COMMUNIST AID AND TRADE ACTIVITIES IN LESS DEVELOPED COUNTRIES, OCTOBER 1975

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01098A000600120004-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: November 16, 2016
• Document Release Date: March 23, 2000
• Sequence Number: 4
• Publication Date: December 1, 1975
• Content Type: REPORT

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Communist Aid and Trade Activities
in Less Developed Countries; October 1975
Secret
ER RP 75-33
December 1975
Copy NO
O
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by 015319
Exempt from General Declassification Schedule
of E.O. 11652, exemption category:
? 58(7), (2), and (3)
Automatically declassified on:
data impossible to determine
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CONTENTS AND SUMMARY OF EVENTS
(October 1975)
Page
Articles
Iran-USSR Economic Relations Continue To Warm . . . . . . . . . . . . . I
Assesses the growth of Soviet-Iranian relations.
Soviet Trade with Less Developed Countries, 1974 . . . . . . . . . . . . . 3
Summarizes Soviet-LDC trade performance in 1974.
Other Activities
Economic .................................. 6
Military . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 11
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COMMUNIST AID AND TRADE ACTIVITIES
IN LESS DEVELOPED COUNTRIES
OCTOBER 1975
Soviet-Iranian economic relations are entering a new phase as Tehran, with its
increased wealth, is shedding its client status. A recent agreement calls for
cooperative efforts to undertake, in both countries, projects whose estimated
eventual cost could run as high as $3 billion. Tehran also became an aid donor, when
it recently agreed in principle to provide credits for a paper complex in the USSR.
Soviet Economic Aid to Iran, 1963-75
The changing relationship is built on more than a decade of mutually beneficial
arrangements made possible by their common border. Beginning with an agreement
in 1963 to build a border dam, Soviet and has expanded to about S800 million and
includes a steel mill, a gas pipeline, and smaller industrial and agro-industrial
facilities (see the map).
The darn's power and water for irrigation is allocated in equal shares to Iran
and the USSR. The gas pipeline from the Iranian gas fields to the Soviet border
enables Iran to sell a former waste product to service its economic and military debt
to the USSR. Moscow is using the gas to meet the growing energy requirements in
Azerbaijan and the Transcaucasus while saving the costs of transporting gas from
distant fields. The gas deal also allows the release of some Soviet gas for sale at
higher prices in Western Europe. The steel mill was provided by the Soviets at a time
when no other country was willing to finance it. Projects contemplated under the
15-year cooperation agreement signed in 1972 are a further expression of their
mutual economic interests. A second border dam and gas pipeline are planned, and
capacity at the steel mill is to be nearly tripled by 1978; September protocols
provide for electrifying a 90-mile line from Tabriz in Iran to Jolfa on the Soviet
border and for studies to build a 100-mile railroad from Mashad in Iran to Tedzhen
in the USSR. Negotiations also are in progress for another 200-mile line from Qazvin
to Astara, on the Soviet border. These transport links will help accommodate the
growing Soviet-Iranian trade as well as the increasing amount of East European
goods being shipped to Iran through the USSR.
Some of these new projects will likely be covered by the $250-$300 million in
aid still outstanding under old credits. Moscow has usually carried through with its
aid ;pledges despite changing circumstances and will be willing to accept payment in
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natural gas. Some will likely be financed by Iran or jointly, but the Soviets will
continue to provide the equipment and technical assistance.
Soviet Aid Projects In Iran
Baghdad
Asian
cja
!-fydr. -. ct-ic
dam
electrified
taenzt.
,grit
A atc?: P,
ct plant
10
Neutral Arabia /
Neutral Zone
Ahvatt `r
Wower_,"' i
The rising trade between the two countries
has reflected the expanding Soviet aid program.
By 1973, trade had risen to eight times the 1962
level; total trade shot up another 75% in 1974.
For the first time in three years the USSR ran a
nonmilitary trade surplus-$47 million (see the
tabulation)-as increased exports of machinery
and equipment, building materials, chemicals, and
edible oils exceeded expanding imports.
Saveh;
Million US $
Soviet exports
185
351
Soviet imports
188
304
Natural gas
91
175
Other
Nonmilitary trade
97
129
balance
2
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The trade is small when viewed as part of each country's total foreign trade. It
is less than 3% of both Soviet exports and imports and 1% and 5% in the Iranian
case. Iran in 1974, nevertheless, was the USSR's third largest trading partner in the
developing world. (Secret)e
SOVIET TRADE WITH LESS DEVELOPED COUNTRIES, 1974
Soviet-LDC trade increased in 1974
but at a slower pace than in 1973. Most of
the growth resulted from higher prices
rather than volume gains. Soviet 1974
imports from LDCs reached $3.3 billion
(see the chart and the table), up more
than a third from the previous year
mainly because of rising prices for oil and
other primary products. Exports rose
more slowly, up 17% to $4.8 billion, as a
consequence of reduced military deliver-
ies. These trends caused the Soviet trade
surplus with. the LDCs to shrink from
$1.7 billion in 1973 to $1.5 billion in
1974. As in previous years the main
ingredient of the Soviet surplus was mili-
tary sales. In 1974 the Soviets ran a $0.5
billion deficit in nonmilitary goods sales
to the LDCs, which was offset by nearly
$2 billion in military goods deliveries.*
Moscow's Trading Partners
Soviet Foreign Trade
with LDCs, 1974
"Difference between total reporh ' Soviet exports
to LDCs and the summation of id ratified Soviet
exports to LDCs.
LDCs accounted for about 15% of
Soviet trade in 1974, the same as in 1973. The Soviet share in LDC global trade,
however, fell slightly to 2%.
* Soviet exports cannot be fully identified by either type of commodity or destination. A large difference
exists between what the Soviets report as total exports to LDCs and the total derived by adding amounts
they list for individual LDCs. We believe this export residual includes mostly military goods.
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Soviet Exports to and Imports from LDCs1
Million US $
Total trade2
Exports
4,0453.8
Imports
2,410.8
Exports
4,761.4
Imports
3,272.0
Unallocated residual3
2,156.8
35.9
2,028.8
32.2
LDC total
1,907.0
2,374.9
2,732.6
3,239.8
Africa
284.6
267.3
445.9
335.0
Algeria
87.3
70.3
145.6
81.0
Cameroon
0.9
4.7
1.3
14.9
Central African Republic
0.5
....
0.7
....
Congo
1.6
.3.5
2.6
2.6
Dahomey
1.8
2.8
2.1
Ethiopia
2.2
3.0
3.4
4.8
Ghana
13.1
37.8
33.4
32.5
Guinea
56.4
2.6
29.6
6.5
Ivory Coast
5.3
8.4
11.4
25.9
Kenya
0.3
....
0.5
0.8
Libya
19.0
41.0
37.6
....
Malagasy Republic
....
0.4
....
0.9
Mali
3.6
0.7
5.5
0.9
Morocco
38.2
35.2
71.4
43.6
Nigeria
14.8
39.0
28.4
92.9
Rwanda
0.4
0.5
1.0
....
Senegal
6.6
??..
21.5
....
Sierra Leone
1.6
2.0
1.4
....
Somalia
15.5
1.5
22.2
2.6
Sudan
3.4
....
5.0
3.2
Tanzania
0.8
3.4
3.0
3.7
Togo
1.9
....
2.2
....
Tunisia
7.8
7.3
10.7
11.9
Uganda
1.2
3.2
1.2
6.3
Zambia
0.4
....
4.2
Europe
42.0
14.3
170.9
38.1
Malta
1.5
....
1.6
1.2
Portugal
....
....
8.3
0.8
Spain
40.5
14.3
161.0
36.1
East Asia
18.8
144.4
23.2
305.6
Burma
2.6
0.7
4.1
0.4
Indonesia
3.6
5.7
10.6
26.3
Malaysia
1.2
130.5
0.9
248.2
Singapore
8.6
4.3
5.9
17.8
Thailand
2.8
3.2
1.7
12.9
Latin America
34.1
367.0
144.0
408.9
Argentina
6.1
97.5
7.9
173.6
Bolivia
5.4
16.5
5.4
15.0
Brazil
12.5
157.3
118.8
147.8
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Soviet Exports to and Imports from LDCs'
(Continued)
1974
Latin America (Continued)
Colombia
Exports
1.1
Imports
12.5
Exports
1.3
Imports
5.7
Costa Rica
0.3
6.9
0.8
2.1
Dominican Republic
....
21.1
....
Ecuador
0.3
0.9
0.7
5.8
El Salvador
....
5.0
....
Guatemala
....
5.8
....
???.
Guyana
....
9.3
0.3
5.9
Jamaica
....
5.3
....
12.5
Mexico
0.7
0.1
1.4
1.7
Peru
5.8
20.8
6.1
6.2
Uruguay
1.1
7.2
1.0
32.6
Venezuela
0.8
0.8
0.3
....
Near East and South Asia
1,527.5
1,581.9
1,948.6
2,152.2
Afghanistan
45.5
48.3
81.6
80.0
Bangladesh
58.7
13.2
52.8
23.9
Cyprus
10.3
6.9
14.2
11.9
Egypt
374.2
356.3
397.7
563.4
Greece
57.5
49.4
117.5
87.0
India
300.8
494.1
355.6
456.8
Iran
185.4
188.5
350.8
303.5
Iraq
191.0
257.3
240.6
357.4
Jordan
3.4
....
3.2
....
Kuwait
10.7
....
6.2
....
Lebanon
15.5
10.3
33.7
9.8
Nepal
0.9
0.4
2.8
....
North Yemen
4.6
0.3
11.2
0.1
Pakistan
17.0
32.1
39.9
32.5
Saudi Arabia
3.9
....
3.7
....
South Yemen
15.5
0.1
19.9
0.1
Sri Lanka
8.5
9.2
29.3
15.8
Syria
97.3
63.0
92.5
135.0
Turkey
126.8
52,5
95.4
75.0
I . Data are from the official Soviet foreign trade yearbook for 1974, converted at $1.35 per ruble for 1973
and $1.32 per ruble for 1974.
2. Greece, Malta, Portugal, and Spain have been added to the LDC total shown in the yearbook.
3. Residuals are computed by subtracting the summation of trade for individual less developed countries from
the total for Soviet-LDC trade listed in the foreign trade yearbook.
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India, Egypt, Iran, and Iraq together accounted for about a half of Soviet 1974
trade with the Third World. Egypt relied most heavily on this exchange as 25% of its
trade was with the USSR: India's share was 8%, Iraq's 6%, and Iran's 3%. Moscow
ran nonmilitary trade deficits with all these countries, except for Iran.
Elsewhere, rising prices accentuated Soviet deficits with major raw materials
suppliers. Moscow's traditionally large deficit with Malaysia grew as rubber prices
spiraled. Although Moscow was able to ease its Latin American deficit through oil
sales to Brazil, the deficit remained at more than $250 million because of large
agricultural purchases from Argentina and Brazil.
Price increases also affected traditional trading patterns. Soviet nonmilitary
trade with Syria showed a deficit for the first time because of higher prices paid for
Syrian oil and cotton. Nigeria was propelled into second place among African
partners because of a 65% increase in the price of cocoa beans. Algeria, which
imported more Soviet building materials and edible oils at higher prices, remained
Moscow's largest African trading partner. Petroleum exports to Morocco helped to
increase the USSR's usual surplus with Africa. (Unclassified)n
Economic
General. Romanian economic relations with the Third World focused on
African countries. Bucharest signed its first trade and cooperation agreements with
Guinea-Bissau and signed an annual trade prptocol with Guinea. Increased Romanian
economic activity is envisioned under protocols signed with Sudan and Mali. In
Sudan, Romania will participate in developing machine building, chemical, mining,
and timber industries, presumably to be financed under a 1971 $75 million credit
agreement. A series of joint ventures in mining, petroleum, light industry, and
agriculture are planned in Mali. A team of Romanian geological experts is expected
soon in the Ivory Coast, following October discussions on mining cooperation.
(Unclassified)
During October, the USSR inaugurated service on a new shipping line serving
East African ports. (Unclassified)
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Algeria. Under a $68 million contract, Czechoslovakia and East Germany
will. jointly build a factory to produce pumps for water, chemical processing, and
petroleum. The terms of the contract are probably commercial. (Unclassified)
Congo. Bulgaria agreed early in October to provide $10 million in credits
for Congolese development projects. Contracts were signed for feasibility studies
on stock-breeding complexes, and a joint company was established for exploration
and. exploitation of phosphates and other minerals. (Unclassified)
Gabon. On 21 October, China agreed to provide $25 million in credits to
Gabon for agricultural machinery and light industrial projects. The terms are
somewhat harder than for most recent Chinese agreements - 5 years' grace followed
by 10 years for repayment. (For Official Use Only)
Guinea. Guinea has terminated its bilateral clearing account arrangements
with Bulgaria, Czechoslovakia, and Romania and plans to renounce all of its
remaining clearing agreements. A hard currency trade and payments agreement
signed with Romania on 2 October is expected to serve as a prototype for
agreements with other Communist trading partners. Guinean trade officials claim
that its exports to Communist countries have been undervalued and that hard
currency settlements will enable it to maximize the benefits from that trade. (For
Official Use Only)
Liberia. The USSR told the Liberians it was willing to finance a fishing
venture, a citrus processing plant, and an animal feed plant. The fishing project
includes trawlers, modification of docking facilities, and construction of a processing
plant. Liberian officials are expected to veto the Soviet proposals. (Secret)
Libya. The October visit of the Czech premier to Libya apparently dealt
largely with political issues. The only economic agreement calls for establishing
an interministerial commission to study means to broaden industrial cooperation.
(Confidential)
A Libyan oil delegation in Bucharest signed agreements to obtain Romanian
equipment and technical assistance for oil drilling and exploration and for the
construction of petrochemical and fertilizer plants. The terms of the agreements
were not revealed. (Unclassified)
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Malagasy Republic. The USSR and the Malagasy Republic signed an economic
cooperation agreement in October under which the USSR will provide a 150-kw
transmitter, educational equipment and technical assistance, a feasibility study for
a cement plant, and assistance for mining research. The USSR also agreed to study
Malagasy proposals for a dam, agro-industrial projects, and road construction. A
trade agreement signed at the same time calls for establishing a Soviet commercial
office in Tananarive to expand trade between the two countries. (Confidential)
Nigeria. A team of Chinese technicians arrived in Lagos to assist in the
development of small-scale metal, woodworking, and leather industries in Nigeria.
(Unclassified)
Rwanda. A Rwandan delegation was in Peking in early October, probably
to discuss procurement of commodities under Rwanda's $22 million Chinese credit.
(Unclassified)
Somalia. Somalia and Hungary signed their first long-term trade agreement
and a technical assistance agreement during the visit of the Hungarian President
to Mogadiscio. Hungary has promised aid in agriculture, animal husbandry, and
technical training. (Unclassified)
Burma. A 21-member Burmese government industrial delegation arrived in
China on 24 October, probably to discuss Chinese economic assistance proposals
reportedly made to the Burmese Foreign Minister in September. (Confidential)
Indonesia. A team of Soviet engineers recently completed a study for a
hydroelectric plant in Indonesia, the first of six projects planned under an economic
agreement concluded last December. A contract is expected to be signed by the
end of the year. (Confidential)
Philippines. The Philippines announced that a Soviet delegation is expected
in Manila in November to continue negotiations on the establishment of diplomatic
relations. (Unclassified)
Singapore. An official trade delegation departed for a two-week visit to China
at the invitation of Chinese trade officials. Members include government officials
and representatives of Singapore's manufacturing, trading, and banking sectors. (For
Official Use Only)
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Argentina. The East German Foreign Trade Minister arrived in Argentina on
14 October for talks on expanding trade. Formal trade exchanges between the
two countries were renewed last year following a 12-year hiatus. (Unclassified)
Brazil. Romania has offered petrochemical plants to Brazil under 12-year
credits similar to the $150 million credit extended earlier this year for steelmaking
equipment. (Unclassified)
Mexico. On 1 October Mexico and the USSR signed an agreement on joint
research in :nine fields, including energy, geology, and oceanography. (For Official
Use Only)
Peru. On 30 September, East Germany announced the purchase of $28 million
of Peruvian metals, including copper, silver, and zinc, the first major order under
a May agreement to expand trade. (For Official Use Only)
Hungary recently extended Peru a $10 million suppliers credit for wheat and
other food. Repayment is due two years after delivery at 7% interest. (Unclassified)
Afghanistan. The USSR and Afghanistan recently signed contracts for Soviet
project surveys that will be financed under a 1975 aid agreement. Surveys will
be made for four bakeries, a large grain silo in Mazar-i-Sharif, and two flour mills.
(Unclassified)
Cyprus. On 1 October Cyprus announced its first economic and technical
cooperation agreement with the USSR. The new accord puts no dollar value on
the assistance, but is a general framework agreement under which Moscow will
extend credits for specific projects after studies are completed. Projects mentioned
include darns and a new airport at Nicosia. Earlier this year Cyprus bought two
fertilizer plants from the USSR under long-term credits. (Unclassified)
Egypt. On 30 September Hungary extended $25 million in five-eight year
credits for machinery and equipment for Egyptian development projects. Egypt
and. Hungary also agreed to settle their trade accounts in hard currency beginning
1 January 1976. (Unclassified)
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India. The Soviet Union will begin delivery in 1976 of $20 million worth
of equipment for the Mathura oil refinery. Financing for the 120,000 b/d plant
is from a 1966 Soviet credit. (Unclassified)
Iran. A 4 October protocol provided for the Bulgarian sale to Iran of railroad
passenger cars, 400 freight cars, and various agricultural products. The two sides
also plan to cooperate in agro-industrial enterprises in Iran under $20 million in
previously extended Bulgarian trade. credits. A delegation will visit Tehran soon
to discuss these projects, including poultry raising, dairies, and canning plants.
(Unclassified)
Prague has agreed to supply equipment to expand the Czech-built Tabriz
machine tool plant and construct several agricultural projects. In return, Tehran
will sell machinery and possibly gas to Prague. A joint ministerial commission will
meet later this year for further discussions on these projects. It also will consider
new Czech proposals to set tip a brass factory and cement and power plants in
Iran. (Confidential)
Under a Polish-Iranian agreement signed in October annual trade is expected
to rise to $100 million through increased exchanges of Iranian industrial goods
and Polish agricultural products, fertilizer, and ships. Poland also agreed to set
up projects in Iran, including textile and sugar mills and a tin concentration plant.
A Polish delegation is expected in Iran soon to discuss additional project proposals
including a cheese factory in Iran and a paper mill in Poland. Tehran reportedly
agreed to provide a $200 million advance payment to obtain needed Polish goods.
(Unclassified)
Iraq. The Chairman of the Polish State Council paid a mid-October visit to
Iraq to discuss Polish economic aid for various projects presumably under a 1972
$100 million credit. The joint Iraqi-Polish Commission will continue these
discussions at its annual meeting in early December. (Unclassified)
The USSR and Iraq recently signed, a contract for exploitation of the Luhais
oil field in southern Iraq, expected to produce at least 50,000 barrels of crude
a day. The USSR has done exploratory work in the field under credits extended
in 1969 and also will help construct a gas separation unit, a pumping station,
storage tanks, a power plant, and a 50-60-mile pipeline connecting the new field
with other Iraqi pipelines. Financing arrangements for the estimated $50 million
program were not announced. (Unclassified)
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Jordan. On 19 October Romania signed further agreements to expand the
Az-Zarga oil refinery. The two sides also discussed Romanian participation in oil
and water prospecting, a new oil refinery, a cement plant, and several agricultural
projects, probably on commercial basjs. (Unclassified)
Kuwait. Kuwait has concluded two agreements with Poland, one on economic
and technical cooperation, the other on trade and payments. Poland will cooperate
in developing Kuwait's petrochemical industries, presumably with a view to securing
long; term supplies of Kuwaiti oil. (Unclassified)
Pakistan. An aid protocol signed in late October portends increased Romanian
participation in Pakistan's industrial development under $56.5 million of credits
extended in July 1973. Romania will help set up a dairy, textile mills, and food
preservation and storage plants and will drill for oil near Rawalpindi. Romania
also expressed interest in helping construct an oil refinery at Multan and conducting
phosphate exploration in the 1lazara district. (Unclassified)
South Yemen. The USSR and South Yemen recently signed contracts for
Soviet aid for petroleum exploration. Moscow will prospect for oil in the east
and conduct an aerial geophysical survey, under a 1972 $40 million credit
agreement. (Unclassified)
~gtary
25X1 B
Morocco. The USSR made deliveries in October of rocket launchers, .trucks,
and small arms (Confidential)
25X1 B
Tanzania. Peking currently is helping Tanzania to construct a military and
political academy at Munduli. The school, scheduled for early 1976 completion,
has a planned enrollment of 960 cadets. (Unclassified)
Near East and South Asia
Syria. The USSR concluded a major new arms agreement with Syria, during
President Asad's October visit to Moscow. Asad was seeking MIG-25 reconnaissance
aircraft, as well as additional MIG-23 jet fighters and surface-to-air missile
equipment. Acquisition of the MIG-25 Foxbat would be a feather in Asad's political
cap both as a demonstration of Syrian strength and of Soviet support for its policies.
(Confidential)
II
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Secret
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