EAST GERMAN PLANS LARGE-SCALE PURCHASES OF CHEMICAL PLANTS FROM THE WEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A002100070001-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 15
• Document Creation Date: November 16, 2016
• Document Release Date: April 6, 2000
• Sequence Number: 1
• Publication Date: September 1, 1964
• Content Type: BRIEF

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CONFIDENTIAL
Current Support Brief
EAST GERMANY PLANS LARGE-SCALE PURCHASES
OF CHEMICAL PLANTS FROM THE WEST
CIA/RR CB 64-61
September 1964
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
CONFIDENTIAL
GROUP 1
Excluded from automatic
downgrading and
declassification
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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EAST GERMANY PLANS LARGE-SCALE PURCHASES
OF CHEMICAL PLANTS FROM THE WEST
East Germany has announced definite intentions to join the parade
of Communist countries seeking large-scale purchases of complete
chemical plants in the West. A member of the State Planning Com-
mission has stated that 12 plants will be purchased in 1964 and perhaps
2 to 5 in 1965 and that total purchases by 1970 could reach 40 plants or
more. 1/ The first of these contracts to be signed, involving an ammonia
plant valued at $10. 5 million, was announced by the UK firm of Humphreys
and Glasgow at the Leipzig Fair this September. 2/
Although East Germany already possesses both a well-developed
chemical industry and a large chemical equipment industry, the desire
to purchase plants and equipment on a large scale from the West has
become steadily more apparent since late 1963. A long-range and inten-
sive program for development of the domestic chemical industry plus a
relatively large commitment for export of chemical equipment to other
countries of the Bloc have posed an admitted strain on the chemical
machine building industry. In early 1964, moreover, the program of
development was accelerated, and the USSR unexpectedly requested de-
livery of 100 chemical installations from East Germany between 1966
and 1970. As a result, East German officials have inquired widely in
Western Europe and the US concerning the purchase of a large variety
of chemical plants. By late August the US Department of Commerce
had granted an export license for a plant for production of acrylonitrile,
and contracts totaling nearly $20 million were negotiated with UK and
French firms.
1. Equipment Supply Problem in East Germany
The East German chemical industry has had an extensive develop-
ment program underway since 1958, but major elements of this pro-
gram have fallen as much as several years behind schedule. In Feb-
ruary 1964 the hastened implementation of the program, by which out-
put is planned to increase about 70 percent from the 13 billion East
German marks (DME) ($3 billion) produced in 1963 to slightly more
than 22 billion DME ($5 billion) in 1970, was given highest priority. 3/
Dollar values are given in current US dollars throughout this publi-
cation.
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An especially important part of the development program consists of the
related construction of petroleum refineries; a large petrochemical com-
plex; and facilities for production of plastics, synthetic fibers, and other
synthetic materials. The requirements for equipment for this development
have been large. For the petrochemical project, which involves equipment
and technology more or less foreign to East German experience, major
units for cracking and separating gasoline and for production of polyethy-
lene (plastic) already have been purchased from the UK 4/ and West
Germany. 5/ The production capacity of the East German chemical equipment in-
dustry has not been sufficient to supply the volume of equipment required
both for expansion of the chemical industry and for maintenance of an ex-
tensive export program. A substantial part of the output has been drained
off through exports to other Bloc countries. The USSR alone received
roughly one-fourth of the annual production of about 320 million DME
($76 million) worth of equipment in 1961 and 1962. 6/ This difficult situ-
ation was complicated by an agreement signed in June 1964 for the de-
livery to the USSR of 100 complete installations during 1966-70. 7/ These
deliveries are to include several types of installations that duplicate those
being investigated by East Germany for purchase from the West.
2. Interest in Purchase of Western Equipment
The need for a relatively quick solution to the problem of equipment
supply has led to specific action in 1964 to increase imports of equipment
and complete plants from non-Bloc countries. Changes have been made
in the foreign trade organization to centralize responsibility for procure-
ment of large-scale industrial installations, and a number of exploratory
negotiations have been carried out with UK, French, Belgian, and Austrian
firms. A purchasing commission touring Western European capitals re-
portedly intends to place orders totaling about $125 million to $150 million 8/
for the purchase of a tire plant; a synthesis gas plant; a delayed coking
plant; equipment for production of polyester fiber (dacron) and complex
fertilizers; and plants for production of hormones, pesticides, and syn-
thetic rubber. (For additional information on these plants, see the table.
In addition, interest has been expressed in plants and technology for produc-
tion of polypropylene, ethylene dioxide, maleic anyhdride, nitric acid, and
other chemicals.
The first results of efforts to obtain equipment now are being
announced. In August 1964 the US Department of Commerce approved
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an application for the export to East Germany of a plant for production
of 20, 000 metric tons of acrylonitrile per year (used in the manufacture
of plastics, synthetic fibers, and synthetic rubber). 9/ Humphreys and
Glasgow, a UK engineering firm, announced on 11 September that a
contract has been signed for the design and construction of an ammonia
plant with a capacity of 510 metric tons per day to be located at the new
petrochemical complex in Schwedt. The ammonia is to be used in a
nearby nitric acid and ammonium nitrate (fertilizer) plant to be built
by the French group, Schneiderjacreusot. 10/ The two projects are to
cost about $20 million, and the contracts involve a credit of 5 years
from the mean date of shipment. 11 /
3. Negotiation Difficulties and Second Thoughts
The main hurdle in discussions with Western European countries
has been the East German desire to obtain credits of at least 5 years
and preferably 10 years. The effort to avoid political concessions in
return for such credit apparently has led East Germany to favor the UK
and France over West Germany. Western plant builders no longer seem
to fear that the East Germans simply wish to buy prototypes to copy for
fulfillment of export orders to other Communist countries and less de-
veloped countries, but some trepidation has been expressed as to the
long-range consequences. To discharge the financial obligations in-
curred through these purchases, East Germany almost certainly will
compete increasingly in the world chemical market.
C-O-N-F-I-D-E--N-T-I-A-L
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Sources:
1. Chemical Week, 27 Jun 64, p. 68. U.
2. Wall Street Journal, 15 Sep 64, p. 5. U.
3. Statistische praxis, Feb 64, p. 29. U.
4. Hydrocarbon Processing and Petroleum Refiner, 12 Oct 62,
p. 140. U.
Ibid. , Jan 64, p. 174. U.
5. Air. IR no 1470382, 14 Mar 61. C.
State, Bonn. T72275 (Incoming), 21 May 64. C.
6. JPRS. 21, 948, 20 Nov 63, p. 57-60. U.
7. Neues Deutschland, 13 Jun 64, p. 2. U.
8. CIA. FDD, East Europe Daily Press Report, 18 Jun 64, p. 10.
OFF USE.
9. Commerce. O. C. Document no 2501, 20 May 64. C.
10. Wall Street Journal, 15 Sep 64, p. 5. U.
11. State, London. Airgram A-474, 25 Aug 64. OFF USE.
12. Chemical Week, 27 Jun 64, p. 68. U.
Analyst:
Coord: ORR
ORR
~~~
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 Analyst:
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OFFICE OF RESEARCH AND CAE 4e0RTS
St/P/RR - Control Section
Control Sheet
Series Number_CIA/RR CB 64-61
Date of Document September 1964
9.?.PL No
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172 in St/PJC
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Classification
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R/CH
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downgrading and
 C F t E T AL
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SUBJECT- Distribution of Current Support Brief No. 64-614, East
Germa Plane Large-Scale Purchases of Chemical Plants trot
West --- September 1964 (CONFUEN LIALL_
Copy No.
3
4 - 12
13 - 15
16 - 21
22
23 - 31
32
33 - 2841
O/DDI, Room 7E32, Hdqtrs.
NIC
OCI Internal
ONE
St/CS/RR
O/DDI -M
NSA/I
NSAL
ORR Iii stributIon, St/A/ Document Support Section,
Room GH0915, Hdqtrs.
(Distributed by OCR)
rl TIAL I!11
Excludedf flc atlen
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 CONFIDENTIAL
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? ' tJA/Ds Distribution of Current Support Brie: No. 64-61, East Germany
Plans Lam-Scale Purchases of Chemical Plants rvm `Wea --- ep em er
1 C3N El~t'l'D
Rec Zient
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AD/RR
DAD/RR
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2 October 1964
MEMORANDUM FOR-. Chief, Dissemination Control Branch, DD/CR
Chief, Publications Staff, ORR
Transmittal of Material
It is requested that the attached copies of CIA/RR CB 64-61, Bast
Germ Plans Large-Scale Purchases of Chemical Plants from the West;
idential,, be forwarded as follows:
State, INR Communications Center,
Room 7818, State Dept. Bldg.
Suggested distribution for
Embassies in 0scows Bonn, Brussels,
London,, Berlin? and Paris
Attachments:
Copies #193 x.98 of CB 64-61
cot CG/3
r._ ca ' - d by
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BY: e
/g
Date: v ~r
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' ? -EastGermany Plans Large-Scale Purchases of Chemical Plants from
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i and Branch R/CH
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