completion in
December 1971. During 1968 the Soviets completed
one more stage of construction of the Heavy Machine
Building Plant at Ranchi, Bihar, and the third
million-ton unit of the Barauni Oil Refinery on
Bihar.
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Total trade turnover between Communist coun-
tries and India decreased by 6 percent from 1966
to 1967. Figures for the first half of 1968
indicate that the rising trend in India's imports
and exports to these countries continued during
1968, though exports probably rose at a higher rate
than imports. The Soviet Union made some highly
publicized announcements during the year of its
willingness to buy from India over the next few
years large quantities of iron and steel products,
railroad freight cars, and light engineering prod-
ucts. It appears that Moscow privately is assuming
a tough bargaining position in implementing these
pledges, including heavy pressure on India to buy
Soviet commercial aircraft as a quid pro quo.
Soviet deliveries to India in 1968 included
some 50 SU-7 fighter-bombers as well as an F-class
submarine and two Petya-class escort vessels.
Approximately half of the 107 SU-7's on order from
the USSR have now been delivered. At least another
two submarines and four Petya's are expected,
some perhaps in 1969. The domestic production
of MIG-21's, meanwhile, continued at the MIG
assembly plant at Nasik, where as many as three
aircraft per month are being produced.
One of the hallmarks of Iran's recent shift
to a more "independent" foreign policy has been
its increasing rapprochement with the USSR.
Although aware that the USSR still constitutes a
potential danger, the Shah feels strongly that
the greatest threat to Iran and to his own posi-
tion now comes from the radical Arab nationalism
promoted by President Nasser of the UAR. Because
of this the Shah felt that he could react posi-
tively to the Soviet overtures for closer relations
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which had replaced the one-time hostile USSR policy
toward Iran.
Iran's economic relations with the USSR ex-
panded significantly in 1968 with the signing of
a credit of $178 million and agreement for sev-
eral industrial projects. Drawings on Soviet
credits rose from $10 million in 1967 to some
$40 million in 1968 as work moved ahead on a
number of projects, including the steel mill and
gas pipeline. About 900 non-military technicians
from the USSR were working in Iran in 1968.
Iran views its expanding relations with-the
East European states, not as an extension of its
relations with the USSR but largely as a means of
providing an additional market: for its crude oil.
New economic agreements with Rumania, Czechoslovakia,
and Hungary providing total credits of $275 million
call for most repayments to be made by delivery of
Iranian crude oil in return for machinery and other
capital goods. If the agreements are carried out
as envisaged, they will give significant added
substance to Iran's ties with these countries.
;rider. the January 1967 arms deal, Iran re-
ceived an estimated $20 million of military equip-
ment from the USSR in 1968. Deliveries included
280 armored personnel carriers and about 200
artillery pieces.
Iraq
Communist aid relations with Iraq during 1968
were highlighted by four new small military aid
agreements. In March the USSR provided a $9 mil-
lion credit for purchase of AN-24 transport air-
craft and Bulgaria signed a $2 million credit
for artillery ammunition. In May, Czechoslovakia
signed a $25 million agreement for 280 twin 30-mm
antiaircraft guns and ammunition, and a $5 million
agreement for 20 more L-29 jet trainers. Communist
military deliveries to Iraq in 1968 amounted to
an estimated $70 million, up somewhat from 1967
and second only to that received by the UAR among
the Arab countries. Since Iraq sustained only
limited losses in the June 1967 war, the subsequent
large shipments from the USSR and other Communist
countries have tended to increase Iraqi military
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inventories well beyond the prewar level. Among
the more important items received in 1968 were 1.6
SU-7 fighter-bombers and 36 additional MIG-21's.
Under way to Iraq at the year's end were two of
the four T-43 class fleet minesweepers ordered
from the USSR under the May 1966 agreement.
Under this same agreement, Iraq is expected to
receive eight Komar missile boats on which Iraqi
crews are presently being trained.
By contrast, Communist economic aid to Iraq
was small during 1968. The only agreement of note
was with the USSR. in late 1968 which provided for
Soviet assistance in developing a fishing industry
in the Persian Gulf. In return Iraq agreed to
provide berthing and repair facilities for Soviet
fishing vessels. Although the USSR submitted a
feasibility report on the proposed Euphrates Dam,
little or no substantive progress was made in
implementing this project which has been under
consideration for about a decade.
In an attempt to break Jordan's predominant
aid ties with the West, the USSR offered to pro-
vide badly needed military equipment and made some
modest economic aid overtures during 1968. King
Husayn has been placed under increasing pressure
to accept the Soviet offers of military aid for
his badly mauled air and ground forces which have
replaced only a fraction of the equipment lost in
the June 1967 war and subsequently have been
embarrassed by Israeli forays into the country.
So far, however, the Jordanian military continues
to rely on US and British arms aid and some trans-
fers of Western equipment from other Arab coun-
tries. Soviet economic aid offers seem to have
found greater receptivity. A Soviet delegation
to Amman in February 1968 took home a list of
projects proposed by Jordan, and a Jordanian
team went to Moscow in January 1969 to discuss
the matter further.
On 20 November Jordan signed three economic
agreements with Rumania for the ten-year period
1968-77. They included (1) an economic and
technical cooperation agreement under which
Rumania would supply Jordan with industrial plants
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and equipment, designs, and technical assistance
for fertilizer production, mineral extraction,
and electric power generation in return for
Jordanian phosphates; (2) a petroleum agreement
under which the Rumanians would undertake oil
exploration for Jordan's Natural Resources
Authority, providing the technical services and
equipment and extending the necessary financial
credits in return for 60 percent repayment by
Jordan in crude oil, phosphates, or other
minerals and 40 percent in pounds sterling; and
(3) a trade agreement under which Rumania under-
takes to import Jordanian products up to at least
30 percent of the value of Rumanian exports to
Jordan -- recent Rumanian exports to Jordan have
averaged around $2 million a year, while Jordan's
1967 exports to Rumania were only $60,000.
7. Nepal
Nepal's carefully non-aligned position is dic-
tated by its location between Communist China and
India, and the country accepts economic assistance
from both Communist and Western sources. Communist
China, which to date has supplied most of the Com-
munist aid to Nepal, extended. a grant of $2 million
in September 1968. This grant will be used to
undertake a 10-mile extension. of the Katmandu-
Kodari road. The Chinese also agreed to extend
until 1975 the time limit on the use of aid funds
made available under a 1960 agreement. In addition,
China began construction of the Sun Kosi River
hydroelectric project near Katmandu which was agreed
to in 1967. Soviet credits of $21 million are
about one-third of China's, and have largely been
utilized. In 1968 the USSR completed and placed in
operation the Birganj Agricultural Implements Plant
and continued work on their one remaining project,
the Simra-Janak.pur Road in Southern Nepal.
3. Pakistan
During 1968, Pakistan evidenced a definite
effort to strike a balance in its relations with
Communist China, the USSR, and the United States.
Soviet Premier Alexi Kosygin visited Pakistan in
April, and Pakistan, in turn, sent several high-
level military and economic missions to Moscow
during the year. Two such missions also visited
China. Presidential adviser S. Fida Hassan headed
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a delegation to China's National Day in October,
and General Yahya Khan led a military mission to
Peking in November. A large Chinese mission,
including military elements, made an unpublicized
visit to Pakistan between 25 April and 6 May 1968.
Pakistan's economic aid relations with the
USSR have prospered. In September 1968 the
Soviets added $3.7 million to their 1966 credit
to Pakistan. The Soviets under the 1966 credit
are preparing a feasibility study for a steel
mill at Kalabagh, West Pakistan, and will conduct
one on the atomic powerplant at Roopur, East
Pakistan. The USSR also signed an agreement to
assist in the development of Pakistan's fishing
industry and dispatched three trawlers to par-
ticipate in a training program.
Communist China significantly expanded its
economic aid to Pakistan with the extension of a
$42 million interest-free credit on 26 December
1968. This is China's third credit to Pakistan
and brings to $109 million the total amount of
Chinese aid extended. The new credit calls for
repayment in Pakistani raw materials over a 20-
year period after a 10-year grace period. Two-
thirds of the new credit will be used for capital
investment projects and the remainder for import
of commodities.
Pakistan expanded its trade with the Communist
countries in 1967, largely in response to larger
imports from and exports to Eastern Europe. The
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trend in increased trade with Eastern Europe has
been under way for some time under direct encour-
agement from the Pakistani government. Aid
deliveries by Czechoslovakia and Poland contrib-
uted partially to the rise in Pakistani imports
from Eastern Europe of from $20 million in 1966
to $33 million in 1967. Trade with the USSR re-
mained at about the same level as in 1966.
Pakistan continued to run a deficit in its trade
account with the USSR. In July 1968 the USSR and
Pakistan signed a protocol to their 1968-70 trade
agreement which provides for delivery of $66.7
million of Soviet machinery and equipment under
credit. These credits include the $63 million of
trade credits extended in 1966 plus a $3.7 mil-
lion addition to the 1966 credit. In 1967,
Pakistan maintained its characteristically favor-
able balance of trade with Communist China.
[n April, Saudi Arabia signed an agreement
with Rumania to barter 9 million to 12 million
tons of crude oil in exchange for Rumanian goods
and equipment valued at $100 million. Rumania
was to build an oil refinery in Saudi Arabia,
but King Faisal vetoed the project for political
reasons. Thus left with no use for Rumanian
credits about $4 million worth of oil already
had been sent -- the Saudis suspended further
oil deliveries in November.
In evident displeasure and concern over
China's use of trade for introduction of propa-
ganda, the Saudi Arabian Chamber of Commerce in
April advised merchants and local bankers not to
open any further letters of credit for Chinese
imports. This action was taken with government
approval and evidently reflects the official
attitude on future imports from China.
since achieving independence in late 1967,
the leftist regime in the People's Republic of
South Yemen has courted the Communist countries
in an effort to get much-needed budgetary sup-
port, plus development aid and arms. Although
no budgetary aid was forthcoming, South Yemen
in 1968 obtained offers of project assistance
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and/or technical aid from the USSR, Communist
China, North Korea, and several East European
countries. A $12 million credit extension by
the Chinese was announced. Very little of the
Communist aid had materialized by the end of
the year.
11. Syria
The close relations which have existed between
Syria and the USSR showed signs of strain during
1968. Friction between the two sides seemed to
center largely around the area of military aid.
A new agreement, signe
at the behest of Egyptian President Nasser,
reportedly provides for only about 5 to 15 per-
cent of the requested equipment. The USSR,
moreover, refused to intervene for Syria when
Czechoslovakia informed Damascus in January 1968
that arms purchases henceforth would be on a cash
rather than credit basis. The Syrians, in turn,
continued to criticize the quality of some
Soviet military equipment and, in particular,
the arrogant attitude of Soviet advisers.
Following a major government reshuffle in
Damascus in October. 1968, there were indications
that the new Ba'athist leadership wanted not only
to prevent Syrian-Soviet relations from becoming
even closer but perhaps even to reduce its con-
siderable dependence on Moscow. In the latter
part of the year, Syrian officials visited
London, Paris, and Bonn in an apparently unsuc-
cessful effort to buy Western arms.
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En the area of economic aid, there was only
one new Communist credit in 1968. In June,
Rumania extended a $25 million credit for the
purchase of machinery and equipment and for aid
in specified projects. In May, Bulgaria agreed
to apply credits extended in June 1966 to aid
in increasing Syrian phosphate production by
one-third to an eventual level of $17 million
yearly and to purchase the increased output of
phosphates. Soviet aid activities were confined
to the initiation of work on the Euphrates Dam
in March and to continued assistance on the rail-
road system and in petroleum exploration.
:!2. Turkey
In reaction to the Czechoslovak invasion,
Turkey curtailed its cultural relations and dis-
played coolness in its political relations with
the USSR and the other Warsaw Pact participants.
However, Ankara was careful to continue economic-
commercial relations as usual to avoid jeopar-
dizing the aid it is receiving and anticipates
from the USSR.
The USSR and Turkey are making progress in
implementing projects covered by the 1967 Soviet
credit. Construction has begun on two of the
projects -- an aluminum plant and an oil re-
finery. Contracts have been signed for three
of the projects -- a steel mill, sulfuric acid
plant, and fiberboard factory. A protocol has
been signed for a hydroelectric power station.
The foreign exchange costs of these projects
probably will amount to more than $300 million,
or well in excess of the $200 million credit
specified in the 1967 agreement. In such case,
the agreement provides that the excess will be
repaid at 2h percent interest with installment
terms to be decided by the USSR and Turkey.
In addition to the above, the Soviet Union
and Turkey are reported to be building an irri-
gation dam on the Apra Cayi River, which forms
part of their common border. Soviet technicians,
moreover, are scheduled to assist the Turks in
exploring for oil.
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13. United Arab Republic
The military and economic consequences of
the Arab defeat in June 1967 continued to in-
fluence the nature of Communist aid to the UAR
during 1968. Soviet deliveries of both offensive
and defensive arms were made under a July 1967
pact for $150 million as well as earlier agree-
ments. With 80 to 90 percent of resupply believed
to be completed in most major categories of
equipment, the rate of deliveries in 1968 de-
clined to about the pre-war level. A new agree-
ment in July 1968 for a large undetermined amount
of equipment may form the basis for continued
deliveries which probably will contribute to a
modernization and some expansion in UAR inven-
tories beyond the pre-war level.
Coupled with the increased supply of military
hardware, the USSR has expanded its technical
assistance effort to include some 2,500 military
advisory personnel and has augmented its presence
and support of UAR defense through fleet and air
visits. The Soviet Mediterranean Squadron made
greater use of Egyptian ports during the year,
and the USSR took a direct hand in operation of
the Al Kabbari shipyard. More than 100 addi-
tional Soviet technicians arrived for work at
the shipyard during the vPar r? AA4 4-. __
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During the year, trade protocols were concluded
with the USSR, Czechoslovakia., Poland, Bulgaria,
East Germany, Hungary, Communist China, and North
Korea, in some cases calling for a significant
increase in trade volume.
The protracted civil war and resultant dislo-
cations have influenced the nature and scope of
Communist aid to Yemen. The USSR continued to
ship some arms, to the Republican regime but was
undoubtedly dismayed at the misuse of the equip-
ment and the military stalemate which prevailed
during the greater part of 1968. Since such aid
is vital to survival of the Republicans, the USSR
agreed to another arms accord when a Yemeni dele-
gation visited Moscow in October. Under the esti-
mated $5 million agreement, the Yemenis will re-
ceive 25 tanks (probably T-5.4's), 100 mortars,
some artillery and small arms, and possibly addi-
tional MIG-17 aircraft. In order to make more
effective use of its equipment, the USSR is sending
additional instructors to help reorganize the
Republican army and establish new units at Hudaydah
and Ta'izz.
Few of the economic technicians who were
evacuated in December 1967 have returned -- a
year or so ago there were almost 500 Soviet civil-
ians in Yemen. During the visit of Prime Minister
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Amri to Moscow in October, however, the Soviet
Union apparently agreed to reactivate or expand
various development projects, including the
Hudaydah-Ta'izz road, the cement plant at Bajil,
and the land reclamation and cotton cultivation
project in the Tihama coastal plains. In addition,
construction of a fish canning factory and a
fishing port at Hudaydah probably will be started
up again. The USSR also agreed to furnish certain
foodstuffs and consumer goods under the same 1964
$72 million credit which provided for the fore-
going development projects, but rejected a Yemeni
request for a $50 million cash loan. Finally,
the USSR has offered 50 new scholarships to train
Yemeni students in the Soviet Union.
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USIB
UNITED STATES
INTELLIGENCE
BOARD
Economic Intelligence
Committee
Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free World, 1968
Statistical Supplement to R 14-523
Communist Economic Credits and Grants to Less Developed Countries, 1954-68
Secret
EIC R14-S23-S
March 1969
Copy No. r:
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This publication contains details on non-military
credits and grants extended by the Communist countries
since 1954 to less developed countries in Africa, the
Far East, Latin America, and the Near East and South
Asia. This information was previously included in
the annual EIC R-14 series on "Aid and Trade Activ-
ities of Communist Countries in Less Developed Areas
of the Free World." It is now being issued separately
on request to those consumers who find a continuing
need for this information.
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. For certain limited pur-
poses the term also may include Albania, Cuba, Mongo-
lia, North Korea, and North Vietnam, none of which is
normally a donor of aid. Yugoslavia is not normally
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.
The term extension refers to a commitment to pro-
vide goods and services either on deferred payment
terms or as grants. Assistance is considered to have
been extended when accords are initiated and consti-
tute a formal declaration of intent. The term draw-
ing refers to the delivery of goods or the use of
services.
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Secret
1 -1
USIB
UNITED STATES
INTELLIGENCE
BOARD
Economic Intelli ,renct
Committee
Aid and Trade Activities of Communist
Countries in Less Developed Areas of the
Free World, 1968
MIDYEAR SUPPLEMENT, 1 January-30 June 1969
Secret
EIC R14-S23
July 1969
Copy No.
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Foreword
The attached summary and tables, covering the
six months from 1 January through 30 June 1969,
constitute the midyear supplement to EIC-R14, AiJ
and Trade Activities of Communist Countries in mess
Developed Areas of the Free World, and update the
data contained in EIC R14-S23,'dated March 1969.
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 Subcommittee of the Economic
Intelligence Committee, which includes representa-
tives 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.
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 follow-
ing countries of Eastern Europe -- Bulgaria,
Czechoslovakia, East Germany, Hungary, Poland,
and Romania.
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, 1968
Secret
Copy No.
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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. For certain limited purposes the term
also may include Albania, Cuba, Mongolia, North
Korea, and North Vietnam, none of which is nor-
mally a donor of aid. Yugoslavia is not normally
included.
The term Zess 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 coun-
tries in Latin America except Cuba; and (5) all
countries in the Near East and South Asia.
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Summary . . . . . . . . . . . . . . . . . 1
I. Communist Activities in Less
Developed Areas, by Type
of Activity . . . . . . . . . . . . 7
A. Major Trends . . . . . . . . . . 7
B. Economic Assistance . . . . . . . 9
1. Credits and Grants 9
a. Extensions . . . . . . . 9
b. Drawings . . . . . . . . 10
2. Technical Assistance . . . . 10
a. Non-Military
Technicians . . . . . . t0
b. Academic Students
and Technical Trainees .2
C. Military Assistance . . . . . . . L4
1. Credits and Grants . . . -4
a. Extensions . . . . . . . 14
b. Drawings . . . . . . . . :L5
2. Technical Assistance . . . . 15
a. Military Technicians . . 15
b. Military Trainees from
Less Developed Coun-
tries . . . . . . . . . _15
D. Trade . . . . . . . . . . . . . . i6
1. Value . . . . . . . . . . . . 16
a. 1968 . . . . . . . . . . u..6
b. 1967 . . . . . . . . . . 17
2. Distribution and Relative
Shares . . . . . . . . . . . 18
a. From the Point of View
of the Communist
Countries . . . . . . . 18
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Page
b. From the Point of View
of the Less Developed
Countries . . . . . . . 19
3. Commodity Composition . . . . 20
II. Communist Activities in Less
Developed Areas, by Area
and Country . . . . . . . . . . . . 23
A. Africa . . . . . . . . . . . . . 23
1. Algeria . . . . . . . . . 23
2. Congo (Brazzaville) . . . . . 24
3. Ghana . . . . . . . . . . . . 24
4. Guinea . . . . . . . . . . . 24
5. Mali . . . . . . . . . . . . 25
6. Morocco . . . . . . . . . . . 26
7. Nigeria . . . . . . . . . . 26
8. Somalia . . . . . . . . . . . 27
9. Sudan . . . . . . . . . . . . 27
10. Tanzania . . . . . . . . . . 27
11. Tunisia . . . . . . . . . . . 28
12. Zambia . . . . . . . . . . . 29
B. Far East . . . . . . . . . . . . 30
1. Burma . . . . . . . . . . . . 30
2. Cambodia . . . . . . . . . . 31
3. Indonesia . . . . . . . . . . 31
4. Malaysia . . . . . . . . . . 32
5. Philippines . . . . . . . . . 33
6. Singapore . . . . . . . . . . 34
C. Latin America . . . . . . . . . . 34
1. Argentina . . . . . . . . . . 34
2. Brazil . . . . . . . . . . . 35
3. Colombia . . . . . . . . . . 35
4. Ecuador . . . . . . . . . . . 36
5. Peru . . . . . . . . . . . . 37
6. Venezuela . . . . . . . . . . 37
7. Other Latin American coun-
tries . . . . . . . . . . . 38
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Page
1. Afghanistan . . . . . . . . . 38
2. Ceylon . . . . . . . . . . . 3 8
3. India . . . . . . . . . . . . 39
4. Iran . . . . . . . . . . . . 40
5. Iraq . . . . . . . . . . . . 41
6. Jordan . . . . . . . . . . . 41
7. Nepal . . . . . . . . . . . . 42
8. Pakistan . . . . . . . . . . 42
9. Saudi Arabia . . . . . . . . 44
10. South Yemen . . . . . . . . . 44
11. Syria . . . . . . . . . . . . 44
12. Turkey . . . . . . . . . 45
13. United Arab Republic . . . . 45
14. Yemen . . . . . . . . . . . . 46
Appendix
General Statistical Tables . . . . . . . 49
1. Economic Aid Extended by Communist
Countries to Less Developed Coun-
tries of the Free World, 1968 . . . 51
2. Communist Economic Credits and Grants
Extended to Less Developed Coun-
tries, by Communist Area and
Country, 1954 - December 1968 . . . 2
3. Communist Economic Credits and Grants
Drawn by Less Developed Countries,
by Communist Area and Country,
1954-68 . . . . . . . . . . . . . .
4. Communist Economic Credits and Grants
to Less Developed Countries,
Extended and Drawn, 1954 - December
1968 . . . . . . . . . . . . . . . .
5. Communist Non-Military Technicians
in Less Developed Countries, 1968
6. Academic Students from Less Developed
Countries Trained in Communist
Countries, 1956-68 . . . . . . . . . :8
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7. Technical Trainees from Less
Developed Countries Trained
in Communist Countries,
1956-68 . . . . . . . . . . . .
Page
8. Communist Exports to and Imports
from Selected Less Developed
Countries, 1966-67 . . . . . . . 64
9. Percentage Share of the Communist
Countries in the Trade of
Selected Less Developed Coun-
tries, 1966-67 . . . . . . . . . 67
Illustrations
Figure 1. Communist Activity in
Less Developed Coun-
tries of the Free
World, 1964-68 . .
Figure 2. Economic Credits and
Grants by Communist
Countries to Less
Developed Countries
of the Free World,
Extensions and Draw-
ings, 1954-68 . . .
Figure 3. Trade of Communist Coun-
tries with Less Developed
Countries of the Free
World, 1960-67 . . . . .
Figure 4. Soviet Exports to and
Imports from Less
Developed Countries,
by Commodity Group,
1965-67 . . . . . . . . .
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AID AND TRADE ACTIVITIES OF COMMUNIST COUNTRIES
IN LESS DEVELOPED AREAS OF THE FREE WORLD, 1968
Summary
Major Trends
The growth of Communist aid and trade activity
in the less developed countries of the Free World
has tended to level off since 1964-65 (see Fig-
ure 1).* Annual deliveries of economic aid have
declined since 1964, although $6 billion in com-
mitted aid remains to be delivered. Trade has
grown at a modest rate since 1965, while Communist
programs of technical assistance and academic and
technical training appear to have remained at
about their 1965 levels. Drawings on Communist
military aid, in spite of the large-scale Soviet
resupply of the Arab states in 1967-68, have
leveled off at something on the order of $400
million a year.
During the past several years the Soviets have
adopted a more cautious approach to both economic
and military aid. They have been more discrimi-
nating in the selection, implementation, and terms
of aid. Greater attention is given to determining
the suitability of particular projects for particu-
lar countries, and fewer large, unspecified lines
of credit are extended. Terms of Soviet credits
have hardened somewhat even for its traditionally
favored clients. While not refusing requests for
some form of military aid, the Soviets have shown
increasing concern over the amounts and types of
aid provided and, in the Middle East, have taken
measures to insure more effective use of its mili-
tary aid.
In this report the term extension refers to a
commitment to provide goods and services either
on deferred payment terms or as grants. Assist-
ance is considered to have been extended when
accords are initialed and constitute a formal
declaration of intent. The term drawings refers
to the delivery of goods or the use of services.
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The USSR also has taken a number of steps re-
cently to promote the growth of its trade with the
less developed countries. The conclusion of a
number of short-term commodity agreements to pur-
chase tropical products and agreements to import
products manufactured in enterprises built with
Soviet assistance are consonant with the Soviet
position that only trade can be the basis for per-
manent and growing economic ties. Such agreements
also minimize the buildup of unused payment bal-
ances in the less developed countries.
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