NATIONAL CONFERENCE ON "FOREIGN ASPECTS OF U.S. NATIONAL SECURITY" "THE SOVIET ECONOMIC AND TRADE OFFENSIVE" BY ALLEN W. DULLES DIRECTOR OF CENTRAL INTELLIGENCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67-00318R000100660001-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 12
• Document Creation Date: December 23, 2016
• Document Release Date: May 2, 2013
• Sequence Number: 1
• Publication Date: February 25, 1958
• Content Type: OPEN SOURCE

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NATIONAL CONFERENCE
ON
"THE FOREIGN ASPECTS OF U.S. NATIONAL SECURITY"
"THE SOVIET ECONOMIC AND TRADE OFFENSIVE"
By
Allen W. Dulles
Director of Central Intelligence
February 25, 1958
The subject assigned me this morning is the Soviet economic
and trade offensive. I shall broaden the term "Soviet" to include
what we often refer to as the Communist Bloc, that is, the Soviet
Union, the European Satellites, and Communist China. Each plays
a role in the economic and trade offensive of international communism.
As Director of the Central Intelligence Agency, it is not my
task to recommend policies. It is rather to analyze as accurately
as possible and present the facts as a basis for determining policy.
This I propose to do in describing the Communist trade and
aid offensive.
It is not always easy to get the facts regarding the Communist
world. They throw a shroud of secrecy and security around all
sensitive areas of their policies and actions. In the field of their
trade and aid, however, many of the basic facts are well known.
Of course they try to keep secret the details of the arrangements
among the countries in the Communist Bloc. Also they are not
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anxious for the facts to be known about some of their arms deals
with countries outside of their Bloc.
However, as regards the Soviet's general aims and objectives
in the field of economic and trade penetration, their actions and the
public assertions of their leaders are a helpful guide.
Too often people tend to ignore the statements of those whose
credibility they may have reason to question. Many years ago, Hitler
in MEIN KAMPF wrote what he proposed to do. He did it. Little
attention was paid to his book until after he had gone to war.
In the case of the Soviet Union there has been an extraordinary
consistency over the years in basic policy declarations and the
subsequent actions of the Communist leadership,
The statement issued by the Soviet Union and their allies and
satellites in Moscow last November on the 40th anniversary of the
Bolshevik revolution might well have been written by Lenin. The
declaration of the recent Afro-Asian Conference in Cairo was on all
fours with the program of the Congress of the Peoples of the East
which the Soviet held in Baku in 1920. Lenin himself predicted in
1923 that the outcome of the struggle would be determined by the
population masses of Russia, India and China.
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Tactics change -- the timetable is altered as circumstances
demand. The over-all objectives and strategy remain much the same.
The evidence as we now see it indicates that the USSR, in
striving toward their objectives, do not propose to use their military
power in a manner which would involve the grave risk of war. They
probably still estimate that our power of retaliation could more than
match their offense. They have a healthy respect for our nuclear
capability and our means of delivering nuclear weapons.
In any event they have now alerted us to the dangers which
lie in their growing military capabilities; they have shaken any
complacency, and shown us that we could not always expect to be
first in all phases of military endeavor. They have the skills --
scientific and technical -- to do in the military field what we can do.
If they work on a particular project for longer hours with more
manpower and with more equipment -- human and material -- than
we, they can accomplish a particular objective before we do. This
should have been accepted as axiomatic because neither the U. S.
nor any other country has any monopoly on brains.
Their Sputniks and missiles have also taught us that we
cannot afford to be second best in any important military field.
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This particular Conference will be considering whether we
can afford to be second to the Soviet in supporting friends and allies
and in our relations with the uncommitted newly developing countries
of the world which look abroad for help in their industrialization and
in all that goes to raising the standard of life.
The President in his recent message to the Congress cited
the three major objectives of our Mutual Security Program. One
of these was the forestalling of Communist subversion or massive
economic penetration of other nations.
In pressuring for a period of relaxation of tensions and
co-existence it seems clear that the Soviet desire this for two
purposes: first, to build their military strength and to develop the
highly complicated modern weapons -- ballistic and nuclear -- and,
second, to press forward in the area where they probably consider
us most vulnerable; the winning of the allegiance and, eventually the
control of the uncommitted nations of the world by trade and aid, and
by subversion.
They probably estimate that if they can induce us to devote
our resources almost exclusively to the military field, they can
the more easily break our economic and cultural ties with other
nations and win them over.
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Today, February 25th, is the tenth anniversary of the takeover
of Czechoslovakia by Communism. Not a shot was fired. It was not
guided missiles but the so-called "guided democracy" which did the
trick.
In Prague last July, Khrushchev said, "We can fight without
bombs and we are convinced that our cause will be victorious," He
added that he would not predict in which countries communism would
consolidate itself first but that once nations learned the advantages of
socialism they will "organize and achieve a change in the social order".
Our own grandsons, he recently predicted to an American
correspondent, "will live under Socialism in America, too." Again,
speaking at a reception at the Albanian Embassy last year he laid
down the challenge: "If the capitalist gentlemen wish to help the
backward nations as they constantly and clamorously declare, they
are welcome to do this .
The underdeveloped nations, however,
must bear in mind that the capitalist never gave anything gratuitously
because this contradicts the very essence of capitalism." And, last
October, he explained that the "wars are not necessary for the victory
of socialism, capitalism will inevitably vanish from the historical
arena just as was the case of feudalism which made room for capitalism."
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These are the theories they openly preach to the world and they
propose to go out into the world with missionaries of trade and aid
to spread this doctine.
While the Communist leaders have suppressed and liquidated
more peoples of alien races and views within their area of control
than any dictator or conqueror of the past, they ally themselves
abroad with nationalistic aspirations. While they deny freedom to
their satellites in Eastern Europe, they attack those countries which,
like Britain, have voluntarily given freedom to many more peoples
than the entire population of Russia itself.
We would be negligent, however, to ignore the fact that their
trade and aid programs backed with subtle propaganda have had a
significant impact. The farther removed a country is from any real
appreciation of Soviet actions in their own area of domination, Hungary
or East Germany for example, the greater is the impact of Soviet
propaganda and of their deliveries of arms of industrial products and
"know how."
In effect, they will buy anything, trade anything, and dump
anything if it advances communism or helps to destroy the influence
of the West.
They are careful to choose the countries where they can tailor
their program to the advancement of their political aims. But if this
is demonstrable, the terms of trade and aid are seemingly attractive.
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Interest rates are low and, with good communist-type behaviour on
the part of the recipients, it may be entirely remitted.
The strings are invisible. They can move quickly. They have
no budgetary limitations or legislative restrictions. Their only
"Battle Act" is the battle to advance Communist aims. They have
vast stores of obsolescent military equipment which looks new and
shiny to countries in the infancy of military development. It can be
given away without affecting the Soviet's own military position. They
will take in barter payment agricultural products and raw materials
which we, because of our surpluses, find it impracticable to accept.
Now, to get down to cases:
The total amount in credits and grants extended by the Sino-Soviet
Bloc for economic development and military aid to countries in the
Free World outside the Bloc over the last three years amounts to the
equivalent of about $2 billion.
Over 95% of this aid has been concentrated on six countries --
Afghanistan, Egypt, Syria, India, Indonesia and Yugoslavia. In
these countries over the past two and a half years Soviet programs in
aggregate have been more than double those of the free world. Of course,
many other countries have received attractive offers and many are today
in the throes of deciding whether to decide to seek aid from the West or
from the Soviet Bloc.
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The Soviet programs have also included a large scale movement
of technical personnel from the Communist Bloc to the Free World
countries where aid is extended. More than 2,000 Bloc technicians
are now active in nine of the newly developing countries in which U. S.
comparable personnel number less than 1, 000. Also large numbers of
technicians are going from these countries to Moscow, Prague, and
Peiping for their training.
From the viewpoint of the strain on the Soviet economy and to
enable comparison with the U. S. foreign aid effort, it is important
also to consider Soviet aid to other members within the Communist Bloc.
Over the past decade more than $1. 6 billion has been pumped
into China in the form of military credits and military hardware and
perhaps as much as $500 million has been given to Red China outright.
In addition, in the form of non-military aid, some $3.7 billion
has gone in loans and grants from the Soviet Union toward the
development and reorientation into the Communist system of the basic
economic programs of Communist-dominated countries. Of this,
more than $900 million went to Poland, $650 million to East Germany,
$450 million to Communist China. Bloc aid to North Korea since the
armistice has totalled $586 million not including military materiel.
This works out at $73 per North Korean which, on a per capita basis,
exceeds U.S. economic assistance to South Korea. A comparable
effort has been made on behalf of North Vietnam.
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Any attempt at analyzing the bookkeeping in the trade relations
between the Soviet and the other communist states is tricky business.
The real value of the ruble is an unknown quantity and transferring ruble
amounts to dollars is at best an estimate. These figures, however,
give the order of magnitude of the trade and aid. They do not take
account of certain other factors.
For example, the early stage of the relations between the
Soviet and the Satellites and China saw the moving of captured plants
and materials from these countries to the USSR to hasten Soviet
post-war construction and rehabilitation. Many plants in these countries
were operated under direct Soviet control and the output siphoned off
to the USSR. Then, too, low prices were fixed by the Soviet on goods
it purchased and the high prices on the goods they sold to the Satellites
and China.
This was during the Stalin period and the post-war reconstruction.
Then the Soviet saw that they had to turn around and rebuild their
subject empire which was in partial ruins. As a result, today, while
no firm balance sheet can be drawn, the European Satellites and
Communist China represent a net drain on the Soviet economy and
adds somewhat to the financial burden of their aid program in the
Free World.
Nevertheless we believe the Soviets can and will continue
their programs in Free World countries at a scale at least as great
as we now witness. Both intra bloc and external programs combined
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will require less thari one percent of their Gross National Product.
The net economic cost over a period of years will be even less than
this because from this program they will receive some needed raw
materials and consumer goods.
I mentioned the appeal of the Soviet program to the newly
developing countries of the world. Many are too far away from Moscow
to understand the meaning of Hungary, to analyze the dangers which
Communism spells for their newly found freedom.
They see that Russia, which economically and industrially
was a backward country a couple of decades ago, has in some manner,
mysterious to them, become in a relatively short space of time the
second greatest industrial and military power of the world. They do
not understand the cause. They do not realize that much of this has
been achieved by profiting from the industrial revolution of the West;
that it has been developed at the expense of the standards of living
of the peoples of Russia; that housing and road building and consumer
goods have been sacrificed to heavy industry and weapons of war.
They tend to feel that the American economic standards are
too high -- too distant -- too hard for them to attain. They are not
overly impressed by the fact that last year we made about sixty
automobiles to the Soviet's one; or that there are wide disparities
between the Soviet and ourselves in the standard of living. They do
hope that they can eventually aspire to something like the economic
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and industrial advancement of the Soviet Union. When the missionaries
of Soviet society appear with their offers, the temptation is great.
If there are no clear-cut alternatives the reaction is often favorable.
To leave the field open to this type of penetration presents us
with grave dangers. What use is it if we and our allies concentrate
solely on building barriers against some future military attack while
the Soviet envoys of trade, aid and subversion get behind those barriers?
Then, too late both we and the countries affected will know the true
meaning of "Red Imperialism".
In this brief presentation, I have endeavored to give an appraisal
as an intelligence officer of the information available to us. I can
summarize by stating that in our considered opinion, the present
strategy of the leaders of international communism as directed from
Moscow will not be based on military adventures or the direct use of
military power. They will not be likely at this time to take steps
which they believe would involve the risk of nuclear war, although
Soviet military power will continue to be used as a threat against
weaker countries.
On the other hand, international communism will undoubtedly
use the methods of economic penetration and internal subversion as
major weapons to advance their cause.
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On this day, ten years since the takeover of Czechoslovakia,
it is appropriate that you should be considering the countermeasures
which will be most effective in meeting these threats to our national
security. They most certainly can be met with the resources which
this country can command.
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