ATTACHED ARE SOME COMMENTS ON THE PAPERS (SANITIZED) HANDED YOU WHICH MAY BE MORE SUITABLE FOR PASSING TO HIM THAN THE COMMENTS FROM ORR.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00268R000700170001-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 13
• Document Creation Date: December 27, 2016
• Document Release Date: September 3, 2013
• Sequence Number: 1
• Publication Date: June 29, 1961
• Content Type: MEMO

/ I _
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Attached are some comments on the paper
handed you which may be more
suitable for passing to him than the
comments from ORR.
Louis Marengo
16?144.4
7 a-7 ?I. 29 June 1961
( DATE )
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STAT
(47)
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rurc UttIU:AL USE ONLY
29 June 1961
Comments on Paper Entitled "Current Need for Policy Oriented Analytical
Studies on Sino-Soviet Bloc Activities in Less Developed Areas"
1. Comments on this paper properly fall into two categories.
The first concern the need for the more policy oriented analytical
studies and the second the specific suggestions for research.
2. We agree with the author's point that there is a need for
basic studies on Bloc operations abroad. At the present time, a
comparatively small number of people are directly engaged in research
on Bloc economic activities in the underdeveloped countries of the
free world. The demand on these individuals for current intelligence
is so great that they have not had the opportunity to do the research
necessary to improve and extend the basic data. Much of the compara-
tively small time available for basic research has been devoted to an
analysis of drawings against Bloc credits, on which our knowledge,
however, remains inadequate.
3. The problem is not only one of research, but also of collection.
It is true, of course, that a considerable body of basic data are
available. Nonetheless, knowledge is lacking on many areas and
collection could be substantially improved. The problem is in large
measure one of securing the necessary priorities.
4. Some work has of course been done outside of the intelligence
community as well as inside. For example, the Department of State
in 1958 published a paper entitled "The Sino-Soviet Economic Offensive
in the lass Developed Countries" and Joseph Berliner in the same year
published a book entitled "Soviet Economic Aid". Both of these are
good pieces of work, but they are now out of date.
5. It is possible to take issue with some of the requirements
expressed in the paper. For example, the paper suggests that a study
be made of areas in which the Bloc has been notably deficient in
its performance or taken advantage of the recipient country in an
underhanded way. Considerable attention has already been given to
this range of problems and little evidence of Bloc dereliction has
come to light. The paper also suggests that a study be made of the
types of operations in which Bloc countries are particularly strong
If
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C,) FOR MIMI. ust. U1LYu
or particularly weak. It is doubtful that such a study would yield
very much that could be put to effective policy use. These criticisms
are relatively unimportant, however, when viewed against the main
point of the paper?that analytical studies are urgently needed. ,
6. Two general points in the paper are also open to criticism.
The first is the possible implication that the underdeveloped country
problem can yield to a series of special studies conducted by a
special study group. What is needed is continuing study over what will
probably be a long period of time; the Bloc trade and aid program
has been with us since 1955 and continues to grow at a healthy rate.
Second, we do not believe it would be desirable to have the suggested
analytical studies done by a special unit set up for the purpose.
In addition to avoiding a start from scratch, the use of existing
departments and agencies would involve only a fraction of the cost of
establishing and staffing a separate entity, and would be more
efficient. Current reporting and basic analytical studies do not
constitute neatly separable categories of work. The two activities
are intimately related and mutually supporting, and mould require
much the same basic material. There seems to be no point in having
two separate groups examining the same material from two different
points of view. It is certainly not inevitable that basic analytical
studies would get bogged down in other priorities if handled by the
same office doing current studies.
firPlrILII nrkil v
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I-
MEMORANDUM FOR: Assistant to the DD/I (NSC)
SUBJECT:
27 June 1961
Comments on ICA Paper, "Current Need for Policy
Oriented Analytical Studies on Sino-Soviet Bloc
Activities in Less Developed Areas"
I
,
1. A review of the subject paper must be made sympathetically;
the author touches on a number of specific points which find present
intelligence studies wanting. As an experienced practitioner in U.S.
assistance programs to underdeveloped countries, his lack of under-
standing as to what his Soviet counterparts are "up to" in these Free
World areas and the activity of the EIC Standing Group certainly
merits attention. For, if he feels a lack of sureness in assessing
Bloc activities, how much more unprepared are the rotating policy-
makers?
2. It would be a simple matter to "nitpick" the author's list
of requirements for study -- we have, for example, reviewed allega-
tions that Soviet aid goods were of poor quality, sold at excessive
prices to simple-minded dupes, and other claims of "sharp" practices,
to no particular avail. One may also question whether the under-
developed country problem is of the ad-hoc nature implied by the
author; that is, of the kind which would yield to a series of special
studies prepared by a special study group. The Soviet Bloc trade and
aid program has been with us since 1955 and shows no tendency of
diminishing; on the contrary it continues to grow at a healthy rate.
3. However, it is impossible to deny the truth of the author's
basic concern, namely, that intelligence on the cold war?is simply.
inadequate. This, in our opinion, is due both to a lack of collection
and to an insufficiency of analysis. It has been compounded by the
Department of State's progressive dismantling of its effort in the
field. As Sino-Soviet involvement in Free World underdeveloped
countries grows, and as U.S. financial commitments to the cold war
increase, the U.S. intelligence community's analytical capabilities
progressively dwindle. Make sense?
4. The intelligence collection machinery is still overwhelmingly
geared to hot war.
t.41, E
50X1
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(?) iJuivrivni
SUBJECT: Comments on ICA Paper, "Current Need for Policy-Oriented
Analytical Studies on Sino -Soviet Bloc Activities in Less
Developed Areas"
5. Analysis? State just is not doing its part on Free World
underdeveloped countries. Equally important, we have recently had to
"bail out" ONE by contributing or rewriting the economic part of NlEts
on Taiwan, Yugoslavia, Japan, and Brazil, and on other developed and
underdeveloped Free World countries. It has been fortunate that so
far, thanks to ORR unofficial aid, no serious economic error has been
allowed to remain in an NIE. However, this "bail out" practice is
something like having a nation's civil air fleet composed exclusively
of unscheduled airlines -- it's fine as long as it works, but there
are bound to be days when nothing flies.
6. The present ORR effort in research on economic activities of
the Bloc in the underdeveloped Free World is carried on by a handful of
professionals. These people are augmented on an ad hoc basis by other
specialists in the trade, construction, transport, weapons, and various
commodity fields. The latter specialists, however, have functional
responsibilities for research on a limited geographic area, namely,
the Sino -Soviet Bloc. The Cold War, however, is not so conveniently
confined either geographically or by subject. The demands for finished
current intelligence which are placed on this group in ORR are of such
a volume that only scattered moments of time are available for research
of the type necessary to improve and extend the basic data. For over a
year these scattered moments have been devoted to an attempt to make
adequate our very inadequate rule-of-thumb estimates of drawings against
Bloc credits. Progress has been depressingly slow.
7. What is needed is not a new organization which will mean more
paper, pencils and poohbahs, but an increase in the research capability
of the organizations who have dealt with this problem and a charter to
extend research into areas which will be useful. This means much more
work on strategic Free World economies and much more work on subjects
which are only peripherally economic, but which are integral parts of
the Bloc offensive. In our opinion, above all else this means an
?2?
COHFEiAi
50X1
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,
SUBJECT: Comments on ICA Paper, "Current Need for Policy-Oriented
Analytical Studies on Sino -Soviet Bloc Activities in Less
Developed Areas"
augmentation of the ERA/ORR effort. We also believe that existing
departments and agencies have personnel and materials to carry on an
expansion of the present collection and analysis at a fraction of the
cost of establishing and staffing some separate entity. Moreover,
use of established organizations where possible maintains the authority
and responsibility of action and production organizations. Coordina-
tion of research could be carried on within existing governmental
committees to the extent such coordination is required. What is
presently required is more collection as well as more research and
writing, rather than coordination. The latter will always be with
us.
Chief, Economic Research Area
Research and Reports
50X1
F ?
r'!-'7774-fl:';7!WI
, 1
J.%
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-41
Current Need for Po1iepOrieutedAna37tioal Studies on
Sino-Soviet Bloc Activities in Less Developed Areas.
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?
Bloc aid, trads and cultural activities in underdeveloped
countries in the last five years have developed spectacularly in variety,
scope and impact, but the way in which our information on such activities
is prepared and used does not fully meet current U. S. policy and opera-
tional requirements. Coverage of Bloc operations abroad has improved
significantly, and executive branch agencies produce a large number of
separate pieces of intelligence and reporting on various Bloc activities
abroad. However, although these separate informational places perform
a definite service, their usefulness is quite limited. Like varicolored
pieces of tile, they need to be fitted together into a mosaic to bring
out their full meaning. From existing reports and despatches, our policy
planners, State and ICA operations officere, and Embassy and USOK per-
mune' at present can gain but a fragmentary knowledge of the wide
ramifications of the Bloc offensive and the many ways: in which it affects
both US interests and the interests of the recipient countries. Currently
produced intelligence materials are not in the fprm reQuiredAsuale_a_
l-
meaningfUbickdrOP-te-tbe formulatien of U. S. policy and thcaPICUtiozt.
of operational counter-measures with respect toBlo?ptiVities oversew.
What is vitally needed now, it seems to me, ia a number of
analytical intelligence studies which are focussed specifically on
aiding the policy-making process. These studies can be developed from
the mass nce information ac ed over the est ars.
They should be directed to ensue z a number of key questions which
have been repeatedly raised, but not adequately clarified, in the Execu-
tive Branch and in the Embassies and USOK's. Such questions are con-
cerned with the strengths and weaknemes of_Dlon_opp discernible
patlerja of approach and ex_m!itippt specific effects U, and
rec p ea counfirests, inter-relationshisitiise over-
lapping of U. S. and Bloc aid, etc. .
I would recommend that the following studies be undertaken to
provide the analytical background so necessary to intelligent U. S.
decisions on this subject. Al]. of these studies should be documented ?
by case and example so as both to indicate the validity of the points
made and to serve as a balm for continuing amassment.
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/6,
f-..01??? 7
1. Precisely in what ways do various Bloc actiiities in the
free world adversely affect U. S. interesta and the interests of the
recipient country?
1
Since it is fast becoming apparent that Bloc entry into a
country cannot be denied, we need better information an thou: fields
where Bloc participation is most dangerous and those where such
participation ie less harmful. Such information will help put us in a
position to minimise the effects of Bloc operations in a more effectiVe.
way.
a. With Regard to U. S. Interests: For exaMplei how
does the building by thelISSR of a steel India hurt the US;'
what if the Bloc helps finance its 5-,year plans; what doe. it mean to
us in terms of political, economic or military interests if the Bloc
builds highlenr., airfields and oil storage depots in Afghanistan, or
sends ships to Indonesia or small arms to Guinea; or if Rad China
sends acrobatic or operatic troupes and movies to Cambodia or Brasil;
or if the USSR sells newsprint to Iran; Or buys cotton in the Sudan;
or establiahes friendship societies and libraries, buildi hospitals,
staffs schools, sets up banks, trains technicians, or trades machinery?
,t4,14
This would involve topics such as the build-up of the
public sector, the reduction of the role of U. S. private ix:Vestment,'
greater use of Bloc products and Bloc weapons, participation of the
1, --Bloc in key ministries, reduction of U. S. leverage, encouragement of
diplomatic recognition of Bloc countries, promotion- of Bloc prestige
and influencel_weakening of U. S. bases, pre-empting by !Bloc of most
7 -
_desirabli
gin projects introduction of Bloc cadres and training or
systems, etc. Oases which do not appear to be against the interests
of the U. S. should also be covered.
b. With Regard to Interests of the Recipient Country:
Similarly, how do such Bloc activities adversely ainot the interests
of the recipient countries? Definitive answers to this question would
put us in a better position than we are now to exercise disivasion and
take counteraction. Our ambassadors and USCM directors need solid
facts and arguments in this respect, many of which they do not now have
or cannot get solely by their own efforts. Our man in Ethiopia needs
to know what takes place in going programa in Afghanistan or Indonesia
or U.A.R. to be in a position to enlighten both himself and the Emperor
on the labyrinthian aspects of Bloc aid activities and their dangers.
So does our man in Tunisia, or Pakistan, or Paraguay, or Mali, or Brasil
or any of the countries where the Bloc is pushing for greater influence.
This study would involve topics such as cumulative
dependence on the Bloc for critical materials and for spare parts, using
projects for intelligence purposes, strengthening local communiat bodies,'
uneconomical use of country resources, obligation of repayments with
hard currency exports, breakaway from established markets, influencing
of the military, subversion opportunities, etc.
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2. In what types of operations are the Bloc countries perticu-)d-
larly strong; in what types are they particularly weak?
This study should cover (1) types of projects (e.g. - sugar
mills, cement factories, hospitals, drilling projects, road building,
airfields, irrigation); (2) types of commodities (e.g. - trucks, textiles,
grains, tractors, machine tools, light machinery, nil); (3) types of
military equipment (e.g. - various small arms, transport planes, tanks,
destroyers, A.A. guns, question of obeolescence); types of technicians
(e.g. - vocational teachers, agricultural experts, economic planner',
medical personnel, industrial specialists, militarY)J types of training
programs (e.g. - steel mill operations, small industry, language, agri-
culture, road-building, military). (4) strengths and weaknessee in trade
and aid agreement terms, repayment and settlement provisions, arbitration
of disputes, etc.
.11111,"
3. Where has the Bloc either been notably deficient in its
aid and trade performance or taken advantage of the recipient country in
some underhand way?
This study should be in the form of a compilation of specific
major examples of the above, with each exemple followed by a comment
which gives an Objective presentation of all the mai3a facts we know about
the situation.. The comment should provide the reader with a true per-
spective of what was involved so that he can judge hoe :such knowledge
can.best be used. To the extent possible the comment should clarify
whether the fault ley wholly with the Bloc, partly with the Bloc and
partly with the recipient, country, whether the charge has substance,
whether the Bloc rectified the eituation, whether the deficiency is
typical, etc.
The examples should cover such points as Shipments of poor
quality materials, overpricing, re-sales at discounts, banking practices
which favor Bloc imports, technicians as agents, Oases of bribery, con-
struction of potential military highways for the USSE4 withholding of
spare parts or commodity shipments for political purposes, discontent of
students studying in Moscow, poor construction, white elephants and
similar items.
4. What evidence do we have to demonstrate various tactics
used by the Bloc in achieving particular strategic goals?
This study, which relates closely to Study No. 1, *hoed !show
by examPles the details *fait* method, used to gain entrance and spread
their influence in recipient countries.' For example, how are cultural
exchanges (e.g. -'acrobatic and deride troupes) used to spread communiet
propaganda in urban and rural areas? Hoe are military aid and trade
missions used fox political ends? How is military aid used to curry
favor with particular unit commanders so as to pave the ray for larger
military aid agreements? How does the Bloc favor certain importers in
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order to to penetrate certain manufacturing facilities within a country?
How is newsprint used to insure spread of Bloc propaganda?
5. Is there a discernible pattern of how the various Bloc
activities are interwoven with one another and manipulated in penetrating
R country?
This question may be difficult to answer as clearly as we can
some of the others, but information on interrelationships and patterns
of Bloc activities would certainly be valuable both in planning our own
policy and in being able to anticipate Bloc moves. We know, for example,
that in many cases military aid is the thin edge of the wedge to gain
greater contacts. We have seen how trade missigneA_cultural missions,
and propaganda and local CP activities move 0021COrilital
svide7ebi of intra-Bloo coopeiiEiii1 spliEijierge? in CA.
It may prove entirely feasible to put together some case studies (e.g.
Afghanistan, Ghana, Guinea) which delineate in detail this type of total
approach to a country, where aid is only part of a much larger and more
ominous picture.
The above are the major points that require study at this time.
There are some others that can be fruitfully explored. One of these is
the problem of overlapping Bloc and U. S. aid, such as the Bui and Volta
projects in Ghana, the Helmand Valley in Afghanistan, or using Pt 480
cotton in Bloc-built textile mina. This problem will become more acute
as Bloc implementation proceeds.
That the foregoing recommended studies are important at this
time, and will become increasingly so, appears self-evident. However,
since the size and quality of the staff necessary to undertake these
studies bear a direct relationship to just how important they are 41.1dged
to be in respect to ether needs, the question of study procedures can
be lat until ihe question of priority is decided.
At present, ell I can say in that long experience on this
subject has given me strong convictions on two points. firgti_these are
sat_the_Iype of studies that can be effectively performed cutif?kortU--
tExecutive BranoT.- 1j theExedaliFillianch agencies hive the sources
and the resources to produce a meaningful result. Whatever group works
on these studies must have day-to-day, continuous access to State
Department, CIA and Miense current file. and also have close relation-
ships with the people who are familiar with those files. The files are
truly voluminous. CIA dispatches, TLICS and spot CS informational reports,
are potentially the most lucrative source. Sabassy semiannual reports
on Bloc activities, their biweekly economic reports and daily dispatches
ran a very close second, The files of the Defense Department, ospeoially
the Army, can be particularly helpful on the military aspects. USIA
can be tapped. All these highl.y classified files are indispansible as
support to a worthwhile study effort, and the best way to utilise them
is to be in a position to work closely with the people who maintain then.
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There will be many gaps that will have to be filled in by queryipr the
field. All this cannot be done effectively by an outside group, no
matter how technically proficient in study execution.
The second point concerns the necessity for the establishment
of a special unit to work bill time on these studies. If the projects
are assigned to existing offices now dealing with current reporting on
the subject, the probability is that the direction and execution of the
studies would inevitably get bogged down in other priorities of the
biTice that the assignment would fall to. The quality of the result will
inevitably be weakened. Existing offices, however, must be called upon
for their cooperation in filling out various parts of the study and in
supplying the source materials.
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