(SANITIZED)PROSPECTS FOR SOVIET ECONOMIC RELATIONS WITH EASTERN EUROPE IN 1971-75

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700010099-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 21
• Document Creation Date: December 22, 2016
• Document Release Date: February 1, 2010
• Sequence Number: 99
• Publication Date: August 1, 1971
• Content Type: IM

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0141() F A f -rj-M Confiden4iaf
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Prospects For Soviet Economic Relations
With Eastern Europe In 1971-75
Confidential
ER IM 71-147
August 197?
Copy No. 1
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WARNING
This document contains information affec-ng the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
GROUP 1
Cndoded Goan o .,o.no I:
downryrndinry and
drdooiGmtian
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CONFIDENTIAL
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
August 1971
INTELLIGENCE MEMORANDUM
PROSPECTS FOR SOVIET ECONOMIC RELATIONS
WITH EASTERN EUROPE IN 1971-75
Introduction
1. In the last four years Soviet trade with Eastern Europe has grown
at 10% annually, keeping pace with the growth of total Soviet trade. The
1971-75 trade agreements envision a continued high rate of growth in
Soviet - East European trade and an acceleration in their mutual deliveries
of machinery and equipment. A step-up in economic integration within the
Council for Mutual Economic Assistance (CEMA) is also planned. This
memorandum discusses the projected trade between the USSR and Eastern
Europe during the current five-year plan period (1971-75) and identifies
the more important areas of Soviet - East European cooperation associated
with the renewed interest in economic integration within CEMA.
Discussion
Back round
2. The USSR conducts more than half of its trade with Eastern
Europe (see the chart), a share it has maintained for the past two decades.
During 1967-70, Soviet trade with Eastern Europe has grown at an average
annual rate of about 10%, reaching a value of $13.4 billion in 1970.
1. The development of trade during the four years 1967-70, rather than
in the full five year plan period (1966-70), more accurately reflects the
recent growth in Soviet - East European trade. The CEMA foreign trade
price revision begun in 1965 and fully implemented by 1966 reduced prices
of many goods and resulted in a decline in the value of Soviet - East
European trade in 1966, although the volume increased (see Table 1).
Note: This memorandum was prepared by the Office of Economic Research
and coordinated within the Directorate of Intelligence.
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Distribution of Soviet Foreign Trade in 1970
The growth of Soviet trade with Poland has been the most dynamic during
this period, growing an average of more than 14% per year. As a result,
Poland has taken over second place from Czechoslovakia. East Germany,
however, remains the USSR's chief trade partner. Soviet trade with Hungary
also has grown faster than the average rate with Eastern Europe. A
combination of reduced CEMA foreign trade prices and the reorientation
of Romanian trade to the West precipitated a decline in Soviet-Romanian
trade in 1966, from which recovery has been slow (see Table 1).
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Soviet Trade Turnover with Eastern Europe a/
Million US $
Average Annual Increase
(Percent)
1965
1966
1967
1968
1969
1970
1966-70
1967-70
Bulgaria
1,204
1,351
1,537
1,841
1,949
2,018
10.9
10.6
Czechoslovakia
1,961
1,813
1,950
2,028
2,224
2,437
4.4
7.7
East Germany
2,648
2,645
2,829
3,112
3,368
3,661
6.7
8.5
Hungary
1,061
1,016
1,183
1,344
1,419
1,644
9.2
12.8
Poland
1,507
1,536
1,815
2,082
2,323
2,611
11.6
14.2
Romania
844
792
819
873
926
1,021
3.9
6.6
Total
9,225
9,154
10,131
11,280
12,210
13,392
7.7
10.0
a. Because of rounding, components may not add to the totals shown.
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3. The composition of Soviet exports to Eastern Europe has not
changed a great deal in recent years (see Table 2). Fuels, raw materials,
and semimanufactures continue to account for a significant although a
declining share of the total. Exports of some items such as crude oil, pig
iron, and steel increased considerably less in value than in quantity because
of reduced CEMA prices. Other crude materials (for example, coke and
iron ore) increased very little, and some (for example, hard coal and cotton)
actually declined in volume. Grain exports rose substantially during 1965-69,
rising from 2.8 million tons to 4.4 million tons, but the increase in volume
(57%) was substantially less than the value increase (83%).
4. The large and growing volume of Soviet exports of raw materials
to Eastern Europe, however, is not sufficient to cover the ever-growing East
European requirements for these goods. Supply constraints in the USSR
and the need for the USSR to export these commodities to the West to
earn hard currency probably have combined to prevent the USSR from
providing a greater share of Eastern Europe's total requirements.
Consequently, being generally in deficit in raw material resources, the East
European countries have had to turn to Free World sources to cover part
of their requirements (see Table 3). Nevertheless, except for East Germany
and Romania, East European imports of such commodities from the USSR
have grown faster than similar imports from the Free World, although they
have slowed down in 1966-69 compared to 1961-65.
5. Soviet exports of raw materials and semimanufactures to East
Germany fell between 1965 and 1969, although they remained much the
largest in Eastern Europe. Soviet deliveries to East Germany of mineral
fuels in 1969 were about $20 million below the 1965 level as the sharp
decline in petroleum products, coal, and coke more than offset the
substantial increase in Soviet deliveries of crude oil. Adding to East German
problems was the decline in Soviet exports of base metals and manufactures,
which in 1969 were $8 million less than in 1965. To compensate for this
decline in vital raw materials, East Germany had to go to the West -
particularly to West Germany - to obtain adequate supplies. It would
appear that Moscow considered East Germany's dependence on Soviet
materials to be excessive in view of its own supply problem.
6. Soviet exports of machinery and equipment increased about 70%
during 1966-69, or from 17% to about 22% of total Soviet exports to
Eastern Europe. Increased deliveries of machinery and equipment to East
Germany (three times the 1965 level) and to Poland accounted for almost
60% of the overall increase to Eastern Europe. Almost across the board,
this increase can be traced to the greatly expanded Soviet deliveries of
transportation equipment which accounted for 50% of the overall increase
to Eastern Europe and, for East Germany and Poland, 45% and 34%,
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Soviet Exports to Eastern Europe, by Commodity a/
Value in Million US $
1_?o5
1966
1967
1968 1969
Value
Percent
Value
Percent
Value
P
ercent
Value
Percent
Value
Percent
4,553
100.0
4,692
100.0
5,039
100.0
5,636
100.0
6,198
100.0
Machinery and equipment
787
17.3
960
20.5
1
100
21
8
1
,
.
,230
21.8
1,340
21.6
Complete enterprises
Tractors and a
i
ul
213
4.7
246
5.2
276
5.5
301
5
3
gr
c
tural machines
Trans
ortati
i
140
3.1
156
3.3
166
3.3
151
.
2
7
304
4.9
p
on equ
pment
161
3.5
252
5.4
320
6.4
394
.
6.9
146
439
2.4
7.1
Fuels, lubricants, and related
755
16.6
734
15.6
758
15
0
materials
.
824
14.6
940
15
2
Hard coal and coke
Oil and oil
d
265
5.8
243
5.1
226
4.5
204
3
6
2
.
pro
ucts
470
10.4
466
9.9
490
9.7
566
.
10.0
18
650
3.5
10.5
Ores and concentrates, metallic
6.0
254
5.4
273
5
4
29
.
6
5.3
303
4.9
Iron ore
5.3
231
4.9
248
4.9
274
4.9
277
4.5
Ferrous metals
718
15.8
700
14.9
723
14
4
766
.
13.6
910
14.7
Pig iron
Rolled fe
106
2.3
101
2.2
108
2.1
137
2
4
167
rrous metals
510
11.2
498
10.6
510
10.1
520
.
9.2
614
2.7
9.9
Nonferrous metals
210
4.6
217
4.6
229
4
6
276
.
4.9
261
4.2
Chemicals
123
2.7
135
2.9
144
2
8
171
.
3.0
212
3.4
Wood and wood products
186
4.1
200
4.3
220
4
4
249
.
4.4
279
4.5
322
7.1
332
7.1
255
5.6
266
5.7
424
9.3
465
9.9
587
11
6
574
1
.
0.2
556
9.0
Grains
Other food
200
4.4
188
4.0
271
5.4
277
4.9
322
5
2
Manufactured consumer
oods
153
3.4
202
4.3
229
4.5
194
3.5
122
.
2
0
g
71
1.6
75
1.6
86
1.7
103
1.8
112
.
1.8
Other
112
2.5
134
2.9
152
3
0
155
2
.
.8
178
2.9
Unspecified b/
645
14.2
562
12.0
563
11
2
789
14
.
.0
954
15.4
a. Because of rounding, components may not add to the totals shown. Percentages are derived from unrounded data.
b. Believed to include Soviet military-related deliveries to Eastern Europe.
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.;~P--. ^~' .,:i~ ,. ?.Y '~ Y. t
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Soviet and Free World Exports to Eastern Europe
of Raw Materials and Semimanufactures a/
Million US $ b/
Percent Change S/
Soviet Exports
Free World Exports
Soviet Exports
Free World Exports
1960
1965
1969
1960
1965
1969
1965/60
1969/65
1965/60
19
69/65
Bulgaria
123
262
441
64
119
163
112
68
85
37
Czechoslovakia
304
534
647
333
324
336
75
21
-3
4
East Germany
703
936
903
258
328
456
33
-4
27
39
Hungary
177
311
444
139
187
240
75
43
34
29
Poland
260
378
594
327
389
493
46
57
19
27
Romania
163
232
224
95
182
329
42
-3
92
80
Total
1,730
2,652
3,253
1,216
1,529
2,017
53
23
26
32
a, Based on Soviet and Free World statistics. Soviet data has been adjusted to US Department
of Commerce categories which include the following: crude materials, inedible, except fuels;
mineral fuels, lubricants, and related materials; animal and vegetable oils and fats; chemicals;
and base metals and manufactures.
b. Because of rounding, components may not add to the totals shown.
c. Derived from unrounded data.
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CONFIDENTIAL
respectively. Bulgaria, however, remains the single largest market in Eastern
Europe for Soviet machinery and equipment, accounting for roughly 30%
of such sales since 1965.
7. Soviet imports from Eastern Europe feature machinery and
equipment, accounting for 40%-45% of the total annually (see Table 4).
Imports from Eastern Europe account for roughly two-thirds of total Soviet
imports of machinery and equipment, with East Germany supplying
one-fourth of the imports from all sources. Consumer goods, mainly
manufactured items, also account for a significant share of Soviet imports
from Eastern Europe. Imports of consumer goods have -?4sen steadily in
recent years but their share has declined somewhat. Eastern Europe,
nevertheless, is the chief source of Soviet imports of manufactured consumer
goods, accounting for 70% of the Soviet world total in 1969. Leading
categories are clothing, shoes, and furniture.
Continued High Growth Rates Forecast Through 1975
8. According to the recently concluded trade agreements, Soviet
trade with Eastern Europe will increase 50% compared with the previous
five-year period, totaling about $84.1 billion during 1971-75. The implicit
average annual growth rate of nearly 8% would raise the level of trade
from the $13.4 billion achieved in 1970 to about $19.4 billion in 1975.
The individual trade agreements envision trade with Bulgaria and East
Germany growing 10% or more per year, and with Czechoslovakia and
Hungary, about 7% and 8%, respectively. Much lower rates are implied for
Soviet trade with Poland and Romania - about 4% and 5%, respectively.
It is estimated, however, that Soviet trade with Eastern Europe will grow
even more than provided for in the agreements. The USSR regularly
surpasses the targets set in its five-year trade agreements with Eastern
Europe. The long-term trade agreements are less detailed in the goods to
be traded than the annual agreements which often provide for deliveries
not specified in the five-year agreements. The 1961-65 trade agreements
with Eastern Europe were overfulfilled by 18%, while those of 1966-70
were overfulfilled by more than 6%. In fact, early in 1966 the USSR
projected the actual value of trade with Eastern Europe during 1966-70
at some $56 billion, rather than the $53 billion stipulated in the long-term
trade agreements; the overfulfillment of 6% was thus anticipated. The
individual 1971-75 trade agreements are briefly discussed below.
USSR-Bulgaria
9. The trade agreement provides for a 60% increase in 1971-75
compared to 1966-70, with a trade turnover of about $13.9 billion for
the five-year period. The implicit average growth rate of nearly 11% per
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Soviet Imports from Eastern Europe, by Commodity a/
1965
1966
1967
1968
Value
Percent
Value
Percent
Value Percent
Value
Percent
Value
Percent
Total
4,673
100.0
4,462
100.0
5,09
3 100.0
5,644
100.0
6,011
100.0
Machinery and equipment
2,114
45.2
1,926
43.2
2,18
5 42.9
2,509
44.5
2,679
44.6
Railroad rolling stock
295
6.3
247
5.5
26
4 5.2
264
4.7
302
5.0
Motor vehicle garage equipment
143
3.1
139
3.1
16
4 3.2
198
3.5
228
3.8
Ships and marine equipment
291
6.2
292
6.6
32
9 6.5
386
6.8
379
6.3
Fuels, lubricants, and related
189
4.1
175
3.9
17
6 3.5
160
2.8
165
2
7
materials
Hard coal
103
2.2
112
2.5
11
9 2.3
107
1.9
11=
.
1.9
Ores and concentrates, metallic
145
3.1
121
2.7
11
4 2.2
125
2.2
142
2.4
Ferrous metals
107
2.3
89
2.0
9
0 1.8
102
1.8
127
2.1
Chemicals
198
4.2
213
4.8
25
6 5.0
293
5.2
327
5.4
Consumer goods
1,188
25.4
1,266
28.4
1,53
3 30.1
1,636
29.0
1,712
28.5
Food
304
6.5
290
6.5
35
1 6~9
364
6.5
388
6.5
Manufactured consumer goods
884
18.9
976
21.9
1,18
2 23.2
1,272
22.5
1,323
22.0
259
5.5
248
5.5
27
4 5.4
278
4.9
257
4.2
Unspecified b/
472
10.1
424
9.5
46
4 9.1
540
9.6
603
10
0
.
a. Because of rounding, components may not add to
the totals shown.
Percentages are derived from unrounded
data.
b. Belived to include East European deliveries of uranium and some military-related items to the USSR.
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year matches the actual growth rate of the previous five-year period. The
Soviet share of Bulgarian trade is slated to increase to 58% by 1975
compared to an estimated 53% in 1970. Mutual deliveries of machinery
and equipment are expected to increase by nearly 100% and to rise to
about 42% of the total turnover (compared with 33% in 1969).
USSR-Czechoslovakia
10. The trade agreement calls for a 43% increase in trade during
1971-75 compared to the value of trade during the previous five years,
reaching a cumulative total of S 15.0 billion. This target probably will be
surpassed. While Czechoslovakia's overall trade plans are vague at present,
Czechoslovak officials have stated that during 1971-75 total trade is planned
to grow at about 8% per year. On the assumption that the USSR will
maintain at least its present one-third share of Czechoslovak trade, J it
is estimated that their mutual trade will grow on average by about 8%
per year, compared with the 7% growth rate implied in the five-year trade
agreement. 3/ Mutual deliveries of machinery and equipment are to increase
by more than one-half (more than 60%, according to some reports). The
USSR is to provide Czechoslovakia with "substantial quantities" of raw
materials, especially crude oil, which - according to a separate agreement --
will total 65 million tons, roughly a 50% increase over deliveries during
1966-70.
USSR - East Germany
11. According to the trade agreement, the two countries will exchange
goods worth some $24.4 billion during 1971-75, an increase of about 57%
compared to the 1966-70 period. The implicit average annual growth is
almost 10%, somewhat faster than in the previous five-year period. Soviet
deliveries of machinery and equipment reportedly are to nearly triple in
value, 4/ while East German deliveries are to increase by about 50%;
together, they are to total $11.1 billion during 1971-75, roughly double
2. For the past 15 years, with two exceptions, the USSR has accounted
for one-third or more of Czechoslovak trade.
3. Recently a Soviet trade official stated that trade would grow annually
by approximately 8%.
4.
machinery. and equipment will account
for 45% of East German imports from the USSR in 1975 compared to
a current level of "nearly 25%. " According to Soviet trade statistics,
machinery and equipment accounted Jbr 18% of Soviet exports to East
Germany in 1969 and only 8% in 1965.
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that of the previous five years. The USSR also will continue traditional
deliveries of raw materials and semimanufactures, including crude oil which
to total more than 64 million tons compared with 38 million tons in
1966-70. Prospects for other materials are mixed, with some declining (for
example, coal and iron ore) and some remaining at about the same level
as in 1970 (for example, ferrous metals), so that by 1975 the total value
of such deliveries may have changed very little. East German exports of
consumer goods are to total some $2.6 billion during 1971-75.
USSR-Hungary
12. The trade agreement calls for trade to increase 56% during
1971-75 compared to the previous five years, reaching a total value of
$10.3 billion. Implicit in this figure is an average annual increase of 7.7%.
Both the USSR and Hungary, however, have given a target of $2.4 billion
by 1975, implying an average annual growth rate of 8.3%. According to
the agreement, machinery and equipment are to account for 50% of
Hungarian exports (45% in 1969). Overall, mutual deliveries of machinery
and equipment are expected to increase 65% during 1971-75, faster than
total trade. Soviet raw material exports will continue to satisfy the bulk
of Hungary's import requirements as follows: oil, 85%; iron ore, 95%; pig
iron, 97%; phosphate fertilizers, 91%; and lumber, 85%.
USSR-Poland
13. Soviet trade with Poland is to amount to $14.6 billion during
1971-75 according to the long-term agreement, or about 40% more than
the value of goods traded during 1966-70. This means an average annual
increase of less than 4% from the 1970 level. Soviet trade with Poland,
however, will probably grow at more than double that rate. Poland will
be receiving a billion rubles in economic aid from the USSR presumably
during 1971-75. The recently announced (June 1971) supplemental trade
agreement, according to which Soviet-Polish trade during 1972-75 is to
exceed the original plan, probably is connected to the Soviet aid package.
Meanwhile, the protocol for 1971 calls for a 9% increase in trade compared
to 1970. There also have been statements in the Soviet and Polish press
citing a 13% average annual increase in their mutual trade during 1971-75,
but at the present time there is insufficient evidence to support claims for
such high rates of growth. A growth rate of 9% annually is more likely.
According to the original agreement, mutual deliveries of machinery and
equipment are to increase 80%, including a 60% increase in Polish deliveries,
which are to exceeed $5 billion during 1971-75 (implicitly, Soviet deliveries
are to increase more than 80%). Increased exports of Soviet raw materials
to Poland are to include 48 million tons of oil, 53 million tons of iron
ore, eight million tons of pig iron, and three million tons of rolled ferrous
metals.
- 10 -
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USSR-Romania
14. The Soviet-Romanian long-term trade agreement provides for
exchanges of goods valued at $5.9 billion during 1971-75, a 33% increase
over the volume of trade during 1966-70, and an average annual increase
of less than 5%. It is believed that this agreement also will be overfulfilled,
althou rh probably for different reasons than for the other countries. The
Ron-,to (,ts apparently have been careful not to commit themsulves to a
voltart.;,~ trade which might seriously limit their flexibility in dealing with
the Soviets. Virtually no increase in trade was provided for in the 1966-70
trade agreement, for example, but, following an initial decline in 1966,
Soviet-Romanian trade grew at an average annual rate of nearly 7% over
the next four years. The 1971 protocol also calls for a 7% increase.
Accordingly, it is estimated that Soviet-Romanian trade will grow at about
the same rate as during the previous four years.
15. Our forecast for 1",71-75 is for a minimum of $87.6 billion for
Soviet trade with all six East European countries (see Table 5). This
represents a projected overfulfillment of about 4%. Trade is likely to be
even larger. Already, there has been a Soviet statement to the effect that
trade with Eastern Europe in 1975 is to be 58% greater than in 1970.
This implies an overfulfillment of nearly 6%, with trade growing at an
average annual rate of 9.6% (based on the value of trade in 1970), which
would raise trade in 1975 to some $21.2 billion.
16. An important factor in the projected growth of Soviet trade with
Eastern Europe is the planned acceleration of mutual deliveries of machinery
and equipment. A review of the trade agreements suggests that such
deliveries will grow at least 50%o faster than the total trade turnover - that
is, by about 13% or more per year - and that Soviet exports of machinery
and equipment to Eastern Europe will develop at a higher rate than imports,
especially to East Germany and Poland. Overall, it is estimated that the
Soviet deliveries will approximately double their value compared to 1966-70.
The USSR nevertheless will remain a net importer of these goods from
Eastern Europe.
17. Except for the modification in the structure of Soviet exports
because of planned increases in machinery and equipment deliveries, the
goods to be exchanged between the USSR and Eastern Europe will remain
largely the same as during the previous five-year plan period. Soviet exports
to Eastern Europe will continue to consist primarily of fuels, raw materials,
and semimanufactures. During 1971-75, for example, the USSR is scheduled
to deliver 243 million tons of oil (a 76% increase over 1966-70), 33 billion
cubic meters of natural gas (four times the 1966-70 level), and 94 million
tons (iron content) of iron ore (a 30% increase). Imports from Eastern
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 Soviet - East European Five-Year Trade Agreements and Actual Trade
1971-75
(Percent)
Trade Trade
Agreement Actual Agreement Estimate
Bulgaria
7,800
Czechoslovakia
11,110
East Germany
14,440
Hungary
6,330
Poland
8,890
Romania
4,220
Total
52,790
Trade Trade
Agreement Actual iS57-70 Agreement Estimate
8,696
13,890
13,890
8.8
10.9
10.6
10.9
10,452
15,000
15,440
4.2
4.4
7.7
7.0
15,615
24,440
24,440
2.9
6.7
8.5
9.8
6,607
10,330
10,500
5.9
9.2
12.8
7.7
10,367
14,560
17,030
5.6
11.6
14.2
3.7
4,430
5,890
6,280
0
3.9
6.6
4.8
56,167
84,110
87,580
10.0
7.7
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10.9
8.0
9.8
8.3
9.0
7.0
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Europe will continue to be dominated by machinery and equipment and
manufactured consumer goods. Included in the Soviet shopping list for
1971-75 are chemical plant and equipment worth nearly $1.5 billion (three
times the 1966-70 level), railroad and water transportation equipment worth
roughly 1.3 billion (no apparent change over 1966-70), and manufactured
consumer goods worth t ;hly $9.5 billion (about a 50% increase over
1966-70).
Renewed Interest in Economic Integration
18. To some degree, the projected acceleration of mutual deliveries
of machinery and equipment is a reflection of the planned step-up in
economic cooperation among the CEMA member countries. The renewed
emphasis on economic integration stems in part from the growing realism
of most East European countries about what imports of Western capital
goods can and cannot do to solve pressing economic problems. Eastern
Europe's trade with the West will continue to grow, but the difficulties
in expanding exports to the West, as well as the significant indebtedness
to the West, snakes increased trade and cooperation within CEMA
increasingly attractive.
19. In general, the CEMA countries now appear to be somewhat more
amenable to the idea of the coordination of their long-run economic plans
at the production stage than in the past, when cooperation meant chiefly
the coordination of mutual trade. This renewed interest in economic
integration within CEMA, however, does not mean that these countries are
accepting the idea of supranational planning as proposed by Khrushchev
in 1962. East European economic and political nationalism is still too strong
a force to permit this, as is their general distrust of Soviet intentions.
20. The progress of economic integration will depend to some degree
on Soviet efforts in stimulating Eastern Europe's interest in CEMA
integration. To help promote the integration of the CEMA econ:,r?ies, the
USSR will have to become more involved in integration schemes than it
has in the past. In the absence of Soviet involvement, Eastern European
integration might conceivably create autonomous bodies which eventually
could threaten Soviet economic control over Eastern Europe. It is extremely
unlikely, however, that the USSR will permit integration to develop to this
;point. For example, it is very doubtful that the CEMA organization
"Intermetal" would ever evolve into anything comparable to the European
Coal and Steel Community. Short of that,, further integration would tend
to strengthen Soviet control, and therefore it is the East Europeans who
feel threatened by integration. Except perhaps for the Bulgarians, the East
Europeans likely will stress the principle of mutual advantage in their
economic dealings with Moscow. In so doing, they will attempt to preserve
whatever independence of the USSR they may njw possess.
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Areas of Soviet - East European Cooperation
21. The curlier impasse over the scope and forms of future economic
cooperation with Eastern Europe was apparently resolved in part at the
23rd special CEMA session of April 1969. Soviet participation in integration
schemes was discussed
the USSR plans "to organize on a broad
scale the specialization and cooperation of its industry with other CEMA
countries in the manufacture and delivery of assemblies and components
for the production of automobiles, buses, and roadbuilding and other types
of machinery and equipment and also in the development of the production
of computer equipment." the efforts of the CEMA
countries were being combined in research and development in the
electronics, machine building, and chemical industries.
22. Agreement already has been reached on a number of specific
cooperation projects within CEMA between the USSR and various Fast
European countries, some bilate?al and some multilateral. In the automotive
industry, for example, the USSR has concluded agreements with Bulgaria,
Czechoslovakia, 1BIungary, and Poland whereby, in exchange for Soviet
automobile,, these countries v.-,e to deli~,cr various parts to the VAZ plant
in Tolyatti. A Soviet credit to Cz,choslov;tkia to be drawn down during
1971-7; will enable the latter to more than double the output of a heavy
Tatra truck plant to over 7,000 units per year. Eventually, about half the
output will go to the USSR. In addition, the USSR and Hungary have
extencied an earlier agreement according to which the USSR ,specializes it
the production it' rear-end suspensions for buses, while Hungary specializes
in the production of front-end suspensions.
23 In other areas, the USSR has concluded various cooperation and
specialization agreements with all the Last European countries (except
Romania) on the development and production of individual tyl,~,s of
computers and auxiliary equipment. The Soviet agreement with Hungary
on computer technology by itself envision:. mutual trade of nearly
$280 million during 1971-75. Agreements also have been concluded with
nearly all the CEMA countries on cooperation in the machine tool building
industry as well as expanded cooperation in the chemical industry wher-by
new facilities are to be built throughout Eastern Europe with Soviet
technical assistance. This will bring these countries to an even higher level
of interdependence in chemicals than has been achieved in the past. Major
products subject to coordination during 1971-75 will include advanced types
of manmade fibers, plastics, synthetic rubber, olefins, and other items.
24. In addition to cooperation involving installations within their own
borders, the East European countries will continue to invest in various
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facilities in the USSR, particularly In the raw materials industries. In
exchange for increased Soviet deliveries of raw ntat.erials, the East European
countries; have agreed to it "more extensive participation in the development
of the corresiionding production capacities in the Soviet Union."
the USSR has concluded agreements (the details of which
are not known) with Czechoslovakia and East Germany for their
participation in the expansion of the Soviet petroleum and gas Industries;
with Poland and Ihingary for I'nrther developing the Drt! hba oil pipeline;
with Bulgaria for increasing the capacities of the Soviet gas, timber, cellulose,
and metallurgical industries; with Romania for increasing !:apacities in the
Soviet iron ore industry; and with Ilungary for increasing the production
of cardboard, asbestos, and phosphorous-bearing raw materials and
fertilizers.
25. The newly created CI?MA IntcrnaIlonal Investment Bank (II13) j
probably will' ,participate in the financing (at least partly) of those projects
which either involve three or more countries or require hard-currency
purchases (Western equipmenr,). h None of the above projects have bee IT
singlet) out as candidates fot? financing by this new hank so car, but to
the extent that Western equipment or technology is to be used, it slic:uid
rio: be surprising to find the 1113 involvtid. Moreover, to the extent that
the 1113 participat':s in the financing of these projects on Soviet territory,
the cost to the Isar; Europeans will he spread avid therefore will he less
cif a burc'jen for any single country. It may well he th;rt the establishment
of the 813 was a necessary prerequisite to East European acceptance of
the persistent Soviet demands to invest in its raw materials industries.
Maintenance of the Soviet lfcgc?mott!i over Pastern Ftirojrc?
20. All evidence points to the USSR contiuusng as the dominant tratk-
part!ter of all the East l.uroI)ean countries. The USSR will continue to
account for more than one-fourth of Romanian trade atnd roughly onc?third
of ('zechoslovak track! (sce Table (1), The USSIt is expected to increase
further its already suhst;tnti,,f share of the other (our coulrtric", Irade:
l8ulgaria. from the current level of about 53'; lo af:ojil 58',' by 1015.
.5, the (l;31,'1 (aveNtint?rt( )herb liega/t ol,c rations o/t I ./,lrtlatrt' /V . 1
/(s e11arttr al;;ie.s for the floating of bonds nu intonational ennu'i' rnarAcis,
which (logct1161 tc':tlt dcl:oslts from /tort (%//rrntt!rtr~1 cotuttric?s) Well. will
!:..:'isle .....:: :; tl:: l ;..: t ~. 1:;,. a c :... , .. '!' J:..... tic.;....c.. , ......... ,.,.
c?.t'am/rle. arc to /r,1-? Irl ~lv?1 ntillton cInez:: 11171. irtcltrrl:s:g curb.