INTELLIGENCE REPORT COMMUNIST AID TO LESS DEVELOPED COUNTRIES OF THE FREE WORLD, 1974

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500200017-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 58
• Document Creation Date: December 16, 2016
• Document Release Date: November 9, 2004
• Sequence Number: 17
• Publication Date: June 1, 1975
• Content Type: IR

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Secret
Intelligence Report
Communist Aid to Less Developed Countries
of the Free World, 1974
Secret
ER IR 75-16
June 1975
Copy
N? 620
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In this report the term Communist countries refers to the USSR, the People's
Republic of China, and the following countries of Eastern Europe - Bulgaria,
Czechoslovakia, East Germany, Hungary, Poland, and Romania.
The term less developed countries of the Free World includes the following:
(1) all countries of Africa except the Republic of South Africa; (2) all countries
of East Asia except Hong Kong and Japan; (3) Malta, Greece, Portugal, and Spain
in Europe; (4) all countries in Latin America except Cuba; and (5) all countries
in the Near East and South Asia.
The term extension refers to a commitment to provide goods and services
either on deferred payment terms or as grants. Assistance is considered to have
been extended when accords are initialed and constitute a formal declaration of
intent. The term drawings refers to the delivery of goods or the use of services.
The estimates made of Communist military aid are the aggregate value (at list price)
of agreements, where known, or are derived through the use of analogous prices
minus downpayments and cash sales.
The substance of this report has been coordinated with the Bureau of
Intelligence and Research of the Department of State, the Defense Intelligence
Agency, and the Agency for International Development.
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New Communist military and economic aid to the less developed countries
(LDCs) of the Free '7orld dropped to US $2.7 billion in 1974, its lowest level
in three years (see Figures 1 and 2). In spite of the reduced program, there was
Communist Aid to Less Developed Countries
Million Current US$
Communist Aid to Less
Developed Countries
of the Free World
1974
1954.64 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974
Annual
Average
Military
3.%!
MhZLI'Ll
4816
1954-64 1985 1966 1967 1968 1969 1970
Annual
Average
Note: Comments and queries regarding this report are welcomed. They may be
directed to I of the Office of Economic Research,
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The Shares of Communist Military Aid
Extended to Less Developed Countries, 1974
By Donor
Near East and South Asia
L %
The Shares of Communist Ecinnomic Aid
Extended to Less Developed Countries, 1974
By Donor
By LDC Area
Near Latin America
By LDC Area
ocher t% East Asia
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no apparent change in Communist aid policy. Prog-ams under way continued at
roughly the same pace as in most recent years, and the number of Communist
military and economic personnel stationed in LDCs increa.-ed.
Most of the decline in 1974 was in military aid, which dropped sharply from
the abnormally high crisis levels of 1973. MilPary aid, always more politically
oriented than economic aid, although 30% smaller in 1974, demonstrated again
the extent of the Soviet and East European commitment to the Middle East. For
Iraq it was a record year; for Syria, second only to 1973. Reflecting the strains
in Soviet-Egyptian political relations, Egypt received no new military aid, while
aid to Iraq and Syria accounted for more than 60% of the USSR's and Eastern
Europe's $1.2 billion of new assistance. Iraq and Syria also had the largest
contingents of Communist military advisers. Most significantly, Moscow's new
deliveries of equipment to Iraq and Syria surpassed in sophistication the equipment
furnished to any other LDC. The supersonic MIG-23 jet fighters, shipped to Iraq
and Syria have not even been provided to Warsaw Pact countries. Also reflecting
political overtones, Iran was the only other country to receive a large new military
commitment in 1974 - a $250 million credit for ground forces equipment, military
support, and engineering equipment.
Moscow and Eastern Europe continued to use economic aid to protect their
comm':rcial and long-term economic interests. Again in 1974 the formation of joint
industria! and commercial ventures "ith LDCs increased, and joint committees for
economic cooperation were operatiog in a r..'tmber of LDCs as coordinating and
aid planning bodes. New Soviet and East European commitments in 1974 totaled
$1.2 billion, about the same as in 1973 but 25% below the 1971-72 records. The
failure to furnish large blocks of new aid reflected mostly the coritiruing slow
draw down on existing aid. Although drawings against unused economic credits
reached a new high of 3930 million, they were propelled by a record $265 million
Soviet grain shipment to India. Otherwise, drawings would have approximated
recent annual levels.
The commercial motivation for economic aid was highlighted by the large
Communist credits to Argentina, intended to correct the imbalance in Soviet and
East European trade with Argentina. Soviet and East European equipment sales
under these credits could rise to as much as $850 million over the next several
years.
Other major Soviet and East European economic aid went largely to ongoing
projects, such as Moscow's new credit ($216 million) to Pakistan for a steel mill
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being built with $210 million of Soviet aid extended in 1971. In an unusual move,
Moscow agreed to provide one-half of its $28 million budget support credits to
Bangladesh in hard currency.
China's $200 million of new economic aid in 1974 marked a significant drop
from its $575 million annual commitments since the Cultural Revolution. Although
still pursuing an active aid program in Africa, Peking reduced its new economic
aid pledges, mostly because of a lack of opportunities and because outflows still
were heavy for completing the Tan-Zam Railroad, China's largest single aid project
in the Third World. Nevertheless, Peking's area of interest was unchanged, and
except for a $25 million credit to Laos, its major effort continued on the African
continent. Peking's two major clients - Tar.zania and Zambia - again took the
lion's share (65%) of China's total aid. Its o. fly significant military commitment
($61 million) was to its chief military client - Pakistan.
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1. Communist countries pledged more than $1.4 billion in new economic
aid to the LDCs in 1974, about 15% below last year's amount and down nearly
35% from record 1971-72 levels (see Tables 1 and 2). Communist economic credits
to LDCs have topped $19 billion since the beginning of the program, less than
one-half of which has been drawn.
Communist Economic Aid Extended to Selected LDCs, 1974
Million US $
Total
Total
1,415.2
USSR
612.6
Eastern
Europe
605.3
China
197.3
Africa
283.8
21.8
90.0
172.0
Guinea
83.5
2.0
80.0
1.5
Mauritania
47.3
0.4
10.0
36.9
Tanzania
75.0
....
....
75.0
Zambia
54.9
3.4
....
51.5
Other
23.1
16.0
....
7.1
East Asia
25.0
....
....
25.0
Laos
25.0
....
....
25.0
Latin America
452.2
222.2
230.0
....
Argentina
435.0
215.0
220.0
....
Other
17.2
7.2
10.0
Near East and
South Asia
654.2
368.6
285.3
0.3
Bangladesh
103.1
27.6
75.5
Pakistan
216.0
216.0
...
Syria
285.0
100.0
185.0
Other
50.1
25.0
24.8
0.3
2. All donors, except the countries of Eastern Europe, reduced their pledges
in 1974. The USSR and East European countries offered about the same amounts,
together accounting for more than 85% of total new aid. Chinese aid was a far
cry from the record $730 million extended in 1970 when Peking again began to
offer large amounts of aid to LDCs and significantly below the $580 million average
of the four-year period 1970-73.
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Total
1,4152
1,647
2,144
2,171
USSR
613
654
650
1,125
Eastern Europe
605
554
910
484
China
197
439
584
563
1. Because of rounding, components may not add to the totals shown.
2. Converted from foreign currencies that have appreciated approximately 20% in relations to the US dollar
since 1971. Inflation of prices may have reduced the real value of the aid even further.
3. Argentina, Syria, Pakistan, and Bangladesh, in that order, were the major
recipients of Communist economic credits getting three-fourths of the total. The
USSR and Eastern Europe gave almost equal amounts to Argentina; East European
countries dominated in aid to Syria and Bangladesh; and Moscow provided for
all the assistance to Pakistan.
4. The USSR remained the top Communist donor. Although Moscow
channeled its aid to 19 clients, three countries .- Argentina, Pakistan, and Syria -
predominated. Argentina, now the largest claimant for Soviet aid to Latin America,
received a $215 million credit to develop electric power facilities. Moscow gave
a like amount to Pakistan to augment 1971 credits for the construction of a steel
mill. Following President Asad's visit in April, Moscow provided a minimum $100
million in new credits to Syria. Part was to complete the second stage of the
Soviet-built Euphrates dam, a port, and a textile mill. Moscow offered Egypt only
$20 million in new aid, all for mine clearing in the Gulf of Suez. Other small
amounts were spread among a handful of LDCs in need of emergency relief and
balance-of-payments support, including $13.5 million in hard currency to
Bangladesh. Until 1974, Moscow's hard currency transfers to all client states had
totaled only $20 million.
5. Romania, Czechoslovakia, and Poland were the biggest donors among East
European countries, accounting for three-fourths of all pledges. At $260 million,
Bucharest's program was the largest; Prague and Warsaw each offered $100 million.
Argentina and Guinea were the major recipients of Romanian aid. Bucharest also
pledged $50 million to Bangladesh and $10 million each to Mauritania, Sri Lanka,
and Lebanon, the first Communist aid to that country. All of Poland's aid went
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to Argentina; Czechoslovakia centered its program entirely on Syria. Credits by
Bulgaria, East Germany, and Hungary totaling $145 million rounded off the East
European effort. Sofia's share, more than $78 million, went largely to Syria.
6. Almost all of Peking's economic aid package went to African countries,
except for a $25 million credit to Laos and a $300,000 grant to Sri Lanka. The
Laotian credit constituted Peking's first formal aid agreement with the coalition
government. A sizeable chunk is earmarked for road construction - to link a
Chinese built road in northern Laos with the existing Laotian road network. Most
of the new credits to Africa supplemented Chinese programs already under way.
Tanzania received the largest credit, $75 million, mainly to expand a Chinese-built
textile mill and to construct spur lines to the Tan-Zam Railroad. The remainder
included nearly $52 million to Zambia, $37 million to Mauritania, and $1.5 million
each to Kenya and Upper Volta.
Drawings
7. Drawings by LDCs reached a record $930 million in 1974 because of
shipments against the large Soviet grain credit to India signed in late 1973. No
significant changes in magnitude occurred in drawings against Chinese and East
European aid. If the Soviet grain were excluded, total drawings in 1974 against
Communist credits would approximate the annual average of 1970-73; for the
USSR, drawings would be somewhat below the average for the same period (see
Table 3).
8. The apparent static character of LDC drawings activity has become an
accepted principle of the Soviet aid program. Deliveries to major clients fluctuate
in cadence with stages in construction of heavy industrial plants. India's dull
performance during the past five years, however, has created an extra drag on
the Soviet program. As the largest recipient of Soviet assistance, India has yet
to draw $600 million of Moscow's $1.9 billion in pledges. Some $300 million
of project aid has not been allocated to specific uses. Project aid deliveries have
dropped from a peak of $125 million in 1964 to about $25-$30 million annually
since 1969.
9. East European deliveries fluctuate less dramatically. They are made up
largely of orders for machinery and equipment which are easier to manage than
Soviet heavy industrial plants.
10. Drawings on Chinese credits fell moderately in 1974. Deliveries to
Tanzania for the Tan-Zam Railroad dropped to $60 million, from $100 million
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Table 3
Communist Economic Aid Drawn by Less Developed Countries
Million Current US $
Total
USSR
Eastern
Europe
China
Total'
8,196
5,319
1,461
1,416
1954-64
2,090
1,528
385
177
1965
521
352
91
77
1966
498
334
74
90
1967
518
303
114
100
1968
486
300
116
70
1969
502
341
91
70
1970
540
360
112
68
1971
732
419
145
170
1972
665
348
97
221
1973
713
402
117
194
1974
930
634
118
178
in 1973. The railroad, Peking's largest single project in the LDCs, is nearing
completion. Only $30 million of the original $400 million credit for the railroad
remains and that amount should be drawn in 1975.
Repayments
11. Despite Soviet rescheduling, LDC economic aid repayments to Communist
countries in 1974 probably were somewhat higher than the $420 million estimated
for 1973. Afghanistan, Ghana, Somalia, and South Yemen, whose debts were
rescheduled; mainly received extensions of previously allowed moratoria. Requests
for rescheduling by Egypt,' India, and Syria - among the USSR's largest debtors -
were not acted upon. Moscow in an unusual move, canceled some outstanding
debt - for South Yemen2 $50 million, and for Somalia about $13 million. The
USSR usually handles LDC debt servicing problems by extending repayment terms,
often after long grace periods.
1. May include some economic debt, although these payments are made.
2. Probably includes military debt as well as some debt on commercial account.
4
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12. The Communist presence in Third World countries expanded in 1974,
as the number of non-military technicians stationed in the LDCs topped 47,000.
Chinese technicians still predominate, reflecting Peking's continued heavy
commitments to Africa (see Table 4 and Figure 3).
Communist Economic Technicians in Less Developed Cou;:tries'
I. Minimum estimates of the number of persons present for a period of one month or more. Numbers are
rounded to the nearest five.
2. Including laborers in some countries, especially in Tanzania, Zambia, and Somalia.
3. Excluding 25,000 to 30,000 Chinese personnel reported working on the Karakoram Highway in Pakistan.
13. Most of the East European technicians detailed to LDCs were stationed
in Algeria and Libya. Algeria also-.received the largest share of Soviet personnel.
More than one-half of Soviet and East European personnel in LDCs in 1974 were
in Algeria, Libya, Egypt, Syria, and Iraq. An additional 15% of Soviet and East
European personnel were detain. c to aid projects in Afghanistan, Bangladesh, India,
and Iran.
14. More than three-fifths of the Chinese technicians in LDCs were stationed
in Zambia and Tanzania in construction activity related '-o the Tan-Zam Railroad.
The Chinese withdrew some 3,000 technicians in 1974 as construction was winding
down. Of the remaining personnel, about 10,000 were used to lay track in Zambia,
and 3,500 to complete ancillary rail facilities in Tanzania. Elsewhere in Africa,
Peking upped its contingents in Cameroon, Mauritania, Rwanda, and Sierra Leone
Persons
1973
1974
Total
USSR
Eastern
Europe
China
Total
iJSSR
Eastern
Europe
China
Total
43,960
13,095
7,325
23,540
47,375
14,725
9,715
22,935
Africa
31,675
4,590
5,075
22,010
34,120
6,005
7,445
20,670
East Asia
75
25
10
40
110
15
25
70
Europe
Latin
35
....
....
35
120
....
120
America
Near East and
400
185
165
50
545
310
170
65
South Asia3
11,775
8,295
2,075
1,405
12,480
8,395
2,075
2,010
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 Communist Technicians
in the Less Developed Countries, 1974
25 l
Chile l~~~~0~
7
Brazil
140
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Morocco;
4,655196511
1300 N iA-
I MaliZ -1' 1 35
Mauritania 145 jo 2G '1 Niger
Senegal +129 0.' v'UppporrVolta
y4 Soud1 Nigeria
,, 1'176 ~i5 I-
265 f V, 6U 5 1 Etluopia4I; o , 11 1 /'
Guinea\~ _t_ 5
~~ mnliof
4051 ~ 111 SierraLoone~Nigeria 6 CAn~ (360 ~- 2
Lih ',U5111ahomeCa oiooi
50 _C11127 r 9Oa
mia
iS..,T 03110may Uganda-3T V Kenya i,uuua iumea rJ
B
~~ - 30 ~ Congo
Eqw oriel Guinea
260 25 CangoriN 70 Rwanda
~('50
I am
1151611I1
370 'at5nm1 Burundi
rk r.
Turkey
'
TunisiaGreece 340
{
1 470 Malta 25 lSyria
120 Lebanon
Jera~TI \i.23o'y (3,616, I06
a
,160 2011, ~35
uda~aq I~
420 B 010 r!255~~ 611
Africa
East Asia
Europe
Latin America
Near East and South Asia
Total I
of Ecn
2,040+,n 2,,1 S11
rj r.
Turkey'
Tunisia.,Greece,, 1340 5
~q70 Malta 2 ~Synn
X1120 Eahooon ! ry `375 q~~.{{ 113U Iron
1,2+i; 70
3011 L~
V Jordon r
Egypti Ki 15
~',uwat6011 2011
/ North
Vernon
r r 110
an 'r 1Y' `JI~Jr
Sud 010
420 14U Soulh Yemen
Ethiop a Somalia2~
1360 2950
Uganda AV Kenya I,ODO9'
30
j210~ Rwanda
Africa
East Asia
Europe
Latin America
Near East and South Asia
1 ,
715 DU \_r'--1 \ Tanzania
370 ;7 7T,510,1U
k ) I
Zambia
15
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1 45
Mauritius
Technicians in 1974'
Total Number Total Nwnher
of Economic Technicians of Military Teehni:ians
34,120
110
12C
545 15
12,480 4,095
'Present for r month or mare.
411
~Alghamalon ~~ r
r } 2J
6J~~j~85}~ L.. _ Nepal
Pakistan
jYs'
India ]30}~r5'r0
~ r~ t 10 ~? I
n)
Thailad, ,
Malaysia
6
Secret
Indonesia y
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under agreements to develop agricultural and transportation facilities. Large groups
also were sent to both North and South Yemen.
15. LDCs contracted for a minimum of $150 million in Soviet and East
European services in 1974. They also paid for in-country support. Moreover, East
European countries require hard currency payment for their technicians. Peking
on the other hand usually requires LDCs to pay only the local costs for technicians,
and these are financed by commodity import credits.
Technical Training
16. Nearly 32,600 LDC personnel have gone to Communist countries for
technical training since 1954 (see Table 5). Departures were up in 1974, mainly
because of an expanded East European program.
Technical Trainees from Less Developed Countries Departing for Training
in Communist Countries'
Total
USSR
Eastern
Europe
China
Total
USSR
Eastern
Europe
China
Total
USSR
Eastern
Europe China
total
32.570
20,075
11,700
795
4,380
2,640
1,660
80
3,715
2,625
1,090
Africa
7,145
3,525
3,455
165
905
325
500
80
660
315
345
East Asia
1,095
355
330
410
10
5
5
..,,
Latin
America
260
130
130
....
80
35
45
....
70
45
25
Near East and
South Asia
24,070
16,065
7,785
220
3,385
2,275
1,110
....
2,985
2,265
720
17. Although the USSR consistently receives the largest share of new trainees,
it also continues to emphasize in-country technical training at project sites,
vocational schools, secondary and university-level institutes, and on-the job
training.' Moscow, for example, has established 23 secondary and higher education
institutes in 11 developing countries that can train about 16,030 students annually.
Moreover, the Soviets have built or are building at least 100 vocational training
facilities. Moscow sends about 1,500 Soviet instructors to LDCs each year to staff
training facilities.
3. More than 300,000 unskilled workers have been trained at Soviet project sites.
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18. The Soviet effort to develop technical education facilities in LDCs is
particularly significant in North African and Near Eastern countries. Moscow's help
has led to the construction of more than 90 educational establishments in Arab
countries. Sixty-eight of these were operational by the end of 1974 (mainly in
Egypt, Algeria, and Iraq) and training had been provided to 130,000 students.
A new agreement with Iran calls for construction of 20 new industrial training
centers, including two technological institutes and a teacher training school.
19. China carries on only a small program in technical training - only 795
trainees in 20 years. Peking believes that the relatively simple skills required to
implement Chinese-supported projects are better acquired through in-country,
on-the-job training rather than at Chinese domestic facilities.
Academic Students
20. Since 1956, nearly 65,700 students from LDCs have gone to Communist
countries for academic study. Data on new students in 1974 and those in residence
at Communist academic institutions at yearend are shown in Table 6.
21. The USSR repeatedly trains more foreign students than any other
Communist country. It offers studies in more than 400 specialities at more than
800 universities. Last European countries also operate a good sized effort. The
Chinese program is intentionally kept small and selective. Since the Cultural
Revolution, China has accepted only Tanzanian and Zambian students, except in
1974 when the enrollee base was broadened to include a handful of students from
Ethiopia, Sudan, Iran, and Sri Lanka.
Academic Students from Less D_veloped Countries Trained in Communist Countries'
ersons
1956774
1974
O
i
-T
i
e
n
ra
ned as of Dec 1974
Total
USSR
Eastern
Europe
China
Total
USSR
Eastern
Europe
China
Total
USSR
Eastern
Europe
China
Total
Africa
65,655
32
660
37,790
26,835
1,030
4,645
3,100
1,515
30
25,240
16,375
8,550
315
East Asia
,
3
1
19,170
12,745
745
2,390
1,515
860
15
13,625
8,765
4,560
300
Latin
,
45
1,605
1,405
135
55
50
5
....
430
285
145
America
Near East and
6,700
4,270
2,430
....
525
390
135
....
2,705
1,940
765
South Asia
23,150
12,745
10,255
150
1,675
1,145
515
15
8,480
5,385
3,080
15
I
. Numbers are rounded to the nearest five. Some of the estimates are based on scholarship awards.
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Secret
22. Third World students stress science and engineering training relevant to
indigenous development needs. Africans outnumber all others on the student list,
nearly two-thirds in residence at Soviet institutions.
23. In October 1974, Prague permanently closed the University of
17 November, which had administered training for all foreigners in Czechoslovakia.
The closure signals decreasing emphasis on socio-political training/indoctrination
rather than the termination of academic training for Third World students. The
University had only language, international relations, and economics faculties.
Students seeking training in other disciplines were sent to schools elsewhere in
Czechoslovakia. Administrative responsibility for students now will be assumed by
the university at which they are enrolled.
Military Aid
24. Communist countries pledged more than $1.3 billion in new military aid
to LDCs in 1974, down 30% from last year's record performance (see Table 7).
Arab states remained the centerpiece of Communist arms diplomacy in 1974. The
USSR was the top donor; Syria and Iraq, the ranking clients, received 60% of
all new Soviet aid. Moscow offered no new aid to Egypt, a dramatic turnaround
from last year, when Cairo received $635 million (see Table 8). Although new
credits to Syria were off sharply, the military aid package in 1974 was sufficient
to keep rebuilding and modernization programs on track. Damascus was especially
pleased with the terms of the new accords that permitted liberal deferment of
payments. Iraq, whose ; ery large purchaes were needed to rebuild inventories
depleted in the Kurdish war, has no repayment problems, as burgeoning oil revenues
are generating large current account surpluses.
25. Moscow had nine other LDC clients for arms aid. gran topped the list
as it concluded a record $250 million accord for ground forces and engineering
equipment. Major new Soviet agreements with Tanzania and Uganda signaled the
introduction of surface-to-air missiles to glad: Africa.
26. Other notable Soviet-LDC arms developments in 1974 included:
? Shipment of supersonic fighters and surface-to-air missiles to Somalia;
? Two new African clients, Guinea-Bissau and the Central African Republic;
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Table 7
Communist Military Aid Extended
to Less Developed Countries'
Table 8
Soviet Military Aid
Extended to Major Arab States
Million Current US $
Million US $
Eastern
1974 1973
Total
USSR
Europe
China
Total
674 1,489
Total
13,641
11,837
1,251
553
E
y
t
635
1955-64
4,331
3,788
505
38
g
p
Iraq
....
270 149
1965
386
262
45
79
Syria
406 705
1966
516
449
15
52
1967
646
515
75
56
1968
532
462
45
25
9 A $30 million order by Mo-
1969
427
338
86
3
rocco;
1970
1,086
984
39
63
1971
1,549
1,376
97
76
a Significant cash deals with
1972
1,018
829
111
78
r:w.... ie1cn ._._a
.11-
Au
1974
], ,..314 14
1,100
1449 9
65 5
Nigeria ($50 million); and
I. Because of .ounding, components may not add to the
totals shown.
w New accords with Peru and
Sri Lanka.
27. East European countries offered some $150 million in military aid to nine
LDCs in 1974. About one-half went to Iraq, nearly all from Bulgaria and Romania.
During an early December visit to India, the Czech Prime Minister signed a
$45 million aid agreement to provide Delhi with tanks, armored personnel carriers,
trainer/attack aircraft, and engineering equipment. The East European effort also
included smaller accords with Egypt, Lebanon, Syria, and Tanzania.
28. China continued as a minor actor in Communist military aid. Peking
reaffirmed its support for Pakistan with a $61 million accord and added two new
clients, Nepal ($1 million) and Zaire ($3 million).
29. Drawings against outstanding military credits - $1.3 billion - plummeted
from the record $2.1 billion in 1973, as Moscow's deliveries to Egypt dipped to
only $80 million. Nonetheless, military deliveries were the second highest on record
(see Tables 9 and 10).
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Socrot
Communist Military Aid Drawn
Soviet Military Deliveries
by Less Developed Countries' to Major Arab States
Total
USSR
Eastern
Europe
China
Total
11,910
10,444
1,007
459
1955-64
3,211
2,686
490
35
1965
353
331
9
13
1966
576
460
43
73
1967
495
448
21
26
1968
539
460
50
29
1969
480
417
36
27
1970
1,034
936
71
27
1971
917
779
73
65
1972
880
759
46
75
1973
2,144
1,995
77
72
1974
1,281
1,173
91
17
1. Becausa of rounding, components may not add to the
totals shown. certainly are better equipped
now than at the beginning of the
October 1973 war. Syria also became the first LDC to receive the MIG-23 Flogger.
Some of the most modern equipment exported by Moscow, including Osa-II guided
missile Patrol boats and MIG-23 aircraft, were sent to Iraq. In addition, Baghdad
received its first FROG-7 rocket launchers.
31. In other Near East developments, Moscow for the frst time in three
years resumed shipments of limited quantities of military equipment to North
Yemen. Deliveries to Iran ($100 million) continued, although behind schedule.
32. Soviet deliveries to India ($104 million) fell to their lowest level since
1970. Although shipments declined steadily during 1971-73, the drop does not
signal a shift in Soviet-Indian military aid programs. Rather, old agreements are
nearly completed and Moscow has not yet begun to implement new agreements.
Elsewhere in South Asia, Afghanistan continued to receive record quantities of
Soviet arms, particularly armored vehicles.
33. Soviet deliveries to Africa - $67 million -- increased over previous years.
Somalia alone took more than 60% of the total as Mogadiscio received its first
MIG-21s and SA-2 surface-to-air missile equipment. Peru was the only Latin
1974 1973
Total 791 1,601
Egypt 80 565
Iraq 276 335
Syria 435 701
30. Nearly all the arms
came from the USSR, with Syria
and Iraq th,- principal recipients.
The level and mix of Soviet
weapon shipments to Damascus
has upgraded Syria's ground
forces so that they almost
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American recipient, getting $25 mi_1i1on worth of tanks and ground forces
equipment. About 170 Soviet tanks have been shipped to Peru under a 1973
agreement.
34. The bulk of East European ar,ns deliveries in 1974 went to Arab states.
Iraq ($56 million) received more than one-half; Syria and Egypt most of the rest.
Bulgaria and Romania provided most of the equipment supplied Iraq;
Czechoslovakia carried most of the Syrian load. Chinese deliveries were directed
mainly to Pakistan, although token shipments went to Nepal and Zaire.
Training
35. Nearly 40,000 LDC military personnel have been trained in Communist
countries since 1954. Dckta on new trainees and those in training at the end of
1974 are shown in Table 11.
Military Personnel from Less Developed Countries Trained in Communist Countries'
Total
USSR
Eastern
Europe
China
Total
USSR
Eastern
Europe
China
Total
USSR
Eastern
Europe
Chipr
Total
39,590
33,530
3,755
2,305
3,635
3,400
110
125
4,070
3,260
100
710
Africa
0,855
7,230
475
2,150
1,085
995
....
90
2,170
1,460
30
680
East Asia
Latin
9,300
7,590
1,710
....
....
....
....
America
Near East and
150
150
....
....
100
100
....
60
60
South Asia
20,285
18,560
1,570
155
2,450
2,305
110
35
1,840
1,740
70
30
1. Data refer to the estimated minimum number of persons departing for training. Numbers arc rounded to the nearest five.
36. The USSR bears the brunt of LDC military training, handling about 85%
of all trainees since 1955. Near East and South Asian countries remained the largest
users of Communist military twining in 1974, with African countries a distant
second. The number of Ir'dian trainees, all in the USSR, nearly tripled, and the
Iraqi and Nigerian contingents doubled. Moscow also accepted new trainees from
Tanzania. These increases more than offset reductions in training complements from
the Congo, Guinea, Egypt, and Syria. There were no Egyptian military trainees
in any Communist country at the end of 1974.
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Regional Overview
Africa
37. African countries received $450 million in new economic and military
credits in 1974. Economic pledges were down more than one-third from 1973
to $285 million; new military aid zoomed to more than $165 million. The USSR
was the main donor, its contribution spearheaded by $160 million in new military
credits. Last year Moscow's military credits to Africa were negligible. Peking
remained the top donor of new economic credits, although its offering was about
half the $335 million in 1973. As shown in Figure 4, there were 12 recipients
of new economic aid, led by Guinea, Tanzania, Zambia, and Mauritania in that
order; Tanzania, Somalia, and Morocco topped the new military aid list that
included eight clients.
Algeria
38. The Communist-Algerian aid program was lackluster in 1974, although
Algeria continued to host the largest contingent of Soviet aid personnel in the
Third World. Beyond the fact that no new economic or military aid was pledged,
effective use by Algeria of existing credits remained slow. Soviet-supported projects
were plagued by equipment breakdowns and shortages of spare parts.
39. In May the Chairman of the Soviet State Committee for Foreign
Economic Relations went to Algiers to discuss upgrading project performance. The
meeting resulted in a new protocol to expedite several projects in Algeria's second
four-year development plan (1974-77). They include:
? expansion of Soviet-built facilities at the El Hadjar steel complex;
? geological prospecting; and
? development of agricultural, water, and energy resources.
These programs will be financed by $200 million in outstanding credits.
40. During the year, protocols also were signed with Bulgaria, Hungary,
Poland, and Romania that entail aid to agriculture, light industry, communications,
school construction, and oil and gas development. Algeria so far has failed to use
most of the more than $340 million in credits received from East European donors.
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46
Algeria
NegL Negl. Noyl.
Guinea. Kenya
Bissau
6
Congo
Communist Economic and
Military Assistance
to Africa
Million Cunont US S
1955.74
7 Negl.
Equatorial Guinea 3
Ethiopia
75 75
/ 2. 1 Ncgl.
Togo Tunisia
Mililary As:iislancc
Extended
Drawn
Economic Assistance
Extended 4,324
Drawn 1,551
Uganda
e 14
890
1,7(1
4Ju /.. N?gl
Gambia Ghana
17
Guinea
rr-
Negl.
Zaire
FIGURE 4
1974
Million Current US $
Extended
Drawn
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During the year a Czech-built powerplant at Skikda probably was completed, and
Poland opened a pilot shipyard at Oran to train Algerian workers.
41. One of the few bright spots was the dramatic expansion of
Communist-Algerian trade. Protocols for 1974 call for a minimum turnover of $575
million, and long-term trade accords signed with Bulgaria, Romania, and the USSR
project a $1 billion turnover with these countries alone in 1977.
42. As for military relations, Moscow resumed fighter aircraft deliveries -
five MIG-21 s - after a three-year hiatus. Although Soviet Defense Minister Grechko
visited Algeria late in May and an Algerian military delegation went to Moscow
in July, no new military agreements were signed.
Ethiopia
43. China again dominated Communist-Ethiopian aid relationships in 1974.
Peking expanded work on mineral surveys and water distribution systems and began
construction on the Waldiya-Woreta road. This 185-mile highway that will link
agriculturally rich provinces with the port of Assab should be completed by the
end of 1977.
44. Moscow showed few aid initiatives. Teachers were sent to the Bahr-Dar
Polytechnic Institute, technicians made their annual run to overhaul the Soviet-built
Assab oil refinery, and a few technicians were posted temporarily at the Ambo
research laboratory.
45. Other major Communist aid consisted of drought relief. China shipped
10,000 metric tons of wheat in February and Moscow sent 4,000 tons in July.
46. Among African countries, Guinea received the largest new economic
credit - $80 million from Romania. Most of this money will be used to develop
the bauxite mining and processing industry, although some will go to iron ore
mining, construction of a tractor plant and a plastics factory, and agricultural
development. Romania also sent 750 tractors.
47. The Soviet supported bauxite project at Kindia is still the largest
Communist aid investment in Guinea. By the end of the year, only $18 million
of the original $92 million credit was unused. Money spent on developing the
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bauxite mine, constructing a rail line, and upgrading port facilities at Conakry finally
paid off as the first shipments of bauxite began in June and were regularized in
October. Moscow will receive more than 2 million tons of bauxite annually for
the next 30 years, half as debt repayment.
48. New Soviet aid in 1974 consisted mainly of a grant shipment of 10,000
tons of flour in May. Among Communist countries, the USSR not only offered
the most economic technicians but also took the most students for academic
training.
49. Chinese aid focused heavily on the agricultural sector. Technicians were
sent to assist rice, sugar cane, and other crop cultivation programs and to complete
an agricultural implements plant at Mamou, a school at Kankan. and an irrigation
dam near Dabola. Peking sent 3,000 tons of rice in May as grant aid.
50. Chinese amid Soviet military aid programs were beset with problems.
Guinea complained that deliveries of spare parts for the Shanghai-class motor
gunboats were behind schedule and that Chinese personnel were neither maintaining
the craft nor training Guinean technicians properly. In October, Guinea sent
15 students to the USSR for marine diesel maintenance training because of
inadequate training received in China. Moscow had its own problems too. Some
$4 million of military equipment was delivered, but little progress was made on
Soviet construction of a naval facility on Tamara Island for Guinean forces.
51. New Communist economic aid to Mauritania reached a single year high
of $47 million in 1974. China was the leading donor, followed by Romania.
52. The $37 million Chinese a?.d package was earmarked mainl-./ for
construction of a deep water port at Nouakchott and to build a 70-mile segment
of the Nema-Nouakchott highway. In 1971, Peking had pledged more than
$20 million, part of which was to be used for port construction. China rounded
off its 1974 activities by sending Chinese technicians to supervise the experimental
rice farm at Rosso and by providing 3,000 tons each of rice and corn as grant
aid.
53. Bucharest undertook its initial aid relationship with Mauritania, pledging
$10 million to cover both a steel works survey at Maudhibou and mineral and
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petroleum exploration. Romania also entered agreements to form joint companies
to develop the livestock and fishing industries. Soviet aid consisted only of a 3,000-
ton shipment of corn as grant aid.
Libya
54. During Prime Minister Jallud's visit to Moscow in May, a Soviet-Libyan
trade agreement was signed and a joint inter-governmental committee to coordinate
economic, oil, and trade issues was set up. These developments underscored Libya's
intention to go ahead with Soviet projects that have been under consideration for
some time. The joint committee met in July and again in October to identify
general areas of cooperation and to review project possibilities. Soviet development
assistance is being considered for mineral pi ospecting, iron and steel development,
electric power, oil and gas, port development, and agriculture.
55. Libya remained the major Third World beneficiary of East European
technical assistance. The East European presence will continue to grow under
long-term barter agreements concluded in 1974 specifying the exchange of oil for
equipment and services. Romania is to provide an oil refinery and technical services
for petroleum development, agriculture, and housing under a $1 billion deal
concluded in February. Czechoslovakia and Poland also signed long-term agreements
to provide machinery, equipment, and technicians in return for oil. Bulgaria and
Hungary entered short-term contracts to import oil in exchange for machinery and
equipment. Price disputes may have precluded fulfillment of these East European
agreements, which called for imports totaling some 140,000 b/d.
56. In December, Libya was considering proposals to finance expansion of
the Hungarian food processing industry. This would be the first Libyan assistance
to a Communist country.
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58. Soviet military deliveries during 1974 reached a record $75 million and
included more than 200 medium tanks, as well as several SA-3 and SA-6 missile
units, the first in Libya's inventory. As in the past, payment for the Soviet
equipment was cash on delivery.
59. Moscow remains the major Communist aid donor to Morocco. Even
though no new economic pledges surfaced in 1974, $30 million in new military
credits was extended. Moscow did move a intensify its involvement in Moroccan
economic development. A 25- to 30-year agreement signed in December specified
Soviet aid to develop phosphate deposits at Miskala. The USSR is to supply the
machinery and equipment for an open cast mine, a railroad, road networks, and
port installations, presumably under existing credits. Under the agreement, Morocco
will deliver 3 to 5 million tons of phosphates annually from 1980 to 1990 and
up to 10 million tons each year for the next 15 to 20 years.
60. Soviet project assistance was keyed to starting construction of a $30
million dam on the Loukkos River, hailed as one of the most important projects
under Morocco's new five-year plan. Construction of the hydropower plant at Ait
Adel neared completion. Soviet-assisted power projects already in operation account
for at least one-third of Morocco's total power supply. Work also was initiated
on port storage facilities at Casablanca and Agadir, implementing a June 1973
protocol. A two-year contract was signed in June for Soviet geologists to resume
mineral surveys in north Morocco and to continue prospecting in other areas. Shale
oil development also has been mentioned for possible Soviet financing. Finally,
a five-year agreement signed in March calls for a $600 million trade turnover during
1974-78.
61. As for East European assistance, Romania continued work on copper
mining and processing projects and agreed to participate in urban development
programs. Poland delivered locomotives, presumably under an existing credit. Early
in 1975, Warsaw plans to start equipment deliveries for a sulfuric acid plant -
its largest project in the Third World. In line with 1973 plans, Morocco signed
trade agreements that ended barter arrangements with Bulgaria, Czechoslovakia,
Hungary, and Poland. China entered the Moroccan aid scene by sending its first
survey team to study plans for a sports complex.
62. As for military aid, Moscow concluded two arms accords with Morocco.
The first was a commercial deal covering some 125 tons of ammunition, the second
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was a $30 million agreement for equipment, including air-defense missiles. Deliveries
under this accord are to be spread o;'er three years, with repayment in Moroccan
goods.
63. Somalia received only $11 million in new economic credits in 1974,
although it was the second-ranking African recipient of new Communist military
aid ($45 million).
64. Moscow continued to dominate Com;nuw'st aid to Somalia. It provided
nearly all of the new economic aid that ";as used for budgetary support, including
a $4 million oil subsidy. Moscow reduced Somalia's economic debt by $13 million
under a Soviet-Somali Treaty of Friendship.
65. Soviet project aid focused on equipment deliveries for the hydroelectric
power and irrigation project at Fanole under an $18 million credit extended in
1971. In mid-summer a bilateral fishing agreement was signed, and a joint
Somali-Soviet fishing company started operations. In December, Moscow agreed
to ship 5,000 tons of corn early in 1975 as grant aid.
66. Construction of the Belet Uen-Burao road, the principal project under
China's $109 million credit extended in 1971, is in full swing. The road may be
completed by 1977. In February, the Hargeisa water supply project built with
Chinese aid was put into operation. Later in the year the Chinese finished work
on a cigarette and match factory. Work both on the Hammar Hospital and on
agricultural projects and a grant shipment of 4,000 tons of sorghum rounded off
the Chinese effort.
67. East European activity was small. Bulgarian technicians worked on tin
deposits under a January 1972 agreement, and East Germany sent equipment as
part of an $800,000 credit extended in 1970 for prison reform.
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69. No new initiatives occurred in Communist-Sudanese economic aid in
1974, although Moscow ciid resume military deliveries. Peking still has the most
active economic aid program, and during the year project assistance continued on
the Wad Medani-Gedaref road, the conference hall in Khartoum, and the textile
mill at Hasahaisa, all under a $42 million line of credit extended in 1970. Peking
also assisted in chrome prospecting and in building a fishing industry on Lake
An Nubah as part of a 1971 credit that offered $40 million for development
projects. This credit also provided for the construction of paper factories that the
Chinese reportedly agreed to in September.
70. The only Soviet projects to move forward were the Red Sea Hills
geological survey, hospital construction, and the saw mill at Wau. All are funded
by unused credits, some of which go back 14 years.
71. Romania's aid was keyed to unused 1971 credits for building a
25,000-spindle textile mill on the outskirts of Khartoum and an assembly hall at
Omdurman.
72. After a two-year hiatus, Moscow resumed its military shipments with
about $2 million worth of ground forces equipment. Deliveries probably were
arranged during discussions held in Khartoum in January and fell under a 1968
military accord. Peking's military program consisted solely of maintaining an
in-country training mission.
73. Tanzania received $150 million in new Communist aid in 1974. Of this
total, $75 million was economic aid, all supplied by China. Military aid, also about
$75 million, came from the USSR ($74 million) and Bulgaria ($1 million).
74. The new Chinese aid will be used to develop iron ore deposits in Chunya
and coal deposits in Tukuyu and to construct a Chunya-Tukuyu rail line that will
be extended to the Tan-Zam Railroad. The Tan-Zam is already in limited service
between Dar es Salaam and Mwenzo just inside the Zambian border. Most of the
4,100 Chinese technicians in Tanzania are working on projects related to the
Tan-Zam Railroad and on training.
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75. Peking also maintained project assistance for the state farm at Mbarali
and for a new pharmaceuticals plant to be completed in 1975. Chinese technicians
were also a: tive in Zanzibar, where they finished the sugar mill at Nahonda and
continued constructing a saw mill at Temba.
76. The inertia of Moscow's economic aid to Tanzania continued in 1974.
Less than $3 million of a $20 million line of credit extended in 1966 has been
used, and there is nothing to suggest a speedup. Not much more can be said for
East European efforts, although Bulgaria did agree to construct a tannery under
an existing 1972 credit.
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78. Peking continues to maintain a 745-man military training and
construction force in Tanzania and has agreed to extend its training mission for
two more years. China may have agreed to supply Tanzania with additional small
arms, artillery, and ammunition, but no deliveries were detected in 1974.
79. New Communist economic aid to Zambia in 1974 consisted of a $52
million project assistance credit from China and a $3 million credit from the USSR
for the purchase of two YAK-40 civil air transports. About one-third of the Chinese
credit is for construction of the Serenje-Samfya road; the rest is for as yet
unidentified technical and agricultural projects.
80. Work on the Tan-Zam Railroad accelerated in 1974. Only about 60 miles
remain to be installed, and the line should reach its western terminus of Kapiri
Mposhi in 1975. Passenger and freight service between Dar es Salaam and Mpika
should begin in the fall and the entire line will be.fully operational in 1976. The
Chinese will turn the railroad over to the Tanzanians and Zambians only after
at least six months of trial operations. Peking still needs to deliver additional
locomotives, freight cars, and passenger cars and to complete construction of sidings
and signal facilities.
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Other African Countries
81. The USSR sent $8 million worth of grain as grant aid to ten
drought-stricken African countries. China offered similar aid valued at $6 million
to four countries. East European countries also sent token amounts. Except for
Ethiopia and Somalia, all recipients were in West Africa.
82. The Central African Republic signed its first military aid agreement with
the USSR in the first half of 1974. The initial delivery under this $1 million accord
was airlifted to Bangui during October. It was followed by the delivery of small
quantities of ground forces equipment unloaded in the ports of Douala, Cameroon,
and Brazzaville, Congo, where it was transshipped by barge.
83. China continued work in Congo at the dam and hydroelectric complex
on the Bouenza River and on a limestone crushing factory. Congo drew $4 million
on a 1970 Chinese credit for budgetary support. The USSR worked on the
veterinary laboratory for which a grant was made in 1973.
84. Communist country,= improved their relations with Ghana, with China
making the greatest gains. In 1973, China reactivated some projects provided in
pre-1965 credits; in 1974 the Chinese began to plan technical assistance for several
of them. The USSR also has offered to review some pre-1966 projects. East
European countries discussed possible future projects, limiting their activities largely
to signing new agree:.ients. In the military field, Ghana signed an arms agreement
with Bulgaria, its first with a Communist country in more than nine years. The
accord covered a small quantity of small arms and ammunition.
85. Guinea-Bissau became the newest recipient of Soviet military aid. A visit
by a Soviet military delegation in November to assess the military needs of the
newly established government led to a military aid agreement. An accord was
expected, as Moscow was the major arms supplier to the National Liberation
Government prior to independence. The first delivery of equipment arrived in
December and consisted of shop-van trucks and ammunition. The cargo was
offloaded at Conakry Port, then trucked to Bissau.
86. The USSR was active in Mali, exploiting the Kalana gold fields,
conducting geologi:,al surveys, and providing agricultural technical assistance. The
Chinese began work on a second sugar refinery at Seribala and were active in several
small projects. The Chinese still have not acceded to Mali's major aid request to
construct the Manantali Dam on the Senegal River. They did send a team to restudy
the project, however.
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87. Peking signed a $5 million economic aid accord with Niger in July and
later in the year sent some agricultural technicians to work at rice farms. China
is the only Communist country offering development assistance to Niger.
88. There was no appreciable increase in Soviet or Chinese economic aid
to Nigeria, despite President Gowon's visit to both countries. Peking sent agricultural
development teams to five Nigerian states, but it maintains a low profile. The USSR
continued mineral prospecting at Kaduna, and equipment and staff were sent to
the oil training facility at Warri. Trade agreements were signed with Hungary,
Czecholsovakia, and East Germany
89. An August visit to China by Rwanda's Foreign Minister ushered in a
new period of cooperation. Work on the Kigali-Rusumo road, China's largest project,
was inaugurated officially one month after his return. Rwanda agreed to order
$2.5 million worth of Chinese goods to pay for local costs of development projects,
and China reversed a previous decision not to build a cement plant. There was
no change in economic relations with Moscow.
90. In September 1974, officials from Togo signed a new protocol with China
that reportedly established procedures for utilizing Peking's $45 million line of
credit extended in 1972. Less than $1 million of this credit has been drawn so
far.
91. Tunisia and China signed their first development protocol to use portions
of a $40 million credit extended by Peking in 1972. Projects include construction
of a 75-mile canal, a road, and a rolling stock assembly plant to use Chinese
components. Tunisia has used the credit so far only to finance local costs for a
Chinese medical team in Tunisia.
92. Uganda
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94.7aire's use of a $100 million line of credit extended by Peking in 1973
was minimal. Several shipments of agricultural equipment were received, and
Chinese technicians were active at experimental farms. Planning is under way to
construct a conference hall in Kinshasa, and China expects to sand 400 technicians
and workers to start the project in November 1975.
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96. Communist countries gave only small amounts of aid to East Asian
countries in 1974 (see Figure 5). Laos received its first aid since 1962 as china
pledged $25 million for commodity support and road construction. 'Vientiane also
was negotiating an agreement with Moscow, but nothing materialize;i by the end
of the year. Burma reportedly drew $9 million against an existing $24 million
line of credit for commodity support extended by Peking in November 1971.
97. On the political front, China established diplomatic relations with
Malaysia in May, signed its first governmental agreement with the Philippines in
October, and received a Thai trade delegation soon after Bangkok lifted its ban
on trade with China in December.
98. Indonesian-Communist relations focused on the USSR and Eastern
Europe. Jakarta, ending an eight-year freeze in formal relations with the USSR,
signed a trade agreement in March.
99. Jakarta formally sounded out prospects for obtaining Communist aid,
anticipating a decline in Western aid. While critical of the harsh terms of Communist
aid in the past, Indonesia can now afford the less concessional terms of such aid
because of increased oil revenues.
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1974
9
Burma
Communist EconomiW and
MilitavIr Assistance
to East Asia
1955-74
Million Curren) US $
rt
1J
Economic Assistance
Extended
771
Drawn
475
Military (lssisiance
Extended
1,3313
Drawn
1,091
1974
Million Current US $
Extender
Drawn
25X1
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100. Jakarta ended an eight-year freeze in formal economic relations with the
USSR, signing a one-year trade agreement in March 1974. At that time, aid was
discussed for Indonesia's new five-year plan, culminating in a general economic
and technical assistance agreement, signed in December. The USSR is expected
to subject Indonesian project requests to a thorough review before making specific
commitments.
101. Aid to Indonesia's development plan also was discussed with East
European countries, and Jakarta reportedly submitted project proposals to most
of them. However, the major activity with Eastern Europe was in trade, as Jakarta
concluded new trade agreements with Hungary, East Germany, Romania, and
Poland and will sign similar agreements with Bulgaria and Czechoslovakia early
in 1975.
102. Peking extended a $25 million credit to Laos in October, the first
Communist assistance to that country in almost a decade. The credit is mainly
for commodity procurement and road construction and is repayable over 10 years,
following 15 years' grace. A Chinese team arrived in Laos at the end of December
to study the road project.
103. At yearend, Vientiane sent a delegation to Moscow to negotiate the
renewal of an unused 1962 Soviet aid agreement for construction of a hospital
and a hydroelectric powerplant. Vientiane expects Moscow to match Peking's
contribution to Laotian development.
Philippines
104. Chinese-Philippine relations were moving toward normalization in late
1974, as a trade agreement was signed that called for sizable, long-term Chinese
crude oil shipments to the 2hilippines. Manila originally planned to conclude trade
agreements with Moscow and Peking simultaneously, but in October a preliminary
accord was signed in Peking for initial petroleum shipments of 15,000 b/d at
concessionary prices. Chinese oil moved almost immediately, and in November a
Philippine delegation to China drafted several contracts to sell agricultural products
and metals. There were intermittent trade discussions with Moscow throughout
the year. A draft trade agreement submitted by Moscow in 1973 still was being
considered at yearend, despite favorable recommendation by the Philippine
Department of Foreign Affairs.
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105. The USSR, however, did gain initial entry in the Philippine merchant
shipping industry, establishing a $1.5 million joint shipping company in late July.
Earlier in the year, Moscow offered shipping services at 15% below existing rates
in return for bunkering facilities near Manila, but no action was taken on this
initiative.
Malaysia
106. Malaysia's relations with the Communist world during 1974 were
highlighted by the May decision to recognize China. Previously, Burma and Laos
were the only non-Communist East Asian LDCs with diplomatic ties in Peking.
At the end of the year, Malaysia was awaiting the findings of a Soviet feasibility
study on the Tembeling hydroelectric project. The USSR is favored to be awarded
the contract for the project. In December, Moscow agreed to assist development
of the fishing industry. The terms were not disclosed. Malaysia also approved Soviet
plans to establish a joint shipping company to transport increasing amounts of
rubber the USSR intends to buy directly from Malaysia. Moscow currently buys
most of its Malaysian rubber on the London market.
107. During the year, Bangkok drafted its first trade agreements with
Czechoslovakia, Hungary, Poland, and Romania and announced that the level of
trade with the USSR in 1974 would double that in 1973. Thailand requested
Bucharest to assist in power engineering, iron and steel, machine building, and
extractive industry projects. Romania previously had sent technicians for geological
exploration.
108. Contacts between Bangkok and Peking should increase in the wake of
the repeal of Thai legislation that since 1959 prohibited trade with China. New
measures already have established a state agency to administer all trade with
Communist countries. Although Peking has questioned the workability of such an
arrangement, Thai officials were in China in December to negotiate purchases of
petroleum, newsprint, fertilizer, and agricultural equipment.
Europe
109. Malta is still the only non-Communist European country to receive
Communist aid. Drawings against a $45 million credit extended by China in 1972,
however, amount to only $6 million. A glass factory built under this credit was
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completed in 1974, and about 25 Chinese technicians arrived to sort construction
of a 300,000-ton-capacity drydock.
110. Communist economic relations with Greece remained stable in 1974 as
the Karamanlis government came to power. Moscow continued to deliver equipment
for the $89 million Philippi power project, even though a final decision on
completing the plant is pending. Work moved ahead on the $22 million Polish-built
Orestias sugar refinery scheduled for completion in 1975. Poland put another sugar
plant on stream at Xanthi in February. Both Bulgaria and Romania signed
agreements in 1974 to set up joint ventures with Greek firms for processing animal
skins, a major export to Communist nations.
111. Since the April revolution, Portugal has accepted and encouraged
Communist moves to normalize trade and diplomatic relations. The signing of a
trade agreement with the USSR calling for the exchange of Soviet steel and oil
for Portuguese cork, almonds, and consumer goods was among Lisbon's more
significant moves.
112. Spain also continued to expand trade with Communist countries in 1974.
Half-year data show that trade turnover rose nearly $160 million, or 65%, above
the corresponding half of 1973. Poland and Romania were the principal trading
partners, supplying sugar and lumber in exchange for Spain's iron and steel products.
113. Latin America received a record $452 million in new economic aid from
Communist countries in 1974. Argentina, the largest single recipient of new
Communist pledges among all LDCs, took more than 95% of the total. Guyana,
Colombia, and Bolivia, in that order, shared the remainder. Peru was the only
recipient of new military pledges (see Figure 6), although Moscow was courting
Bolivia and Ecuador.
114. The Communist thrust was shared almost equally by Moscow and its
East European allies. China offered no new aid. Other notable developments in
Latin American-Communist economic relations included:
o Soviet inroads in the coveted power generating equipment field with the
conclusion of a $64 million contract with Argentina;
? diplomatic relations established between Peking and Brasilia during the
visit of a Chinese trade delegation in mid-August; and
.et
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/0
Brazil
Communist Economic and
M; ffi hiry Assistance
to Latin America,
105074
Million Current US S
Economic Assistance
Extended
1,737
Drawn
274
Military A ssi:danr.c
Extended
'l?
Drawn
30
Negl.
Guyana
1974
Million Current US $
I
Uruguay
Extended
Drawn
25X1
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joint venture manufacturing arrangements between East European
countries and Peru, Argentina, Chile, Mexico, and Ecuador.
Argentina
115. After a six-year hiatus, Communist economic aid to Argentina was
resumed in 1974. With new pledges of some $435 million, Argentina garnered more
aid than any other LDC.
116. Moscow extended an open-ended credit in February for electric power
project assistance. Data in 1974 suggested a value of $215 million. Our most recent
information, however, indicates that contractual arrangements in 1974 totaled only
$64 million, exclusive of a 15% downpayment, all for the Salto Grande
hydroelectric project. Additional contracts have been signed in 1975 for several
other power projects.
117. Credits extended by Czechoslovakia, Hungary, Poland, and Romania were
as follows:
? In late February, Czechoslovakia provided an open-ended 10-year credit,
mainly for electric power developme.it. About $40 million in equipment
for powerplants is expected to come under the credit. Prague and Buenos
Aires agreed to establish a joint company to produce power generating
equipment for sale in Argentina and other Latin American countries.
? Hungary pledged $20 million for capital equipment purchases.
? Poland extended a $100 million credit, partially repayable in goods over
10 years. Part is to be used to construct a coal purification plant and
to purchase mining equipment for the Rio Turbio power project. Warsaw
also is expected to supply fish processing equipment for a joint fishing
enterprise with Buenos Aires.
? Romania offered $100 million in credits, its largest aid pledge in 1974,
for mining, petroleum, and communications equipment. Argentina's first
purchases under the 10-year credit included $42 million in oil drilling
equipment for delivery over the next two years.
118. Finally, Argentina's trade with Communist nations, particularly with the
USSR, surged in 1974. Moscow purchased a minimum $220 million worth of meat,
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corn, wheat, and wool, more than double 1973 purchases. Peking brought more
than a million tons of foodgrains under a three-year grain trade agreement signed
in January. Buenos Aires also concluded a five-year trade agreement with East
Germany, marking the renewal of formal trade exchanges after 12 years.
119. Bolivian dealings with Communist countries centered on mineral resource
development. Moscow pledged more than $1 million in new aid for mining
machinery. This credit is repayable over five years at 5% interest. La Paz also
purchased mining equipment and two tin volatilization plants under a $28 million
credit extended by Moscow in 1970. Moscow, in concert with two Western firms,
also agreed to supply equipment for the tin smelter at Vinto. Other Communist
aid consisted of Czech deliveries of antimony smelter equipment for a plant
scheduled to h,,~ completed at Oruro early in 1975. Prague had extended a
$3 million c:redi.t for this purpose in 1971.
120. In n ~uera; trade, Bolivia sold about 2,500 tons of tin and tin concentrates
to Communist countries. Moscow bought 1,700 tons for some $12 million;
Czechoslovakia and Poland purchased most of the rest.
121. There we-- no dramatic military aid developments. A Bolivian military
delegation visited the L;S on an inspection tour, but no arms deal was concluded.
122. About $210 million in existing Communist credit- to Brazil remained
largely unused in 1974. The only new allocation was for th . purchase of electric
generators for the Jorge Lacerda power-:ia..t against a 1961 Czech credit. Prague
also continued to provic.e assistano- for Prc~missao powerplant. For its part,
Moscow, under a 1966 credit, delivered turbines for the Capivari powerplant.
123. Brazilian-Communist Made continued to expand in 1974, with turnover
xpect-. 6 'co reach $600-$800 million in 197'r based on long-term barter agreements.
Soviet e:;:pcrts to Brazil increased markedly, reversing Brazil's large trade surplus
with Moscow. The USSR, for example, sold nearly $160 million worth of petroleum
products to Brazil. Soviet imports topped $100 million, and another $100 million
in sugar and coffee imports is scheduled for 1975.
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124. Brazil established diplomatic relations with Peking during a Chinese trade
delegation's visit in mid-August. Later in the year, China signed a five-year
agreement to import 150,000-200,000 tons of sugar annually, which at current
prices would be worth $100 million annually. Price, however, is to be negotiated
as each contract for 50,000 tons is signed. Brazil also sold more than $73 million
worth of goods, principally sugar, cotton, and sisal, to China during the first half
of the year.
125. Although there is an active Communist economic presence in Peru, Lima
is extremely cautious in negotiating specific aid projects. In May, Peking agreed
to participate in the Chimbote irrigation project, the first specific project funded
under a $42 million credit extended in 1971. Peru also signed its first contracts
with Poland against an existing $8 million credit. Warsaw will supply port
equipment and fish processing units for a new fishing complex at Tacna. Polperu,
a joint-venture lumber complex called for in a 1972 credit for $20 million, also
was implemented. Warsaw will provide $7 million to build the complex and will
be repaid in lumber products. Other East European aid involved the delivery of
$10 million worth of educational equipment by Hungary, railroad cars by Romania,
and power equipment by Czechoslovakia.
126. Peru received no new Soviet aid pledges, but signed contracts for several
important projects tied to existing unused credits. Moscow signed a $5 million
contract for work on the first stage of the $450 million Olmos hydroelectric project
and agreed to supply $9.5 million in oil storage tanks for the $500 million Andean
pipeline project. Both agreements will be financed by a $26 million credit extended
in 1970. Although Moscow continues to aid the Parta port project, its $1.8 million
offering in processing equipment fell far short of Peru's original expectations.
127. The most interesting new development in Lima's relations with
Communist nations is the implementation of joint venture arrangements with East
European countries. Under Peruvian law, such ventures are limited to less than
50% foreign ownership. Czechoslovakia, for example, holds a 30% share in a
motorcycle manufacturing plant in Trujillo; the estimated capital cost of the plant
tops $9 million. Hungary signed cwo joint venture agreements: one sets up a $10
million electric motor plant with a Hungarian firm holding a 49% interest; the
other is for an Ikarus-280 bus assembly plant. Romania also is participating in
two joint ventures - the $G0 million Antamina copper development project and
a $10 million machine tool plant in Trujillo.
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Other Latin American Countries
129. Only China and Romania have maintained diplomatic ties and trade ties
with Chile since the September 1973 coup. Peking imported nearly $73 million
worth of copper, nitrates, and iodine in the first half of 1974 and sold nearly
$10 million worth of rice. Negotiations for a joint venture with Romania in copper
smelting continues. Nonetheless, no aid was made available against Chinese or
Romanian credits.
130. During the year, Colombia received. a new $6 million Soviet credit for
the purchas, of 200 trolley buses and actively promoted commercial ties with other
Communist countries. Bogota is emphasising trade in fertilizers and insecticides
and technical aid to develop mineral and raw material resources. Colombia and
Romania signed an agreement in November that calls for development assistance
in coal and phosphate mining and petroleum exploration. Poland also pledged
technical assistance in coal anti pl:^cphate exploration.
131. Costa Rica concluded its first commercial contract with Peking, a
$500,000 coffee sale, and the USSR became San Jose's second largest coffee market
with $2 million in orders for the first half of the year. A Soviet offer to supply
$10 million in trolley buses as part of an existing 1971 credit for $15 million
was pending at the end of the year.
132. Ecuador bought tractors from Czechoslovakia under a $5 million credit
extended in 1971. Quito agreed to enter joint-venture enterprises with Romania
and Poland that involved up to 49% in foreign equity. In January, Ecuador and
Romania agreed to a mutual assistance program in petroleum matters, including
establishment of a joint company for oil development. Buchaiest and Quito also
are jointly constructing a $4.6 million salicylic acid plant. Warsaw hopes to join
with Ecuador in building an $11 million tuna port and currently is conducting
a joint fisheries research expedition. Ecuador is considering a Soviet invitation to
send a military delegation to Moscow.
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133. Guyana's relations with Communist countries improved somewhat in
1974. Preoccupied with bauxite nationalization efforts, Prime Minister Burnham
canceled a planned October visit to Peking for discussions on new aid, but work
progressed on use of a 1972 credit for $26 million. Ground breaking for a large
brick factory was scheduled for January 1975, and preparatory work for a cotton
textile mill continues. The most significant development, however, occurred in trade
as Peking made its first purchase of Guyanese sugar. The 30,000 ton deal is worth
about $15 million, more than double the value of their bilateral trade in 1973.
Guyana also increased its purchases of Chinese equipment.
134. Guyana received its first economic pledge from East Germany, a $10
million credit. Some of these funds have already been allocated for a rice bran
oil extraction plant. The East Germans also are training local personnel in
maintaining and operating mining equipment at the nationalized aluminum plant.
135. China became one of Jamaica's new sugar clients under a five-year accord,
stipulating shipments of 200,000 tons. Deliveries during 1974 called for some
10,000 tons, worth $5 million. Although Jamaica and Peking signed an economic
and technical cooperation pact in February that called for some Chinese project
aid, specific projects have not been identified.
136. Mexico still receives no Communist aid but expanded commercial
relations with Communist countries. Initial trade agreements were signed with East
Germany and Czechoslovakia, and negotiations bega-i for joint ventures with Prague
and Bucharest. A joint venture agreement was reached with Moscow to manufacture
tractors.
137. Nicaragua's export trade with Communist countries took on a new look
after the ban on such trade was lifted. Peking reportedly purchased $15 million
worth of cotton in the first half of the year, an i several East European nations
recently began negotiations for purchases from the 1974-75 crop.
138. Uruguay revitalized aid and trade relations with Communist countries.
In August, about $2 million in capital goods were purchased from Bulgaria as part
of a 1971 credit for $5 million. In September, two contracts were signed with
Hungary, drawing down the remainder of l 1970 credit for $9.1 million. Budapest
will supply 15 railway coaches, spare parts, and a maintenance workshop as well
as power transmission equipment early in 1976. Drawings against a 1969 Soviet
equipment credit continued to be slow.
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139. In foreign trade, the value of Uruguay's exports to Communist trading
partners totaled $17 million by mid-year, up one-third from a comparable period
in 1973. Moscow entered the wool market for the first time and was the largest
single buyer of greasy wool during the 1973-74 clip year. Communist countries
took almost 40% of all wool exports.
140. Venezuela had limited economic dealings with Communist countries,
although a number of them offered to trade technology and agricultural machinery
for petroleum and iron ore. Caracas did buy some Hungarian buses, after being
assured that Hungarian technicians would maintain the vehicles until training of
indigenous personnel was completed.
Near East and South Asia
141. The Near East and South Asia continued to receive the largest share
of new Communist economic and military aid, 45% and 85%, respectively.
Nonetheless, the $1.8 billion in new pledges represented a sharp decline from the
$2.9 billion 1973 agreements. Economic aid dropped 45% to $650 million; military
aid ($1.1 billion) was down 35% from last year.
142. The USSR remained the top donor with more than 80% of new military
credits and more than one-half of the economic pledges. Syria, Pakistan, and
Bangladesh, in that order, were the major claimants for new economic aid - taking
more than 90% of the total. Small amounts were offered to five other clients.
India received no new credits (see Figure 7).
143. There were 10 recipients of new military credits, led by Syria, Iraq, and
Iran. Egypt received hardly any military aid, a dramatic turnaround from 1973,
when Moscow offered $635 million.
144. Drawing against outstanding economic and military credits approximated
$700 million and $1.2 billion, respectively. Nearly two-thirds of arms deliveries
to the region went to Syria and Iraq. Most of the rest was sent to India, Iran,
and Egypt. India and Egypt took more than 60% of the economic aid deliveries.
Afghanistan
145. Communist aid to Afghanistan was limited to deliveries against unused
economic and military credits. Kabul garnered no new aid credits.
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!ii
Afghanistan
28
Bangladesh
91 118
Egypt
rrr. 4;qt
~' I Get'
1U.t 2911 10/)
India Iran
FIGURE 7
Communist Economic and
y~ lfli :xy Assistance
to the Near East and
South Asia
1054-14
Million Current US $
Economic Assistance
Extondod
12,145
Drawn
5,890
Mililary A;sil;tncc
Extondod
11?ti5
Drawn
!11,1169
25X1
Recipients of economic
and military aid
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146. Moscow agreed to double the price it pays Afghanistan for natural gas,
to 95 cents per thousand cubic meters, effective October 1974. Afghanistan exports
some 2.8 billion cubic meters to the USSR annually as repayment for aid.
147. Moscow agreed in October, under a 1972 credit, to construct a
100,000-ton-capacity oil refinery with storage and piping facilities at the Angot
oil depot. Other Soviet initiatives under old credits included an agreement to assist
in mineral and petroleum exploration and to construct a major bridge that will
link both countries with direct road and rail transport.
148. After some 11 years of surveys and construction delays, Afghanistan's
first fertilizer plant, the Mazar-i-Sharif facility, came on stream late in October.
The plant, which was funded by $18 million in Soviet credits, will have an annual
capacity of 120,000 tons. Moscow will provide spare parts and technical assistance
through 1976.
149. Afghanistan's aid relations with other Communist nations also improved.
Prague initiated surveys for a trolley bus system, a cement plant, a thermal power
station, and a coal mine. If the projects appear feasible, Prague will given
construction support under a $20 million credit extended in 1973. Chinese
technicians continued to work on the Parwan irrigation system and soon will begin
the $5 million expansion of the Bagrami textile mill under an unused 1972 credit
for $45 million.
150. The record deliveries of Soviet armor to Afghanistan in 1973 continued
as 185 tanks, 70 armored personnel carriers, and 12 self-propelled antiaircraft
artillery pieces were turned over to Kabul in 1974. In addition, 36 MIG-17 aircraft
to augment Kabul's fighter pilot training program and two MIG-21s and an SU-7
were flown in to replace aircraft lost in crashes. Deliveries of tank transporters,
trucks, spare parts, ammunition, and support equipment raised the value of
deliveries to a record $57 million.
fghanistan s
military dependence on Moscow has not been lessened despite some attempts to
seek training and some equipment from India and Egypt.
25X1
Bangladesh
151. Bangladesh garnered more than $103 million in new economic pledges
from the Communist countries in 1974 - making it the fourth largest recipient.
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152. East European Communist countries were the principal donors:
? Romania extended a $50 million credit for a new spinning mill and to
equip a petrochemical complex. Bucharest also added $1 million to cover
cost overruns on railroad equipment furnished under a previous credit.
? East Germany gave its first pledge, $25 million repayable over 11 years
at 2.5%. Dacca will use these credits to construct a calcium soda plant,
a rice mill, and a typewriter factory.
? Bulgaria provided a $500,000 food grant and allocated about one-half
of a $9.6 million credit extended in 1973.
? Czechoslovakia made no new pledges, but worked on aeveral projects,
including upgrading the capacity of the Khulna powerplants.
153. Poland's initiatives centered on implementing electrification and textile
mill projects under a $12 million credit offered in 1973. The USSR extended a
new $28 million credit for relief assistance. About half was in hard currency and
the rest in commodities. Project assistance under existing credits was limited to
the Ghorosal powerplant, nearly completed, and to drilling for oil and gas. Moscow
agreed to help modern 'e the Chittagong petroleum refinery and to expand its
steel mill. Both projects are still in the planning stage.
154. The USSR finally completed the $20 million salvage program, in the port
of Chittagong. The operation was supposed to take two months; it took two years.
The Soviets donated some of the salvage equipment to Bangladesh for use at the
Maritime Institute they helped set up in Chittagong.
Egypt
155. Moscow's role as a donor of new economic aid declined in 1974 as Cairo
was slow to accept new offers. The only new Soviet credit was a $20 million
grant for clearing mines from the Gulf of Suez, which was completed in November.
Drawings on existing Soviet credits were in high gear, however.
156. A $160 million agreement was signed in July, apparently to allocate
unused funds f om a 1971 credit.
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e At least $55 million was earmarked for a 50% expansion in the capacity
of the Hulwan iron and steel complex to 1.5 million tons. When this
project is completed, Cairo will approach self-sufficiency in steel.
e About $45 million will go to expand the capacity of the Naja Hamadi
aluminum plant from 100,000 tons to 166,000 tons. Initial plant
operations, delayed because of a lack of bauxite, should start up in June
1975, with Guinean bauxite. Three-fourths of the output is for export,
mostly to the USSR.
e $60 million will be used to build cement and textile plants.
25X1
157. Soviet aid to Egypt's fishing industry and support for irrigation, rural
electrification, and other projects continued. Studies on improving the Nile River,
including plans to build five small dams, were completed. A new contract was
negotiated to enlarge the capacity of the Soviet-built Alexandria shipyard,
completed in 1968.
159. Other activity centered on efforts to accelerate use of East European
credits. Romania, Bulgaria, and Poland, for example, set up joint cooperation
committees with Egypt to speed the use of unallocated aid funds. Bucharest
discussed participation in ch,-mical projects under a $100 million credit and
completed its largest aid project in Egypt - a 100,000-ton-capacity sodium products
plant in Alexandria.
160. Virtually all East European countries signed trade protocols during 1974,
emphasizing the sale of their machinery and equipment for Egyptian agricultural
goods and cheap manufactures that Cairo has difficulty in selling elsewhere.
Bulgaria, East Germany, and Hungary are estimated to have bought about 7,000
b/d of Egyptian crude oil during the year.
161. Moscow halted arms deliveries to Cairo in April when political relations
between the two countries soured. Seaborne deliveries were resumed in August,
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but major items of equipment were not involved. Consequently, only $80 million
in military equipment was supplied, only 15% of deliveries in 1973 and the lowest
in any year since 1966.
25X1
mong East European countries,
only Hungary offered new military aid, $8 million covering small arms, ammunition,
and support equipment.
162. With no new economic credits and $45 million in new military aid,
Communist economic relations with India lost some of the momentum of previous
years. Despite mutual concerns over China and New Delhi's continuing dependence
on Moscow for military support, the USSR refused a request to recommit
unallocated project aid to finance the purchase of industrial raw materials. Moscow
also demurred on a request for further large food assistance. Moreover, the USSR
neither extended new aid for India's Fifth Plan (1 April 1974 to 31 March 1979)
nor agreed to reschedule any of India's annual debt service of some $200 million.
163. The second meeting of the Indo-Soviet Commission on Economic,
Scientific, and Technical Cooperation that met in Moscow in September produced
no more positive results than did the 1973 meeting. Protocols were signed to
confirm previous commitments and in some cases to accelerate project construction
schedules. Although discussions were held on setting up joint projects in third
countries and production sharing in the USSR and India, no steps were taken to
implement the recommendations.
164. Drawings on Soviet project aid remained sluggish as they have since 1970.
Although aid deliveries were at a record $300 million, they were inflated by huge
emergency wheat shipments (about $265 million) delivered under a 1973
commitment. Utilization of project aid for the year was only in the $25 million
range.
165. First stage operations at the Bokaro steel mill, although begun early in
the year, will not reach scheduled capacity of 1.7 million tons until mid-1975
at the earliest - four to five years behind schedule. Late deliveries, labor disputes,
and material shortages still stifle plant production at Bokaro, Moscow's major
industrial aid venture in India. Studies are now under way to expand output at
the Bhilai steel plant from its planned capacity of 4 million tons to an eventual
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7 million tons. Preparatory work continued for the construction of several major
plants agreed to in 1973, especially the Mathura oil refinery, an alumina plant
in Madyah Pradesh, and copper ore mining at Malanjkhand. Construction was slow
on several other projects, including the aluminum smelter at Korba (which is nearing
completion of the first stage), oil and coal exploration, and exploitation and
expansion of power facilities. A large new coal field was reported in Bihar during
the year as a result of joint Soviet-Indian exploration efforts.
166. The trade surplus with the USSR was reduced markedly because of the
1974 Soviet wheat deliveries.
167. Indian economic activity with other Communist countries remained
unchanged. Implementation on all projects was slow. No new aid came from East
European countries, although the time period for drawing against Bulgaria's 1967
credits was extended. Work on details to implement ongoing aid projects and to
increase trade turnover went on throughout the year. Finally, East Germany and
India established a joint commission for economic, scientific, and technical
cooperation.
168. Soviet military deliveries to India fell to $104 million in 1974 - the
lowest point since 1970. The decrease reflects a lull as old agreements are completed
and deliveries under newer agreements begin rather than a shift in Soviet military
aid policy.
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171. Iran received no new Communist economic aid in 1974, although new
military credits were at a record high. Communist initiatives stressed completing
on-going aid projects and expanding trade. Strains in Soviet-Iranian economic
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relations were cased somewhat after an 85% increase in the price for Iranian natural
gas. This settlement set the price at 57 cents per thousand cubic fe?t. The value
of Soviet natural gas imports in 1974 probably reached $185 million.
172. The Shah made an uneventful trip to Moscow in November. Both sides
agreed in principle on new, undisclosed, long-range industrial development projects.
At yearend, Moscow was considering aid to several projects, including development
of gas fields in northeastern Iran. Work is under way to triple annual production
at the Soviet-assisted Isfahan steel complex to 1.9 million tons by 1977, and a
further Soviet expansion is planned. The Shah also agreed to resume trilateral talks
with the USSR and West Germany on the sale of natural gas to Western Europe,
which would involve construction of a second natural gas pipeline from Iranian
fields to the Soviet border. The USSR would consume Iranian gas and substitute
Soviet gas at its Western terminal.
173. Major developments in Communist aid included:
? installation of compressors on the Soviet-assisted gas pipeline to raise
annual throughput capacity to 10 bi;lion cubic meters of natural gas;
? discovery by a Soviet-managed geological survey of coal reserves totaling
at least 100 million tons in south-central Iran;
? commissioning of the first of 11 Soviet-built prefabricated housing plants
as part of a $44 million credit extended in 1970; and
? delivery by Poland of equipment for textile plants earmarked in a 1973
credit.
Warsaw wanted to obtain 12,000 b/d of oil in 1974 as aid repayment, but price
differences slowed oil deliveries.
174. Czechoslovakia, Hungary, and Poland agreed to remove the gold clause
from their trade and payments on agreement with Iran. Trade is now denominated
in either Iranian rials or an average of several Western currencies. Iran was unable
to persuade Romania and the USSR to drop the clause.
175. Iranian-Communist trade will continue to grow as project aid is
implemented and aid repayments rise. For example, the value of Soviet natural
gas imports from Iran in 1974 probably was twice the 1973 level of $91 million.
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Gas exports in 1974 permitted Tehran to service its entire military and economic
debt to the USSR and still left about $90 million to be settled on current account.
Iranian exports previously used to balance the Soviet trade account probably are
being diverted to other markets.
176. .ommunist countries, which now absorb more than one-third of Iran's
non-oil exports, signed new accords to further increase trade turnover. Iran signed
a seven-year trade agreement with Romania valued at $1.5 billion - the largest
concluded with a Communist nation. Under the accord, Romanian agricultural
products will be exchanged for Iranian industrial goods.
177. Large credits reportedly were offered to Poland and Bulgaria as advanced
payments to establish joint agricultural enterprises. At yearend, a Bucharest request
for an open-ended $250 million credit was still pending because Tehran wanted
to tie a large portion of the funds to joint agricultural ventures.
178. In the military sphere the Shah continued to supplement procurement
of sophisticated weapons from the West with purchases of ground forces, military
support, and engineering equipment from the USSR. Tehran signed a $250 million
accord in May, the largest deal since Iran started ordering Soviet equipment. Military
deliveries under old credits hit $100 million despite the fact that Soviet delivery
schedules were lagging.
Iraq
179. Military aid - new commitments and deliveries under old credits - was
the dominant element in the Communist-Iraqi aid dialogue in 1974. New Soviet
military credits hit a record of $270 million,4 and East European countries added
another $75 million. These new accords not only guarantee the continued growth
and modernization of the Iraqi armed forces but also replenish ordnance depleted
in the Kurdish war.
180. Moscow also delivered $275 million worth of equipment in 1974. A wide
range of new weapons systems was introduced, including MIG-23 Flogger jet
fighters, the SA-6 surface-to-air missile system, Osa-I[ guided missile patrol boats,
and FROG-7 tactical surface-to-surface rockets. In addition, the SA-2 surface-to-
surface missile system was reintroduced. Iraq received SA-2s in the early 1960s,
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181. Moscow enlarged its military advisory contingent from 750 in 1973 to
1,000 in 1974 to accommodate this surge in sophisticated weapon system,;
deliveries. Iraq sent 700 military personnel to the USSR for training, half to attend
surface-to-air missile courses.
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183. Oil developments dominated the economic aid picture. Both the
second-stage development of the North Rumaila oilfield and the Basra oil refinery
(the major Communist projects in Iraq) were completed. Production at the largely
Soviet-developed North Rumaila oilfield now stands at 360,000 b/d and accounts
for about one-fifth of Iraq's total output. Moscow also speeded work to increase
capacity to 840,000 b/d by late 1975. Some of the oil from North Rumaila goes
to the Czech-built refinery at Basra, and discussions were under way to double
the capacity of the Basra facility to 140,000 b/d. Soviet construction of a 375-mile
oil products pipeline between Baghdad and the Basra refinery proceeded, using
about $40 million of unused 1971 credits.
184. Iraq's oil barter arrangements with the Communist nations were set back
early in 1974 when Baghdad temporarily stopped all crude oil shipments on Soviet
account and demanded hard currency payments at a price equal to that charged
Western customers. Soviet oil purchases from Iraq fell 65% to 75,000 b/d in 1974.
East European nations took some barter oil despite prices of more than $11 per
barrel. Few long-term agreements were concluded, however, and prices were left
open on tnose agreements. China, a net oil exporter, purchased Iraqi crude (10,000
b/d during 1974) for the first time.
185. In other developments, the USSR and Iraq signed protocols to build the
Haditha hydropower complex, a cement plant, and an irrigation project and to
conduct mineral prospecting. New Soviet financing probably will be needed to
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complete this group of projects. Both sides also agreed to establish % joint fishing
company based in Basra. The company is to be capitalized at $34 million, of which
51% is to be funded by Iraq.
186. Hungary was awarded a contract, possibly as part of the $50 million
credit extended in 1972, to install facilities to handle liquid sulfur at the port
of Umm Qasr. Budapest also agreed to go ahead with construction of a
slaughterhouse, cold storage plants, and brick factories and agreed to accept 1,600
Iraqis for agricultural training. Poland accepted 140 Iraqis for training and intends
to implement agricultural project aid under a $100 million credit extended in 1972.
The credit calls for repayment in oil. Finally, an Iraqi delegation visited China
to draw up contracts for a yarn washing plant, the first project identified with
the $45 million credit extended by Peking in 1971. Chinese proposals on two
bridges to be built in northern Iraq were also dicsussed.
187. The USSR contributed the only new Communist economic aid to North
Yemen - 25,000 tons of wheat valued at $5 million. Moscow also completed
technical support for expanding the port of Hudaydah under a 1964 credit and
may provide machinery and equipment for further expansion. Romanian specialists
arrived during 1974 to survey oil deposits; studies already have been completed
on petroleum storage and a pipeline. A team of North Koreans also was in San'a
to survey sites for a vehicle and tractor spare parts plant. The Chinese initiated
surveys to construct a cottonseed oil extraction plant under a 1972 aid agreement.
188. Moscow resumed military shipments, the first in three years. Deliveries
included three MIG-17s, an IL-28 bomber, some medium tanks, small arms, spare
parts, and ammunition. Moscow's renewed interest probably stems from the transfer
of some West European-manufactured ground forces equipment from other Arab
states to San'a last year, and Yemeni discussions with the United States for military
training. Saudi Arabia's active interest in helping San'a modernize its armed forces
may stimulate further offers of Soviet military assistance.
189. Pakistan was among the top claimants of new Communist economic aid
in 1974 - ranking third among all LDCs. All of the $216 million in new aid came
from Moscow and was earmarked for the Karachi steel mill, the most important
Soviet aid project in Pakistan. Moscow's pledges for that facility now approximate
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$425 million. Except for setting up an ancillary training center for 700 students,
the USSR has yet to make major deliveries under these credits. Moscow did ship
tractors, textile machinery, and a 1,000-kilowatt radio transmitter to be set up
in Islamabad.
190. China focused on implementing some $255 million in unused credits and
grants. Late in the year Chinese technicians began limited testing of the
foundry-forge constructed at Taxila under a Chinese grant. Work was finished on
the Larkana sugar mill, slated to start operations in 1975. Peking agreed to help
set up a urea fertilizer plant in the Northwest Frontier Province under a $12 million
grant. Construction of the Hattar refractory plant, also under a grant, was at a
near standstill.
191. China began work on three textile mills, a stadium complex in Islamabad,
and the transmission grid connecting Tarbela and Wah, all under a $200 million
credit extended in 1970. Early in the year, China sent 30,000 laborers to work
on the Pakistan portion of the Karakoram highway because work had been delayed
by a major landslide in the spring.
192. Romania, under a 1973 credit for $25 million, is helping on a 2-1/2
year project to expand a refinery in Karachi. Bucharest also is negotiating to
participate in the construction of a textile mill and a locomotive plant. Poland
agreed to construct two sawmills and two sugar plants under some $8.3 million
in outstanding credits. Warsaw's program has been inactive since 1970, when a
sugar mill at Hyderabad was completed. Bulgaria announced that it will set up
a $3.6 million leather tannery under an unused 1969 pledge.
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195. China and the USSR added to their economic positions in the Gulf of
Aden area, possibly in response to Yemeni overtures to Western and Arab states
for aid. In July, Moscow agreed to supply $40 million in credits for projects under
a 1972 accord, including a thermal powerplant, airfield modernization, and
geological surveys. The USSR also won its bid to replace Algeria in a joint-venture
oil company, and the Soviet-Yemeni joint fishing company began operations.
196. An economic and technical cooperation agreement was signed in
November during the visit of a Yemeni delegation to Peking. China repeated an
earlier offer to expedite food grain shipments and to speed implementation of
$77 million in credits. Bulgaria agreed to increase its aid to $10 million. Sofia
also signed a $15 million land reclamation contract, which will be funded by the
Kuwait Fund for Arab Economic Development. Hungary supplied $100,000 worth
of medical equipment.
197. Moscow sent some $24 million in arms to Aden, the most in any year
since shipments started in 1968. Deliveri.;s included 12 MIG-21s and miscellaneous
ground force equipment, funded under a 1973 accord. In addition, Hungary offered
new aid covering some $6 million in uniforms, medical supplies, and foodstuffs.
198. Using outstanding credits, Mosco?, beefed up project aid to Sri Lanka
in 1974. Soviet technicians began to expand the Ceylon Steel Corporation mill
built with Soviet aid in the early 1960s and to prospect for oil. Equipment was
delivered for a flour mill and a housing plant. A multipurpose dam and irrigation
project, the center of aid discussions during Prime Minister Bandaranaike's visit
to Moscow in November, also was surveyed. Moscow has agreed to assist in the
$100 million project, but a firm financial commitment is not expected until early
in 1975.
199. China delivered 100 tractors as new grant aid and $14 million worth
of rice under a December 1973 grant. The Pugoda textile mill began operations,
and construction of a finishing mill to complete the complex was initiated.
Minneriya was chosen as the site for another Chinese-assisted textile complex, to
be funded from an $8 million credit extended in 1972.
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200. Romania extended an $11 million credit for the purchase of railroad
cars, its first aid since 1972. East Germany completed the $23 million Thulhiriya
textile mill and started construction of a second mill.
201. Colombo accepted a Soviet gift of an $11 million naval training vessel.
Sri Lanka claimed that it preferred a US or UK vessel, but none was offered.
Earlier in the year, Moscow offered to sell a Petya-class destroyer escort on liberal
credit terms, but Colombo turned the deal down.
Syria
202. Damascus was the second-ranking claimant of all new Communist
economic aid and took the largest share of new military credits. Moscow provided
a minimum of $100 million in new economic credits. fire USSR agreed to build
a small dam on the Al-Kabir River and to do-ble the capacity of berthing facilities
at the port of Latakia, permitting 12 ships to be handled simultaneously. Funds
also were earmarked for facilities at the nearly completed Euphrates dam, including
irrigation systems and transmission lines from the dam. Moscow assigned 1,200
technicians to these and other projects.
203. Three East European countries extended $185 million of new economic
aid to Syria in 1974. Czechoslovakia gave $100 million for industrial projects. The
latter credit is repayable in 10 years, after a two-year grace, at 2% interest. Bulgaria
offered a $73 million credit - the largest ever concluded with an LDC -- for
unspecified agricultural and industrial projects. Repayment will be over 12 years
at 2.5% interest. Hungary provided $12 million as an add-on to a $14 million
line of credit extended in 1966. Romania focused its activities on implementing
plans to build a 120,000 b/d refinery at Banias under a 1972 accord. This project
will require about $180 million for Romanian equipment and services as well as
foreign exchange for purchases from third countries. Partial repayments will be
made over six years in Syrian oil.
204. Syria received $416 million of new Communist military aid in 1974,
more than $400 million from the USSR and the rest from East European countries.
New commitments were down some 45% from last year, but Damascus still received
more military aid than any other LDC.
205. President Asad's visit to Moscow in April produced a new $400 million
agreement that called for delivery of equipment to further modernize Syria's air
defense and ground forces. Two smaller accords for vehicles and helicopters were
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signed later in the year, worth at least $6 million. Although talks held in September
probably provided for contingency deliveries in the event of renewed hostilities
with Israel, Moscow made no new commitments.
206. Deliveries during the year amounted to $435 million, Moscow shipping
under both the $ 700 million accord signed in October 1973 and the new April
1974 agreement. Weapon systems delivered upgraded Syria's air and ground forces
so that at yearend they were better equipped than at the beginning of the October
war. Late in May, Syria became the first country to receive supersonic MIG-23
jet fighters from the USSR. The aircraft, which has not been given to Moscow's
Warsaw Pact allies, has capabilities that exceed those of any other fighter in Arab
arsenals and will enable the Syrian air force to better cope with Israel's F-4
Phantoms. The SA-9 missile system also was delivered. Other equipment shipped
during the year included 110 MIG-21s and SU-7 jet fighter aircraft, 360 T-62
tanks, 260 BTR-60 armored personnel carriers, and 16 FROG-7 surface-to-surface
rocket launchers.
207. Moscow posted 2,150 advisers and technicians in Syria to support its
military aid program, up from the 1,800 in 1973. Most are used in air
defense-relat?d functions, including familiarization and training on newly arrived
MIG-23s. An increasing number of Soviet advisers were detailed to the Syrian army
to improve the tactical capabilities of armored and other ground forces units. During
the year, more than 500 Syrian military personnel went to the USSR for training.
208. The $10 million in new East European military aid included military
support equipment from Czechoslovakia, ammunition from East Germany, and
unknown goods from Bulgaria. East European countries delivered about $12 million
worth of equipment, including some T-54 tanks and OT-64 armored vehicles from
Czechoslovakia and smaii arms and ammunition from is st Germany.
Other Near East and South Asian Countries
209. Jordan's economic contracts with the Communist countries remained
limited. Romania, in June, submitted a draft protocol on long-range cooperation
in oil prospecting and other projects during the first meeting of the joint
Jordanian-Romanian Economic Committee. The protocol also provided for
increased trade and for export of Jordanian = hosphates to Romania.
210. Romania became the first Communist county to pledge economic aid
to Lebanon. Under a February agreement, Bucharest will provide $9 million of
equipment for a cement plant near Beirut. Repayment will be over 10 years.
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211. Czechoslovakia concluded a military aid agreement with Lebanon during
1974 covering some $2 million in small arms and ammunition. Czechoslovakia has
provided small quantities of this type of equipment in previous years for cash.
212. Peking began to implement several aid projects in Nepal under a 1972
grant for $35 million. A trolley bus system connecting Katmandu an' Bhaktapur
is scheduled to be completed late in 1975. Construction of the $4.8 million
Katmandu ring road is moving ahead, as is work on a brick plant and a textile
mill. Nepal's reliance on Peking for industrial goods increased under new trade
agreements that will make China the major source of cement, iron rods, and paper.
213. China also concluded its first military aid accord with Nepal under which
communications and power generating equipment will be provided to the Napalese
army. Nepal still remains dependent on India for its weaponry.
214. The Persian Gulf states intensified their economic dialogue with
Communist countries. Bahrain concluded its first direct governmental agreement
with a Communist country in May with a $2.3 million cash sale of 2,000 tons
of domestically produced aluminum ingots to China; sales to China in. 1973 were
less than $100,000.
215. Moscow still tries for a stronger economic position in Kuwait, despite
its failure to win a $170 million contract to build four powerplants in that country.
The Soviet oil minister visited Kuwait during the year, and Soviet trade
organizations are seeking close ties with their Kuwaiti counterparts. Romania and
Kuwait signed their first official trade and economic cooperation agreements calling
for participation by Bucharest in chemical, petroleum, and constriction projects
over the next few years.
216. In what is believed to be a first for the Aral- oil producers in economic
relations with Communist nations, Kuwait's International Investment Company
issued $40 million in eight-year, 10% bonds to Kuwaiti subscribers on behalf of
Hungary. The repayment :,chedule provides a three-year grace period.
217. Most East European states sent trade delegations to the United Arab
Emirates. Romania bought 7.5 million barrels of crude oil from Abu Dhabi for
nearly $14 per barrel. In other activities, the USSR was awarded a contract to
supply 120 transformers worth $6 million to Abu Dhabi - the first Soviet contract
with a UAE state.
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